RAOJI NARANJI Vs. RATANSI KANJI

JUDGEMENT

(1.) The main point in this appeal is whether a suit will lie to set aside a reference and award made through the Court under the provisions of the second schedule of the Civil P. C..

(2.) The facts giving rise to the present appeal are as follows. Certain firms dealing in piece-goods in Bombay combined together for the purpose of importing large quantities of those goods for sale for their mutual benefit in Bombay. There were three such combinations which are the subject-matters of three suits, viz., suit No. 2203 of 1919 relating to a syndicate of two firms; suit No. 2204 of 1919 relating to a syndicate of six firms; and suit No. 2244 of 1919 relating to a syndicate of ten firms, The suits were for dissolution of the partnerships formed by the respective syndicates and the immediate cause of the suits was the slump in the piece-goods market in Bombay. All the firms in the syndicates of two and six were the members of the syndicate of ten. On April 4, 1921, a consolidated consent order was taken (Cor. Kajiji J.) referring the suits to the arbitration of two senior counsel of this Court, Mr. B. J. Desai and Mr. D. F. Mulla. Interim awards were made by the arbitrators on April 16, 1924, a April, 10,1925. The time for making the award was extended to November 1, 1926. Then, on December 13,1926, on a chamber summons for further- extension of time (Cor. Rangnekar J.) some of the defendants objected that the syndicate of ten was an illegal association as it was not registered under Section 4 of the Indian Companies Act. On August 18, 1927, a consent order was taken from Mr. Justice Rangnekar superseding the arbitration under the order dated April 4, 1921, and referring the three suits together with two other suits (suit No. 984 of 1923 and suit No. 420 of 1922) filed by the receiver in suit No. 2244 of 1919 against a debtor to the syndicate in that suit to the joint arbitration of the same arbitrators. In this consent order the parties agreed to be precluded from advancing the plea under Section 4 of the Indian Companies Act and further agreed that the issue of illegality of the syndicate of ten should be regarded as res judicata. Thereafter suit No. 3820 of 1922 was filed by the receiver in Suit No. 2244 of 1919 against Messrs. Hargovan Ranchhod, debtors to the syndicate of ten. In this suit Mr. Justice Davar on April 5, 1928, held, in favour of the defendants in that suit, that the syndicate of ten was illegal under Section 4 of the Indian Companies Act. The arbitrators continued to hold sittings at which the defendants pleading illegality attended under protest, but on April 13, 1928, the arbitrators passed their final award. A summons was then taken out by those defendants Nos. 3 to 10 to set aside the award. The present plaintiffs-appellants on June 5, 1928, also filed the suit (No. 1175 of 1928) out of which the present appeal arises to declare the consent order dated August 18,1927, and all proceedings before and after that order and the award under it void. The chamber summons stands over pending the disposal of this appeal. The trial Judge dismissed suit No. 1175 of 1928, and from that decree the present appeal has been filed.

(3.) The main point is whether the suit will lie having regard to paras. 15 and 16 of the second schedule of the Civil P. C.. No decree has been passed on the award. Now, it is open to a party objecting to an award to apply under para. 15 (1) (o) that it is invalid. The invalidity may be of the reference or the award or both. If the reference is invalid the award must ipso facto also be invalid. I attach no importance to the distinction sought to be made by the appellants counsel between the words " arbitration and award " and " award " in Section 14 of the Indian Arbitration Act and para. 15 of the second schedule of the Civil P. C. respectively. In, my opinion the R. 50. difference in the phraseology is immaterial. Now, no appeal will lie under the Civil Procedure. Code from an order settting aside or refusing to set aside an award; for Section 104 of the Code of Civil Procedure does not provide for such an appeal. An appeal will lie under clause 14 of the Letters Patent; for Section 104 in prohibiting appeals from orders other than those mentioned in it exempts from its operation cases where an appeal lies " by any law for the time being in force." Further, under para. 16 of the second schedule of the Civil P. C., no appeal lies from a decree passed on an award except in so far as the decree is in excess of or not in accordance with the award. Since the addition of the words " or being otherwise invalid" in para, 15 of the second schedule the only remedy open to a party seeking to impeach an award as invalid is to apply under that para, to have it set aside. The addition of those words was to give effect to the principle of finality in cases of arbitrations enunciated in Ghulam Jilani V/s. Muhammad Hassan (1901) L.R. 29 I. A. 51, s.c. 4 Bom. L.R. 161. I am not prepared to say that in no case will a suit lie to set aside proceedings purporting to be taken under the second schedule of the Code of Civil Procedure. If the proceedings are fraudulent, fictitious or vexatious, I think a suit would lie (see Section 9 of the Civil P. C.); for in such a case the proceedings would only have been instituted to injure the plaintiff and would only be used as a cloak to cover that fact. They would not be proceedings in an arbitration at all. Such a case would arise, e. g., where the defendant-forged the plaintiff's name to a reference or where the plaintiff was a minor and the sanction of the Court had not been given to the reference. In E. D. Sassoon & Co. v. Ramdutt Ramkissen Das (1922) I.L.R. 50 Cal. 1 it was observed that a suit would lie although, no doubt, that was a suit to set aside an arbitration purporting to be under the Indian Arbitration Act and in that Act the words "or otherwise invalid" are absent. But that is not the case here. Apart from the question which has been raised as to the obligation on the Court to take notice of an illegality alleged to be patent on the face of the proceedings, the plaintiffs-appellants have consented to an order of reference, and are seeking to impugn the award made on such reference. There has been an agreement to refer although the appellants ask the Court to ignore it. Such a position does not, I think, come within the scope of the cases in which a suit will lie.