CHERUKURI LAKSHMINARASU Vs. CHERUKURI NAGAMMA

JUDGEMENT

(1.) This case is really the aftermath of a previous suit which ended in an abortive attempt at arbitration. The original action (O.S. No. 59 of 1926, on the file of the District Munsif of Ongole) was brought by presumptive reversioners for a declaration of their rights in properties in the possession of a widow and a minor. One of the questions arising in that suit was the genuineness of a will. The decision of that question apparently involved certain disclosures which are alleged to have been likely to embarrass the karnam of the village. As a result of this anticipated embarrassment, the village officers engineered a compromise. It is found as a fact by the lower Court that there was a definite agreement as to the terms of this compromise, and that the parties decided that it would be best to have this compromise embodied in the award of an arbitrator on a reference by the Court. Consequently, an application for reference to arbitration, which is Ex. A in the present proceedings, was drafted and signed by both the parties and filed in Court. Apparently both the parties and the learned District Munsif overlooked the, fact that according to the terms of Ex. A, questions of possession and pecuniary compensation, which were not in issue in the suit, were to be referred to the arbitrator. The Court referred the suit and the arbitrator made the award. Objections were raised to the award on the grounds (a) that it was procured by fraud and (b) that it went outside the subject-matter of the suit. No decision was given on the fraud question, and the Court decided that the award went beyond the scope of the suit and could not therefore form the basis of a decree. The suit, O.S. No. 59 of 1926, was then decided on the merits and resulted in a decree and an appeal. While that suit was pending, the present suit was filed, wherein the plaintiff seeks possession of properties allotted to them by the decision of the arbitrator, or in the alternative a declaration that they have a reversionary right therein. The suit is in fact based on the abortive reference to arbitration as evidence of an agreement between the parties capable of separate enforcement by suit.

(2.) There are two questions now before me in this second appeal. One is whether the plaintiffs are entitled to enforce as an extra judicial agreement between the parties, for allotment of properties by the arbitrator, what was in form and fact an agreement to refer matters through Court to an arbitrator with a view to the termination of the suit, which scheme has become abortive. The other question is whether there was fraud as alleged so as to vitiate the agreement. I will deal first with the purely legal question, as to the possibility of making an abortive reference to arbitration through Court the foundation of a separate suit as on a private agreement. The plaintiffs who are the appellants base their arguments mainly on the decision reported in Narayana Iyengar V/s. Trippayya 1926 Mad. 366, where it was held that when there was a reference to arbitration through Court and a separate agreement by the parties that the arbitrators should deal with matters not within the scope of the suit, though the award is invalid under para. 15 read in the light of para. 3, Schedule 2, Civil P.C., yet the agreement between the parties, that these matters outside the suit should be settled by the arbitrator is binding upon them and it may form the subject of a separate suit. With reverence to that ruling, it must be observed that in the present case there is really no-agreement subsequent to the agreement to refer matters to arbitration. The agreement embodied in Ex. A is essentially an agreement by the party to get both the matter in suit and some matters out of suit decided by the arbitrator through the Court, with a view to put an end to the pending litigation.

(3.) I have heard the arguments of both sides at considerable length, and after careful consideration, I am definitely of opinion that this agreement does not provide for any settlement of matters by the arbitrator, apart from the pending suit. The essence of the agreement is that both the plaintiffs and the defendant were anxious to determine the litigation without further expense, and on that consideration, they agreed that the arbitrator on reference through Court should decide the question of the rights of parties including the rights to possession and pecuniary compensation. Apart from this reference through Court, there was no agreement at all, and if the reference through Court broke down, the prospect of putting an end to the litigation ceased, and the whole foundation of the agreement goes, and there is nothing loft which can be enforced, I take it that this is the line of thought which must have formed the basis for the decision in Bodachari V/s. Muniyachari 1921 Mad. 709, wherein a Bench of this Court, in a similar case found that an award under an invalid reference being itself invalid gives no rights either as an award or as a compromise.