PATNA HIGH COURT

                                                   Kokil Singh

                                                         Vs

                                         Ramasray Prasad Choudhary

                                               (Das, C.J. Ross, J.)

                                                   24.01.1924

                                                  JUDGMENT

Ross, J.
1. This is an appeal from a judgment of the Subordinate Judge of Darbhanga ordering an award
to be filed and a decree to be prepared in its terms. The defendant was a Tahsildar under the
plaintiffs and their co-sharers. The plaintiffs brought a suit against the defendant for accounts
from 1319 to 1324. An agreement was entered into between the parties to refer the matter to
arbitration and to withdraw the suit and the suit was accordingly dismissed on the 27th of
February, 1922. The agreement to refer the dispute to arbitration is dated the 25th of February,
1922. It recites the institution of the suit and declares that "It has been now agreed that the suit be
decided by arbitration." Chaudhary Ram Khelawan Rai was appointed arbitrator. The procedure
to be followed in the arbitration was prescribed, and the 30th of Baisakh 1329 was fixed, as the
date on which the award should be given. It was agreed that if Ram Khelawan Rai should be
unwilling or unable to act as arbitrator, then his brother Ghaudhary Ram Rup Rai should act as
arbitrator on the same terms. On the 11th of April, 1922, a notice is said to have been given by
Ram Khelawan Rai to each of the parties, to the effect that on account of illness he would be
unable to go to the villages and was unable to act as arbitrator, and, therefore, he had made over
the arbitration agreement to his brother Ram Rup Rai who would act as arbitrator; the parties
were directed to go to him with their evidence. On the 2nd of May, 1922, a fresh agreement was
made between the parties with regard to the arbitration. This agreement recites the suit above
mentioned and the previous agreement of the 25th of February. It also recites that Ram Khelawan
Rai had expressed his inability to act as arbitrator by-notice sent under a registered cover, and,
therefore, Ram Rup Rai had worked as arbitrator in the presence of the executants up to the 22nd
of April and had done a good deal of work in connection therewith. But the arbitrator could not
pass his award by the date fixed. It was, therefore, necessary to execute an agreement for
extension of the date and it was agreed that Ram Rup Rai should act as arbitrator and pass his
award in accordance with the stipulations of the registered deed of agreement, dated the 25th of
February, 1922, by the 29th of Sawan 1329. It should be mentioned that both these agreements
were registered. On the 3rd of August, 1922, the arbitrator made his award which refers to the
hearing of the arbitration in the presence of both parties on several dates as attested by the
signatures of the parties and to the production of the oral and document tary evidence of both
parties. It then declares that the defendant is to pay to the plaintiffs Rs, 18,741. The plaintiffs on
the 15th of September, 1922, applied to the Subordinate Judge under paragraph 20 of the Second
Schedule to the Civil Procedure Code, that the award be filed in Court. Cause was shown by the
defendant and various objections were taken but the Subordir nate Judge, after going into
evidence, overruled the objections and made the order which is the subject of this appeal.

2. The objections taken before the Sub? ordinate Judge and again in this Court are objections on
grounds both of fact and law. The main objections on facts are, first, that Ram Khelawan Rai
never refused to arbitrate and that the defendant agreed to the arbitration of Rup Rai on the
strength of a falsa notice which he believed to havQ been signed by Ram Khelawan Rai, but
which in fact was not signed by him, secondly, that the arbitrator refused to accept the
defendant's evidence, and in particular, a safinama or acquittance which, if admitted, would have
shown that he had received a full discharge from the plaintiffs and, thirdly, that the arbitrator
refused to hold, a local, enquiry as requested by the defendant. The objections in law are, first,
that the agreement to refer to arbitration having been arrived at while a suit was pending, and
being without leave of the Court, it cannot be the basis of an award which can be filed under
Schedule If, nor of a certificate of adjustment under Order XXIII, Rule 3, and, secondly, that an
obvioust point of law has not, been considered by the arbitrator, namely, that the defendant
having been appointed both by the plaintiffs and by their co-sharers, the plaintiffs alone could not
call him to account.

3. I shall deal first with thequestions of fact. The principal question, is the question whether Ram
Khelawan Rai gave notice of his inability to work as arbitrator. The principal, witnesses on each,
side are Ram Rup Rai for the plaintiffs and Ram Khelawan Rai for the defendant; two copies of
notice have been produced, one by the plaintiffs (Exhibit 5) and the other by the defendant
(Exhibit A). Ram Rup Rai says in his evidence that, his brother did not arbitrate owing to ill-
health. The witness was then asked to arbitrate and his brother told, him that he would serve
notice on the parties to that effect Ram Khelawan on the contrary says that he gave no notice to
the parties refusing to arbitrate, although he admits in cross-examination that he did think it
necessary to give notice. He also admits that his brother Ram Rup is honest. He denies that the
notice (Exhibit A) produced by the defendantwas signed by him. Now it is to be observed that
the notice produced by the plaintiffs was not denied, by Ram Khelawan, it was not put to him. It
may be noted also, in view of the evidence of Singheswar Prasad, to be presently referred to, that
Ram Khelawan was not asked whether Ram Rup Rai was in the habit of signing for him and
further that Ram Rup Rai was not cross-examined on his denial that the signature on Exhibit A
was made by him. The notice alleged to have been seived on the defendant (Exhibit A) is said in
the defence, evidence to have been written by the witness Singheswar Prasad at the request of
Ram Rup and to have been signed by Ram Rup in his presence. It is, therefore, common ground
that Exhibit A was not signed by Ram Khelawan Rai and it was, therefore, not the notice which
was served on the defendant, if any notice by Ram Khelawan Rai was served. If the evidence of
Singheswar Prasad was credible then a case of fraud would be established, but, in my opinion
that evidence is wholly woithless. The, learned Subordinate Judge has disbelieved the witness
holding that he is no better than a tout. Singheswar Prasad admits that he asked Ram Rup why he
was signing for Ram Khelawan and the answer was that he signed many papers for him. But the
remarkable feature of this particular signature is that it purports to be by Ram Khelawan Rai by
his own pen. Therefore, Singheswar Prasad, if his evidence, was true, was by his own showing a
party to a forgery. I can see Absolutely no leaeon why this forgery should have been committed.
The parties had agreed that if Ram Khelawan was unable to act his brother should act in his
place. They were, therefore, quite willing to accept the arbitiation of Ram Rup Rai and I cannot
see why a forged notice should have been resorted to in order to obtain Ram Rup's arbitration,
especially as it is an undoubted fact that Ram Khelawan Rai was suffering from leprosy and
would, therefore, quite probably be unable to act. In the second agreement, extending the time
for making the award the receipt of the notice is referred to the arbitrator held the last seven
sittings at his own house where his brother Ram Khelawan lives. Ram Khelawan, no doubt, says,
that he was not there, having gone en pilgrimage, but this statement is denied by Ram Rup. The
fact seems to be that there is hostility between the plaintifs and Musammat Alakhrupi Kuar, the
mother of their co-sharer Baleswar. Alakhrupi is evidently supporting the defence as appears
from the fact that she is said to have given the defendant an acquittance. Her daughter is married
to the son of Ram Khelawan and the defendant massages her affairs. It appears that for these
reasons Ram Khelawan Rai has come to support a wholly false defence that he gave no notice
about the arbitration. It is incredible that this protracted arbitration should have been carried
through by Ram Rup Rai openly and in the presence of the parties if in fact his brother had not
given them notice of his own inability to do the work. There is no reason to doubt the
genuineness of the notice (Exhibit 5) and if notice was given to one party, I can see no reason
why it should not have been given to both. I hold, therefore, that Ram Rup Rai properly became
the arbitrator in this matter.

4. The second ground is no better. The arbitrator kept notes of his proceedings from day to day
which were signed by the parties and he also gave notices of the dates fixed. Thus the first sitting
was notified to be held at the deorhi of Babu Baleswar Prasad Chaudhary and the parties were
directed to appear there with their oral and documentary evidence. Now this is where the
defendant, if he relied on his safinama, might have been expected to produce it; and, if he wanted
the evidence of Musammat Alakhrupi Kuer, he might have had it taken there. But although the
safinama was produced before the arbitrator, as he says, the lady's evidence was not required by
the defendant, the reason being, as the arbitrator says, that the defendant did not ask him to
examine the lady "as she was a big person." Exhibit 7 is a notice by the parties, including the
defendant, to the arbitrator, asking him to alter one of the dates because the defendant had
business on the date fixed. Exhibit I is a notice of one of the dates, issued by the arbitrator and
acknowledged by the defendantas well as by the plaintiffs. With regard to the proceedings
themselves, there is a note by the defendant on the 22nd April that he had filed two lists of his
evidence for, the arbitration. Again on the 18th July, there is a note that he had examined all his
witnesses in the arbitration before the Thakurjee at Havi Bhawar, that is, the residence of the
arbitrator. On the 19th of July, the defendant signs a note of the proceedings of that date and
again on the 20th, 21st, 22nd and the 23rd; and on the 24th the following note "the arbitration
proceedings...have been taken in presence of both the parties and have been completed to-day." It
is true that the defendant denies his signatures on these notes, but on this point I prefer the
evidence of the arbitrator himself. The arbitration was protracted, it was held in the presence of
the parties, and it is impossible that important evidence should have been refused. The learned
Subordinate Judge has compared the signatures of the defendant on these notes with his admitted
signature and he finds that the writings of the defend" ants which are of a peculiar nature, are
identical. These notices and notes conclude this part of the case against the defence.

5. With regard to the question of local enquiry, there is simply oath against oath. The arbitrator
says that the defendant never requested him to make enquiries in the villages. Only one question
was put to him in cross-examination on this point and he said that he would have gone to the
locality if the defendant had requested him to do so. I can see no, reason to doubt this evidence,
and disbelieve the statement of the defendant that he asked the arbitrator to go to the villages but
he did not do so, in view of the undoubted falsity of the rest of his deposition.

6. 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 keep 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 Jilani v. Muhammad Hassan1 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
Chand2 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 Krishna3 it 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 Venkatachallam Reddi v. Rungiah Reddi4 it
was held that paragraph 17 of the Second Sched ule to Civil Procedure Code covers only cases
where parties without, having recourse to litigation agree to refer their difference to arbitration;
and that 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 Shavaksha Dinsha
Davar v. Tyab Haji Ayub5 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 deal with arbitration 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, alloAved the application to be treated as an application under paragraph 20. In
Mani Lal Motilal v. Gokal Das Rowji6 however, the same, learned Judge came to the conclusion
that 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 Lal7 Rankin, J., has expressed the opinion that the
rules in paragraphs 20 and 21 cannot be applied in such a case. The authority is clear that no
assistance can be obtained from Order XXIII, Rule 3, Civil Procedure Code. 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, wishers it has been agreed by the parties to get the suit decided by arbitrators.
The petitioners have, therefore, executed an ekrarnama dated 25th February, 1922. Therefore,
they do not like to prosecute this case. This suit may be dismissed without trial. Costs may be
borne by the parties." In 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 euit 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 16 Ind. Cas. 478, where it was held that there may be an agreement to
refer to arbitratiyi in a pending suit without the intervention of the Court. See also Shavaksha
Dinshd Davar v. Tyab Haji Ayub8 and Mani Lal Motilal v. Gokal Das Rowji9 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 np 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 of 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 23 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 2) because the
matter wi3 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.

7. 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 enterel into between the parties extending
the time till the 23th 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.
Lowe10 and Watkins v. Phillpotts11 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.

8. Finally, as to the error of law said to have been committed by the arbitrator in making, an
award when all the co-sharers 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 arbitratorto,
consider, and, even if there was, then, as, was pointed out by the Judicial Committee in Ghulam
Jilani v. Muhammad Hassan13 arbitrators are Judges of law as well as Judges of fact and an error
of law certainly does not vitiate their award.

9. My opinion, therefore, is that on all grounds this appeal fails and it must be dismissed with
costs. The stay application is dismissed.

10. Das, J.--I agree.

Cases Referred.

129 C. 167 : 6 C.W.N. 226 : 4 Bom. L.R. 161 : 12 M.L.J. 77 : 29 I.A. 51 : 8 Sar. P.C.J. 154 (P.C.)
230 C. 218 : 7 C.W.N. 180
327 Ind. Cas. 46 : 38 B. 687 : 16 Bom. L.R. 653
412 Ind. Cas. 372 : 36 M. 353 : 10 M.L.T. 248; (1911) 2 M.W.N. 249 : 21 M.L.J. 990
537 Ind. Cas. 140 : 40 B. 386 : 18 Bom. L.R. 559
659 Ind. Cas. 53 : 45 B. 245 : 22 Bom. L.R. 1048
769 Ind. Cas. 808 : 49 C. 608; (1922) A.I.R. (C.) 404
837 Ind. Cas. 140 : 40 B. 386 : 18 Bom. L.R. 559
950 Ind. Cas. 53 : 45 B. 245 : 22 Bom. L.R. 1048
10(1832) 9 Bing 32 : 2. M. and Scott 44 : 1 L.J. (N.S.) C.P. 150 : 35 R.R. 512 : 131 E.R. 526
11(1825) M'Cle. and. Y. 393 : 29 R.R. 809 : 148 E.R. 465
1229 C. 167 : 6 C.W.N. 226 : 4 Bom. L.R. 161 : 12 M.L.J. 77 : 29 I.A. 51 : 8 Sar. P.C.J. 154 (P.C)