Ross, J.:— (after stating the facts, as set out above, and deciding the objections on facts in favour of the respondents, proceeded as follows):—
I now turn to the objections to the order of the Subordinate Judge in point of law. The contention of the appellant is that there cannot be a reference to arbitration out of Court when a suit is pending, because in a pending suit the arbitrator gets his authority both from the parties and from the Court; and that if the parties decide to refer a pending suit to arbitration they must apply to the Court for an order of reference and keen the suit pending so that the Court may have control over the arbitration. A number of cases were referred to in the argument. In the leading case, Ghulam Khan v. Muhammad Hassan, the Privy Council observed that: “Where the parties to a litigation desire to refer to arbitration any matter in difference between them in the suit………………all proceedings from first to last are under the supervision of the Court.” In Tincowry Dey v. Fakir Chand Dey Maclean, C.J, said that section 523 (paragraph 17 of Schedule II) does not apply to a case of reference to arbitration where there is pending litigation. In Vyankatesh Mahadev v. Ram Chandra Krishna was said that “Where the Court is seized of a cause its jurisdiction cannot be ousted by the private and secret act of parties, and if they, after having invoked the authority of the Court, and placed themselves under its superintendence, desire to alter the tribunal and substitute a private arbitrator for the Court, they must proceed according to the law laid down in the first sixteen clauses of the second schedule.” In T. Venkatachala Reddi v. T. Rangiah Reddi it was held that paragraph 17 of the second schedule to Civil Procedure Code covers only cases where parties without having recourse to litigation agree to refer their difference to arbitration; and that I an agreement to refer to arbitration in a pending litigation made without the intervention of the Court could not be filed under paragraph 17 of the second schedule. In Shavakshaw D. Davar v. Tyab Haji Ayub it was held that a decree could not be made on an award under Order XXIII, rule 3. But Macleod, J., went on to observe as follows: “An arbitration between the parties to a suit without an order of the Court has not been excluded and must, therefore, come under the provisions which deals with arbitrations without the intervention of the Court. I do not see myself why the words “without the intervention of the Court” should not refer to cases where the agreement of reference is made out of Court although the parties to the agreement are already parties to a suit, and, in my opinion, section 89 is now conclusive on the question,” The learned Judge, therefore, allowed the application to be treated as an application under paragraph 21. In Manilal Motilal, A Firm… v. Firm Gokal Das Rowji… however, the same learned Judge came to the conclusion that order was wrong; but he did not agree with the trial Judge who had said that an award in a reference by the parties to a suit without the intervention of the Court could not be a valid award. In Amar Chand Chamaria v. Banwari Lall Rakshit Rankin, J., has expressed the opinion that the rules in paragraphs 20 and 21 cannot be applied in such. The authority is clear that no assistance can be obtained from Order XXIII, rule 3. As to paragraph 20 of the second schedule these decisions, in my opinion, have no application to the present facts. On the 25th of February, 1922, the following petition was filed before the Court in, the suit:
“On the advice of well wither it has been freed by the parties to get the suit decided by arbitrators. The petitioners have therefor executed an ekrarnama dated 25th February 1932. Therefore they do not like to prosecute this case. This suit may be dismissed without trial. Costs may be borne by the parties.”
On this the Subordinate Judge passed the following, order:
“The suit is dismissed in terms of the solehnama.”
This order is final and cannot be questioned now: and, in any case, I can see nothing illegal in it. I see no reason why the suit should not have been withdrawn by consent of the parties. The suit then was at an end; but the agreement to refer to arbitration stood. There is nothing illegal in such an agreement being made pending litigation [Nanjappa v. Nanja Rao where it was held that there may be an agreement to refer to arbitration in a pending suit without the intervention of the Court see also Shavakshaw D. Davar v. Tayab Haji Ayub and Manilal Motilal, A Firm… v. Firm Gokal Das Rowji… quoted above]. Paragraph 1 of the second schedule is not mandatory, it is permissive. If the parties apply to the Court for an order of reference then the Court must keep control over the proceedings up to the end. But it is not necessary for the parties to take this course and there is nothing to prevent their getting the suit dismissed by consent. Then the whole matter is at large. The point is that in all the cases cited above there was a suit pending at the time when the award was made, and the question was how the award was to be dealt with in the suit; and the better opinion seems to be that it can only be dealt with by being pleaded as a bar to the further continuance for the suit. But where there is no suit pending when an application is made to the Court under paragraph 20, I can see nothing to bar the procedure under paragraph 20 in the fact that the original agreement to arbitrate was made while a suit was pending. Paragraphs 20 and 21 provide for an adequate check of the proceedings before the award becomes a rule of the Court. This is all that is necessary. The present proceedings fall directly within the terms of paragraph 20 because the matter was referred to arbitration without the intervention of the Court. The Court made no order in the matter of arbitration in the original suit which was simply dismissed.
But here there is another fact. The original agreement to refer to arbitration provided by its fourth clause that the arbitrator should pass his award by 30th Baisakh, 1329. As the arbitration was not completed by that date a fresh agreement was entered into between the parties extending the time till the 29th of Sawan, 1329. This enlargement of time is equivalent to a fresh submission to arbitration [see Halsbury's Laws of England, Vol. I, page 463, and Stephens v. Lowe and Watkins v. Phillpotts]. This agreement was not made during the pendency of any suit and was free from the objection that has been urged against the first submission.
Finally, as to the error of law said to have been committed by the arbitrator in making an award when all the cosharers were not plaintiffs, it is sufficient to say that the suit was at an end and that the submission to arbitration was a submission of the dispute between the present plaintiffs and the defendant. There was, therefore, no question of law for the arbitrator to consider and, even if there was, then, as was pointed out by the Judicial Committee in Ghulam Khan v. Muhammad Hassan, arbitrators are judges of law as well as judges of fact and an error of law certainly does not vitiate their award.
My opinion, therefore, is that on all grounds this appeal fails and it must be dismissed with costs.
Das, J.:— I agree.
Appeal dismissed.