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Kunthi Ammal and anr. Vs. Sarangapani Chetti - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtChennai
Decided On
Reported inAIR1931Mad170; (1931)60MLJ498
AppellantKunthi Ammal and anr.
RespondentSarangapani Chetti
Cases ReferredManchester Ship Canal Co. v. S. Pearson
Excerpt:
.....apply to the present case. 16. the meaning of this is, clearly,'that when the arbitration act governs a submission, the operation of the specified sections of the civil procedure code is excluded......of a suit, the suit could be instituted only in a presidency town, and that the code of civil procedure, second schedule, provides that the second schedule of that code shall not apply to any case falling within the purview of the indian arbitration act. on behalf of the respondents it is contended that the indian arbitration act will not apply to submissions or arbitrations where there are five arbitrators as in the present case, that is, more arbitrators than one contemplated by sections 8 and 9 of the act and that, even if the act applies, the city civil court has jurisdiction as it is directed under the madras city civil court act (vii of 1892) to take cognizance of all suits triable on the original side of the high court provided the value of the suit does not exceed rs......
Judgment:

Madhavan Nair, J.

1. This Civil Miscellaneous Appeal arises out of an order passed by the City Civil Judge in a suit to have an agreement submitting a case for arbitration filed in Court and to provide for the arbitration in accordance with law. The agreement sought to be enforced was entered into between the plaintiff and the defendants referring disputes about their joint family property to five panchayatdars, asking them to divide it among the signatories to the document. One of the panchayatdars refused to act as an arbitrator. For this and other reasons the defendants contended that the agreement could not be enforced. They also contended that the City Civil Court had no jurisdiction to entertain the suit as it fell within the scope of the Indian Arbitration Act (IX of 1899) which vests the High Court with exclusive jurisdiction to try suits of this nature. The learned City Civil Judge overruled these contentions and passed the following order:

I, therefore, direct that Bhagirathi Pillai be appointed arbitrator in place of the person who has resigned and remit this case to the original arbitrators who have not resigned and this additional person newly appointed to dispose of the case according to law and submit a finding within one month.

2. This appeal has been filed by the defendants against this order.

3. It is urged on behalf of the appellants that the Indian Arbitration Act gives exclusive jurisdiction to the Original Side of the High Court to determine this matter, as, if it were the subject-matter of a suit, the suit could be instituted only in a Presidency Town, and that the Code of Civil Procedure, Second Schedule, provides that the Second Schedule of that Code shall not apply to any case falling within the purview of the Indian Arbitration Act. On behalf of the respondents it is contended that the Indian Arbitration Act will not apply to submissions or arbitrations where there are five arbitrators as in the present case, that is, more arbitrators than one contemplated by Sections 8 and 9 of the Act and that, even if the Act applies, the City Civil Court has jurisdiction as it is directed under the Madras City Civil Court Act (VII of 1892) to take cognizance of all suits triable on the Original Side of the High Court provided the value of the suit does not exceed Rs. 2,500, and provided further that the suit does not relate to Probate, Matrimonial and Insolvency Proceedings. It is admitted that the present case falls within these provisions of the Madras City Civil Court Act.

4. On the above arguments, two questions arise for consideration: (1) Whether the jurisdiction to determine the subject-matter submitted to, arbitration in the present case lies exclusively with the High Court; (2) if so, is the City Civil Court vested with that jurisdiction under the Madras City Civil Court Act? As we shall presently show, in the view that we take of this case, it is not necessary to express any definite opinion on the second question.

5. Under the Indian Law, reference to arbitration is governed by the provisions of the Code of Civil Procedure and the Indian Arbitration Act (IX of 1899). Under Section 89, Clause (1) of the Civil Procedure Code,

Save in so far as is otherwise provided by the Indian Arbitration Act, 1899, or by any other law for the time being in force, all references to arbitration, whether by an order in a suit or otherwise, and all proceedings thereunder, shall be governed by the provisions contained in the Second Schedule.

6. Section 3 of Act IX of 1899 says that Sections 523 to 526 of the Code of Civil Procedure, 1882, (paras. 17, 19 and 20 of' Schedule II of the Code of Civil Procedure, 1908) shall not apply to any submission or arbitration to which the provisions of this Act for the time being apply. This section excludes those references . to arbitration to which the provisions of the Act apply from the operation of paras. 17 to 20 of the Second Schedule of the Civil Procedure Code. Section 2 of the Act states:

This Act shall apply only in cases where, if the subject-matter submitted to arbitration were the subject of a suit, the suit could, whether with leave or otherwise, be instituted in a Presidency Town.

7. According to this section the Act would apply to an agreement forming the subject-matter of a reference to arbitration only if a suit between the parties with respect to that subject-matter could be instituted in a Presidency Town. Section 4 of the Act states that 'the Court' referred to in the Act in the Presidency Towns is the High Court. In the present case it is clear that if a suit is instituted by the parties with reference to the subject of arbitration, that is, the division of their family property, that suit will have to be instituted at Madras, and therefore, under Sections 2 and 4 of the Act, the High Court will be the Court having jurisdiction to determine the reference to arbitration. This is the argument of the appellant. The respondents meet this argument by saying that the plaintiff in order to succeed in his contention should, besides showing that his case falls within Section 2 of the Act, also show that the provisions of the Act would apply to the submission or arbitration in question. This argument has special reference to Section 3. of the Act and is put in this way: Having regard to that section, only those submissions, i.e., written agreements to submit, present or future differences to arbitration, whether an arbitrator is named therein or not, [see, Section 4 (b)], to which the provisions of the Indian Arbitration Act will apply, will be exempt from the operation of the Code of Civil Procedure; in other words, if any of the provisions embodied in any section of the Arbitration Act will not apply to a 'submission,' then that 'submission' will be governed by the rules of the Code of Civil Procedure. In this case, as one of the panchayatdars has refused to act, it is conceded that without resorting to Section 8 or 9--if these sections will apply--his vacancy cannot be filled up and that relief cannot be given to the plaintiff. The respondent proceeds to show that Sections 8 and 9 of the Indian Arbitration Act will not apply to a submission like the present one wherein the dispute is referred to the arbitration of five panchayatdars as those sections will apply only to cases where there is 'a single arbitrator or but two arbitrators'. In support of his interpretation of Sections 8 and 9 of the Act, Gopalji Kuverji v. Morarji Jeram I.L.R. (1919) B. 809 is relied on. If this argument is accepted, it will follow that the question of the application of the Act should be considered with reference to both Sections 2 and 3, and that if any of the sections of the Act will not apply in the matter of any submission, then despite the fact that a suit in respect of its subject-matter if instituted will undoubtedly lie in the High Court, the provisions of the Code of Civil Procedure will become applicable and the City Civil Court will have exclusive jurisdiction to deal with the matter.

8. We will now proceed to see how far this argument of the respondent can be accepted. Section 8 of the Indian Arbitration Act deals with the power of the Court in certain cases to appoint an arbitrator, umpire or a third arbitrator. Section 9 of the Act deals with the power which the parties have in certain cases to supply the vacancy. I do not think it is necessary for deciding this case to deal at length with the scope of the provisions of these two sections, as I am prepared to accept the reasoning of the learned Judges in Gopalji Kimherji v. Morarji Jeram I.L.R. (1919) B. 809, in which the question is discussed elaborately. In that case, strongly relied on by the respondent, it was held by Scott, C.J., and Hayward, J., reversing the judgment of Marten, J., that, in a case of submission to three named arbitrators all of them after acting having declined to proceed any further, the Court had no jurisdiction to appoint fresh' arbitrators in their place under the Indian Arbitration Act. Generally stated, following the decisions In re Smith & Service and Nelson & Sons (1890) 25 Q.B.D. 545 and Manchester Ship Canal Company v. S. Pearson & Son, Ltd. (1900) 2 Q.B. 606, under the English Arbitration Act, the learned Judges adopted the view that Sections 8 and 9 would apply only to cases where there is a single arbitrator or but two arbitrators. According to this decision, these sections will not apply to the present case as the agreement in question refers the matter in dispute to five panchayatdars, and therefore, if the respondent's argument is correct, it would follow that the provisions of the Code of Civil Procedure are not excluded under Section 3 of the Act and the City Civil Court must be held to have exclusive jurisdiction to deal with the matter. The appellants argue that this decision is wrong and rely on General Electric Trading Co. v. Siemens (India), Ltd. I.L.R. (1928) C. 848 Sections 8 and 9 of the Indian Act correspond to Sections 4 and 5 of the English Arbitration Act which correspond to clauses 12 and 13 of the Common Law Procedure Act of 1854. So far as I can see, though there is some variation in the wording of Sections 5 and 6 of the English Arbitration Act from the wording of the corresponding section of the Common Law Procedure Act, the purport of the sections remains exactly the same. In my view there is no support for the view of Ghose, J., that the wording of Sections 5 and 6 of the English Arbitration Act would make them applicable to cases of three arbitrators, cases to which admittedly Sections 12 and 13 of the Common Law Procedure Act would not apply. In this connection, it may be observed that In re Smith & Service and Nelson & Sons (1890) 25 Q.B.D. 545, relied on by the learned Judges of the Bombay High Court, was decided after the passing of the English Act of 1899, and under it it was held that-

where an agreement to refer disputes to arbitration provides for a reference to three arbitrators, one to be appointed by each of the parties, and the third by the two so appointed, and one of the parties refuses to appoint an arbitrator, the Court has no power under or apart from the Arbitration Act, 1889, to order him to do.

9. In that case, Lindley, L.J., made the following observations:

It certainly looks like a blot in the Act, that by reason of there being no provision as to three arbitrators, as distinguished from two arbitrators and an umpire, Sections 4, 5 and 6 do not apply; but we cannot help that.

10. This so-called blot in the English Act was cured in England by the enactment of the Administration of Justice Act of 1925, 10 and 11 Geo. V, c. 81. This would show that the Legislature thought that the interpretation of Sections 5 and 6 of the English Act adopted by the learned Judges in In re Smith & Service and Nelson & Sons (1890) 25 Q.B.D. 545 was correct. The blot in the Indian enactment has not been cured by the Indian Legislature as was done by the English Legislature with reference to the English Act, Having regard to these considerations it seems to me that the interpretation of the learned Judges in Gopalji Kuverji v. Morarji Jeram I.L.R. (1919) B. 809 of Sections 8 and 9 of the Indian Arbitration Act is amply supported by the English authorities. The subsequent decision of the Bombay High Court, In re Babaldas Khemchand I.L.R. (1919) B 1, in no way conflicts with the prior decision in Gopalji Kuverji v. Morarji Jeram. I.L.R. (1919) B. 809 Mackintosh & Co. v. Scindia Steam Navigation Co., Ltd. I.L.R. (1922) B. 250 shows that:

where the parties agree to refer their disputes to arbitration without the. intervention of the Court, no suit having been brought in respect of those disputes, the Court has no power to order the issue of a commission for the examination of witnesses in the arbitration.

11. Though I agree thus far with the respondent's contention that the provisions of Sections 8 and 9 of the Indian Arbitration Act do not apply to a case of five panchayatdars like the present one, it does not necessarily follow from this conclusion that the Indian Arbitration Act will not apply to the present case. The very case so strongly relied on by the respondent, Gopalji Kuverji v. Morarji Jeram I.L.R. (1919) B. 809 supports this position. As observed by Scott, C.J. (see page 831), 'the Act does not attempt to provide for every case,' and Mr. Justice Hayward points out that, though reference to three named arbitrators is not included within the particular provisions of Sections 8 to 9, they might fall within the provisions of the other sections including Section 19 of the Indian Arbitration Act. In this connection attention may also be drawn to the observations of Vaughan Williams, L.J., in Manchester Ship Canal Company v. S. Pearson & Son, Ltd. (1900) 2 Q.B. 606, which show that the English Arbitration Act would govern a submission to arbitration even though the reference is to three arbitrators. The conclusion is therefore clear that though Sections 8 and 9 of the Indian Arbitration Act will not apply to the present case, still the case will fall under the purview of the Act though the parties are left without any remedy under the Act, This blot in the Act will not, in my opinion, make the Act inapplicable to a case though reference is made in it to five panchayatdars. Two inferences follow from this . conclusion: (1) that Section 3 cannot be used in the manner suggested by the appellant to limit the scope of Section 2, that Section 3 simply means that in cases governed by the Indian Arbitration Act, the operation of the provisions of the Code of Civil Procedure mentioned in it is excluded, that the reference to arbitration in the present case is not governed by the provisions of the Code of Civil Procedure and is not therefore within the exclusive jurisdiction of the City Civil Court, and (2) that Section 2 read with Section 4 vests the jurisdiction to deal with the present reference exclusively in the High Court, but that the High Court, in the light of the foregoing observations, must be held to be unable to give the relief asked for by the plaintiff under Section 8 or 9 of the Act as according to our interpretation these sections cannot be applied to cases wherein the reference is made to five panchayatdars. This disability is certainly 'a blot in the Act'; but it must remain so till it is cured by the Legislature.

12. It is conceded that, if the High Court cannot interfere in the present case, then the City Civil Court which, according to the respondent, is directed to deal with the matter, is also helpless, and therefore the second question raised in this appeal as regards the jurisdiction of the City Civil Court under the Code of Civil Procedure need not be decided.

13. Having regard to my view that the relief asked for cannot be given to the plaintiff under Section 8 or 9 of the Act, we must set aside the order of the Lower Court. In the result, the plaintiff's suit will be dismissed. In the circumstances, we make no order as to costs.

14. No special order is necessary in the Civil Revision Petition.

Cornish, J.

15. I agree. In my opinion the Arbitration Act governs the submission to arbitration in the case before us. If that be so, Section 17 of the Second Schedule of the Civil Procedure Code has no operation; and it follows that the order of the City Civil Court Judge purporting to be made under that section was without jurisdiction and should be set aside. Section 2 of the Arbitration Act states that subject to the provisions of Section 23 (which are not material here) the Act shall apply only in cases where, if the subject-matter submitted to arbitration were the subject of a suit, the suit could be instituted in the Presidency Town. Admittedly, a suit in respect of the subject-matter of the submission in -this case could have been instituted in the Presidency Town. Then Section 3 of the Arbitration Act provides that Sections 523 to 526 of the Code of Civil Procedure, 1882, corresponding to paragraphs 17, 19, 20 and 21 of Schedule II of the Civil Procedure Code, 1908:

shall not apply to any submission or arbitration to which the provisions of this Act for the time being apply.

16. The meaning of this is, clearly,' that when the Arbitration Act governs a submission, the operation of the specified sections of the Civil Procedure Code is excluded. This exclusion is recognised by Section 89 of the Code of Civil Procedure, which says:

Save in so far as is otherwise provided by the Indian Arbitration Act, 1899, all references to arbitration whether by an order in a suit or otherwise, and all proceedings thereunder, shall be governed by the provisions in the Second Schedule;

and this must mean that the provisions of the Second Schedule shall apply to an arbitration except when the Arbitration Act says that they shall not. But the contention is that the Arbitration Act has no application when, as in the case before us, the submission is to more arbitrators than are contemplated by Sections 8 and 9 of the Act. It is established by In re Smith & Service and Nelson & Sons (1890) 25 Q.B.D. 545, Manchester Ship Canal Co. v. S. Pearson & Son, Ltd. (1900) 2 Q.B. 606 and Gopalji Kuverji v. Morarji Jeram I.L.R. (1919) B. 809 that the power given to the Court by Sections 5 and 6 of the English Act, and by the identical Sections 8 and 9 of the Indian Act, is confined to cases where there is a single arbitrator or but two arbitrators; see the judgment of A. L. Smith, L.J., in Manchester Ship Canal Co. v. S. Pearson & Son, Ltd. (1900) 2 Q.B. 606 But these authorities do not, nor do the later authorities In re Babaldas Khemchand I.L.R. (1919) B. 1 and Mackintosh & Co. v. Scindia Steam Navigation Co., Ltd. I.L.R. (1922) B. 250, in my opinion, support the argument that a submission ceases to be governed by the Arbitration Act by reason of the submission being to three or more arbitrators. On the contrary that proposition appears to be negatived by the judgment of Vaughan Williams, L.J., in Manchester Ship Canal Co. v. S. Pearson & Son, Ltd. (1900) 2 Q.B. 606, where he said:

In the report of In re Smith and Service (1890) 25 Q.B.D. 545 the judgments, in which it is said that Sections 4, 5 and 6 [these sections corresponding to Sections 19, 8 and 9 of the Indian Act] did not apply, must be read by the light of the argument for the appellants. It is there Said that Section 4 had no application to that case, because no legal proceedings had been taken. It is plain from this that when the learned Lords Justices said that Section 4 did not apply, it was not meant that this was because it was a case of reference to three arbitrators, but only because no legal proceedings had been commenced.

17. In short, it was pointed out that the Arbitration Act was not rendered inapplicable to a submission because in a particular instance the powers given to the Court by the Act were unavailing.

18. On the question which was raised by Mr. Sesha Aiyangar, whether the definition of 'Court' in Section 4 of the Arbitration Act is to be taken as indicating another exception to the jurisdiction conferred on the City Civil Court by Section 3 of the Madras City Civil Court Act (VII of 1892), I do not think it is necessary to give a decision;, for it is obvious that if the High Court has no power under Section 8 or 9 of the Arbitration Act to make an appointment of an arbitrator when the reference is to five arbitrators, the City Civil Court has no such power.

19. For these reasons, I agree that the appeal should succeed and be allowed.


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