MAHADEV NARAYAN NERKAR Vs. NARAYAN DATTATRAYA SAMANT

JUDGEMENT

(1.) In this case, the applicant was defendant No. 2 in a suit for partnership accounts &c, which was filed against him and two other defendants. The plaintiff alleged that defendant No. 3 had retired in the year 1921 and that he was not liable to account. Defendant No. 2 in a written statement to some extent controverted this allegation. He said that it was not settled at the time of defendant No. 3's retirement what were the amounts outstanding between the different partners, and he added a prayer, which might be taken as covering relief as to the amount due from defendant No. 3 as well as the other partners upon taking accounts, Among the issues that were subsequently raised No. 3 was, "what were the terms of the partnership business alter defendant No. 3 retired from it," and No. 5 was, "what is found due on taking accounts to each of the parties in suit." Defendant No. 3 did not appear at all in the suit, and it proceeded against him ex parte. The plaintiff and defendants Nos. 1 and 2 later on referred the suit to the arbitration of a pleader, who submitted an award which was accepted by the plaintiff and defendant No. 1. Defendant No 2, however, raised various objections, and one of them was that defendant No. 3 had not signed the submission paper or the application about it. The Subordinate Judge held all his objections to be unsustainable, and that defendant No. 3 was not a person interested in the matters referred to arbitration within the meaning of paragraph 1 of Schedule II of the Civil Procedure Code. Accordingly, in his opinion, his not joining in the reference did not invalidate it. Defendant No. 2 comes to us in revision and asks us to hold that the reference to arbitration was ultra vires in consequence of defendant No. 3 not having joined in the reference, and that the award, therefore, is a nullity.

(2.) The first question that arises is, what is the meaning of the words "all the parties interested" in sub-para, (1) of para. 1 of the Second Schedule of the Code, in particular, with reference to a defendant, who does not put in an appearance and does not contest the plaintiff's suit. Authorities on this particular question are somewhat conflicting. It has been held by the High Court of Allahabad that a defendant, who doss not put in an appearance, nor contest the suit is not a "party interested" within the 1928 meaning of this paragraph, and that the mere fact that such defendant has not joined in an application will not invalidate the award See Ishar Das V/s. Jieshab Deo (1910) I.L.R. 32 All. 657; Babta Prasad V/s. Nabata (1912) I.L.R. 35 All 107 Dharam Kirti Savant; and Ajudhia Prasad V/s. liadar-ul- Hueain (1917) I.L.R. 39 All. 489, 495. On the other hand, it has been held by the High Court of Calcutta in Laduram Nathrnull v. Na-ndalal Karuri (1919) I.L.R. 47 Cal. 555 and that of Madras in Potita Pavcma Panda v. Narasinga Panda (1919) I.L.R. 42 Mad. 632 that the mere fact that the defendant has not put in an appearance and does not contest the suit is no ground for holding that he is not a party interested within the meaning of this paragraph; and the Madras High Court has further held that a party may be interested, though no relief is claimed against him: Subbamo v. Appadurai Aiyar (1924) 48 M.L.J. 142. In the last named case there were clear grounds for saying that the defendant No. 4 in the suit under consideration was an interested party in the result of the suit. Similarly, in Indur Subbarami lieddy V/s. Kandadai Rajamannar Ayyangar (1902) I.L.R. 26 Mad. 47 where in a suit for partnership accounts two out of three defendants made an application to the Court to refer the matter in dispute to arbitration, bat the representatives of defendant No. 3, who was then deceased, were not parties to the application, which was, however, granted, there were grounds for saying that defendant No 3 was clearly a party interested, because he was a partner at the time when the partnership incurred the liability in respect of which the partnership suit was brought; and the main test must, I think, be whether the party who has not joined in the reference was interested in the matter in difference that was referred to arbitration. This is what is laid down by Dawson Miller C.J. in Raghunath Sukul V/s. Ramrup Raut (1923) I.L.R. 2 Pat. 777 where he says (p. 781):- In my opinion the words all the parties interested do not mean necessarily all the parties to the suit, but all the parties interested in any matter in difference between them which they wish to refer.

(3.) I do not think that any general rule can be laid clown whether a defendant, who has not put in an appearance and who does not contest the suit, is or is not a party interested within the meaning of this paragraph; and each case must, I think, be decided upon its own particular facts.