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Hindustan Steel Works Construction Ltd. Vs. N.V. Chowdhury and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberMatter No. 601 of 1984
Judge
Reported inAIR1986Cal338
ActsArbitration Act, 1940 - Sections 8 and 31(4); ;Code of Civil Procedure (CPC)
AppellantHindustan Steel Works Construction Ltd.
RespondentN.V. Chowdhury and ors.
Appellant AdvocateTapas K. Banerjee and ;S.P. Mazumdar, Advs.
Respondent AdvocateA.C. Bhabra, ;B.K. Chatterjee and ;Shyamprosad Sarkar, Advs.
DispositionApplication allowed
Cases Referred(In Home Office v. Dorset Yacht Co.
Excerpt:
- orderpratibha bonnerjea, j.1. this is an application under section 8 of the arbitration act for appointment of an umpire. the petitioner entered into a contract on 22nd/23rd nov. 1982 by accepting the tender submitted by the respondent. the contract contained an arbitration clause that disputes arising out of the contract would be decided by arbitration. disputes arose and reference was made to the joint arbitrators in accordance with the agreement. by a letter dt. 13-4-84 the arbitrators intimated the petitioner that they had received the statement of claim from the respondent and called upon the petitioner to submit its counter-statement on or before 2-5-84. the petitioner alleges that the joint arbitrators entered upon the reference without appointing an umpire. the petitioner by.....
Judgment:
ORDER

Pratibha Bonnerjea, J.

1. This is an application under Section 8 of the Arbitration Act for appointment of an umpire. The petitioner entered into a contract on 22nd/23rd Nov. 1982 by accepting the tender submitted by the respondent. The contract contained an arbitration clause that disputes arising out of the contract would be decided by arbitration. Disputes arose and reference was made to the joint arbitrators in accordance with the agreement. By a letter dt. 13-4-84 the arbitrators intimated the petitioner that they had received the statement of claim from the respondent and called upon the petitioner to submit its counter-statement on or before 2-5-84. The petitioner alleges that the joint arbitrators entered upon the reference without appointing an umpire. The petitioner by letter dt. 23-4-84 pointed out to the joint arbitrators that they did not appoint an umpire before entering upon the reference and requested them to appoint the umpire. It is alleged that in spite of such notice, the joint arbitrators did not appoint any umpire. Hence the present application was taken out on 30-5-85. The petitioner has invoked the jurisdiction of this Court on the ground that the tender submitted by the respondent was accepted by the petitioner at its office at No. 1, Shakespeare Sarani, Calcutta-700 071, situate within the jurisdiction of this Court. In short the petitioner alleges that the contract was concluded within the jurisdiction and as such part of the cause of action arose within the local limits of this court. The respondent in the present case, has taken a preliminary objection that the jurisdiction of this Court has been invoked on the ground that part of the cause of action has arisen within the jurisdiction but the rest has arisen outside. Therefore this application could not have been made in this court without first obtaining leave under Clause 12 of the Letters Patent and as such this application must be rejected in limine. In support of his contention, the respondent's counsel Mr. Bhabra, strongly relies on our Division Bench judgment reported in : AIR1984Cal24 (Tobu Enterprises Pvt. Ltd. v. Cameo Industries Ltd.). This case requires a careful consideration. The facts of this case were that on 25-1-84 this Court granted leave under Clause 12 of the Letters Patent to the respondent to make an application under Section 20 of the Arbitration Act 1940. The said application was registered as Special Suit No. 3A of 1983. The respondent Tobu Engineering preferred an appeal against the order dt. 25-1-83 granting leave under Clause 12 of the Letters Patent. The respondent in this appeal raised an objection that the appeal was not maintainable under Section 39(1) of the Arbitration Act as the order granting leave under Clause 12 of the Letters Patent must be treated as an order passed under the Arbitration Act on account of the provisions of Sections 2(c) and 31(2) of the Act. The question, therefore, arose whether the order dt. 25-1-83 was passed under the Arbitration Act or only under Clause 12 of the Letters Parent. If that order was under Clause 12 only then Section 39(1) of Arbitration Act will have no application and the order will be appealable. The Appeal Court rejected the contention of the respondent that the order dt. 25-1-83 was passed under the Arbitration Act and held in para 9 at page 21:--

'It is difficult for us to accept the contention of the respondent that an order under Clause 12 of the Letters Petent is an order under the Arbitration Act. Neither Section 31 nor Section 2(c) refers to Clause 12 of the Letters Patent. The question of passing any order under the Arbitration Act will arise after leave under Clause 12 is granted enabling a party to file an application under Section 20 of the Arbitration Act So long as the leave is not granted there is no proceeding before the court under the Arbitration Act and as such there can be no order under the Arbitration Act.'

2. It was further argued in that case on behalf of the respondent, that the jurisdiction of this High Court to entertain an application under the Arbitration Act depended wholly on the provisions of Section 2(c) and Section 31 (1) and (2) of the Arbitration Act and not on Clause 12 of the. Letters Patent and as such no leave under Clause 12 of the Letters Patent would be necessary to make an application under the Arbitration Act on the ground that only a part of the cause of action arose within the jurisdiction. The respondent's counsel, in support of his contention had cited : AIR1963Cal642 (Rebati Ranjan Chakraborty v. Suranjan Chakravarti). It was an appeal before Sinha and Dutta JJ. In this case Sinha J. held that the appeal was not maintainable and as such he did not decide the question of jurisdiction and/or whether leave under Clause 12 of the Letters Patent would be necessary to make an application under Section 20 of the Act on the ground that a part of the cause of action had arisen within the jurisdiction of that court. But Dutta J. held : --

'Clause 12 of the Letters Patent does not determine the jurisdiction of the Court but Section 2(c) read with Section 31 does it, and in so doing Section 2(c) indirectly incorporates the provisions of the Letters Patent. To put it differently, Cl, 12 of the Letters Patent cannot determine the jurisdiction but for Section 2(c) read with Section 31. Hence jurisdiction of the court to entertain an application for appointment of Receiver and/or Award does not flow from the Letters Patent but springs from Section 31 read with Section 2(c) which by reference attracts Clause 12 of the Letters Patent..... In this view of the matter it is immaterial to consider whether it is necessary in order to find jurisdiction in the High Court that a part of the cause of action should arise within the local limits of jurisdiction and further in such a case leave should be taken before filing the plaint or it is sufficient if a part of cause of action only arises within the local limits of the jurisdiction.'

3. Dealing with Dutta J.'s observation in : AIR1963Cal642 , the Division Bench in : AIR1984Cal24 observed in para 12 as follows : --

'While it is true that Section 2(c) read with Section 31 of Arbitration Act determines the jurisdiction of the Court, most respectfully we beg to differ with the observation of the learned Judge that Section 2(c) indirectly incorporates the provisions of the Letters Patent or that it attracts Clause 12 of the Letters Patent. Consequently, we are unable to subscribe to the view of the learned Judge that it is immaterial whether part of the cause of action should arise within the jurisdiction of this court or leave under Clause 12 should be taken or not.'

4. The Division Bench also gave their reasons for differing with the view taken by Dutta J. by analysing the scope and effect of Sections 2(c) and 31 (1) and (2) of the Arbitration Act in manner stated in para 13 of the report. The reasonings are as follows : --

'The word 'questions' in Section 2(c) is significant to be noticed. Section 2(c) enjoins that the civil court should have jurisdiction to decide the 'questions' that is to say all the questions forming the subject matter of a reference. It, therefore, follows that if, in a given case, the civil court has not the jurisdiction to decide all the questions, but only one or some of the questions forming the subject matter of a reference that particular civil court will not have jurisdiction in terms of Section 2(c). Similarly, under Sub-sections (1) and (2) of Section 31 of the Arbitration Act, a court not having jurisdiction in the matter to which the reference relates in a particular case, will have no jurisdiction to decide the questions referred to in Sub-section (2). Here also the word 'matter' in Sub-section (1) refers to, the entire matter and not part of it. In view of, however, of the provision of Sections 17, 19 or 20 of the Civil P.C., such a situation create no difficulty in filing a suit in a Civil Court.'

5. It is, therefore, clear that according to this Division Bench, the word 'Court' under Section 2(c) and Section 31(1)(c) of the Arbitration Act must be a civil court having jurisdiction to deal with the 'entire subject matter of the reference' and not part thereof. It should be a court, within whose jurisdiction, the entire cause of action has arisen. Therefore, this Division Bench further held that Sections 2(c) and 31(1)(2) of the Arbitration Act attract civil courts Under Sections 17, 19 or 20 of the Civil P.C. because such courts can entertain and try the entire suit even though they have jurisdiction over only part of the cause of action thereof. No other formality will have to be observed for filing such suits in these courts but so far as this High Court is concerned, the position is different. Clause 12 of the Letters Patent requires leave for filing a suit in this court. Under Clause 12, unless leave is obtained first, no suit can be filed in this court on the basis that part of the cause of action has arisen within its local limits. Only after granting the leave under Clause 12, this High Court gets jurisdiction to try the entire suit and not otherwise. Therefore Sections 2(c) and 31(1) and (2) of Arbitration Act do not attract a chartered High Court like ours. Sections 2(c) and 31 (1) and (2) do not bring within their purview a court which has jurisdiction only over part of the cause of action in respect of an application under the Arbitration Act.

6. Unfortunately the attention of the Division Bench was not invited to the provisions of Section 31(4) of the Arbitration Act which is set out below for convenience :

'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 proceedings and all other subsequent applications arising out of that reference and the arbitration proceeding shall be made in that Court and in no other court.'

7. The reference of 'no other court' in sub- Section 31(4) will clearly establish that this sub-section contemplates a situation where two or more courts have jurisdiction in respect of an application and when the application is made in any of such courts first in order of time, then that court will be fixed with the exclusive jurisdiction and all other courts which otherwise are entitled to entertain the application, will be divested of their jurisdiction in the matter. This sub-section has overriding effect over other provisions of the Arbitration Act and over all other laws for the time being in force. This sub-section also provides that an application can be made in a court which has jurisdiction over part of the cause of action in the matter and such court is described in the sub-section as 'competent Court'. Therefore Section 2(c) and Section 31 (1), (2), (3) and (4) also include a Court which has jurisdiction over part of the cause of action. The Division Bench's finding that Section 2(c) and Section 31(1) and (2) only refer to the Court which has jurisdiction over the whole of the cause of action as laid down in : AIR1984Cal24 is contrary to the provisions of Section 31(4) of the Act. It is true that Section 2(c) or Section 31 does not expressly refer to Clause 12 of the Letters Patent, but in my opinion, when the Arbitration Act 1940, itself has made provisions regarding jurisdiction of civil courts for trying applications under the Arbitration Act, with overriding effect over all other laws in force, then there is no occasion for taking recourse to the provisions of the Civil P.C. or Clause 12 of the Letters Patent. In (1948) 52 Cal WN 224 (R. Wright v. Governor General in Council) one party had made an application Under Section 33 of the Arbitration Act for staying an arbitration proceeding on the ground that there was no dispute in existence and as such the Arbitrator had no jurisdiction to proceed in the matter. This application was allowed and an appeal was preferred. Before the Appeal Court it was contended that no appeal would lie under Section 39 of the Arbitration Act from an order allowing an application u/S 33 of the Act. The appellant contended that if the appeal was incompetent under Section 39 of the Arbitration Act, the appeal could still be entertained by this chartered High Court under Clause 15 of the Letters Patent. It was, however, held, that the provisions of the Letters Patent being subject to the legislative powers of the Governor General in Council, under Clause 44 of the Letters Patent, the provisions of Section 39 of the Arbitration Act would prevail over the provisions of Clause 15 of the Letters Patent and the appeal would be incompetent under Section 39 of the Act. It would be significant to note that in : AIR1984Cal24 , R. Wright's case was not considered although the Division Bench thoroughly considered : AIR1963Cal642 where Sinha J. had elaborately dealt with R. Wright's case for coming to his finding that order passed under Section 41 of the Arbitration Act was not appealable under Section 39 of the Act. In : AIR1963Cal642 , Sinha J. held:--

'The Arbitration Act 1940 was a Special Act and therefore controlled the general right of appeal given by Clause 15 of the Letters Patent.'

Clause 44 of Letters Patent is set out below :--

'And we do further ordain and declare that all the provisions of these our Letters Patent are subject to the legislative powers of the Governor General in legislature..... and may be in all respect be amended and altered thereby.'

8. The provisions of Section 31(4) and Clause 44 of the Letters Patent, when read together, will leave no doubt, that Section 31(4) will prevail over Clause 12 of the Letters Patent and this Court as a Civil Court having jurisdiction over part of cause of action in an application under the Arbitration Act will be entitled to entertain such an application under the provisions of the Arbitration Act itself without taking recourse to Clause 12 of the Letters Patent because Clause 12 is subject to the provisions of Section 31(4) of the Act.

9. The Division Bench having already decided that a 'Court' under Sections 2(c) and 31 (1) and (2) must be a court having jurisdiction over the entire cause of action, in the matter, a court which has jurisdiction over part of it must derive its jurisdiction either from the Civil P.C. Under Section 17, 19 or 20 or from Clause 12 of the Letters Patent. Arbitration Act does not make any provision to meet this situation. The Division Bench, therefore, came to the conclusion : --

'So long as such leave is not obtained this court will not have jurisdiction to entertain or try the suit and consequently in terms of Section 2(c) read with Section 31 of the Arbitration Act, also an application under Section 20 of the Arbitration Act. Neither Section 2(c) nor Section 31 dispense with the obtaining of leave under Clause 12 of the Letters Patent. In the circumstances, it is not possible to say that Section 2(c) indirectly incorporates or attracts the provisions of Clause 12 of the Letters Patent as observed by Dutta J.'

10. If the attention of the Appeal Courtwas invited to the words 'Court competent toentertain' contained in Section 31(4) of the Act aswell as its overriding effect and Clause 44 of theLetters patent, there was every possibility thatthe Division Bench would have come to adifferent conclusion altogether. In my opinion,this High Court, in its ordinary original civiljurisdiction, in Arbitration matters, derives itsentire jurisdiction only from the ArbitrationAct itself, irrespective of the fact whether thiscourt has jurisdiction over the whole of thecause of action or the part thereof. That is whyDutta J. held in : AIR1963Cal642 :--

'Hence the determination of the existence or non-existence of jurisdiction of a court to entertain an application under the Arbitration Act is conditioned by Section 2(c) and Section 31 of the Act and is consequently under this Act.'

11. But while saying so, Dutta J. did not deal with the provisions of Section 31(4) or Clause 44 of the Letters Patent specifically in the judgment. As a result, the attention of the Appeal Court, while considering : AIR1963Cal642 , was not drawn to the provisions of Sub-section 31(4) or Clause 44. The counsel for the parties to the appeal in Tobu Enterprises : AIR1984Cal24 also did not invite the Appeal Court's attention to these provisions. As a matter of fact, the Division Bench did not have any opportunity or occasion to deal with this Sub-section 31(4) of the Arbitration Act or Clause 44 of the Letters Patent in this appeal. Moreover, the Division Bench was very much concerned and swayed by the words 'if the same had been the subject matter of a suit' contained in Section 2(c) of the Act. It came to the conclusion that leave would be necessary in case the court has jurisdiction over the part of the cause of action only and as no suit could be filed without the leave, no application under the Arbitration Act under the similar circumstances could be entertained without leave under Clause 12 of the Letters Patent. The analogy of 'suit' given in Section 2(c) of the Arbitration Act, only gives us a guideline to find out the right court. The word 'suit' acts as an indicator and points out which court will be competent court to entertain the application under the Act. Section 2(c) cannot treat an 'application' under the Act as a 'suit' because a 'suit' is barred under Section 32 of the Arbitration Act. Hence an application under the Arbitration Act remains an 'application'. As a matter of fact, if a civil suit is filed covering the subject matter of an arbitration agreement, the Act provides that the said suit can be stayed under Section 34 of the Arbitration Act. The Arbitration Act, with all emphasis, prohibits a suit. Therefore, it cannot be contended that the Arbitration Act intended that an application under this Act and a civil suit should be treated on the same footing. In : AIR1966Cal259 (S. P. Consolidated Engineering Co. Pvt. Ltd. v. Union of India) it was contended that for filing a Special Suit under Section 20 of the Arbitration Act in this High Court on the basis of the part of the cause of action arising within the local limits of this court, leave under Clause 12 of the Letters Patent would be necessary. This Court rejected the contention and held at page 266:--

'.....I am unable to accept Mr. Sen's contention that leave under Clause 12 is imperative under Section 20 of the Act even though such a proceeding may well be characterised as a suit.'

12. This view of : AIR1966Cal259 was accepted in : AIR1981Cal202 (Das Consultants Pvt. Ltd. v. N. M. D. Corpn. Ltd.) and in para 7 of this case it was held that for filing an application under Arbitration Act:

'If part of the cause of action had arisen within the jurisdiction of the court, then proceeding can be instituted in this court and in that event leave under Clause 12 of the Letters Patent was not necessary.'

The aforesaid observations were made on the ground that the applications under the Arbitration Act were not suits.

13. The learned Judges of the Division Bench while agreeing with the aforesaid two cases that applications under the Arbitration Act are not suits, however, held at page 39 : --

'.....It is true that the application under Sec. 20 of the Arbitration Act is not a suit but the jurisdiction of the court will have to be decided on the basis that if it had been a suit, whether the court would have jurisdiction to entertain and try the suit. This is manifestly clear from the provisions of Sections 2(c) and 31 of the Arbitration Act.'

The Division Bench has overruled : AIR1981Cal202 and : AIR1966Cal259 and reversed the decision of Dutta J. in : AIR1963Cal642 .

14. I am quite aware of the fact that this decision of the Hon'ble Appeal Court is binding on me. But wiih greatest respect, I beg to differ with the view taken by the learned Judges of the Division Bench on the ground, that in arriving at the decision reported in : AIR1984Cal24 , the learned Judges did not have any opportunity or the occasion to consider the provisions of Section 31(4) of the Arbitration Act as well as Clause 44 of the Letters Patent and that was why the Division Bench came to the finding that unless leave under Clause 12 of the| Letters Patent would be obtained first as is done in case of a suit where the court had jurisdiction over part of cause of action only, an application under the Arbitration Act would not be maintainable without leave if the same would be filed in this court on the basis that a part of the cause of action arose within its local limits. This principle was laid down by the Division Bench on this point without consideration of Section 31(4) and Clause 44 of the Letters Patent, and therefore is distinguishable. It has been observed in some cases that where leave under Clause 12 is necessary, leave is the 'foundation of the jurisdiction' of the court to try the matter, what does it mean? Does it mean that without leave, this court lacks inherent jurisdiction? In my opinion, leave cannot be the 'foundation of jurisdiction'. Such expressions are loosely made. Unless this court has inherent jurisdiction over part of the cause of action in the suit this court cannot grant leave under Clause 12. Therefore, the existence of inherent jurisdiction of the court over the suit must be admitted before leave is obtained. Hence leave cannot be the foundation of jurisdiction. Testing from another angle, the theory that 'leave is the foundation of jurisdiction' seems baseless and absurd. Certainly, it cannot be contended that this court by granting leave confers upon itself the jurisdiction to try the suit and can again divest itself of this jurisdiction by revoking the leave. It is an absurd proposition to suggest that a civil court has discretion of conferring jurisdiction upon itself and also divesting itself of it. In my opinion, by granting leave, the court only exercises its discretion to take up the whole suit. The leave is also a condition precedent which must be fulfilled before the suit is filed. This discretion is to be exercised by this court judicially after considering many factors. Generally 'leave' is granted ex parte but if the other side prays for revocation of the leave, the court has to consider the question or balance of convenience of the parties, whether the suit would be oppressive or would cause hardship or injustice to the defendant and so on and so forth. Upon consideration of the above aspects of the matter, this court then decides either to retain the order of leave or to revoke the same. In case of revocation, the parties will thereafter be free to follow any other legal recourse open to them and to seek redress from any other court having jurisdiction in the matter. But that cannot be done, if the provisions of Section 31(4) come into operation. Assuming for the sake of argument that leave under Clause 12 is necessary in Arbitration applications then what would be the result? Then once this court grants leave to apply and the application is made, this court will automatically be fixed with the exclusive jurisdiction Under Section 31(4) of the Act and all other courts, which have jurisdiction in the matter will lose the same. In such a case, even if the exparte leave given to the applicants causes oppression, hardship or injustice to the respondent in the balance of convenience is against retaining the matter in this court, still this court will have to retain it. This court will have no jurisdiction to revoke the leave as Section 31(4) does not provide that on revocation of the leave, the jurisdiction of the other courts will be revived. Once a court is vested with the exclusive jurisdiction the other courts would be completely divested of their jurisdiction for good. Under the circumstances if this court refuses to take up the matter, the parties will be without any remedy. Take another instance. If the parties agree to a forum selection clause but in breach of such agreement one party files a suit in the 'excluded' court, then the excluded court can return the suit for filing the same in the agreed court. In case of this High Court, if the leave has been given, then the court will revoke the leave to give effect to the agreement which is binding on the parties. But consider .what will happen in case of the arbitration application, filed in this High Court. Due to operation of Section 31(4), this court having vested with the exclusive jurisdiction in respect of the matter cannot revoke the leave. The jurisdiction of the agreed court will be totally lost as has been held in : [1982]1SCR842 . There will be no court where the party can go to seek redress. The effect of Section 31(4) on forum selection clause was not considered in Hakam Singh's case in : [1971]3SCR314 or in : AIR1984Cal24 . There is also glaring difference between the scope and effect of the provisions of Clause 12 and Section 31(4). If leave under Clause 12 is obtained for filing a suit all other courts having jurisdiction over the suit retain their jurisdiction. A defendant in such a case can file a cross-suit in any other court having jurisdiction on the basis of the same cause of action. Both these suits will be good suits but the subsequent suit can be stayed Under Section 10 of C.P.C. or can be transferred under Clause 13 of the Letters Patent, if the first suit is filed in this High Court. No such thing is possible when Section 31(4) of Arbitration Act operates. All subsequent applications made in other courts would be without jurisdiction. The legal incidents and consequences, of leave under Clause 12 of the Letters Patent and the provisions of Section 31(4) are so conflicting and contradictory to each other that both cannot be made applicable to the same case. Under the circumstances, it is not possible to hold Clause 12 of the Letters Patent as well as Section 31 (1), (2), (3) and (4) govern the arbitration application. It is therefore, evident that provisions of 'leave' under Clause 12 and Section 31(4) were enacted for entirely different purposes. The whole object or legal consequences of Clause 12 of the Letters Patent will be rendered useless and inoperative if the provisions of Section 31(4) of the Arbitration Act are sought to be made applicable to the same case. The High Court's discretion to revoke the leave will be completely lost. Moreover the provisions of Section 31(4) due to its overriding effect, cannot be bye-passed or ignored in any manner whatsoever and must prevail over Clause 12 of the Letters Patent. These are the factors which will sufficiently indicate that the jurisdiction of this High Court in Arbitration matters is quite independent of Clause 12 of the Letters Patent. In humble disagreement with the decision of the Hon'ble Appeal Court, I hold that Clause 12 of the Letters Patent does not govern the applications under the Arbitration Act. Section 31(4) overrides Clause 12 by virtue of the provisions of Clause 44 of the Letters Patent. In any event, this decision of the Appeal Court must remain confined t6 the application under Section 20 of the Act only. This I say, on the ground that the Supreme Court itself has conflicting views regarding the nature of Section 20 application. In : [1970]1SCR351 (Union of India v. Surjeet Singh Alwal) the Supreme Court Bench consisting of three Judges held that Section 8 and Section 20 applications would come within the scope of Section 31(4) of the Act whereas in : [1982]1SCR842 (Guru Nanak Foundation v. Raltan Singh & Sons) the Supreme Court Bench consisting of two Judges held that Section 20 application did not come under Section 31(4) of the Act. It is desirable that the law on this point should be settled. I have already dealt with this aspect in my judgment delivered on 3-5-85 in Matter No. 369 of 1983 (reported in : AIR1986Cal80 ) (Ramkripal Sharma v. Union of India).

15. It may be contended that in : AIR1984Cal24 , the Appeal Court while interpreting Section 2(c) and Section 31 (1) and (2) of Arbitration Act, did not consider the same only from the point of view of Section 20 application but considered their general effect and its findings are applicable to the whole of the Arbitration Act. As the single Bench, this court is bound to follow the view taken by the Appeal Court. I have already pointed out that in my opinion, the decision of the Appeal Court can be distinguished on the ground that it did not consider at all the provisions and the overriding effect of Section 31(4) of the Act as well as Clause 44 of the Letters Patent. Moreover, the Supreme Court in : [1985]2SCR72 (Amamath Om Prakash v. State of Punjab) pointed out how to read and apply the principles laid down in a judgment as will appear from para 11 of the report : --

'..... observations of the learned Judge are not to be read as Enclid's theorems, nor as provisions of the Statute ..... We consider it proper to say, as we have already said in other cases, that judgments of courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for Judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words or a statute, their words are not to be interpreted as statutes.'

16. In that case the Supreme Court also quoted with approval the observation of Lord Ried in (1970) 2 All ER 294 (In Home Office v. Dorset Yacht Co.) :

'Lord Athin's speech ..... is not to be treated as if it was a statutory definition. It will require qualification in new circumstances.'

17. These observations of the Supreme Court will apply in full force on the facts and circumstances of this case. The observations of the Appeal Court regarding Section 2(c) and Section 31 (1) and (2) as well as Clause 12 of Letters Patent in : AIR1984Cal24 will require qualification and fresh interpretation under the new circumstances when considered in the light of the provisions of Section 31(4) of the Arbitration Act read with Clause 44 of the Letters Patent.

18. The second point taken by the respondent is that the present application is premature. According to the respondent, the joint arbitrators were to appoint the umpire within one month from the last date of appointment of the Arbitrator under Rule 2 of the 1st schedule of the Arbitration Act. In the present case last date of appointment pf Arbitrator was 6-4-84. One month would expire on 5-5-84. Therefore notice Under Section 8 of the Act for appointment of Umpire should have been given after 5-5-84 but notice was given on 23-4-84, before expiry of one month. Hence this application must be rejected. On the other hand, the petitioner's counsel submits that the arbitration agreement between the parties provides 'Umpire to be appointed by the Arbitrators in writing before proceeding on the reference'. In view of this express agreement, that Umpire should be appointed before the Arbitrators would enter upon the reference, the provisions of Rule 2 of the 1st, schedule of the Act would not be applicable by virtue of the operation of Section 3 of the Arbitration Act which is as follows : --

'An arbitration agreement unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference.'

19. It is contended that in this case, appointment of Umpire ought to have been made prior to 13-4-84 when the Joint Arbitrators informed the petitioner that they had already received the statement of fact and directed the petitioner to file its counter statement. The Joint Arbitrators, proceeded with the reference without appointing an umpire in violation of the express provision of the agreement and committed the default. The notice dt. 23rd April 1984 was a valid notice perfectly in accordance with the provision of Section 8 of the Act. I accept this submission of the petitioner's counsel.

20. In that view of the matter, I hold that this application is maintainable. I, appoint Mr. Justice Salil Kumar Roy Chowdhury, a retired Judge of this High Court as the sole Umpire. In case of disagreement between the Joint Arbitrators, he will enter upon the reference. His remuneration is fixed at 60 Gms. per each effective sitting irrespective of hours. He will be entitled to engage a stenographer, an interpreter and a clerk and their remunerations are to be fixed at the meeting of the parties. The Umpire, however, will be entitled to retain the stenographer, interpreter and clerk, already appointed by the Joint Arbitrators, if he thinks fit. He will make his award within 6 months from the date of his entering upon the reference. The cost of this application will be cost in the Arbitration proceeding. All parties, the Joint Arbitrators and the Umpire to act on a signed copy of the minutes of this order. This signed copy of the order to be served on the arbitrators and the umpire within three weeks from date. In default the order will stand vacated.


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