1. MUHAMMAD YAQUB ALI, J. The question raised in this appeal is whether - an agreement between the parties that the Court may decide the disputes arising in the suit in accordance with the statement made by a third person is an adjustment within the purview of Order XXIII, rule 3, C. P. C., or a contract which the Court in its discretion may decline to enforce.
2. The facts briefly are that the appellants filed a suit against the respondents in the Court of a Civil Judge, Sialkot, for rendition of accounts and dissolution of partnership. Before the written statement was filed, the parties came to ail agreement and stated before the Court on the 3rd December 1963, that the suit may be decided in accordance with the statement made by one Abdur Razzak as to the matters in dispute between them. The case was thereupon adjourned to the 11th December 1963, and summons issued to Abdur Razzak.
3. Abdur Razzak appeared in Court on the next date of hearing, but before his statement was recorded, the appellants moved an application under sections 11(2) and 25 of the Arbitration Act and Order XXIII, rule 3, C. P. C., for resiling from the agreement on the ground that he had threatened them with adverse consequences which constituted misconduct. The trial Judge entertained the application and called for a reply by the respondents for 14-1-1964. At the same time he recorded the statement of Abdur Razzuh which was to the effect that the alleged partnership did not exist between the parties and that the appellants were entitled to receive only Rs. 2,274.00 from the respondents: Feeling aggrieved the appellants preferred an appeal before the District Judge, who came to the conclusion that the appellants were entitled to repudiate the agreement of the 3rd December 1963, before the statement of Abdur Razzak was recorded, but expressed his inability to interfere in the matter as no appeal lay from an order passed under Order XXIII, rule 3, C. P. C. The appellants eventually filed a revision petition in the High Court which was dismissed by a learned Single Judge in limine without adverting to the question whether the appellants were competent to resile from the agreement dated the 3rd December 1963, before the statement of Abdur Razzak was recorded by the trial Judge and if so whether the decree passed by the trial Judge was not without jurisdiction.
4. Leave to appeal was granted on the 3rd May 1965, to consider that if there was no compromise within the meaning of rule 3, Order XXIII, C. P. C., then the trial Court should not have recorded the statement of Abdur Razzak after the appellants had retracted from the agreement and expressed lack of confidence in him.
5. A number of precedent cases were cited from the bar both for and against the proposition whether the parties to such an agreement can retract before the third person has made the statement before the Court regarding matters in dispute between them. The decision in some of the cases is based on the Oaths Act, 1873, in some on the provisions of rule 3; Order XXIII, C. P. C. And in others on the provisions of the Arbitration Act. In our view an agreement that the Court may decide the matters in dispute between the parties in accordance with the statement of a third person is not covered by the provisions of any one of these statutes. Under the Oaths Act : "8. If any party to, or witness in, any judicial proceeding offers to give evidence on oath or solemn affirmation in any form common amongst, or held binding by, persons of the race or persuasion to which he belongs, and not repugnant to justice or decency, and not purporting to affect any third person, the Court may, if it thinks fit, notwithstanding anything hereinbefore contained, tender such oath or affirmation to him."
6. Oath is administered under section 10 and under the next succeeding section; "11. The evidence so given shall, as against the person who offered to be bound as aforesaid, be conclusive proof of the matter stated."
7. As Abdur Razzak was not to be given special oath, the provisions of section 11 were not attracted to the case.
8. The provisions of rule 3, Order XXIII, C. P. C., become applicable when "the suit has been adjusted wholly or in part by any lawful agreement or compromise or when the defendant satisfies the plaintiff in respect of the whole or any part of the suit". The mere agreement that the suit may be decided in accordance with the statement of Abdur Razzak, therefore, did not amount to an adjustment of the suit.
9. Similarly, the Arbitration Act applies only when an agreement to refer the disputes between the parties to one or more arbitrators for decision is executed. It is no one's case that Abdur Razzak was appointed arbitrator. On the contrary the respondent disputed this position before the trial Judge.
10. The correct position, therefore, is that the agreement dated the 3rdl November 1963, that the matters in dispute may be decided in accordance with the statement of Abdur Razzak was in the nature of a contract and the trial Court could in its discretion decline to hold the appellants by it.
11. The exercise of discretion will depend on the facts and circumstances of each case. As observed by the learned Judges of the High Court of Lahore in Dilawar Khan v. Tikka Khan and others (PLD 1954 Lah. 291)
12. "Specific performance is an equitable relief which a party cannot claim as a matter of right. The Court has a discretion in the matter and if the particular circumstances of a case, the conscience of the Court is not satisfied that it is necessary to hold the parties to such an agreement, it will direct its performance. That seems to me to be the correct principle to be applied to such cases. I am in respectful agreement with the view taken in some of the reported cases that such an agreement does not constitute an adjustment of the suit within the meaning of Order XXIII, rule 3 of the Code of Civil Procedure. Such an agreement per se does not amount to an adjustment but if it is carried out, it may eventually lead to an adjustment."
13. The ground on which the trial Court rejected the application by the appellants dated the 11th December 1963, to retract from the agreement of the 3rd December 1963, does not, therefore hold good. The District Judge was right in concluding that an appeal does not lie from an order recording a compromise under rule 3, Order XXIII, C. P. C., but as seen these provisions of the Code had no application to the case. I remedy, therefore, lay in the High Court, but the revision petition filed by the respondents was summarily dismissed by a learned Judge on the ground that the appeal preferred by the appellants before the District Judge was not competent in law. It was urged in the revision petition that since the appellants had retracted from the agreement to abide by the statement of Abdur Razzak, the trial Judge did not have the jurisdiction to record his statement and dispose of the suit in accordance with that statement, but no notice of this ground was taken.
14. The application made by the appellants to the trial Judge for retracting from the agreement dated the 3rd December 1963, was in the circumstances, not disposed of properly. The only course open to us, therefore, is to set aside the judgment and decree passed by the trial Judge on 20-1-1964 and to remand the case to him for a fresh decision as to whether on the averments made by the appellants in their application dated the 11th December 1963, it is a fit case to hold them by the agreement of 3rd December 1963, and if not to dispose of the suit on merits.
15. The appeal is, accordingly, allowed and the case remitted to the trial Judge in the terms indicated.
16. Above. Costs will abide the final decision in the suit.