HADJIAR v. RAHEEM et al

115-NLR-NLR-V-21-HADJIAR-v.-RAHEEM-et-al.pdf


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Present ; De Sampayo J. and Loos A.J.
HADJIAR v. RAHEEM et al.
(The Alim Will Case.)
32—D. C. Colombo, 864.
Testamentary suit—Reference to- arbitration by privateagreement—Appli-
cation to file award in Court—Civil Procedure Code, 696—Whencase is pending, reference to arbitration can only. be made by Court—Jurisdiction of District Court—Civil Procedure Code, s. 406.
An applicationfor probatebeing refused, an appealwas
preferred tothePrivyCouncil.TheDistrict Judge, inthemean-time, granted lettersof administrationon the footingofan intestacy
to an officer of the Court, and made order that some of the heirsshould bring in a certain sum of money which they had into Courtor give security. Atthisstagethe-parties desiredtocome to . a
settlement onall matters, including the appeal to thePrivyCouncil
and distribution oftheestate,andreferred thematters – to the
arbitration. ofN bya private agreement.' The awardwas -accepted
. by all theparties onthe faceofthe document, andtheysigned
the same asfinaland binding on them. The petitionersbrought
the awardintoCourtin a specialcase, and appliedbypetition
that the award be filed in Court under the provisions of section 096of the Civil Procedure Code.
Held,' thatthe'matters – referred to arbitrationbeingalready
the' – Subject ; of litigationin thetestamentary suit,theaward was
not such as can be filed under section 696.
Where a ' suit is pending, a" reference to arbitration can – only bemade by the Court1 itsdf h* that suit.
1980.
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Held further,that the DistrictCourthadno jnriadictionover
the matterin aseparate suitasdistinguishedfrom thetestamentary
suit.
“ This doesnot imply that theawardiswholly useless,and
effeotmay not begiven toitinsomeotherway.Theawardappears
to be binding onthe partiesasregards themethod ofdistribution
of the estate in the testamentary suit and other matters connectedtherewith, andalthough the awardcannotbedealt with assuch
under thearbitration sectionsofthe Code,it may,nevertheless,
be treatedundersection 408ofthe Codeas an adjustment of
compromise arrived at by the parties. ”
rpHE facts are set out in the following judgment of the DistrictJudge (W. Wadsworth, Esq.): —
This is somewhatnovel application,andhas noprecedent inCeylon.
One Ahamadu Lebbe Marikar Alim died intestate in December, 1917,leaving verylarge property,and leaving behindhimhis widow and
several children as heirs. Some of the children are minors. Some ofthe heirsproduced awill allegedtohave beenmadebythe deceased,
but the Court in case No. 6,176 held that the will was not made by thedeceased,and refusedto admitittoprobate. IncaseNo.6,415of this
Courts letters of administration were issued to the widow and two of thesons of the deceased jointly, and the estate is being administered now.
The present petitioners state that “ differences having arisen betweenthe petitioners and respondents in regard to the distribution of theestate of the saiddeceased amongsttheheirs, the petitionersand the
respondents referred such differences by two writings (which theyproduce) to the arbitration of one Naina Marikar, whose decision theyagreed to accept as final and binding on them.”The petitioners
further statethat the saidarbitrator accordinglymadehis award, and
they producethe said award(in two documents).Theymove the Court
that theaward maybe filedinCourt in terms ofsection 696of the
Civil Procedure Code. In effect they ask' the Court that the award beingfiled in Court judgment be entered in terms of the award and a decreeentered thereon. Thefifth respondent,oneof theheirs, objectsto ' this
award being filed in Court under that section. He has raised severalobjections. Some very important points of law were raised and werediscussed by counsel on both sides with marked ability.
As I indicated at the argument, the chief question appears to be, in thefirst place, whether an award of this kind can be brought under theprovision of section696, CivilProcedureCode, to form the basisof a
decree by itself.
The chapter inour CivilProcedureCode—chapter LI.—whichdeals
with “reference toarbitration” maybeclassifiedunder threeheads: —
Sections 676 to 692 deal with reference to arbitration in a pending
case, where all theparties toan actiondesire the matter to he referred
to arbitration.
Sections 693 to 695 provide for the case of persons agreeing torefer any matter in dispute or difference to arbitration, and seeking theinterference of the Court to enforce the agreement.
8. Sections 696to 698 provide foran award made withoutthe
interference of a Court to be made binding on parties thereto.
The threekindsare, inmy opinion, distinct,and apply to different
circumstances. The firstrelates to casespending inaCourt, where the
subject-matterindispute ordifferenceis *n euttoiia legit, where the
Court havingjurisdictionhadalready taken cognizanceofthematter
»mt exercisedjurisdiction,butwhere before adjudicationalltheparties
desire to refer the matter to arbitration. The Court has completecontrol, andthereference is only onthe orderof the Court. It has
power to correct, modify, or return theaward, andeven to set it aside
or make order superseding the reference, and exercise its jurisdictiondirect. In such a caseof reference toarbitration thejurisdiction of the
Court, whichhadbegun tobe exercised, is notdivested, bat a certain
mode is prescribed,withmanysafeguards,to delegate itsjurisdiction
to a person or persons, at the express desire of all the parties to the action,to decide the matterindisputewithout thestrict proof ofthe several
matters as required by law of evidence, and without the observance of anyrule or procedure. The award of the arbitrator must be made within aprescribed time, and ifnot set aside orrejeated, orifit is not invalid, for
any of the reasons prescribed in the different sections, a judgment isentered in terms oftheawardand decreeentered thereonhaving the
same effect of a decree entered after adjudication by the Court itself, midexecution of that decree is allowed as in any ordinary decree.
In the second class there is no action pending. The sections relatingto this do not relate to any action in which a Court of competentjurisdiction had taken cognizance and exercised jurisdiction. Itprovides for cases where persons having dispute or difference agree inwriting that such difference be referred to arbitration, and then come toCourt and seek itsinterferenceto enforcethe agreementto arbitrate
in the exercise of its power and authority as is provided in these sections.The Court thereupon exercises its jurisdiction, and proceeds to order thereference to arbitration. It is thus brought in eustadia legit, and theCourt’spowers thereafter are the sameasin referenceto arbitration
under the firstheading.The award issubject to the same limitations
and control by Court.
In thethird class (sections 696 to 698),too,there is noaction pending.
No matter is in the custody of the Court. The sections do not relateto anyreference to arbitration throughtheinterventionof the Court.
In fact, thesection does not speak ofany personor of any party tothe
referenceor the award itself. No form ofreference ismentioned. It
does not speakof anymatterin difference or in dispute between any
persons whatsoever. The section provides for a particular circum-stance,and that circumstance alone.Thesection runs as follows:
“ When any matter hasbeenreferredto arbitration without the inter-vention of acourt ofjustice, and anaward hasbeen made thereon,any
person interested in the awardmaywithin sixmonthsof the making of
award apply to the courtofjurisdiction over thematter to which
the award relates that award be filed in Court. "
This section provides for a special proceeding in a particular case andunder particular circumstances.Itrelates toa casenot contemplated
in either ofthe twoclasses mentioned above.The 'contention thatthe
words “anymatter”in this sectionshould beconstrued to apply,also
to matters for which provisionhadbeen madein theearlier sections is
untenable. .The fallacy ofargument is dear. Because the "section
provides for aparticularcase,thereforeall cases can be brought under
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ff<
'v. 1
this particular case.Because thesection provides foracase where
suae . matter had beenreferred toarbitration' withouttheintervention
of the Court, and therefore,allmatters can bereferred toarbitration
withouttheinterventionofthe Court,If matters in disputein an action
already pending maybebrought under "any matter"insection 696,
there is no necessityforsections 676to -692 and for thesafeguards placed
thereininrespect ofthereferenceand award and forthe exercise
of any control by Court. I take it that the Legislature in providingspecialproceeding forreference to arbitration in a matter which has
already been brought in custadia legit, and over which the Court hascommencedto exerciseitsjurisdiction,did not want thejurisdiction of
the Court to be ousted.
In this case the matter of the administration of the estate of the Alimis pending in this Court. Letters of administration has been orderedto be issued to certain persons. The powers of the. administrators arelimited by the order. They are answerable to the Court for the assetsof estate and for the due distribution thereof. If the heirs amongthemselves had come to some arrangement as to the distributor of theestate, whether such arrangement had been effected between themselvesor by the intervention of athird person called an arbitrator,the juris-
diction of the Court in the testamentary proceeding is not ousted, butthe administrators must continue to administer the estate and give anaccount of their administratorship. If in the distribution of the estatethey act in terms of any agreement or settlement, or if, ignoring thesettlement, they distribute the estate according to the law of inheritance,the legality of their act can only be adjudicated upon in the testa-mentary proceeding. There is ample provision in our law for anyperson interested in the estate to question the distribution or theaccounting of an estate by an administrator, either in a judicial settle-ment of account or by separate action.
To adopt a special proceeding prescribed for a particular case andthereby obtain adecreeto bindadministratorswho had notbeen
parties to any compromise qua administrators, and who had not obtainedthe authority ofCourt toact inthe matter,especiallywheretheir
powers had beenspeciallylimitedby Court, will beto oustthe
testamentary jurisdictionof the Court. In Ceylon there is no pro-vision for the Court inits civiljurisdictionto entera decree to supersede
or vary any decree or order made in its testamentary jurisdiction.
Inmy opiniontheprocedure adoptedby thepetitionerscannot be
entertained. Section 696 oftheCivil ProcedureCode doesnot apply.
Any compromise, agreement,oradjustment asregards thedistribution
of the estate must be brought up in dne course in the testamentaryproceedings wherethe estate isadministered.Becausetheadjust-
ment has taken the form of an award by an arbitrator agreed to by theheirs, it can in law have no more sanction than any agreement enteredintoby the heirsindependentlyof the interventionof a thirdperson. I
find that this application cannot be maintained.
In view of this finding, I do not consider it necessary to go into theother objections raised or to express any opinion, except to mentionthatthe award isonthe faceof it snchthat nodecree canbe entered
up in termsof the award soas to be capable of execution, forit is im-possible to say against whomsucha decree could be entered orenforced,
certainly not against the administrators of the estate of the deceased.
I dismissthe application,withcosts. Petitioners will paythe costs
of the fifthrespondent. Theotherrespondents will bear their own costs.
The guardians of the minor respondents will bear their costs personally.
Keuneman (with him H. E. damn), for appellants.
A. St. V. Jayawardene^ tar the respondent.
The following oases were cited in the course of the argument: —Ayyagi v. Desai,1 Kalliandas v. Mandachand,* Sagurmall v. Mathura-das,3 Chetti v. Chetti,* Samibai v. Pragji,3 Khan v. Haasan,3 Tin-cowny Bey v. Fakir Chand Dey,7 Mahadee v. Krishna,3 Verikataohalav. Rangiah,* ' Amrit Ram v. Daerat Ram,13 Sheo Dat v. ShankarSingh,11 Doleman & Sons v. Osset Corporation,13 Harakpbai v.Jamnabai,13 and Paramanik v. Mandal.1*
Cur. adv. vult.
April 26, 1920. De Sampayo J.—
This is the matter of an application under section 696 of theCivil Procedure Code to file an award in Court in connection with ,the estate of a deceased person. The District Judge refused theapplication, and this appeal is taken by all the petitioners, exceptthe sixteenth petitioner, who is the widow of the deceased, andby the respondents to the petition, except the fifth respondent,who opposed the application, and is the respondent to this appeal.A preliminary objection was taken to the appeal on the groundthat the sixteenth petitioner, the widow, was a necessary partyto this appeal. We considered it advisable to give her notice ofthe appeal and to make her a respondent, and this has beendone.
The question involved is one of procedure and is of great import-ance, and in' order to show how it has arisen, it is necessary to statethe facts at some length. One 0. L. M. Ahamado Lebbe MarikarAlim, who carried on a very extensive hardware business in Colombo,and was possessed of considerable movable and immovable property,died in December, 1917. He was married three times, and left.him surviving his widow, the third wife, and several children by allthe beds. Shortly after his death the fourth and fifth petitioners,who are two of the sons by the first bed, propounded a documentdated October 22, 1917, as Alim’s last will, and as executors therebyappointed applied for probate in the testamentary suit No. 6,175.This was opposed by some of the other children and the widow,and the District Court on September 30, 1918, held that thedocument was not the will of the deceased Alim and refused probate,
i(1913) 37 Bom. 442.*(1914) 33 Bom■ 687.
3(1879) 4 Bom. 1.*(1911) 36 Mad. 333.
*(1901) 26 Bom. 76.13(1894) 17 AU. 21.
*(1900) 24 Mad. 326.u(1904) 17AU. S3
*(1893) 20 Bom. 304.**(1912) 3 K. B. 237.
*(1901) 29 Ckd. 167.13(1912) 37 Bom. 639.
'(1902) 30 Cal. 218.”(1907) 34 Cal. 886.
1020.
Db Sampayo
. . J.'
Hadjiarv. Raheem
( «» )and the Supreme Court in appeal affirmed that decision. The fourthand fifth petitioners then preferred an appeal to the Privy Council.In the meantime, in view of the decision of ijjie District Court withregard to the alleged will, an application was made to the DistrictCourt in the testamentary suit No. 6,415 for letters of administrationto the estate of the deceased Alim as upon an intestacy, and inMarch, 1919, the Court made order allowing letters of administrationto Abdul Majeed, third petitioner and son of the deceased Alimby the first bed; Thassim, fifteenth petitioner and son by the secondbed; and Neemath Umma, sixteenth petitioner and widow. Butthese persons failed actually to take out letters, as they appearnot to have been able to supply the necessary stamps and payestate duty, and the Court accordingly issued letters to its ownofficer, Mr. Kretser, limited to such time as he might be able tocollect sufficient assets and pay the stamp and estate duty. Itappears that the deceased’s hardware business was, during his life-time, managed by his sons, the fourth and fifth petitioners, andthat after his death they continued to carry on the business, asexecutors or otherwise, on behalf of the estate, and in the same waythey were also in possession of some other property of the estate.The official administrator applied in the suit No. 6,415, under section712 of the Civil Procedure Code, for an order on the fourth andfifth .petitioners to hand over to him the moneys and property intheir possession amounting in all to over Rs. 500,000. The DistrictJudge made an order to that effect, or in the alternative to givesecurity to the extent of Rs. 600,000. In all these matters the fourthand fifth petitioners were supported by most of the heirs, includingRaheem, respondent to this appeal, and were opposed by the others,including the widow. The chief dispute up to that point was asto the question of will or no will. At this stage, however, the partiesappear to have desired to come to a settlement, not only as to themain question, but as to how the estate on the footing of an intestacyshould be distributed among the heirs, about which they were notagreed, and as to all other matters in difference among them inconnection with the estate. Accordingly they, on October 25, 1919,agreed to refer all these matters to the friendly arbitration OfMr. Slema Lebbe Naina Marikar Hadjiar-. In view of the positionof the parties in connection with the testamentary suit, the sub-mission to arbitration took a double form. One agreement wasentered into by the fourth and fifth petitioners and the heirs,including Raheem, the respondent, who agreed with and supportedthem; and another by the fourth and fifth petitioners and the heirs,who were opposed to them. In both the agreements the referencewas as follows: “All matters relating to the estate and effectsof the said 0. L. M. Ahamado Lebbe Marikar Alim, and to toedistribution thereof, are hereby referred to toe award and finaldetermination of the said Slema Lebbe Naina Marikar Hadjiar,
whose decision hereto the parties agree to accept as final andconclusive.” The only difference is that in the agreement in whichthe heirs who opposed the application for probate in the testa-mentary suit No. 6,175 joined the sentence began ” all matters indifference between the parties hereto, whether in the said proceedingsNo. 6,175 or otherwise, in reference to the estate and effects,” &c.On November 10, 1919, the arbitrator made an award in respectof each reference in identical terms, except, of course, as to the valueof the property, which, according to the award, the parties wereto get in the distribution of the estate respectively.
The award in substance was that the appeal to the Privy Councilin the testamentary suit No. 6,175 should be withdrawn; that thedeceased Alim should be regarded as having died intestate; andletters of administration should be taken out in terms of the orderin testamentary suit No. 6,415; that in respect of their shares ofidle estate, the heirs (named) should each get in property or cashUs. 80.000, Rs. 40,000, as the case may be, and so on; that thefourth and fifth petitioners and Mohamed Haniffa, the sixth peti-tioner, who was also one of the executors nominated in the impeachedwill, should pay and discharge all the debts and liabilities of theestate, and indemnify and keep indemnified the other heirs againstall actions, claims, and demands; that they should also pay all thecosts of administration, including the estate duty; that as certainhouse property in Colombo was held in trust by the deceased Alim,they should transfer the same to the persons beneficially entitled;and finally, that, subject to the payments mentioned and the sharesof the other heirs as settled, the fourth, fifth, and sixth petitionersshould have and take whatever remained of the estate and effectsof the deceased Alim.
The award was accepted by all the parties on the face of thedocument, and they signed the same as final and binding on them.The petitioners, sixteen in number, including the widow, broughtthe award into Court in a special case and applied by petition,to which they made the remaining five heirs respondents, that theaward be filed in Court under the provisions of section 696 of the CivilProcedure Code. The application was numbered as a separateaction as intended, and was dealt with as such. Of the respondents^Baheem, who is also the respondent to this appeal, opposed theapplication, and the District Judge upheld the objection raisedon his behalf and refused the application. fhe petitioners andthe first four respondents have appealed.
– The objection to the application is two-fold: (1) That the mattersreferred to arbitration being already the subject of litigation inthe testamentary suit No. 6*415, the award is not such as can befiled under section 696 of the Code; and (2) that the Court on itsordinary civil side and apart form the testamentary suit has nojurisdiction over the matter. In my opinion this objection is
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well founded. The appellants rely on the language of section 696,which is as follows:—
“ When any matter has been referred to arbitration withoutthe intervention of a Court of Justice, mid an award hasbeen made thereon, any person interested in the award- may within six months of the making of the award applyto the Court having jurisdiction over the matter to whichthe award relates, that the award be filed in Court.”
The subsequent sections have the effect of providing that if theapplication is allowed, a decree shall in terms of section 692 be enteredin accordance with it, and shall be enforced in manner providedin the Code for execution of decrees. Emphasis has been laidon the words “ any matter ” in the above section, and it is contendedthat they are wide enough to include a matter already in litigation.But, I think, in construing section 696, the whole scope of theprovisions in chapter LI. with regard to arbitrations should beconsidered. As pointed out by the Privy Council in a certain case,which will be presently referred to, these provisions come underthree heads:(a) Where a litigation is pending, in which case the
application as provided in section 676 must be made to the Courtitself for an order of reference; (b) where any persons agree in writingto refer any difference between them to arbitration without theintervention of Court, in which case the agreement may on applica-tion under section 693 be filed in Court, and an order of referencemade by the Court thereon; and (c) the case provided for in theabove section 696, namely, where the arbitration has reached thestage of an award. It has been decided in numerous cases bythe Privy Council and by the Indian Courts under the correspondingsections of the Indian Code, and it is not now disputed, that theclass of cases coming under head (b) (tie., section 693) cannot berecognized if the matter in dispute is already the subject of liti-gation, and I am' unable to see any distinction between that classand the class under head (c). This chapter of the Code is exhaustive,and as the only provision with regard to arbitration in mattersinvolved in a pending litigation is section 676, it follows that theprovisions of sections 693 and 696 apply only where no litigationis pending. The only authorities cited to the contrary are Hari-valabdas Kalliandaa v. Utumchand Mandachand1 and Sheo Dat v.Sheo Shankar Singh? in which it was held that where parties toa suit have agreed to refer the matters in dispute between themin such suit to arbitration, the agreement ousts the jurisdictionof the Court to proceed with the suit, and that an agreement undersection 523 of the old Indian Code corresponding to section 693of Our Code applied sis well to a case in which a reference to arbi-tration had been made pending the suit as to a reference made»/. t. R, 4 Bom. i. :*(1901) I. L. R. 27 All. 53.
before any litigation was instituted. This appear to be in directconflict with the principle fully expounded in Doleman & Sons v.Oseett Corporation.1 There Lord Justice Fletcher Moulton saysthat “ where the Court has seisin of the dispute, the private tribunal(constituted by reference to an arbitrator), if it has ever comeinto existence, is functus officio, unless the parties agree de novothat the dispute shall be tried by arbitration, as in the case wherethey agree that the action itself shall be referred. There cannotbe two (tribunals each with the jurisdiction -to -insist on decidingthe rights of the parties and to compel them to accept its decision.In my mind this is dearly involved in the proposition that theCourts will not allow their jurisdiction to be ousted.” The judg-ments of Lord Justices Vaughan, Williams, and Farwell were tothe same effect; that is to say, where a suit is pending, a referencecan only be made by the Court itself in that suit, in which casewhat happens is that the Court stays its proceedings, and allowsthe arbitration to proceed under its own control. I think thatthe provisions of section 698 and section 686 of our Code shouldbe construed in the light of the principle so enunciated. Evenin India the decisions of the Bombay and Allahabad Courts havebeen disapproved of. In Ghulam Khan v. Muhammad Hassan 2the Privy Council had already analysed (he provisions as to arbi-trations in the Indian Code under the three heads above mentioned.Head (a) (that is to say, section 676 of our Code, where the referenceis the order of the Court in the pending case) was taken by itself,and the heads (b) and (c) (that is to say, sections 693 and 696 ofour Code) were grouped together, and with regard to them, theirLordships said that proceedings described as a suit and registeredas such must be taken in order to bring the matter—the agreementto refer or the award, as the case may be—under the cognizanceof the Court. It is thus clear that under section 696 the referenceand award must be unconnected with any pending litigation.This has been the view taken by the Calcutta and Madras Courts.See Tenkatachdla Reddi v. Rangiah Reddi,3 Tincowny Dey v. FakirChand Dey.* Even the Bombay High Court has since adoptedthe same view:Harakpbai v. Jamnabai,s in which it was held
that the provisions in question did not apply to or contemplatea reference to arbitration by parties to a suit, which was pendingoutside the suit, and without the intervention of the Court. It wassaid, however, that these decisions were on the provision of the IndianCode corresponding to section 693 of our Code, and were obiter sofar as section 696 was concerned. But the reasoning equally appliesto the latter section, and I have no hesitation in adopting it, as I amin complete accord with it. The later case, Vankatesh Mahadeo v.
•(1912) L. R. 3 K. B. 257.•(1911) I. L. R. 35 Mad. 353.
•(1901) I. L. R. 29 Cal. 137.*(1902) I. L. R. 30 Oal. 213.
•(1912) I. L. R. 37 Bom. 639. '

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1M0.
Db Saxfayo
J.Hadjiar
«. Bantam
Ram Chandra Krishna,1 bears more directly on the point. It wasthere held, in the same way as in the English case above cited,that where the Court was seized of a cause, its jurisdiction couldnot be ousted by the private and secret act of parties, and thatif they, after having invoked the authority of the Court and placedthemselves under its superintendence, desired to alter the tribunaland substitute a private arbitrator, they must proceed accordingto the law laid down in the first sixteen clauses of the second scheduleof the New Civil Procedure Code; that is to say, they must movein the same suit for an order of reference.
For these reasons I think that the application under section 696to file the award in Court was rightly rejected. That being 'so,it is unnecessary to consider the further question whether the decreeto be entered on the award would or would not be capable ofexecution. I may say, however, that in my judgment the DistrictCourt had no jurisdiction over the matter in a separate suit asdistinguished from the testamentary suit, which is still pending.Testamentary jurisdiction is a special and exclusive jurisdictionwith regard to the estate and effects of the deceased, and all mattersconnected with the administration and distribution thereof. Thisdoes not, however, imply that the award is wholly useless, and effectmay not be given to it in some other way. The award appearsto be binding on the parties as regards the method of distributionof the estate in the testamentary suit and other matters connectedtherewith, and although the award cannot be dealt with as suchunder the arbitration sections of the Code, it may, nevertheless,be treated under section 408 of the Code as an adjustment orcompromise arrived at by the parties. On this point I may referto Vyankatesh Mahadeo v. Ram Chandra Krishna (supra), Venkata-chala Reddi v. Rangiah Reddi (supra), and to Abir Paraniantk v.Jahan Mahmud Mandal.2 This is all the more so, because it appearsthe fourth and fifth petitioners have already performed some ofthe terms of the award. But for this purpose the appellants’ propercourse is to move in the testamentary suit, to which they musttherefore be referred.
In my opinion the present appeal Should be dismissed, with costs.
Loos A.J.—I entirely agree.
Appeal dismissed.
H1914) I. L. B. 38 Bom. 887.
*(1907) I. L. B. 34 Cal. 886.