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Kokil Singh v. Ramasray Prasad Choudhary
Legal Opinion Summary — Ross, J. (with Das, J. concurring)
Factual and Procedural Background
The opinion arises from objections (initially decided on the facts in favour of the respondents) to the order of the Subordinate Judge on a matter involving a pending suit and an agreement to refer the dispute to arbitration.
On 25th February (the text contains two date references: the judge records that "On the 25th of February, 1922, the following petition was filed" and the petition as quoted refers to an "ekrarnama dated 25th February 1932"), a petition was filed in the suit stating that the parties had executed an ekrarnama and desired the suit to be dismissed without trial and that costs be borne by the parties. In consequence the Subordinate Judge made an order: "The suit is dismissed in terms of the solehnama."
There was an agreement to refer the dispute to arbitration. The original arbitration agreement included a clause fixing a date by which the arbitrator should pass his award; that date was not complied with, and the parties subsequently entered into a fresh agreement extending the time for completion of the arbitration.
The appellant challenged aspects of the procedure and the award on points of law (including the contention that a reference to arbitration out of court when a suit is pending is impermissible and a complaint that the arbitrator made an award while not all co-sharers were plaintiffs). Ross, J. disposed of the legal objections and dismissed the appeal with costs; Das, J. agreed.
Legal Issues Presented
- Whether parties may, while a suit is pending, refer the matters in dispute to arbitration out of court (that is, without an order of reference by the Court), or whether such a reference can only be effective if made by an order of the Court while the suit is kept pending so the Court retains supervision.
- Whether an agreement extending the time for the arbitrator to make his award (entered after the original date fixed in the submission) constitutes a fresh submission to arbitration and is therefore free from objections that applied to the original submission made while the suit was pending.
- Whether an award by an arbitrator is vitiated by an asserted error of law where (a) the suit had been dismissed and (b) not all co-sharers were plaintiffs at the time of the award.
Arguments of the Parties
Appellant's Arguments
- The appellant contended that there cannot be a valid reference to arbitration made out of Court while a suit is pending, because in pending litigation the arbitrator's authority derives both from the parties and from the Court; if the parties wish to refer a pending suit to arbitration they must apply to the Court for an order of reference and keep the suit pending so the Court may supervise and control the arbitration.
- The appellant also argued that an award was erroneous because the arbitrator made an award when all the co-sharers were not plaintiffs (implying a defect in the arbitrator's authority or jurisdiction relating to the parties before him).
The opinion does not set out a detailed account of the respondents' legal arguments in the text quoted; the judge records that earlier objections on facts were decided in the respondents' favour but does not elaborate respondents' submissions in detail.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ghulam Khan v. Muhammad Hassan (Privy Council) | Where parties to litigation desire to refer a matter in difference between them in the suit to arbitration, "all proceedings from first to last are under the supervision of the Court." Also cited for the proposition that arbitrators are judges of law as well as judges of fact and that an error of law does not necessarily vitiate their award. | Used both to record the established principle of Court supervision where parties refer matters while suit is pending and to support the conclusion that an alleged error of law by the arbitrator does not automatically invalidate the award. |
| Tincowry Dey v. Fakir Chand Dey Maclean | Section 523 (paragraph 17 of Schedule II) does not apply to a case of reference to arbitration where there is pending litigation. | Cited by the judge as part of the line of authorities addressing the limits of paragraph 17 and the interplay between references made during pending litigation and procedural provisions for arbitration. |
| Vyankatesh Mahadev v. Ram Chandra Krishna | Where a Court is seized of a cause, its jurisdiction cannot be ousted by private acts of the parties; if parties, having invoked the Court's authority, desire to substitute a private arbitrator they must proceed according to the law (first sixteen clauses of the second schedule). | Noted as part of authorities supporting the proposition that parties cannot, by private act, oust Court jurisdiction when a suit is pending; the judge considered this in determining whether the present agreement was objectionable. |
| T. Venkatachala Reddi v. T. Rangiah Reddi | Paragraph 17 of the second schedule to the Civil Procedure Code covers only cases where parties, without having recourse to litigation, agree to refer their difference to arbitration; an agreement to refer to arbitration in pending litigation without Court intervention cannot be filed under paragraph 17. | Relied on to delineate the scope of paragraph 17 and to contrast cases where agreements to arbitrate are made outside litigation with those made during litigation. |
| Shavakshaw D. Davar v. Tyab Haji Ayub | Held that a decree could not be made on an award under Order XXIII, rule 3; Macleod, J. observed that an arbitration between parties to a suit without an order of the Court had not been excluded and might fall under provisions dealing with arbitrations without Court intervention; section 89 said to be conclusive. | The judge quoted Macleod, J.'s observation to show judicial recognition that an arbitration agreement made out of Court by parties to a suit might still be governed by provisions applicable to arbitrations without Court intervention and to indicate that such matters could be treated under the appropriate paragraph (here, paragraph 21 in that case). |
| Manilal Motilal, A Firm… v. Firm Gokal Das Rowji… | The learned Judge (same as above) reached conclusions differing from the trial judge and did not agree with the view that an award in a reference by parties to a suit without Court intervention could not be a valid award. | Cited to show judicial disagreement as to the effect of references made by parties to a suit without Court intervention and to support the proposition that such awards could be valid. |
| Amar Chand Chamaria v. Banwari Lall Rakshit Rankin | The judge expressed the opinion that the rules in paragraphs 20 and 21 cannot be applied in certain situations (as discussed in that authority). | Noted as part of conflicting authorities; the present court treated those decisions as not controlling the present facts and proceeded to apply paragraph 20 where appropriate. |
| Nanjappa v. Nanja Rao | Held that there may be an agreement to refer to arbitration in a pending suit without the intervention of the Court. | Relied upon to support the proposition that an agreement to arbitrate made while a suit is pending (without Court intervention) is not necessarily illegal or void. |
| Stephens v. Lowe and Watkins v. Phillpotts | Cited for the proposition that an enlargement of time for an arbitrator to make his award is equivalent to a fresh submission to arbitration. | The court applied this principle to hold that the parties' agreement extending the time for the award was equivalent to a fresh submission and therefore was not made during the pendency of a suit (in the operative sense) and was free from the earlier objection. |
| Halsbury's Laws of England (Vol. I, p. 463) | Secondary authority referenced for the principle that an enlargement of time is equivalent to a fresh submission to arbitration. | Used alongside Stephens v. Lowe and Watkins v. Phillpotts to justify treating the time-extension agreement as a fresh, unobjectionable submission to arbitration. |
Court's Reasoning and Analysis
The court proceeded by addressing the appellant's legal objection that a reference to arbitration "out of Court" while a suit is pending is impermissible because the arbitrator's authority in a pending suit is also derived from the Court. The judge reviewed a body of authorities that explore the relationship between references made during pending litigation and the procedural provisions of the Civil Procedure Code (notably paragraphs 17, 20 and 21 of the second schedule and Order XXIII, rule 3).
The court's analysis can be summarized in the following steps, reflecting the reasoning in the opinion:
- The Subordinate Judge's order dismissing the suit "in terms of the solehnama" was final and lawful; the court saw nothing illegal in the parties withdrawing the suit by consent. Once the suit was dismissed, the suit was at an end while the agreement to refer to arbitration remained in existence.
- The judge observed that paragraph 1 of the second schedule (and related provisions) is permissive rather than mandatory: if parties apply for an order of reference the Court must supervise the arbitration, but the parties are not compelled to adopt that route; they may obtain dismissal of the suit by consent and proceed with arbitration without Court intervention.
- The earlier authorities discussed concerns largely where a suit remained pending at the time an award was made and considered how such awards should be dealt with in the pending suit. The court distinguished those situations from the present one where there was no suit pending at the time the application under paragraph 20 was made.
- The court concluded that where there is no suit pending when an application is made under paragraph 20, nothing bars the procedure under paragraph 20 merely because the original agreement to arbitrate had been made while a suit was earlier pending. Paragraphs 20 and 21 provide an adequate check of the arbitration proceedings before an award becomes a rule of the Court.
- The court further relied on the fact that the original submission fixed a date for the award and the parties later entered into a fresh agreement extending time. Applying the authorities cited (Halsbury; Stephens v. Lowe; Watkins v. Phillpotts), the judge held that an extension of time was equivalent to a fresh submission to arbitration. That fresh agreement was not made during the pendency of any suit and hence was not open to the objection urged against the first submission.
- As to the alleged error of law because "all the co-sharers were not plaintiffs," the court noted that the suit had been dismissed and that the submission to arbitration concerned the dispute between the present plaintiffs and the defendant. The judge relied on Ghulam Khan to state that arbitrators are judges of law as well as fact, and that an error of law does not necessarily vitiate an award.
- On these grounds the court found that the appellant's legal objections failed and that the appeal should be dismissed with costs.
Holding and Implications
HOLDING: The appeal is DISMISSED WITH COSTS.
Implications and immediate effects:
- The Subordinate Judge's order dismissing the suit by consent (in terms of the solehnama / ekrarnama) was upheld as final and lawful.
- The court held that an agreement to refer a dispute to arbitration that survives dismissal of the suit can be proceeded with under paragraph 20 (i.e., as an arbitration without Court intervention) provided the application under paragraph 20 is made when no suit is pending.
- The court treated an extension of time for the arbitrator to make his award as a fresh submission to arbitration, thereby removing the objection that attached to the earlier submission made while the suit was pending.
- An asserted error of law by the arbitrator did not, on the facts before the court, vitiate the award because arbitrators are judges of law and fact (citing Ghulam Khan), and the dispute at the time of the award was between the present parties after dismissal of the suit.
- The decision resolves the dispute between these parties by dismissing the appeal; the opinion applies existing authorities to the facts rather than announcing a novel rule of law for broader application. The opinion does not purport to lay down a new precedent beyond the application of cited authorities to these facts.
Appeal dismissed. — Ross, J.; Das, J. agreed.
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.
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