Tincowry Dey v. Fakir Chand Dey — 1902 DIGILAW 278 (CAL)

JUDGMENT Francis W. Maclean, K.C.I.E., C.J., 1. On the 12th of July 1895, one Tincowry Dey instituted a suit in this Court against Fakir Chand Dey, Protap Chunder Dey and Prohlad Chunder Pal, asking for the dissolution of the partnership firm of Fakir Chand Dey, for the taking of the partnership accounts and further consequential relief. On the 25th of August 1896, it was declared that the partnership ought to stand dissolved from the 12th of June 1895 and certain partnership accounts were directed to be taken. Fakir Chand Dey was found by the Second Assistant Registrar of this Court to be the accounting party and he was subsequently directed to file his accounts. On the 8th of September 1898, the matters in dispute in the suit were by consent referred to the arbitration of one Babu Kedar Nath Dutt. Owing, as is alleged, to the action of Fakir Chand Dey, who would not make up the accounts, that arbitration was unable to proceed. On the 19th of November 1900, Fakir Chand Dey instituted a suit in this Court against Prohlad 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 January 1901, the order of the 8th of September 1898 was discharged and the accounts directed by the decree in the partnership suit were referred to the Second Assistant Registrar of this Court. In May 1901 Fakir Chand Dey filed his accounts, to which considerable objection was taken by his other partners. On the 21st of June 1901, a consent decree was passed in the suit of Fakir Chand Dey against Protap Chandra Dey and Prohlad Chunder Pal, to which, it will be noticed, the Plaintiff in the partnership suit, Tincowry Dey, was not a party and it was, amongst other things, decreed by consent that Protap Chunder Dey and Prohlad Chunder Pal should pay Rs. 11,651 odd with interest to the Plaintiff, but that the execution of the decree should be stayed, until the final determination of the partnership suit, which the parties had agreed by a certain compromise and settlement to refer to the arbitration of one Kally Kristo Dhur, which arbitration was to be concluded within six months from the date of the last-mentioned decree. Tincowry was not a party to these terms of settlement; but it is reasonably clear that he subsequently came in and was willing 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 his agreement to refer the matter to the arbitration of Kally Kristo Dhur and a long correspondence ensued between the solicitors of the parties upon this matter. Tincowry Dey, Protap Chunder Dey and Prohlad Chunder Pal insisted that the arbitration should go on, while Fakir Chand Dey was doing his best not to give effect to his agreement to refer the matter to the gentleman I have named and I am satisfied that the action of Fakir Chand Dey in the matter was not straightforward or fair and I regard his reasons for not accepting the gentleman named as the arbitrator as frivolous and ill-founded. Fakir Chand Dey appears to have been very successful in keeping his partners at bay in the partnership suit, for, although the suit was instituted on the 12th of July 1895 and we are now nearly in 1903, the accounts have not yet been taken. 2. However, on the 26th of August 1901, Prohlad Chunder Pal presented a petition to this Court, asking for an order "that the matters in dispute in this suit, including the question of costs in this suit and of the award and of obtaining judgment therein, be referred to the arbitration of Babu Kally Kristo Dhur, Twist Merchant and Broker of Burrabazar, in the town of Calcutta with all the power of an arbitrator and that the said Defendant, Fakir Chand Dey, do furnish the said Babu Kally Kristo Dhur with the accounts of the said partnership business within a week from the date of the order to be made hereon and the said arbitrator do make his award within six months from the said date." The matter came before Mr. Justice Sale, who found that there was a valid and binding agreement between the parties to refer the matters in dispute to the arbitration of the gentleman named and that Fakir Chand Dey had shown no cause for withdrawing from the agreement. Justice Sale, who found that there was a valid and binding agreement between the parties to refer the matters in dispute to the arbitration of the gentleman named and that Fakir Chand Dey had shown no cause for withdrawing from the agreement. The learned Judge found that Section 21 of the Specific Belief Act did not help the Applicant, that the Arbitration Act would not help him and that the case did not fall within either Section 506 or Section 523 of the Code of Civil Procedure. 3. I agree in the conclusion which the learned Judge has arrived at upon these points, though I am not disposed to think that Section 523 of the Code applies, where there is a pending suit which affects the subject-matter of the reference to arbitration. Upon this head I may refer to the recent decision of their Lordships of the Judicial Committee of the Privy Council in the case of Ghulam Khan v. Muhammad Hassan ILR (1902) Cal. 167, which seems to me to import that Section 523 does not apply, where there is a pending suit. But the learned Judge, though he thought he was unable to interfere either under the Arbitration Act or the sections of the Code, to which I have referred, was of opinion that Section 375 of the Code applied and he made an order in the following terms: "It appearing that an agreement was entered into by the parties on or before the twenty-first day of June one thousand nine hundred and one whereby the parties agreed to refer this suit to the arbitration of Babu Kally Kristo Dhur of Barabazar, which arbitration is to be finished within six months, it is ordered that the said agreement be recorded. And it is further ordered and decreed that in terms of the said agreement, this suit be referred to the arbitration of Babu Kally Kristo Dhur of Bara Bazar with all such powers and authorities as are vested in arbitrators under the provisions of the CPC and that the said arbitration be finished within six months from the date on which this decree shall be completed and filed," and so on. 4. The only question that we have to decide is whether Section 375 of the Code applies to the present case. 4. The only question that we have to decide is whether Section 375 of the Code applies to the present case. Section 375 of the Code runs as follows:--"If a suit be adjusted wholly or in part by any lawful agreement or compromise, or if the Defendant satisfy the Plaintiff in respect to the whole or any part of the matter of the suit, such agreement, compromise or satisfaction shall be recorded and the Court shall pass a decree in accordance therewith, so far as it relates to the suit and such decree shall be final so far as relates to so much of the subject-matter of the suit as is dealt with by the agreement, compromise or satisfaction." I am aware of no case in the High Courts of India where it has been held that a mere agreement to refer is an agreement within the meaning of Section 375, though no doubt in the case of Pragdas Sagurmall v. Girdhardas Mathuradas ILR (1901) Bom. 76, it has been held that on an agreement to refer when and after an award has been made, the agreement, coupled with the award, may be treated as an agreement within the meaning of Section 375. Apart from the question whether in such a case the proper course would not have been to apply u/s 525 of the Code, that case is distinguishable from the present, for here the parties have not got beyond an agreement to refer and no award has been made. It is indisputable here that by his petition the Petitioner does not ask for an order u/s 375 and the possible application of that section would appear to have been an after-thought. It seems to me that the relief specifically asked for by the petition could, if at all, only be granted by the Court u/s 523 of the Code, to which two difficulties present themselves--first, that Tincowry Dey could hardly be said to have agreed in writing within the meaning of that section and in fact, the Court below has found to the contrary and secondly, that Section 523 does not apply to the case of an agreement to refer, where there is a pending litigation. Section 500 appears to apply to the case where parties have agreed to refer in a pending suit and Section 523 to the case where there is no pending litigation. Section 500 appears to apply to the case where parties have agreed to refer in a pending suit and Section 523 to the case where there is no pending litigation. At least this is the way in which I read the observations of their Lordships of the Judicial Committee in the case of Ghulam Khan v. Muhammad Hassan ILR (1902) Cal. 167, to which I have already referred. It is true that a contrary view was expressed in the case of Harivalabdas Kalliandas v. Utamchand Manekchand ILR (1879) Bom. 1 but I doubt, if this decision can stand having regard to the Privy Council case to which I have referred. 5. However, the only question we have to decide is whether the present case falls within Section 375. We must look to the Code as a whole and we find that Sections 506 to 526 inclusive deal with references to arbitration as a matter of special proceeding. Those sections come after Section 375 and I read those sections as laying down the procedure in the case of references to arbitration and as exhaustive upon that particular subject. In this view, as these sections deal specifically with this particular matter, the inference would be that Section 375, which precedes these arbitration sections, was not intended to apply to a mere agreement to refer to arbitration. In one sense, 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 the arbitrament of another tribunal, but it is not, in my opinion, such an adjustment as is contemplated by Section 375. That section appears to me to contemplate that the subject-matter of the suit must be adjusted by the agreement. 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 the subject-matter of the suit as is dealt with by the agreement, compromise or satisfaction." 6. No part of the subject-matter of the suit is dealt with by the agreement in the present case: that is all left open to be dealt with by the arbitrator; and if so, it is difficult to see how there can be any finality in the decree in relation to that subject-matter. 7. No part of the subject-matter of the suit is dealt with by the agreement in the present case: that is all left open to be dealt with by the arbitrator; and if so, it is difficult to see how there can be any finality in the decree in relation to that subject-matter. 7. If parties agree to determine a suit and to leave the dispute to be decided by arbitration instead of by the Court, the suit can be withdrawn u/s 373. 8. Upon these grounds and more especially upon the ground that references to arbitration and arbitration proceedings are specially dealt with by special sections of the Code, in my opinion Section 375 was not intended to apply to an agreement merely to refer a suit to arbitration. Further, I fail to see how u/s 375 the Court had any power to make a decree for referring the matter to the arbitration of the gentleman named "with all such powers and authorities as are vested in arbitrators under the provisions of the CPC and that the said arbitration be finished within six months from the date" on which the said decree would be completed and filed or to order that that "decree be in supersession of the decree made in this suit and dated the twenty-fifth day of August one thousand eight hundred and ninety-six and the orders made in this suit and dated, respectively, the eighth day of September one thousand eight hundred and ninety-eight and the tenth day of January one thousand nine hundred and one;" 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 made under the arbitration sections of the Code rather than u/s 375. 9. In my opinion this case does not fall within Section 375 and the appeal must be allowed with costs. As I do not think that the conduct of the Appellant, Fakir Chand Dey, has been straight, forward in the matter, we give him no costs in the Court below. Hill J. 10. I agree in thinking that this appeal should be decreed and I concur, speaking generally, in what has been said by the Chief Justice. As I do not think that the conduct of the Appellant, Fakir Chand Dey, has been straight, forward in the matter, we give him no costs in the Court below. Hill J. 10. I agree in thinking that this appeal should be decreed and 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 to express 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 of Section 375 of the Code. The application in this case to the Court below was not, I think, made with advertence to Section 375 or with a view to the adjustment of the suit within the meaning of that section. It asked in terms for an order referring the matters in dispute in the suit to arbitration and that was the order which was made. Such an order it was not, I think, competent to the Court to make u/s 375, while, for the reasons mentioned by the Chief Justice, Sections 506 and 523 appear to me to be inapplicable. This being so, it seems to me that the question, to which I have referred above, does not arise. But I may add that, as at present advised, I am not prepared to hold that under no circumstances could an agreement to refer be properly treated as an adjustment of a suit such as is contemplated by Section 375. Stevens J. 11. I concur in the view which has been expressed by my brother Hill. I think that Section 375 of the CPC does not apply to the application which was made for a reference to arbitration in the present case and that the appeal must therefore be decreed.