Case: Munshi Ram Vs. Banwari Lal (deceased) &amp; Another

1. This appeal by special leave has been filed by one Munshi Ram, aagainst whom a decree based on a compromise, following an award by an arbitrator, is sought to be executed. The respondents are theThe appeal is directed against a common judgment and decrees of the Punjab High Court dated November 26, 1952 in two appeals under the Letters Patent (Nos. 5 and 11 of 1952) by which the orders of a learned single Judge of the High Court in Execution First Appeals Nos. 56 and 121 of 1951 were confirmed. The present appeal is, however, confined to the decision in L. P. A. No. 11 of 1952. To understand what these orders were, and also the point involved in this appeal, a somewhat long narration of facts is necessary.2. The following genealogy gives the relationship of the parties:Munshi Ram was adopted by Mangalsain, when the former was live orold. Mangalsain was separate from the other branch.3. There was a firm known as Kanhyalal and Sons, consisting of Kanhayalal and his two sons. The affairs of the firm fell on evil days. We are, however, not concerned with it, Munshi Ram had, on the other hand, started another concern by the name of "Munshi Ram, B. Sc." and that concern prospered. It appears that the respondents in this appeal claimed to be partners in that business. With the merits of their claim we are not again concerned. On October 30, 1946, there was an agreement between the contending parties, by which the dispute was referred to the sole arbitration of one Lala Premnath, Advocate. Lala Premnath gave an award on March 3, 1947, by which he awarded Rs. 50,000/payable to Faqir Chand as followsRs. 15,000 on April 4, 1947.(b) balance in three equal instalments on August 4, 1947, December 4, 1947 and March 4, 1948.Interest on any instalment defaulted atper cent, per mensem until payment.He also awarded Rs. 45,000 payable to Banwarilal as follows:(a) Rs. 15,000 on April 4, 1947.(b) balance in three equal instalments on the same dates as above with interest in the same way on default.There was also an award about the residential house called haveli, which was given in moieties to Faqir Chand and Banwarilal, including the portion built by Munshi Ram. The rest of the immovable property was given to Munshi Ram as hisproperty, and it was declared that Faqir Chand and Banwarilal would have no connection with or claim in the concern, "Munshi Ram, B. Sc.No action appears to have been taken for some time. But on April 4, 1947, Rs. 15,000 were paid to Banwarilal. On the request of Faqir Chand made on December 17, 1947, the arbitrator filed an application under S. 14 (2) of the Arbitration Act, on January 6, 1948. With this application, he produced a signed copy of the award. It may be pointed out that the original award has not been produced, and is said to be lost. On February 19,1948, the Stamp Auditor reported that according to the endorsement on the copy of the award, the original was written on a stamp paper of the value of Rs. 50/and that there was a deficiency of Rs.He recommended that the award be impounded. The SeniorFerozepore, ordered that the report would be considered, when the document would be produced.5. On July 11, 1948, Munshi Ram made an application for setting aside the award on the following, among other, grounds : (a) that the award was insufficiently stamped; and (b) that the award was not registered. He also alleged that the Arbitrator was guilty of legal misconduct, and that the award was given beyond time. These objections were replied to by the respondents. Meanwhile; it appears that there was some further settlement, and the parties stated that they were prepared to have a decree passed in accordance with the terms accepted by them. By an order dated October 18, 1948, the Court passed a decree on the award, modifying terms of the award according to the compromise. The objections of the Stamp Auditor as well as other objections were not considered.6. The modified terms in the decree were that instead of Rs. 50,000 and Rs. 45,000 payable to Faqir Chand and Banwarilal respectively, the sums payable were Rs. 46,000 and Rs. 41,000. In the award, it was provided as followsthe amount to be paid asfor the yearhas not been assessed so far. All the three parties shall be liable to pay that in equal shares.In the decree that was passed , it was set down"In fact both the petitioner and the second party No. 2 were entitled to receive a further sum of four thousand rupees each, but the second party No. 1 has deducted that amount from their shares on account of their share of thefor the yearshows that there was no difference between the award and the decree, in so far as the amounts were concerned. There was, however, a difference in the made of payment. These payments were as follows:Faqir Chandpaid,41,000It was also provided that the award was not operative, so far as the haveli was concerned, and parties would take other action. There was no other vital difference.7. On December 27, 1949, Banwarilal filed an application for execution of the decree for the defaulted instalment. On January 3, 1950, Munshi Ram filed objections by an application purporting to be under O. 47, r. 1, Ss. 47 and 151 of the Code of Civil Procedure. The main objections were that the order making the award into a rule of the Court after modifying it was "void, without jurisdiction, invalid and against law" on the following grounds:(1) The original award was not filed and only the original could be modified and not a copy.(2) The award was not properly stamped and without recovery of the deficit duty and the penalty, the proceedings were without jurisdiction.(3) The decree being an instrument of partition, must be stamped.The opposite parties joined issue. The SeniorFerozepore, by his order dated March 3, 1951, held that the original being lost, the copy was admissible, and decree passed was not without jurisdiction. In view of the decision in Dwarka Das v. Krishna Kishore ILR 2 Lah 114 : (AIR 1921 Lah 34), the parties admitted that a compromise could be made even after the award, and the Senioralso held likewise. He held further that the award was an instrument of partition, and that there was deficiency of stamp duty. The learned Seniorthen considered whether the decree needed to be stamped as an instrument of partition, and held that it was an instrument of partition, and could not be acted upon, unless either the award or the decree was properly stamped. He, therefore, rejected the application for execution, but added a riderAgainst the last direction quoted here, Munshi Ram appealed to the High Court of Punjab at Simla (Execution First Appeal No. 121 of 1951). Meanwhile, Banwarilal made a second application depositing the necessary stamp papers on March 10, 1951. By order dated March 28, 1951, the Executing Court impounded the decree, and sent it to the Collector. Against that order, Banwarilal appealed to the High Court (Execution First Appeal No. 56 of 1951).Munshi Ram also appealed, but his appeal has not been printed in the record here.9. These two appeals were heard by a learned single Judge of the High Court but at different times. The first to be heard was Execution First Appeal No. 56 of 1951, in which order was passed on December 28, 1951. That was the appeal of Banwarilal against the order of March 28, 1951 impounding the decree and sending it to the Collector. Munshi Rams appeal against the same order was not then heard. The appeal of Banwarilal was treated by the learned single Judge as a revision. According to the learned Judge, the order did not fall within S. 47 of the Code of Civil Procedure. The learned Judge. . . . . . . . . I am of the opinion that the Court was justified in not proceeding with the execution application on the 3rd March, 1951. But once on an application made by theit had ordered the stamp duty to be put in and the stamp had been put in, the decree passed had become a properly stamped decree. The proceedings which had been brought on an application dated the 27th of December, 1949, had ended on the 3rd of March, 1951 and could not be reopened unless some proper proceedings had been taken and no such proceeding was taken. On the other hand on the 10th of March, Banwari Lal applied that stamp duty be allowed to be put in which was allowed and, therefore after the proper stamp duty had been put in there was left no unstamped decree on the file . .. . .. . .... . if the Court had carried out its own orders there would not have been any unstamped decree to be impounded on the 28th Marchlearned Judge repelled the argument of the counsel for Munshi Ram, who urged that the decree was a nullity or was unexecutable, which, he held, did not arise at all in that appeal treated as a revision. The order impounding the decree was therefore, set aside.10. The learned Judge then heard Execution First Appeal No. 121 of 1951.That appeal was filed by Munshi Ram against the direction in the order of March 3, 1951. The learned Judge by his judgment dated June 16, 1952, held that the appeal was incompetent and that he would not interfere in revision. It appears that the other appeal against the order of March 28, 1951 by Munshi Ram was also heard, but it was also dismissed, though no reasons appear to have been given separately, perhaps because the order appealed against, had already been set aside by the learned Judge in the appeal decided on December 28, 1951.11. Against these orders, two appears under the Letters Patent were filed by Munshi Ram. L. P. A. No. 11 of 1952 was filed against the order dated June 16, 1952 passed in Execution First Appeal No. 121 of 1951. L. P. A. No. 5 of 1952 was filed against the order in the appeal of Banwarilal, which was decided on December 28, 1951. These two appears were dismissed by a common judgment in L. P. A. No. 5 of 1952 on November 26, 1952, though a separate short order was also passed in L. P. A. No. 11 of 1952.

Reasoning: This point does not seem to have been urged in the High Court or in the Court below. When the matter was before the SeniorFerozepore, it was conceded, in view of the decision of the Lahore High Court in ILR 2 Lah 114 : (AIR 1921 Lah 34), that the parties were entitled to enter into a compromise regarding the terms of the award, and that a decree could be passed on the basis of an award modified by such a compromise.In the appeal which was filed by Munshi Ram against the decision of the SeniorFerozepore, no ground was taken that the compromise could not be recorded, or that by compromise the award could not be modified. The only objection then taken was that the award was insufficiently stamped and not registered, that secondary evidence of the award could not be admitted, and further that no decree could have been passed on the basis of the copy of the award produced as secondary evidence. There was a general ground that the decree in question was wholly without jurisdiction, and that the learned "trial Court" lacked inherent jurisdiction to pass such a decree. This ground obviously had reference not to the point of law now mooted but to the grounds on which the award was attacked. As a result, we find no mention of the present point in the two orders passed by Kapur, J. (as he then was). When the matter was taken to the Divisional Bench by appeals under the Letters Patent, no point bringing out the controversy was raised. The only objection was that the Court had no jurisdiction to order that the copy of the award should be stamped, and it was urged that the decree passed on the basis of the unstamped award was a nullity, and could not be executed. The point, now urged, therefore, does not figure in the judgment of the Divisional Bench, against which the present appeal has been filed. Further, even when an application was made for a certificate, this point was not mentioned as one of the grounds of appeal. All the points that were urged then are mentioned in the order refusing certificate. It was only when the petition for special leave was filed in this Court that this point was included, and as many as eight separate grounds were urged, which, as has been shown above, were not taken at an earlier stage. On this ground alone, this Court should decline to consider this matter, and this appeal should be dismissed. Further, the decree was never questioned on this ground, as it could hardly be, since it was passed on consent of the parties. It a now being characterised as a nullity, because in execution, a decree can only be questioned on the ground that it is a nullity. We need not go to these objections, since the point was argued before us, and as there appears to be a conflict of view in the High Courts upon the subject of compromises following awards by arbitrators, we think it proper to decide the question whether after an award is filed in the Court, and parties enter into a compromise modifying the terms of the award, the Court can pass a decree on the award, as modified by the parties.In our opinion, cases under the Arbitration Act of 1899 cannot afford a good guidance in this matter. As has already been pointed out, under that Act the award was itself executable as a decree, and the Court was not required to pronounce a judgment or to pass a decree. If the Court had not the power to pass a decree at all, it could even less pass a decree modifying the award even by the consent of the parties.We are aware that the Privy Council case has led to a great difference of opinion in India; but it does furnish the right cue to the decision of the problem with the view of avoiding the anomalies pointed out by Chakravartti, J. When an award is given, the parties cannot, under the Act, challenge it except as laid down there. The powers of the Court are indicated by the Act. They are limited to accepting the award, if there be no objection and passing a decree in accordance therewith, or superseding the reference or revoking or modifying the award or remitting it for further consideration, as laid down in the Act. But, the Act does not disable the parties from terminating their dispute in a different way, and if they do, it could not be intended by law that a dispute, which has been successfully terminated, should again become the subject of litigation. If the parties are dissatisfied with the award and want to substitute it by a compromise involving matters alien to the original dispute which are inseparable, the Court may supersede the submission and leave the parties to work out their agreement in accordance with the law outside the Arbitration Act. In such circumstances the new compromise itself may furnish a very good ground for superseding the reference and thus revoking the award, as said by Chakravartti, J. Where the parties do not throw the award overboard but modify it in its operation the award, in so far as it is not altered, still remains operative and continues to bind the parties and cannot be revoked. In that contingency, the Court may follow one of two modes indicated by the Privy Council in Hemanta Kumaris case, 46 Ind App 240 : (AIR 1919 PC 79). If the whole of theof the compromise is within the reference, the Court may include in the operative part of the decree the award as modified. But if it is not so, the Court may confine the operative part of the decree to the award as far as accepted and the other terms of settlement which form a part thereof, if severable and within the original reference, in a schedule to the decree. The portion included in the operative part would be executable, but the agreement included in the schedule would be enforceable as a contract, of which the evidence would be the decree but not enforceable as a decree. The power to record such an agreement and to make it a part of the decree, whether by including it in the operative portion or in the schedule to the decree, in our opinion, will follow from the application of the Code of Civil Procedure, by S. 41 of the Arbitration Act and also S. 141 of the Code. It only remains to point out that in a reference without the intervention of the Court, the Court has no general jurisdiction over theas in a reference in a pending suit. If the submission is superseded in the former, there is nothing more the Court can do, but in the latter, the Court must proceed with the suit before it, and give effect to the compromise in the suit according to law.20. In the present case, the decree on the award was properly framed, because the award made room for adjustment of theordering that thewhen assessed, would be borne equally by the three parties, and the compromise merely worked out that direction by reducing the amounts payable to the two respondents by Rs. 4000/each. The compromise, on this part, did not go outside the award, but was a direct consequence of the award. It quantifiedwhich, under the award, was to be quantified later. The amounts were the same which were originally payable, less theThe only difference was as to the made of payment, and instead of three instalments per quarter, the amount was payable in mare instalments yearly. This, in our opinion, was a matter on which the parties could agree, and the Court could substitute their agreement in the operative part of the decree. There is nothing in the Arbitration Act, which disentitles the Court from taking note of an agreement of this character, and, in our opinion, the decree cannot be characterised as a nullity on this ground.