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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 ..... respondent belong to the Nattukottai Chettiar community and their family which is affluent had extensive money-lending business in Burma. Chidambaram Chettiar, the father of appellant 1 and the respondent, died on August 20, 1926. At the time of his death the respondent was an infant 6 years of age. Appellant 1 had already been associated with his father in the management of the business and on his father's death he became the manager of the family and took charge of its affairs and business. On September 6, 1941, the respondent gave notice to appellant 1 calling upon him to effect a partition and to render accounts of his management and the properties of the family. This demand was not complied with and so the respondent instituted the present suit on September 24, 1941. According to the plaint the assets of the family consisted of immoveable properties in India which was then described as British India and in Pudukottai, an Indian State. These consisted of Items Nos, 1 to 12 and Item No. 13 respectively in Sch. 'A'. The jewels and moveables belonging to the family were set out in Sch. 'B', whereas two money-lending firms which the family owned and conducted at Minhla and Sitkwin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the total value of the assets enumerated in Sch. 'C ' would be only Rs. 9,00,000 and not Rs. 15,00,000 as alleged by the respondent. The respondent's case that appellant I had manipulated accounts and misappropriated family funds was denied, and it was urged that for the purpose of partition the assets of the family as they stood on the date of the partition should be taken into account. The appellants also pleaded that the court had no jurisdiction to divide the immoveable properties situated in Burma. According to them there was a special practice obtaining among the families of the Nattukottai Chettiar community according to which appellant I was entitled to a decent remuneration for the management of the joint family business and properties. According to another custom pleaded by the appellants it was alleged that provision had to be made for future Seermurais for the unmarried daughters of the family. Broadly stated these were the pleas raised by appellants 1 and 3 to 5. Appellant 2 who was a major filed a separate written statement generally adopting the written statement filed by appellant 1 ; nevertheless he put the respondent to the strict proof of the allegations mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (C.M.P. No. 1402 of 1944). On this petition the High Court ordered that there was no need to stay all proceedings before the Commissioner and that it would be enough if the passing of the final decree alone was stayed. As a result of this order interim stay which had been granted ex parte was vacated. After the final order on this application was passed the Commissioner commenced his enquiry, but before the enquiry could make any progress the parties decided to refer their disputes for arbitration. Accordingly on July 18, 1944, a joint application was filed by the parties before the trial judge requesting him to refer to the arbitration of Mr. VE. RM. AR. Ramanathan Chettiar of Kandanoor and RM. AN. S. RM. Chellappa Chettiar of Kothamangalam " all matters in dispute in the suit and all matters and proceedings connected therewith ". An application under 0. 32, r. 7, was also filed since three of the parties to the dispute were minors. On July 21, 1944, the trial court allowed the said application and certified that the proposed reference was for the benefit of the minors and so referred " the matters in dispute in the suit and all matters and proceedings connected therewith " for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d invalid. In his opinion the reference also included the dispute relating to the sums of Rs. 2,10,251-4-0 which had been entered in the Thanathu maral accounts of appellant 1 and the respondent and that this part of the reference contravened the order passed by the High Court in C.M.P. No. 1402 of 1944. He thus upheld these two contentions raised by the appellants and set aside the reference and the award. It was against this order that the respondent preferred C.M.A. No. 210 of 1946. The High Court has allowed the respondent's appeal. It has confirmed the findings of the trial court in respect of the pleas raised by the appellants as to the misconduct of the arbitrators and as to the invalidity of the reference on the ground that it was the result of coercion and undue influence. It has, however, reversed the conclusions of the trial court that the reference and the award were invalid inasmuch as they related to immoveable properties in Burma and contravened the stay order passed by the High Court. The High Court has construed the order by which reference was made to the arbitrators in the present proceedings as well as the award and has held that they are not open to be challen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of the four subsidiary appeals in the group. We will now revert to the points which arise for our decision in the principal Civil Appeal No. 112 of 1955. The first ground on which the validity of the reference and the award is challenged is based on the assumption that the reference involved the determination of the title to immoveable properties situated in Burma and/or that the award has actually determined the said question of title. The appellants contend that there can be no doubt that courts in this country have no jurisdiction to determine questions of title in respect of immoveable properties in foreign countries or to direct a division thereof. This position is not and cannot be disputed. The rule of law on this subject has been thus stated by Dicey: "The courts of a foreign country have no jurisdiction to adjudicate upon the title or the right to the possession of any immoveable property not situate in such country."(1) It is also urged that where a court has no jurisdiction to determine any (1) Dicey's " Conflict of Laws ", 6th Ed., pp. 141 and 348. matter in controversy such as the question of title in respect of the foreign immoveable property it has no jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties had further agreed to produce their own papers and copies before the arbitrators and that if the arbitrators needed any further papers, accounts or documents which had been filed in court they should be authorised to require the Commissioner to send them to the arbitrators. It is on this application that the court made the order that " all matters in dispute in this suit and all matters and proceedings connected therewith " be referred for determination to the two named arbitrators, The question which arises for our decision is: What was the scope and extent of the matters thus referred to arbitration ? In other words, did this order of reference include the respondent's claim for a share in the immoveable properties in Burma ? The appellants contend that the order of reference includes not only all matters in dispute in the suit but also all matter,-, and proceedings connected therewith and their case is that these clauses are wide enough to include the respondent's claim for a share in the immoveable properties in Burma. There is no doubt that the latter clause refers to matters and proceedings connected with the suit; but the appellants' contention can be upheld only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties in Burma seriously challenged. The only plea raised in respect of the latter claim was that the court bad no jurisdiction to deal with it. This state of the pleadings in a sense truly reflected the nature of the dispute between the parties. It is common ground that the family is a trading family and there could be no doubt that the assets of the family were partible between the members of the family. It was on these pleadings that the trial judge framed fifteen issues and set down the case for hearing. At this stage appellant 2 wanted to go back upon his written statement by making further and additional pleas. That is why he filed an application (Ex. P. 3 (a)) for leave to file an additional written statement. As we have already mentioned this application was rejected by the trial court; but for our present purpose it is relevant to consider the pleas which he wanted to raise by this additional statement. He wanted to contend that the amounts set apart in favour of appellant 1 and the respondent respectively by their father remained invested distinctly and separately during his lifetime and that in law they ought to be taken to be separate properties belonging to the two re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the three appeals pending before the High Court was it urged by any party that the immoveable properties in Burma should be brought within the scope of the partition suit. The application made by the parties for arbitration to which we have already referred has deliberately set out the pendency of the three appeals in the High Court at the material time in order to furnish the background for determining the extent and nature of the dispute which was sought to be referred to arbitration. The respondent's claim for a share in the properties outside India had been negatived by the trial court and the decision of the trial court had become final because it was not challenged by the respondent and so there can be no doubt that the said claim was- outside the purview of the dispute which was then pending between the parties in the High Court. It was not, and could not have been, intended to be a matter in dispute in the suit between the parties or any matter and proceedings connected therewith. Therefore we are satisfied that the High Court was right in coming to the conclusion that the reference did not include any claim with regard to the immoveable properties in Burma. It is, howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall pay one-half of the taxes and the defendants 1 to 5 the other half. Since the aforesaid property has been situate in Pudukottai State it has not been divided on the good and bad qualities of the soil; if it is necessary, the plaintiff and the defendants shall have it divided in equal halves later on when required." In regard to the properties in Burma, paragraph 1 of the award recites that " after communications are restored in Burma the plaintiff and the defendants have to divide the firms in Burma at the places Minhla and Sitkwin belonging to them and the lands, godowns, homes, gardens and the properties items, bank deposits, jewels, movables, all assets etc., and the subsequent income attached thereto into two halves; and the plaintiff has to take one half and the defendants the other, half ". Paragraph 2 adds that since both the parties have agreed to divide the movable properties attached to the said shop later on the arbitrators had not divided them. The award has also stated that the sale deeds at Alagapuri and relating to the lands attached to the said firms have been divided into two lots and for the purpose of safe custody two lists known as Schs. A and B have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it merely refers to the true legal position that they would be enjoyed by the two branches half and half. The arrangement proposed by the arbitrators in respect of the immoveable properties in Burma is very significant. They merely asked the parties to hold the documents of title half and half for safe custody and they have added that when the parties decide to divide the properties all the documents would have to be brought together and a partition made according to law. That again is an arrangement dictated by commonsense and cannot be said to amount to a decision in any way. It is not as if the award declares the shares of the parties in respect of the properties. What it does is no more than to state the true and admitted legal position of the parties' rights in respect of the said properties. In this connection it would be useful to refer to the observations made by Viscount Dunedin in Bageshwari Charan Singh v. Jagarnath Kuari (1932) I.L.R. 11 Pat. 272; 53 I.A. 130. In that case the Privy Council was called upon to consider the question about the admissibility of a petition which was relied upon as an acknowledgment of liability under s. 19, sub-s. (1) of the Limitation Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner. That is the usual order made in such cases, and it is difficult to appreciate how this order has been contravened by reference to arbitration or by the award that followed it. The award is not and does not purport to be a final decree in the proceedings and the proceedings before the arbitrators substantially correspond to the proceedings of the enquiry which the Commissioner would have held even under the order of the High Court. Therefore this, contention must also fail. We must now consider another objection against the validity of the reference which has been seriously pressed before us. It is urged that the reference and the award are invalid because the trial court was not competent to make the order of reference under s. 21 of the Act. Section 21 reads thus: " Where in any suit all the parties interested agree that any matter in difference between them in the suit shall be referred to arbitration, they may at any time before judgment is pronounced apply in writing to the Court for an order of reference." Two conditions must be satisfied before an application in writing for reference is made. All the interested parties to the suit must agree to obtain a refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference in suit continue between the parties before the appellate court. If during the pendency of such an appeal parties interested agree that any matter in difference between them in the appeal should be referred to arbitration the first two conditions of the section are, satisfied. When s. 21 was enacted did Legislature intend that during the pendency of the appeal no reference should be made even if the parties satisfied the first two conditions prescribed by the section ? In considering this question it would be relevant and material to take notice of the fact that prior to the passing of the Act in 1940 the longstanding practice of Indian courts was to refer to arbitration disputes pending before the appellate court between the respective parties to the appeals. If the object of enacting s. 21 was to prohibit such reference at the appellate stage it would, as the High Court has observed, cause " a revolution in the existing practice ". Was such a revolution really intended ? Having regard to the fact that the words used in s. 21 are substantially the same as those used in Sch. 11, paragraph 1, of the earlier Code, it would be difficult to to sustain the plea that the ena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion " at any time 'before the judgment is pronounced " is only intended to show the limit of time beyond which no reference can be made, and that limit is reached when a final judgment is pronounced. The provision that " any matter in difference between the parties in the suit can be referred to arbitration " cannot be subjected to the further limitation that the said matter can be referred to arbitration if it is not covered by the judgment of the court. The effect of the section appears to be that so long as the final judgment is not pronounced by the court any matter-i. e., some or all the matters-in difference between the parties can be referred to arbitration provided they are agreed about it. If a reference can be made even at the appellate stage when all matters in difference between the parties are covered by the final judgment of the trial court, it is difficult to understand why in allowing reference to be made during the pendency of the suit in the trial court any further conditions should be imposed that only such matters of difference can be referred to as are not covered by an interlocutory judgment of the court. We would accordingly hold that it is open to the tria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred against it, the matter is concluded and there is no scope for applying s. 21 at all. On the other hand, if a decree determining the suit has been drawn up by the trial court and it is taken to the appellate court, during the pendency of the appeal, it is the appellate court that is competent to act under s. 21. These three cases do not present any difficulty; but where a preliminary decree has been drawn up and an appeal has been filed against it the complication arises by reason of the fact that the disputes between the parties are legally pending before two courts. Proceedings which would have to be taken between the parties in pur- suance of, and consequent upon, the preliminary decree are pending before the trial court; whereas matters in difference between the parties which are covered by the preliminary judgment and decree are pending before the appellate court. In such a case it may perhaps be logically possible to take the view that the arbitration in respect of the disputes in relation to proceedings subsequent to the preliminary decree can be directed by the trial court, whereas arbitration in respect of all the matters concluded by the trial court's preliminary ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o refer a case for arbitration under the arbitration sections of Act VIII of 1859 which applied only to courts of original jurisdiction nor was such power conferred on an appellate court by s. 37 of Act XXIII of 1861. One of the reasons which weighed with Couch, C. J., who delivered the principal judgment of the Full Bench was that according to him neither reason nor convenience required that the appellate court should refer a suit to arbitration after the matter had been decided by the trial court. Kemp, J., who concurred with the decision, apprehended that " if the parties are allowed to refer matters to arbitration after a case has been finally disposed of by a court of justice such a proceeding might tend to bring lower courts into contempt ". In our opinion this apprehension is not well-founded. Besides it is well- known that when parties agree to refer the matters in dispute between them in suit to arbitration they desire that their disputes should be disposed of untrammelled by the rigid technicalities of the court procedure. A search for a short-out by means of such arbitration sometimes takes the parties on a very long route of litigation but that is another matter. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r can be thus referred to arbitration it must be shown that the court in question has been statutorily clothed with the power to make such an order; and that would depend on the construction of s. 21 of the Act. The Calcutta High Court has-construed the said section in substance consistently with the view taken by it in the case of Jugesseur Dey . On the other hand the Patna High Court has taken a contrary view in Thakur Prasad v. Baleshwar Ahir & Ors. . Jamuar, J., who delivered the judgment of the court, has considered the decision of the Calcutta High Court in the case of Jugesseur Dey and has dissented from it. In the Allahabad High Court somewhat conflicting views had been expressed on different occasions; but, on the question as to whether the appellate court can refer a matter in dispute between the parties to arbitration or not, and whether the suit includes an appeal, the decision of the Full Bench of the Allahabad High Court in Moradhwaj v. Bhudar Das seems to be on the same lines as that of the Patna High Court. This Full Bench also considered the question about the applicability of s. 21 to execution proceedings but with that aspect of the matter we are not concerned i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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