•

•

8.C.R. SUPREME COURT REPORTS 209

hold that r. 89 of 0. 21 does not apply to such a sale

and that the High Court was right in rejecting the

·appellants' claim based on the said rule.

The result is the appeal fails and is dismissed with

costs.

..A_p_peal dis111issed.

1959

J ibon ]( ris.hna

Mukherjea

v.

New Blieerbhum

Coal Co. Lid •

Gajendragadkar J .

•

CT. A. CT. NACHIAPPA CHETTIAR AND OTHERS,

v.

CT. A .. CT. SUBRMIANIAJl.I CHETTIAR.

. (P. B. GAJENDRAGADKAR, K. SunBA RAO and

J. c. SHAH, JJ.)

Arbitration-Partition suit-Preliminary decree-Appeal to·

High Coitrt~Reference to arbitration by Trial Court-Competency­

Foreign immoveable properties ·excluded by preliminary decree­

JV hether reference and award include such properties-Construction­

lndian Arbitration Act, I940 (X of I940), s. 2I.

In a suit for partition of the j'lint 'family properties filed by

the respondent against his brother and his sons, appellants' I to 5

respectively,

the latter

while admitting the relationship of the

respondent and his half share to the family properties, pleaded,

inter alia, that the court had no jurisdiction to divide the imlnove­

able properties situated in Burma and in the Indian State of

Pudukottai. The trial court passed a preliminary decree exclud­

ing from its operation the aforesaid immoveable, properties.

Against

the preliminary decree appeals were preferred before the

High Court by the several parties on various grounds, but in his

appeal

the respondent did not challenge the finding of the trial

court that it had no jurisdiction to deal with foreign immoveable

properties. During

the pendency of the appeals, on the joint

application made

by the parties, the trial court made an order

referring

for determination by the two arbitrators .named by

them" all the matters in dispute in the suit and all matters and

proceedings connected therewith". In due course the arbitrators

gave an award which was then filPd in the trial court. As regards

immoveable properties in Pudukottai the award recited that since

the parties had separated and the properties in suit before the

arbitrators had been· actually divided by metes and hounds, the

two branch•s shall enjoy the Pudukottai properties in equal

halves; while with reference to the properties in Burma the

arbitrators asked the parties to hold the documents of title half

and half for safe custody and added that when the parties decided

to divide the properties all the documents would have to be

27

1959,

November IJ ..

210 SUPREME COURT REPORTS [1960 (2)]

'959 brought together and a partition made according to law. The

. - . appellant challenged the validity of the award on the grounds

Nach1appa CheUtar inter alia (1) that the reference and the award dealt with immove-

v. able properties in Burma and Pudukottai and so they were

Subramania»i invalid, and (z) that the trial court was not competent to make

Chettiar the order of reference under s. 21 of the Indian Arbitration Act,

1940.

Held: (1) that the reference and the award could not be

challenged on

the ground that they purported to deal with

foreign immoveable properties because (a) at the time when the

matters

in· dispute were referred to arbitration it \vas on the basis

of the finding of the trial court that the court had no jurisdiction

to deal with foreign immoveable properties,

and (b) the award

did not divide the said properties or declare their shares in them,

but merely recited the fact that the parties having become

divided

and accepted a half share in each of the branches they

would hold and enjoy the properties half and half.

There is a distinction between a mere recital of a fact and

something which in itself creates a title.

Bageshwari Charan Singh v. J

agarnath Kuari, (1932) L.R. 53

I.A. 130, relied on.

(2) that the words

"suit" and "court" in s. 21 of the Indian

Arbitration Act, 1940, include appellate court proceedings and

appellate court, respectively.

Abani Bhusan Chakravarthy and Others v. Hem Chandra

Chakravarthy and Others,

A.LR. 1947

Cal. 93, disapproved,

Thakur Prasad v. Baleshwar Ahir and Others, A.LR. 1954

Pat. ro6, M oradhwaj v. Bhudar Das A.LR. 1955 All. 353 and

Subramannaya Bhatta v. Devadas Nayak and Others, A.I.R. 1955

Mad. 693, approved.

(3) that the word "judgment" in s. 21 of the Act means a

judgment which-finally decides all

matters in controversy in the

suit and does not refer to the various interlocutory orders and

judgments that may be passed during the hearing of the suit.

(4) that a judgment delivered by a court in

a partition suit

which is followed by a preliminary decree is not a final judgment

in the suit and that a court after a preliminary decree has been

passed has jurisdiction to make

an order of reference under s. 21

of the Act.

]adu Nath Roy and

Others v. Parameswar Mullick and Others,

(1939) L.R. 67 I.A. II, relied on.

(5) that where a preliminary decree has been drawn up and

an appeal has been filed against it, both the trial court and the

appellate court are possessed of the matters in dispute in part

and it would be open to either court to make an order of

reference in respect of all

the

matters in dispute between the

f

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S.C.R. SUPREME COURT REPORTS 211

parties; that as in the present case proceedings subsequent to the z959

preliminary decree were pending before the trial court, the latter

was competent to act under s. 21 of the Act. Nachiappa Chettiar

C1v1L APPELLATE JURISDICTION: Civil Appeals v.

Subramaniam

Nos. 112 to 116 of 55. Chettiar

Appeals from the judgment and order dated Decem­

ber 14, 1951, of the Madras High Court, in AAO 210

of 1946, C. M. Ps. Nos. 3273 and 3274 of 1946, AAO

661 of 1946, and AAO 49 of 1947 respectively, arising

out of the judgment and order dated January 28, 1946,

of the Subordinate Judge, Devakottah, in I. A. No. 18

of 1945 in 0. S. No. 91 of 1941.

A. V. Viswanatha Sastri, K. Parasaran and M.S.K.

Aiyangar, for the appellants.

K. Rajah Iyer, R. Rangachari and R. Ganapaihy Iyer,

for the respondent.

1959. November 13. The Judgment of the Court

was delivered by

GAJENDRAGADKAR J.-These five appeals arise from Gajendragadkar J.

a partition suit (O.S. No. 91 of 1941) filed by the

respondent Subramanian Chettiar against his brother

Ct. A. Ct. Nachiyappa Chettiar and his four sons, ap-

pellants 1 to 5 respectively, m

the court of the

Subordinate Judge of Devakottai, and they have been

brought to this

Court with a certificate granted by the

·High Court of Madras under A.rt. 133 of the Consti­

tution. The principal appeal in this group is Civil

Appeal No. 112 of 1955 and the questions which it

raises for our decision relate to the validity of the

award made by the arbitrators to whom the matters

in dispute bet~een the parties were referred pending

the present~litigation. It would, however, be conveni­

ent at the outset to state broadly the material facts

leading

to the suit and indicate the genesis and nature

of the five respective appeals.

The appellants

and the respondent belong to the

Nattukottai Chettiar community and their family

which is

affluent had extensive money-lending busi­

ness in Burma. Chidambaram Chettiar, the father of

appellant 1 and the respondent, died on August 20,

1926. At the time of his death the respondent was·an

•

212 SUPREME COURT REPORTS [1960(2}]

z959 infant 6 years of age. Appellant I had already been

N

,. PP C' ,,. associated with his father in the mana~enient of the

acnia a 11l iar • • ......

v.· . busmess and· on his father's death he became the

Subramaniam manager of the family and took pharge of its affairs

Chtttiar · and business. On September 6, 1941, the respondent

. - gave notice lo appellant 1 calling upon him to effect

Ga1emlragadkar J. a partition and to render accounts of his management

and the properties of the family. This demand was

not complied with and so the respondent instituted

the present suit on September 24, 194L

According

to the plaint the assets of tho family

consisted

of immoveable properties in India which was

then described as British India and

iri. Pudukottai, an

Indian Sta to. These consisted of Items Nos. I to 12

and Item No. 13 respectively.in Sch. 'A~. The jewels

and moveables belcinging tu the family were set out in

Sch. 'B ', whereas two money-lending firms which the

family owned and conducted at l\Iinhla and Sitkwin in

Burma were set out in Schs. 'D' and 'E' respectively.

The plaint further alleged that Chidambaram Chettiar

had entered large amounts belonging to the family in

the names of the members of the family in what are

·called Thanathu maral accounts and these amounts

were _invested in various firms or lent to several

individuals.

The total of these investments came to

about Rs.

15,00,000 described in Sch. 'C '. The assets

thus described in Schs. ' C ', ' D' and ' E ' included

immoveable properties

in Burma and the respondent

claimed

a half-share in all of them. It appears that

the family had endowed several properties in favour

of charities and they were described in Sch. 'F '. The

respondent claimed that in effecting partition between

the parties a scheme should be framed for the manage­

ment of the said respective charities. According to

the respondent appellant 1 had in the course of his

management manipulated accounts and had in fact

misappropriated large amounts, and so he claimed an

account from appellant 1. That in brief is the nature

of the claim made by the respondent in his plaint.

At the date of the suit appellants 3 to 5 were minors

and they were represented by appellant 1. It appears

that a written statement was filed by appellant I for ·

,, '

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,

S.C.R. SUPREME COURT REPORTS 213

himself and as guardian of his minor sons in which the z959

relationship of the respondent and his half-share to N h. -Ch .

h

,, .

1

. d "tt d S l ac iappa ettiar

t e iam1 y properties were a m1 e . evera conten- v.

tions were, however, raised with reference to the pro-Subramaniam

perties available for partition. It was alleged that Chettiar

Items Nos. 10 and 11 in Sch. 'A' were dedicated to

charity and as such not divisible and that Item No. 3 Gajendragadkar f.

was being used as a school. The written statement

referred to some more properties which had not been

included· in the plaint though they were 'liable to

partition: In regard to the jewels and moveables it

was contended that"'several items not belonging to the

family, and some not even in existence, had been

shown in

the said schedule. It was also alleged that

some of the jewels shown in the said schedule belong-

ed to the several appellants as their separate property.

Then as regards the Thanathu maral accounts the ap-

pellants gave a detailed history of the amounts and their

investments. It was admitted that

the said amounts

belonged to the family though the investments had

been made in the names of the different members

of the family. It was, however, urged that the total

value of the assets enumerated in ~ch. 'C ' would be

only Rs. 9,00,000 and not Rs. 15,00,000 as alleged by

the respondent. The respondent's case that appel-

lan.t I

had manipulated accounts and misappropriated

family fonds was denied, and it was urged that for the

purpose of partition the assets of the family as they

stood on the date of the partition should be taken

into account. The appellants also pleaded that the

court had

no jurisdiction to divide the immoveable

properties

situated in Burma. According to

them there

was a special practice obtaining among the families of

the N attukottai Ohettiar community according to

which· appellant I was entitled to a decent remunera-

tion for the management of the joint family business

and properties. According to another custom pleaded

by the appellants it was alleged that provision had to

be made for future Seermurais for the unmarried

· daughters of the family. Broadly stated these were

the pleas raised by appellants l and 3 to 5. Appel­

lant 2 who was a major filed a seEarate written

214 SUPREME COURT REPORTS [1960 (2)]

1959 statement generally adopting the written statement

- . filed by appellant 1; nevertheless he put the respond-

Nachiappa Chell•ar h · f f h lJ · d b h"

ent to t e stnct proo o t . e a egat10ns ma e y im

Subra:;aniam in the plaint in support of his claim.

Chettiar In reply to the contentions thus raised by the

. - appellants the respondent filed a reply. In this state-

Ga;endragadkar J. ment he pleaded inter alia that there was a custom

amongst the community for a member of the joint

family to set up a separate family after marriage and

that monies drawn by him thereafter would b'e entered

in a separate account called Pathuvazhi and that at

the time of the partition the amounts appearing in the

said account would be debited to the said member.

The respondent claimed that account should be made

in accordance with this custom in effecting the partition

of the family. On these pleadings the learned trial

judge framed fifteen issues.

It appears that an attempt was made by the parties

to have their disputes referred to arbitration, and in

fact a reference was ·made on April 6, 1943, but this

attempt proved abortive and the suit was set down for

hearing before the court, and the hearing actually

commenced on December 11, 1943. Meanwhile, on

Decem her 6, 1943, appellant 2 filed an application

under 0. 8, r. 9, of the Code of Civil Procedure for per­

mission to file an additional written statement. This

application was numbered as I. A. No. 988 of 1943. It

would be relevent to refer to the plea which appellant

2 sought to raise by this application. He alleged that

the deceased Chidambaram Chettiar had set apart on

March 25, 1925, two sums of money of Rs. 2,10,251-4-0

each separately in the name of the respondent and

appellant 1 so as to vest the same in them forthwith,

and he urged that these amounts and their accretions

were

not the properties of the family liable to partition

·

in the suit. This application was opposed by the res­

pondent. On December 14, 1943, the trial jndge

dismissed

the said application on the ground that it

sought to raise a new and inconsistent plea and that

had been really inspired by appellant 1.

On Decem­

ber 29, 1943, the learned judge delivered his judgment

in the suit and it was followed by a preliminary decree.

r

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S.C.R. SUPREME QOURT REPORTS 215

Against this decision three appeals were preferred r959

before the High Court of Madras." A. S. No. 115 of 1944 . .

was filed

,by appellant 2 and No. 199 of 1944

byNachiap~~ Chet'.•ar

appellants 1, 3 to 5, whereas A. S. No. 499 of 1944 w~s Subramaniam

filed by the respondent. It appears that under his Chettiar

appeal No. 115 of 1944, appellant 2 made an applic-. ---

ation for stay of further proceedings before the Com-Ga;end.-agadkar J.

missioner (C.M.P. No, 1402 of 1944). On this petition

the High Court ordered that there was no need to stay

all proceedings before

the Commissioner and that it would be enough if the passing of the final decree

alone was stayed. As a result

of this order interim

stay which had been granted ex parte was vacated.

After

the final order on this appliqation was passed

the Commissioner commenced his enquiry, but before

the enquiry could make any progress the parties

decided to refer

their disputes for arbitration.

Accordingly on

July 18, 1944, a joint application

was filed

by the parties before the trial judge

request­

ing him to refer to the arbitration of Mr. VE. RM.

AR.

Ramanathan Chettiar of Kandanoor and RM.

AN.

S. RM. Chellappa Chettiar of Kothamangalam

"all matters in dispute in the suit and all matters a.nd

proceedings connected therewith". An application

under 0. 32, r. 7, was also filed since three of the

parties to the dispute were minors. On July 21, 1944,

the trial court allowed the said application and certi­

fied that the proposed reference was for the benefit of

the minors and so referred "the matters in dispute in

the suit and all matters and proceedings connected

therewith" for determination by the two arbitrators

named by the parties. .

The arbitrators then began their proceedings and

made an interim award on August 1, 1944. It was

followed

by their final award on December 6, 1944.

This award was filed in the trial court. On January 3, 1945, the appellants filed a petition

(I. A. No. 18 of 1945) under ss. 30 and 31 of the Indian

Arbitration Act (he.reinafter called the Act). By this

petition the appellants urged that the award should be

set aside on the grounds enumerated by them in the

petition. Their case was that the reference to arb~tration

216 SUPREME COURT REPORTS [1960(2)]

z959 had been brought about by coercion and undue

N h

.

-Ch . influence, that the arbitrators had not held any proper

-·~ ~ . d . .

· v. enquiry an that they were partial and biased. Thus

submmaniam the award was sought to be set aside on the ground

Chettiar that the reference was bad and that the arbitrators

--were guilty of misconduct. The validity of the award

Gajendragadk.r J. was also challenged on the ground that both the

reference and the award were invalid because they

contravened the principle of private international law

that comts in one country would have no jurisdiction·

to adjudicate

on title to immoveable property situate,d

in a foreign

country or to direct its division; the

reference and the award dealt with immoveable

pro­

perties in Burma and so they were invalid. The

appellants further contended that the reference to

arbitration was opposed to the orders passed by the

High Court in C.M.P. No. 1402 of 1944, and as such it

was invalid.

This application was resisted by the respondent. He

traversed all the allegations made by the appellants

and claimed that a decree in terms of the award should

be passed.

At t.he hearing of this petition no oral

evidence was Jed by the parties; they were content to

base their case on the documents produced on the

record and on points of law raised by them.

The trial judge rejected the appellants' case about

the alleged misconduct of the arbitrators. He also

found

that there was no substance in the contention

that the reference was the result of undue influence or

coercion. He was satisfied that the arbitrators had

made a proper enquiry and that the award was not

open to any objPction on the merits. He, however,

held

that the reference to the arbitrators which

includ­

ed matters in dispute in the suit comprised q11estions

of title in relation to immoveable properties in Burma,

and so it was without jurisdiction and invalid. In his

opinion

the reference also included the dispute relating

to the sums of Rs.

2,10,251·4 0 which had been entered

in the Thanathu maral accounts of appellant l and the

respondent aud that this part of the rPference con­

travened the order passed by the High Court in

C.M.P. No. 1402 of 1944. He thus upheld these two

•

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S.9.R. SUPREME COURT REPORTS 217

contenti9ns raised by the appellants and set aside the r959

reference and the award. It was against this order --

h

. h d £ d C M A N 210 f 1

9

6

Nachiappa

Chettiar

t at t e respon ent pre1erre . . . o. o 4 .

The High Court has allowed the respondent's appeal. Subra:aniam

It has confirmed the findings of the trial court in Chettiar

respect of the pleas raised by the appellants as to the . - .

misconduct

of the arbitrators and as to the invalidity Ga;endragadkar f.

of the

referen'Ce on the ground .that it was the rei:mlt of

coercion and undue influence. It has, however, re-

versed

the conclusions of the trial court that the

reference and the award were invalid inasmuch as

they related to immoveable properties in Burma and

contravened the stay order passed by the High

Court.

The High Court has construed the order by which

reference was

made to the arbitrators in the present

proceedings as well as the award and has held that

they are not open to be challenged on either of the

two grounds urged by the appellants. It was also

urged before

the High

Court that the order ofreference

was invalid because

under s. 21 of the Act the trial

court was not competent to make the reference; this

contention has been negatived

by the High Court. In

the result the High Court has found that the reference

and the award were vaJid and it has directed that a

· . decree should be passed

in

t('lrms of the award. Itjs

against this decision that Civil Appeal No. 112 of 1955

arises; and, as we have already mentioned, the

questions which it raises relate to the validity of the

award on which the two courts have differed. Before

we deal

with the merits of these points, however, we

may indicate how the other appeals arise.

In A. S. No. 115 of 1944 filed by appellant 2 before

the High

Court the appellant presented Miscellaneous

Application C.M.P. No. 2374 of 1U46 under 0. 23, r. 3,

for

an order that the interim award (Ex.

P. 15) passed

by the arbitrators which had been signed by all the

parties in token of their consent should be treated as a

com.promise

and a decree passed in accordance with it

under 0. 23, r. 4. The High

Court has observed that

in view of its decision in C.M.A. No. 210 of 1946 it was

really unnecessary

to pass any order in this appeal;

but it thought that since the matter was likely to go

28

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218 SUPREME COURT REPORTS [1960 (2)]

r959 in appeal to this Court it would be better to make a

N h

. P-P Ch

11

• formal order and direct that a decree in terms of the

acia a eiar . .

v. mtenm award should be drawn under 0. 23, r. 3.

Subramaniam Against this decision the appellants have preferred

Chet!iar Civil Appeal No. 116 of 1955 in this Court.

. d dk

1

The appellants had made a similar application in

GaJ"' raga "' ·A. S. No. 199 of 1944 and it was numbered as C.M.P.

No. 3273 of 1946. The High Court has allowed this

application for similar reasons and. its decision has

given rise to Civil Appeal No. 115 of 1955.

In the trial court the appellants had filed two similar

applications under 0. 23, r. 3; but they had been

rejected

by the trial court; these orders had given rise

to two appeals in the High

Court, C.M.A. No. 661 of

1946 and C.M.A. No. 49of1947. The High Court has

allowed these appeals and has ordered that a decree in

terms of compromise should be passed under 0. 23,

r. 3.

Against the orders thus passed by the High

Court

in these two appeals, Civil Appeals Nos. 113 and 114

of 1955, have been filed in this Court. That is the

genesis and nature of the four subsidiary appeals in the

group. We will now.revert to the points which arise

for

our decision in the principal

Civil Appeal No. 112

of 1955.

•

The first ground on which the validity of the refer­

ence and the award is challenged is based on the

assumption that the reference involved the determin­

ation of the title to immoveable properties situated

in Burma and/or that the award has actually deter­

mined the said question of title. The appellants

contend that there can be no doubt that courts in

this country have no jurisdiction to determine

questions of title in respect of immoveable properties

in foreign countries

or to direct a division thereof.

This position is not and cannot be disputed. The

rule of law on this subject has been thus stated by

Dicey:

"The courts of a foreign country have no

jurisdiction

to adjudicate upon the title or the right

to the possession of any immoveable property not

situate in such

country."(

1

) It is also urged that

where a court has no jurisdiction to determine any

(1) Dicey's "Conflict of Laws", 6th Ed., pp. 1~1 and 348.

S.C.R. SUPREME COURT REPORTS 219

'

matter in controversy such as the question of title in· z959

respect of the foreign immoveable property it has no . - .

· · d' · c "t c th d t · t" f th Nachiappa Cheltiar

Juris ict10n to re1er 1 ior e e ermma 10n o e

arbitrators. This position also is not and cannot be Subra:aniam

disputed. The appellants further ,argued that if ,the Chettiar

reference includes properties over which the court -

had jurisdiction as well as those over which it had no Gajendragadkar J.

jurisdiction the whole of the reference becomes invalid

and in such a case it is not permissible to separate the

invalid part of the reference from that which is valid.

The correctness of this contention is disputed by the

respondent; but, for the purpose of the present appeal

the respondent is prepared to argue on the assumption

that even this contention is well-founded. The res-

pondent's case is that neither the reference nor the

award purports to deal with any immoveable property

in Burma; and so the challenge to the validity of the

reference and the award on the legal points raised by

the appellants cannot· succeed. It is, therefore, neces-

sary to examine the reference and the award and

decide whether the factual assumption made by the

appellants in urging their legal grounds against the

validity of both . the reference and the award is

justified.

In dealing with this question it is necessary first to

ascertain the scope of the request

made by the parties

when

they applied to the trial court for reference of

their dispute to arbitration. In their application (Ex. P. 12) the parties have briefly indicated the nature of

the respondent's claim and have stated that the

dispute between the parties was then pending before

the High Court in the form of three appeals preferred

by them. 'rhen it is averred that appellants 3 to 5

are.minors

but it is added that the proposed reference

was for

their benefit and so another application had

been separately made for the court's sanction to the

said reference in respect of the said minors.

"The

parties desire and agree", said the application, "that

all matters in dispute in this suit and all matters and

proceedings connected therewith should be referred to

the unanimous decision of the two named arbitrators".

They had also agreed that they would abide by the

220 SUPREME COURT REPORTS [1960(2))

'959 unanimous decision of the arbitrators and that the

Nachiappa Chettiararbitrat?rs shoul~. be empowered to partiti?n the

v. properties of the JOlllt family between the parties and

Subramaniam if necessary also by payment of monies to equalise the

Che1tiar shares and to tak;e the necessary accounts and to

' decide all matters in dispute between them including

Gajendragadkar ). costs. The parties had further agreed to produce

their own papers and copies before the arbitrators

and that if the arbitrators needed any further papers,

accounts or documents which had been filed in court

they should be authorised to require the Commissioner

to send

them to the arbitrators. It is on this

applic­

ation that the court made the order that "all matters

in dispute in this suit and all matters and proceed­

ings connected therewith " be referred for determin­

ation to the two named arbitrators. The question

which arises for

our decjsion is: What was the scope

and extent of the matters thus referred to arbitration?

In other words, did this order of reference include

the respondent's claim for a share in the immoveable

properties in

Burma ?

The appellants contend that the order of reference

includes

not only all matters in dispute in the suit but

also all matters and proceedings connected

therewith

and their case is that these clauses are wide enough to

include the respondent's claim for a share in the

immoveable properties in Burma. There is no doubt

that the latter clause refers to matters and pmceedings

connected with the suit; but the appellants' conten­

tion can be upheld only if it is shown that the respon­

dent's claim for a share in the properties in Burma

was connected with the suit or was a part of the

matters connected with it at the material time.

What then was tho natur~ and extent ofthe dispute

between

the parties at the material time? Let

us

examine the pleadings of the parties, the issues framed

by the trial court, the decision of the trial court on

them and ascertain the nature and extent of the

subsisting dispute between them which was pending

in the High Court in the three respective appeals.

There is no doubt that in his plaint the r.espondent

had claimed a share in the immoveable properties in

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S.C.R. SUPREME COURT REPORTS 221

Burma. In regard to this claim his allegation was J959

that with the aid of the advances made by the familyN h' -Ch .

fi

. B d f h . th t d "b d oc iappa ett1ar

rms 1n urma an o t ose m e accoun s escn e v.

as Thanathu maral accounts, lands and other proper-Subramaniam

ties had been purchased and they formed part of the Chettiar

assets of the firms and the Thanathu maral accounts.

The written statement filed by appellant 1 admitted Gajendragadkar J.

that there were Thanathu maral -transactions during

-

the lifetime of Chidambaram Chettiar and that all

sums

taken from the family assets, though invested

for

the sake of convenience in the name of one or the

other member of the family, belonged to the family

and had been treated as family assets. According to

the appellants, however, the extent of the

Thanathu

maral transactions had been exaggerated by the

respondent. On the whole the written statement

-

clearly ad+riitted that the branches of appellants 1 to

5 on the one hand and of the respondent and his son

on the other are entitled to a half-share each; but

they pleaded that the said shares have to be allotted

only

after making some provisions out of the joint

family funds for

the payments of the future

Seermurai

etc., due to the unmarried daughters in the family.

They also contended that the court had no jurisdic-

tion to divide the immoveable properties in Burma

though it was admitted that the respondent was

entitled to

the relief in respect of the division of the

family assets as set forth in the written statement.

This

written

sta~ement was adopted by appellant 2

-

though in a general way he denied the allegations in

the plaint which had not been expressly admitted by

him in his written statement. It would thus be seen

that the respondent's share in the family properties

was

not in dispute nor was his share in

the· properties

in

Burma seriously challenged. The only plea raised

in respect of the latter

cla,im was that the court had

no jurisdiction to deal with it. This state of the

pleadings in a sense truly reflected the nature of the

dispute between the parties. It is common ground

that the family is a trading family and there could be

..

no doubt that the assets of the family were partible

between the members of the family .. It was on these

222 SUPREME COURT REPORTS [1960 (2))

'959 pleadings that the trial judge framed fifteen issues and

set down the case for hearing.

Nachiappa Chettiar ,

v. At this stage appellant 2 wanted to go back upon

Subramaniam his written statement by making further and additional

Ch•ttiar pleas. That is why he filed an application (Ex. P. 3 (a))

for leave to file

an additional written statement. As

Gajendragadkar J. we have already mentioned this application was

rejected by the trial court; but for our present

pur­

pose it is relevant to consider the pleas which he

wanted to raise by this additional statement. He

wanted to contend that the amounts set apart in

favour of appellant 1 and the respondent respectively

by their father remained invested distinctly and

separately during his lifetime and that in law they

ought to be taken to be separate properties belonging

tn the two respective branches. In other words, the

plea thus sought to be raised was that by reason of

the investment of the amounts in the names of appel­

lant. 1 and the respondent respectively the said

amounts constituted the individual . and separate

monies of the respective persons and became the

separate properties of their branches. Appellant 2

thus raised a contention about the character of the

amounts invested· by the deceased Chidambaram

Chettiar in the two names of his sons respectively and

in that sense the issue which he sought to raise was

in regard to the character of the amounts themselves.

It had no direct reference to any immoveable proper­

ties in Burma.

Since the trial court refused to allow appellant 2 to

raise this additional plea he proceeded to try the issues

already framed by him, and, as we have already indic­

ated, he held that he had no jurisdiction to deal with

immoveable properties in Burma., and appointed a

Commissioner

to make an enquiry in pursuance of the

preliminary decree. The preliminary decree in terms

excluded from its operation the immoveable properties in• Burma as well as in the Indian State of Pudukottai.

In the proceedings before the Commissioner parties

agreed that the properties in Burma and Pudukottai

shvuld be left out of account and so no dispute appears

,, '

•

'· _1

(

-

•

-

•

S.C.R. .SUPREME COURT REPORT~ 223

to have been raised before him that the accounts of -z959

the firms in Burma should be taken by him. N h' Ch.

11

•

ac iappa e •a•

In the appeal filed by the respondent against this v.

preliminary decree he did not challenge the decision Subramaniam

of the trial court that he had no jurisdiction 'to deal Chettiar

with immoveable properties out of British India. His" . / d -dk

1

appeal raised some other points which it is unneces-,a;en raga ar

•

sary to mention. This fact is very significant. It

shows that the respondent accepted the finding of the

trial court and did not want the High Court to consider

his claim for a share

in the excluded properties. In

the appeal preferred by appellant 2 he had urged inter

alia that the trial court should have allowed him to

raise

the additional pleas and it appears that he had

also raised a point that the trial court bad no jurisdic-

tion to direct a division of the moveable properties of

the firms in Burma. The grounds taken by appellant 2

in his memo leave no manner of doubt that none of

the pleas which he sought to raise before the High

Court had any reference to immoveable properties in

Burma. It is, therefore, clear that in none of· the

three appeals pending before tlie High Court was it

urged by any party that the immoveable properties in

Burma should be brought within the scope of the

partition suit.

The application made by the parties for arbitration

to which we have already referred has deliberately set

out the pendency of the three appeals in the High

Court at the material time in order to furnish the

background for determining the extent and nature

of the dispute which was sought to be referred to

arbitration. The respondent's claim for a share in the

properties outside India had been negatived by the

trial court and the decision of the trial court had

become final because it was not challenged by the

respondent and so there can be no doubt that the said

claim was outside

the purview of the dispute which

was

then pending between the parties in the High

Court. It was not, and could not have been, intended

to be a

matter in dispute in the suit between the

parties or any matter and proceedings connected

therewith. Therefore we are

tiatisfied that the High

224 SUPREMB COURT REPORTS [1960 (2)]

r959 Court was right in coming to the conclusion that the

N h

.. P-P Ch

11

. reference did not include any claim with regard to the

acia a eiar. bl' .. B

v. 1mmovea e properties m urma.

Subraman;am It is, however, urged that the reference did include

Chettiar the points raised by appellant 2 in his appeal before

G

.

d-dk

1

the High

Court; and that no doubt is true. But what

a;en raga ar . . h .

1s t e effect of the said grounds raised by appellant 2?

As we have already pointed out the said grounds did

not raise any question about immoveable properties in

Burma. They merely raised a dispute about. the

character of amounts invested by the deceased

Chidambaram Chettiar in the names of appellant I

and the respondent respectively. It was a dispute in

regard to monies or·moveables and so appellant 2 was

driven to contend that the trial court had no jurisdic­

tion to deal with such moveables. This contention is

obviously without.

substance and has not been raised

either in the courts below or before us. The only

argument raised is that the reference included claims

in regard to immoveable properties in Burma and this argument CIJ.nnot be supported on the ground of the

pendency of the appeal by appellant 2 before the High

Court because, even if the said appeal was allowed, it

could have no reference to any immoveable properties

in Burma. Thus the attack against the reference on

the ground that it included immoveable properties in

Burma must fail. ·

Does the award deal with the said immoveable pro­

perties

in Burma? That is the next question which

falls to be considered. If it does, it would be invalid

not only because it purports to deal with foreign

immoveable properties

but also for the additional

reason

that it is in excess of the terms of reference. At

the hearing of the present appeals in this

Court

Mr. Viswanatha Sastri, for the appellants, attempted ·

to criticise the decision of the arbitrators on several

_grounds; but we did not allow him to raise any con­

tentions against the merits of the award because both

the courts below have rejected the appellants' objections

in that behalf, and in view of their concurrent findings

it would not be open to the appellants to raise the

same points over again. That is why we would

...

•

SUPREME COURT REPORTS 225

confine ourselves to.those portions of the award which, z959

according to the appellants, show that the arbitrators Nachiappa Chettiar

divided the immoveable properties in Emma and v. . ·

P d k tt

· Subramaniam

U u 0 a1. . . . , . Chettiar

In regard to the propertie~ m Pudukkotta1 this' is _

what the award says in paragraph 3: "The plaintiff Gaje11dragadkar ].

and the defendants shall enjoy them in equal halves

as under marukkal kuttu. In proportion to their

respective shares, the plaintiff shall pay one-half of

the taxes and the defendants 1 to 5 the other half .

$ince the aforesaid property has been situate in Pudu-

kottai State it has not been divided on the good and

bad qualities of the soil; if it is necessary, the plaintiff

and the defendants shall have it divided in equal

halves later on when required,"

In regard to the properties in Burma, paragraph I

of the award recites that "after communications are

restored in Burma the plaintiff and the defendants

have to divide the firms in Burma at the places Minhla

and Sitkwin belonging to them and the lands, godowns,

homes, gardens

and the properties items, bank

deposits;

jewels, movables, all assets etc., and the subsequent

income

attached thereto into two halves; and the

plaint­

iff has to take one half and the defendants the other

half". Paragraph 2 adds.that since both the parties

have agreed to divide the movable properties attached

to the said shop later on the arbitrators had not divid­

ed them. The award has also stated that the sale deeds

at Alagapuri and rc;ilating to the lands attached to the

said firms have been divided into two lots and for

the purpose of safe custody two lists known as Schs. A

and B have been prepared and both parties have

signed the lists. Later on, at the time of division of

the said lands, firms and assets, all the documents shall

be collected together

and the parties shall take the

documents relating to their respective shares. · The arbitrators then dealt with the additional plea

sought to be raised by appellant 2, and in substance

they refused appellant 2 permission to raise that plea

because

they thought that having regard to

the

conduct of the parties it was futile to raise such a plea.

That is why'they directed that "the plaintiff's branch

29

226 . SUPREME COURT REPORTS [1960 (2)]

'9

5

9

and the defendant's branch have shares

iii all the

. N h" PP Ch tt" amounts and they added that their conduct fully

ac •a v: ' '"'justified the said conclusion and the parties agreed

Subramaniam to it. "

Chettiar It is these portions of the award on which the

- appellants based their content.ion that immoveable

Gajendragadkar J. properties in Pudukottai and Burma have been dealt

with by the arbitrators. In our opinion this con­

tention is not wellcfounded. What the arbitrators

have done is to divide the properties which were then

the subject-matter of the dispute between the parties;

and having done so they have indicated what the

legal position of. the parties would be in respect of the

properties outside the dispute. In appreciating the

effect of the words used in the award we must bear in

mind that the arbitrators were laymen not familiar

with the technical significance of" regal expressions,

and so we must read the relevant clauses as a whole

with a view to determine what in effect and substance

they intended to decide. Now take the recitals in the

·award to the Pudukottai properties. The award

expressly states that the properties had not been divid­

ed by them and that the plaintiff and the defendants

shall have them divided when so required. All that the

award says is that since the parties had separated and

the properties in suit before the arbitrators had been

actually divided by metes and bounds, the two

branches shall enjoy the Pudukottai properties in

equal halves. This clause in the award cannot be said

to di vi de the said properties or even to determine their

shares in them. The shares of the parties in the said

properties were admitted and so the award merely says

that as divided members they will hold and enjoy the

properties half and half.

Similarly

in regard to the properties in Burma the

award expressly states that the said properties had

not been divided and it merely refers to the true

legal position that they would be enjoyed

by the two

branches half and half. The arrangement proposed by

the arbitrators in respect of the immoveable properties

in Burma is very significant. They merely asked the

parties to hold the documents of title half·and half for

~;C.R. SUfREME COURT REPORTS . 227

safe custody and they have added that when the I959

parties decide to divide the properties all the do cu-N h. -Ch

1

.

b b h h d

ac iappa etiar

ments would have 'to e roug t toget er an a v.

partition made according to law. That again is an Subramaniam

arrangement dictated by common-sense and cannot be Chettiar

said to amount to a decision in any way. It is not

as if th~ award declares the shares of the parties in Gajendragadkar J.

respect of the properties. What it does is no more

than to state the true and admitted legal position of

the parties' rights in respect of the said properties.

In-this connection it would be useful to refer to the

observations made by Viscount Dunedin in Bagesh­

wari Charan Singh v. Jagarnath Kuari(1). In that

case the Privy Council was called upon to consider

the question about the admissibility of a petition

which was relied upon as an acknowledgment of liabi­

lity under s. 19, sub-s. (1) of the Limitation Act; and it

was urged that the said petition was inadmissible

because

it purported or operated to create or

declar~

a right to immoveable, property and as such was

compulsorily registrable under s. l 7{1)(b) of the Regis­

tration Act, 1908. In urging the objection to the

admissibility of the petition a large number of Indian

decisions were cited before the Privy Council dealing

with the word "declare" used in s. l 7(l)(b) of the

Registration Act, 1908; and it was apparent that­

there was a sharp conflict of views. In Sakha Ram

Krishnaji

v. Madan Krishnaji

{

9

), West, J., had observ­

ed that the word "declare" in s. l 7(1)(b) is placed

along

with ' create ', ' assign ', ' limit ' or ' extinguish '

a

right,

tit.le or interest, and these words imply_ a

definite change

of legal relation to the property by an

expression of will embodied in the document referred

to,

~nd had added that he thought that is equally

the case with the word " declare ". On the other

hand certain other decisions ,had construed the word

"declare" liberally in a very wide sense and it was on

those decisions that the objection against admissibility

of· the petition was founded. In repelling the objec­

tion Lord Dunedin observed that "though the word

(1) (1932) I.L.R. II Pat. 272; 53 I.A, 130,

(2) (1881) I.L.R. 5 Born. 232.

228 SUPREME COURT R.EPORTS [1960 (2)]

'959 " declare " might be given a wider meaning they are

Nachiap~~ Cliettiar ~:~\~fihe: t~~~ ~7:ti:~~:n o~~gi~:~~ee~k:n ~:r:r ~~~i~j

Subrnmaniam of fact and something which in itself creates a title."

Che11;., These observations assist us in deciding the question

as to

whether the impugned portions of the award Gajend.agadkar l ·declare the parties' rights in immoveable properties

in the sense of deciding them as points, or matters

referred to arbitration. In our opinion, the High

Court was , right in answering this question against

the appellants. Therefore the award is not open to

the attack that it deals with immoveable properties

out of the jurisdiction of the court.

That takes us to the next ground of attack against

the validit,y of the award. It is urged that the award

contravenes the order passed by the High Court on

the stay petition filed before it by appellant 2. There

is, however, no substance in this contention. All that

the High Court directed was that pending the final

decision

of the appeals

before it a final decree should

not be drawn. In fact the High Court clearly observ­

ed that there was no reason for staying all the

proceedings pending before the Commissioner. That

is the usual order made in such cases, and it is difficult

to appreciate how this order

has been contravened

by reference to arbitration or by the award that

follow­

ed it. The award is not and does not purport to

be a final decree

in the proceedings and the

proceed­

ings· before the arbitrators substantially correspond

to

the proceedings of the enquiry which the

Com­

missioner would have held even under the order

of the High Court. Therefore this contention must

also fail.

We must now consider another objection against

the validity of the reference which has been seriously

pressed before us.

It is urged that the reference and

the award are invalid because the trial court was not

competent to make the order of reference under s. 21

of the Act.

Section 21 reads thus:

" 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

I-.

4

,

•

S.C.R. SUPREME COURT REPORTS 229

may at any time before judgment is

apply in writing to the Court for

reference."

pronounced

an order of

I959

Nachiappa Chettiar

v.

Two conditions must be sati.sfied before an applica-Subramaniam

tion in writing for reference is made. All the interest-Chettiar

ed parties to the suit must agree to obtain a reference . -.

and the subject-matter of the reference must be anyGa;endragaakar f.

matter in,difference between the parties in the suit.

When these two conditions are satisfied the applic-

ation for reference must be made at any time before

the judgment is pronounced. Thus broadly stated

the construction of the section presents no difficulty.

But when we analyse the implications of the two

conditions and seek to determine the denotation of the

word " court ,-, difficulties arise. What does the word

" court " mean in this section ? ·According to the

appellants "court" means the court as defined by

s. 2(c) of the Act. S. 2(c) defines the "court" inter

alia

as

"a civil court having jurisdiction to decide the

questions forming the subject-matter of the reference

if the same had been the subject-matter of a suit " ;

and this prima f acie means the trial court. The

argument is that an order of reference can be made

only by the trial court and not by the appellate court,

and so there can be no reference after the suit is

decided

and a decree has been drawn up in accord-

ance

with the judgment of the trial court. In the

present case a judgment had been delivered by the

trial court and a preliminary decree had been drawn

in accordance with it, and so there was no scope for

making any order of reference. That is the first part

of the argument which must be carefully examined.

Does

the

"court" in the context mean the trial

court ? This construction cannot be easily reconciled

with one of the conditions prescribed by the section.

After a decree is

drawn up in the trial court and an

appeal is presented against it, proceedings in appeal

are a

continuation of the suit; and speaking generally,

as prescribed

by s.

107 of the Code of Civil Procedure

the appellate court has all the powers ·of the trial

court and can perform a.s nearly as may be the sam~

duties as are conferred and imposed on the trial court.

•

•

•

230 SUPREME COURT REPORTS [1960 (2))

'959 If that be so, during the pendency of the appeal, can

N h

. PP Cl tr it not be said that matters in difference between the

acia a :eiar . . . . b d

v. parties m smt contmue to e matters in ispute in

Subramauian• appeal? The decision of the appeal can materially

Chettiar affect the nature and effect of the decree under appeal;

G

.

d-dk

1

and there is no doubt that all the points raised for

a;en raga ar d . . f

·the ec1s10n o the appellate court can be and often

•

are points in difference between them in the suit; and,

. in that sense, despite the decision of the trial court

'the same points of difference in suit continue between

the parties before the appellate court. If during the

pendency of such an appeal parties interested agree

that any matter in difference between them in the

appeal should be referred to arbitration the first two

conditions

of the section are satisfied. When s. 21

was enacted did Legislature intend that during the

pcndency of the appeal no reference should be made

even if the parties satisfied the first two conditions

prescribed

by the section ?

In considering this question it would be

rrlevant

and material to take notice of the fact that prior to

the passing of the Act in 1940 the longstanding prac­

tice of Indian courts was to refer to arbitration dis­

putes pending before the appellate court between the

respective parties to the appeals. If the object of

enacting s. 21 was to prohibit such refe:i;ence at the

appellate stage it would, as the High Court has observ­

ed, cause " a revolution in the existing practice ".

Was such a revolution really intended? Having

regard to the fact that the words used in s. 21 are

substantially the same as those used in Sch. II, para­

graph 1, of the earlier Code, it would be difficult to

to

sustain the plea that the enactment of s. 21 was

intended to bring about such a violent departure from

the existing practice. If that had been the intention

of the Legislature it would have made appropriate

changes in the words used in s. 21. Therefore, the

word

" court" cannot be interpreted to mean only

the trial court as contended by the appellants.

Similarly, the word "suit" cannot be construed in

the narrow sense of meaninj only the suit and not an

appeal. In our opinion, court" in s. 21 includes

--f

-.-""

"'

,-

S.C.R. SUPREME COURT REPORTS 231

the appellate court proceedings before which are r959

generally recognised as continuation of the suit; and --

the word "suit" will include such appellate proceed- Nachiappa Chettia•

ings. We may add that whereas s. 41 of the Act is Subra:~niam

consistent with this view no other section militates Chettiar

against it.

The next question is: When can an application for Gajendragadka• J.

reference be made ? The section prescribes that it

can be made at any time before the judgment is'

pronounced. It has been fairly conceded before us

that the word "judgment" cannot refer to the various

interlocutory orders and judgments that may be passed

during

the hearing of the suit; and so the word " judgment" cannot be given· the meaning assigned

to it by s. 2 (9) of the Code. It cannot mean in tJ:i_e

context the statement given by the judge of the

grounds of a decree or order. It must mean a judg-

ment which finally decides all matters in controversy

in the suit. Thus it follows that it is -open to 'the

parties to apply for a reference at any time before the

final judgment is pronounced in the suit. If that be

so,

can the parties apply for an order referring matters

in difference

Qetween them even though such matters

may have been covered by interlocutory judgments

delivered in

the meanwhile? The appellant.s suggest

that though reference to arbitration may be made at

any

time before the final judgment is pronounced the

subject-matter of the reference must be such as is not

covered by any decision of the court pronounced in the

meanwhile. This argument reads the word "judg-

ment " as judgment in regard to a matter in difference

between

the parties ; if

a difference between the parties

has been covered by an interlocutory judgment it can

no longer be referred to

arbitration ; that is the con-

tention. We are

not impressed by this contention.

In our opinion the scheme of the section does not

permit the addition of any words qualifying the word

" judgment" used in it. The expression_" at any time

before the judgment is pronounced " is only intended

to show the limit of time beyond which no reference

can ,be made, and that limit is reached when a final

judgment. is pronounced. The provision that " any

232 SUPREME COURT REPORTS [1960(2)]

x959 matter in difference between the parties in the suit

- . can be referred to arbitration " cannot be suhjected to

Nachiappa Ch<ttiar the further limitation that the said matter can be

Subra=~niam referred to arbitration if it is not covered by the judg-

Chettiar ment of the court. The effect of the section appears

to be that so long as the final judgment is not pro-

Gajendragadkar J. nounced by the court any matter-i. e., some or all the

matters-in difference between the parties can be

'~eferred to arbitration provided they are agreed about

it. If a reference can be made even at the appellate

stage when all matters in difference between the parties

are covered by the final judgment of the trial court,

it is difficult to understand why in allowing reference

to be made during the pendency of the suit in tho trial

court any further conditions should be imposed that

only such matters of difference can be referred to as

are not covered by an interlocutory· judgment of the

court. We would accordingly hold that it is open to

the trial court to refer to arbitration any matters of

difference between the parties to the suit provided

they agree and apply at any time before the court

pronounces its final judgment in the suit.

But this construction still leaves one question to be

considered.

Had a final judgment been pronounced

by the trial court in this case at the time when it

passed the order 'of reference? It had delivered

a

judgment and a preliminary decree had been drawn up.

A

judgment delivered by a court in a partition suit

which is followed by a preliminary decree cannot be

said to be a final judgment in the suit. Proceedings

which parties may take pursu.ant to the preliminary

decree are still a part of the suit, and it is only with the

passing of the final decree that the suit comes to an

end. As observed by the Privy

Council in J adu Nath

Roy & Ors. v. Parameswar Mullick & Ors. {

1

)

a parti­

tion suit in which a preliminary decree has been passed

is

still a pending suit with the result that the rights of

parties who are added after the preliminary decree

have to be adjusted at the time of the final decree.

This position is not disputed. Therefore, the fact that

a preliminary decree had been drawn up in the present

(1) (1939-40) 67 I.A. II.

·.

S.C.R. SUPREME COURT REPORTS 233

case and it was based upon a judgment delivered by r959

the court cannot exclude the application of s. 21. The N h. -P Ch

1

.

, . d. b d l' d b h . ac tap a et tar

Judgment which ha een e ivere y t e court is v.

not a final judgment contemplated bys. 21. The trial Subramaniam

court would, therefore, have jurisdiction to make the Chettiar

order of reference. · · · .

Th

. h th .c t h' h . t d Gajendragadkar ].

ere IS, owever, ano er iac w 10 in ro uces a ·

complication ; and that is the pendency of the three

appeals before the High Court at the material time.

As we

have already observed the three appeals which

were pending before

the High

Court raised before that

court matters in difference between the parties in the

suit, and to that extent th<;i said matters of difference

were really pending before

the High

Court and not

before the trial court. In such a case, which is the

court that has jurisdiction· to make the order of

reference? There is no difficulty in holding that if

the suit is pending in the trial court and a final judg-

ment has not been pronounced by it, it is the trial court

which is competent to make

the order of reference.

Similarly,

if a suit has been decided, a final judgment

has been delivered and a decree had been drawn up

by the trial court and no appeal has been preferred

against it, the matter is concluded and there is no

scope for applying

s. 21 at all.

On the other hand, if

a decree determining the suit has been drawn up by

the trial court and it is taken to the appellate court,

during

the pendency of the appeal, it is the appellate

court

that is competent to act under .s. 2L These three

cases do

not present any difficulty; but where a preli-

minary decree has been drawn up and an appeal has

been filed against it the complication arises by reason

of the fact that the disputes between the parties are

legally pending before two courts. Proceedings which

would

ha

v,e to be taken between the parties in pur-

suance of,

and consequent upon, the pr_eliminary

decree are pending before

the trial court; whereas

matters in difference between the parties which are

covered by the preliminary judgment and decree are

pending before

the appellate court. In such a case it

may perhaps be logically possible to take the view that

I

234 SUPREME COURT REPORTS [1960(2)]

r959 the arbitration in respect of the disputes in relation

N h' p--;-ch

11

. to proceedings subsequent to the preliminary decree

ac •• ; ' '"'can be directed by the trial court;whereas arbitration

Submmaniam in respect of all the matters concluded by the trial

Chettiar court's preliminary judgment which are pending before

G . d-dk the appellate court can be made by the appellate court;

"

1'"

raga ar 1 ·but such a logical approach is not wholly consistent

with s. 21 ; and rather than help to solve any difficulty

it may in practice create unnecessary complications.

In most cases matters in dispute before the trial court

in final decree proceedings are so inextricably connect­

ed with the matters in dispute in appeal that effective

arbitration can be ordered only by one reference and

not by two. We are, therefore, inclined to hold that

in a case of this kind where both the courts are posses­

sed

of the matters in dispute in part it would be open

to either court to make an order of reference in respect

of all the

matters· in dispute between the parties.

It is argued that on such a construction conflict of

decisions may arise if two sets of arbitrators may be

appointed.

We do not think that such a conflict is

likely

to occur. If the parties move the trial court

and obtain an order of reference they would inevitably

ask for appropriate orders of withdrawal or stay of the

appellate proceedings; if, on the other hand, they

obtain a similar order of reference from the appellate

court they would for similar reasons apply for stay of

the proceedings before the trial court. In the present

·

case proceedings subsequent to the preliminary decree

were pending before

the trial court and so we must

hold that the trial court was competent to act under

s. 21.

On that view the objection against the validity

of the reference based on the provisions of s. 21

cannot succeed. '

We may now briefly refer to some of the decisions to

which our attention was invited. Before the Act was

passed in 1940, the procedure for referring matters in

dispute between

the parties in pending suits was govern­

ed by the provisions of Sch. II to the

Code of Civil

Procedure. There appears to have been a consensus of

judicial opinion in favour of the view that under

Sch. II, para1;1raph 1, the appellate court could mak~

'

S.C.R. SUPREME COURT R:ffiPORTS 235

an order of referenc_e in respect of matters in dispute r959

. between the parties in an appeal pending before it. A . - .

note

of dissent had, however, been struck by a Full

Nachiappa Chettiav

Bench_ of the Calcutta High Court in Jugesseur Dey Subra:aniam

v. Kritartho 111oyee Dossee (

1

). In that case the ques- Chettiar

tion for decision arose under the provisions of the Code

of 1859 and the Full Bench hel<il. that an appellateGajendragadkar J,

court had no power even by consent of parties to refer

a cas~ for arbitration under the arbitration sections of

Act VIII of 1859 which applied only to courts of

original jurisdiction nor was such power , conferred on

an appellate court by s. 37 of Act XXIII of 1861.

One of the reasons which weighed with Couch, C. J.,

who delivered the principal judgment of the. Full

Bench was that according to him· neither reason· nor

convenience required that the appellate court should

refer a suit

to arbitration after the matter had been

decided by

the trial court. Kemp, J., who concurred

with

the decision, apprehended

that" ifthe parties are

allowed

to refer matters to

arbitration after a case has

been finally disposed of by a court of justice such a

proceeding might

tend to bring lower courts into contempt". In our opinion this apprehension is not

well-founded. Besides it is well-known that when

parties agree to refer the matters in dispute between

them in suit to arbitration they desire that their

disputes should be· disposed of untrammelled by the

rigid technicalities of the court procedure. A search

for a short-cut

by means of such arbitration sometimes

takes the parties on a very

long route of litigation but

that is another matter.

The Calcutta view was dissented from by the Madras

High Court in Sangaralingam Pillai (2) in somewhat

emphatic words. "Entertaining all respect for the

opinions of the learned judges of the High Court of

Calcutta by whom the case of Jugesseur Dey (1) was

. decided ", observed the judgment, "we are not con­

vinced by the reason given in the judgment for holding

that an appellate court might not, with consent of the

parties, refer the matters in dispute in the appeal to

arbitration." Having thus expressed their disapproval

(1) 12 Beng. L_.R. 266. . (2} (1881) I.L .. R. 3 Mad. 78.

236 SUPREME COURT REPORTS [1960 (2))

r959 of the Calcutta view, the learned judges proceeded

h

. -C'·-. to add that in the case before them an order of

Na' wppa ,we ti a• c h h d f

v. reierence was soug t for under s. 582 of t e Co e o

subramaniam 1877 and they held that under the said provision .the

Ch'ttia• appellate court is given the same powers and is required

- to perform the same functions as nearly as may be as

Gajendragadka• J· the trial court. The view thus expressed by the Madras

High Court was subsequently accepted and approved

by the Calcutta High Court in Bhugwan Das Marwari

.& Anr. v. Nund Lall Sein & Anr. (') and Buresh

Chunder Banerjee v. Ambica Churn Mookerjee (

2

). As

we

have already observed, prior to the enactment of

the Act there has been a longstanding judicial practice

under which orders of reference have been passed by

appellate courts iu respect of matters in dispute

between the parties in appeals pending before them.

The construction of s. 21 has led to a divergence of

judicial opinion. In Abani Bhusan Chakravarty

& Ors.

v. Hem Chandra Chakravarty & Ors. (

3

), the Calcutta

High Court has taken the view that the court as

defined in the Arbitration Act cloes not include an

appellate court and consequently there is nothing in

the Act which enables an appellate court to refer to

arbitration matters in clispute between the parties.

This decision proceeds on the erroneous view that the

"court" in s. 21 means only the court as defined in

s. 2(c) and that the considerations ba'sed on the powers

of the appellate court prescribed by s. 107 are foreign

to the Act. It also appears that the learned judges

were disposed

to think that if the matter in uispute

between

the parties at the appellate stage was referred

to arbitration it might tend to bring the lower courts

into contempt. There is no doubt that a court cannot

claim an inherent right to refer a matter in dispute

between the parties to arbitration. Before a matter

can be thus referred to arbitration it must be shown

that the court in question has been statutorily clothed

with the power to make such an order; and that would

depend on the construction of s. 21 of the Act. The

Calcutta High Court has construed the said section in

(1) (1886) I.L.R. 12

Cal. 173- (2) (1891) I.LR. 18 Cal. 507. ·

(l) A.I.R. 1947 Cal. 93.

•

•

S.O.R. SUPREME COURT REPORTS 237

-substance consistently with the view taken by it in the r9s9

case of J ugesseur Dey (1 ). N h · pp Ch ·

. ac ia a etliar

On the other hand-the Patna High Court has taken v.

a contrary view in Thakur Prasad v. Baleshwar Ahir Subramaniam

& Ors. (2). Jamuar, J., who delivered the judgment of Chettiar

the court, has considered the decision of the Calcutta -

High Court in the case of J ugesseur Dey (

1

) and has Gajendragadkar l•

dissented from it. In the Allahabad High Court some-

what conflicting views had been expressed on different

occasions; but, on

the question as to whether the

appellate court can refer a matter in dispute between

the parties to arbitration or not, and whether the suit

includes an appeal, the decision of the Full Bench of

the Allahabad

Higl). Court in Moradhwaj v. Bhudar

Das (

3

) seems to be on the same lines as that of the

Patna High Court. This Full Bench also considered

the question about the applicability of s. 21 to execu-

tion proceedings

but with that

aspect of the matter we

are not concerned in the present appeal. The Madras

High Court has taken the same view in Subramannaya

Bhatta

v. Devadas Nayak

& Ors. (

4

). However, none

of these decisions

had occasion to .consider the question

about the competence

of both the trial court and the

appellate .court in cases where a preliminary decree

has been passed

and an appeal has been filed against

the said decree. It would thus appear that the

majority of the

Indian High Courts have construed

the words " suit" and " court" used in s. 21 liberally

as including appellate proceedings

and the appellate

court respectively.

In the result we hold that the

trial court was competent to make the reference and

its validity is not open to any objection.

That leaves only one point to be considered. It is

urged

by the appellants that the arbitrators acted

. illegally

and without jurisdiction in directing the

. appellants to pay to the respondent Rs. 2,682-6-0 by

way of interest on the amounts specified in the award

up to December 5, 1944,

and from that date at the

rate of 5as. per cent. per mensem, thus imposing on

(1) 12 Beng. L.R. 266.

(2)

0

A..l.R. 1954 Pat. 106.

(3) A.I.R. 1955 All. 353.

(4) A.LR. 1955 Mad. 693.

·-·-~~·--;-,.:·,,,~ -~ ,

'~

•

-.

'

--238 StJPREME COURT REPORTS [1960{2)]

'x959 the appellants a total liability of Rs. 2,36,782-11-9.

Na&hiappa Chettia• :rhe appellants have also been directed to pay future

v. mterest on -the same amount at· Sas. per cent. per

Sub••maniam mensem from the said date until the date of payment.

Chettia• .· This argument is based solely, on the . observations

-made by Bose, J., who delivered the judgment of this

Gajendr•g~dka• f·Court, in ·Seth Thawardas Pherumal v. The Union of

India('). It appears that in that case the claim

awarded by the arbitrators was a claim for an unliquid­

ated sum to which Interest. Act of 1839 applied as

interest was otherwise

not payable by law in thatkind

of case. Dealing with the contention that the arbitr--ators could not have awarded interest in such a case

Bose, J., set out four conditions which must be satisfied

·before interest can be awarded under the Interest Act,

and observed that none of them was present in the

,

· case; and so he concluded that the arbitrator had no

power to allow interest simply because he thought that

the payment was reasonable. The alternative argu­

ment urged before this Court that interest could be

awarded under s. 34 of tl:1-e Code of Civil Procedure,

1908, was also repelled on the ground that the

arbitrator is, not a court within the meaning of the

Code nor does the· Code apply to arbitrators. Mr .

. Viswanatha Sastri relies upon these observations and

contends that in no case can the arbitrators award

interest. It is open to doubt whether the observations

on which Mr. Viswanatha Sastri relies support or were

intended to lay down such a broad and unqualified

proposition. However; we do

not propose to pursue -this matter any further because the present contention

was not urged before the High Court. It was no doubt

taken as a ground of appeal but from the judgment it

is clear that it was not urged at the time of hearing.

Under these circumstances we do not think we would

be justified

in allowing this point to be raised before us.

The result is that the conclusion reached by the

High

Court is right and so its order that a decree

should be

drawn in terms of the award must be

con­

firmed. Civil Appeal No. 112of1955 accordingly fails

and is dismissed with costs. It is conceded that if the -

(x) [1955] 2 S.C.R. 48.

•

•

•

S.C.R. SUPREME COURT REPORTS 239

principal appeal fails it would not be necessary to z959

make any effective orders on the rest of the appeals in N h. PP Chettiar

this group. The said appeals also fail and are ac ia v~

dismissed ; but there would be no order as to costs. Subramaniam

.A.ppeals dismissed.

• Chettiai'

Gajendragadkar J,

THE OKARA ELECTRIC SUPPLY CO. LTD.,

AND ANOTHER·

v.

THE STATE OF PUNJAB AND ANOTHER

(B. P. SINHA, C.J., P. B. GAJENDRAGADKAR,

K. SUBBA RAO, K. C. DAS Gui:TA and J. C. SHAH, JJ.)

1- ' Constitution--Electricity undertaking-Grant of temporary

sanction for supplying energy-Condition imposed for compulsory

acquisition of undertaking

on

. payment of compensatio.n-W hether

ultra vires-Stat11te authorising imposition of such condition­

W hether infringes fundamental rights-Indian Electricity Act, r9w

(IX of r9ro), s. 28(r)-Constitution of India, Arts. r9(r)(f) and

Art. 3r.

Section 28(r) of the Indian Electricity Act, l9IO authorised

the State Government to grant sanction to a non-licensee to

engage in the business of supplying energy on "such conditions

in this behalf" as it may fix. By a notification dated May 26,

1948, issued under s. 28(1) the first respondent granted sanction

to the first petitioner, to engage in the business of supplying

energy

to

Mliktsar. Clause II of the notification provided that

"' the Provincial Government shall have the option of acquiring

the undertaking at anytime after October 21, 1950, after giving

one year's notice

and that it shall pay the price of lands, buildings,

works, material

and plant. that may be acquired at the fair

market value.

On January 3, 1958, the first respondent issued a

notice exercising the option given under cl.

II and intimated to

the first petitioner that upon expiry of one year its undertaking

shall vest

and become the absolute property of the first respon­

dent.

On January 4, 1959, the first respondent took possession

of the undertaking in pursuance of the notice. The petitioners

contended

that cl. II of the notification was ultra vires s. 28 and

that if cl. II was justified by s. 28 then s. 28 was void as it

offended Arts.

19 and 31 of the Constitution. , ·

Held, that cl. II of the notification was intra vires s. 28.

A statutory provision which Q(!alt with the 9rant of sanction tq

-

I959

N oveniber r3.