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Nirmal Chandra Bose Vs. Sudhendu Kumar Dutta and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtOrissa High Court
Decided On
Case NumberMiscellaneous Appeal No. 60 of 1954
Judge
Reported inAIR1959Ori77
ActsArbitration Act, 1940 - Sections 20 and 20(1)
AppellantNirmal Chandra Bose
RespondentSudhendu Kumar Dutta and anr.
Appellant AdvocateB. Mohapatra and ;R.K. Mohapatra, Advs.
Respondent AdvocateL.K. Dasgupta, ;S.N. Dasgupta and ;S. Misra, Advs.
DispositionAppeal dismissed
Excerpt:
.....406, approved. new india assurance co. ltd. v birendra mohan de, 1995 (2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - but the question arises whether when the parties clearly intended that the arbitrator's venue should be calcutta, they could possibly have intended that the civil court may be either at berhampur or at calcutta. 9. in my opinion, therefore, if the language of clause (8) of the deed of partnership is construed, giving full effect to the meaning of the words inserted therein, and bearing in mind the law relating to arbitration which the contracting parties may be presumed to have been aware of the only reasonable inference is that the parties intended that the arbitration proceedings, as well a?.....the terms of contract between them were embodied in the deed of partnership (ext. 1).the material clauses are clauses 7 and 8. clause 7 says that the profits and losses of the partnership business shall be borne in the proportion of 3 annas by the respondent no. 2 bhagaban sahu, and 13 annas by the respondent no. 1 and the appellant. apparently respondent no. 2 was merely a sleeping partner. clause 8, on the construction of which this appeal rests, may be quoted in full.'all disputes and questions in connection with or touching the partnership or this deed arising between the parties, shall he referred to a single arbitrator to be nominated by second party and all such disputes shall be decided at calcutta only.'3. on 6-3-1953, the appellant (one of the second parties in the deed of.....
Judgment:

R.L. Narasimham, C.J.

1. This is an appeal from the judgment of the Subordinate Judge, Berhampur, rejecting an application by the appellant-petitioner under Section 20 of the Arbitration Act on the ground that the Berhampur Court had no jurisdiction to entertain that application, and that the Civil Court in Calcutta alone has such jurisdiction.

2. The material facts are as follows:

The appellant is a contractor residing in Calcutta. Respondent No. 1 is also a permanent resident of Calcutta whereas respondent No. 2, Bhagaban Sahu is a resident of Aska in the district of Ganjam. The three persons entered into a partnership on 29-2-1952, (Ext. 1) for the purpose of jointly working Government Forest Coupes in Ganjam district after taking the same on lease from the Forest Department. The terms of contract between them were embodied in the deed of partnership (Ext. 1).

The material clauses are clauses 7 and 8. Clause 7 says that the profits and losses of the partnership business shall be borne in the proportion of 3 annas by the respondent No. 2 Bhagaban Sahu, and 13 annas by the respondent No. 1 and the appellant. Apparently respondent No. 2 was merely a sleeping partner. Clause 8, on the construction of which this appeal rests, may be quoted in full.

'All disputes and questions in connection with or touching the partnership or this deed arising between the parties, shall he referred to a single Arbitrator to be nominated by second party and all such disputes shall be decided at Calcutta only.'

3. On 6-3-1953, the appellant (one of the second parties in the deed of partnership) filed an application purporting to be under Section 20(1) of the Arbitration Act before the learned Subordinate Judge, Berhampur, praying that by virtue of the deed of partnership and the arbitration Clause (para 8) a reference may be made to a single Arbitrator at Calcutta and for other consequential reliefs. One of the preliminary issues raised in this case was whether the Civil Court at Berhampur had jurisdiction to entertain such an application in view of the stipulation in Clause 8 of the deed of partnership to the effect that such disputes shall be decided at Calcutta.

The validity of the deed of partnership and the maintainability of the application were also canvassed. The trial Court, first examined the preliminary question of its jurisdiction and held that it had no jurisdiction and that the application ought to have been filed in Calcutta. Hence he directed the return of the application for presentation before the proper court. He also gave his views as regards the legal validity of the deed of partnership and the maintainability of this application.

4. In this appeal, the findings of the trial court as regards the validity and maintainability were seriously challenged; but counsel for both sides agreed that these questions may be left open for decision by the Court, which hears the application on merits. It was also conceded that Clause (8) of the deed of partnership would not be hit by the provisions of Section 28 of the Contract Act.

5. Hence the main question that arises is the-correct meaning of Clause (8) of the deed of partnership, quoted above. What is the true construction of the stipulation that, 'All such disputes shall be decided at Calcutta only'? According to the appellant, 'such disputes' in the said clause mean only those disputes referred to in the preceding portion of that clause which are referred to a single Arbitrator. '

In other words, the agreement between the parties was that when those disputes are referred to a single Arbitrator that Arbitrator shall, decide them at Calcutta only. So far as Civil Court's jurisdiction, is concerned, the parties did not come to any agreement and under the general law, it was open to the parties to choose either the civil court at Berhampur or a competent Civil Court at Calcutta.

6. On the other hand, on behalf of the respondent it was contended that in the absence of any limiting words such as 'shall be decided by the Arbitrator' in the said clause, the words should be given the natural meaning and their full import. Hence when the parties did not expressly state that 'the decision of the Arbitrator shall be made in Calcutta' but stated that 'All such disputes shall be decided at Calcutta', the intention is that, not only the Arbitrator but also the competent Civil Court, to decide the disputes shall be at Calcutta.

7. It is indeed significant that though in the earlier portion of Clause (8), there is a clear reference to a single arbitrator, the disputed passage does not expressly say that that Arbitrator shall decide the disputes at Calcutta. The language is wide enough to include not only the decision of the Arbitrator but also the decision of the Civil Court that may arise either in consequence of the decision of the Arbitrator or as ancillary to the same.

The parties appear to be highly educated persons and as 13 annas interest in the partnership was vested in the appellant and respondent No. 1 who are both residents of Calcutta, it appears that for the convenience of the second party, this clause, in the agreement was inserted requiring the decision of such disputes at Calcutta.

Mr. Mohapatra fairly conceded that even according to the narrow construction of Clause (8), it was the intention of the parties that the Arbitrator should decide such disputes at Calcutta. But the question arises whether when the parties clearly intended that the Arbitrator's venue should be Calcutta, they could possibly have intended that the Civil court may be either at Berhampur or at Calcutta.

8. For the decision of this question, it is' necessary to refer to some of the relevant provisions of the Arbitration Act which the parties may be presumed to be aware of. There are several provisions in the said Act which require intervention of the Court prior to the passing of an award by the Arbitrator. Thus Clause (3) of the First Schedule which is required to be part of every arbitration agreement says that 'If the Arbitrator is unable to make any decision within four months, he may apply to the Court for extension of time'.

Hence if the Arbitrator sitting at Calcutta finds that he is unable to give the award in four months, he has no other alternative but to apply to the Court for extension of time. If it is admitted that the Arbitrator is required to sit at Calcutta, it is difficult to imagine that the parties contemplated that he may apply for extension of time to the Court either at Berhampur or at Calcutta. If the convenience of the Arbitrator was the main consideration, that would apply with equal force to the selection of the Court for extension of time.

Then again, Section 5 of the Arbitration Act says that even after appointment of an arbitrator, his authority may be revoked by leave of the Court. Section 8(1)(a) says that where the concurrence of two parties is required for appointment of an Arbitrator and if they differ as regards the person to be selected, the Court may give its decision on the subject. Section 11 confers power on the Court to remove an Arbitrator under some circumstances.

Section 12 deals with the consequential orders to be passed by the Court after removal of such an Arbitrator. Section 13 while describing the powers of the Arbitrator, expressly says in Clause (b) that if the Arbitrator feels some doubt, he may state a special case for the opinion of the Court on any question of law involved or state the award itself wholly or in part in the form of a special case of such question for the opinion of the Court.

These provisions are found in Chapter II under the heading, 'Arbitration without intervention of a Court'. They show unmistakably that the law of arbitration contemplates intervention by the Court at several stages prior to the passing of the award by the Arbitrator. Hence, if the parties intended that for the convenience of the Arbitrator, he should give his decision at Calcutta, I cannot imagine how they could have intended that the Arbitrator may apply to the Court at Berhampur for other directions contemplated in the aforesaid section prior to his giving the final award.

Special emphasis may be laid on Section 13, Clause (b) under which he has right to state the award on difficult questions of law. It is, I think, unthinkable that the parties intended that the Arbitrator, sitting at Calcutta may apply to the Court at Berhampur for its opinion on any difficult question of law.

9. In my opinion, therefore, if the language of Clause (8) of the deed of partnership is construed, giving full effect to the meaning of the words inserted therein, and bearing in mind the law relating to arbitration which the contracting parties may be presumed to have been aware of the only reasonable inference is that the parties intended that the arbitration proceedings, as well a? proceedings in the Civil Court arising out of the said arbitration shall take place only at Calcutta and not at Berhampur or any other place. On a strict construction of this clause, the trial court, was justified in returning the application for its presentation before the proper court,

10. On all other issues, this Court need not express any opinion at this state and they are left open. The appeal is, therefore, dismissed with costs.

S. Barman, J.

11. I agree.


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