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PUNJAB & HARYANA HIGH COURT
Kapur, J.
Ram Narain
Versus
Santosh Kumar
First Appeal No. 96 of 1950,
Decided On : JULY 19, 1951
REFERENCE TO REFEREE - VALIDITY - ADJUSTMENT OF SUIT - BINDING EFFECT OF REFEREE'S STATEMENT - COMPROMISE - VALIDITY - BLANK SPACES IN COMPROMISE - EFFECT - COURT'S POWER TO RECORD AGREEMENT OR COMPROMISE - ORDER XXIII, RULE 3, CIVIL PROCEDURE CODE.
Fact of the Case:
Parties to a suit referred their differences to a referee, Seth Jagat Narain, who was appointed by the court. The referee made a statement in the form of a letter, along with a compromise agreement signed by all parties, which was accepted by the court. Subsequently, defendants Nos. 5 to 7 filed objections, alleging that the agreement was invalid, conditional, and incomplete, and that the referee had acted in collusion and filled in blanks in the compromise without their consent.
Finding of the Court:
1. The appointment of Seth Jagat Narain was as a referee and not as an arbitrator. 2. The letter sent by the referee amounted to a statement. 3. There was consideration for the contract entered into between the parties, which was reciprocity. 4. The compromise agreement was valid and binding on the parties. 5. The blank spaces in the compromise were filled up before the signatures of the parties were obtained. 6. There was no defect in paragraph 17 of the compromise as the term of years was clear from paragraph 4. 7. The adjustment of the suit was based on the referee's statement and the compromise agreement, which formed part of the statement. 8. The court had the power to record the agreement or compromise and pass a decree in accordance therewith under Order XXIII, Rule 3 of the Civil Procedure Code.
Issues: 1. Whether the reference to Seth Jagat Narain was valid. 2. Whether the referee's letter amounted to a statement. 3. Whether there was consideration for the contract between the parties. 4. Whether the compromise agreement was valid and binding. 5. Whether the blank spaces in the compromise affected its validity. 6. Whether there was a defect in paragraph 17 of the compromise. 7. Whether the adjustment of the suit was based on the referee's statement and the compromise agreement. 8. Whether the court had the power to record the agreement or compromise under Order XXIII, Rule 3 of the Civil Procedure Code.
Ratio Decidendi: 1. The agreement to refer the dispute to Seth Jagat Narain was not a reference to arbitration but a reference to a referee. 2. The referee's letter, along with the compromise agreement, constituted a statement that was binding on the parties. 3. The consideration for the contract was reciprocity, as the parties agreed to abide by the referee's statement. 4. The compromise agreement was valid and binding as it was signed by all parties and supported by the referee's statement. 5. The blank spaces in the compromise were filled up before the parties signed the document, and there was no evidence of collusion or improper conduct by the referee. 6. The term of years was clear from paragraph 4 of the compromise, and the absence of a specific term in paragraph 17 did not invalidate the agreement. 7. The adjustment of the suit was based on the referee's statement and the compromise agreement, which together constituted an offer and acceptance between the parties. 8. The court had the power to record the agreement or compromise and pass a decree in accordance therewith under Order XXIII, Rule 3 of the Civil Procedure Code.
Final Decision: The appeal was dismissed with costs.
Kapur, J.
1. This is a defendants appeal against an order passed by Mr. Des Raj Pahwa. Commercial Subordinate Judge, Delhi, dismissing their objections. The appeal is headed as being under Order XLIII. Rule 1(m), Civil Procedure Code, read with Section 39(1) Sub-clause (vi), Indian Arbitration Act.
2. A preliminary objection has been taken that no appeal lies against the order passed by the Subordinate Judge. Order XLII, Rule 1(m) provides for an appeal against an order under Rule 3 of Order XXIII recording or refusing to record an agreement, compromise or satisfaction and Section 39(1) (vi) of the Arbitration Act provides for an appeal against an order setting aside or refusing to set aside an award. It is not possible to give a decision on this point without considering the nature of the proceedings which have been taken in the Court below and the decision given thereon.
3. The plaintiffs, Santosh Kumar and others, brought a suit for, (1) partition of Khanna Talkies in Delhi, (2) dissolution of partnership and accounts and (3) rendition of accounts received of Khanna Talkies. On the 13th December 1949, the differences between the parties were referred to the arbitration of Mr. Ram Kanwar, retired District Judge, but he did not act and on the 20th February 1950 he resigned. On the 21st March 1950, an application was made to the Court which was signed by all the parties. The application was to the following effect:
"It is submitted that in the above case the parties have willingly * * * appointed Seth Jagat Narain, Proprietor of Jagat Talkies, Delhi, as referee. The parties are fully aware that plaintiff No. 1 is the son-in-law of Seth Jagat Narain. It is there fore prayed that the case be referred to him and whatever decision he, without taking into consideration the issues in dispute, gives would be acceptable to the parties and none of the parties will raise any kind of objection".
On the same day, statements of parties were recorded, and firstly of the defendants except defendant No. 3. They stated -- "We have willingly appointed Seth Jagat Narain. proprietor of Jagat Talkies as referee * * * ".
The plaintiffs made the same statement saying that Seth Jagat Narain, Proprietor of Jagat Talkies had been appointed as referee. Defendant No. 3 also made a similar statement.
4 On the 21st March 1950, at the time of the statements of the plaintiffs and defendants their advocates were present and on the 24th March 1950, the following order was made :
"The arbitration agreement has been completed and duly attested. Per arbitration agreement and the statements of the parties recorded thereon Shri Seth Jagat Narain. Proprietor Jagat Talkies, Delhi, is appointed as a referee for the decision of the matter in controversy. His fee is fixed at Rs. 250/-which will be paid half by the plaintiff and half by the defendants. Parties are directed to appear before the referee on the 29th of March 1950, at 12 P.M., in his office for proceedings. Statement to be put in by the 14th April, 1950. Process to be put in today and process as requested be given by hand."
5. On the 1st April 1950, the referee asked for the file to be sent and the file was sent. On the 2nd April 1950, he recorded the statements of all the parties and asked for further time from the Court up to the 25th April 1950. On the 25th the following order was passed by the Court. "The referee has prayed for extension of time on the ground that the negotiations for settlement which were going on between the parties failed. As requested by him I hereby enlarge the time for filing of statement. As further requested by the referee, the parties are directed to appear before him on Sunday the 30th April 1950, at 10 A.M. at his residence with evidence. If any of the parties defaults to appear, the referee shall be authorised to proceed ex parte against the defaulting party. Statement to be filed on the 25th of May 1950." On the 6th May 1950, a letter was sent by the referee to the C
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