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Regular Second Appeal No. 128 of 1962, decided on 21 February 1966.

Provision imperative, to be strictly complied with‑Permission for reference of case to arbitration‑Court conscious that it was dealing with case of minor, that minor was properly represented, that genuine and bona fide attempt was being made by parties for settlement of dispute through arbitration and that reference to arbitration was in interest of minor‑Order not detailing reasons for granting leave‑Not defective in all cases.

The provision of law, i.e., Order XXXII, rule 7, C. P. C., is an imperative rule and is to be strictly complied with; no particular formula is necessary to be used by the Court in order to grant the leave. If from the facts proved on the record, it can be gathered that the Court was conscious of the fact that he was dealing with the case of minor, that the minor was properly represented and that a genuine and bona fide attempt for settlement of the dispute through arbitration was being made by the parties and that it was in the interest of the minor that such a reference to arbitration be allowed and on these facts the Court comes to the conclusion that leave should be granted, an order not detailing reasons therefore, will not be defective in all cases.

Where the minor was represented by his real brother as guardian ad litem who made an application to the Court for permission to refer the case to arbitration mentioning the factum that the "reference to arbitration was in the interest of the minor to save unnecessary litigation expense" and the Court, in presence of the minor's father and the guardian ad litem, made short order: "permitted", it was urged that in passing such order, the Court did not apply its judicial mind to the case:

Held, that it cannot be said that the Court was oblivious of the fact that it was dealing with a minor's case or of the interest of the minor especially when in the proceedings before the Court the father or the guardian ad litem were not shown at any stage to be claiming adversely to the minor. It cannot, therefore, be urged with success that the reference had not been made with a conscious judicial mind of the Court.

Seth Ram Gopal through Seth Fateh Chand v. Lala Shanti Lal A I R 1942 All. 85 ; Mir Attaullah Khan v. Sardar Mahboob Ali Khan and others P L D 1965 Kar. 341; Kedar Nath Sahu. v. Basant Lal Sahu A I R 1939 Pat. 278; Chhabba Lal v. Kallu Lal and others A I R 1946 P C 72; Ganesha Row v. Tuljaram Row and another I L R 36 Mad. 295 ; Mst. Mariam and another v. Mst. Amine and others A I R 1937 All. 65 and Ramnarain Singh and others v. Atal Behari Singh and others A I R. 1939 Pat. 387 distinguished.

Ishan Chandra Kundu and another v. Nilratan Adikari and others A I R 1923 Pat. 375 rel.

Ss. 30, 31 & 33‑Reference to arbitration found to be valid‑Award and decree made on such reference cannot be challenged by way of independent suit‑Such award and decree can only be assailed under Ss. 30, 31 & 33.

Peer Bakhsh Khan for Appellants.

Khan Abdul Latif Khan for Respondents No 1.

Reader of the Court for minor Respondents.

Dates of hearing: 15th and 16th February 1966.

Facts giving rise to this appeal are that Hamid Khan (defendant‑respondent No. 3) purchased a lorry (registered No. 925/FPH)' in the year 1953. At the relevant time Pir Khan (respondent No. 2) held one route permit (No. 305) and thus they both joined to have the vehicle registered in their joint names in equal shares. Subsequently, Murad Khan (appellant No. 1) claims to have purchased one half share of Hamid Khan in the vehicle and the permit both, but because Pir Khan did not admit his rights as transferee of half share both in the vehicle and the permit, Murad Khan brought a suit (being Suit No. 122/1 instituted on 16‑12‑1954) in the Court of Senior Civil Judge Abbottabad, for a declaration to the effect that he was owner to the extent of one half in the vehicle as also the route permit. In that suit, Pir Khan pleaded that he was the sole owner of the route permit, but had transferred half share in the vehicle to his minor son Dildar Khan (respondent No. 1). On this, Murad Khan amended his plaint so as to implead Dildar Khan (minor) through Pir Khan, his father as guardian ad litem. Pir Khan refused to act as such and instead the Reader of the, Court was appointed. However, on the 27th July 1955, Gul Muhammad (respondent No. 4), the real brother of the minor, applied to the Court to be appointed guardian ad litem in place of the Court Reader. This, prayer was allowed and Gul Muhammad, the newly appointed guardian ad litem filed a written statement on behalf of the minor through counsel, on the 28th September 1955, the important features of which were firstly, the minor did not claim any interest in the route permit which was stated to be solely belonging to his father Pir Khan, and secondly, that he was the transferee of only half share in the vehicle. It may be stated at this stage that this very position had been taken by Pir Khan in his two written state ments filed in the suit first on 24th January 1955, and subsequently on 11th October 1955, after amendment of the plaint. It appears that meanwhile the minor had also brought a suit (being Suit No. 579/1 dated 4‑6‑1955) seeking declaration that he was the owner of half share in the vehicle and that the sale of one half share by Hamid Khan in favour of Murad Khan (appellant No. 1) was fictitious and ineffective. This suit had also been brought by the minor through his elder brother, Gul Muhammad, as next friend. On the 23rd of February 1956, an application purporting to have been made under Order XXXII, rule 7, C. P. C. (although no law is cited in the application) was presented on behalf of the minor by Gul Muhammad guardian ad litem, seeking, permission of the Court for reference of the dispute in the two suits between the parties to the sole arbitra tion of Qazi Muhammad Abdullah Pleader Mansehra, saying that it was in the interest of the minor to save unnecessary litigation expense. This application was allowed by the Court saying "Permitted". The same day, i.e. 23rd February 1956, a joint application presented by all the parties in the two suits for reference of the dispute to the sole arbitration of the aforesaid pleader of Mansehra was accepted by the Court, in the following terms, after recording a joint statement of the parties:

"In view of the application made by the parties and affirmed by them today by giving a joint statement in this behalf, I hereby appoint Qazi Muhammad Abdullah, Pleader Mansehra to act as arbitrator between the parties in order to settle the dispute pending between them in accordance with the terms of reference. His fee is fixed at Rs. 60 to be paid by each party in equal share, i.e. Rs. 15 each. The arbitrator should send his report along with the award to this Court on the date fixed for hearing."

Before the Arbitrator, when a part of the evidence had been recorded, the parties entered into a compromise with the result that the vehicle with the permit was given to Murad Khan appellant against a sum of Rs. 8,500 which consideration was to be shared by the minor and his father Pir Khan in the ratio of 2/3rd and 1/3rd respectively. The other terms of the compromise being unnecessary need not be repeated. On the basis of this compromise, the Arbitrator gave an award which was duly filed in the Court. Both the, minor and his father (Pir Khan) preferred objections under section 30 of the Arbitration Act. The objections were four in number. However, the two relevant objections may be reproduced below for purposes of the present controversy:‑

(i) The Arbitrator in the absence and without the sanction of the Court, was not competent to effect a compromise and in arranging a compromise, he has exceeded his powers.

(ii) The guardian ad litem of the minor without having first obtained the permission of the Court could, not effect a compromise and this being so, the compromise is void and more so is detrimental to the interests of the minor."

The objections were, however, overruled and the award was made a rule of the Court on 28th May 1956, when the decree followed under section 17 of the Arbitration Act. Being dissatisfied with the award and the decree, a review application was preferred by the minor through a new next friend. This review petition was rejected and the same was the fate of his revision petition (being Civil Revision No. 213 of 1957), filed in this Court. While rejecting the revision petition in limine, J the learned Judge observed as under:‑

"I see no good ground for interference at this stage. No fault can be found with the order of the Senior Sub‑Judge which is now under challenge. He was right in rejecting the review application. The minor has still a remedy by way of a suit on the ground that the decree is not binding on him for the defect that the reference to arbitration was without the permission of the Court. That suit will have to be instituted through a next friend other than the one under whose guardianship he was at the time of reference to arbitration."

2. The minor has brought the present suit seeking declaration to the effect that the decree and decision of the Senior Civil Judge dated 28th May 1956 based on the award dated 12th March 1956 and compromise dated 4th March 1956, are not binding on him, that he is also the owner of one half share of the aforsaid lorry and full owner of the route permit, with a prayer for permanent injunction restraining the defendant appellants from interfering with the afore‑said rights of the plaintiff. The appellants have resisted the suit on various grounds and as many as the following 18 issues have been framed in the case which fully reflect the pleadings of the parties:‑----

(1) Whether the plaintiff is full owner of the permit and of half share of the lorry O. P. P.

(2) Whether defendant No. 4 was not the proper guardian of plaintiff in the previous suit O. P. P.

(3) Whether the reference to arbitration was not according to law O. P. P.

(4) Whether award was based on compromise and is not therefore binding on the plaintiff and also because the permission to compromise was not obtained O. P. P.

(5) Whether the compromise is not binding on the plaintiff being against his interest O. P. P.

(6), Whether the order and decree of the Court are not in accordance with the award, if so, with what effect O. P. P.

(7) Whether the compromise and award are in excess of the relief claimed. If so, with what effect O. P. P.

(8) whether the Court and arbitrator made any transfer of the permit in favour of defendant No. 1 If so, whether such transfer was without jurisdiction O. P. P.

(9) Whether arbitration proceedings were detrimental to the interest of the minor plaintiff If so, to what effect O. P. P.

(10) Whether the guardian of the plaintiff had been guilty of gross negligence in the previous suit If so, to what effect

(11) Whether the suit is not maintainable O. P. D.

(12) Whether the suit is incompetent in its form O. P. D.

(13) Whether the suit is properly valued O. P. P.

(14) Whether plaintiff has a cause of action O. P. P.

(15) .Whether the suit is barred as res judicata O. P. D.

(16) Whether the suit has been lodged with collusion with the defendant No. 2 If so, to what effect ' O. P. D.

(17) Whether the suit is within time O. P. P.

(18) Relief.

The suit was decreed and this second appeal is against the decree of affirmance of the lower Appellate Court, by which it has been held that the reference to arbitration was invalid for want of compliance with the provisions of Order XXXII rule 7, C. P. C. and that the compromise alleged to have been entered into on behalf of the minor also suffers from the same defect, and therefore the minor is not bound by the decree and judgment dated 28th May 1956 of the Senior Civil Judge in Suit No. 122/1 and proceedings in the said suit are revived from the stage at which the said suit was referred for decision to the Arbitrator.

3. In this Court, Mr. Peer Bakhsh Khan, learned counsel for the appellant, has assailed the judgment of the Court below on four grounds:

(1) Reference to arbitration was made quite in accordance with law and as requirements of Order XXXII, rule 7, C. P. C. were fulfilled, the reference has been erroneously held to be defective.

(2) The award based on compromise is not bad because the compromise before the Arbitrator does not require leave of the Court under Order XXXII, rule 7, C. P. C. for the reason that after reference to arbitration, the Court exercised jurisdiction in the matter only to the extent specified in section 41 read with the 2nd Schedule and sections 23 (2) and 25 of the Arbitration Act.

(3) Under the provisions of section 32 of the Arbitration Act no suit lies to question the reference or for that matter the award.

(4) There has been no prejudice caused to the interests of the minor, which interests were fully safeguarded by his real father and real brother during the course of arbitration proceedings and the making of the award a rule of the Court.

Learned counsel fairly conceded that if it were found that the reference to arbitration on 23rd February 1956, was in any manner defective, a suit challenging the decree based on the award was maintainable. On the other hand, learned counsel for the respondents, maintained that irrespective of the reference being valid or invalid, if the compromise before the. Arbitrator is established to be violative of provisions of Order XXXII rule 7, C. P. C., a suit in the declaratory form challenging the decree based on such an award was competent. His next contention was that because the award given by the Arbitrator was beyond the terms of reference, i.e. instead of deciding the dispute of half share of the appellant in the lorry and the route permit, the Arbitrator proceeded to give the entire lorry and route permit, the award was not within the four corners of the Act, and therefore 'the suit did not come within the mischief of section 32 of the Act. Under this objection, he also argued that since the word "decree" does not occur in section 32 read with sections 31 and 33 of the Act, the present suit challenging the decree was not barred. With regard to prejudice caused to the minor, he urged that as it is a question to be. considered by the Courts below, if the suit is held to be maintainable, this Court should ordinarily refain from entering into that aspect of the case.

4. Lengthy arguments extending over two days have been addressed in the case and both learned counsel has referred to mass of authority. I, however, find that the main question to be decided in the case is whether the reference made on 23rd February 1956 is a valid order and if it is so, all other points debated by the parties will not need determination. In order to show that there was no application of the judicial mind of the learned Senior Civil Judge while granting permission to refer the matter to arbitration, counsel for the respondents argued that there is no particular mention of benefit of the minor in the application made to secure leave of the Court in that regard and the mere reiteration of the phrase that reference to arbitration was in the interest of the minor to save unnecessary litigation expense' did not fulfil the requirements of the rule. He further urged that because the learned Court has given no detailed reasons for grant of permission, it cannot be said that the Court was conscious of the fact that he was dealing with the case of a minor and that it was in the interest of the minor that the matter be referred to arbitration. He maintained that the one word order "Permitted" passed in the case is merely a routine order. In support of this argument, he has particularly relied on Seth Ram Gopal through Seth Fateh Chand v. Lala Shanti Lal (A I R 1942 All. 85) and Mir Attaullah Khan v. Sardar Mahboob All Khan and others (P L D 1965 Kar. 341). The case of a lunatic was being considered by their Lordships of Allahabad High Court in Seth Ram Gopal through Seth Fateh Chand v. Lala Shantilal where on the application made, the learned Court had simply written the word "allowed" and their Lordships while discussing the case observed that they were not attaching great importance to the word used. It was only because of other factors, namely, that the Arbitrator was the father of one of the parties and that the Arbitrator had interest in the subject matter of the dispute and that previous application for reference had been refused by the Court, they proceeded to hold that the permission was invalid. In the case Mir Attaullah Khan v. Mahboobalf Khan and others the Court has used the word "accepted", and the learned Judge considering the facts of the case before him came to the conclusion that there was no indication of application of judicial mind of the Court to question whether the compromise was for the benefit of the minor. The authority on which much reliance has been placed by learned counsel is: Kedar Nath Sahu v. Basant Lal Sahu (A I R 1939 Pat. 278), which is to the effect that the Court must give reasons for grant of such a permission. The other cases referred to are: Chhabba Lai v. Kallu Lal and others (A I R 1946 P C 72), Ganesha Row v. Tuljaram Row and another (1 L R 36 Mad. 295) and Mst. Mariam and another v. Mst. Amina and others (A I R 1937 All. 65). These authorities lay down the well established rule that Order XXXII rule 7, C. P. C. is a mandatory provision of law and must be strictly complied with. Learned counsel for the appellants does not dispute this proposition of law, but maintains that in the present case the exigencies of the said provision have been fully complied with amongst other authorities he has specially referred me to Ramnarain Singh and others v. Atal Behari Singh and others (A I R 1939 Pat. 387) and has also taken me through the record. He argues that in the circumstances of the case the leave and the reference were quite valid and proper.

5. I have given anxious consideration to this aspect of the case and I find that no doubt the provision of law, i. e. Order XXXII, rule 7, C. P. C., is an imperative rule and is to be strictly complied with, no particular formula is necessary to be used by the Court in order to grant the leave. If from the facts proved on the record, it can be gathered that the Court was conscious of the fact that he was dealing with the case of a minor, that the minor was properly represented and that a genuine and bona fide attempt for settlement of the dispute through arbitration was being made by the parties and that it was in the interest of the minor that such a reference to arbitration be allowed and on these facts the Court comes to the conclusion that leave should be granted, an order not detailing reasons therefore, will not be defective in all cases. In this regard, I may borrow with benefit the terse observations of their Lordships in Ishan Chandra Kundu and another v. Nilratan Adikari and others (A I R 1923 Pat. 375) of the report:‑---

"In order to attract the provisions of Order XXXII, rule 7 of the Code of Civil Procedure, it is enough to show that the attention of the Court was directly called to the fact that a minor was a party to the compromise and that the leave of the Court was obtained on petition or in some way not open to doubt. No particular formula is necessary to be used by the Court in order to grant the leave and when it is shown that an application was made by the guardian to the Court asking for leave to enter into the compromise and the Court makes a note of that application and passes a decree in terms of the compromise, it must be held that the leave of the Court was expressly recorded within the meaning of Order XXXII rule 7, of the Code. This was the principle laid down by their Lordships of the Privy Council in the case of Manohar Lal v. Jadunath Singh (33 I A 128) and the case now before us comes directly within the principles so laid down."

In the instant case, we are dealing with a unique position. The minor claimed to be a co‑sharer to the extent of one‑half in the lorry with Hamid Khan, who does not dispute having transferred his share in favour of the appellant. The minor did not claim any right or interest in the route permit which he tried to show rested with his father, Pir Khan. The father who was also a party to these proceedings merely claimed right to the route permit and to no part of the lorry. Even the minor in his cross suit did not go beyond the pleas taken by him in the suit brought by Murad Khan. Thereafter, he was represented by his real adult brother as guardian ad litem and if in the presence of his father and real brother, on an application made by that' real brother, which does mention the factum that it was in interest of the minor to save unnecessary litigation expense, the Court passes a short order, it cannot be said that the Court was oblivious of the fact that he was dealing with a minor's case or of the interest of the minor, especially when in the proceedings before him the father or the guardian ad litem are not shown at any stage to be claiming adversely to the minor. In all the cases cited at the Bar on behalf of the respondents, this distinguishing feature is absent and I, therefore, hold that it cannot be urged with success that the reference had not been made with a conscious judicial mind of the Court.

6. Once we come to the conclusion that the order of reference to arbitration was a valid and proper order and the reference to arbitration was valid, the provisions of section 32 of the Arbitration Act at once come into play. It has been argued on behalf of the respondents that because the compromise before the Arbitrator had been entered into without permission of the Court under Order XXXII, rule 7, C. P. C. the compromise and the award and thereafter the decree were bad in law, and therefore the suits ' to assail such a decree and award and compromise are maintainable. No authority for the view has been placed before me on behalf of the respondents to show that if a compromise on behalf of a person non sui juris is entered into after a valid reference to arbitration without complying with the procedure laid down under Order XXXII, rule 7, C. P. C. the award based on the compromise and the decree that follows can be assailed in any manner other than the one provided for in the Arbitration Act itself. Learned counsel for the respondents referred me to some observations in Ganesha Row and Tuljaram Row and another but I venture to observe with respect that in that case their Lordships of the Privy Council were not dealing with the provisions of section 32 of the Arbitration Act, 1940. It is after the aforesaid provision of law has been placed on the Statute Book that a bar has come into being in terms of the said section which reads as follows:‑---

"32. Notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act."

The plea of learned counsel that because the word "decree" is not used in sections 31, 32 and 33 is also of no avail, for the reason that the various provisions of the Arbitration Act mainly deal with the award and not the decree which follows and even under the provisions of section 39 of the Arbitration Act appeals have been provided for against the orders made by the Court and not against decrees, which may be appealable only to the extent mentioned in section 17 of the Act. The only remedy and machinery provided to assail award made in pursuance of a valid reference are sections 30, 31 and 33 of the Act. Therefore, it can be safely said that in view of my finding that the reference to arbitration was a valid reference the award and the decree made could not be challenged by way of an independent suit.

8. The result is that the appeal succeeds and the judgment and decree of the Court below is set aside. However, in the circumstances of the case, the parties are left to bear their own Costs.

S. Q. Appeal accepted.

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