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TMI Blog1959 (11) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. In the present case proceedings subsequent to the preliminary decree were pending before the trial court and so we must hold that the trial court was competent to act under s. 21. On that view the objection against the validity of the reference based on the provisions of s. 21 cannot succeed Appeal dismissed. - C.A. 112 OF 1955 - - - Dated:- 13-11-1959 - P.B. GAJENDRAGADKAR, K. SUBBARAO AND , J.C.SHAH, JJ. JUDGMENT These five appeals arise from a partition suit (O.S. No. 91 of 1941) filed by the respondent Subramanian Chettiar against his brother Ct. A. Ct. Nachiyappa Chettiar and his four sons, appellants 1 to 5 respectively, in the court of the Subordinate Judge of Devakottai, and they have been brought to this Court with a certificate granted by the High Court of Madras under Art. 133 of the Constitution. The principal appeal in this group is Civil Appeal No. 112 of 1955 and the questions which it raises for our decision relate to the validity of the award made by the arbitrators to whom the matters in dispute between the parties were referred pending the present- litigation. It would, however, be convenient at the outset to state broadly the material facts leading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s plaint. At the date of the suit appellants 3 to 5 were minors and they were represented by appellant 1. It appears that a written statement was filed by appellant 1 for himself and as guardian of his minor sons in which the relationship of the respondent and his half-share to the family properties were admitted. Several contentions were, however, raised with reference to the properties available for partition. It was alleged that Items Nos. 10 and 11 in Sch. 'A' were dedicated to charity and as such not divisible and that Item No. 3 was being used as a school. The written statement referred to some more properties which had not been included in the plaint though they were liable to partition. In regard to the jewels and moveables it was contended that several items not belonging to the family, and some not even 'in existence, bad been shown in the said schedule. It was also alleged that some of the jewels shown in the said schedule belonged to the several appellants as their separate property. Then as regards the Thanathu maral accounts the appellants gave a detailed history of the amounts and their investments. It was admitted that the said amounts belonged to the family thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code of Civil Procedure for permission to file an additional written statement. This application was numbered as I. A. No. 988 of 1943. It would be relevent to refer to the plea which appellant 2 sought to raise by this application. He alleged that the deceased Chidambaram Chettiar bad set apart on March 25, 1925, two sums of money of Rs. 2,10,251-4-0 each separately in the name of the respondent and appellant I so as to vest the same in them forthwith, and he urged that these amounts and their accretions were not the properties of the family liable to partition in the suit. This application was opposed by the respondent. On December 14, 1943, the trial judge dismissed the said application on the ground that it sought to raise a new and inconsistent plea and that had been really inspired by appellant 1. On December 29, 1943, the learned judge delivered his judgment in the suit and it was followed by a preliminary decree. Against this decision three appeals were preferred before the High Court of Madras. A. S. No. 115 of 1948 was filed by appellant 2 and No. 199 of 1944 by appellants 1, 3 to 5, whereas A. S. No. 499 of 1944 was filed by the respondent. It appears that under his a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no jurisdiction to adjudicate on title to immoveable property situated in a foreign country or to direct its division; the reference and the award dealt with immoveable properties in Burma and so they were invalid. The appellants further contended that the reference to arbitration was opposed to the orders passed by the High Court in C.M.P. No. 1402 of 1944, and as such it was invalid. This application was resisted by the respondent. He traversed all the allegations made by the appellants and claimed that a decree in terms of the award should be passed. At the hearing of this petition no oral evidence was led by the parties; they were content to base their case on the documents produced on the record and on points of law raised by them. The trial judge rejected the appellants' case about the alleged misconduct of the arbitrators. He also found that there was no substance in the contention that the reference was the result of undue influence or coercion. He was satisfied that the arbitrators had made a proper enquiry and that the award was not open to any objection on the merits. He, however, held that the reference to the arbitrators which included matters in dispute in the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mise and a decree passed in accordance with it under 0. 23, r. 4. The High Court has observed that in view of its decision in C.M.A. No. 210 of 1946 it was really unnecessary to pass any order in this appeal; but it thought that since the matter was likely to go 28 in appeal to this Court it would be better to make a formal order and direct that a decree in terms of the sayinterim award should be drawn under 0. 23, r. 3. Against this decision the appellants- have preferred Civil Appeal No. 116 of 1955 in this Court. The appellants had made a similar application in A. S. No. 199 of 1944 and it was numbered as C.M.P. No. 3273 of 1946. The High Court has allowed this application for similar reasons and its decision has given rise to Civil Appeal No. 115 of 1955. In the trial court the appellants had filed two similar applications under 0. 23, r. 3; but they had been rejected by the trial court; these orders had given rise to two appeals in the High Court, C.M.A. No. 661 of 1946 and C.M.A. No. 49 of 1947. The High Court has allowed these appeals and has ordered that a decree in terms of compromise should be passed under 0. 23, r. 3. Against the orders thus passed by the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference and the award is justified. In dealing with this question it is necessary first to ascertain the scope of the request made by the parties when they applied to the trial court for reference of their dispute to arbitration. In their application (Ex. P. 12) the parties have briefly indicated the nature of the respondent's claim and have stated that the dispute between the parties was then pending before the High Court in the form of three appeals preferred by them.. Then it is averred that appellants 3 to 5 are minors but it is added that the proposed reference was for their benefit and so another application had been separately made for the court's sanction to the said reference in respect of the said minors. The parties desire and agree ", said the application, that all matters in dispute in this suit and all matters and proceedings connected therewith should be referred to the unanimous decision of the two named arbitrators". They had also agreed that they would abide by the unanimous decision of the arbitrators and that the arbitrators should be empowered to partition the properties of the joint family between the parties and if necessary also by payment of monies to equal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hidambaram Chettiar and that all sums taken from the family assets, though invested for the sake of convenience in the name of one or the other member of the family, belonged to the family and had been treated as family assets. According to the appellants, however, the extent of the Thanathu maral transactions had been exaggerated by the respondent. On the whole the written statement clearly admitted that the branches of appellants 1 to 5 on the one hand and of the respondent and his son on the other are entitled to a, half-share each; but they pleaded that the said shares have to be allotted only after making some provisions out of the joint family funds for the payments of the future Seermurai etc., due to the unmarried daughters in the family. They also contended that the court had no jurisdiction to divide the immoveable properties in Burma though it was admitted that the respondent was entitled to the relief in respect of the division of the family assets as set forth in the written statement. This written statement was adopted by appellant 2 though in a general way be denied the allegations in the plaint which had not been expressly admitted by him in his written statement. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e properties in Burma as well as in the Indian State of Pudukottai. In the proceedings before the Commissioner parties agreed that the properties in Burma and Pudukottai should be left out of account and so no dispute appears to have been raised before him that the accounts of the firms in Burma should be taken by him. In the appeal filed by the respondent against this preliminary decree he did not challenge the decision of the trial court that he had no jurisdiction to deal with immoveable properties out of British India. His appeal raised some other points which it is unnecessary to mention. This fact is very significant. It shows that the respondent accepted the finding of the trial court and did not want the High Court to consider his claim for a share in the excluded properties. In the appeal preferred by appellant 2 he had urged inter alia that the trial court should have allowed him to raise the additional pleas and it appears that he had also raised a point that the trial court bad no jurisdiction to direct a division of the moveable properties of the firms in Burma. The grounds taken by appellant 2 in his memo leave no manner of doubt that none of the pleas which he soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le properties in Burma. Thus the attack against the reference on the ground that it included immoveable properties in Burma must fail. Does the award deal with the said immoveable properties in Burma ? That is the next question which falls to be considered. -If it does, it would be invalid not only because it purports to deal with foreign immoveable properties but also for the additional reason that it is in excess of the terms of reference. At the hearing of the present appeals in this Court Mr. Viswanatha Sastri, for the appellants, attempted to criticise the decision of the arbitrators on several grounds; but we did not allow him to raise any contentions against the merits of the award because both the courts below have rejected the appellants' objections in that behalf, and in view of their concurrent findings it would not be open to the appellants to raise the same points over again. That is why we would confine ourselves to those portions of the award which, according to the appellants, show that the arbitrators divided the immoveable properties in Burma and Pudukottai. In regard to the properties in Pudukkottai this is what the award says in paragraph 3: " The plaintiff and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween the parties; and having done so they have indicated what the legal position of the parties would be in respect of the properties outside the dispute. In appreciating the effect of the words used in the award we must bear in mind that the arbitrators were laymen not familiar with the technical significance of legal expressions, and so we must read the relevant clauses as a whole with a view to determine what in effect and substance they intended to decide. Now take the recitals in the award to the Pudukottai properties. The award expressly states that the properties had not been divided by them and that the plaintiff and the defendants shall have them divided when so required. All that the award says is that since the parties had separated and the properties in suit before the arbitrators had been actually divided by metes and bounds, the two branches shall enjoy the Pudukottai properties in equal halves. This clause in the award cannot be said to divide the said properties or even to determine their shares in them. The shares of the parties in the said properties were admitted and so the award merely says that as divided members they will hold and enjoy the properties half and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was on those decisions that the objection against admissibility of the petition was founded. In repelling the objection Lord Dunedin observed that "though the word "declare " might be given a wider meaning they are satisfied that the view originally taken by West, J., is right. The distinction is between a mere recital of fact and something which in itself creates a title." These observations assist us in deciding the question as to whether the impugned portions of the award declare the parties' rights in immoveable properties in the sense of deciding them as points or matters referred to arbitration. In our opinion, the High Court was right in answering this question against the appellants. Therefore the award is not open to the attack that it deals with immoveable properties out of the jurisdiction of the court. That takes us to the next ground of attack against the validity of the award. It is urged that the award contravenes the order passed by the High Court on the stay petition filed before it by appellant 2. There is, however, no substance in this contention. All that the High Court directed was that pending the final decision of the appeals before it a final decree sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of the trial court. In the present case a judgment had been delivered by the trial court and a preliminary decree had been drawn in accordance with it, and so there was no scope for making any order of reference. That is the first part of the argument which must be carefully examined. Does the "court" in the context mean the trial court ? This construction cannot be easily reconciled with one of the conditions prescribed by the section. After a decree is drawn up in the trial court and an appeal is presented against it, proceedings in appeal are a continuation of the suit; and speaking generally, as prescribed by s. 107 of the Code of Civil Procedure the appellate court has all the powers of the trial court and can perform as nearly as may be the same duties as are conferred and imposed on the- trial court. If that be so, during the pendency of the appeal can it not be said that matters in difference between the parties in suit continue to be matters in dispute in appeal? The decision of the appeal can materially affect the nature and effect of the decree under appeal ; and there is no doubt that all the points raised for the decision of the appellate court can be an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed during the hearing of the suit; and so the word " judgment" cannot be given the meaning assigned to it by s. 2 (9) of the Code. It cannot mean in the context the statement given by the judge of the grounds of a decree or order. It must mean a judgment which finally decides all matters in controversy in the suit. Thus it follows that it is open to the parties to apply for a reference at any time before the final judgment is pronounced in the suit. If that be so, can the parties apply for an order referring matters indifference between them even though such matters may have been covered by interlocutory judgments delivered in the meanwhile? The appellants suggest that though reference to arbitration may be made at any time before the final judgment is pronounced the subject-matter of the reference must be such as is not covered by any decision of the court pronounced in the meanwhile. This argument reads the word " judgment " as judgment in regard to a matter in difference between the parties; if a difference between the parties has been covered by an interlocutory judgment it can no longer be referred to arbitration; that is the con- tention. We are not impressed by this contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee have to be adjusted at the time of the final decree. This position is not disputed. Therefore, the fact that a preliminary decree had been drawn up in the present case and it was based upon a judgment delivered by the court cannot exclude the application of s. 21. The judgment which had been delivered by the court not a final judgment contemplated by s. 21. The trial court would, therefore, have jurisdiction to make the order of reference. There is, however, another fact which introduces a complication; and that is the pendency of the three appeals before the High Court at the material time. As we have already observed the three appeals which were pending before the High Court raised before that court matters in difference between the parties in the suit, and to that extent the said matters of difference were really pending before the High Court and not before the trial court. In such a case, which is the court that has jurisdiction to make the order of reference? There is no difficulty in holding that if the suit is pending in the trial court and a final judgment has not been pronounced by it, it is the trial court which is competent to make the order of reference. Similarly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellate proceedings; if, on the other hand, they obtain a similar order of reference from the appellate court they would for similar reasons apply for stay of the proceedings before the trial court. In the present case proceedings subsequent to the preliminary decree were pending before the trial court and so we must hold that the trial court was competent to act under s. 21. On that view the objection against the validity of the reference based on the provisions of s. 21 cannot succeed. We may now briefly refer to some of the decisions to which our attention was invited. Before the Act was passed in 1940, the procedure for referring matters in dispute between the parties in pending suits was governed by the provisions of Sch. 11 to the Code of Civil Procedure. There appears to have been a consensus of judicial opinion in favour of the view that under Sch. 11, paragraph 1, the appellate court could make an order of reference in respect of matters in dispute between the parties in an appeal pending before it. A note of dissent had, however, been struck by a Full Bench of the Calcutta High Court in Jugessueur Dey v. Kritartho Moyee Dossee . In that case the question for dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll Sein Anr. (1) and Suresh Chunder Banerjee v. Ambica Churn Mookerjee . As we have already observed, prior to the enactment of the Act there has been a longstanding judicial practice under which orders of reference have been passed by appellate courts in respect of matters in dispute between the parties in appeals pending before them. The construction of s. 21 has led to a divergence of judicial opinion. In Abani Bhusan Chakravarty Ors. v. Hem Chandra Chakravarty Ors., the Calcutta High Court has taken the view that the court as defined in the Arbitration Act. does not include an appellate court and consequently there is nothing in the Act which enables an appellate court to refer to arbitration matters in dispute between the parties. This decision proceeds on the erroneous view that the it court" in s. 21 means only the court as defined ins. 2(c) and that the considerations based on the powers of the appellate court prescribed,by s. 107 are foreign to the Act. It also appears that the learned judgeswere disposed to think that if the matter in dispute between the parties at the appellate stage was referred to arbitration it might tend to bring the lower courts into contemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posing on the appellants a total liability of Rs. 2,36,782-11-9.The appellants have also been directed to pay future interest on the same amount at 8as. per cent. per mensem from the said date until the date of payment. This argument is based solely on the observations made by Bose, J., who delivered the judgment of this Court, in Seth Thawardas Pherumal v. The Union of India [1955] 2 SCR 48. It appears that in that case the claim awarded by the arbitrators was a claim for an unliquidated sum to which Interest Act of 1839 applied as interest was otherwise not payable by law in that kind of case. Dealing with the contention that the arbitrators could not have awarded interest in such a case Bose, J., set out four conditions which must be satisfied before interest can be awarded under the Interest Act, and observed that none of them was present in the case; and so he concluded that the arbitrator had no power to allow interest simply because he thought that the payment was reasonable. The alternative argument urged before this Court that interest could be awarded under s. 34 of the Code of Civil Procedure, 1908, was also repelled on the ground that the arbitrator is not a court withi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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