Order XXVI Rule 11 CPC - Commissioner's Report Non-Adjudicatory In Nature ; Only An Opinion or Noting : Supreme Court

The Supreme Court observed that a court appointed commissioner's report is only an opinion or noting and are 'non-adjudicatory in nature'.

The parties can contest an expert opinion/commissioner's report, and the court, after hearing objections, can determine whether or not it should rely upon such an expert opinion/commissioner's report, the bench of Justices Sanjiv Khanna and Bela M. Trivedi observed. 

The bench also introduced a principle of a 'facilitator' which a court may appoint, be it a commissioner or an expert, for a specific purpose and cause for ascertainment of a fact which may be even disputed.

In this case, in a suit for the settlement of accounts, the court appointed a Chartered accountant conducting audit of all the disputed records (Accounts) of both the parties. He submitted his report before the court stating that an amount of Rs.24,03,300/- was due and payable by the defendant to the plaintiff. The defendants filed objections, inter alia, on different grounds challenging the report. The defendant's contention that S.K. Mantri was appointed as a commissioner under Order XXVI Rule 9 of the Code of Civil Procedure, 19085 was rejected by the Court. The High Court also affirmed the trial court's view that during the pendency of the suit, the matter was referred to arbitration in terms of Section 21 of the Arbitration Act. S.K. Mantri, Chartered Accountant, was appointed as an arbitrator with the parties' consent.

In appeal before the Supreme Court, the issue was whether the parties had agreed that the subject matter of the suit or a part thereof should be referred to arbitration under Section 21 of the Arbitration Act, 1940?

To answer this issue, the bench noted the distinction between the scope and functions of an arbitral tribunal and a commissioner. The court observed:

For submission to arbitration, there must be an arbitration agreement or an agreement in terms of Section 21 of the Act that the difference or dispute between the parties for which they intend to be determined in a quasi-judicial manner. Commissioners are appointed by the court. Appointment may be with consent of the parties, or even when there is objection to the appointment. Preexisting agreement or the requirement that the parties agree before the court, as is mandatory in case of arbitration, is not necessary when a court directs appointment of a commissioner. In the case of a reference to a commissioner, all that the parties expect from the commissioner is a valuation/ examination of the subject matter referred, which he would do according to his skill, knowledge and experience, which may be without taking any evidence or hearing argument.

The court also made the following observation upon the role of Commissioner or expert appointed by the Court

"We would like to introduce the principle of a 'facilitator' which a court may appoint, be it a commissioner or an expert, for a specific purpose and cause for ascertainment of a fact which may be even disputed. In some cases, the commissioner may even hear the parties and give his expert opinion based on the material or evidence produced by the parties before the commissioner.."

"Order XXVI Rule 9 of the Code gives wide powers to the court to appoint a commissioner to make local investigations which may be requisite or proper for elucidating any matter in dispute, ascertaining the market value of any property, account of mesne profit or damages or annual net profits. Under Order XXVI Rule 11, the court has the power to issue a commission in a suit, in which examination of adjustment of accounts is necessary, to a person as it thinks fit directing him to make such examination or adjustment. When a court issues such a commission to such a person, it can direct the commissioner to make such an investigation, examination and adjustment and submit a report thereon to the court. The commissioner so appointed does not strictly perform a 'judicial act ' which is binding' but only a 'ministerial act'. Nothing is left to the commissioner's discretion, and there is no occasion to use his judgment or permitting the commissioner to adjudicate and decide 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 the court the actual state of affairs. Such a report does not automatically form 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 of functions of the court to decide the issue. Sometimes, on examination of the commissioner, the report forms part of the record and evidence. The parties can contest an expert opinion/commissioner's report, and the court, after hearing objections, can determine whether or not it should rely upon such an expert opinion/commissioner's report. Even if the court relies upon the same, it will merely aid and not bind the court. In strict sense, the commissioners' reports are 'non-adjudicatory in nature', and the courts adjudicate upon the rights of the parties."

The court also noted that Section 14A has been inserted in the Specific Relief Act, 1963, as per which if a court considers it necessary to get expert opinion to assess it on a specific issue involved in the suit, it may engage one or more experts and direct to report to it on such issue.

Allowing the appeal, the court held that in the instant case, the report of the Chartered Accountant is not an award and is to be treated as a report of a commissioner appointed by the Court under Order XXVI Rule 11 of the Code.

Case details

M.P. Rajya Tilhan Utpadak Sahakari Sangh Maryadit vs Modi Transport Service | 2022 LiveLaw (SC) 471 | CA 1973 of 2022 | 11 May 2022

Coram : Justices Sanjiv Khanna and Bela M. Trivedi

Headnotes

Code of Civil Procedure, 1908 ; Order XXVI Rule 9,11 - The commissioners' reports are 'non-adjudicatory in nature', and the courts adjudicate upon the rights of the parties - It is only an opinion or noting, as the case may be with the details and/or statement to the court the actual state of affairs. Such a report does not automatically form 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. (Para 33)

Arbitration Act, 1940 ; Section 21 - The word 'agree' in Section 21 of the Act refers to consensus ad idem between the parties who take a considered decision to forego their right of adjudication before a court where the suit is pending, and mutually agree to have the subject matter of the suit or part thereof adjudicated and decided by an arbitrator. (Para 17)

Code of Civil Procedure, 1908 ; Order XXVI Rule 11 - Arbitration Act, 1940 ; Section 21 - Distinction between the scope and functions of an arbitral tribunal and a commissioner - For submission to arbitration, there must be an arbitration agreement or an agreement in terms of Section 21 of the Act that the difference or dispute between the parties for which they intend to be determined in a quasi-judicial manner. Commissioners are appointed by the court. Appointment may be with consent of the parties, or even when there is objection to the appointment. Preexisting agreement or the requirement that the parties agree before the court, as is mandatory in case of arbitration, is not necessary when a court directs appointment of a commissioner. In the case of a reference to a commissioner, all that the parties expect from the commissioner is a valuation/ examination of the subject matter referred, which he would do according to his skill, knowledge and experience, which may be without taking any evidence or hearing argument. (Para 32)

Code of Civil Procedure, 1908 ; Order XXVI Rule 11 - We would like to introduce the principle of a 'facilitator' which a court may appoint, be it a commissioner or an expert, for a specific purpose and cause for ascertainment of a fact which may be even disputed. In some cases, the commissioner may even hear the parties and give his expert opinion based on the material or evidence produced by the parties before the commissioner. (Para 32)