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Scope And Extent Of Matters Referred To Arbitration

Vanshita Singh ,
  19 September 2022       Share Bookmark

Court :
Hon’ble Supreme Court of India
Brief :

Citation :
1960 AIR 307

Ct. A. Ct. Nachiappa Chettiar And Ors. Vs. Ct. A. Ct. Subramaniam Chettiar

13 November 1959

Justice P.B.Gajendragadkar

Petitioner: Ct. A. Ct. NachiappaChettiar And Ors.
Respondent: Ct. A. Ct. Subramaniam Chettiar


The appellants 1 through 5 have been brought to this Court with a certificate issued by the High Court of Madras under Article 133 of the Constitution. The appeals stem from a partition suit brought by the respondent Subramanian Chettiar against his brother Ct. A. Ct. NachiyappaChettiar and his four sons.


The Constitution of India

The Arbitration Act, 1940

  • Section 21 - Parties to suit may apply for order of reference. - Where in any suit all the parties interested agree that any matter in difference between them in the suit shall be referred to arbitration, they may at any time before judgment is pronounced apply in writing to the Court for an order of reference.
  • Section 30 - Grounds for setting aside award.
  • Section 31 – Jurisdiction. - an award may be filed in any Court having jurisdiction in the matter to which the reference relates.


  • The appellants and respondent are Nattukottai Chettiars, and their wealthy family operated a significant money-lending operation in Burma. The respondent and appellant 1’s father, Chidambaram Chettiar, passed away on August 20, 1926. The respondent was just six years old then.
  • When his father passed away, the appellant 1 assumed control of the family and its business because he had already been involved in his father’s management of the company.
  • The respondent served appellant 1 notice on September 6, 1941, requesting that he partition the family’s property and provides accounting of his administration of them.
  • The respondent filed the current lawsuit on September 24, 1941, after this demand was unmet.
  • In accordance with the plaint, the family's assets were immoveable properties in Pudukottai, an Indian State, and in what was then referred to as British India.
  • The plaint further claimed that Chidambaram Chettiar had entered sizable family funds in his name and the names of family members and that these funds were invested in many businesses or lent to several people.
  • The respondent alleged that appellant 1 had distorted finances during his supervision and had actually plundered huge sums of money, thus he claimed an account from appellant 1.
  • Appellant 2 submitted a request to submit an additional written statement on December 6, 1943. The respondent objected to this application.
  • On December 14, 1943, the trial court dismissed the aforementioned motion because it intended to make a novel and contradictory argument and was primarily motivated by appellant 1.
  • A preliminary decree was issued when the learned judge's judgement in the case was given on December 29, 1943. Three appeals were filed with the High Court of Madras against this judgement.


  • Whether the appellate court can refer a matter in dispute between the parties to arbitration or not?


  • On the grounds that they listed in the petition, the appellants argued that the award should be overturned. Their argument was that the arbitration request had been made under coercion and with undue influence, that the arbitrators were prejudiced and partisan and had not conducted a proper Chettiar inquiry. Therefore, the award was challenged on the grounds that the reference was flawed and the arbitrators were guilty of misconduct.
  • The validity of the award was also contested on the grounds that both the reference and the award violated the principle of private international law, which states that courts in one country do not have the authority to decide on the ownership of immovable property located in another country or to order its division; the reference and the award dealt with immovable properties in Burma, making them invalid.
  • The appellants additionally argued that the arbitration reference was illegal because it conflicted with the High Court's directions.
  • The appellants submit that it is beyond dispute that courts in this country lack the authority to resolve title disputes involving immovable properties located abroad or to order their partition.
  • Additionally, it is put forth that a court should not refer a dispute to arbitrators for resolution if it lacks the authority to decide the issue at hand, such as the title to a foreign immovable property.


  • The respondent resisted this application. He went over every claim made by the appellants and asserted that an award decree should be passed.
  • According to the respondent, neither the reference nor the award purport to deal with any immovable property in Burma, hence the legal arguments made by the appellants to challenge the reference’s and the award’s legality cannot succeed. Therefore, it is necessary to look at the reference and the award and determine if the appellants' factual premise that supports their legal arguments challenging the validity of both the reference and the award is supported.


  • The Court held that the trial court was competent to make the reference and its validity is not open to any objection.
  • Additionally, the appellants have been ordered to pay future interest on the same sum at a rate of 8% per month starting on the date of the order until the date of payment.
  • Because the current objection was not raised before the High Court, the Supreme Court decided against continuing to investigate this case. It was undoubtedly considered as an appeals ground, but the verdict makes it apparent that it wasn’t raised during the hearing.
  • The Supreme Court did not believe that under these circumstances they would be justified in permitting this matter to be presented before them. As a result, the High Court’s decision was valid, and its direction that a decree be made in accordance with the award must be upheld.


As a result, the civil appeal failed and was dismissed with costs. It was agreed that no effective orders on the remaining appeals in this group would need to be made if the main appeal failed. The aforementioned appeals were also failed and dismissed, however there was no judgement regarding costs.

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