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P.C. Ray and Co. (India) Pvt. Ltd. Vs. Union of India (Uoi) - Court Judgment

LegalCrystal Citation
SubjectArbitration;Civil
CourtKolkata High Court
Decided On
Case NumberAppeal No. 278 of 1970, Award No. 428 of 1961 and Matter No. 126 of 1970
Judge
Reported inAIR1971Cal512
ActsArbitration Act, 1940 - Section 17; ;Code of Civil Procedure (CPC) , 1908 - Section 11
AppellantP.C. Ray and Co. (India) Pvt. Ltd.
RespondentUnion of India (Uoi)
Advocates:Choudhury, Adv.
DispositionAppeal dismissed
Cases ReferredRajani Kumar Mitra v. Aimaddin Bhuiya
Excerpt:
- .....guaranteed) is barred by the principles analogous to res judicata, not being a jurisdictional issue, the arbitrators in the second reference in our opinion, are entitled to entertain, try and adjudicate upon the same. principles of res judicata as principles of general law are applicable to arbitration proceedings as well as awards. an award if valid is in fact a final adjudication by a competent forum chosen by the parties themselves and until setaside is conclusive upon the merits of the controversy submitted. an award will operate as res judicata in subsequent proceeding between the parties either in court or before the arbitrators unless the arbitrators in making the said award had acted without jurisdiction. (see (1807) 14 ind app 125 (pc)).17. in the first arbitration the.....
Judgment:

Ghose, J.

1. This appeal is directed against the judgment and order dated Septemher 1, 1970 delivered and passed by Masud, J. on an application made by the appellant. In the application the appellant claimed mainly super-session of an arbitration agreement contained inthe agreement dated August 31, 1951 between the appellant and the respondent. The appellant in the said application also prayed for a declaration that the Arbitrators appointed by the parties in terms of the arbitration agreement contained in the said agreement dated August 31, 1951 have no jurisdiction to proceed with the reference on the ground that the issues involved before the Arbitrators are barred by principles analogue to res judicata in view of an Award made in a previous reference between the parties on the basis of the very same arbitration agreement. The appellant also in the petition prayed for an injunction restraining the Arbitrators from proceeding with the reference.

2. In the appeal before us Mr. Chaudhury appearing on behalf of the appellant has pressed only two of the reliefs claimed before the learned Judge of the Court of the first instance, viz., for an injunction restraining the Arbitrators from proceeding with reference and a declaration that the Arbitrators have no jurisdiction to proceed with the reference before them. In the appeal the rest of the judgment and order of Masud, J. was not touched upon. The prayers for declaration that the Arbitrators had or has no jurisdiction to proceed with the reference and injunction restraining them from proceeding with the reference are connected with each other although in the main application before Masud, J. the prayer for injunction seems to have been made as and by way of consequential relief to the main relief of super-session of the arbitration agreement or revocation of the authority of the appointed Arbitrators. The facts leading to the making of the application before Masud, J. are set out hereunder:

3. By a contract dated August 31, 1951 executed by and between the appellant and the respondent Union of India, the appellant was granted exclusive rights to cut, fell and extract timber from the forests in the North Andamans for a period of 25 years on the terms and conditions contained in the said contract.

4. Pursuant to the said contract the appellant commenced to fell and extract timber from the said forests. In or about 1961 the appellant referred certain disputes between itself and the Union of India to the arbitration of one Mr. R. Singh, a retired Judge of Allahabad High Court and one Mr. A. N, Lahiri, a retired member of the West Bengal Higher Judicial Service as Arbitrators appointed by the parties in terms of the arbitration agreement contained in the aforesaid contract. In the said arbitration the respondent Union of India made a counter claim for a sum exceeding Rs. 2 crores on account of royalty on the basis of shortfall in felling timber below the minimum guaranteed quantity by the appellant in terms of the said agreement dated August 31, 1961.

5. By and under the said agreement the appellant, inter alia, covenanted to cut, fell and extract timber of different kinds and different quantities in various areas as set out in Clause 6 of the said contract. The said guarantee given by the appellant under the said term of the said contract was subject to force majeure and availability of quantities and qualities of timber mentioned in Clauses 4 and 5 of the said contract between the parties. It should be noted here that only the disputes between the parties between 1951 and March 1961 were referred to the Arbitrators in the aforesaid first reference. In the aforesaid first reference an issue was raised by the Arbitrators, inter alia, as follows:--

'Is the Government entitled to claim royalty on shortfall? If so, how much?' In the Award made and published by the Arbitrators in the said reference the Arbitrators held, inter alia, that ''we are of opinion that the Government is not entitled to claim any royalty on account of shortfall in this case.'

6. In or about 1964 the respondent referred the disputes with regard to its claim for royalty on account of shortfall in felling timber below the guaranteed quantity for the years 1961-62 to 1962-63 to arbitration again. Initially said Mr. R. Singh (since deceased) and Mr. A. K. Sinha, then a member of the Bar of this Court were appointed Joint Arbitrators in the said second reference. Ultimately on account of death and/or resignation of Arbitrators, Mr. H. Mahapatra, a retired Judge of Patna High Court and Mr. R. R. Choudhury, a practising Barrister of this Court came to be appointed by the parties as Joint Arbitrators for adjudicating upon the disputes referred to the said second arbitration.

7. In the said second reference the learned Arbitrators settled, inter alia, an issue to the following effect, to wit,

'Is the Union Government's claim barred by res judicata on principles analogous thereto with reference to the Award given in the first arbitration on 18th March 1967?'

And a further issue to the following effect, viz.,

'Is the Union Government estopped by principles of estoppel from raising their claim or part thereof in the present proceeding with reference to the award in the first arbitration case between the parties?'

8. The appellant contended before the learned Arbitrators that the saidArbitrators had no jurisdiction to proceed with the aforesaid issues and wanted the said Arbitrators to state a case to the Court for deciding the said contention of the appellant. The learned Arbitrators refused to state any case to the Court. Thereupon the appellant applied before the learned Arbitrators to adjudicate upon the said two issues as and by way of preliminary issues and make a separate Award on the same. The learned Arbitrators refused to do so as well.

9. Thereupon the aforesaid application was made for the reliefs mentioned hereinabove before Masud, J. By judgment and order delivered and passed by Masud, J. on September 1, 1970 the said application was dismissed.

10. Mr. Chaudhury appearing on behalf of the appellant contended before us that the res judicata in fact ousts the jurisdiction of a Court as well as of the Arbitrators. Mr. Chaudhury cited the observations of Mahmood, J. in (1886) ILR 8 All 324 quoted in the First Volume of Mulla's Code of Civil Procedure, 13th Edition at p. 51 to the following effect:--

'............ Perhaps the shortest wayto describe the difference between the plea of res judicata and estoppel, is to say that while the former prohibits the Court from entering into an enquiry at all as to the matter already adjudicated upon, the latter prohibits a party after the enquiry has already been entered upon, from proving anything which would contradict his own previous declaration or acts, to the prejudice of another party who relying upon those declarations or acts, has altered his position. In other words, res judicata prohibits an enquiry in limine, whilst an estoppel is only a piece of evidence.'

Mr. Choudhury contended that like Courts, Arbitrators cannot decide their own jurisdiction inasmuch as res judicata ousts the jurisdiction of Courts as well as Arbitrators. The Arbitrators cannot go into such question. If they do so the proceeding would be tainted with illegality and must be set aside by the Court.

11. In support of his contention Mr. Chaudhury cited the decision of a Division Bench of this Court consisting of Nasim Ali, J. and Pal J. reported in AIR 1942 Cal 92, Radharani v. Benodamoyee. In the said case the aforesaid observations of Mahmud, J. were quoted and it was observed that res judicata was a question of fact which upon its application to the facts of a certain case turned into a question of law. Mr. Choudhury also cited the case of Allah Bux v. Nusserwanji & Co., reported in AIR 1936 Sind 99 and the observations at p. 101 of the said Report to the effectthat res judicata ousts the jurisdiction of the Court.

12. Before we proceed further it must be noted that an application was made by the appellant itself for setting aside the said Award made in the aforesaid first reference on August 25, 1967. On August 9, 1968 the said application for setting aside the said Award was dismissed whereupon on December 20, 1968 an appeal was filed by the appellant itself against the said order of dismissal.

13. Although under Section 17 of the Arbitration Act no appeal can be preferred against a judgment and decree passed in terms of an Award except for the reasons mentioned in the said section, if an appeal against the order of dismissal of an application setting aside, an Award be allowed, the Award would be set aside automatically as a consequence thereof.

14. The plea of res judicata, in our opinion, is not a plea touching the ' jurisdiction of a Court in the total or absolute sense. The Court has to go into the said plea as any other plea of law, as for example, limitation and then decide whether the issue or the claim is barred by res judicata or principles analogous thereto.

15. It has been held that the plea of res judicata may be waived by a party to a proceeding. In the premises the plea of res judicata can never be a jurisdictional question. For jurisdiction can be conferred neither by waiver nor even by consent of the parties. It has been held by a Division Bench of this Court in Rajani Kumar Mitra v. Aimaddin Bhuiya reported in AIR 1929 Cal 163 at p. 164 as follows: to wit:--

'The bar of res judicata is one which does not affect the jurisdiction of the court but is a plea in bar which a party is at liberty to waive. If a party does not put forward his plea of res judicata in a suit he must be taken to have waived it .................. The partyomitting to plead res judicata intentionally invites the court to decide the casa on the merits. ...............'

16. The said question or issue that the claim of respondent, Union of India on account of shortfall (i.e. felling timber less than the quantity guaranteed) is barred by the principles analogous to res judicata, not being a jurisdictional issue, the arbitrators in the second reference in our opinion, are entitled to entertain, try and adjudicate upon the same. Principles of res judicata as principles of general law are applicable to arbitration proceedings as well as awards. An award if valid is in fact a final adjudication by a competent forum chosen by the parties themselves and until setaside is conclusive upon the merits of the controversy submitted. An award will operate as res judicata in subsequent proceeding between the parties either in court or before the arbitrators unless the arbitrators in making the said award had acted without jurisdiction. (See (1807) 14 Ind App 125 (PC)).

17. In the first arbitration the disputes referred by the parties were whether in the facts and circumstances prevailing during the period covering the dispute i. e. from 1951 to March 1961, the respondent. Union of India was entitled to royalty on the basis of shortfall of the quantities of timber felled by the appellant. The said issue was an issue of fact depending upon the availability of timber, of the conditions and sizes as mentioned in Clauses 4 and 5 of the said contract between the parties, during the aforesaid period covering the dispute. The said issue could never be an issue of law or construction of the said terms of the contract as urged by Mr. Chowdhury before us.

18. In the second reference the Issue involved is whether the Union of India as entitled to any royalty on the basis of shortfall of timber felled during the period 1961-62 and 1962-63, on the basis of covenant of minimum guarantee contained in Clause 6 of the contract between the parties. This issue also is a question of fact and is dependent upon the existence or otherwise of timber and the quality or size thereof as mentioned in Clauses 4 and 5 of the contract during the period for which the said royalty has been claimed by the Union of India.

19. Mr. Chowdhury contended before us that the said issue in the second reference are barred by the principles analogous to res judicata in view of the award made and published in the first reference mentioned above. For the reasons stated herein above we are of the opinion that the arbitrators must decide the said question or issue. We refrain from expressing any opinion on the aforesaid contention of Mr. Chowdhury.

20. For the reasons stated above tills appeal must fail and dismissed with cost.

21. There will be stay of proceeding for one week from date.

S.K. Mukherjea, J.

22. Iagree.


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