GOPAL CHANDRA PODDAR Vs. LAKSHMI KANTA SAHA

JUDGEMENT

(1.) This is an appeal on behalf of the plaintiff and arises out of a suit brought by him to enforce an award on an arbitration without the intervention of the Court. The Subordinate Judge has dismissed the suit mainly on the ground that the agreement for reference to arbitration on which the award is founded is opposed to public policy and is illegal under the provisions of Section 23, Contract Act. It appears that a criminal proceeding was pending against the defendant Lakshmi Kanta Saha under Section 408, I.P.C. A settlement was reached in the course of that proceeding on 20 December 1928. A petition was made on behalf of the accused in which the terms of the settlement were set forth. That petition discloses that under orders of the Court the house of the defendant was searched and an iron safe with documents, unused stamps, and articles of gold and silver within it and also documents, pledged articles etc., found outside the safe were brought to the Court. It was stated in that petition that Gopal Chandra Poddar who is the plaintiff and who was the complainant in that case had brought a case against the defendant claiming the said articles and papers as his own. It is further stated in that petition that depending on the sense of justice and award of Gopal Chandra Poddar and his youngest brother Rai Mohan Poddar so far as regards his claims and ownership in respect of the iron safe and all the documents and pledged articles found within the safe were concerned, possession was given up in respect of those articles which had been recovered on search in favour of the complainant.

(2.) It is further stated that Lakshmi Kanta Saha would be bound to abide by whatever decision Gopal Chandra Poddar and his youngest brother Rai Mohan Poddar would come to in respect of his claims of ownership in these articles and in respect of a cloth business owned by the complainant, now defendant and managed by him as his gomostha. The award of these two persons, it was further stated, would be completed within 90 days, and if it was not completed within the said 90 days on account of the laches of the complainant and his brother, then the accused would not be bound by any term of settlement. A. further reference was made to a mortgage suit to which it is not necessary to refer having regard to the fact that the plaintiff has already got the mortgage decree in respect of his claim. On this petition being filed, on the same day the criminal proceedings which were started under Section 408 the said proceedings were dropped. It is to be noticed that an offence under Section 408, I.P.C., is a non-compoundable offence. The award was duly made by the two arbitrators and it is to be found at p. 19, part 11 of the paper book. Upon that the plaintiff filed the award in Court on 28 August 1929 and wanted to have a decree on the said award. Defendant 1 filed a written statement on 19 November 1929. Amongst the numerous defences to the suit it is necessary to notice the defence which was founded on the illegality of the agreement for reference to arbitration, and the issues based on the other defences have all been found in favour of the plaintiff. The Subordinate Judge on this issue, with regard to the illegality of agreement for reference to arbitration, came to the conclusion that it was opposed to public policy and it was illegal under Section 23, Contract Act, and therefore the award as the outcome of an illegal reference was also invalid and found that the award cannot be acted upon He accordingly dismissed the suit.

(3.) Against this decision the plaintiff has brought this appeal and it is contended on his behalf that the Subordinate Judge has committed an error of law in treating the agreement to refer to arbitration as void under the Contract Act. It is contended that as there was a civil liability independent of the liability for an offence under Section 408, I.P.C., the agreement cannot be said to be one which is contrary to public policy. It is difficult to accept this contention in view of the decision of their Lordships of the Judicial Committee of the Privy Council in the case of Kamini Kumar Basu V/s. Nath Basu . In that case, as in the present, the real question involved was as to whether any part of consideration for the reference to arbitration was illegal. It appears clear from the facts which had already been stated that it was an implied term among other terms of the settlement to refer to arbitration that the complaint under Section 408, I.P.C., would not be further proceeded with. As a matter of fact the order sheet of the same case leaves no room for doubt that the proceeding was dropped in consideration of the fact that the accused who is the present defendant agreed to refer the question of ownership of the several articles to arbitration. That being so the facts fall within the purview of the decision of the case which has been referred to. It is necessary to quote a few lines from the judgment of their Lordships of the Judicial Committee which was delivered by Sir Benode <JGN>Mitter</JGN> . Sir Benode <JGN>Mitter</JGN> observed thus: If it was an implied term of reference under the ekrarnama that the complaint would not be further proceeded with, then in their Lordships opinion the consideration of the reference or the ekrarnama as the case may be is unlawful and the award or the ekrarnama was invalid quite irrespective of the fact whether any prosecution in law had been started.