Authored By : Francis Maclean, C.H. Hill, J.F. Stevens

Francis Maclean, K.C.I.E., C.J.,

1. On the 12th of July 1895, one Tincowry Dey instituted asuit in this Court against Fakir Chand Dey, Protap Chunder Dey and ProhladChunder Pal, asking for the dissolution of the partnership firm of Fakir ChandDey, for the taking of the partnership accounts and further consequentialrelief. On the 25th of August 1896, it was declared that the partnership oughtto stand dissolved from the 12th of June 1895 and certain partnership accountswere directed to be taken. Fakir Chand Dey was found by the Second AssistantRegistrar of this Court to be the accounting party and he was subsequentlydirected to file his accounts. On the 8th of September 1898, the matters indispute in the suit were by consent referred to the arbitration of one BabuKedar Nath Dutt. Owing, as is alleged, to the action of Fakir Chand Dey, whowould not make up the accounts, that arbitration was unable to proceed. On the19th of November 1900, Fakir Chand Dey instituted a suit in this Court againstProhlad Chunder Pal and Protap Chunder Dey, seeking to recover the sum of Rs.12,255, which, he said, he had deposited with the Defendants. On the 10th of January1901, the order of the 8th of September 1898 was discharged and the accountsdirected by the decree in the partnership suit were referred to the SecondAssistant Registrar of this Court. In May 1901 Fakir Chand Dey filed hisaccounts, to which considerable objection was taken by his other partners. Onthe 21st of June 1901, a consent decree was passed in the suit of Fakir ChandDey against Protap Chandra Dey and Prohlad Chunder Pal, to which, it will benoticed, the Plaintiff in the partnership suit, Tincowry Dey, was not a partyand it was, amongst other things, decreed by consent that Protap Chunder Deyand Prohlad Chunder Pal should pay Rs. 11,651 odd with interest to thePlaintiff, but that the execution of the decree should be stayed, until the finaldetermination of the partnership suit, which the parties had agreed by acertain compromise and settlement to refer to the arbitration of one KallyKristo Dhur, which arbitration was to be concluded within six months from thedate of the last-mentioned decree. Tincowry was not a party to these terms ofsettlement; but it is reasonably clear that he subsequently came in and waswilling to be a party to and to be bound by that arbitration. Fakir Chand Dey,it seems to me upon the evidence, tried subsequently to shuffle out of hisagreement to refer the matter to the arbitration of Kally Kristo Dhur and along correspondence ensued between the solicitors of the parties upon thismatter. Tincowry Dey, Protap Chunder Dey and Prohlad Chunder Pal insisted that thearbitration should go on, while Fakir Chand Dey was doing his best not to giveeffect to his agreement to refer the matter to the gentleman I have named and Iam satisfied that the action of Fakir Chand Dey in the matter was notstraightforward or fair and I regard his reasons for not accepting thegentleman named as the arbitrator as frivolous and ill-founded. Fakir Chand Deyappears to have been very successful in keeping his partners at bay in thepartnership suit, for, although the suit was instituted on the 12th of July1895 and we are now nearly in 1903, the accounts have not yet been taken.

2. However, on the 26th of August 1901, Prohlad Chunder Palpresented a petition to this Court, asking for an order "that the mattersin dispute in this suit, including the question of costs in this suit and ofthe award and of obtaining judgment therein, be referred to the arbitration ofBabu Kally Kristo Dhur, Twist Merchant and Broker of Burrabazar, in the town ofCalcutta with all the power of an arbitrator and that the said Defendant, FakirChand Dey, do furnish the said Babu Kally Kristo Dhur with the accounts of thesaid partnership business within a week from the date of the order to be madehereon and the said arbitrator do make his award within six months from thesaid date." The matter came before Mr. Justice Sale, who found that therewas a valid and binding agreement between the parties to refer the matters indispute to the arbitration of the gentleman named and that Fakir Chand Dey hadshown no cause for withdrawing from the agreement. The learned Judge found thatSection 21 of the Specific Belief Act did not help the Applicant, that theArbitration Act would not help him and that the case did not fall within eitherSection 506 or Section 523 of the Code of Civil Procedure.

3. I agree in the conclusion which the learned Judge hasarrived at upon these points, though I am not disposed to think that Section523 of the Code applies, where there is a pending suit which affects thesubject-matter of the reference to arbitration. Upon this head I may refer tothe recent decision of their Lordships of the Judicial Committee of the PrivyCouncil in the case of Ghulam Khan v. Muhammad Hassan I.L.R. (1902) Cal. 167,which seems to me to import that Section 523 does not apply, where there is apending suit. But the learned Judge, though he thought he was unable tointerfere either under the Arbitration Act or the sections of the Code, towhich I have referred, was of opinion that Section 375 of the Code applied andhe made an order in the following terms: "It appearing that an agreementwas entered into by the parties on or before the twenty-first day of June onethousand nine hundred and one whereby the parties agreed to refer this suit tothe arbitration of Babu Kally Kristo Dhur of Barabazar, which arbitration is tobe finished within six months, it is ordered that the said agreement berecorded. And it is further ordered and decreed that in terms of the saidagreement, this suit be referred to the arbitration of Babu Kally Kristo Dhurof Bara Bazar with all such powers and authorities as are vested in arbitratorsunder the provisions of the Code of Civil Procedure and that the saidarbitration be finished within six months from the date on which this decree shallbe completed and filed," and so on.

4. The only question that we have to decide is whetherSection 375 of the Code applies to the present case. Section 375 of the Coderuns as follows:--"If a suit be adjusted wholly or in part by any lawfulagreement or compromise, or if the Defendant satisfy the Plaintiff in respectto the whole or any part of the matter of the suit, such agreement, compromiseor satisfaction shall be recorded and the Court shall pass a decree inaccordance therewith, so far as it relates to the suit and such decree shall befinal so far as relates to so much of the subject-matter of the suit as isdealt with by the agreement, compromise or satisfaction." I am aware of nocase in the High Courts of India where it has been held that a mere agreementto refer is an agreement within the meaning of Section 375, though no doubt inthe case of Pragdas Sagurmall v. Girdhardas Mathuradas I.L.R. (1901) Bom. 76,it has been held that on an agreement to refer when and after an award has beenmade, the agreement, coupled with the award, may be treated as an agreementwithin the meaning of Section 375. Apart from the question whether in such acase the proper course would not have been to apply under Section 525 of theCode, that case is distinguishable from the present, for here the parties havenot got beyond an agreement to refer and no award has been made. It isindisputable here that by his petition the Petitioner does not ask for an orderunder Section 375 and the possible application of that section would appear tohave been an after-thought. It seems to me that the relief specifically askedfor by the petition could, if at all, only be granted by the Court underSection 523 of the Code, to which two difficulties present themselves--first,that Tincowry Dey could hardly be said to have agreed in writing within themeaning of that section and in fact, the Court below has found to the contraryand secondly, that Section 523 does not apply to the case of an agreement torefer, where there is a pending litigation. Section 500 appears to apply to thecase where parties have agreed to refer in a pending suit and Section 523 tothe case where there is no pending litigation. At least this is the way inwhich I read the observations of their Lordships of the Judicial Committee inthe case of Ghulam Khan v. Muhammad Hassan I.L.R. (1902) Cal. 167, to which Ihave already referred. It is true that a contrary view was expressed in thecase of Harivalabdas Kalliandas v. Utamchand Manekchand I.L.R. (1879) Bom. 1 butI doubt, if this decision can stand having regard to the Privy Council case towhich I have referred.

5. However, the only question we have to decide is whetherthe present case falls within Section 375. We must look to the Code as a wholeand we find that Sections 506 to 526 inclusive deal with references toarbitration as a matter of special proceeding. Those sections come afterSection 375 and I read those sections as laying down the procedure in the caseof references to arbitration and as exhaustive upon that particular subject. Inthis view, as these sections deal specifically with this particular matter, theinference would be that Section 375, which precedes these arbitration sections,was not intended to apply to a mere agreement to refer to arbitration. In onesense, perhaps, it may be said that the suit is adjusted by such an agreement,inasmuch as by it the whole subject-matter of the suit is transferred to thearbitrament of another tribunal, but it is not, in my opinion, such anadjustment as is contemplated by Section 375. That section appears to me tocontemplate that the subject-matter of the suit must be adjusted by theagreement. This view seems to gain support from the last words of the section,viz., "such decree shall be final, so far as relates to so much of thesubject-matter of the suit as is dealt with by the agreement, compromise orsatisfaction."

6. No part of the subject-matter of the suit is dealt withby the agreement in the present case: that is all left open to be dealt with bythe arbitrator; and if so, it is difficult to see how there can be any finalityin the decree in relation to that subject-matter.

7. If parties agree to determine a suit and to leave thedispute to be decided by arbitration instead of by the Court, the suit can bewithdrawn under Section 373.

8. Upon these grounds and more especially upon the groundthat references to arbitration and arbitration proceedings are specially dealtwith by special sections of the Code, in my opinion Section 375 was notintended to apply to an agreement merely to refer a suit to arbitration.Further, I fail to see how under Section 375 the Court had any power to make adecree for referring the matter to the arbitration of the gentleman named"with all such powers and authorities as are vested in arbitrators underthe provisions of the Code of Civil Procedure and that the said arbitration befinished within six months from the date" on which the said decree wouldbe completed and filed or to order that that "decree be in supersession ofthe decree made in this suit and dated the twenty-fifth day of August onethousand eight hundred and ninety-six and the orders made in this suit anddated, respectively, the eighth day of September one thousand eight hundred andninety-eight and the tenth day of January one thousand nine hundred andone;" or to order to deliver to the arbitrator the records of the suit.The form of the decree would seem to indicate that it was regarded as one madeunder the arbitration sections of the Code rather than under Section 375.

9. In my opinion this case does not fall within Section 375and the appeal must be allowed with costs. As I do not think that the conductof the Appellant, Fakir Chand Dey, has been straight, forward in the matter, wegive him no costs in the Court below.

C.H. Hill, J.

10. I agree in thinking that this appeal should be decreedand I concur, speaking generally, in what has been said by the Chief Justice.In the view, however, which I take of the case, it seems to me unnecessary toexpress any definite opinion on the question whether an agreement to refer may,under any circumstances, amount to an adjustment of a suit in the sense ofSection 375 of the Code. The application in this case to the Court below wasnot, I think, made with advertence to Section 375 or with a view to theadjustment of the suit within the meaning of that section. It asked in termsfor an order referring the matters in dispute in the suit to arbitration andthat was the order which was made. Such an order it was not, I think, competentto the Court to make under Section 375, while, for the reasons mentioned by theChief Justice, Sections 506 and 523 appear to me to be inapplicable. This beingso, it seems to me that the question, to which I have referred above, does notarise. But I may add that, as at present advised, I am not prepared to holdthat under no circumstances could an agreement to refer be properly treated asan adjustment of a suit such as is contemplated by Section 375.

J.F. Stevens, J.

11. I concur in the view which has been expressed by mybrother Hill. I think that Section 375 of the Code of Civil Procedure does notapply to the application which was made for a reference to arbitration in thepresent case and that the appeal must therefore be decreed.

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Tincowry Dey vs.Fakir Chand Dey (22.12.1902 - CALHC)