KISSEN GOPAL NATHANI Vs. MURLIDHAR CHOWDHURY

JUDGEMENT

(1.) THIS is an application under Section 21 of the Arbitration Act, 1940, for an order of reference in a pending Suit No. 1539 of 1956 of this Court. On 7th June, 1956 this suit was filed by Kissen Gopal Nathani against Murlidhar Chowdhuri and johurmul Jugalkishore for recovery of a certain sum of money. It appears that by a document in writing dated 3rd August, 1960 all the parties in this suit appointed Chiranjilal Mahuwalja as sole Arbitrator in respect of this suit and agreed to refer the dispute between them to him for arbitration. An unofficial translation of this document is annexed to the petition have directed the applicant to file an official translation of the document in due course. Kissen Gopal is now disputing this agreement. For the purpose of this application I shall assume (without deciding) that Kissen Gopal did enter into the aforesaid agreement and shall deal with this application on that footing. On the strength of this document Muralidhar has taken out this application for an order of reference under Section 21 of the Arbitration Act. Jugal Kishore is supporting him but Kissen Gopal opposes this application. Question is can the court make the order for reference? "Section 21 of the Arbitration Act provides; "Where in any suit 'all the parties interested' agree that any matter in difference between them in the suit shall be referred to arbitration, 'they' may at any time before judgment is pronounced apply in writing to the court for an order of reference."

(2.) IT is contended on behalf of the applicant that as all the parties have entered into an arbitration agreement in writing the requirements of the Act are duly satisfied and if now one of the parties opposes the application for deference that should not prevent the court from referring the suit to arbitration. An agreement to refer disputes in a suit to arbitration is a lawful agreement and should be given effect to. IT is further said that the word 'they' occurring in the latter portion of the section should be construed to mean 'they or any of them' and Section 13 of the General Clauses Act may in this connection be referred to. Lastly, it was contended that the Original Side Rules, which provide that the application must be signed by all parties, are but rules framed under Section 44 of the Arbitration Act and necessarily must be consistent with the Act. Therefore, if the Act gives certain right, that cannot be taken away by the rules framed under it.

(3.) IT is well settled that a contract in writing to refer to arbitration matters in dispute in a pending suit is legal. Legal in the sense that it is not illegal to enter into such an agreement as it does not oust the jurisdiction of the court and is not in restraint of legal proceedings. Section 21 of the Act itself recognises such agreement as legal and its object lawful. But that does not mean that such a contract is enforceable by any of the parties except as provided in the Arbitration Act. Section 21 of the Specific Relief Act provides that no contract to refer 'present or future differences' to arbitration shall be specifically enforced. IT has further been held that such a contract is not an adjustment or compromise of the suit and cannot be enforced under Order 23, Rule 3 of the Code of Civil Procedure (See Tincowri v. Fakir Chand, ILR 30 Cal 218, Jugal-das Damodar Modi and Co. v. Purusottam Umedbhai. <DJG>Bachawat, J.</DJG>