Indian Kanoon - Search engine for Indian Law

3. The application was resisted by the original plaintiff on various grounds. By its reply at Exhibit 229, the plaintiff-Board contended that the application of the defendants does not satisfy the requirements of Order 23 Rule 3 of the Code of Civil Procedure and, therefore, such application was not maintainable. It is also the case of the plaintiff that the alleged agreement regarding referring the dispute to the Arbitrators is dated 11-2-1994, but in view of the provisions of Chapter IV of the Arbitration Act, 1940, in a pending suit, the reference can be made only in accordance with the provisions of the said Chapter. It is also averred that the Arbitrators have not followed the procedure, as required under the Arbitration Act. It is also averred that the award was not published within a period of four months from the date of entering into the reference. It is also the say of the plaintiff that no stay was granted under Section 34 of the Arbitration Act. It is stated by the plaintiff in its reply that both the Arbitrators, one Zinabhai Darji as well as one Arvindbhai Buch, both were Trustees of defendant No. 1-Trust and on that ground, the Award is vitiated. It is also the say of the plaintiff that the Arbitrators should have functioned in a quasi-judicial manner and that, their enquiry should not have been a slipshod one. The Arbitrators had not even heard the matter in an appropriate manner.

Both the sides have also cited various judgments in connection with the award given by the arbitrator in a pending suit without the intervention of the Court.

8. The principal question which requires consideration in this revision is whether the Court is bound to pass a decree, as contemplated by Order 23 Rule 3 of the Code of Civil Procedure on the basis of such award, if one of the parties is not willing to abide by the said award of the arbitrators.

9. Considering the arguments of both the sides, it is, as such, not in dispute that, in a pending suit, the parties have decided to refer the dispute to arbitrators without intervention of the Court in any manner. Under the circumstances, such award is required to be treated as an award as provided in the proviso to Section 47 of the Arbitration Act. It is not in dispute that so far as the award of the arbitrators is concerned, the same is governed by the Arbitration Act, 1940. The effect of such award is, therefore, required to be examined in the light of the provisions of Section 47 of the Arbitration Act, 1940. Section 47 of the Arbitration Act, 1940 provides as under:

As pointed out earlier, a compromise of the dispute requires willingness of both the sides and cannot be willingness of one side, and such willingness can be ascertained, if, ultimately, both the sides agree to sign the consent terms. This position is also very clear in view of Order 23 Rule 3 of CPC, by which it is clearly provided that it should be proved to the satisfaction of the court that a suit has been adjusted wholly or in part by any lawful agreement or compromise (in writing and signed by the parties). Now, when the plaintiff is not willing to sign the said consent terms, the Court has no alternative but to proceed with the suit on its own merits, ignoring the so-called settlement or compromise of the suit. Even apart from the said provision of Order 23 Rule 3, even proviso to Section 47 of the Arbitration Act, 1940 itself provides that such award of the arbitrators can be taken into consideration for the purpose of adjustment of the suit or as a compromise of the suit, with the consent of all the parities. If all the parties are not giving consent for accepting such award, naturally, the same cannot be treated as a compromise or adjustment of a suit pending before the court. Such award, therefore, which is given by an arbitrator in a pending suit can only be pressed into service as an adjustment or compromise of a suit and the effect of such award would be nothing but a document of compromise or adjustment of a suit and not beyond that. Under the circumstances, the Court is not bound to pass a decree solely on the basis of the award of such arbitrators, simply because initially, the party might have agreed to go to arbitrators by consent. In my view, considering the proviso to Section 47 of the Arbitration Act, 1940 as well as Order 23 Rule 3 of the Code of Civil Procedure, such award can be treated as a compromise or adjustment. Even at the time of presenting such compromise, the parties should have shown their willingness to abide by the same.

12. Mr. Dayani, learned Advocate for the petitioners, has cited certain judgments of other High Courts. However, in my view, considering the judgment of the Apex Court in Naraindas's case (supra), and considering the provisions of Section 47 of Arbitration Act, 1940, and Order 23 Rule 3 of the Code of Civil Procedure, no view, other than the one taken by the trial court, is possible, by which the trial court has found that unless the plaintiff is willing to sign the said compromise, the court cannot accept the same for the purpose of recording the satisfaction of compromise as provided under Order 23 Rule 3 of the Code of Civil Procedure. So far as proviso to Section 47 of the Arbitration Act, 1940 is concerned, it deals only with the compromise or adjustment of the suit and the said provision does not deal with the satisfaction of the claim of the plaintiff. So, while considering the application of the defendants for the purpose of recording the compromise, the court is required to consider the proviso Section 47 of the Arbitration Act, 1940, which deals with two things, (i) compromise; or (ii) adjustment. In a pending suit, if the party chooses to go before the arbitrators, without the help of the Court, such award can never be said to be an enforceable award, as discussed earlier, as per the provisions of the Arbitration Act, 1940, but is required to be given limited effect of recording the compromise as provided in the provision of Order 23 Rule 3 of CPC as well as the proviso to Section 47 of the Arbitration Act, 1940. At this stage, reference is also required to be made to the judgment of the Apex Court in Gurpreet Singh v. Chatur Bhuj Goel AIR 1988 SC 400. The said decision is in connection with Order 23 Rule 3 of CPC regarding compromise of the suit. In paragraph 10 of the said judgment, it has been held by the Apex Court that under Rule 3 of Order 23 of CPC, when a claim in a suit has been adjusted wholly or in part by any lawful agreement or compromise, the compromise must be in writing and signed by the parties and there must be a completed agreement between them. In paragraph 10, it has been held as under :