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TMI Blog2004 (4) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... the plaintiff to recover Rs. 2,78,54,408.47 Ps., along with the interest thereon. In this revision, we are not concerned with the merits of the aforesaid suit in any manner. During the pendency of the said suit, the parties to the suit, on their own volition, decided to refer the said dispute to two arbitrators. Accordingly, the parties, without the intervention of the Court, decided to approach the arbitrators in connection with the dispute in question. It is required to be clarified that the parties went to the arbitrators in a pending suit, which is filed by the plaintiff to recover the aforesaid amount, and, it seems that the arbitrators gave their award on 10-12-1994. By the said award, the Arbitrators recommended that the State Government may pay some grant to the defendants and the plaintiff-board shall withdraw all civil and criminal cases which are filed by the plaintiff against defendant No. 1-Sevasangh. The plaintiff-board, subsequently, passed a resolution, in its meeting on 28-1-1985, showing the willingness to accept, both the interim award as well as the final award. The resolution of the Board is produced at pages 45 and 46 in the compilation. Since the suit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the Arbitrators, one Zinabhai Darji as well as one Arvindbhai Buch, both were Trustees of defendant No. 1-Trust and on that ground, the Award is vitiated. It is also the say of the plaintiff that the Arbitrators should have functioned in a quasi-judicial manner and that, their enquiry should not have been a slipshod one. The Arbitrators had not even heard the matter in an appropriate manner. 4. The learned trial Judge, after hearing both the sides, at length, rejected the said application of the defendants at Exhibit 222, and, accordingly, the trial court has decided not to accept the said award on record for the purpose of passing a decree under Order 23 Rule 3 of the Code of Civil Procedure. It is the aforesaid order, which is impugned in the present revision application at the instance of the original defendants. 5. The trial court, while deciding the said application, came to the conclusion that since the compromise is not signed by both the parties, the same cannot be accepted. The trial court also came to the conclusion that, in the instant case, the defendants have not prayed before the Court that though the time has not been extended by the parties, the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said award as an adjustment of claim of the plaintiff by resorting to order 23 rule 3 of the Code of Civil Procedure read with section 47 of the Arbitration Act, 1940, Mr. Dayani submitted that the trial court has committed an error of jurisdiction in not passing an appropriate order by recording the compromise, as contemplated by order 23 rule 3 of the Code of Civil Procedure. 7. Mr. D.D. Vyas, learned Advocate appearing for the original plaintiff-respondent No. 1, on the other hand, submitted that, in a pending suit, the parties decided to go to Arbitrators on their own volition and without intervention of the Court in any manner. It is submitted by him that even the Arbitrators have not followed the procedure prescribed by the Act and has not given the award within the stipulated time. It is submitted by Mr. Vyas that in a pending suit, if the parties, on their own volition, decide to refer the dispute to the arbitrators, such award cannot be pressed into service for recording as a compromise of the suit unless the parties agree to accept such award as a compromise of the suit. He submitted that the arbitrators have not decided any claim of the plaintiff and the claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an arbitration award otherwise obtained may with the consent of all the parties interested be taken into consideration as a compromise or adjustment of a suit by any Court before which the suit is pending ." [Emphasis supplied] Since the defendants have preferred the application at Exhibit 222 for the purpose of recording compromise, as provided by Order 23 Rule 3 of the Code of Civil Procedure, reference is also required to be made to order 23 rule 3 of CPC, which provides as under : "Order XXIII Withdrawal and adjustment of suits ****** 3. Compromise of suit . Where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise in writing and signed by the parties, or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject-matter of the suit, the court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the parties to the suit, whether or not the subject-matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit : Provided that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or without an order of the court. Dealing with the said question, it has been observed by the learned Judge in paragraphs 2 and 3 as under : "2. It is settled position of law that where in a suit the parties have referred their difference to the arbitration without an order of the Court and an award is made, a decree in terms of the award can be passed by the Court under order 23 rule 3 of the Civil Procedure Code ( vide Chambasappa Gurushantappa Hiremath v. Basadingayya Gokarmaya Hiremath [1927] 51 I.L.R. 903 and Modi Narandas Chhaganlal v. Jamnadas Maneklal [1969] 10 Guj. L.R. 210) Mr. Shah, learned Advocate for respondent Nos. 1( b ) to 1( h ) does not dispute this proposition of law. Mr. Shah has, however, tried to support the judgment of the learned District Judge on the ground that under proviso to section 47 of the Arbitration Act the Court can accept the compromise only if the consent is given by the parties at the time when the Court is called upon to consider whether the award should be accepted as an adjustment or a compromise. He also supported the view of the learned District Judge that inasmuch as no permission was granted to Ajubai to sign this award as alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision Bench consisting of S. Obul Reddi and Venkitarama Sastry, JJ. held in Andhra Mennonite Self Supporting Church Society v. Sundramma AIR 1973 AP 19 that the consent under proviso to section 47 of Arbitration Act means consent to the reference and also to the award and no further consent to the terms of the award at the time of recording the compromise under order 23 rule 2 is necessary. The Division Bench, speaking through Venkatrama J., observed in paragraph 8 as under : Now the only question is whether the consent to the award should be regarded as a consent given to the compromise itself or whether there should also be a consent to the terms at the time when the Court takes up for consideration the application under order 23 rule 3 C.P.C. on the question. We are bound by the Full Bench decision of the Madras High Court in Abdul Rahman v. Muhammad Siddiq AIR 1953 Mad. 781 in which it was decided as follows : "We are accordingly of opinion that under the proviso to section 47, an arbitration award obtained otherwise that in proceedings taken in accordance with the Act cannot without more be recognised as a compromise or adjustment of the suit; that no decree can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the parties to arrive at such an agreement or compromise; or who persuaded the parties to enter into such a compromise or adjustment or what were the matters considered by the parties in arriving at such a settlement or compromise. The parties may arrive at a settlement or compromise by the instrumentality of a third person; or they may arrive at such a settlement or compromise on accepting the advice of some persons. When an award is accepted by the parties to a suit all that they do is to make the award an instrument to enable them to come to an agreement or adjustment of the suit. Once the parties have accepted the award, the award ceases to be a decision of a third person and it assumes the character of an agreement arrived at by the parties to the suit. When, therefore, after accepting the award any party goes to the court and states to it that the parties have accepted the award and, therefore, it should be accepted as a compromise or adjustment of the suit, what is put before the Court is that there has been an agreement between the parties to the suit and it should by acted upon. When the other side appears in the Court and says that there has been no such agreement, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 47 of the Act must be a consent given before the Court and not earlier, do not deal with a case where the parties to the suit had accepted the award prior to the matter being agitated in the court. The question, therefore, as to what would be the effect of the parties accepting the award after it is made did not arise in those cases and those cases are, therefore, not helpful to me in the decision of this case." In the aforesaid case, therefore, the court found that the parties have accepted the award of the arbitrators. The Court has specifically found that moment the party accepts the award, it becomes an agreement between the parties or an adjustment of the suit arrived at by the parties as per the provisions of order 23 rule 3 of the CPC and, therefore, it should be treated as a settlement or compromise of the dispute by acceptance of such award by the parties. 11. At this stage, reference is also required to be made to the judgment of the Apex Court in Naraindas v. Vallabhdas AIR 1972 SC 1. It has been found by the Apex Court in paragraph 7 of the said judgment that it is always open to parties to refer a dispute to arbitration without the intervention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the award is enforced as a compromise or adjustment of the suit because all the interested parties give their consent to the award. Where, however, as in the present case, no suit is pending with respect to the subject matter of dispute and the parties choose to refer a dispute to arbitrators, it is not essential that the parties should signify their consent to the award before the same can be enforced. Any other view would run counter to the entire scheme and object of arbitration for the settlement of disputes according to which agreement and consent are imperative only at the stage of referring the dispute to arbitrators but not at the stage of the award. The decision of Bachawat, J. (as he then was) in Jugaldas Demodar Modi Co. v. Pursottam Umedbhai Co. AIR 1953 Cal. 690, relied upon by the appellant has no bearing as the said case dealt with an arbitration reference during the pendency of a suit." [Emphasis supplied] (p. 3) In my view, considering the aforesaid judgment of the Honourable Supreme Court, and considering the provisions of section 47 of the Arbitration Act, 1940 especially as per the proviso to section 47 of the Act, such award can, at the most, be pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dure as under : "A compromise is always bilateral and means a mutual adjustment. A compromise means agreement or adjustment for the settlement of a controversy by mutual concessions, often involving partial surrender." [Emphasis supplied] In the instant case, the petitioners submitted application Exhibit 222, with a request that the suit claim be treated as satisfied in terms of the Compromise and the trial court may pass a decree accordingly. The said application was resisted by the original plaintiff by filing reply Exhibit 229. It goes without saying that the expression compromise necessarily involves the concept of mutual concessions and consensus. When the original plaintiff resisted the application Exhibit 222, by filing Exhibit 229, the plaintiff was, in terms, opposing the move on the part of the petitioners-original defendants and, therefore, in this case, the element of compromise is lacking, in terms. It is, no doubt, true that the award of the arbitrators is in the picture. However, unless it is agreed by both the sides to abide by the said award, the said award cannot be taken as a compromise in a pending suit. Apart from the provisions of order 23 rule 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wful agreement or compromise (in writing and signed by the parties). Now, when the plaintiff is not willing to sign the said consent terms, the Court has no alternative but to proceed with the suit on its own merits, ignoring the so-called settelment or compromise of the suit. Even apart from the said provision of order 23 rule 3, even proviso to section 47 of the Arbiration Act, 1940 itself provides that such award of the arbitrators can be taken into consideration for the purpose of adjustment of the suit or as a compromise of the suit, with the consent of all the parities. If all the parties are not giving consent for accepting such award, naturally, the same cannot be treated as a compromise or adjustment of a suit pending before the court. Such award, therefore, which is given by an arbitrator in a pending suit can only be pressed into service as an adjustment or compromise of a suit and the effect of such award would be nothing but a document of compromise or adjustment of a suit and not beyond that. Under the circumstances, the Court is not bound to pass a decree solely on the basis of the award of such arbitrators, simply because initially, the party might have agreed to go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the parties and there must be a completed agreement between them. In paragraph 10, it has been held as under : "10. Under rule 3 as it now stands, when a claim in suit has been adjusted wholly or in part by any lawful agreement or compromise, the compromise must be in writing and signed by the parties and there must be a completed agreement between them. To constitute an adjustment, the agreement or compromise must itself be capable of being embodied in a decree. When the parties enter into a compromise during the hearing of a suit or appeal, there is no reason why the requirement that the compromise should be reduced in writing in the form of an instrument signed by the parties should be dispensed with. The Court must therefore insist upon the parties to reduce the terms into writing." (p. 403) 13. Considering the matter from the aforesaid angle, in my view, the trial court is absolutely justified in not recording compromise under order 23 rule 3 of CPC, since the plaintiff has not shown willingness to abide by the said compromise by accepting the award of the arbitrators for the purpose of settling its claim and since the plaintiff has not settled or compromised the disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, it is for the defendants to take appropriate stand before the trial court in the pending suit. This court is not required to decide this point as this revision is confined only in connection with the recording of the compromise as provided in order 23 rule 3 of the Code of Civil Procedure. Whether, the defendants can defend the suit of the plaintiff, on the ground that the award of the arbitrators, can be said to be a satisfaction of the claim of the plaintiff in the suit, or, whether, now, the suit of the plaintiff is in any way not maintainable, and, whether the suit is now required to be dismissed by virtue of the subsequent event of the award of the arbitrators, are all questions required to be examined by the trial court, after appreciating the evidence on record. 14. Mr. Dayani, at this stage, submitted that the defendants would like to amend the written statement by incorporating the above points in the written statement or the purpose of defending the suit, with a request that the suit is required to be dismissed in view of the fact that the plaintiff has accepted the award of the arbitrators. However, this Court is not required to examine this point. If, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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