' This judgment will dispose of Civil Revision No, 38 of 1969, F. A.
0. No, 92 of 1969, F. A.
0. No, 14 of 1969, and F. A.
0. No, 46 of 1969, all of which arise from the same suit instituted by Mian Zulfiqar Ali and Haji Iqbal Mohammad, against Mohammad Ramzan and Mohammad Sulaiman defendants Nos, 1 and 2, for dissolution of partnership and rendition of accounts. The suit was instituted on 3-2-62. Mian Nazir Ahmad filed an application on 23-6-62, for being impleaded as a defendant, which was allowed and he became defendant No,
3. The parties thereafter made, an application that their dispute be referred for arbitration, to two arbitrators, who after being appointed as such gave their award. In the award nothing was said about dissolution of partnership or rendition of accounts instead, a sum of Rs, 91,348.27 was awarded to be paid by defendant No, '3 to defendants Nos, 1 and 2. Neely Cotton Factory, which belonged to defendant No, 3 and which was stated to be on a lease with the firm sought to bed is-solved, was ordered to be handed over to defendants Nos, I and 2 who were allowed to retain its possession till such time that defendant No, 3 paid up the sum of Rs, 91,348.27 to them. The plaintiffs, one of whom is a son and the other a son-in-law of defendant No, 3, filed objections to the award, and so did defendant No, 3, but these objection petitions were dismissed by the Civil Judge on 8-7-68 and by the same order a decree was passed in terms of the award.
Defendant No, 3, as well as plaintiff No, 1 filed two separate appeals, apparently against the said judgment and decree, before Sardar Mohammad Abdul Ghafoor Khan Lodhi, District Judge, Multan, who by his order dated 9-12-68 set aside the judgment and decree of the trial Court, superseded the award of the arbitrators, and remanded the case to the trial Court for a decision on merits. Civil Revision No, 38 of 1969 is filed by defendants Nos, 1 and 2, against the orders of the learned District Judge dated 9-12-68, praying that the same may be set aside so that the judgment and decree passed by the trial Court in their favour, and against defendant No, 3 be restored. By way of abundant caution defendants Nos, 1 and 2 have also filed F.A.O. No, 92 of 1969, against the same order of remand passed by the learned District Judge, fearing that if the order was held to be appealable, the revision would be dismissed as being incompetent. One of the grounds taken in the revision petition is that the learned District Judge did not have the jurisdiction to entertain the appeals filed by defendant No, 3 and the plaintiff; because the value of the property dealt with in award was more than 90,000. Defendant No, 3 has therefore filed F. A.
0. No, 14 of 1969, against the order of the Civil Judge dated 8-7-68, which he had challenged in appeal before the District Judge, and whereby his application raising objections to the award had been dismissed. This F. A.
0. Has been filed as a precautionary measure, so that if the revision petition be accepted on the ground that the District Judge had no jurisdiction to hear the appeal and set aside the order of the civil Court, this appeal may be entertained against the said order. For the same reason have the plaintiffs filed F. A.
0. No, 46 of 1969, against the same order of the learned Civil Judge.
2. The parties have addressed their arguments mainly in the revision petition, because other cases will stand disposed of on findings to be arrived at in this petition. For deciding the revision petition it is necessary to give the facts in some greater detail. In their suit for dissolution of partnership and rendition of accounts, the plaintiffs (respondents Nos, 2 and 3 herein) had alleged that their partnership with the two defendants (the petitioners herein) had been entered into through a partnership deed dated 13-11-61. The firm was named as Cotton Ginners. It was stated in the plaint, that respondents Nos, 2 and 3 had taken the Neeli Cotton Factory Burewala, on lease from Mian Nazir Ahmad defendant No, 3 (respondent No, 1 herein) for the Cotton season 1961-62 through a lease agreement dated 11-11-61. In the partnership business, only the petitioners were to invest money in the sum of Rs, 70,000, and all four partners were to run the factory in partnership. The reasons for praying for dissolution are also mentioned in the plaint, but what is more significant for the purposes of the revision petition is that the value of the suit for purposes of court-fee and jurisdiction was fixed in the plaint at Rs, 130 tentatively. The petitioners in their written statements averred that the partnership was fictitious, and it had no effect on their rights as partners of another firm "Sulaiman Brothers", who after allegedly taking the factory from Mian Nazir Ahmad had spent a large sum of money to bring it in a running condition. During the proceedings of the suit receivers were appointed, and the possession of the factory was handed over to them. It was at this stage that Mian Nazir Ahmad respondent No, 1 filed an application under Order 1, rule 10, C. P.
C. On 23-6-62, for being impleaded as a defendant. In order to bring out his interest in the litigation, it is necessary to note his contentions in the application he had made for his impleadment. He stated that he was the owner of the Cotton Factory, and since the Cotton season, in respect of which there was a dispute between the four partners was over, he was interested in taking the factory back. He had also observed in the application that receivers had been appointed for the factory, and that in order to protect his rights in the factory he wanted to be impleaded as a party.
The application was contested by the petitioners, but it was not opposed by respondents Nos, 2 and 3. While allowing the application for impleadment, the Court observed in its order dated 28-7- 62, that Mian Nazir Ahmad was the owner of the factory which was in possession of the receivers, and that he was therefore interested in the litigation.
3. The above facts are stated to give a bird's eye view of the scope of the suit and the respective interests of the parties in its decision particularly respondent No,
1. It was in these circumstances that on 3-9-62 all the parties filed an application under section 21 of the Arbitration Act, for an order of reference, nominating Ch. Mohammad Din and Ch. Ata Mohammad as arbitrators for deciding their "entire case". Learned counsel for the petitioners emphasises that it was agreed that the decision of the arbitrators would be binding in respect of all disputed questions on all the parties. Thereafter the Court made a reference to the two arbitrators and directed them to file their award before 4-10-62.
4. The award was made on 25-9-62 and filed in Court on 3-1-63. In the award the arbitrators held that Mian Nazir Ahmad had to pay Rs, 91,348.27 to Messrs Sulaiman Brothers, and that this amount of money the petitioners were entitled to receive from him. According to the award the factory was handed over to the petitioner to retain it till such time that Mian Nazir Ahmad respondent No, 1, paid the amount to them. The present factual position, as admitted by the parties, is that Mian Nazir Ahmad has paid the amount to the petitioners, and has already taken the possession of the factory from them.\
5. On 16-1-63, Mian Nazir Ahmad filed objections to the award, and so did respondents Nos, 2 and 3.
The following issue was framed :- ' Whether the award is liable to be set aside for reasons stated in the application by the plaintiffs and defendant No 3."
' On 8-7-68, the objections were set aside and the award made a rule of the Court, and a decree was passed in terms of the award in favour of the petitioners and against respondent No, 1, for the payment of Rs, 91,348.27, allowing the two petitioners to retain the factory till such time that respondent No, 1 paid this amount to them.
6. The case of the petitioners in this revision is that in view of the provisions of section 17 of the Arbitration Act, the appeals filed by the respondents, before the District Judge, were not competent, and therefore the decree passed by the Civil Judge in terms of the award given by the arbitrators, was legal and valid ; that in any case a decree for Rs, 91,348.27 having been passed, the proper forum for filing the appeal was the High Court, and the order passed by the learned District Judge was therefore null and void ; and that even, if the appeals filed be regarded as being under section 39 of the Arbitration Act against an order of dismissal of objections against the award, the proper forum would still be the High Court ; that in any case, on merit there were no valid grounds for setting aside the award.
7. The case of respondent No, 1 is that the award had rightly been superseded, and that it was is any case made without jurisdiction, because in a suit for dissolution of partnership and rendition of accounts between the plaintiffs and the two defendants, no decree for payment of money could be passed against defendant No, 3, and in favour of defendants Nos, 1 and 2, that there was no agreement made between the parties for the decision of any such dispute, nor could arbitrators be appointed for settling such a dispute, which was not within the scope of the suit itself ; and that in any case the arbitrators had misconducted themselves, and their award was rightly set aside by the lower appellate Court. It is also his case that the appeal which he had filed before the District Judge, was not against the decree of the civil Court, but against the order rejecting his application raising objections to the award.
8. The first question which requires determination is whether the appeals filed before the District Judge were barred by section 17 of the Arbitration Act, which is reproduced below for reference : "17. Where the Court sees no cause of remit the award or any of the matters referred to arbitration for consideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award and upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award."
It is clear from this section that no appeal can be filed from a decree passed in terms of an award, except on the ground that it was not in accordance with the award. The decree cannot be challenged under this section on the ground that the award deserved to be set aside. The reason for creating this bar is obvious, Before the stage of passing a decree is reached, objections can be raised against an ward, and if the objection petition be dismissed, an appeal against such dismissal is provided under section 39 of the Arbitration Act. Therefore an award cannot be allowed to be challenged twice, once by filing an appeal against the order of dismissal of the objection petition, and subsequently again -after a decree is passed in terms of the award. Section 39 of the Arbitration Act is also reproduced below : "39.-(1) An appeal shall lie from the following orders passed under this Act (and from no others) to the Court authorised by law to hear appeals from original decree of the Court passing the order: (i)
(vi) setting arise or refusing to set aside an award, 3,..
The Legislature having provided for an appeal against an order of refusal to set aside the award, at a stage prior to the passing of the decree, had to prohibit the repagination of the same matter at stage after the passing of the decree. However what had happened in this case was that the learned Civil Judge had by the same judgment dismissed the objections filed by the plaintiffs and defendant No, 3, and made the award a rule of the Court. It was against this composite judgment that the appeals were filed. It is stated in the grounds of appeal also that the appeal was being filed "under section 96, C. P. C. Read with section 39 of the Arbitration Act", The grounds raised are also such as are taken under section 39 of the Arbitration Act. Under the circumstances I hold that the appeals filed before the District Judge should be deemed to be appeals under section 39 of the Arbitration Act, against an order and not appeals c against a decree. Section 17 of the Act therefore did not bar the filing of these appeals.
9. The next submission made on behalf of the petitioners is that the learned District Judge lacked the pecuniary jurisdiction to hear these appeals. The contention is that the jurisdictional value of an appeal in a suit for accounts is determined by the amount that is decreed, and not by the value that is tentatively fixed in the plaint. It is submitted that there are authorities which lay down that if the amount decreed be higher than the value tentatively fixed in the plaint, then the forum for appeal will be determined by the amount decreed, but if the amount decreed be less, then the forum would be determined by the value stated in the plaint. Reliance in this behalf is placed on the following cases : Ganga Ram v. Nikka Singh , Ch. Mohammad Zarif v. Sh. Abdul Haq Sethi .
There has been a conflict of opinion, on this question between the various High Courts from days prior to independence. However the view which prevailed with this Court is that when a larger amount is decreed in a suit for accounts the value for purposes of jurisdiction for filing the appeal is determined by the amount decreed, and not the jurisdictional value mentioned in the plaint.
However when an appeal against a preliminary decree is to be filed, the value given in the plaint must determine the forum, and not any other amount because at that stage no other amount can be arrived at. This question has also been examined in Ch. Mohammad Zarif v. Sh. Abdul Haq Sethi, and referring to a Full Bench decision in Megh Raj v. Rupchand Uttam Chand , it is observed to the effect that forum for appeal in such cases against a preliminary decree is determined by the jurisdictional value fixed in the plaint.
10. The question raised in Megh Raj's case was of court-fee only. It is not disputed that in view of the provisions of section 8 of the Suits Valuation Act, the jurisdictional value in such suits is the same as the value for purposes of court-fee. According to section 11 of the Court Fees Act, if in a suit for accounts, a larger sum is decreed than the value fixed in the plaint for purposes of court-fee, then court-fee becomes payable on the larger sum, and the deficiency has to be made up. The same amount of court fee has to be paid in appeal also. However if the amount decreed be less than the1 2 3 value mentioned in the plaint, then court-fee payable cannot be reduced, because if nothing be found to be due by the trial Court, the appellant on that reasoning will not be required to pay any Court fee. Since no amount is decreed at the stage of passing of a preliminary decree, it is held by the Full Bench in the above-mentioned case, that court-fee on an appeal against a preliminary decree must be paid according to the notional value mentioned in the plaint. It means that till such time that a final decree is passed, and for a larger sum, the value for purposes of court fee must remain the same. That being so, the value for purposes of jurisdiction cannot be changed either.
11. For applying this test to the present case, the facts have to be examined again. I have already found, that the two appeals were filed against an order of the Civil Judge and not against final decree. Under section 17 of the Arbitration Act a decree in terms of an award cannot be passed unless objections against the award are disposed of. Therefore, although in the present case the objections were rejected by the same judgment by which the decree was passed, it has to be presumed that the objections were disposed of first. I have already found that the appeals should be presumed to have been filed against the order of rejecting the objections. It necessarily follows that the appeals relate to a stage prior to the passing of the decree, when there could be no occasion for the jurisdictional value being altered. In this view of the matter, the appeals were brought in the right forum.
12. However, learned counsel for the petitioners has raised another question in this matter. He submits that the forum for appeals brought under section 39 of the Arbitration Act, is determined by the value of property dealt with in the award, which in this case was more than Rs, 25,000, and as such the appeals should have been filed in the High Court. In this behalf he has relied on Jagannath Prasad v. Hazari Lal and others a decision from the Indian Jurisdiction. That however was a case in which reference had been made out of Court. The question that arose in that case was whether an appeal could be filed as a matter of right to the Supreme Court under C. P. C. On the basis of the jurisdictional value of the case being higher than a certain amount. It was held that the value of the entire property being dealt with in the award was the true criterion for judging the valuation of the suit and hence the appeal to the Supreme Court.
13. The facts of the present case are quite different. It is not a case of reference out of Court. A reference in this case was made while the suit for dissolution of partnership and rendition of accounts was pending, and the reference was made to arbitrators under provisions of section 21 of the Arbitration Act. Under section 39, which has been reproduced above, an appeal can only be filed to the "Court authorised by law to hear appeals from original decrees of the Court passing the order". The "Court" passing the order is also defined in section 2 (c) of the Act as follows :- 2(c) 'Court' means a civil Court having jurisdiction to decide the question forming the subject matter of the reference if the same had been the subject matter of a suit, but does not, except for the purpose of arbitration proceedings under section 21, include a Small-Cause Court'."
When an order for reference is made under section 21 of the Act, as in the' present case, the "Court having jurisdiction to decide the question forming the subject-matter of the reference" can be no other Court than the Court before whom the suit for dissolution of partnership and rendition of accounts was filed. An appeal under section 39 is therefore competent before a Court, which would hear appeals against a decree passed by a Civil Judge in a case for dissolution of partnership and rendition of accounts. According to the unamended section 18 of the West Pakistan Civil Courts Ordinance, 1962, an appeal at the relevant time could be filed before the District Judge if the value of the original suit in which the decree was passed did not exceed Rs, 25,000. As already discussed above the value of such suits remains the same as determined in the plaint, unless a final decree for a larger sum than Rs, 25,000 is passed. At all stages before the passing of the final decree, the value for determining appellate forum must remain the same as fixed in the plaint. I therefore hold that the learned District Judge was quite correct in entertaining the appeal.4
14. The next question which has been raised pertains to the scope of the arbitration proceedings.
The two arbitrators were appointed under section 21 of the Arbitration Act which is reproduced below : "21. Where in any suit all the parties interested agree that any matter in difference between them in the suit shall be referred to arbitration, they may at any time before judgment is pronounced apply in writing to the Court for an order of reference."
' It is obvious from the above that the parties could refer only that matter for arbitration, which was "in difference between them in the suit". There fore counsel for respondent No, 1 is quite correct in saying that the scope of the arbitration did not extend beyond deciding the suit for dissolution of partnership and rendition of accounts between the plaintiffs and defendants Nos, 1 and 2. The dispute between the petitioners (defendants Nos, 1 and 2) and respondent No, 1 (defendant No, 3) was quite extraneous to the suit. The arbitrators therefore could not decide that the two petitioners will return the factory to respondent No, 1, subject to his paying Rs, 91,348.27 to them. Under Order 1, rule 10, when a person is impleaded as a defendant, as respondent No, 1 was impleaded in this case, he is so impleaded only for the purpose of settling "all questions involved in the suit". He is not impleaded to introduce new controversies in the suit, and change its character all together, even though the controversies may be relateable to the property in dispute. A reference in this behalf may be made to H. Sitaramaya v. M. Ramappaya and others . I am of the view that the dispute between the two original defendants and the added defendant was not "a question involved in the suit" and as such the question could not be referred for arbitration under section 21 of the Act. It has already been observed above that respondent No, 1 (defendant No, 3) had applied for being impleaded as a party because a receiver had been appointed in this case to take possession of the factory which was his property, and which he had leased to the plaintiffs. He wanted to protect his rights by being impleaded as a party. The trial Court also had observed while impleading him as a party, that he being the owner of the factory was interested in the litigation. His implement could not in any way enlarge the scope of the suit that was already pending.
15. In any case I am not persuaded to hold that any dispute between the petitioners and respondent No, 1 was in fact referred under section 21 of the Arbitration Act. It is emphasised on behalf of the petitioner that the parties had sought the appointment of the arbitrators to settle their "entire case". I have gone through the contents of the application, and I am not convinced that what was decided by the arbitrators was within the scope of what the parties had expressed in the application to be referred for arbitration. In my view the arbitrators have decided something which could neither be referred to them under section 21 of the Arbitration Act, nor was in fact prayed in the application to be so referred.
16. It is submitted on behalf of the petitioners that in fact respondent No, 1 was their partner, and not respondents Nos, 2 and 3, and the decision in this case is really a decision of the suit between the three of them for a dissolution of partnership and rendition of accounts, and therefore the decision of the arbitrators was within the scope of their authority. However I have not been able to find any factual basis for this submission. The dispute in this case related to the partnership, real or imaginary, which Respondents Nos, 2 and 3 (the plaintiffs) had alleged and not the one alleged by the petitioners (the two defendants) with Mian Nazir Ahmad.
' The learned District Judge found that at first only one of the arbitrators had submitted his award on 4-10-62, deploring at the same time the non-co-operation of the other arbitrator, and submitting that the other had also disagreed with him. The Court observed that had the two arbitrators appointed an Umpire before this stage was reached, as they were bound to do under the agreement, the trial Judge would have been in a position to refer the matter to him, and no occasion would have arisen for the arbitrators to subsequently file the unanimous award which they did.5 ' The Court therefore held that the failure of the arbitrators to appoint an Umpire vitiated their proceedings. Learned counsel for the petitioners contends that it was not mandatory for arbitrators to appoint an Umpire beforehand, even when an agreement between the parties required them to do so, and that an Umpire could be appointed after the arbitrators differed with each other. It is not necessary to decide in this case whether under all circumstances arbitrators must nominate an umpire before commencing their proceedings. However in this case it is clear that differences had arisen between the two arbitrators, and at that stage the case.- ought to have been entrusted to the umpire. There was no scope for then filing a subsequent unanimous award. The learned District Judge therefore was quite correct to hold that the proceedings before the arbitrators were vitiated,
18. For the above reasons I do not find any merit in the revision, which accordingly is dismissed. The petitioners will pay the costs to respondent No, 1.
19. F. A.
0. No, 92 of 1969, filed by defendants Nos, 1 and 2 is not competent, because the order which is impugned in that appeal has already been held to have been passed in an appeal under section 39 of the Arbitration Act, which section bars a second appeal. It is therefore dismissed as being incompetent.
20. F. A.
0. No, 14 of 1969 which is in motion and which is filed by defendant No, 3 against the order of the Civil Judge dated 8-7-68 has become infructuous, because the order has been set aside by the District Judge by his appellate order dated 9-12-68, which has been upheld in the connected Civil Revision. Likewise F. A.
0. No, 46 of 1969 which is in motion and which is filed by the plaintiff against the same order has also become infructuous for the same reason. Both these appeals are therefore dismissed in limine as having become infructuous. AIR 1928 Lah. 157 PLD 1956 Lah. 1060 AIR 1946 Lab. 280 AIR 1953 All. 509 AIR 1918 Mad. 1137