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Issues: Whether an award made by arbitrators on a reference made by the parties during the pendency of a suit, without intervention of the Court, can be recorded as a compromise or adjustment of the suit under Order XXIII Rule 3 of the Code of Civil Procedure, 1908 when one party does not consent to abide by the award.
Analysis: An award obtained outside the court in a pending suit is not, by itself, enforceable as a decree. Under the proviso to Section 47 of the Arbitration Act, 1940, such an award may be taken into consideration as a compromise or adjustment only with the consent of all parties interested. Order XXIII Rule 3 of the Code of Civil Procedure, 1908 likewise requires a lawful agreement or compromise in writing and signed by the parties. A compromise necessarily imports mutual assent and bilateral adjustment; it cannot be unilateral. Since the plaintiff expressly refused to accept the award as a compromise and did not sign consent terms, the essential element of mutual agreement was absent.
Conclusion: The award could not be recorded as a compromise or adjustment of the pending suit, and the trial court was justified in refusing to pass a consent decree on that basis.
Final Conclusion: The revision failed, and the suit was left to proceed on its own merits before the trial court.
Ratio Decidendi: In a pending suit, an out-of-court arbitration award can be treated as a compromise or adjustment only if all parties consent to it and the compromise satisfies the statutory requirement of being a lawful agreement in writing and signed by the parties.
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