Skip to content


Sachidanand Mishra Vs. Gopalka Auto Finance and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration;Civil
CourtKolkata High Court
Decided On
Case NumberC.R. No. 2826 of 1978
Judge
Reported inAIR1986Cal294,89CWN1182
ActsArbitration Act, 1940 - Sections 2, 31, 31(2), 33, 34 and 40
AppellantSachidanand Mishra
RespondentGopalka Auto Finance and anr.
Advocates:Raj Grihi Ram, Adv.
Excerpt:
- .....must be presumed that the contention of the petitioner against the existence or genuineness of the arbitration agreement was impliedly overruled by that court. the learned judge, 9th bench, city civil court, calcutta accepted the said contention of the opposite party no. 1 and held that the application under section 33 of the act was barred by the principles analogous to res judicata. in view of the said finding, the learned judge dismissed the said application and the said misc. case no. 235 of 1977 arising therefrom. hence this rule.5. it is submitted by mr. raj grihi ram, learned advocate appearing on behalf of the petitioner that the presidency small cause court, calcutta has no jurisdiction to decide as to the existence or validity of an arbitration agreement and, as such, the.....
Judgment:

M.M. Dutt, J.

1. This Rule raises a short but interesting point Before, however, we indicate the point, it is necessary to state the facts of the case which lie in a narrow compass.

2. The petitioner has instituted a suit being Suit No. 2380 of 1974 in the Presidency Small Cause Court, Calcutta against the opposite party No. 1, Gopalka Auto Finance, for the realisation of the sura of Rs. 2,135/- alleged to have been paid by the petitioner to the opposite party No. 1 in excess of the amount due under the hire purchase agreement entered into by the parties in connection with financing a vehicle. The opposite party No. 1 entered appearance in the said suit and filed an application under Section 34 of the Arbitration Act, 1940, hereafter referred to as 'the Act', praying for the stay of the said suit alleging, inter alia, that the hire purchase agreement contained an arbitration clause, whereby the parties had agreed to refer their disputes to arbitration. The learned Judge, 4th Bench, Presidency Small Cause Court, Calcutta, after hearing the parties, allowed the said application under Section 34 of the Act and stayed the suit by his order dated November 19, 1976.

3. Thereafter, the petitioner filed an application under Section 33 of the Act before the learned Chief Judge, City Civil Court, Calcutta, challenging the existence and genuineness of the alleged agreement andcharacterising the same as a piece of fraud and forgery. The application under Section 33 was registered and numbered as Misc. Case No. 235 of 1977. The said Misc. Case, on transfer, eventually came up for hearing before the learned Judge, 9th Bench, City Civil Court, Calcutta.

4. At the hearing of the application under Section 33 of the Act, it was contended on behalf of the opposite party No. 1 that the application was barred by res judicata or principles analogous thereto. It was submitted on behalf of the opposite party No. 1 that as the said suit was stayed by the Presidency Small Cause Court, Calcutta under Section 34 of the Arbitration Act, it must be presumed that the contention of the petitioner against the existence or genuineness of the arbitration agreement was impliedly overruled by that Court. The learned Judge, 9th Bench, City Civil Court, Calcutta accepted the said contention of the opposite party No. 1 and held that the application under Section 33 of the Act was barred by the principles analogous to res judicata. In view of the said finding, the learned Judge dismissed the said application and the said Misc. Case No. 235 of 1977 arising therefrom. Hence this Rule.

5. It is submitted by Mr. Raj Grihi Ram, learned Advocate appearing on behalf of the petitioner that the Presidency Small Cause Court, Calcutta has no jurisdiction to decide as to the existence or validity of an arbitration agreement and, as such, the doctrine of res judicata or the principles analogous thereto have no manner of application, even assuming that the contention relating to the existence or to the genuineness of the arbitration agreement was impliedly overruled.

6. In order to adjudicate upon the point, it is necessary to refer to some of the provisions of the Arbitration Act, Section 2(c) of the Act defines 'Court' as meaning a Civil Court having jurisdiction to decide the questions forming the subject matter of the reference if the same had been the subject matter of a suit, but does not, except for the purpose of arbitration proceedings under Section 21, include a Small Cause Court.

7. Thus under Section 2(c), except for the purpose of Section 21 of the Act relating to the agreement of all the parties to refer anymatter in difference to arbitration, a Small Cause Court is not a Court for any other purpose under the Act.

8. The next provision which is relevant for our purpose is Section 31 of the Act which runs as follows :

'31(1). Subject to the provisions of this Act an award may be filed in any Court having jurisdiction in the matter to which the reference relates.

(2) Notwithstanding anything contained in any other law for the time being in force and save as otherwise provide in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been, or may be, filed, and by no other Court.

(3) All applications regarding the conduct of the arbitration proceedings or otherwise arising out of such proceedings shall be made to the Court where the award has been, or may be, filed, and to no other Court.

(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference any application under this Act has been made in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceeding and all subsequent applications arising out of that reference and the arbitration proceeding shall be made in that Court and in no other Court.'

9. In view of Sub-section (2) of Section 31 of the Act, all questions regarding the validity, effect or existence of an arbitration agreement shall be decided by the Court in which the award under the agreement may be or has been filed and by no other Court. In the instant case, there can be no doubt that if any award is made on the alleged agreement, it cannot be filed in the Presidency Small Cause Court, Calcutta, for it would be an award made in a proceeding for arbitration without the intervention of Court. So, the Presidency Small Cause Court, Calcutta has no jurisdiction to decide any such questions as specified in Sub-section (2) of Section 31 of the Act.

10. But the point is whether, in the instantcase, the Presidency Small Cause Court, Calcutta, could decide or had impliedly decided the question as to the existence of the alleged agreement in disposing of the application under Section 34 of the Act. It is not disputed on behalf of the petitioner that an application under Section 34 is maintainable before a Small Cause Court. There can be no doubt that the condition precedent to the grant of stay of a suit under Section 34 of the Act is the existence of a valid arbitration agreement. Thus where an application under Section 34 is opposed by the plaintiff challenging the existence or validity of the arbitration agreement, it will be incumbent upon the Small Cause Court like any other Court to decide the objection as to the existence or validity of the arbitration agreement in disposing the application. If the Small Cause Court comes to the finding against the existence or validity of an arbitration agreement, it has no other alternative than to dismiss the application under Section 34 of the Act.

11. In the instant case, the learned Judge, 4th Bench, Presidency Small Cause Court, Calcutta has not decided anything as to the existence or validity of the alleged arbitration agreement, presumably because no objection in that regard was taken by the petitioner to the maintainability of the application under Section 34 of the Act We are, however, in agreement with the learned Judge, 9th Bench, City Civil Court, Calcutta, that even without any finding in that regard by the Presidency Small Cause Court, Calcutta, it shall be assumed that the order for stay of the suit also involves an implied decision in favour of the existence and validity of the arbitration agreement.

12. But whether the decision of the Small Cause Court is express or implied relating to the existence or validity of an arbitration agreement on an application under Section 34 of the Act, is quite immaterial, for such a decision cannot bar an application under Section 33 of the Act filed before a competent Civil Court either on the doctrine of res judicata or principles analogous thereto. The simple reason is that the Small Cause Court has no jurisdiction to decide any of the questions as to the existence or validity of an arbitration agreement. Its finding on the said questions, if raised in connection with an application underSection 34 of the Act, is merely an incidental finding. Such a finding has no ultimate binding force, and will be liable to be set aside as soon as any contrary finding is made by a competent Court on an application under Section 33 of the Act at the instance of any of the parties to the alleged agreement. In such circumstances, the proper procedure for the Small Cause Court will be, on an application being made by the party succeeding in the application under Section 33, to recall its order staying the suit, dismiss the application under Section 34 of the Act and proceed with the hearing of the suit on merits in accordance with law. AH this, the Small Cause Court will do in the exercise of its inherent power for ends of justice.

13. In the circumstances, we set aside the impugned order of the learned Judge, 9th Bench, City Civil Court, Calcutta, and direct the learned Judge to dispose of the petitioner's application under Section 33 of the Act on merits.

14. The Rule is made absolute. There will, however, be no order for costs.

Jitendra Nath Chaudhuri, J.

15. I agree.


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