M.P. RAJYA TILHAN UTPADAK SAHAKARI SANGH MARYADIT, PACHAMA, DISTRICT SEHORE AND OTHERS versus M/S. MODI TRANSPORT SERVICE on 11 May 2022

M.P. RAJYA TILHAN UTPADAK SAHAKARI SANGHMARYADIT, PACHAMA, DISTRICT SEHORE AND OTHERS

v.

M/S. MODI TRANSPORT SERVICE

(Civil Appeal No. 1973 of 2022)

MAY 11, 2022

[SANJIV KHANNA AND BELA M. TRIVEDI, JJ.]

Arbitration Act, 1940: s. 21 – Parties to suit may apply fororder of reference – Dispute between the parties – Suit filed for thesettlement of accounts – Thereafter, application by the respondentfor appointment of Chartered Accountant-CA as Commissioner, tosubmit report after conducting audit of accounts – Appointment ofCA – Pursuant thereto, submission of report by CA before the courtstating the amount due and payable by the appellant to therespondent – Thereafter, objections by the appellant that CA wasappointed as Commissioner u/Or. XXVI r. 9 and not as arbitrator u/s.21 – Rejection of objections – Order appointing the CA as anarbitrator attained finality, and also upheld by the High Court –On appeal, held: Report of the Chartered Accountant is not an awardand is to be treated as a report of a Commissioner appointed by thecourt u/Or. XXVI r. 11 – There is distinction between the scope andfunctions of an arbitral tribunal and a commissioner appointedu/Or. XXVI rr 9 and 11 – For submission to arbitration, there mustbe an arbitration agreement or an agreement in terms of s. 21 –Whereas the Commissioners are appointed by the court, may bewith consent of the parties, or even when there is objection to theappointment – Pre-existing agreement or the requirement that theparties agree before the court, as is mandatory in case of arbitration,is not necessary when a court directs appointment of a commissioner– On facts, when the court appointed the CA who as an expert wasrequired to give his opinion on the statement on accounts to facilitateand help the court to adjudicate and finally decide the suit – Instantapplication cannot be read as moved on a prior agreement orconsensus for reference to arbitration as was not signed by theappellant – Raising no objection as to appointment of CA does notgive rise to an affirmation that the appellant had agreed to hisappointment as an arbitrator so as to substitute court jurisdiction –

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[2022] 4 S.C.R.

AMoreover, the court always maintained its dominion over the subjectmatter of the suit – Thus, the order of High Court set aside – Codeof Civil Procedure, 1908 – Or. XXVI r. 11.

Allowing the appeal, the Court

HELD : 1.1 The first condition for invoking Section 21 ofBthe Arbitration Act, 1940 is that the parties to the suit must agreethat any matter of difference between them would be referred toarbitration. All interested parties must agree and apply to thecourt where the suit is pending to obtain an order of reference toarbitration. The subject matter of the reference must be any ofCthe matters between the parties to the suit. Entire subject matterof the suit may not be referred to arbitration. Parties may agreeto only refer a part or portion of the dispute to arbitration. Theexpression ‘agree’ is significant and expressive as to when a courtcan exercise jurisdiction under Section 21 of the Act. Word ‘agree’means any arrangement or understanding or action in concert.DThe Contract Act, 1872 states that an agreement may be oral orin writing, albeit the command of Section 21 of the Act is that theparties should apply to the court in writing for an order ofreference. In the context of Section 21, the court can refer adispute/difference subject matter of a suit when the partiesEmutually agree to arbitration. There must be a joining or meetingof minds between the parties to go for arbitration in respect of asubject matter in a pending suit. [Para 15][661-D-G; 662-A]

1.2 Arbitration is an alternative to the court adjudicationprocess by a private forum chosen by the parties. NormallyFreference can be made or even directed to the arbitrator only if apre-existing arbitration agreement subsists between the parties.In the absence of a pre-existing arbitration agreement, the courthas no power, authority or jurisdiction to refer unwilling partiesto arbitration. Therefore, the word ‘agree’ in Section 21 of theAct refers to consensus ad idem between the parties who take aGconsidered decision to forego their right of adjudication before acourt where the suit is pending, and mutually agree to have thesubject matter of the suit or part thereof adjudicated and decidedby an arbitrator. [Para 17][663-G-H; 664-A-B]

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1.3 In the instant case, the application dated 23.12.1994was moved by the plaintiff and it was not signed by the defendant.As per the heading, the application was for the appointment of acommissioner/arbitrator to conduct an ‘enquiry’ in respect of theaccounts by a competent Chartered Accountant who shall act asa panch/Commissioner and submit a report after conducting anaudit of the accounts. It was stated that the transactions betweenthe parties are fairly large in number and, therefore, it is necessaryto handover the said task to a Chartered Accountant. Theapplication also states that for the enquiry regarding accounts anopportunity of hearing should be given to both the parties. Nameof SKM, Chartered Accountant, to act as panch/commissionerwas proposed. The prayer in the application was that the panch/commissioner would submit the report to the court afterconducting an audit of the accounts. The application cannot beread as an application moved on a prior agreement or consensusfor reference to arbitration. The application cannot be read as anapplication by the parties under Section 21 of the Arbitration Act.First, it is not an application for reference of disputes to anarbitrator for adjudication but a request for the appointment ofan expert, that is, a Chartered Accountant, who would examinethe accounts and papers and submit the report to facilitate thecourt. The role assigned to SKM is also clear from the letter ofappointment which states that SKM has been appointed as CAand would be conducting an audit of all disputed accounts of bothsides, and that he should send a report to the court. Secondly,the court’s jurisdiction to finally decide was not questioned orannihilated. In fact, the court always remained in the picture,exercised parley as an adjudicator having dominion over thesubject matter of the suit. [Paras 18 and 19][664-E-G; 665-A]

1.4 The first portion of the order dated 23.12.1994 recordsthat the plaintiff has made an application for settlement of accountsand that the accounts can be examined only by a well-educatedChartered Accountant. A copy of the application had been handedover to the counsel for the defendant who had no objection “tobeing appointed as Panch in this case”. This statement issomewhat vague, but cannot be read as as an indication oraffirmation that the defendant had agreed to the appointment of AB

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Aan arbitrator as an alternative and substitute to court adjudication.If it was so, this should have been clearly stated to enable theparties to respond and make statement. At best it was restrictedto the appointment of an expert/commissioner who would examinethe accounts and submit his report. The second portion of theorder dated 23.12.1994 states that in the application name ofBSKM, Chartered Accountant, as panch was proposed to whichno party had any objection. Thereafter, the order records thedirection of the court that the fee of the arbitrator ‘would be asprescribed in the schedule of the Arbitration Council of Indiaand if the arbitrator demands a fee the same should be equallyCshared by both the parties’. The last portion does not incorporateand does not refer to any agreement or even concession givenby the defendant agreeing to arbitration as an alternative to courtadjudication and decision. The court had not disposed of the suitby referring the subject matter or a part of the subject matter ofthe suit to arbitration. The said order is for issuing a commissionDas the court had accepted an application filed by the plaintiff forverification of the accounts. The commissioner was to act as anexpert or facilitator for the court and submit a report to the courtto help the court adjudicate and finally decide the suit. [Paras 20and 21][665-B-G]

E1.5 There is also a distinction between the scope andfunctions of an arbitral tribunal and a commissioner appointedunder Order XXVI Rules 9 and 11 of the Code. For submissionto arbitration, there must be an arbitration agreement or anagreement in terms of Section 21 of the Act that the difference orFdispute between the parties for which they intend to bedetermined in a quasi-judicial manner. Commissioners areappointed by the court. Appointment may be with consent of theparties, or even when there is objection to the appointment.Preexisting agreement or the requirement that the parties agreebefore the court, as is mandatory in case of arbitration, is notGnecessary when a court directs appointment of a commissioner.In the case of a reference to a commissioner, all that the partiesexpect from the commissioner is a valuation/ examination of thesubject matter referred, which he would do according to his skill,knowledge and experience, which may be without taking anyH

evidence or hearing argument. The principle of a ‘facilitator’ canbe introduced, which a court may appoint, be it a commissioneror an expert, for a specific purpose and cause for ascertainmentof a fact which may be even disputed. In some cases, thecommissioner may even hear the parties and give his expertopinion based on the material or evidence produced by the partiesbefore the commissioner, as in this case when the court appointeda Chartered Accountand who as an expert was required to givehis opinion on the statement on accounts to facilitate and helpthe court arrive at a fair and just decision. It was to save thecourt’s time and cut delay in the decision by the court. [Para32][670-F-G; 671-A-E]

1.6 Order XXVI Rule 9 of the Code gives wide powers tothe court to appoint a commissioner to make local investigationswhich may be requisite or proper for elucidating any matter indispute, ascertaining the market value of any property, accountof mesne profit or damages or annual net profits. Under OrderXXVI Rule 11, the court has the power to issue a commission ina suit, in which examination of adjustment of accounts isnecessary, to a person as it thinks fit directing him to make suchexamination or adjustment. When a court issues such acommission to such a person, it can direct the commissioner tomake such an investigation, examination and adjustment andsubmit a report thereon to the court. The commissioner soappointed does not strictly perform a ‘judicial act which is binding’but only a ‘ministerial act’. Nothing is left to the commissioner’sdiscretion, and there is no occasion to use his judgment orpermitting the commissioner to adjudicate and decide the issueinvolved; the commissioner’s report is only an opinion or noting,as the case may be with the details and/or statement to the courtthe actual state of affairs. Such a report does not automaticallyform part of the court’s opinion, as the court has the power toconfirm, vary or set aside the report or in a given case issue anew commission. Hence, there is neither abdication nordelegation of the powers of functions of the court to decide theissue. Sometimes, on examination of the commissioner, the reportforms part of the record and evidence. The parties can contestan expert opinion/commissioner’s report, and the court, afterhearing objections, can determine whether or not it should rely A

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Aupon such an expert opinion/commissioner’s report. Even if thecourt relies upon the same, it will merely aid and not bind thecourt. In strict sense, the commissioners’ reports are ‘non-adjudicatory in nature’, and the courts adjudicate upon the rightsof the parties. [Para 33][671-E-F; 672-A-E]

B1.7 The matter referred to SKM was limited to examinationof the accounts. The issues and questions of dispute in the suitwere far broader and wider. These included questions as to theagreed price or the rate of transportation , computation of thetransportation costs payable to the plaintiff under the contract incase the coal delivered was within or beyond the 1% stipulation,Cwhether or not the defendants were right in making deductionson account of bad quality coal, higher moisture content etc.whereby the weight of the coal had increased, delay in deliveryon the part of the plaintiff, whether the defendants are entitled tocharge interest while making recoveries, etc. SKM himself didDnot decide whether or not the plaintiff is entitled to rent of theplot or security charges observing that this was an aspect for thecourt to decide. However, he forgot that his ‘jurisdiction’ waslimited to checking and verifying accounts and not deciding anyissue or questions beyond the accounts. [Para 35][673-C-E]

E1.8 The impugned order of the High Court affirming theorder passed by the Additional District Judge is set aside. It isheld that the report of the Chartered Accountant is not an awardand is to be treated as a report of a commissioner appointed bythe Court under Order XXVI Rule 11 of the Code. [Para 36][673-F-G]F

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Firm Khetu Ram Bashamber Dass v. Kashmiri Lal (1959)SCC OnLine Punj 102; Kerala State Electricity Boardand Another v. Kurien E. Kalathil and Another (2018)4 SCC 793 : [2018] 11 SCR 511; Afcons InfrastructureLtd. v. Cherian Varkey Construction Co. (P) Ltd. (2010)G8 SCC 24 : [2010] 8 SCR 1053; Shailesh Dhairyawanv. Mohan Balkrishna Lulla (2016) 3 SCC 619 : [2015]12 SCR 70; Byram Pestonji Gariwala v. Union Bankof India (1992) 1 SCC 31 : [1991] 1 Suppl. SCR 187;Bihar State Mineral Development Corpn. v. Encon M.P. RAJYA TILHAN UTPADAK SAHAKARI SANGH MARYADIT, PACHAMA,DISTRICT SEHORE v. M/S. MODI TRANSPORT SERVICE

Builders (I) (P) Ltd. (2003) 7 SCC 418 : [2003] 2 Suppl.SCR 812; ITC Ltd. v. George Joseph Fernadez andAnother (1989) 2 SCC 1 : [1989] 1 SCR 469; K.K.Modi v. K.N. Modi and Others (1998) 3 SCC 573 :[1998] 1 SCR 601; Bharat Bhushan Bansal v. U.P. SmallIndustries Corporation Ltd. (1999) 2 SCC 166 : [1999]1 SCR 181; Dayal Singh and Others v. State ofUttaranchal (2012) 8 SCC 263 : [2012] 10 SCR 157;Murari Lal v. State of M.P. (1980) 1 SCC 704 : [1980]2 SCR 249; Nagarajan v. A. Madhanakumar (1996)SCC OnLine Mad 17 – referred to.

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Felthouse v. Bindley (1862) 142 ER 1037; Davis v.Edinburgh Magistrate 1953 SC 34 – referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1973of 2022.

From the Judgment and Order dated 19.09.2019 of the High Courtof Madhya Pradesh, Principal Seat at Jabalpur in First Appeal No. 505of 1996.

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Ms. Ankita Chaudhary, Dy. AG, Abhinav Shrivastava,Ms. Himanshi Shakya, Sunny Choudhary, Advs. for the Appellants.

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AArunabh Chowdhury, Sr. Adv., Mrs. Pragya Baghel, SourabhTandon, Advs. for the Respondent.

The Judgment of the Court was delivered by SANJIV KHANNA, J.

1. The legal issue arising in the present appeal is whether theparties had agreed that the subject matter of the suit or a part thereofshould be referred to arbitration under Section 21 of the Arbitration Act,1940.[1]

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2. On 03[rd] September 1993, the respondent before us - M/s. ModiCTransport Service,[2] a partnership firm, had filed a civil suit in the Courtof the District Judge, Sehore Camp, Astha, Madhya Pradesh, for thesettlement of accounts of transportation of coal undertaken by themaccording to the agreement dated 01[st] October 1990 and thesupplementary agreement dated 13[th] December 1991, with M.P. RajyaTilhan Utpadak Sahkari Sangh Maryadit, Pachama, District Sehore,DMadhya Pradesh (the first defendant). The General Manager andManaging Director of the said Sahkari Sangh were impleaded as secondand third defendants.[3] The plaintiff had also prayed for a grant of theamount due and payable by the defendant and the amount spent by theplaintiff on the security of the defendant’s goods and all other amountsE(sic) with interest @ 2%.[4]

3. The plaint, in brief, states that the plaintiff had transported coalon the delivery orders issued by the defendant from the coal mines tothe defendant’s plant. The plaintiff had no connection with the quality orany deficiency in the quality of the coal. The plaintiff, as per directions,had loaded the coal from the coal mines of Western India CoalfieldsFLimited. The plaintiff’s sole responsibility was to deliver the coal on timeat the defendant’s plant. By communication dated 05[th] June 1992, thedefendant had informed that the plaintiff would be paid transportationcharges at Rs.1.42p. per tonne per kilometre till the finalisation of thenew agreement. The order would remain in force for at least six months.

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1 We are examining the provisions of the Arbitration Act, 1940 and consequently, theobservations and the findings recorded should not be without proper appreciation ofthe principles applied to the proceedings under the Arbitration and Conciliation Act,1996.

2 ‘The plaintiff’, for short.

3 Collectively three defendants are referred to as ‘the defendant’, for short.

H4 Interest period was not specified.

The plaintiff, as required, had furnished a bank guarantee ofRs.1,00,000/- (rupees one lakh only) for six months. Thereafter, thedefendant had refused to pay transportation charges @ Rs.1.42p. pertonne per kilometre. Further, the defendant had made deductions fromthe bills raised on the basis of the actual tonnage of coal delivered, thoughthe plaintiff, as per the agreement, was entitled to a 1% variation orexemption on the quantum of coal loaded at the coal mine. Accordingly,transport charges were payable per ton per kilometre as loaded at thecollieries and not on the quantity actually delivered as long as the shortfallwas within 1%. The defendant had also made false and wrong deductionson account of the high moisture content in the coal. Interest was chargedand deducted from the bills of the plaintiff by the defendant. Subsequently,the defendant had issued a telegraph asking the plaintiff not to transportcoal. The plaintiff had to arrange for a plot to store the coal for which hehad to pay a rent of Rs.10,000/- (rupees ten thousand only) per monthand incur security expenses of Rs.5,000/- (rupees five thousand only)per month for up to five months.

4. The defendant contested the suit by filing a detailed writtenstatement. As per the defendant, it was an essential duty of the plaintiffto lift the coal offered only on being satisfied that the coal was of goodquality. The plaintiff had lifted good quality coal from the collieries againstthe release orders of the defendant, but low quality of coal was deliveredto the defendant. The defendant was cheated. The representatives ofthe plaintiff were informed about the low quality of coal on account ofexcessive moisture, and stone and dust being mixed with the coal. Thetruck drivers had showered water on the coal to intentionally increasethe weight of the coal before delivery. Letter dated 05[th] June 1992 in thisregard was issued by the defendant to the plaintiff. The plaintiff was tobe paid transportation charges for the coal actually accepted at the plantof the defendant and not for the coal which was not delivered. As perclause 11 of the agreement, shortage up to 1% per truck was themaximum limit, whereas the plaintiff had claimed that 1% shortage shouldbe allowed even when there was no difference between the dispatchedand delivered weight. The price of coal was deducted and recoveredfrom the plaintiff when the shortage was in excess and beyond the 1%allowable limit. There were delays in the delivery of coal, sometimesextending to more than a month from the dispatch date. Accordingly, thedefendant had made deductions on account of wrong and fraudulentacts due to which the defendant had suffered losses. The plaintiff was AB

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Aalso liable to pay interest as the defendant had suffered due to blockageof funds. The defendant was not liable to pay any demurrage or rentcharges for the plot and, in fact, such charges were never paid. Theplaintiff had not delivered and kept huge quantity of coal for six to sevenmonths after the coal was lifted from the coal mines. Other defencesraised related to incomplete documentation and excess freight chargesBby the wrong declaration as to the place from where the coal was lifted.The letter dated 05[th] June 1992 enhancing the rate to Rs.1.42p. pertonne per kilometre was withdrawn/cancelled retrospectively vide theletter dated 30[th] September 1992. The letter dated 05[th] June 1992 wasissued on wrong facts based on the rate quoted by a sister concern ofCthe plaintiff in a tender floated in June 1992. Subsequently, the sisterconcern had voluntarily reduced the rate to Rs.1.32p. per tonne perkilometre. In fact, the plaintiff and their sister concern had quoted threedifferent rates in a short period of time to misguide and confuse theGeneral Manager (Plant) of the defendant who had issued the letter dated 05[th] June 1992. The plaintiff did not raise any objection to theDletter dated 30[th] September 1992 and had continued to transport anddeliver coal post the issue of the letter. The plaintiff had accepted thecancellation of the letter dated 05[th] June 1992. Furnishing of the bankguarantee of Rs.1,00,000/- (rupees one lakh only) for six months wasnot on account of an increase in rates but on account of the fact that theEcontract for transportation of coal by the plaintiff has been extended upto December 1992.

5. As stated above, the plaintiff had not quantified the amountpayable therein and had sued for settlement of accounts regarding thequality of coal transported. They had also prayed for the interest @ 2%Fwhich, it appears, was the amount claimed as payable per month. Forvaluation, the plaint had fixed the value of the suit at Rs.1,00,000/- (rupeesone lakh only) and a court fee of Rs.8,180/- (rupees eight thousand onehundred eighty only) was paid with the statement that excess court feecould be deposited after the amount was quantified. However, a number of contestations inter se parties were raised like the rate and quantificationGof the transport charges, lapses and alleged failure by the plaintiff ondifferent accounts, the deductions made by the defendant and theplaintiff’s liability to pay interest on excess payments made.

6. During the pendency of the said suit, the plaintiff had filed anapplication before the First Additional District Judge, Sehore, which reads:H

“COURT: FIRST ADDITIONAL DISTRICT JUDGE,SEHORE (M.P.)CIVIL SUIT NO. 16B/93

M/s Modi Transport Service

…..Plaintiff

Versus

M.P. Rajya Tilhan Sangh etc.

……Defendant

Application for appointment of Arbitrator/Commissioner

1. Present Suit has been filed by the plaintiff against theDefendants for settlement of accounts. In view of the pleadingsmade by the Plaintiff, documents produced on record and pleadingsand documents of Defendant, it is prima facie clear that there is adispute between both the parties is in respect of accounts. For thepurpose of conducting enquiry regarding accounts after givingopportunity of hearing to both the parties, it is necessary in theinterest that after appointing a Competent Chartered Accountantas Panch/ Commissioner in the present case he may be directedto submit report after conducting audit of Accounts. Since, thetransaction took place between both the parties are much higher,therefore, it is necessary to handover the aforesaid work to aChartered Accountant.

Therefore, it is prayed that by allowing the present Application,and after appointing Sh. Sushil Kumar Mantri, CharteredAccountant, Sehore as Panch/ Commissioner as proposed by theplaintiff, kindly direct him to Submit Report before the Hon’bleCourt after conducting Audit of the Accounts.

Sehore, dated 23.12.1994

Sd/- illegible

PlaintiffThrough Counsel”

The application was signed and moved by the plaintiff. It was notsigned and moved by the defendant.

7. On 23[rd] December 1994, the date on which the application wasfiled and first listed, the First Additional District Judge, Sehore, passedthe following order:

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SUPREME COURT REPORTS

A“COURT OF THE FIRST ADDITIONAL DISTRICTJUDGE, SEHORE (M.P.)Civil Suit No. 16B/93

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Opposite Parties along with Shri S.K. Verma, Advocate This case is fixed for evidence today, but an application has beensubmitted on behalf of the plaintiff to the effect that in this caseaccounts have to be settled between the parties and this workcan be done only by a well-educated chartered accountant. Insuch a situation, if this matter is handed over to a charteredaccountant for decision, then both the parties will not have anyobjection. A copy of this application was given to Mr. Verma. Hehas no objection to being appointed as Panch in this case. In theapplication itself, it has been proposed to appoint Shri Sushil KumarMantri, Chartered Accountant, Sehore as Panch of the case, onwhich no party has any objection. Hence the application is accepted.The fee of the arbitrator will be payable according to the feeprescribed in the schedule of the Arbitration Council of Indiaimmediately, if the Arbitrator demands fee, both the parties shouldpay half the fee to the arbitrator before settlement of the matter.The final liability of the fee will depend on the settlement of thefees of the case. A notice to this effect on behalf of the SessionsCourt for appointment of the arbitrator. The arbitrator shouldpresent his decision within the stipulated period by giving notice tothe parties concerned and this matter should be placed before meat the appointed time after being presented in the Arbitration Court.

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Dated: 23.12.1994"

8. Pursuant to the said order, the court sent the following letterdated 23[rd] January 1991 to S.K. Mantri, Chartered Accountant, Sehore:

“COURT OF FIRST ADDITIONAL SESSIONS JUDGE,GSEHORE (M.P.)

Sr. No 11/ SehoreDated – 23.01.1995To,Sh. S.K. MantriChartered Accountant H

Sehore.

In Suit No. 11/93 of this Court titled Modi Transport Vs. TilhanSangh, you have as appointed as Panch. You by conducting auditof all the disputed records (Accounts) of both the parties, kindlysend your Report by 22.04.1995.

On receiving your Remuneration Report, payment will be madeto you in the Court.

Sd/-

(Satish Chandra Dubey)First Additional District Judge, Sehore(M.P.)”

9. On 28[th] March 1995, S.K. Mantri appeared before the courtand applied for an extension of the date to submit the report, which timewas extended. Another order dated 22[nd] April 1995 states that the panchdecision was not submitted and that the panch must present the awardwithin the stipulated period by giving notice to the parties concerned.Thereafter, the court passed a number of orders recording the presenceof the parties and that they sought time to arrange the vouchers and therecords. Time was also given to verify the papers, which were checkedin the court in front of the parties’ representatives. Order dated18[th] May 1995 records that photocopy and laboratory analysis recordshad been placed on record. Order dated 19[th] May 1995 refers to theaccount summary submitted by the plaintiff regarding the pending billsand amounts for the previous years. Information in that regard was soughtfrom the defendant. Therefore, it is clear that the proceedings remainedpending before the court. The suit was not treated as disposed of anddecided in view of the order dated 23[rd] December 1994.

10. On 22[nd] June 1995, S.K. Mantri submitted his report beforethe court stating that an amount of Rs.24,03,300/- (rupees twenty fourlakhs three thousand three hundred only) was due and payable by thedefendant to the plaintiff. This amount included interest ofRs. 9,43,007/- (rupees nine lakhs forty three thousand seven only)computed @ 24% per annum on different amounts between 23[rd] February1993 to 31[st] May 1995. He held that the plaintiff is entitled to get Rs.1.42p.per tonne per kilometre. He held that “in my opinion the reduction ofone per cent per truck should be followed (sic-allowed) by a A

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Areduction in contract for excess reduction”. Claim of the defendantfor a deduction on account of moisture and low quality coal was notjustified in the absence of evidence. Lastly, the plaintiff would be entitledto receive rent and security charges, but because of lack of a clearprovision and a specific prayer, the amount could only be decided by thecourt. Significantly the second paragraph of the report as to the basis onBwhich it was prepared reads:

“That the report has been prepared on the basis of records(accounts) which have been presented to me by the plaintiff andthe opposition till date 31.05.95, which is presented before yourgoodself.”C

11. Order dated 22[nd] June 1995 passed by the court mentions thatthe arbitrator has presented his report and documents along with the list.If the parties have any objections regarding the arbitral report, then theyshould appear on the next date.

D12. The defendants filed objections, inter alia, on different groundschallenging the report, which objections were decided by the court ofAdditional District Judge, Sehore, vide order dated 16[th] May 1996. Heheld that S.K. Mantri had been appointed as an arbitrator as providedunder Section 21 of the Arbitration Act. The defendant’s contention thatS.K. Mantri was appointed as a commissioner under Order XXVI RuleE9 of the Code of Civil Procedure, 1908[5] was rejected. Further, theobjections to the award filed on 01[st] November 1995 were beyond 30days and barred by limitation. Counsel for the defendant was present inthe court when the arbitrator submitted the award in the court on 22[nd]July 1995. The allegation of misconduct on the ground that S.K. MantriFwas a Chartered Accountant of the defendant, who was actually involvedin the preparation of accounts, was overruled as this objection was notraised when S.K. Mantri was appointed as an arbitrator. Order dated23[rd] December 1994 appointing S.K. Mantri as an arbitrator had attainedfinality as it was not challenged by the defendant.

G13. The first appeal preferred by the defendant before the HighCourt has been dismissed vide the impugned judgment dated19[th] September 1996. The High Court has affirmed the trial court’s viewthat during the pendency of the suit, the matter was referred to arbitrationin terms of Section 21 of the Arbitration Act. S.K. Mantri, Chartered H5 ‘the Code’, for short.

M.P. RAJYA TILHAN UTPADAK SAHAKARI SANGH MARYADIT, PACHAMA,DISTRICT SEHORE v. M/S. MODI TRANSPORT SERVICE [SANJIV KHANNA, J.]

Accountant, was appointed as an arbitrator with the parties’ consent.The fee was payable to S.K. Mantri as per the prescribed arbitrationschedule. The objection that S.K. Mantri was the Chartered Accountantof the defendant, was rejected as it could not be said that he had actedin an unfair manner. That apart, the objections were filed beyond theprescribed period of 30 days.

14. Defendant, namely, M.P. Rajya Tilhan Utpadak Sahkari SanghMaryadit, Pachama, District Sehore, Madhya Pradesh and the GeneralManager and Managing Director of the Sahkari Sangh have accordinglyfiled this appeal before us.

15. Section 21 of the Act, reads as under:

“21. Parties to suit may apply for order of reference:- Wherein any suit all the parties interested agree that may matter indifference between them in the suit shall be referred to arbitration,they may at any time before judgment is pronounced apply inwriting to the Court for an order of reference.”

The first condition for invoking Section 21 is that the parties to thesuit must agree that any matter of difference between them shall bereferred to arbitration. All interested parties must agree and apply to thecourt where the suit is pending to obtain an order of reference toarbitration. The subject matter of the reference must be any of the mattersbetween the parties to the suit. Entire subject matter of the suit may notbe referred to arbitration. Parties may agree to only refer a part orportion of the dispute to arbitration. The expression ‘agree’ is significantand expressive as to when a court can exercise jurisdiction under Section21 of the Act. Word ‘agree’ means any arrangement or understandingor action in concert.[6] The Indian Contract Act, 1872 states that anagreement may be oral or in writing, albeit the command of Section 21of the Act is that the parties should apply to the court in writing for anorder of reference. In the context of Section 21, the court can refer adispute/difference subject matter of a suit when the parties mutuallyagree to arbitration. There must be a joining or meeting of minds betweenthe parties to go for arbitration in respect of a subject matter in a pending 6 See Section 2 of the Contract Act which vide clause (a) defines proposal, clause (b)which defines when proposal is accepted, clause (e) which states that every promiseand every set of promises, forming the consideration for each other, is an agreement andclause (h) which states that an agreement enforceable by law is a contract Clause (h)also has two sub-clauses.

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Asuit. Felthouse v. Bindley[7] states that the parties agree when they wilfullyagree to perform certain acts or refrain from doing something. The partiesshould be agreed about the subject matter at the same time and in thesame sense.

16. Interpreting Section 21 of the Act, a Full Bench of the PunjabBand Haryana High Court in Firm Khetu Ram Bashamber Dass v.Kashmiri Lal[8] has held:

“Thus, before any matter involved in a suit pending in a Court canbe referred to arbitration (a) there must be an agreement amongstall the parties interested that any matter in dispute between themin the suit shall be referred to arbitration; (b) if they come to suchan agreement, then they have to make an application in writing tothe Court concerned; and (c) thereafter, the Court has to pass anorder referring the dispute to the arbitrator agreed upon betweenthe parties.

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There can be no manner of doubt that if there is no agreementbetween all the parties who are interested in the case and if theapplication is not made on behalf of them all, the reference madeby the Court is bad and the award based on such a reference isinvalid in law. This view has been consistently taken by all theHigh Courts. In Negi Puran Singh v. Hira Singh and others,while dealing with provisions of Civil Procedure Code, 1882, similarto sections 21 and 23 of the Arbitration Act, Stanley, C.J. andBanerji, J., of the Allahabad High Court held that if there was noapplication signed by all the parties who were interested in thesettlement of the suit, the reference and the award given, thereafter,would be invalid. The same view was taken in Haswa v. Mahbuband another, by another Division Bench of the same Court.In Gopal Das v. Baij Nath, Sulaiman, J., (as he then was),referred to a number of decisions of Allahabad and Calcutta HighCourts and observed as follows:—

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“*** it is necessary that all persons who are interested in thematter which is in difference between the parties and which isgoing to be referred to arbitration, should join. Although it isnot absolutely necessary that they should all sign the application G

7 (1862) 142 ER 1037H8 1959 SCC OnLine Punj 102

made to the Court, it is necessary that they should agree to thereference.”

See also Tej Singh and another v. Ghase Ram and others ,In Ram Harakh Singh v. Mumtaz Hasain, the question ofacquiescence and ratification was also considered.

Following Gopal Das v. Baij Nath and Subba Rao v. Appadurai ,Ghulam Hasan, J., held that the foundation of the jurisdiction ofthe Court is the consent of the parties and the subsequentratification does not validate the reference which was void abinitio. Calcutta and Madras High Courts have also taken a similarview. The question was considered by a Full Bench of the CalcuttaHigh Court in Laduram v. Nandlal, Mookerjee, J., at page 114of the report observed as follows:—

“The foundation of jurisdiction here is the agreement amongstall the parties interested that the matters in difference betweenthem shall be referred to arbitration. If all the parties interesteddo not apply and yet an order of reference is made, the orderis illegal because made without jurisdiction. If an award followson the basis of that reference, it is equally illegal, because it isfounded upon a reference made without jurisdiction.”

See also Seth Dooly Chand v. Munuji and others and KhanMohmed v. Chella Ram and another and Subha Rao v.Appadurai.

In Subha Rao v. Appadurai, Devadoss, J., while considering theprovisions of para 1 of Schedule II, Civil Procedure Code,—whichin substance is the same as section 21 of the Arbitration Act—observed as follows:—

“What gives the Court jurisdiction to refer the matter toarbitration is consent of all the parties. Consent subsequentlygiven cannot give jurisdiction to the Court which it did notpossess at the time when it referred the matter to arbitration.”

17. In our opinion, the aforesaid ratio expresses the correct positionin law. Arbitration is an alternative to the court adjudication process by aprivate forum chosen by the parties. Normally reference can be madeor even directed to the arbitrator only if a preexisting arbitration agreementsubsists between the parties. In the absence of a preexisting arbitration A

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Aagreement, the court has no power, authority or jurisdiction to referunwilling parties to arbitration. Therefore, the word ‘agree’ in Section21 of the Act refers to consensus ad idem between the parties who takea considered decision to forego their right of adjudication before a courtwhere the suit is pending, and mutually agree to have the subject matterof the suit or part thereof adjudicated and decided by an arbitrator.B

18. In the present case, the application dated 23[rd] December 1994was moved by the plaintiff and it was not signed by the defendant. Asper the heading, the application was for the appointment of acommissioner/arbitrator to conduct an ‘enquiry’ in respect of the accountsCby a competent Chartered Accountant who shall act as a panch/Commissioner and submit a report after conducting an audit of theaccounts. It was stated that the transactions between the parties arefairly large in number and, therefore, it is necessary to handover theaforesaid task to a Chartered Accountant. The application also statesthat for the enquiry regarding accounts an opportunity of hearing shouldDbe given to both the parties. Name of S.K. Mantri, Chartered Accountant,to act as panch/commissioner was proposed. The prayer in theapplication was that the panch/ commissioner would submit the reportto the court after conducting an audit of the accounts. The applicationcannot be read as an application moved on a prior agreement orconsensus for reference to arbitration.E

19. In view of the aforesaid discussion, we cannot read theapplication dated 23[rd] December 1994 as an application by the partiesunder Section 21 of the Arbitration Act. First, it is not an application forreference of disputes to an arbitrator for adjudication but a request forFthe appointment of an expert, that is, a Chartered Accountant, who wouldexamine the accounts and papers and submit the report to facilitate thecourt. The role assigned to S.K. Mantri is also clear from the letter ofappointment dated 23[rd] January 1995 which states that S.K. Mantri hasbeen appointed as a panch and would be conducting an audit of alldisputed accounts of both sides, and that he should send a report to theGcourt.[9] The letter also mentions that “on receiving your remunerationreport, payment would be made to you in the court”. Secondly, thecourt’s jurisdiction to finally decide was not questioned or annihilated. In 9 Distinction between an arbitrator and expert; and an arbitrator and a commissioner hasHbeen examined and discussed below.

fact, the court always remained in the picture, exercised parley as anadjudicator having dominion over the subject matter of the suit.

20. However, the plaintiff has placed reliance on the order dated23[rd] December 1994 to submit that the defendant had agreed toarbitration. It is, therefore, necessary for us examine the contents of theorder. The first portion of the order records that the plaintiff has madean application for settlement of accounts and that the accounts can beexamined only by a well-educated Chartered Accountant. A copy of theapplication had been handed over to the counsel for the defendant whohad no objection “to being appointed as Panch in this case”. This statementis somewhat vague, but we do not read the statement as an indication oraffirmation that the defendant had agreed to the appointment of anarbitrator as an alternative and substitute to court adjudication. If it wasso, this should have been clearly stated to enable the parties to respondand make statement. At best it was restricted to the appointment of anexpert/commissioner who would examine the accounts and submit hisreport.

21. The second portion of the order dated 23[rd] December 1994states that in the application name of Sushil Kumar, Chartered Account,as panch has been proposed to which no party had any objection.Thereafter, the order records the direction of the court that the fee ofthe arbitrator ‘shall be as prescribed in the schedule of the ArbitrationCouncil of India and if the arbitrator demands a fee the same should beequally shared by both the parties’. The last portion does not incorporateand does not refer to any agreement or even concession given by thedefendant agreeing to arbitration as an alternative to court adjudicationand decision. The court had not disposed of the suit by referring thesubject matter or a part of the subject matter of the suit to arbitration. Inour opinion the said order is for issuing a commission as the court hadaccepted an application filed by the plaintiff for verification of theaccounts. The commissioner was to act as an expert or facilitator forthe court and submit a report to the court to help the court adjudicateand finally decide the suit.

22. We would elaborate these aspects and affirm our reasoningwith reference to case law and statutory provisions.

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A23. This Court in Kerala State Electricity Board and Anotherv. Kurien E. Kalathil and Another,[10] had examined the question ofreference to arbitration in a case where there was no arbitrationagreement between the parties. The question that fell for considerationwas whether the High Court was right to refer the parties to arbitrationon oral consent given by the counsel without the written consent of theBparty whom he represents. In this context, reference was made to Section89 of the Code and the decision of this Court in Afcons InfrastructureLtd. v. Cherian Varkey Construction Co. (P) Ltd.,[11] which is to thefollowing effect:

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“33. Even if there was no pre-existing arbitration agreement, theCparties to the suit can agree for arbitration when the choice ofADR processes is offered to them by the court under Section 89of the Code. Such agreement can be by means of a joint memo orjoint application or a joint affidavit before the court, or by recordof the agreement by the court in the order-sheet signed by theDparties. Once there is such an agreement in writing signed byparties, the matter can be referred to arbitration under Section 89of the Code; and on such reference, the provisions of the AC Actwill apply to the arbitration, and as noticed in Salem Bar (I), thecase will go outside the stream of the court permanently and willnot come back to the court.”E

24. Thereafter, Kerala State Electricity Board (supra), made areference to a similar view expressed by this Court in ShaileshDhairyawan v. Mohan Balkrishna Lulla,[12] which stated that resort toarbitration in a pending suit by the orders of the court would only bewhen parties agree for settlement of the dispute through arbitration.FThus, reference to arbitration is valid only when done by means ofagreement between the parties.

25. On the question whether a counsel can give consent forarbitration on behalf of the parties, Kerala State Electricity Board(supra) referred to the decision in Byram Pestonji Gariwala v. UnionGBank of India,[13] which has settled the law that a counsel should not acton implied authority unless there is an exigency of circumstances 10 (2018) 4 SCC 79311 (2010) 8 SCC 2412 (2016) 3 SCC 619H13 (1992) 1 SCC 31

M.P. RAJYA TILHAN UTPADAK SAHAKARI SANGH MARYADIT, PACHAMA,DISTRICT SEHORE v. M/S. MODI TRANSPORT SERVICE [SANJIV KHANNA, J.]

demanding immediate adjustment of the suit by agreement or compromiseand the signature of the party cannot be obtained without delay.Reference was made to paragraph 37 in Gariwala case (supra), whichreads as under:

“37. We may, however, hasten to add that it will be prudent forcounsel not to act on implied authority except when warranted bythe exigency of circumstances demanding immediate adjustmentof suit by agreement or compromise and the signature of the partycannot be obtained without undue delay. In these days of easierand quicker communication, such contingency may seldom arise.A wise and careful counsel will no doubt arm himself in advancewith the necessary authority expressed in writing to meet all suchcontingencies in order that neither his authority nor integrity isever doubted. This essential precaution will safeguard the personalreputation of counsel as well as uphold the prestige and dignity ofthe legal profession.”

26. The Kerala State Electricity Board (supra) decision rightlyrecords that referring the parties to arbitration has serious civilconsequences, substantial and procedural. Once an award is passed, itcan be only challenged on limited grounds. When there was no arbitrationagreement between the parties, without joint application the High Courtought not to have referred the matter to arbitration. This Court in BiharState Mineral Development Corpn. v. Encon Builders (I) (P) Ltd.[14]emphasised that the arbitration agreement must contain a broadconsensus between the parties that the disputes and differences shouldbe referred to a private tribunal. Further, such a tribunal must be animpartial one.

27. In ITC Ltd. v. George Joseph Fernadez and Another,[15] thisCourt had interpreted Section 20[16] of the Contract Act, which providesthat where both the parties to an agreement are under a mistake as to amatter of fact essential and integral to the agreement, the agreement is void. However, this does not apply if the mistake relates to an erroneous 14 (2003) 7 SCC 418

15 (1989) 2 SCC 1

16 20. Agreement void where both parties are under mistake as to matter offact.—Where both the parties to an agreement are under a mistake as to a matter of factessential to the agreement, the agreement is void.Explanation.—An erroneous opinion as to the value of the thing which forms thesubject-matter of the agreement, is not to be deemed a mistake as to a matter of fact.

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Aopinion as to the valuation of the thing that forms the subject matter ofthe agreement. A mistake as to the quality of an article or attributes onthe other hand is a debatable question as it may not always lead to theconclusion that the contract is void. Further, this provision relating to thevoidness of the contract does not apply to cases of a common mistakeof fact, as distinguished from a mutual mistake made or entertained byBeach of the persons towards or with regard to each other. Where aparty is mistaken as to the other’s intention, though neither realises thatthe respective promises have been misunderstood, there is a mutualmistake. The ascertainment of whether or not there was a mutual mistake is to be ascertained by applying what reasonable third parties wouldCinfer from their words or conduct. The mistake or error must be suchthat it either appears on the face of the contract that the matter as towhich the mistake existed was an essential and integral element of thesubject matter of the contract or was an inevitable inference from thenature of the contract that all parties so regarded it. A contract is void atlaw only if some term can be implied in both offer and acceptance,Dwhich prevents the contract from coming into force. These principlesare relevant when the dispute arises as to the existence of a pre-existingarbitration agreement. Albeit in the case of Section 21, the requirementis even stricter – the “parties interested agree…in writing before thecourt”, which is an inflexible mandate which requires that the partiesEmust agree, or affirm an agreement before the court to refer the subjectmatter as agreed to arbitration.

28. This Court in K.K. Modi v. K.N. Modi and Others,[17] afterreferring to Mustill and Boyd in their book on Commercial Arbitration,pointed out that there is an immense variety of tribunals differing Ffundamentally as regards their composition, their functions and sourcesfrom which their powers are derived. Tribunals, including those whichderive their jurisdiction from the consent of the parties, apart from thearbitration tribunal, may be persons who are not properly called tribunals,but by mutual consent entrusted with the power to affect the legal rights of two parties inter se in a manner creating legally enforceable rights toGdo so by a procedure of a ministerial but not judicial in nature, such aspersons appointed by contract to value property or certify compliance ofbuilding works with the specification. Other examples given are ofconciliation tribunals of local religious bodies or privately appointed persons to act as mediators. Such consent terms lack some of theattributes necessary for an arbitration agreement. The judgment enlistssome of the attributes which must be present in an agreement to beconsidered as an arbitration agreement as:

“17... (1) The arbitration agreement must contemplate that thedecision of the tribunal will be binding on the parties to theagreement,

(2) that the jurisdiction of the tribunal to decide the rights of partiesmust derive either from the consent of the parties or from anorder of the court or from a statute, the terms of which make itclear that the process is to be an arbitration,

(3) the agreement must contemplate that substantive rights ofparties will be determined by the agreed tribunal,

(4) that the tribunal will determine the rights of the parties in animpartial and judicial manner with the tribunal owing an equalobligation of fairness towards both sides,

(5) that the agreement of the parties to refer their disputes to thedecision of the tribunal must be intended to be enforceable in lawand lastly,

(6) the agreement must contemplate that the tribunal will make adecision upon a dispute which is already formulated at the timewhen a reference is made to the tribunal.”

29. K.K. Modi (supra) refers to Russell on Arbitration,[18] whichobserves that whether a chosen form of dispute resolution is expertdetermination or arbitration is a matter of construction of a contract thatinvolves an objective enquiry into the intention of the parties. Specificwords like ‘arbitrator’, ‘arbitration proceedings’ or ‘an expert and notan arbitrator’ can be used to describe how the dispute resolver is to act.However, the words are persuasive, although not always conclusive.The authors on the distinction between arbitration and an expert’s opinionhave elucidated that an arbitral tribunal arrives at its decision based onthe evidence and submissions of the parties by applying the law and itsprinciples, whereas an expert decides on his own expert opinion, applyinghis own expertise.[19]

18 21st Edn., at page 37, para 2-014

19 Russel on Arbitration, 21st Edition

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A30. In Bharat Bhushan Bansal v. U.P. Small IndustriesCorporation Ltd,[20] reference was made to S.K. Chawla’s Law ofArbitration and Conciliation[21] to highlight that an expert primarily actson his knowledge and experience supplemented if he thinks fit by: (i) hisown investigations; and/or (ii) material (which need not conform to therules of ‘evidence’) put before him by either party. On the other hand,Ban arbitrator primarily acts on the material put before him by the parties.Determination by an expert would involve less to thorough investigation.Reference is also made to Hudson’s Building and EngineeringContracts,[22] which distinguishes a certifier and an arbitrator in a buildingcontract observing that the certifier in a construction contract will oftenCperform an administrative rather than a judicial function. Certifiers havebeen described as preventers of disputes in contradistinction witharbitrators, whose function can only arise once a dispute is in existence.

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31. With regard to the significance and effect of the report submittedby an expert, this Court in Dayal Singh and Others v. State ofDUttaranchal[23]states that the purpose of an expert opinion is primarilyto assist the court in arriving at a final conclusion. Such report is notbinding upon the court. The court is expected to analyse the report, readit in conjunction with the other evidence on record and then form its finalopinion as to whether such report is worthy of reliance or not. An expertreport, duly proved, has its evidentiary value but such appreciation hasEto be within the limitations prescribed and with careful examination bythe court. Simply put, an expert deposes and does not decide,[24] his dutyis to furnish the court with necessary scientific/technical criteria so as toenable the judge to form his own independent judgment by the applicationof these criteria to the facts proved in evidence.[25]F32. There is also a distinction between the scope and functions ofan arbitral tribunal and a commissioner appointed under Order XXVIRules 9 and 11[26 ]of the Code. For submission to arbitration, there must 20 (1999) 2 SCC 166

20 (1999) 2 SCC 166

21 Justice S.K. Chawla Law of Arbitration and Conciliation at Page 164.G22 See Eleventh Edition, Volume 1, in Paragraph 6.06523 (2012) 8 SCC 263

24 Murari Lal v. State of M.P. (1980) 1 SCC 704

25 Vide Lord President Cooper in Davis v. Edinburgh Magistrate, 1953 SC 34 quoted byProfessor Cross in his Evidence.26 9. Commissions to make local investigations.– In any suit in which the Courtdeems a local investigation to be requisite or proper for the purpose of elucidating anyH

be an arbitration agreement or an agreement in terms of Section 21 ofthe Act that the difference or dispute between the parties for which theyintend to be determined in a quasi-judicial manner. Commissioners areappointed by the court. Appointment may be with consent of the parties,or even when there is objection to the appointment. Preexisting agreementor the requirement that the parties agree before the court, as is mandatoryin case of arbitration, is not necessary when a court directs appointmentof a commissioner. In the case of a reference to a commissioner, all thatthe parties expect from the commissioner is a valuation/ examination ofthe subject matter referred, which he would do according to his skill,knowledge and experience, which may be without taking any evidenceor hearing argument.[27] In light of the aforesaid decisions, we would liketo introduce the principle of a ‘facilitator’ which a court may appoint, beit a commissioner or an expert, for a specific purpose and cause forascertainment of a fact which may be even disputed. In some cases, thecommissioner may even hear the parties and give his expert opinionbased on the material or evidence produced by the parties before thecommissioner, as in this case when the court appointed a CharteredAccount who as an expert was required to give his opinion on thestatement on accounts to facilitate and help the court arrive at a fair andjust decision. It was to save the court’s time and cut delay in the decisionby the court.

33. Order XXVI Rule 9 of the Code gives wide powers to thecourt to appoint a commissioner to make local investigations which maybe requisite or proper for elucidating any matter in dispute, ascertainingthe market value of any property, account of mesne profit or damagesor annual net profits. Under Order XXVI Rule 11, the court has the matter in dispute, or of ascertaining the market-value of any property, or the amount ofany mesne profits or damages or annual net profits, the Court may issue a commissionto such person as it thinks fit directing him to make such investigation and to reportthereon to the Court:

Provided that, where the State Government has made rules as to the personsto whom such commission shall be issued, the Court shall be bound by such rules.

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11. Commission to examine or adjust accounts.– In any suit in which anexamination or adjustment of the accounts is necessary, the Court may issue a commissionto such person as it thinks fit directing him to make such examination or adjustment.27 Halsbury, Vol.1, Edn. 2 at Pg. 622

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Apower to issue a commission in a suit, in which examination of adjustmentof accounts is necessary, to a person as it thinks fit directing him tomake such examination or adjustment. When a court issues such acommission to such a person, it can direct the commissioner to makesuch an investigation, examination and adjustment and submit a reportthereon to the court. The commissioner so appointed does not strictlyBperform a ‘judicial act which is binding’ but only a ‘ministerial act’.Nothing is left to the commissioner’s discretion, and there is no occasionto use his judgment or permitting the commissioner to adjudicate anddecide the issue involved; the commissioner’s report is only an opinion

or noting, as the case may be with the details and/or statement to theCcourt the actual state of affairs. Such a report does not automaticallyform part of the court’s opinion, as the court has the power to confirm,vary or set aside the report or in a given case issue a new commission.Hence, there is neither abdication nor delegation of the powers offunctions of the court to decide the issue. Sometimes, on examination of the commissioner, the report forms part of the record and evidence.[28]DThe parties can contest an expert opinion/commissioner’s report, andthe court, after hearing objections, can determine whether or not it shouldrely upon such an expert opinion/commissioner’s report. Even if thecourt relies upon the same, it will merely aid and not bind the court. Instrict sense, the commissioners’ reports are ‘non-adjudicatory in nature’,Eand the courts adjudicate upon the rights of the parties.

34. By Act 18 of 2018, Section14A[29] has been inserted in theSpecific Relief Act, 1963. The provision states that without prejudice to 28 A. Nagarajan v. A. Madhanakumar 1996 SCCOnLine Mad 17

29 14A. Power of court to engage experts.—(1) Without prejudice to the generality ofFthe provisions contained in the Code of Civil Procedure, 1908 (5 of 1908), in any suitunder this Act, where the court considers it necessary to get expert opinion to assist iton any specific issue involved in the suit, it may engage one or more experts and directto report to it on such issue and may secure attendance of the expert for providingevidence, including production of documents on the issue.

(2) The court may require or direct any person to give relevant information to theexpert or to produce, or to provide access to, any relevant documents, goods or otherGproperty for his inspection.(3) The opinion or report given by the expert shall form part of the record of the suit;and the court, or with the permission of the court any of the parties to the suit, mayexamine the expert personally in open court on any of the matters referred to him ormentioned in his opinion or report, or as to his opinion or report, or as to the mannerin which he has made the inspection.

(4) The expert shall be entitled to such fee, cost or expense as the court may fix, whichHshall be payable by the parties in such proportion, and at such time, as the court maydirect.]

the provisions of the Code in any suit under the Act in question where acourt considers it necessary to get expert opinion to assess it on a specificissue involved in the suit, it may engage one or more experts and directto report to it on such issue. The court may secure the expert’s attendancefor providing evidence, including the production of documents on theissue. The opinion or report of the expert would form part of the recordof the suit as is the case with the commissioner’s report. With the court’spermission, the parties to the suit may examine the expert personally inthe open court on any of the matters referred to him or as to his opinionor report or as to the manner in which he has made the inspection.

35. The matter referred to S.K. Mantri was limited to examinationof the accounts. The issues and questions of dispute in the suit were farbroader and wider. These included questions as to the agreed price orthe rate of transportation in view of the letter dated 05[th] June 1992,which was withdrawn by letter dated 30[th] September 1992, computationof the transportation costs payable to the plaintiff under the contract incase the coal delivered was within or beyond the 1% stipulation, whetheror not the defendants were right in making deductions on account of badquality coal, higher moisture content etc. whereby the weight of the coalhad increased, delay in delivery on the part of the plaintiff, whether thedefendants are entitled to charge interest while making recoveries, etc.It is interesting to note that the S.K. Mantri himself did not decide whether

or not the plaintiff is entitled to rent of the plot or security chargesobserving that this was an aspect for the court to decide. However, heforgot that his ‘jurisdiction’ was limited to checking and verifying accountsand not deciding any issue or questions beyond the accounts on issuesand questions referred to above.

36. In view of the aforesaid discussion, we allow the present appealand set aside the impugned order dated 19[th] September 2019 of the HighCourt affirming the order dated 16[th] May 1996 passed by the AdditionalDistrict Judge, Sehore Camp Astha. It is held that the report of theChartered Accountant is not an award and is to be treated as a report ofa commissioner appointed by the Court under Order XXVI Rule 11 ofthe Code. Objections of the defendant to the said report will be consideredin light of the aforesaid discussion and our findings, and after hearingboth the sides the trial will proceed as per law. We clarify that theobservations made in this judgment are for the disposal of the presentappeal. The civil suit will be decided on merits without being influenced AB

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37. All pending applications are disposed of. There would be noorder as to costs.

BNidhi Jain

(Assisted by : Tamana, LCRA)

Appeal allowed.

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