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D.R. Malhotra Vs. Indian Aluminium Cables - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberCivil Revision Appeal No. 231 of 1977
Judge
Reported in1978RLR43
ActsArbitration Act, 1940 - Sections 20; Code of Civil Procedure (CPC), 1908 - Sections 11
AppellantD.R. Malhotra
RespondentIndian Aluminium Cables
Advocates: K.P. Kapur and; R.M. Gupta, Advs
Excerpt:
an application was filed by the petitioner under sections 20 and 31 of the arbitration act, 1940, in order to refer the dispute to the arbitrator - in this lieu, an objection was raised questioning the pecuniary jurisdiction of the court - despite the objection, the court found that it had a right to interfere in the matter - hence, it was held that only after the award was given, the subordinate judge had no pecuniary jurisdiction to interfere in the matter - - a court dealing with the application must have both pecuniary as well as territorial jurisdiction, (14) taking the first stage of this case when the application u/s......in the same court (successor). it was for 53.0000.00 respondent contended that award was beyond pecuniary jurisdiction of the court and sub- judge upheld the objection. petitioner, moved high court. the judgment, after giving above facts, is para 8 onwards : (2) now dealing with the present case which is a case in which a reference has been made u/s 20 by the subordinate judge, the wording of the s, 31 (4) can be usefully referred to. it is stated there 'where any persons have entered into an arbitration agreement before the institution of any suit, with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them instead of proceeding under chapter 2 may apply to the court having jurisdiction.....
Judgment:

D.K. Kapur, J.

(1) Petitioner made an application u/s 20, Arbitration Act for reference of dispute to arbitrator. Respondent questioned the jurisdiction of the Court and it was decided in favor of the petitioner and the matter was referred. The award was then made and filed in the Same Court (Successor). It was for 53.0000.00 Respondent contended that award was beyond pecuniary jurisdiction of the Court and Sub- Judge upheld the objection. Petitioner, moved High Court. The judgment, after giving above facts, is para 8 onwards :

(2) Now dealing with the present case which is a case in which a reference has been made u/s 20 by the subordinate judge, the wording of the S, 31 (4) can be usefully referred to. It is stated there 'Where any persons have entered into an arbitration agreement before the institution of any suit, with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them instead of proceeding under chapter 2 may apply to the court having jurisdiction in the matter to which the agreement relates, that the agreement relates, that the agreement may be filed in court'.

(3) The relevant portion of this provision for the purposes of this case is ''A court having jurisdiction in a matter to which the agreement relates.' This means that the question of jurisdiction has to be decided at that stage. Both the counsel for the parties are agreed, that the question of pecuniary jurisdiction was raised at that time the application u/s. 20 of the Act was considered by Shri O.P. Dwivedi subordinate judge first class Both counsel agree that the court found that it did have jurisdiction inspire of an objection being raised. It is also agreed that no one appealed against that decision. This means that there is a decision of a court holding that Mr O.P. Dwiwedi did have jurisdiction over the matter to which the agreement relates. It cannot thereforee now be held that the court was not competent. This decision being earlier now operates as rest judicata.

(4) I wanted to know from from the learned counsel how it came about that this decision was recorded when the eventual claim was for about Rs. 5 lakhs as filed before the arbitrator. It has been explained to me that a claim is for relief in respect of an invention and the quantum of the claim was not specified at that stage and in fact the applicants did not choose to specify it even when questioned on this matter during his oral testimony. Whatever be the reason the eventual result is that it was held that Shri O.P. Dwivedi had the jurisdiction to deal with the question.

(5) The learned counsel for the petitioner has referred to Virendra Sehgal vs Mis. Sumati Lal Jamna Lal, : AIR1970Delhi14 and S.C. Malik vs Union of India : AIR1972Delhi211 to contend that is not enough to file an earlier application under the Arbitration Act but the application must be before a competent court in order to make S. 31(4) applicable. I fully agree with this decision. It is quite apparent that the previous application must be before a competent court. If an application is made to the wrong court then obviously S. 31(4) will not bar the jurisdiction of some other court at a later stage. The problem in this case is that in contradistinction to those cases, the court did find that it had jurisdiction. Having so found, that is the end of the matter because now it is not open for the purpose to show that the court was not competent to entertain the application u/s. 20 of the Act.

(6) The result of this analysis would be that the subordinate judge concerned would be comment u/s. 31(4) notwithstanding the fact that he has not got the pecuniary jurisdiction to deal with a claim for Rs. 530000.00 if it was the subject matter of a suit. This apparently inconsistent result is achieved by the opening words of S. 31(4) which are '-Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, ...... 'This non-obstante clause shows that this subsection has an overriding effect which goes so far as to give the court jurisdiction which it would otherwise not possess because of the language of the provision in question.

(7) The learned counsel for the respondent wants this view to be offset by the ratio of the decisions of the Supreme court in Kiran Singh vs Chaman Paswan : [1955]1SCR117 . In that case it was stated by Supreme court that if a decree was passed by a court not having jurisdiction then it was a nullity. In that case a decree had been passed in appeal by the Dist. Judge which was challenged in second appeal before the High Court. It was found at the second appellate stage that the value for jurisdiction had been wrongly fixed in the trial court and if the correct value had been taken, first appeal would lie to the High Court and not in the District court. It was then argued that the District Judge's decision was a nullity and should be disregarded. The High Court rejected this contention on the basis of its own previous full bench decision. On appeal to Supreme Court, it was held that the view of the High Court was wrong because if the Dist. Judge had no jurisdiction to hear the appeal, his judgment must be treated as a nullity. I think this authority has no application to the present case. In this case there is no doubt that the subordinate judge would not have any jurisdiction to deal with the award but for the application of S. 31(4) of the Act.

(8) The fact of the matter is that if that court had not made a reference u/s 20, it could not have dealt with the award. Unfortunately at the earlier stage the question of jurisdiction was decided differently. That decision binds the parties now having become final. Consequently there is no escape from the conclusion that S. 31(4) makes the subordinate judge competent to deal with the award. This leads to the unusual conclusion that the subordinate judge does have jurisdiction to deal with an award for Rs. 530000.00 and hear objections etd in relation thereto inspire of having a limited pecuniary jurisdiction much less than that amount.

(9) There is a judgment of the Punjab High Court firm Kapur and Sons vs Raj Kumar Khanna wherein the provisions of S. 31(4) were interpreted to mean that the court competent to entertain the second application was not necessarily the same court as originally dealt with the matter at the earlier stage. In that case Subordinate Judge 'A' had earlier dealt with the application which was later transferred to Sub-judge B. 'A' was appointed to take the place of subordinate judge 'B' and actually subordinate judge 'A' decided the application. It was contended that the proceedings could not have been transferred but the court rejected this on a construction of the section, the court held that the limitation placed by the section was not that the selfsame subordinate judge should decide the case, but the court having territorial jurisdiction should be the same as observed 'If such a restricted meaning were to be put as has been contended for then, it means that if the court is abolished at a particular place, proceedings under the Arbitration Act cannot go to any other court in the same place,'.

(10) The effect of this decision would be that it is not necessary that the proceedings must be filed before the same subordinate judge but they must be filed in a court having jurisdiction at the same place.

(11) I think that on the proper construction of the provision, this would mean that if there is a reference made by a competent court it is only another competent court of the same place that can deal with the subsequent application.

(12) Thus I would interpret S. 31(4) as meaning that if an application has been made under the Arbitration Act at court in Delhi, it would be imperative that all subsequent applications should be filed in Delhi and not for instance in Amritsar or Bombay or some other place where the court may have territorial jurisdiction for any particular reason. If this meaning is given, it would mean that the two views contended for by the petitioner and the respondent could be reconciled. I now proceed to set down the manner in which the two views can be reconciled.

(13) If an application in to be moved under the Arbitration Act it has to be moved in a court which has jurisdiction over the subject matter of the claim. This jurisdiction may be territorial or it may be pecuniary. A court dealing with the application must have both pecuniary as well as territorial jurisdiction,

(14) Taking the first stage of this case when the application u/s. 20 of the Arbitration Act was moved the court did have jurisdiction because the pecuniary extent of the claim was not known but the territorial jurisdiction was certainly in Delhi. It may be noticed that the definition of 'court' as given in S. 2(c) is : 'Court means a civil court having jurisdiction to decide the question forming the subject matter of a suit but does not except for the purpose of arbitration proceedings u/s. 21 include a small cause court. Thus to determine the initial jurisdiction of the court one has to assume that the subject matter of the claim is the subject matter of a suit and then one has to see whether this matter could have been entertained by a particular court if it had been the subject matter of a suit. If the quantum of the claim is not known then the question of pecuniary jurisdiction cannot be determined. If the quantum of the claim is uncertain and not specified, then there can be a difference of opinion as to which is the court having pecuniary jurisdiction. That is the state of affairs in the instant case because at the stage of the application u/s. 20 the pecuniary extent of the claim was not known.

(15) After the award was given on the reference, the subordinate judge concerned did not have pecuniary jurisdiction. He would thereforee not be competent court within the meaning of the definition in S. 2(c) but he would be court concerned by S. 31(4) of the Act. As I have explained this provision can be interpreted either in a restricted manner or in a larger context. If the word 'court' means exactly the same court then the subordinate judge is the only court which has exclusive jurisdiction. I must confess that there are some reported decisions which have taken taken the view that the court has necessarily to be the same one. For example it was held in Shukrulla vs. vt. Rahmat Bibi AIR 1947 All 304 that if a reference has been made by the High Court that objections had also to be filed in the High Court. If this view is taken to be correct, then in the present case, both the award and the objection had necessarily to be filed before the subordinate court which made the reference notwithstanding the fact that that was not the normal court. On the other view the court need not be the selfsame court. It must be the proper court having pecuniary jurisdiction at the place where the reference was originally made. Thus on one view the word 'court' occurring in S. 31(4) would mean the subordinate judge and on another view the word 'court' would mean this High Court because normally this is the court which has pecuniary jurisdiction under the Delhi High Court. the exclusive jurisdiction to the selfsame court that decided the initial application. This does not mean that the proceedings cannot be transferred to another court. As held by the Punjab High Court in the judgment referred to above, the case can be transferred to another court. But that court must have the same pecuniary jurisdiction. As the pecuniary jurisdiction in this case is doubted by one of the parties, I think the ends of justice would be met by holding that although the subordinate judge has jurisdiction because of S. 31(4) of the Arbitration Act, it would be proper that the proceedings should be transferred to the court having pecuniary jurisdiction in this matter in exercise of the court's power to transfer proceedings u/s. 24 of the Code of Civil procedure. I accordingly transfer the proceedings from the court of the subordinate judge to the original side of this court.


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