Salima Bibi vs Md. Ibrahim Saheb

Umamaheswaram, J.—The simple question that arises for consideration in the Civil Revision Petition is as to the true scope and effect of the proviso to S. 47 of the Arbitration Act, which runs as follows:

Provided that an arbitration award otherwise obtained may with the consent of all the parties interested be taken into consideration as a compromise or adjustment of a suit by any Court before which the suit is pending.

Without obtaining the consent of the Court, the subject-matter of the suit was referred to arbitrators and an award was passed by them. According to the plaintiff-petitioner, the award was consented to by both the parties and in token of their consent, they signed on the award. When an application was made under the terms of Order XXIII, Rule 3, C. P. C. read with the proviso to S. 47 of the Arbitration Act, the husband-defendant, contended that he signed on the award without knowing its contents. The Courts below held that as he did not consent to the award at the time when the compromise petition was taken up for consideration, the terms of the proviso to S. 47 of the Arbitration Act were not complied with. I am unable to agree with the view taken by the Courts below.

What the proviso enacts is that an arbitration award otherwise obtained may be taken into consideration as a compromise or adjustment of a suit by any Court before which the suit is pending if all the parties consented to the award. The proviso does not state when the consent of the parties should be obtained. If before the filing of the award, the parties consented to it, the Court is entitled to take it into consideration as a compromise or adjustment of a suit within the meaning of Order XXIII, Rule 3, C. P. C. This view is in accordance with the observations of the Full Bench of the Madras High Court in Abdul Rahman Sahib Vs. Muhammad Siddig and Another, . The learned Judges Overruled the earlier decisions of the Madras High Court wherein it was held that a consent to refer to arbitration might itself be regarded as a consent to the award itself. The relevant observations are at page 799 (of Mad LJ) : (at p. 783 of AIR), and are in the following terms :

The consent here referred to must be something other than the consent to refer the dispute for arbitration because without such a consent there can be no arbitration proceedings and in requiring that an arbitration award may be taken into account only with the consent of the parties, the plain intendment of the enactment is that, to do so, there must be something more than a consent to refer to arbitration, that it must be a consent to the arbitration award itself.

As the parties have signified their consent to the award by signing thereon, I am inclined to hold, following the observations referred to supra, that the terms of the proviso are satisfied.

A contrary view has no doubt been taken by the Patna and Rajasthan High Courts in Zeauddin and Others Vs. Abdur Rafique and Others, nd Phool Narain v. Madan Gopal. (S) AIR 1955 Raj 162. In Zeauddin and Others Vs. Abdur Rafique and Others, Shearer, J. observed as follows :

It seems to me quite clear that the consent of the parties required under that proviso is a consent to Court taking the arbitration award into consideration, and not, as was suggested by the learned Advocate for the plaintiffs, a consent expressed by the parties out of court to be bound by the award.

No reasons are given by the learned Judge in support of that view. I fail to see why the parties should signify their consent to the award only when the matter comes up for consideration before the court. If they agree to abide by the terms of the award even outside the Court, I am inclined to think that the Court is entitled under the terms of the proviso to pass a decree under the terms of O. XXIII. R. 3, C. P. C.

The Rajasthan High Court followed this decision in (S) AIR 1955 Raj 162. According to the learned Judges, the plain meaning of the proviso is that the consent of the parties is required for taking into consideration the award as a compromise or adjustment. According to them "In other words, the court will not take into consideration an award otherwise obtained, if all the parties do not consent that it should be taken into consideration as a compromise or adjustment", and that "Any alleged consent outside the court is immaterial". With great respect to the learned Judges, I am not inclined to adopt their construction. If the construction put upon the proviso by the learned Judges is correct, a compromise decree cannot be passed in terms of the award even if they file a joint petition for so recording it if at the time of passing the orders one of the parties withdraws his consent. What has to be proved in each case is whether the parties have consented to the terms of the award. In my view, it does not matter whether the consent was signified outside the Court or before the Court. The Court will take into consideration the award if all the parties had consented to it. As the respondent had filed a counter stating that though he signed on the award, he did not know its terms, it is necessary that an enquiry should be held by the Trial Court as to the truth of his allegations. If the respondent makes out his case that he had not signed on the award with full knowledge of its contents no decree can be passed under the terms of the proviso.

The Civil Revision Petition is consequently allowed and the application remanded to the Trial Court for a determination of the truth of the allegations contained in the counter.

The costs will abide the result.

ORDER : After the judgment was delivered, Sri Bapiraju the learned Advocate for the respondent, invited my attention to the decision of this Court in Gaddipatti Laxminarayana and others Vs. Gangineni Venkata Subbaiah and others, The question that arose for decision was whether proceedings in execution could be the subject-matter of reference to arbitration. No consent of the parties to the award was given at any stage. Reference was made to an observation made by the learned Judges after setting out the terms of the proviso in the following terms :

The consent that is required is consent at the time when the award comes up for consideration....

The learned Judges had not to consider at what stage the consent had to be given as there was no consent at all of the parties to the award in the said case. The last sentence in the judgment ''If the award is agreed to after it is given it operates as an adjustment'', is inconsistent with the earlier observation relied on. The last sentence proceeds on the view that the consent of the parties to the award might be given even before it comes up for consideration. I am therefore clearly of opinion that this decision does not in any way affect the view expressed by me already.