Valuer's discretion is not arbitration, while compromise in misfeasance proceedings can be recorded with court sanction.

A named person appointed to fix liability in absolute discretion as a valuer does not act as an arbitrator, because an award requires a judicial determination after judicial inquiry; the valuer's decision was therefore not enforceable as an award. Misfeasance proceedings under the Companies Act are in the nature of a suit, so Section 141 of the Code of Civil Procedure extends suit procedure and permits a lawful compromise to be recorded under Order XXIII, Rule 3. Court sanction need not come from the same Judge who later hears the matter, because the statute requires sanction of the court, not of a particular Judge; the compromise was binding and enforceable.

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Issues: (i) Whether the decision of the named valuer constituted an award capable of enforcement as such. (ii) Whether a compromise in misfeasance proceedings could be recorded under Order XXIII, Rule 3 of the Code of Civil Procedure by virtue of Section 141 of the Code of Civil Procedure. (iii) Whether the compromise was invalid because sanction had been granted by a different Judge.

Issue (i): Whether the decision of the named valuer constituted an award capable of enforcement as such.

Analysis: The reference required the named person to act as a valuer and not as an arbitrator, and to fix liability in his absolute discretion. The essential characteristic of an award is a judicial determination arrived at after a judicial inquiry. A decision based on unfettered discretion, even if preceded by a summary hearing, is not a judicial determination and therefore does not amount to an award.

Conclusion: The decision did not constitute an award.

Issue (ii): Whether a compromise in misfeasance proceedings could be recorded under Order XXIII, Rule 3 of the Code of Civil Procedure by virtue of Section 141 of the Code of Civil Procedure.

Analysis: Misfeasance proceedings under the Companies Act are proceedings in the nature of a suit. The court hears allegations, determines liability, and passes an executable order for payment. Section 141 extends the procedure applicable to suits to such proceedings so far as it can be made applicable, and there is nothing in the nature of misfeasance proceedings to exclude the recording of a fair compromise.

Conclusion: The compromise could validly be recorded under Order XXIII, Rule 3 of the Code of Civil Procedure.

Issue (iii): Whether the compromise was invalid because sanction had been granted by a different Judge.

Analysis: The Companies Act required sanction of the court, not sanction by any particular Judge. Any Judge on the Original Side constituted the court for this purpose, and the validity of the sanction did not depend on the same Judge trying the misfeasance summons.

Conclusion: The sanction was valid notwithstanding that it was granted by a different Judge.

Final Conclusion: The compromise was binding and enforceable, and the appeal failed.

Ratio Decidendi: A person appointed to allocate liability in his absolute discretion as a valuer does not act as an arbitrator, and misfeasance proceedings are proceedings in the nature of a suit in which a lawful compromise may be recorded with the sanction of the court.

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