Ramdayal Munnalal Sonar v. Sheodayal

1. This appeal arises out of a partition suit in which the plaintiff sues for partition and separate possession of his one quarter share in the family property. After the suit had been instituted the parties asked for time to settle their differences out of Court through an arbitrator. One Sheonarain, a close relative of both the parties was appointed, and the question before us is whether the award, which he made, can be given effect to. All the parties to the suit accept the award except defendant 2 Bamdayal and defendant 3, Bhola, who is his minor son. These two have lost in the lower Court and so appeal here. That first objection they raise is that the award is invalid because the permission of the Court was not obtained. It was argued that under Section 89 of the CPC, all references to arbitration and all proceedings there, under have to be in accordance with the provisions of Sch. 2 except in two cases neither of which applies here. The first of these exceptions comes into operation where the provisions of the Arbitration Act, 1899 apply, and the second when “any other law for the time being in force” applies. The respondents on the other hand contend that O. 23, R. 3 applies and that the matter can be recorded as an adjustment of the suit under a lawful compromise. They claim that the phrase “any other law for the time being in force” occurring in S. 89 embraces O. 23, R. 3 and so its provisions must apply.

2. The Judicial Commissioner's Court applied O. 23, R. 3, in two cases, namely 23 NLR 100 (1926) 13 AIR Nag 405 , 95 IC 89 , 23 NLR 100 and 24 NLR 55, (1928) 15 AIR Nag 173 , 107 IC 525 , 24 NLR 55 but unfortunately neither decision discusses the law. The former was decided by a single Judge and merely followed without comment an unreported ruling of the Judicial Commissioner's Court and three other decisions, one from Allahabad, one from Bombay and one from Madras. The latter was decided by a Bench of two Judges one of them being the Judge who had decided the former case, and it does no more than follow the earlier ruling. A reference was also made to O. 23, R. 3 and to one of the above cases in 31 NLR (Sup) 72 (1936) 23 AIR Nag 8 , 160 IC 202 , 31 NLR (Sup) 72 at p. 75, but as the present questions did not arise there, there is naturally neither discussion of nor decision on the points now at issue. We are unfortunately unable to agree that O. 23, R. 3, applies though there is considerable weight of authority against us. For a time considerations of stare decisis weighed with us, as they did with the Patna High Court in 11 Pat 237 (1932) 19 AIR Pat 205 , 138 IC 82 , 11 Pat 237 , 13 PLT 434 at p. 239, but on the whole we do not think that should prevent us from giving effect to what we conceive to be the law. Security of title will not be affected, nor will injustice result. In fact none of the factors which normally induce Judges to apply the rule of stare decisis is present here. All that will happen will be that the case will be decided in the usual way by the ordinary Courts to which the parties had in the first instance resorted instead of by an outside tribunal. So far as O. 23, R. 3, is concerned, we agree that the word “compromise” standing by itself is wide enough to embrace the award in this suit. That is one of the meanings given to the word in the shorter Oxford English Dictionary and it has been elaborately analyzed in 51 Bom 908 (1927) 14 AIR Bom 565 , 105 IC 516 , 51 Bom 908 , 29 Bom LR 1254 (FB) at pp. 920 and 947. The following cases also take that view, namely 51 Mad 800 (1931) 18 AIR Rang 58 , 131 IC 57 , 9 Rang 39 at p. 806, 6 Luck 591 (1931) 18 AIR Oudh 127 , 131 IC 443 , 6 Luck 591 , 8 OWN 71 at p. 595 and 9 Rang 39 (1931) 18 AIR Rang 58 , 131 IC 57 , 9 Rang 39 at page 41. But that is not the only meaning and therefore what we have to determine is whether this particular aspect of the definition has been excluded by the Legislature in some other part of the Code. If it has not been, then of course full effect must be given to the plain and ordinary meaning of the term. But we think it has. In the first place it is to be observed that Marten, C.J, in considering the juxtaposition of the words “agreement or compromise” in O. 23, R. 3 states at p. 922 of the Bombay Full Bench just cited that:

I do not mean that in every case under O. 23, R. 3, we are to construe “compromise” as meaning arbitration, but that in an appropriate case we may do so.

3. It is clear then that in that learned Judge's view there can be cases in which a compromise does not amount either to an agreement or to an award. It was therefore necessary for the Legislature to use both terms even though it desired, as we think it did, to exclude awards from the scope of the rule. In one sense of the term the word “compromise” includes “agreement,” but since both terms have been employed, it seems to us that the Legislature was thinking in technical terms and not merely of the dictionary meanings of the words. In any case the fact that both expressions have been used does not militate against the view we take.

4. There can be no doubt that an award, at any rate in the sense in which it is used among lawyers, is a very special kind of adjustment by consent and that this term is not ordinarily used to cover an award. Therefore when we find the Code dealing elaborately and specifically not only with arbitrations and awards in a separate place but also with the settlement of pending cases by those means it would seem prima facie that the intention was to treat these different modes of adjustment separately. These considerations weighed with the Calcutta and Patna High Courts and also with certain Judges in Allahabad and Bombay. Rankin, J. analyzed the scheme of the Code in 49 Cal 608 (1922) 9 AIR Cal 404 , 69 IC 808 , 49 Cal 608 and pointed out that unless awards are excluded from the scope of O. 23, R. 3, the whole scheme of the Code dealing with arbitrations is ruined. Mukerji, J. in his dissenting judgment in the Allahabad Full Bench, 47 All 637 (1925) 12 AIR All 503 , 88 IC 768 , 47 All 637 , 23 ALJ 561 (FB) at pp. 658 to 662, states that the Code has provided for every possible case of arbitration and that it has used the word “arbitration” in a special sense throughout, a sense which is nowhere co-extensive with that of an adjustment of a dispute by lawful agreement or compromise. Courtney-Terrell, C.J was of the same opinion in 14 Pat 799 (1935) 22 AIR Pat 243 , 156 IC 1050 , 14 Pat 799 , 16 PLT 280 at page 812. In referring to the judgment of Mukerji, J., he states:

There can be no doubt that the Code of Civil Procedure uses a recognized expression for the proceeding which involves a reference of their dispute by the contending parties to a third party for his decision. This has been described as an “arbitration.” Nowhere in the Code has the word “arbitration” been used in a sense co-extensive with that of an adjustment of a dispute by lawful agreement or compromise. In other words, the provisions relating to an agreement and compromise are of the charaoter entirely different from those which govern the conduct of a voluntary tribunal.

5. Macleod, J. came to a similar conclusion in 40 Bom 386 (1916) 3 AIR Bom 125 , 37 IC 140 , 40 Bom 386 , 18 Bom LR 559 though he changed his mind in a later ruling, 45 Bom 245 (1921) 8 AIR Bom 310 , 59 IC 53 , 45 Bom 245 , 22 Bom LR 1048 at p. 259. Beaman, J. was also of the same opinion in 38 Bom 687. (1914) 1 AIR Bom 184 , 27 IC 46 , 38 Bom 687 , 16 Bom LR 653 We agree that none of this is conclusive but we feel that these are powerful reasons for construing Sec. 89 in the way we do. In view of the conflict of authority on this point it is evident that the words “or any other law” in Sec. 89 are capable of different interpretations. In those circumstances the considerations which we have discussed above ought, in our opinion, to prevail.

6. But before dealing with Sec. 89, there is another matter which we think also adds weight to our view. Arbitration is an exception to the ordinary rule that the jurisdiction of the Courts cannot be ousted by agreement between the parties, so much so that agreements to refer future disputes which have not yet arisen are not binding (see Section 28 of the Contract Act). Therefore when we find the Code dealing with this exception in the detailed and comprehensive manner in which it does, one prima facie inclines to the view that the intention was to make those provisions exhaustive and this is fortified by the observations of the Privy Council in 29 Cal 167 at p. 182 (1902) 29 Cal 167 , 29 IA 51 , 8 Sar 154 , 6 CWN 226 (PC):

Where the parties to a litigation desire to refer to arbitration any matter in difference between them in the suit, in that case all proceedings from first to last are under the supervision of the Court.

7. The policy of the Code then seems to be to prevent parties who have once come before the Courts for a settlement of their disputes from withdrawing from their jurisdiction except in the manner expressly provided in the Code. This was the view taken not only in the Patna and Calcutta cases already cited but also in a later Calcutta case, 55 Cal 538 (1927) 14 AIR Cal 887 , 104 IC 360 , 55 Cal 538 , 47 CLJ 59 , 33 CWN 390 at p. 545, and in 54 Bom 197 (1930) 17 AIR Bom 98 , 124 IC 119 , 54 Bom 197 , 31 Bom LR 1403 at page 206. This policy has, we think, been clearly enunciated in S. 89 which runs thus:

Save in so far as is otherwise provided by the Arbitration Act, 1899, or by any other law for the time being in force, all references to arbitration whether by an order in a suit or otherwise, and all proceedings thereunder, shall be governed by the provisions contained in Sch. 2.

8. But the Allahabad, Rangoon, Lucknow, Madras and Bombay High Courts consider that the phrase “any other law” includes O. 23, R. 3 and that therefore an award of the kind which we find here can be recorded as an adjustment by compromise: see 47 All 637 (1925) 12 AIR All 503 , 88 IC 768 , 47 All 637 , 23 ALJ 561 (FB) at p. 648, 9 Rang 39 (1931) 18 AIR Rang 58 , 131 IC 57 , 9 Rang 39 at p. 42, 6 Luck 591 (1931) 18 AIR Oudh 127 , 131 IC 443 , 6 Luck 591 , 8 OWN 71 at p. 594, 51 Mad 800 (1928) 15 AIR Mad 1025 , 113 IC 632 , 51 Mad 800 , 55 MLJ 429 (FB) at p. 807 and 51 Bom 908 (1927) 14 AIR Bom 565 , 105 IC 516 , 51 Bom 908 , 29 Bom LR 1254 (FB) at p. 945. So far as the Allahabad Full Bench is concerned, one of the three Judges, Mukherji, J. dissented and Walsh, J. based his decision on general principles of law without adverting to S. 89 at all. Therefore the opinion on this point expressed by the third Judge, Kanhaiya Lall, J., is really that of a single Judge. In the Rangoon case the learned Judges said that they knew of no other law to which these words could possibly be appropriate except O. 23, R. 3; but the answer is furnished by the Bombay Full Bench itself. Crump, J. points out at p. 944 that there are statutes other than the Arbitration Act which deal with arbitration such as the Companies Act and the Dekkhan Agriculturists' Relief Act, and both the learned Chief Justice and Blackwell, J. referred to the general law of contract as falling within the meaning of those words. We may add the Co-operative Societies Act and the Electricity Act as further examples.

9. In the Madras Full Bench the learned Judges came to the conclusion that O. 23, R. 3 conferred certain rights on the parties to a suit and that therefore full effect must be given to its terms unless these rights are curtailed or taken away by some specific enactment. They were therefore of the opinion that S. 89 ought not to be construed as having that effect unless it was necessary to do so. But we feel it is necessary. If considerations of this kind are to prevail then we think that the intention of the Legislature should be construed so as to restrict arbitrations in the manner specified by Sec. 89 and that therefore O. 23, R. 3 which does not form part of the body of the Code should not be construed so as to curtail S. 89 which does. The reasons given in the Bombay Full Bench are more difficult to answer. As we have said Marten, C.J was of the opinion that the general law of contract conferred the right in question and Blackwell, J. was also of that view. But Crump, J. considered that the words ‘any other law’ suggested that statute law was meant. The Calcutta High Court is clear that the general law of contract is not included: see 49 Cal 608 (1922) 9 AIR Cal 404 , 69 IC 808 , 49 Cal 608 at p. 614 and 55 Cal 538 (1927) 14 AIR Cal 887 , 104 IC 360 , 55 Cal 538 , 47 CLJ 59 , 33 CWN 390 at p. 544. On the whole we agree with the Calcutta view for the reasons given in the two cases cited and also for other reasons which we give below.

10. In construing a statute the usual rules off construction must be applied unless there is something to suggest the contrary. When therefore we find general words following particular and specific words of the same nature they must be construed as taking their meaning from the specific words which precede them and must be restricted to the same genus. This is the well-known rule of ejusdem generis which is explained in Maxwell on the Interpretation of Statutes (7th Edition), p. 284. We therefore agree with Crump, J. in the Bombay Full Bench and with Courtney-Terrell, C.J at p. 808 of 14 Pat 799 (1935) 22 AIR Pat 243 , 156 IC 1050 , 14 Pat 799 , 16 PLT 280 at p. 816, that other statutory law dealing with arbitration is indicated; but we do not agree with the rulings which decide that another provision in the Code itself is also included. In the first place as was pointed out by Agarwala, J. in 14 Pat 799, (1935) 22 AIR Pat 243 , 156 IC 1050 , 14 Pat 799 , 16 PLT 280

it would be contrary to all canons of the construction of statutes, that where a Code lays down that certain proceedings shall be governed by provisions contained therein and relating to those proceedings, words referring to “other laws” should be taken to refer to the Code itself. It is not open to us to substitute for the words “by any other law” in S. 89 the words “except as provided in this Act or by any other law”.

11. Courtney-Terrell, C.J was of the same opinion at p. 809. In the next place as Mukerji, J. points out at p. 661 of the Allahabad Full Bench, Sch. 2 and O. 23, R. 3 are as much a part of the Code as S. 89 itself and so the words “any other law” must mean law other than the Code in which the words are used as well as other than the Arbitration Act. Fawcett, J. thought so too in 45 Bom 245 (1921) 8 AIR Bom 310 , 59 IC 53 , 45 Bom 245 , 22 Bom LR 1048 at p. 273, though he ultimately came to the opposite conclusion for other reasons. Moreover we find that whenever an exception contained in the Code itself has been made the Legislature has been always careful to say so specifically and to use expressions such as “subject to the provisions herein contained” or words having a like effect. See for example Ss. 9, 20, 96, 100, 104 and 146. On the whole therefore we think that the words “any other law” do not include the provisions of O. 23, R. 3.

12. There are two other points to notice. Though S. 89 states that all arbitration proceedings shall be governed by Sch. 2 except in so far as the provisions of the Arbitration Act or any other law provide, para. 1 of Sch. 2 uses the word “may”. The Madras and Bombay Full Benches accordingly considered that parties who want to settle a pending suit by arbitration are not compelled to resort to Sch. 2 but are entitled to proceed under the general law of contract if they so prefer and the learned Chief Justice in the Bombay case criticizes the Calcutta decision, 49 Cal 608, (1922) 9 AIR Cal 404 , 69 IC 808 , 49 Cal 608 on the ground that Bankin, J. had overlooked the word “may” and construed the provisions as compulsory, see pp. 933 and 951 of the Bombay Full Bench but we do not think he did. What he said was that the provisions in the Code relating to arbitration when viewed as a whole were compulsory and this we think follows from the use of the word “shall” in S. 89. In any case if we must choose between ‘shall’ in the body of the Code and ‘may’ in a Schedule, preference ought, we feel, to be given to the former.

13. The other point is this: The Bombay Full Bench was of opinion that the Schedules to the Code cannot apply unless they are brought into operation by some provision in the body of the Code itself and that as there is nothing else which brings O. 23, R. 3, into operation, S. 89 was introduced to fulfil this function. With the utmost respect we cannot agree. The Code must be regarded as a whole and it came into being as a whole as its first Section will show. On the contrary we are of opinion that the scheme was to make the body of the Code confer jurisdiction and the Schedules to detail the mode in which that jurisdiction is to be exercised. Therefore if there is any conflict between the body and the Schedules the former must prevail; not that we think there is any conflict between S. 89, and O. 23, R. 3. All that has happened is that one of the senses in which the word “compromise” is used in the English language has been cut out of the purview of O. 23, R. 3 by Section 89.

14. Turning now to the arguments about the general law of contract which the Bombay Full Bench considered so weighty, what we think was overlooked is Excep. 2 to Section 28 of the Contract Act. The Section itself enumerates the well known rule of law that agreements tending to oust the jurisdiction of the Courts are void. The second exception excludes certain references to arbitration, namely where disputes between the parties have already arisen, but the exception also states:

Nor shall this Section …. affect any provision of any law in force for the time being as to the references to arbitration.

15. This, we think, clearly makes the provisions of the Code of Civil Procedure the governing factors in so far as they apply. Section 21 of the Specific Relief Act, has a similar saving clause: “Save as provided by the Code of Civil Procedure….” We do not mean to imply that such agreements are unlawful or altogether void. It is possible that they are not, though as that matter is not before us we say nothing about it. But it is one thing to say that an agreement is lawful for certain purposes and quite another to say that it can be enforced in a particular way. Sec. 21 shows that such agreements cannot be specifically enforced and in our opinion S. 89, shows that they cannot be recorded as an adjustment under O. 23, R. 3. Whether other remedies are available is a question with which we are not here concerned though we observe in passing that this possibly explains the use of the word “may” in para. 1 of Sch. 2. What we are clear about is that an award of the kind we have here cannot be recorded as an adjustment by compromise under Order 23, Rule 3. In our opinion the true view of the matter is this: there was considerable conflict of opinion before the present Code of Civil Procedure was introduced as to whether such agreements could be recorded as adjustments or not. Then followed the observations of Lord Macnaghten in the case which we have quoted and so Sec. 89 was introduced to set this conflict at rest and to bring the law into line with Lord Macnaghten's observations. It is immaterial whether those remarks apply to the case we are considering or not (Marten, C.J thought they did not at page 930 of the Bombay Full Bench) for they undoubtedly indicate a desirable line of action and in our opinion Sec. 89 applies to it. In this view of the matter, it is unnecessary to consider the other questions raised in the appeal. We therefore allow the appeal and overrule 23 NLR 100 (1926) 13 AIR Nag 405 , 95 IC 89 , 23 NLR 100 and 24 NLR 55. (1928) 15 AIR Nag 173 , 107 IC 525 , 24 NLR 55 The suit will now continue from the point at which it broke off.

16. As regards costs we are inclined at first to saddle the costs on the party resiling from the award but we find from the order sheet of the lower Court dated 13th December 1933 that the arbitration was not relied on, on that date and so the suit was ordered to proceed de novo. In the circumstances we see no reason why the usual rule about costs should not be enforced. The respondents will therefore pay the coats of the appeal and will also pay the carats incurred in the lower Court between 20th April 1933 and 31st October 1935. These will not be costs in the suit. Counsel's fee in this Court Rs. 50.

S.G/R.K

17. Appeal allowed.