Posted On by &filed under Calcutta High Court, High Court.

Calcutta High Court
Soudamini Ghose vs Gopal Chandra Ghose on 8 June, 1914
Equivalent citations: 28 Ind Cas 557
Author: Beachcroft
Bench: A Mookerjee, Beachcroft


1. This appeal is directed against an order under Clause (1) of paragraph 21 of the second Schedule of the Civil Procedure Code of 1908, The Court below has ordered that an award made by arbitrators without the intervention of the Court be filed. A preliminary objection has been tai fin to the competence of the appeal, on the ground that as a decree has already been drawn up in accordance with the judgment pronounced on the basis of the award and as such decree is not open to appeal under Clause (2) of paragraph 21, the order must be deemed to have merged in the decree and to be no longer liable to be challenged by way of appeal. In our opinion, the preliminary objection must be overruled. It cannot be disputed that under Clause (f) of Sub-section (1) of Section 104 of the Code, an appeal lies from an order tiling or refusing to file an award in an arbitration without the intervention of the Court. Such appeal may be preferred at anytime within the period prescribed therefor by the Indian Limitation Act. The fact that a decree is drawn up on the basis of the judgment which follows the order cannot take away the right of appeal of the party aggrieved by the order. No doubt, the decree cannot be assailed by way of appeal, except on the ground that it is in excess of or not in accordance with the award. But this does not justify the inference that as soon as the decree is drawn up, the order which is its foundation becomes merged therein and loses its character as an appealable order. It has been argued, however, that this view may lead to an anomalous result, namely, that if the appeal is entertained and ultimately allowed, the order will stand cancelled, while the decree based thereon will remain unaffected, because it has never been challenged by way of appeal, as he limited ground on which it can be attacked does not exists. This position has been sought to he illustrated by a reference to the concrete facts of the present case. The order under Clause (1) of paragraph 21 was made by the Subordinate Judge on the 30th June 1911, and on that very day, he pronounced judgment according to the award. The decree on the basis of the judgment was drawn up on the 4th July 1911, but, as required by Rule 7 of Order XX of the Code, bore the date of the judgment. The present appeal against the order was lodged on the 30th September 1911. No appeal has ever been preferred against the decree, as there is no reason to hold that the decree is in excess of or not in accordance with the award. Under these circumstances, it has been argued on behalf of the respondent that if the present appeal is entertained and allowed, the decree will still remain operative, and that consequently, it would be idle to hear this appeal on the merits. This argument is manifestly fallacious. If this appeal is allowed, the decree will become infructuous; the whole foundation of the decree will disappear; and it will be competent to this Court to declare that the decree had been vacated, because the order on which it was based had been cancelled. We hold, accordingly, that this appeal is competent and this view is in record with that adopted in Sabitree v. Promoda Prosad 19 Ind. Cas. 941 : 21 C.L.J. 248 and Khetter Nath v. Ushabala Dasi 22 Ind. Cas. 391 : 18 C.W.N. 381.

2. To appreciate the merits of the controversy between the parties, a brief outline of the facts is essential. One Umes Chandra Ghosh, husband of the appellant and father of the respondent, died in 1909. He had made a testamentary dispositions of his properties on the 3rd June 1906, by which he appointed his widow (the appellant) and his son by a predeceased wife (the respondant) as the executors of his estate. The widow and the son jointly applied for probate of this Will, which was granted to them by the District Judge on the 7th June 1910. Before the probate had been granted, however, on the 18th May 1910 the widow and
the son executed an ekrarnama by which they referred to three rbitrators the disputes which had arisen between them as to the construction of the Will, as to their right to possess and enjoy the properties covered thereby and several other matters. The ekrarnama expressly states that, should the arbitrators deem any of the terms of the Will indefinite or illegal, they would be competent to alter such term and to make a definite and reasonable provision in place thereof agreeably to the intention of the testator. On the 20th July 1910, the
arbitrators made their award. On the 26th September 1910, the son pplied, under paragraph 20 of the second Schedule of the Code, for enforcement of the award. The widow resisted the application on the ground, amongst others, that the award was invalid because based on a submission which was illegal and beyond the competence of the parties. The Subordinate Judge has overruled all the objections taken by the widow, directed that the award be filed and made a decree in accordance therewith. In our opinion, the order of the Subordinate Judge cannot be supported.

3. The parties to the submission were executors to the Will of the testator; they had applied for probate of the Will which was shortly afterwards issued to them. They are bound by the terms of the Will and it is their duty to administer the estate in accordance therewith, subject to the control of the Probate Court. They proceeded, however, by means of a reference to arbitration, to arrange for the administration of the estate as if they wore not joint executors, and for its possession and enjoyment independently of the provisions of the Will. They expressly authorised the arbitrators to substitute for the provisions of the Will, which might seem to them indefinite or illegal, other provisions agreeably to what might be imagined to have been the intention of the testator; in other words, the executors, in their submission, authorised the arbitrators to make a new Will for the testator. The arbitrators have literally availed themselves of the authority thus conferred upon them, and a comparison of the provisions of the Will with the elaborate directions given by the arbitrators for the management and distribution of the estate will make manifest the extent to which they have departed from the provisions of the Will. The question, consequently, arises whether an award of this character, based on a submission which was clearly beyond the competence of the parties, should be enforced by the Court.

4. It is an elementary rule that as a submission to arbitration is a
contract, the parties thereto must not only have a general legal capacity to contract, but they must also have such power in relation to the subject-matter of the submission as will enable them to carry into effect any order which could be legally and properly laid upon them by the award. To put the matter briefly, capacity to make a submission is co-extensive with capacity to contract; every person capable of entering into a contract may be a party to a submission; conversely, he who cannot contract, cannot make a submission; and, as a necessary corollary, in the case of persons whose capacity to contract is
restricted, the power of making a submission is, in the same manner and to the same extent, limited. Consequently, if parties enter into a submission concerning a subject-matter over which one of them has no authority or only a restricted power of disposition, an award ordering such party to do that which he cannot lawfully do will be of no legal effect whatever. This is well illustrated by the case of Wyatt v. Benson (1857) 23 Barb. (N.Y.) 327. There a religious corporation, having no power to sell its real estate except with the consent of the Supreme Court, submitted to arbitration the question of sale of a particular property; the arbitrators ordered the sale to be made; it was ruled that their award had no force or effect whatever. On this principle, it has been held that if an arbitrator directs a party to do anything which he is not competent under the law to do, the direction is invalid. In Bacon’s Abridgment, Tit. Arbitrament and Award, E. 4, it is stated that the award to he valid, must be of a thing lawful. Illustration of the application of this doctrine may be found in more than one casein the books. In Wood v. Griffith (1818) 1 Swanston 43 : 18 R.R. 18 : 1 Wilson 34 : 36 E.R. 291 Eldon, L.C. observed that either the Court of Chancery nor any other Court will enforce an agreement, by which, if carried into execution, the parties will be compelled, under the process of a Court of Justice, to do that which in the view of justice is criminal. In Turner v. Swainson (1836) 1 M. and W. 572 : 46 R.R. 402 : 2 Gale 133 : 5 L.J. Ex. (N.S.) 266 : Tyr. & Gr. 933 Parke B. accepted the contention that an arbitrator clearly could not direct one of the parties to do that which would make him liable to other persons as a trespasser. We must not be taken, however,
to countenance the proposition that an executor or administrator is not
competent under any circumstances to make a reference to arbitration; such right cannot be disputed when exercised within the limits of his authority. Bean v. Farman (1828) 6 Pickering (Mass) 269 Halsbury’s Laws of England, Volume I Article 948. But it is equally plain that an executor cannot make a reference to arbitration with the avowed purpose that the terms of the Will may be modified and arrangements made for the management and distribution of the estate contrary to the directions of the testator. The case before us is plainly not one of
submission to arbitration by an executor for the settlement of any debt, account or claim in relation to the estate in his hands. The arbitrators are, no doubt, asked to construe the Will; and it need not be disputed that pure questions of law may be referred to the decision of an arbitrator: Stiff v. Andrews (1816) 2 Madd. 6 : 56 E.R. 237; Ching v. Ching (1801) 6 Ves. 281 : 31 R.R. 1052 Young v. Walter (1804) 9 Ves. 364 : 7 R.R. 224 : 32 E.R. 642; Mathew v. Davis (1842) 1 Dowing (N.S.) 679; Ghulam Khan v. Muhammad Hassan 29 C. 167 : 29 I.A. 51 : 6
C.W.N. 226 : 25 P.R. 1902 : 12 M.L.J. 77 : 4 Bom. L.R. 161. But the arbitrator’s are hero authorised to do something more than a construction of the Will which, as their Lordships of the Judicial Committee said in Venktata Narasimha Appa Row v. Parthasarathy Appa Row 23 Ind. Cas. 166 : 19 C.L.J. 369 : 37 M. 199 : (1914) M.W.N. 299 : 12 A.L.J. 315 : 18 C.W.N. 554 : 26 M.L.J. 411 : 15 M.L.T. 285 : 16 Bom. L.R. 328 does not menu an addition to the terms of the Will. They are
empowered to alter the terms of the Will. This plainly was not within the competence of the executors.

5. There is a further difficulty in the way of the enforcement of this award. It cannot be disputed that as a submission only refers to the arbitrator questions between the parties, the moment he touches the interest of strangers, he exceeds his authority and his award is void: Turner v. Swainson v. (1836) 1 M. and W. 572 : 46 R.R. 402 : 2 Gale 133 : 5 L.J. Ex. (N.S.) 266 : Tyr. & amp; Gr. 933; Alder v. Savill (1814) 5 Taunton 454 : 15 R.R. 551 : 128 E.R. 766; Lewis v. Rossiter (1875) 44 L.J. Ex. 136 : 33 L.T. 260 : 23 W.R. 832. The principle is well-illustrated by the case of Ingram v. Milners (1807) 8 East 445 : 103 E.R. 414. There, the arbitrator ordered some bankers, parties to the
reference, to pay to the other party, the defendant, out of funds in their hands belonging to a firm of which the defendant was a member, a certain sum stated to be the amount of a debt due to the defendant from his partners, who were, however, not parties to the submission. It was ruled that the direction was void. In the case before us the plaintiff and the defendant are two of the legatees under the Will, and the daughters of the testator, who are not parties to the submission, have a substantial interest in the estate. They are entitled to succeed in the specified contingencies, and one of them was entitled to be married at the expense of the estate. They are in no way bound by this award. In these circumstances, it is impossible for the Court to enforce this award to the detriment of persons who are not parties thereto.

6. The question finally arises, whether it is competent to one of the parties to the submission to take exceptions to the legality of the award. Paragraph 21 of the second Schedule of the Code provides that the award is to be filed, only if no such ground as is mentioned in paragraph 14 is proved. The ground mentioned in Clause (c) of paragraph 14 is an objection to the legality of the award apparent upon the lace of it. Now, the award in this case mentions expressly the Will of the testator and also the deed of submission, and a perusal of the Will and the submission along with the award makes it manifest that the award is illegal and should not have been ordered to be filed. We may add that it is well settled that submission to an arbitration does not operate
as a waiver of an extrinsic objection that the award is illegal because based on an illegal act or subject-matter: Steers v. Lashley (1794) 6 T.R. 60 : 101 E.R. 435.

7. The result is that this appeal is allowed, the order to file the ward set aside, and the application under paragraph 20 of Schedule II of the Civil Procedure Code dismissed with costs in both Courts. The decree of the Subordinate Judge will also stand cancelled. We assess the hearing fee in this Court at five gold mohurs.

Beachcroft, J.

8. I agree.

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