A reference to arbitration is an agreement between parties to submit their disputes to the decision of a third person, called an arbitrator, who is empowered to make a binding decision on the matters in dispute, while a reference to a referee under Section 20 of the Evidence Act is an agreement between parties to refer a matter in dispute to a third person, called a referee, for information or opinion, which is then treated as an admission by the party who made the offer.

D.Falshaw, J.

1. These are two appeals filed under Section 39 of the Arbitration Act which have been referred to a larger Bench by Narula J.

2. The manner in which they have arisen is as follows. The parties are related as shown in the following pedigree table:

GOBING RAM

----------------------------------------

| |

Sadhu Ram Ude Ram

(Deft. No. 1) (Plaintiff)

------------------------------------------------------

| | |

Moti Ram Sumat Parshad Jai Kumar-

(Deft. No. 4) (Deft. No. 2) (Deft. No. 3)

=

Satya Devi (wife)

Deft. No. 5)

On the 30th of June 1962 Ude Ram filed a suit for a declaration that the joint Hindu family comprising the parties had disrupted and claiming a hair share by partition of the joint properties listed in a schedule attached to the plaint and for rendition of accounts regarding the income from the properties, or in the alternative for dissolution of certain alleged partnership firms which the plaintiff alleged had been formed only to evade income tax and in which he claimed a half share.

On the first date of hearing the defendants, on the basis of an arbitration agreement contained in the partnership deed under which the firms above referred to came into existence, filed separate applications under Section 34 of the Arbitration Act for stay of the suit and on the 7th of September 1962 the Court passed an order staying proceedings in that part of the suit which referred to the dissolution of the partnerships and rendition of accounts of those firms, but the plaintiff at the same time was allowed to bifurcate the suit and to proceed, if he so desired, with the suit so far as it related to the partition of joint Hindu family property. The plaintiff elected to do so subject to the result of an appeal to be filed by him against the order staying the other part of the suit under the Arbitration Act. Such an appeal was in fact filed and dismissed in limine by this Court on the 5th of November 1962, and so the plaintiff was left to proceed with the suit for the partition of the joint faimly property.

3. In the meantime the plaintiff had filed an application under Section 8 of the Arbitration Act, which was registered as a separate case, for the appointment of an arbitrator in respect of the matters relating to the alleged partnership on the ground that the parties had failed to agree on the choice of an arbitrator. On the 5th of June 1968 the trial Court appointed Diwan Sham Lal Advocate to arbitrate on the disputes arising out of the partnership agreement.

4. Both the suit and the proceedings under the Arbitration Act came up for hearing on the 19th of August 1963 and in connection with the arbitration proceedings it was directed that a copy of the previous order be sent to Diwan Sham Lal. In the suit a statement was made by or on behalf of all the parties by which all the disputes between the parties were to be placed before Mr. Laxmi Chand, the senior Advocate of Ude Ram plaintiff, as referee. The statement was made by the plaintiff himself and his Advocate Bakhshi Sawan Singh, by Sadhu Ram and Sumat Parshad defendants 1 and 2 in person, and on behalf of the others who were not actually present by their counsel Mr. Ram Sarup, Advocate, and Mr. Mohan Lal, Advocate. The statement reads --

"Let L. Laxmi Chand be appointed as a sole referee for the disputes between the parties. Whatever decision he arrives at will be wholly or solely acceptable to us. He may hear the parties, record evidence or may not do so. The defendants do know the fact that L. Laxmi Chand is counsel for the plaintiff."

Mr. Laxmi Chand was present in C