SHAFIUR RAHMAN, J: --Leave to appeal is sought from the consolidated judgment of the Lahore High Court, dated 28th of May, 1989 whereby a First Appeal against an Order and a Regular Second Appeal, between the same parties on substantially the same subject-matter, were disposed of.
2. The factual background of these two appeals is that on the 1st of November,1961, a Civil Suit (No.253/1 of 1961) was instituted by Bashir Ahmad (now deceased), against the Petitioner, seeking rendition of accounts and dissolution of partnership which existed between them. Earlier to it, i.e., on 18-10-1961, the petitioner had filed a criminal complaint against the aforesaid Bashir Ahmad on charges of misappropriation etc. Of the partnership funds. During the course of the pendency of the civil suit, the parties agreed to refer their disputes including the subject-matter of the criminal case, to Arbitration. The Arbitrator disposed of the entire matter by an Award. The Award called upon Ali Muhammad to withdraw the criminal case from the Court where it was pending as a part of the settlement of the dispute in its entirety. Ali Muhammad filed an application which was given Suit No. 342/62, for making the Award the rule of the Court, and for passing a decree in terms thereof. A number of objections were filed by Bashir Ahmad to the acceptance of the Award and making it a rule of the Court and in passing a decree in terms thereof. The trial Court framed issues, upheld the Award, dismissed the suit of Bashir Ahmad for rendition of accounts etc., and passed a decree in terms of the Award in Suit No.342/62.
3. Two appeals were filed against these decisions of the trial Court but following the decision in Gopal Chandra Poddar v. Lakshmi Kunta Saha (AIR 1933 Cal. 817), it was held that an agreement to refer to Arbitration in consideration for dropping a criminal proceeding in respect of non--- compoundable offence is opposed to public policy and therefore, illegal: The Award stood on that account vitiated. The Award was consequently set aside and the Suit No.342/62 filed by the petitioner was dismissed but the suit No.253/61 filed by the respondent was remanded, for decision after framing the issues.
4. Two appeals were preferred in the High Court and both were dismissed maintaining the conclusion arrived at by the first appellate Court.
5. Mr.Mujeeb-ur-Rahman, Advocate, the learned counsel for the petitioner has taken us through section 23 and section 28 of the Contract Act and the decisions given in Lal Mia v. Abdul Gani and others (PLD 1953 Dacca 149), Sardar Muhammad Yasin Khan, Advocate v. Raja Feroze Khan (PLD 1972 Azad J&K 46), Sudhindra Kumar R.I Chaudhuri and others v Ganesh Chandra Ganguli and others (AIR 1938 Cal. 840) and Babu Har Narain Kapur v. Babu Ram Swarup Nigam and another (AIR 1941 Oudh 593) to contend that where the dispute is substantially and purely of a civil nature, and the criminal proceedings appear subservient to it or ancillary, there is no bar to a compromise whereunder the criminal matter is adjusted within the overall framework of the settlement of the civil dispute. According to the learned counsel, it is only when trading in felony takes place that the public policy intervenes to frustrate any such effort in trading. According to the learned counsel this case has certain conspicuous features which make it abundantly clear that no element of trading in felony was involved and mere adjustment of civil rights and liabilities, was sought to be achieved and enforced.
6. The question which has been frontally attended to by the two appellate Courts was whether the criminal matter was made a subject-matter of arbitration or not and whether the enforcement of the Award would amount to stifling the prosecution or not. It is not denied that in terms of the agreement between the parties to refer the matter to Arbitrator, the subject-matter of the criminal litigation, was specifically mentioned and made the subject-matter of arbitration. The Award also indicates that the settlement of a dispute included the withdrawal of the criminal-cases a part of the settlement between the parties. On these facts, the two appellate Courts were justified in concluding that the subject-matter of the reference to the arbitrator as well as of the Award, were opposed to public policy because they dealt with criminal case, its prosecution or non--- prosecution and the award directing the withdrawal of the criminal case or its non-prosecution by one of the parties.
7. The decided cases referred to by the learned counsel are all distinguishable on two grounds: Firstly, none of the cases relied upon by the learned counsel relates to arbitration or reference of the pending criminal matter to arbitration. They all relate to agreement between the parties settling their disputes. The second distinguishing feature is that the withdrawal or non--- prosecution of the criminal case was taken to be implicit or implied in those agreements and played an important role in the agreement and the agreement was sought to be avoided on that account. In the case before us, there is an explicit mention of the criminal case, a reference of it to the Arbitrator and the Arbitrator directing its withdrawal as a part of the settlement of civil dispute.
Such an Award is sought to be sanctified by the Court and enforced through the process of the Court whereby settlement of civil dispute is achieved directly by stifling the prosecution of a criminal case. It is a well settled proposition that a criminal pending matter cannot be referred to Arbitration, nor can the withdrawal of it directed by the Arbitrator. The Arbitrator's jurisdiction does not extend over magisterial functions. Arbitration Act being a Special Act is limited to civil disputes between the parties and matters pending in Civil Courts.
8. We do not find any question of law which may require our further examination and attention.
Leave to appeal is, therefore, refused in both the cases.