Skip to content


Niranjan SwaIn Vs. State of Orissa and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtOrissa High Court
Decided On
Case NumberCivil Revn. No. 348 of 1982
Judge
Reported inAIR1983Ori10
ActsArbitration Act, 1940 - Sections 5, 8, 11, 12, 20 and 31(4)
AppellantNiranjan Swain
RespondentState of Orissa and ors.
Appellant AdvocateDeepak Misra and ;Anil Deo, Advs.
Respondent AdvocateGovt. Adv. and ;Standing Counsel
DispositionRevision allowed
Cases ReferredIn Union of India v. Surjeet Singh Atwal (supra
Excerpt:
.....clearly points in this direction when it provides that all applications regarding the conduct of arbitration proceedings or otherwise arising out if such proceedings shall be made to the court where the award has been or may be filed and to no other court. the non obstante clause excludes anything anywhere contained in the whole act or in any other law for the time being in force if it is contrary to or inconsistent with the substantive provision contained in sub-section (4). to that extent it carves out an exception to the general question of jurisdiction of the court in which award may be filed elsewhere provided in the act in respect of the proceedings referred to in subsection (4). the provision contained in subsection (4) will have an overriding effect in relation to the filing of..........clearly points in this direction when it provides that all applications regarding the conduct of arbitration proceedings or otherwise arising out if such proceedings shall be made to the court where the award has been or may be filed and to no other court. then comes sub-section (4). it opens with a non obstante clause and is comprehensive in character. the non obstante clause excludes anything anywhere contained in the whole act or in any other law for the time being in force if it is contrary to or inconsistent with the substantive provision contained in sub-section (4). to that extent it carves out an exception to the general question of jurisdiction of the court in which award may be filed elsewhere provided in the act in respect of the proceedings referred to in subsection (4)......
Judgment:
ORDER

R.C. Patnaik, J.

1. This revision is directed against the holding of the learned subordinate Judge, Bhubaneswar, that the application for removal of the arbitrator was not entertainable by him, as the appointment was made by the Supreme Court.

2. The petitioner had entered into agreement No. 18 F-2 of 1971-72 for execution of the work. 'Renovation of Madansila M.I.P.' Disputes and differences between the parties having arisen, the petitioner called upon the Chief Engineer. Irrigation, to appoint an arbitrator in terms of the arbitration clause. The Chief Engineer having failed to appoint, an application was filed under Section 8(2) of the Arbitration Act, 1940 ('Act' hereafter) for appointment of an arbitrator and the learned subordinate Judge in Misc. Case No. 378 of 1979 appointed Shri B.S. Patnaik, a retired District Judge, as the sole arbitrator. Some time later, opposite party No. 2 filed an application under Section 33 of the Act challenging the existence of arbitration agreement and the validity of the arbitration proceeding. The application having been rejected by the learned subordinate Judge in Misc. Case No. 480 of 1980, the matter was brought to this Court in Civil Revision No. 178 of 1981 and this Court dismissed the revision. Civil Appeal No. 564 of 1981 was carried to the Supreme Court. Their Lordships in the said matter appointed the Arbitration Tribunal set up by the State Government in place of Shri B.S. Patnaik to act as the arbitrator. The arbitration proceeding thereafter commenced before the Arbitration Tribunal.

3. Some time after the commencement of the arbitration proceeding, the petitioner filed an application before the learned subordinate Judge for removal of the arbitrator--the Arbitration Tribunal. The learned subordinate Judge relying upon Guru Nanak Foundation v. Rattan Singh and Sons, AIR 1981 SC 2075, held that inasmuch as the arbitrator was appointed by the Supreme Court, he had no jurisdiction to entertain the petition,

4. Mr. Misra, the learned counsel for the petitioner, submitted that the learned subordinate Judge misconceived the rule laid down in Guru Nanak's case and in any view of the matter, the ratio of the said case had no application to the facts of the present case. Hs urged that unlike in Guru Nanak's case, the Supreme Court itself did not make a reference nor did it retain control over the present matter nor give any direction to the arbitrator from time to time.

5. Learned Government Advocate appearing for the opposite partiers, on the other hand, contended that Guru Nanak's case laid down that that Court which appointed the arbitrator continued to have seisin over the matter and any subsequent application was to be made to that very Court as provided in Section 31(4) of the Act.

6. In Guru Nanak's case (AIR 1981 SC 2075) differences and disputes having arisen between the parties to the contract, an application was filed in the Delhi High Court under Section 20 of the Act seeking filing of the arbitration agreement and reference of the disputes covered by the agreement to an arbitrator to be appointed by the Court. Shri Nanda, a retired Chief Engineer, was appointed as the sole arbitrator and reference was made to him. While the reference was pending, an application was filed before the Delhi High Court under Sections 5 and 11 of the Act for removal of Shri Nanda. The High Court rejected the application. M/s. Guru Nanak Foundation moved special leave petition before the Supreme Court challenging the correctness of the order of the High Court dismissing its application for removal. At the hearing, by consent of parties, Shri Nanda was removed and Shri C.P. Malik was appointed as the sole arbitrator. The Supreme Court fixed the remuneration of the arbitrator and directed him to commence the proceedings within 15 days and dispose of the same as expeditiously as possible. When Shri Malik required the parties to file fresh pleadings, on an application moved the Supreme Court directed that the pleadings filed already by the parties before Shri Nanda would be treated as the pleadings in the matter with liberty to the parties to file further pleadings. The arbitrator was further directed that he would also act on the evidence already collected and the proceedings should be concluded within four months from the date of the order. Some time after the question arose, which was the appropriate Court where the award should be filed. The Supreme Court formulated the question thus :--

'... ... ... whether in view of the circumstances herein delineated, which is the Court which would have jurisdiction to entertain the award... .. .. ..'.

Their Lordships examined the definition of the expression 'Court' in Section 2(c) and the provisions contained in Section 14(2) and Section 31 of the Act and held:--

'.. .. ... the Court in which the suit involving a dispute in arbitration would be required to be filed alone would have jurusdiction to entertain the award. ........In other words, in the absence of an arbitration agreement if a dispute was required to be resolved by initiating proceedings in a Civil Court, that Court which will have jurisdiction to entertain the suit alone would have jurisdiction to entertain the award and the arbitrator in view of Section 14, Sub-section (2) would have to file the award in that Court.... ... ... ..'

7. Analysing the provisions contained in Sub-sections (1), (2), (3) and (4) of Section 31, their Lordships held (at p. 2079) :--

'... ... ... ... The scheme disclosed in Subsections (2), (3) and (4) of Section 31 clearly indicates that to the exclusion of all other Courts only one Court will have jurisdiction to deal with the proceedings incidental to the reference and the arbitration. Sub-section (3) clearly points in this direction when it provides that all applications regarding the conduct of arbitration proceedings or otherwise arising out if such proceedings shall be made to the Court where the award has been or may be filed and to no other Court. Then comes Sub-section (4). It opens with a non obstante clause and is comprehensive in character. The non obstante clause excludes anything anywhere contained in the whole Act or in any other law for the time being in force if it is contrary to or inconsistent with the substantive provision contained in Sub-section (4). To that extent it carves out an exception to the general question of jurisdiction of the Court in which award may be filed elsewhere provided in the Act in respect of the proceedings referred to in Subsection (4). The provision contained in Subsection (4) will have an overriding effect in relation to the filing of the award if the conditions therein prescribed are satisfied. If those conditions are satisfied the Court other than the one envisaged in Section 14(2) or Section 31(1) will be the Court in which award will have to be filed. That is the effect of the non obstante clause in Sub-section (4) of Section 31. Sub-section (4) thus invests exclusive jurisdiction in the Court, to which an application has been made in any reference and which that Court is competent to entertain as the Court having jurisdiction over the arbitration proceedings and all subsequent applications arising out of reference and the arbitration proceedings shall have to be made in that Court and in no other Court. Thus Sub-section (4) not only confers exclusive jurisdiction on the Court to which an application is made in any reference but simultaneously ousts the jurisdiction of any other Court which may as well have jurisdiction in this behalf. To illustrate the point, if an award was required to be filed under Section 14(2) read with Section 31 (1) in any particular Court as being the Court in which a suit touching the subject matter of award would have been required to be filed, but if any application in the reference under theAct has been filed in some other Court which was competent to entertain that application, (hen to the exclusion of the first mentioned Court the latter Court alone, in view of the overriding effect of the provision continued in Section 31(4), will have jurisdiction to entertain the award and the award will have to be filed in that Court alone and no other Court will have jurisdiction to entertain the same.'

A little later their Lordships observed (at p. 2080) :--

'....... where an application is made in any reference to a Court competent to entertain it, that Court alone will have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall have to be made in that Court alone and in no other Court.'

In para 18, their Lordships said that the arbitrator was appointed by the Supreme Court and that Court gave further directions to the arbitrator and fixed a specific time limit for conclusion of the proceedings; the arbitrator was directed to continue from the stage where the previous arbitrator had left and to take into consideration the pleadings and evidence already laid before his predecessor. The Supreme Court laid emphasis on the fact that despite disposal of the appeal on subsequent applications further orders were passed and directions were given to the arbitrator. The course of the various proceedings before the Supreme Court did 'indisputably show that this Court had complete control over the proceedings before the arbitrator'. In para 20, their Lordships drew attention to the fact that 'the reference was made by this Court to the 3rd respondent (arbitrator) and that this Court gave further direction about the manner and method of conducting the arbitration proceedings and fixed the time for completion of arbitration proceedings' and held that the Supreme Court was the appropriate Court to entertain the award.

8. Their Lordships relied upon, an earlier decision in the case of State of Madhya Pradesh v. Saith and Skelton (P.) Ltd., AIR 1972 SC 1507. In para 21 of Guru Nanak's case (AIR 1981 SC 2075), the facts of Saith and Skelton's case have been narrated. I would only invite attention to the order dated Jan. 29, 1971 that was passed in Saith and Skelton, construction whereof guided the approach, which reads as follows (at p. 1509):--

'Special leave is granted. The appeal is allowed. The appointment of Sri R.C. Soni as the sole arbitrator is set aside by consent of the parties.

Mr. V.S. Desai, Senior Advocate, is appointed arbitrator by consent of the parties to go into all the questions in this matter and make his award. The remuneration for the arbitrator would be Rs. 5,000/-, which will be shared by both the parties equally.

The arbitrator will make his award within three months from today. The parties will be at liberty to mention for extension of time for making the award. Jan. 29, 1971.

Sd/- G.K. Mittar, J.

Sd/- A.N. Ray, J.'

On Feb. 1, 1971, the Supreme Court directed that the records of the arbitration proceedings be called for and sent to the sole arbitrator, Shri Desai. By order dated April 30, 1971, the Supreme Court extended the time for making the award and permitted the arbitrator to hold the arbitration proceedings at Bombay. Against the aforesaid background, Vaidialingam, J. speaking for the Bench held as under (at p. 1511):--'According to Mr. Shroff the award should have been filed, not in this Court, but in the Court of the Additional District Judge, Mandsaur, as that is the Court which will have jurisdiction to entertain the suit regarding the subject matter of the reference. We are not inclined to accept this contention of Mr. Shroff. It should be noted that the opening words of Section 2 are: 'In this Act, unless there is anything repugnant in the subject or context'. Therefore, the expression 'Court' will have to be understood as defined in Section 2(c) of the Act, only if there is nothing repugnant in the subject or context. It is in that light that the expression 'Court' occurring in Section 14(2) of the Act will have to be understood and interpreted. It was this Court that appointed Shri V.S. Desai on Jan. 29, 1971, by consent of parties, as an arbitrator and to make his award. It will be seen that no further directions were given in the said order which will indicate that this Court had divested itself of its jurisdiction to deal with the award or matters arising out of the award. In fact, the indications are to the contrary. The direction in the order dated Jan. 29, 1971, is that the arbitrator is 'to make his Award' Surely the law contemplates further steps to be taken after the Award has been made, and quite naturally the; forum for taking the further action is only this Court. There was also direction to the effect that the parties are at liberty to apply for extension of time for making the Award. In the absence of any other Court having been invested with such jurisdiction by the order, the only conclusion that is possible is that such a request must be made only to the Court which passed that order, namely, this Court.

That this Court retained complete control over the arbitration proceedings is made clear by its orders dated Feb. 1, 1971 and April 30, 1971. On the former date, after hearing counsel for both the parties, this Court gave direction that the record of the arbitration proceedings be called for and delivered to the Sole Arbitrator Mr. V.S. Desai. On the latter date, again, after hearing the counsel, this Court extended the time for making the award by four months and further permitted the arbitrator to hold the arbitration proceedings at Bombay. The nature of the order passed on Jan. 29, 1971, and the subsequent proceedings, referred to above, clearly show that this Court retained full control over the arbitration proceedings.

Mr. Shroff referred us to the fact that in the order dated Jan. 29, 1971, it is clearly stated 'The appeal is allowed.

' According to him, when the appeal has come to an end finally, this Court had lost all jurisdiction regarding the arbitration proceedings, and therefore the filing of the award should be only in the Court as defined in Section 2(c) of the Act Here again, we are not inclined to accept the contention of Mr. Shroff. That the appeal was allowed, is no doubt correct. But the appeal was allowed by setting aside the order of the High Court and this Court in turn appointed Mr. V.S. Desai as the Sole Arbitrator. All other directions contained in the order dated Jan. 29, 1971, and the further proceedings, as pointed out earlier, indicate the retention of full control by this Court over the arbitration proceedings.'

9. The facts in Saith and Skelton's case (AIR 1972 SC 1507) were held to be more or less identical with the facts in Guru Nanak's case (AIR 1981 SC 2075) and the principle laid dawn in the earlier case was held to apply mutatis mutandis. It would be observed that in the cases of Guru Nanak and Saith and Skelton, references were made by the Supreme Court to the arbitrator and directions were being given to the arbitrator from time to time and the Supreme Court laid stress on the fact that it had retained full control over the matter, viz., the arbitration proceedings.

10. The question is no longer res integra. The provisions have already been construed and interpreted, In the case of Kumbha Mawji v. Dominion of India, AIR 1953 SC 313, before a three-Judge Bench of the Supreme Court the question as to which was the appropriate Court according to Subsection (4) of Section 31 was mooted. The question was : whether Sub-section (4) of Section 31 applied only where the first application under the Act was made during the course of pendency of a reference to arbitration or also to a case like the present one where such first application is made after the completion of the arbitration and on the making of an award.

11. The learned single Judge of the Calcutta High Court had construed the expression 'in a reference' in Sub-section (4) of Section 31 as meaning 'in the course of a reference'. Their Lordships repelling the said view observed (at p. 317):--

'Thus it will be seen on a comprehensive view of Section 31 that while the first sub-section determines the jurisdiction of the Court in which an award can be filed, Sub-sections (2), (3) and (4) are intended to make that jurisdiction effective in three different ways: (1) by vesting in one Court the authority to deal with all questions regarding the validity, effect or existence of an award or an arbitration agreement, (2) by casting on the persons concerned the obligation to file all applications regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings in one Court, and (3) by vesting exclusive jurisdiction in the Court in which the first application relating to the matter is filed. The context, therefore, of Sub-section (4) would seem to indicate that the sub-section was not meant to be confined to applications made during the pendency of an arbitration. The necessity for clothing a single Court with effective and exclusive jurisdiction, and to bring about by the combined operation of these three provisions the avoidance of conflict and scramble is equally essential whether the question arises during the pendency of the arbitration or after the arbitration is completed or before the arbitration is commenced. There is no onceivable reason why the Legislature should have intended to confine the operation of Sub-section (4) only to applications made during the pendency of an arbitration, if as is contended, the phrase 'in any reference' is to be taken as meaning 'in the course, of a reference'.'

A tittle later their Lordships held (at p. 318):

'........ Indeed, having regard to the wide language employed in these sub-sections, it has been assumed that Sub-sections (2) and (3) cover all three classes in all their stages. If so, is there any sufficient reason to think that Sub-section (4) was meant to have a very restricted operation On the view of this sub-section suggested for the appellant, not only would an application made after the award was pronounced be excluded from Sub-section (4) but also an application made before the commencement of the arbitration i.e. for the filing of an agreement of reference and for a direction thereupon. It must be remembered that Section 31 is one of the group of sections headed 'General' which by virtue of Section 26 are applicable to all arbitrations. Unless therefore the wording in Subsection (4) of Section 31 is so compelling as to confine the scope thereof to applications during the pendency of an arbitration, such a limited construction must be rejected.'

12. It would be seen from the underlined portion in the aforesaid observations that their Lordships in categorical terms laid down that Sub-section (4) of Section 31 applied to an application made before the commencement of the arbitration, viz., for the filing of the agreement of reference and for a direction thereupon. Kumbha Mawji's case (AIR 1953 SC 313) (supra) was followed by a Bench of three Judges in the case of Union of India v. Surjeet Singh, AIR 1970 SC 189, and their Lordships observed (at p. 190) :--

'The conditions must be fulfilled in order to give a Court exclusive jurisdiction under Section 31(4) of the Act. In the first place an application under the Arbitration Act must be made to the Court competent to entertain it. In the second place, the application must be made 'in any reference' .... ...... .....'

and their Lordships did not differ from Kumbha Mawji's case, a case decided by a Bench of equal strength. Ramaswami, J. speaking for the Court observed:--

'........ There are different sections in the Arbitration Act whereby an application is to be made even before any reference has been made. Section 8 for instance, provides for an application to invoke the power of the Court, when the parties fail to concur in the appointment of an arbitrator to whom the reference can be made. So also Section 20 provides for an application to file the arbitration agreement in Court so that an order of reference to an arbitration can be made. These are clearly applications anterior to the reference hut they lead to a reference. Such applications are undoubtedly applications 'in the matter of a reference and may fall within the purview of Section 31(4) of the Act even though these applications are made before any reference has taken place. .........'

13. I have already indicated that the facts of Guru Nanak's case (AIR 1981 SC 2075) and of Saith and Skelton's case (AIR 1972 SC 1507) are different. iN those cases reference of disputes were made to the arbitrator by the Supreme Court and directions were given and orders passed by it from time to time, and as their Lordships in both the cases observed, their Lordships had retained full/complete control over the arbitration proceedings. So, it was held that the awards were to be fifed, in view of Sub-section (4) of Section 31, before the Supreme Court. In the present case the Supreme Court merely substituted the personnel of the arbitrator by appointing the Arbitration Tribunal in place of Shri S.S. Patnaik. Nothing more was done. Neither were the records called for making reference nor was the reference in fact made nor was any direction given or orders passed from time to time by the Supreme Court in regard to the arbitration proceedings. The rule laid down in the two cases is, therefore, not applicable. The learned Subordinate Judge before whom the first application in the matter of reference was filed is the Court before whom the award and subsequent applications, if any, are to be filed.

14. The rule laid down by the Supreme Court in the case of Guru Nanak and Saith and Skelton is binding on me. However, with great respect, I hope that the Supreme Court would on an appropriate occasion reconsider its views.

15. The provision contained in Section 31(4) has been enacted with a view to avoiding conflict and scramble in the matter of exercise of jurisdiction. In categorical terms it was held in Kumbha Mawji's case (AIR 1953 SC 313 at p. 317);--

'........The context, therefore, of Subsection (4) would seem to indicate that the sub-section was not meant to be confined to applications made during the pendency of an arbitration. The necessity for clothing a single Court with effective and exclusive jurisdiction, and to bring about by the combined operation of these three provisions the avoidance of conflict and scramble is equally essential whether the question arises during the pendency of the arbitration or after the arbitration is completed or before the arbitration is commenced. ...........'

In para 12, their Lordships observed:--

'........ Then comes Sub-section (4), the object of which apparently is to go further than Sub-section (3), that is, not merely casting on the party concerned an obligation to file all applications in one Court but vesting exclusive jurisdiction for such applications in the Court in which the first application has been already made.'

Their Lordships in unmistakable terms laid down that after an application was made under the provisions of the Act in the matter of reference, that Court where such first application was made, alone would have jurisdiction over the arbitration proceedings and to entertain subsequent applications arising out of that reference. In Union of India v. Surjeet Singh Atwal (supra), the Supreme Court observed that applications under Sections 8 and 20 were clearly applications anterior to the reference but they led to a reference and such applications were undoubtedly applications 'in the matter of reference' and might fall within the purview of Section 31(4) of the Act even though those applications were made before any reference had taken place. So, in a case where before a competent Court the first application either under Section 8 or 20 is made, that determines the Court which would have jurisdiction over the arbitration proceedings and where all subsequent applications arising out of the reference and the arbitration proceeding should be filed. The provision being categorical, is it open to canvass that another Court, say a higher Court, shall have jurisdiction because it acted in a particular way Jurisdiction is determined once for all by Section 31 (4). Jurisdiction cannot shift having regard to the categorical terms of Section 31(4) from one Court to another because of fortuitous circumstances. There is no such intendment in Sub-section (4) of Section 31. Once jurisdiction gets fixed by reason of an application having been made in a Court competent to entertain it, would jurisdiction be vested in a higher Court where the matter is taken against the decision of the original Court Matters reach the High Court in appeal or revision and the Supreme Court by way of special leave and appeals, from decisions passed by the original Court on applications filed under Sections 5, 8, 11, 12, 20 etc. Where can the first application be said to have been filed Indisputably in the original Court. No application is filed in the higher Court. The higher Court is in seisin of the matter in appeal or revision and not by way of an original proceeding (in those jurisdictions where the High Court does not have original jurisdiction). If the High Court or the Supreme Court changes or passes some orders or gives directions, those are not on an application under this Act made in a Court competent to entertain it 'in any reference' but in exercise of jurisdiction provided by the procedural law. The jurisdiction contemplated in Sub-section (4) of Section 31 is the jurisdiction of the original Court (except in case under Chap. IV).

In my humble view, the meaning and intendment of Section 31(4) cannot be altered by the course the matter takes in the higher Court. The rule laid down in Kumbha Mawji's and Surjeet Singh Atwal's cases is still good law. In Guru Nanak's case, both the cases were noticed but were not held to have been wrongly decided. In Guru Nanak's case, the Supreme Court observed that Surjeet Singh Atwal's case 'took note of various sections under which an application can be made before the reference has been made'. I am humbly of the opinion that their Lordships' view in Guru Nanak's case that 'therefore the decision in Kumbha Mawji's case would not mean that a proceeding earlier to the reference in a Court would clothe that Court with such jurisdiction as would render the provision of Section 31(4) otiose' is perhaps opposed to the rule laid down in Kumbha Mawji's and Surjeet Singh Atwal's cases. The portion just excerpted would mean that Section 31(4) would have application from the stage of actual reference and has no application prior to the reference. Such a view is perhaps not in consonance with the rule categorically laid down in Kumbha Mawji's and Surjeet Singh Atwal's cases. Such a view, in my humble opinion, gives a restricted meaning and operation to Section 31 (4). Clothing the Court, where the first application either under Section 8 or Section 20 is made, with exclusive jurisdiction over the arbitration proceedings and in regard to filing of subsequent applications, does not render the provision contained in Sub-section (4) of Section 31 of the Act otiose.

I hold that the decisions in Guru Nanak's and Saith and Skelton's cases are distingashable and the learned Judge has jurisdiction to deal with the application filed by the petitioner for removal.

16. In the result, the revision is allowed and the impugned order is set aside. The proceedings before the Subordinate Judge should be disposed of expeditiously. In the circumstances of the ease, there would be no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //