Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1977 Supreme(All) 189

Allahbad High Court
M.P.MEHROTRA
Ramji Lal - Appellant
Versus
Ram Sanehi Lal Pandey - Respondent
Decided On : 08/09/1977

Advocates:
S.K. Agrawal, for Appellant; S.N. Verma and Birendra Dikshit, for Respondent.

A reference to an outside party to decide matters in dispute in a suit and the question of costs is not a reference to that party for information in reference to a matter in dispute, and if the reference is to be regarded as made only under S. 20 of the Evidence Act, it is a bad reference.

Headnote:
ARBITRATION - REFERENCE TO ARBITRATOR - INTERPRETATION OF S. 20 OF THE EVIDENCE ACT - STATEMENT BY ARBITRATOR - WHETHER ADMISSIBLE AS EVIDENCE - WHETHER OPERATES AS ESTOPPEL.
Fact of the Case:

In a suit for recovery of money, the parties agreed to appoint a referee to decide the dispute and be bound by his statement. The referee submitted his statement, and the trial court passed a decree in accordance with the statement. The defendant appealed, contending that the referee was an arbitrator and his statement was an award, and that he was entitled to file objections to the award within 30 days.
Finding of the Court:

The court held that the reference to the referee was not a reference for information under S. 20 of the Evidence Act, but was an arbitration. The court further held that the statement of the referee was an award, and that the defendant was entitled to file objections to the award within 30 days. The court set aside the judgments and decrees of the lower courts and remanded the case to the trial court for a fresh decision.
Issues: 1. Whether the reference to the referee was a reference for information under S. 20 of the Evidence Act or an arbitration? 2. Whether the statement of the referee was an award? 3. Whether the defendant was entitled to file objections to the award within 30 days?
Ratio Decidendi: 1. The court held that the reference to the referee was not a reference for information under S. 20 of the Evidence Act, but was an arbitration. The court relied on the Privy Council decision in Chhabba Lal v. Kallu Lal (AIR 1946 PC 72), which held that a reference to an outside party to decide matters in dispute in a suit and the question of costs is not a reference to that party for information in reference to a matter in dispute. 2. The court held that the statement of the referee was an award. The court relied on the definition of an award under S. 2(a) of the Arbitration Act, 1940, which defines an award as an adjudication by an arbitrator of the subject matter of a reference. 3. The court held that the defendant was entitled to file objections to the award within 30 days. The court relied on S. 14(2) of the Arbitration Act, 1940, which provides that the parties to an arbitration agreement shall be entitled to notice of the filing of the award and shall have 30 days from the date of such notice to file objections to the award.
Final Decision: The court set aside the judgments and decrees of the lower courts and remanded the case to the trial court for a fresh decision. The trial court was directed to give notice to the parties of the filing of the award and to allow the parties to file objections, if any, in the manner laid down under the Arbitration Act.

JUDGMENT:- This is a second appeal arising out of a suit wherein the plaintiff claimed a money decree against the defendant on the ground that the former had lent certain amount to the latter. To be specific, the plaintiff claimed a decree for Rs. 5478 with pendente lite and future interest as costs. The defendant contested the suit and denied the factum of loan or that anything was due from him to the plaintiff. The plaintiff gave a list of witnesses whom he proposed to examine at the trial and one such proposed witness was Pt. Satya Narain Misra. The plaintiff examined himself and thereafter a joint application (paper No. 33C) was moved on behalf of both the parties praying that Pt. Satya Narain Misra be appointed as a referee under S. 20 of the Evidence Act. Both the parties jointly stated in the said application that whatever would be stated by the said sole referee, either in person before the court or by a statement in writing to be submitted by him to the court, would be treated as sole evidence of both the parties and both the parties would be bound by the same. It was further stated that neither of the two parties would tender any other evidence in the suit. Lastly, it was stated in the application that the said referee would be entitled to examine the papers on record or to make such other enquiries as he liked to make before making his statement in the court. The statement of the referee would be read in accordance with S. 20 of the Evidence Act.

Pt. Satya Narain Misra, the alleged referee, did not personally appear before the court but sent his statement in writing which is paper No. 33B on the record of the trial court. It was stated by him that he sent for the plaintiff and the defendant, heard them, examined the papers in their presence, entertained the evidence which the parties desired to lead and after taking into consideration the entirety of the aforesaid matter, he reached a conclusion that a sum of Rs. 4100 was payable and should be paid by the defendant to the plaintiff. He further stated that on the said sum of Rs. 4100, the plaintiff was also entitled to his proportionate costs. This statement was filed on 9th May, 1956, and on the same date the court pronounced its judgment on the basis of the said statement. The relevant order-sheet of the court is worth re-production.

" 9-5-56. 39B Referee s statement.

Admit, on file,

Sd/- Moti Babu

9-5-56.

Neither party has to raise any objection.

Order

The suit is decreed for a sum of Rupees 4100 with proportionate costs. As to the rest the suit is dismissed with costs on parties.

Sd/- Moti Babu

9-5-56.

2. It seems that on 21st May, 1956 an application was moved which is paper No. 62C. By this application the defendant prayed that the decree of the court based on the judgment dated 9th May, 1956 be not signed. It was contended that the referee was in fact and in law an Arbitrator and his statement amounted to an award. The defendant was entitled to file objection to the award within 30 days of the service of the notice of the filing of the award under Art. 158 of the old Limitation Act. As the defendant was not allowed to file his objections, it was prayed that he should be given an opportunity to file objections to the said award. The said application dated 21st May, 1956 was rejected on the same date. Against the judgment of the trial court dated 9th May, 1956, an appeal was filed in the lower appellate court but the same was dismissed and the trial court s judgment and decree were confirmed. Thereafter the defendant filed the instant second appeal.

3. I have heard learned counsel for the parties. On behalf of the appellant it has been contended that paper No. 33C in reality and in law amounted to an arbitration agreement between the parties and therefore Pt. Satya Narain Misra was really appointed and the dispute between the parties was referred to him in the capacity of an Arbitrator and not as referee under S. 20 of the Indian Evidence Act. Consequently, his alleged s

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Judicial Analysis

1977 Supreme(All) 189

Allahbad High CourtM.P.MEHROTRARamji Lal - AppellantVersusRam Sanehi Lal Pandey - RespondentDecided On : 08/09/1977

A reference to an outside party to decide matters in dispute in a suit and the question of costs is not a reference to that party for information in reference to a matter in dispute, and if the reference is to be regarded as made only under S. 20 of the Evidence Act, it is a bad reference.

Judicial Analysis

Allahbad High Court
M.P.MEHROTRA
Ramji Lal - Appellant
Versus
Ram Sanehi Lal Pandey - Respondent
Decided On : 08/09/1977