V. Narasimha Raju vs V. Gurumurthy Raju And Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeals Nos. 494 and 495 of 1957

Decision Date: 22 August, 1962

Coram: P.B. Gajendragadkar, K.C. Das Gupta, Raghubar Dayal

In this case the Supreme Court recorded that the petition was filed by V Narasimha Raju against V Gurumurthy Raju and several other respondents, and the judgment was delivered on 22 August 1962. The judgment was authored by Justice P B Gajendragadkar, who sat on a bench together with Justices K C Das Gupta and Raghubar Dayal. The citation for this decision appears as 1963 AIR 107 and 1963 SCR (3) 687, with additional references to later reporters. The matter concerned the validity of an arbitration agreement that had been made in connection with the withdrawal of a criminal proceeding, and it raised the issue of whether the consideration for that agreement was contrary to public policy under section 23 of the Indian Contract Act, 1872.

The factual background described a partnership that the appellant, the first respondent, and other persons had operated together until 15 September 1942. At the termination of the partnership the first respondent demanded that a full accounting be prepared and that the profits be divided among the partners. A dispute arose over the division of the profits because the first respondent claimed the entire amount that was due to him and the fourth respondent, while the fourth respondent insisted that the amount should be shared equally between them. Consequently, the first respondent lodged a criminal complaint in a magistrate’s court against the other partners, including the appellant, alleging that they had committed offences under sections 420, 465, 468 and 477 read with sections 107 and 120‑B of the Indian Penal Code. The allegation was that the partnership accounts had been fraudulently altered to show that the fourth respondent was entitled to an equal share of the profits with the first respondent.

Process was issued on the complaint and the matter was adjourned for hearing to 30 December 1943. On that date the first respondent and the accused persons executed an agreement providing that the dispute between the appellant and the other respondents and the first respondent would be referred to a named arbitrator, and the first respondent consented to withdraw his criminal complaint. After the criminal complaint was dismissed because the first respondent informed the court that he had no evidence to support his case, the parties handed the signed agreement to the arbitrator. The arbitrator subsequently rendered an award, and the first respondent sought to have a decree issued in accordance with that award. The appellant then filed an application under the Arbitration Act, 1940, seeking to set aside the award on the ground that the consideration for the arbitration agreement was unlawful. The appellant argued that the consideration consisted of the first respondent’s promise not to prosecute a complaint involving a non‑compoundable offence, rendering the agreement void under section 23 of the Indian Contract Act, 1872. The Court held that the arbitration agreement executed on 30 December 1943 was invalid under section 23 of the Indian Contract Act, 1872, because its consideration was opposed to public policy.

The Court observed that the agreement was contrary to public policy, and therefore the arbitral award could not be enforced. The Court relied on the authorities Bhowanipur Banking Corporation Ltd. v. Sreemati Durgesh Nandini Dassi, A.I.R. 1941 P.C. 95; Kamini Kumar Basu and Ors. v. Birendra Nath Basu and Anr., L.R. 57 I.A. 117; and Sudhindra Kumar v. Ganesh Chandra (1939) 1 Cal. 241 in reaching this conclusion.

These appeals, numbered Civil Appeals Nos. 494 and 495 of 1957, were filed against the judgment and decree dated 5 March 1954 rendered by the Orissa High Court in the case recorded as Appeals Nos. 25 and 26 of 1949. Counsel A.V. Viswanatha Sastri and T.V.B. Tatachari appeared for the appellant, while M.S.K. Sastri represented respondent No. 1. The judgment was delivered on 22 August 1962 by Justice Gajendragadkar. The principal issue before the Court was whether the Muchalika, also described as an Agreement of Reference, which had been executed by the appellant together with four respondents in favour of Tanguda Narasimhamurty on 30 December 1943, was invalid because its consideration contravened public policy as stipulated in section 23 of the Indian Contract Act. Both the trial court and the High Court of Orissa had previously held that the agreement was valid, a position that the appellant challenged by invoking a certificate issued by the High Court under Article 133 of the Constitution, asserting that the earlier decision was legally erroneous.

The factual background disclosed that the appellant had obtained a lease of the Parlakimedi Samasthanam Rice and Oil Mill for a period of three years, covering 1941 to 1944, under a registered lease deed dated 9 December 1940. The lease required the payment of rent in the sum of Rs 7,000 per annum. To operate the mill, the appellant entered into a partnership with six other individuals, and the respective shares of each partner were formally recorded. The partnership’s business activities included milling rice and extracting oil from ground‑nuts. In addition to the mill operation, the appellant pursued a separate commercial venture dealing with paddy and ground‑nuts, wherein he included four of the six original partners as co‑partners. One of these partners was identified as respondent No. 4, Gurumurty Raju. This secondary business continued for approximately fourteen months, terminating at the end of March 1942.

Subsequently, two of the partners withdrew from the latter business, taking with them their capital contributions and any accrued profits. The remaining three partners—namely the appellant, respondent No. 2, and the combined interests of respondents No. 1 and No. 4—continued the partnership. The shareholdings were allocated as follows: the appellant held a share denoted as As. 0.7.3, respondent No. 2 possessed a share of 0.6.9, while respondents No. 1 and No. 4 together held a combined share of 0.2.0. Consequently, the partnership, in practical terms, comprised five partners, with respondents No. 1 and No. 4 jointly entitled to the 0.2.0 portion. The partnership’s business operations persisted until 15 September 1942, when respondent No. 1 demanded that a full accounting be prepared and that the profits be distributed among the partners. In response to this demand, the partnership was wound up, accounts were settled, and the profits were divided. Following the settlement, the appellant and respondent No. 2 withdrew their respective portions of the distribution.

Respondent No. 1 claimed the entire amount that was due to him and to respondent No. 4, whereas respondent No. 4 insisted that the amount should be divided equally between the two of them. This disagreement over the share of respondent No. 1 gave rise to a dispute. In response, respondent No. 1 filed a criminal complaint before the Court of the Joint Magistrate at Berhampur, naming six persons as accused, including the appellant. The complaint alleged that the accused had committed offences under sections 420, 465, 468 and 477, read with sections 107 and 120‑B of the Indian Penal Code. According to the complaint, the partnership accounts had been fraudulently altered so as to show that respondent No. 4 was entitled to share the profits equally with respondent No. 1. During those proceedings, respondent No. 1 obtained an attachment of the account‑books of the two businesses that the appellant operated with his partners. The criminal complaint was recorded as Criminal Case No. 139 of 1943. After the issuance of process and completion of some preliminary steps, the matter was adjourned for hearing on 30 December 1943.

On that date, respondent No. 1 and the accused entered into an agreement, referred to as Exhibit 1, whereby the dispute between the appellant, the other accused and respondent No. 1 was referred to arbitration before Mr Murty, and respondent No. 1 consented to withdraw his criminal complaint. Consequently, when the criminal case was called for hearing on the same day, respondent No. 1 declared that he possessed no evidence to support his case, resulting in the dismissal of the complaint. The arbitration agreement signed by the parties was then handed to the arbitrator, Mr Murty, thereby establishing the impugned arbitration agreement and appointing Mr Murty as arbitrator.

Mr Murty commenced arbitration proceedings, recorded evidence and, on 14 September 1946, rendered an ex‑parte award. While the arbitration was pending, the appellant applied to the Subordinate Judge at Berhampur for the removal of the arbitrator on grounds of misconduct under sections 5 and 11 of the Arbitration Act (application M.J.C. No. 34 of 1944). That application was dismissed. The appellant subsequently filed a revision application against the trial judge’s order (Revision Petition No. C.R. 78 of 1946), which was also dismissed on 26 March 1949. The award had already been pronounced on 14 September 1946, before the dismissal of the revision petition.

After the award’s issuance, respondent No. 1 filed an application before the Subordinate Judge at Berhampur on 10 December 1946 (M.J.C. No. 105 of 1946), invoking sections 14 and 30 of the Arbitration Act to seek the filing of the award and the passing of a decree in accordance with it.

In this case, the appellant filed an application on 14 January 1947 in the same Court under section 33 of the Arbitration Act, seeking the setting aside of the award; the application is recorded as MJ C No 8 of 1947. All of the parties to the reference and the arbitrator were impleaded to the proceedings. By way of that application, the appellant asserted that the award should be set aside on several grounds, the principal one being that the arbitration agreement itself was void because it violated section 23 of the Indian Contract Act. Both the trial Court and the appellate Court rejected that particular contention and dismissed the appellant’s application for setting aside the award. Conversely, the application made by respondent No 1 for the issuance of a decree in accordance with the award was allowed by both Courts. The Courts also examined and rejected the appellant’s other submissions in support of the claim that the award was invalid; however, for the purposes of the present appeals it is unnecessary to recount those findings, because the appellate team has concluded that the appellant is correct in contending that the arbitration agreement is void under section 23 of the Indian Contract Act. Section 23 provides that every agreement whose object or consideration is unlawful is void, and it stipulates that the consideration of an agreement is lawful unless, among other things, it is opposed to public policy. Agreements entered into for the purpose of stifling prosecution are not enforceable, since the consideration behind such agreements is deemed contrary to public policy. When a party initiates criminal proceedings on the allegation that the opponent has committed a non‑compoundable offence and then uses that coercive criminal process to compel the opponent to enter into an agreement, the resulting agreement is treated as invalid because its consideration is opposed to public policy. Under Indian law, offences are classified into three categories: those that are compoundable between the parties, those that are compoundable with the leave of the Court, and those that are non‑compoundable. In the present matter, it is undisputed that the offences for which respondent No 1 instituted criminal proceedings against the appellant and others included non‑compoundable offences. Accordingly, the case concerns a situation where, according to the appellant, a criminal process was launched concerning non‑compoundable offences and the withdrawal of those criminal proceedings was offered as the consideration for the arbitration agreement that the appellant signed. Whether the appellant can substantiate this allegation will be examined later; nevertheless, the legal position on the point is clear. If it is established that the consideration for the arbitration agreement was the withdrawal of the criminal complaint and the decision not to prosecute, then the provisions of section 23 of the Indian Contract Act are engaged, rendering the agreement void because its consideration is opposed to public policy.

The Court observed that once an accusation of a non‑compoundable offence is made, the exclusive jurisdiction to investigate that accusation and to determine whether the offence was in fact committed rests with the criminal courts. That determination may not be removed from the criminal courts either directly or indirectly and cannot be delegated to private individuals. The Court further explained that if an agreement is entered into on the basis that the complainant will not pursue the criminal complaint, the agreement essentially means that the complainant has taken it upon himself to manage his own complaint and has used the promise of non‑prosecution as a bargaining chip to induce or coerce the other party to accept the agreement. Referring to the observation of Mukherjea, J., in Sudhindra Kumar v. Ganesh Chandra (1), the Court reiterated that “no Court of law can countenance or give effect an agreement which attempts to take the administration of law out of the hands of the judges and put in the hands of private individuals.” Consequently, the Court held that if the appellant could establish that the consideration for the arbitration agreement was the respondent No. 1’s promise not to prosecute the complaint, such consideration would be opposed to public policy and the agreement founded upon it would be void and unenforceable.

In support of this view, the Court referred to two decisions of the Privy Council. In Bhowanipur Banking Corporation Ltd. v. Sreemati Durgesh Nandini Dasi (2), Lord Atkin observed that “to insist on reparation as a consideration for a promise to abandon criminal proceedings is a serious abuse of the right of private prosecution. The citizen who proposes to vindicate the criminal law must do so wholeheartedly in the interests of justice, and must not seek his own advantage.” The Court explained that, when deciding whether the consideration is contrary to public policy, it is immaterial whether the underlying debt that formed the consideration was genuine, and it is unnecessary to prove that a crime had actually been committed. What matters, according to the Court, is that “each party should understand that the one is making his promise in exchange or part exchange for the promise of the other not to prosecute or continue prosecuting.” The Court described a case where a mortgage bond was executed by the respondent as part of the consideration for the bank’s promise to withdraw criminal proceedings it had instituted against the mortgagor’s husband. The Privy Council held that the mortgage bond was invalid. Their Lordships further emphasized that the existence of a real debt made no difference because the mortgage had been executed for a consideration that was opposed to public policy, rendering it illegal and void.

Consequently, the agreement was held to be illegal and therefore void. In the decision of Kamini Kumar Basu v. Virendra Nath Basu, the Privy Council observed that when an arbitration clause and an ekrarnama issued pursuant to an arbitral award contained an implied term whereby a complaint concerning a non‑compoundable offence under the Indian Penal Code was to be stayed, the consideration for such a clause was unlawful on the ground of public policy. The Council further held that the award and the ekrarnama were consequently unenforceable, and that this result would follow irrespective of whether a prosecution had formally been commenced in law. In that particular case the criminal prosecution had been withdrawn on the day after the execution of the agreement that was being challenged, yet it was evident that before the agreement was signed the parties had reached an understanding that each would withdraw their respective criminal proceedings. Sir Binod Mitter, who delivered the judgment of the Board, remarked that in situations of this nature it was unlikely that the ekrarnama would expressly state that part of its consideration consisted of an agreement to settle criminal proceedings. However, he explained that it would be sufficient for the party challenging the validity of the agreement to produce evidence from which a necessary inference could be drawn that a portion of the consideration was unlawful.

Applying the principles laid down in those authorities, the Court needed to determine whether the appellant had succeeded in showing that the consideration for the agreement of reference in the present matter consisted of the withdrawal and non‑prosecution of the criminal complaint filed by respondent No. 1. The analysis began with a review of the complaint lodged by respondent No. 1 against the appellant and other accused persons. The complaint alleged that the accused, acting in concert, had intended to defraud respondent No. 1 of a half‑anna share in the partnership assets by tampering with the account books of both the Rice and Oil Mills as well as the joint business. It was further alleged that the name of the fourth respondent had been inserted beside that of respondent No. 1 in the books so as to make it appear that the fourth respondent also owned the two‑anna share jointly with respondent No. 1. Based on these allegations, respondent No. 1 charged the accused, including the appellant, with offences under sections 420, 465, 468 and 477 of the Indian Penal Code read with sections 107 and 120‑B. It was uncontested that a process was issued on the basis of this complaint and that the matter was scheduled for hearing on 30 December 1943.

On that date, 30 December 1943, the parties entered into an arbitration agreement consisting of eight clauses. The agreement purported to empower Mr Murty to determine whether the half‑anna share belonged exclusively to respondent No. 1 or jointly to respondents 1 and 4. In addition, the agreement authorized Mr Murty to decide incidental and subsidiary issues relating to respondent No. 1’s claim for his share in the profits of the partnership. Clause 5 of the agreement further required the arbitrator to determine who should bear the costs incurred by both parties in Criminal Case No. 139 of 1943 pending before the Berhampur Second Officer’s Court, and to do so in accordance with principles of justice and fairness. Thus, the arbitrator was tasked not only with resolving the civil dispute concerning the two‑anna share but also with adjudicating the dispute concerning the expenses arising from the criminal proceedings. The Court then examined the evidence concerning the circumstances under which the arbitration agreement was executed. Mr Murty, who was examined on behalf of respondent No. 1, testified that he had not suggested any term to be incorporated in the draft of the agreement and that he could not identify whose instructions had led to the preparation of the draft, noting that it had been prepared in his absence. He further added that the parties first handed the Muchalika to him before any further steps were taken.

Clause five of the arbitration agreement stipulated that the arbitrator must determine which party, and in what manner, should bear the expenses incurred by both sides in Criminal Case No. 139 of 1943 pending before the Berhampur Second Officer’s Court, and that this determination must be made in accordance with principles of justice and injustice. Consequently, the arbitrator’s mandate extended beyond merely resolving the civil disagreement concerning the two‑annas share of partnership profits; the arbitrator was also required to resolve the dispute over the allocation of costs arising from the criminal proceedings.

The evidence presented to elucidate the circumstances surrounding the execution of the arbitration agreement was examined in detail. Mr Murty, who was examined on behalf of respondent No. 1, testified that he did not propose any of the terms incorporated in the final draft of the agreement and could not identify whose instructions guided its preparation because the draft was prepared in his absence. He further recounted that the parties first gave him a document referred to as the “Muchalika,” and while he was returning it to them, they informed him that they would notify the Criminal Court about the Muchalika and would keep him apprised of any orders issued by the court. Mr Murty emphasized that he could not say whether respondent No. 1 was aware that the delivery of the Muchalika would lead to the withdrawal of the criminal case.

The Muchalika was subsequently attested by two witnesses who also gave testimony in the present matter. One of these witnesses, Sitharamaswamy, stated that the parties convened at approximately one or two o’clock in the afternoon in the court hall of the Sub‑Collector’s Court, where the criminal case was scheduled to be heard. He explained that the document was executed with the purpose of bringing the pending criminal case to an end. Following its execution, the criminal case was indeed cancelled. Sitharamaswamy further testified that respondent No. 1 expressly declared his intention to withdraw the case, proceeded to the criminal court, and secured the dismissal of the proceedings. After the dismissal, the original document was handed over to the arbitrator. It is noteworthy that this witness, who attested the document, had also been called by respondent No. 1 as a witness in the criminal case he had filed against the appellant and others, and he had appeared in court to give evidence on that very day. The second attesting witness, Jayachandra Padhi, provided corroborating testimony.

After the agreement was properly scribed and executed, respondent No. 1 informed the criminal court of his inability to substantiate his claim, leading to the dismissal of the case. Subsequently, all parties assembled on the verandah of the court, and the appellant handed a fair copy of the agreement to the arbitrator. According to the testimony of the witness, the execution of the reference was intended to secure the withdrawal of the criminal case by respondent No. 1 and to allow the arbitration to resolve the underlying dispute between the parties.

In this case, the Court observed that the first witness had declared the condition that the reference to the arbitrator would be handed over only after the criminal case had been withdrawn. The second witness examined by the appellant was identified as Appa Rao. He recounted the circumstances surrounding the execution of the arbitration agreement and stated that the appellant retained the final draft and delivered it to the arbitrator after the criminal complaint had been dismissed. The Court noted that Appa Rao had previously been confronted with a statement he had made in proceedings initiated by the appellant to remove the arbitrator for alleged misconduct; the Court indicated that this earlier statement would be examined later. The appellant, having sworn in support of his case, asserted that respondent No 1 had consented to withdraw the criminal case and to refrain from prosecuting it, and that this promise constituted the consideration for entering into the arbitration agreement. He further testified that, after the criminal complaint was lodged, the partnership books had been seized and the joint business had ceased to operate. According to his evidence, Mr Murty had proposed to achieve a compromise if a reference to him was made and the case was withdrawn, and it was at that juncture that pleaders on both sides prepared the draft of the agreement. The witness then narrated that respondent No 1 went to the court and declared his inability to prove his case, leading to the dismissal of the complaint. Subsequently, the parties emerged from the courtroom and the agreement was delivered to Mr Murty. The Court found that the evidence of this witness clearly demonstrated that the agreement was executed because the appellant had been promised that the criminal case would be withdrawn upon execution of the agreement. The appellant therefore argued that the consideration for the agreement was respondent No 1’s promise not to prosecute, and that the document was handed over to the arbitrator after respondent No 1 fulfilled that promise and the criminal case was dismissed. Respondent No 1, in his evidence, made no categorical denial of these assertions. He admitted the factual circumstances disclosed by the appellant and his witnesses regarding the place, time, and manner in which the agreement was executed. However, he contended that he could not state definitively whether the discussion of referring the matter to the arbitrator arose before or after the dismissal of the criminal case. He acknowledged that he had pleaded his inability to prove his case in the criminal court and that the arbitrator subsequently commenced arbitration. The Court therefore concluded that the appellant’s evidence was cogent, satisfactory and categorical, whereas the evidence presented by respondent No 1 and the arbitrator examined by him was not categorical to the contrary and, at best, remained ambiguous. Moreover, both respondent No 1 and the arbitrator asserted that the agreement had been drafted within the premises of the criminal court.

It was observed that the agreement was drafted just before the criminal case was taken out, making the place and time of its drafting highly significant. The parties were aware that the criminal case was scheduled for the afternoon of 30 December 1943, and the sequence of events clearly demonstrated that they entered into an understanding whereby respondent No 1 would obtain dismissal of the criminal case and, in return, the appellant together with the other accused persons would agree to refer their dispute to the arbitration of Mr Murty. A crucial point was that the final draft, which was executed and attested, was handed over to the arbitrator only after the criminal case had been withdrawn. Consequently, the circumstances surrounding the execution of the document and the chronological order of events disclosed in the evidence indicated that respondent No 1’s promise to withdraw and not prosecute the criminal case served as the consideration for which the appellant and his companions entered into the arbitration agreement. The Court noted that this could not be characterized merely as a motive; clause 5 of the agreement corroborated the appellant’s claim that the withdrawal and non‑prosecution of the criminal complaint were the consideration for the arbitration agreement. Accordingly, the arbitrator was authorised to determine who should bear the expenses incurred in the criminal proceedings, establishing a close connection between the criminal proceedings, their withdrawal, and the arbitration agreement, which further supported the appellant’s case. Counsel for respondent No 1 argued that the agreement was entered into because Mr Murty had offered to settle the parties’ disputes and that the parties accepted his advice. It appeared that Mr Murty had stood as surety for the appellant’s appearance in the criminal court whenever the case was fixed, and counsel relied on the appellant’s statement that Mr Murty had offered to effect a compromise if a reference was made to him and the case withdrawn. The argument advanced that, at Mr Murty’s suggestion, the whole incident occurred and therefore there could be no scope to argue that respondent No 1 promised to withdraw the criminal case as consideration for the arbitration agreement. This argument was rejected because Mr Murty himself did not admit offering to mediate or that the parties accepted his advice; he stated that he was not present when the agreement was written and did not know who dictated its contents. Even apart from this consideration, the statement made by the appellant on which

In this case the Court observed that the argument presented by the appellant was based on a clear proposal that the criminal case should be withdrawn and not prosecuted, and that a reference agreement should be executed. The Court noted that these two steps were portrayed as having a cause‑and‑effect relationship, with one serving as consideration and the other constituting acceptance of the proposal to enter into the arbitration agreement. Consequently, the Court found no basis to reject the appellant’s contention that the consideration for the arbitration agreement was the promise of respondent No. 1 not to prosecute the criminal complaint. The Court acknowledged that both the trial Court and the High Court had dismissed the appellant’s claim, and it recognized the general reluctance of this Court to disturb a concurrent finding of the lower courts on such an issue. However, the Court pointed out that the High Court’s judgment had, in its view, failed to examine the relevant evidence concerning the point raised by the appellant. The High Court’s conclusion, the Court said, rested mainly on two considerations. First, the High Court had criticised the appellant for not having raised the issue when he filed his petition M. J. C. 34 of 1944 seeking the removal of the arbitrator, and therefore held that the present plea was raised at a belated stage. The Court deemed this criticism unfounded. Whether the appellant could have raised the plea in a different proceeding under any provision of the Arbitration Act was a separate matter, but it would be erroneous to fault the appellant for not raising the issue in an application to remove the arbitrator on grounds of misconduct, since that context did not require an allegation that the arbitration agreement itself was invalid. Moreover, the Court held that the appellant’s failure to raise the point in an earlier proceeding did not justify rejecting the plea without considering the merits of the evidence the appellant had produced. The Court further observed that the High Court appeared to have been influenced by another consideration: the testimony of Appa Rao, who had been examined by the appellant in the present proceedings. In the earlier proceedings concerning the arbitrator’s removal, Appa Rao had stated that after respondent No. 1 had testified in the criminal case, a reference to arbitration was made. The High Court apparently regarded this earlier statement as completely inconsistent with the present version advanced by the appellant and his witnesses, and therefore thought it should be rejected. The Court found this view to be clearly erroneous, noting that Appa Rao’s earlier statement was wholly consistent with his evidence in the present proceedings.

In the present proceedings, the Court observed that the testimony of Appa Rao was consistent both with the evidence offered by the appellant and with the statements of the appellant’s other witnesses. The Court explained that the reference in law and fact to the arbitration agreement occurred only when the duly executed agreement was delivered to the arbitrator, and that delivery took place after the criminal case had been dismissed. The appellant continued to maintain this version. The Court further noted that this chronology did not conflict with the appellant’s earlier description of the negotiations that preceded the drafting of the arbitration agreement, the preparation of the draft and its final engrossment, all of which were completed before the criminal case was instituted. According to the appellant’s witnesses, the draft of the agreement had been shown to the arbitrator, but the final executed agreement was handed to the arbitrator only after the criminal case was dismissed. Consequently, the Court held that the High Court’s perception of a serious inconsistency between the present narrative given by Appa Rao and his prior statement was unfounded. The Court expressed regret that the High Court had failed to examine the remaining evidence carefully before concluding that the appellant’s challenge to the validity of the arbitration agreement under section 23 could not be sustained. Because of this flaw in the High Court’s judgment, the Court found it necessary to evaluate the evidence itself. After reviewing the evidence, the Court concluded that it clearly supported the appellant’s case and therefore held that the arbitration agreement executed by the parties on 30 December 1943 was invalid under section 23 of the Indian Contract Act, as its consideration was opposed to public policy. As a result, the Court allowed both appeals, dismissed the application made by respondent No. 1 (M.J.C. 105 of 1946) for a decree in accordance with the award, and allowed the application made by the appellant (M.J.C. No. 8 of 1947) for setting aside the award. The appellant was awarded his costs against respondent No. 1 throughout, together with one set of hearing fees, and the appeals were allowed.