An appeal to the High Court under S. 19 (1) (f) of the Defence of India Act, 1939, is an arbitration proceeding and the decision given therein is an award.

Headnote:
DEFENCE OF INDIA ACT, 1939 - S. 19 (1) (F) - APPEAL TO HIGH COURT - NATURE OF - AWARD OR JUDGMENT - APPEAL TO SUPREME COURT - COMPETENCY.
Fact of the Case:

The Central Government requisitioned certain properties belonging to Hanskumar Kishanchand under S. 75 (A) of the Rules framed under the Defence of India Act, 1939. As there was no agreement on the amount of compensation payable to him, the Central Government referred the determination thereof to Mr. Jafry, Additional District Judge, Khandwa under S. 19 (1) (b) of the Act. On March 31, 1943, Mr. Jafry pronounced his award, by which he awarded a sum of Rs. 13,000 as annual rent for the occupation of the premises. Against this award, there was an appeal to the High Court of Nagpur under S. 19 (1) (f) of the Act, and that was heard by a Bench consisting of Grille, C. J. and Padhye, J. By their judgment dated December 31, 1947, they enhanced the annual rent payable to the appellant by a sum of Rs. 3,250, and they also allowed certain other sums as compensation for dislocation of the High School which was being run on the property. The appellant applied for leave to appeal against this judgment to the Federal Court under Ss. 109 and 110 of the Code of Civil Procedure in respect of the amounts disallowed. A similar application was also filed by the Government with reference to the enhancement of compensation. On August 25, 1949 both these applications were granted, and a certificate was issued that the appeals fulfilled the requirements of Ss. 109 and 110 of the Code- of Civil Procedure. That is how the two appeals come before us.
Finding of the Court:

The Court held that the appeal to the High Court under S. 19 (1) (f) of the Defence of India Act, 1939, is an arbitration proceeding and the decision given therein is an award. Therefore, the decision of the High Court in the appeal under that provision is not a judgment, decree or order either within Ss. 109 and 110, Civil P. C. or Cl. 29 of the Letters patent of the Nagpur High Court, and that, therefore, the present appeals are incompetent.
Issues: Whether an appeal to the High Court under S. 19 (1) (f) of the Defence of India Act, 1939, is an arbitration proceeding and the decision given therein is an award?
Ratio Decidendi: The Court observed that when parties enter into an agreement to have their dispute settled by arbitration, its effect is to take the lis out of the hands of the ordinary Courts of the land and to entrust it to the decision of what has been termed a private tribunal. Such an agreement is not hit by S. 28 of the Contract Act as being in restraint of legal proceedings, because S. 21 of the Specific Relief Act expressly provides that no contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such a contract ....... and has refused to perform it sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit. There is a similar provision in S. 28 of the Contract Act which is applicable, where the Arbitration Act is not in force. Where an arbitration is held in pursuance of such an agreement and that results in a decision, that by the ordinary Courts, and the rights of the parties are thereafter regulated by it. It is true that under the law the Courts have the authority to set aside the awards made by arbitrators on certain grounds such as that they are on matters not referred to arbitration, or that the arbitrators had misconducted themselves, or that there are errors apparent on the face of the award. But where the award is not open to any such objection, the Court has to pass a decree in terms of the award, and under S. 17 of the Arbitration Act, an appeal lies against such a decree only on the ground that it is in excess of, or not otherwise in accordance with the award. In other words, it is the decision of the arbitrator where it is not set aside that operates as the real adjudication binding on the parties, and it is with a view to its enforcement that the Court is authorised to pass a decree in terms thereof. There is thus a sharp distinction between a decision which is pronounced by a Court in a cause which it hears on the merits, and one which is given by it in a proceeding for the filing of an award. The former is a judgment, decree or order rendered in the exercise of its normal jurisdiction as a Civil Court, and that is appealable under the general law as for example, under Ss. 96, 100, 104, 109 and 110 of the Civil P. C. The latter is an adjudication of a private tribunal with the imprimatur of the Court stamped on it, and to the extent that the award is within the terms of the reference, it is final and not appealable.
Final Decision: The Court dismissed both the appeals as incompetent.

Judgment

T. L. VENKATARAMA AIYAR, J. : Both these appeals are directed against the judgment of the High Court of Nagpur passed in an appeal under S. 19 (1) (f) of the Defence of India Act, 1939, hereinafter referred to as the Act.

2. In exercise of the power conferred by S. 75 (A) of the Rules framed under the Act, the Central Government requisitioned on February 19, 1941, certain properties belonging to Hanskumar Kishanchand, the appellant in Civil Appeal No. 224 of 1954. As there was no agreement on the amount of compensation payable to him, the Central Government referred the determination thereof to Mr. Jafry, Additional District Judge, Khandwa under S. 19 (1) (b) of the Act. On March 31, 1943, Mr. Jafry pronounced his award, by which he awarded a sum of Rs. 13,000 as annual rent for the occupation of the premises. Against this award, there was an appeal to the High Court of Nagpur under S. 19 (1) (f) of the Act, and that was heard by a Bench consisting of Grille, C. J. and Padhye, J. By their judgment dated December 31, 1947, they enhanced the annual rent payable to the appellant by a sum of Rs. 3,250, and they also allowed certain other sums as compensation for dislocation of the High School which was being run on the property. The appellant applied for leave to appeal against this judgment to the Federal Court under Ss. 109 and 110 of the Code of Civil Procedure in respect of the amounts disallowed. A similar application was also filed by the Government with reference to the enhancement of compensation. On August 25, 1949 both these applications were granted, and a certificate was issued that the appeals fulfilled the requirements of Ss. 109 and 110 of the Code- of Civil Procedure. That is how the two appeals come before us. Hanskumar Kishanchand is the appellant in Civil Appeal No. 224 of 1954, and the Union of India, in Civil Appeal No. 225 of 1954.

3. At the opening of the hearing, a preliminary objection was taken by the learned Solicitor-General to the maintainability of Civil Appeal No. 224 of 1954 on the ground that the judgment of the High Court passed in appeal under S. 19 (1) (f) was an award and not a judgment, decree or order within the meaning of Ss. 109 and 110 of the Code of Civil Procedure, and that accordingly the appeal was incompetent. If this contention is right, Civil Appeal No. 225 of 1954 preferred by the Government would also be incompetent. That, of course, does not preclude the Government from raising the objection as to the maintainability of the appeal, though the result of our upholding it would entail the dismissal of Civil Appeal No. 225 of 1954 as well. We accordingly proceed to dispose of the objection on the merits.

4. It will be convenient at this stage to refer to the provisions of the Act bearing upon the present controversy. Section 19 (1) provides that,

"Where .........any action is taken of the nature described in sub-section (2) of section 299 of the Government of India Act, 1935, there shall be paid compensation, the amount of which shall be determined in the manner, and in accordance with the principles, hereinafter set out......."

Section 19 (1) (a) provides for the amount of compensation being fixed by agreement, and S. 19 (1) (b) enacts that.

" Where no such agreement can be reached, the Central Government shall appoint as arbitrator a person qualified under sub-section (3) of section 220 of the above-mentioned Act for appointment as a Judge of a High Court."

Sub-section (c) of S. 19 (1) provides for the appointment by the Central Government of a person having expert knowledge as to the nature of the property acquired and for the nomination of an assessor by the person to be compensated, for the purpose of assisting the arbitrator. Sub-section (e) of S. 19 (1) enacts that the arbitrator in making his award shall have regard to the provisions of sub-s. (1) of S. 23 of the Land Acquisition Act, 1894, so far as the same can be made applicable. Then comes sub-s. (f), which is importan

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