NAWAB USMANALIKHAN Vs. SAGARMAL

JUDGEMENT

(1.) THESE four appeals Nos. 81 and 82 of 1957, No. 33 of 1958 and No, 13 of 1959 are between the same parties and are the outcome of an arbitration proceedings consequent upon a private reference to arbitration which resulted in a judgment and decree on the basis of an award.

(2.) APPEAL No. 81 of 1957 is against the order refusing to set aside the award. The appeal was preferred under Section 39 of the Arbitration Act. Appeal No. 82 of 1957 is directed against the order recording the compromise between the parties after the award had been filed in court. The appeal purports to be under Order 43 (1) (m) of the Civil Procedure Code. Appeal No. 33 of 1958 is directed against the order refusing to issue process of attachment in execution against the privy purse of the defendant judgment-debtor, Nawab of Jaora who is the Ex-Ruler of one of the princely States which initially merged into Madhya Bharat and now forms part of the State of Madhya Pradesh. Appeal No. 13 of 1959 is directed against the order in execution rejecting the contention raised on behalf of the judgment-debtor that the decree sought to be executed is without jurisdiction and hence is unexecutable.

(3.) THE facts which are material for consideration of these appeals are few and simple. 5. On 23-2-1957 an agreement of reference was entered into between nawab Usmanali Khan, Nawab of Jaora State and Sagarmal Bheraji also of Jaora whereby both the parties agreed to refer the dispute regarding their money dealings (Len Den) to the arbitration of Lala Durgashankarji Advocate of Jaora as the sole arbitrator. It was mentioned in the agreement of reference that the said arbitrator could examine the accounts and other relevant documents between the parties and determine the dispute and further Jay down the mode of payment of the amount found due. The agreement purported to be signed by the Nawab himself and his creditor Sagarmal. Below the Nawab's signature there was the signature of his Ammukhtyar Masud Ahmad Jafri. In pursuance of this agreement the arbitrator Shree Durgashankar Advocate gave an award on the same date. By the terms of the award the textent of liability of the Nawab was determined to be Rs. 1,60,000/ -. This amount was directed to be paid by eight quarterly instalments as mentioned in the award, the first instalment being made payable on 1-7-1957. It was further mentioned the letters of authority, for realising the aforesaid amount out of the amount of Privy Purse which the Nawab receives at the interval of every quarter corresponding to the dates of instalments, had been made over to the creditor Sagarmal. The award further provided that the documents incorporating security in respect of debts charged against land and ornaments would continue to remain in force as long as the said debts are not paid off and the Nawab will not be entitled to effect transfer of the said land till then. The award also provided that in case default is made in paying a single instalment the creditor will be entitled to recover the entire balance remaining due at once. 6. Below the award, which was signed by the Arbitrator there are the signatures of the creditor Sagarmal and also of the Nawab of character similar to that on the agreement with the signature of the Mukhtyar Masud Ahmad Jafri below it indicating admission of the receipt of notice of the award by both the parties, 7. On the same date the arbitrator filed the award in the court of District Judge ratlam within whose jurisdiction the town of Jaora is situate as required under section 14 of the Arbitration Act. 8. After the issue of notice to the parties regarding the filing of the award a written submission was made on 9-3-1957 under the signature of Shree Masud Ahmad jafri as representing the Nawab accepting the award and requesting the court to pass a decree in favour of the creditor Sagarmal in terms of the award. On the same day an application was submitted on behalf of the Nawab by Mr. Manakchand Bhandari, holding Vakalatnama for the Nawab, requesting that the direction be made to the arbitrator to file all the papers relating to the proceedings of arbitration and that on their submission steps would be taken to set aside the award. The court gave time to file reply and fixed 23-3-1957 as the date. On that day further time was asked for to file the reply. The case was to be put up on 2-41957. On that date, it appears an application was submitted of behalf of the nawab under Sections 30 and 33 of the Arbitration Act seeking to set aside the award on certain grounds of objection to the same. This was signed by the Nawab and countersigned by Shree Manakchand Bhandari, the counsel for the Nawab. However three days later i. e. on 5-4-1957 another application was submitted under the signature of the Nawab this time by the Ammukhtyar Shree Masud ahmad stating that the objection raised on behalf of the Nawab by his counsel shree Manahchand Bhandari were being withdrawn and cancelled and requesting the court to pass the decree in terms of the award subject to the modification regarding the amount of instalments. ,lt was prayed that instead of the instalments of Rs. 21000/-and Rs. 19000/-as stated in the award there should be instalments of Rs. 13000/- every quarter. The creditor endorsed on the back of this application his consent to the modification of the amount of instalments. 9. The Arbitrator filed the relevant papers on 30-4-1957. On that day another application was submitted on behalf of the Nawab by Shree Abdul Alim Khan another Am Mukhtyar under Order 23, Rule 3, C. P. C. seeking to set aside the compromise application referred to above and praying for setting aside of the award. A copy of this application was given to the counsel for Sagarmal and the case was fixed for hearing on 19-6-1957. On that day an application dated 17-61957 was sent through registered post stating that the objections filed by Shree abdul Alim Khan Am Mukhtyar had been done without the authority of the Nawab and that the latter did not wish to press the same and further stating that he would stick to the reply of 5-4-1957. When the matter came up before the court none appeared for the Nawab. The court thereupon passed the judgment on 19-61957 in terms of the award with the modification agreed to by the parties in their submission dated 5-4-1957. A decree was accordingly passed. 10. Subsequent to the passing of the decree the decree-holder. Sagarmal filed an execution petition for realisation of the decretal amount. This was done on 5-41958. Objections were taken to the executability of the sward on several grounds including those relating to jurisdiction, incompetency due to provisions of Section 86 (1) read with Section 87-B, C. P. C. , want of registration of the award and competency of Civil Court to attach the Privy Purse of the Nawab. All the objections except the last one were overruled. As regards the last mentioned objection it was held that the Privy Purse of the Nawab is nothing else than a political pension and as such is non-attachable. 11. As indicated at the outset two separate appeals were preferred on behalf of the Nawab against the order of the court dated 19-6-1957 treating it as the order refusing to set aside an award and also as an order recording a compromise. An appeal was also filed on behalf of the Nawab against the order in execution overruling the objections raised to the executability of the decree based on the award except one regarding Privy Purse. An appeal was preferred by the decree-holder against the order upholding the last mentioned objection. 12. Fairly long and elaborate arguments were addressed by the two learned counsel appearing on behalf of the Nawab. Mr. Sanghi appeared on his behalf in the appeals in respect of the original proceedings while Mr. Mohammad Ahmad khan represented him in appeals in execution. On behalf of Sagarmal the case was argued by Messrs. Chitale and Chaphekar. 13. It will be convenient to state the points raised by the learned counsel on either side and to deal with them seriatim and thereafter to dispose of all the appeals in view of the conclusions reached on them. 14. But before dealing with these points it is necessary to dispose of one preliminary objection regarding limitation. It was contended on behalf of respondent Sagarmal that the appeal No. 81 of 1957 is barred by time. 15. In my opinion this preliminary objection cannot prevail. 16. Appeal No. 81 of 1957 is preferred under Section 39 of the Arbitration Act against the order passing judgment in terms of the award subject to the modification to which parties agreed as regards the amounts of instalments payable by the appellant to the respondent. The order was passed, on 19-6-1957. The appeal is presented on 24-9-1957. The copy of the order filed along with the memorandum of appeal discloses that the application for copy was given on 18-91957 and the copy was ready on 19-9-1957. Thus according to this statement in the copy the appellant is entitled to only two days. However a certified copy of the application submitted by the appellant for obtaining the said copy has been filed. That copy discloses that the application for copy was filed on 17-9-1957 and the appellant received the copy on 21-9-1957. There is nothing to indicate on the face of the copy that he was asked to attend earlier than on 21-9-1957 for receiving copy. The application for copy, of which the aforesaid certified copy is filed, is not traceable in the record "and it is possible that it had been misplaced and has not been put in the record. The number of days in respect of which the appellant is entitled to claim deduction, on the assumption that the certified copy of the application for copy makes correct mention of facts, are five. The appeal accordingly ought to have been filed on 22-9-1957. But 22nd was Sunday and 23rd was a holiday as it was Sarva Pitri Amavasya. The appeal therefore filed on 24-9-1957 is within time. It was contended that the certified copy discloses that only two copying days can be allowed. But it is not shown that the certified copy of the application for copy refers to a different application than one in pursuance of which the certified copy of the order of 19-6-1957 is filed with the memorandum of appeal. The appeal no. 81 of 1957 is therefore within time and the preliminary objection is overruled. 17. We shall now proceed to state the points involved in these four appeals. Principal points- raised in these appeals are the following; (I) The Privy Purse, which the Nawab of Jaora receives from the Central government at every quarter is not a political pension within the meaning of the term as used in Section 60 (1) (g), C. P. C. (II) The decree consequent upon proceedings of arbitration is a decree passed as a result of 'sums' within the meaning of the term as used in section 86 (1) read with Section 87 (B), C. P. C. and that the proceeding was incompetent without the prior consent of the Central Government as indicated in Section 86 (1), C. P. C. (III) The award being with reference to immovable property and is calculated to affect immovable property of the value of more than Rs. 100/- is invalid as the same was not registered and neither any judgment in terms of the award not any decree could have been based on that award. 18. Besides these three main points other points raised in these appeals are - (IV) The award having accelerated payments in respect of debts which had not become due went beyond the scope of reference and is therefore invalid and ought to be set aside. (V) The award creates charge upon Privy Purse and thereby goes beyond the scope of reference. The award is therefore invalid. (VI) The Ratlam court had no territorial jurisdiction to entertain the proceeding consequent upon arbitration and award as the award declared continuance of the mortgage of immovable property situated in the Indore District. (VII) It was incompetent for the parties to arrive at a compromise, once the award was made nor was it competent for the court to give effect to that compromise while acting in a proceeding under the Arbitration Act. (VIII) The award and the compromise provided for subsistence of the charge upon immovable properties of the debtor, the Nawab of Jaora instead of their being merged in the award. This was illegal and neither the award nor the compromise under the circumstances could have been made a rule of the court. 19. Point No. 1 is raised in the appeal No. 33 of 1958 filed by creditor Sagarmal, while the rest of the points are raised in the appeals filed by the Nawab both against the order dated 19-6-1957 treating it as refusal to set aside the award and as recording a compromise bearing numbers 81 and 82 of 1957 and the appeal Mo. 13 of 1959 against the order in execution holding the decree to be executable and not invalid. 20. These points now will be dealt with seriatim. Point No. 1 : 21. The contention raised by Mr. Chitale the learned counsel for Sagarmal in this regard is that the Privy Purse is a term specially used in the covenant entered into by the Rulers when they agreed to merge their respective territories in the Union of States called Madhya Bharat as also in the Constitution and is not synonimous with political pension. The Privy Purse is therefore not covered by the exemption contained in Section 60 (1) (g), C. P. C. and being property is attachable. 22. Before dealing with this point on the basis of authorities as well as on principle it will be material to trace the history regarding this payment which rulers of states which have merged into political entities called the States under the constitution, receive out of the consolidated funds of the Indian Union being charged to that fund. 23. Prior to 14th August, 1947 the rulers of Princely States in India were politically independent States subject to the paramountcy of the British Crown. The rulers exercised practically sovereign powers so far as the internal administration of their respective territories was concerned. With the declaration of independence on 148-1947 the paramountcy of the British Crown lapsed and each ruler of the Princely states became politically an independent sovereign. Later on, on the persuasion of the Government of the Dominion of India, these rulers of Princely States agree-ed to merge their respective territories with a view to bring about welfare of their subjects by the establishment of a state comprising a common executive, legislature and judiciary and in order to give effect to this agreement entered into a covenant. Article XI of this Covenant provided : annually from the revenues of the United State for his privy purse the amount specified against that Covenanting State in Schedule I. (2) The said amount is intended to cover all the expenses of the Ruler and his family including expenses of his residence, marriages and other ceremonies, etc. , and shall subject to the provisions of paragraph (1)neither be increased nor reduced for any reason whatsoever. (3 ). . . . . . . . . . 24. Article XIII provided: