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D.S. Bist and Co. and Etc. Vs. State of J. and K. and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtJammu and Kashmir High Court
Decided On
Case NumberC.M.P. (Arb.) Nos. 99, 100, 103 and 168 of 1977
Judge
Reported inAIR1980J& K45
ActsConstitution of India - Articles 14 and 246; ;Jammu and Kashmir Arbitration Act, 2002 Smvt. - Section 41; ;Jammu and Kashmir Arbitration (Amendment) Act, 1977
AppellantD.S. Bist and Co. and Etc.
RespondentState of J. and K. and ors.
Appellant Advocate J.L. Sehgal,; T.S. Thakur,; R.S. Mehta and;
Respondent Advocate Amar Chand, Adv.
Cases ReferredV. N. Narayanan v. State of Kerala
Excerpt:
- .....appointment of receivers.12. viewed thus, the state legislature did not transgress its limits by amending clause (a) of section 41 with retrospective operation. it admittedly had the competence to make law in regard to arbitration and prescribe procedure therefor. the amending act does not overrule the previous orders passed by the courts, but it only takes away the legal basis of those orders leaving it to the courts themselves to say whether or not they could have passed such orders, had the law at the relevant time been the one which has been declared by the amending act. the first ground urged on behalf of the lessees is, therefore, overruled.13. turning now to the other two grounds, the same also appear to be equally untenable. to begin with, the object behind the amendment of.....
Judgment:

I.K. Kotwal, J.

1. This order will dispose of CMPs Nos. 99, 100, 103 and 168 of 1977 and application dated 9th Dec. 1977 made in Arb. application No. 59 of 1968. All these petitions arise out of proceedings which have been initiated by different forest lessees from whom the Government is claiming certain amounts as arrears of forest dues, but recoveries whereof are said to have been stayed by the Court

2. CMP No. 99 of 1977 arises out of Arbitration application No. 69 of 1967. It is an application under Section 20 of the Arbitration Act in which the award is yet to be given by the Arbitrator. In this case the Arbitrator had in the first instance stayed the recovery of the dues claimed by the Government but later on he revoked the said order on 25-9-1970. The court again stayed the recovery of the dues vide its order dated 8-10-1971.

3. CMP No. 100 of 1977 arises out of Arbitration application No. 63 of 1970, An application under Section 33 of the Arbitration Act for setting aside an award made against the petitioner lessee was allowed by the Court vide its order dated 13-12-1974 and the award was remitted back to the Arbitrator for its reconsideration. It is still pending his reconsideration, No order staying recovery of the Sues has been passed by the Court in this case.

4. CMP No. 103 of 1977 arises out of Arbitration Application No. 7 of 1975. It is an application under Section 33 of the Arbitration Act for setting aside the award made against the petitioner-lessee. The recovery of dues has been stayed by the court vide its order dated 6th Nov. 1975.

5. CMP No. 168 of 1977 arises out of an appeal filed by the lessee against an order of a learned single Judge of this Court refusing to set aside the award made against it by the Arbitrator. Recovery of the sum awarded has been stayed by the court in this case vide its order dated 9-7-1975.

6. Application dated 9-12-1977 pertains to Arbitration application No, 59 of 1968, which Is an application under Section 30 of the Arbitration Act made by the lessee for setting aside the award made against him and the recovery of the sum awarded has been stayed by the court vide its order dated 2-6-1972.

7. Applications have been made on behalf of the State that the orders passed by the court from time to time staying recoveries of Govt. dues in the aforesaid cases may be vacated. These applications are based upon the amendment which has been made in Sections 13 and 41 of the Arbitration Act (hereinafter the Act') vide Act No. VIII of 1977 (hereinafter the Amending Act') Before the amendment Section 41 stood as under:

'Procedure and powers of Court --Subject to the provisions of this Act and of rules made thereunder--

(a) the provisions of the Code of Civil Procedure (X of 1977) shall apply to all proceedings before the Court, and to all appeals, under this Act, and

(b) the Court shall have, for the purpose of, and in relation to, arbitration proceedings the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of and in relation to, any proceedings before the Court:

Provided that nothing in Clause (b) shall be taken to prejudice any power which may be vested in an arbitrator or umpire for making orders with respect to any of such matters'.

8. By the Amending Act, Clause (a) was substituted by the following :

'Amendment of Section 41. Act II of 2002, In Section 41 of the Principal Act, for Clause (a) the following clause shall be and shall always be deemed to have been substituted, namely;--

(a) the provisions of the Civil P. C. (X of 1977) shall apply to all proceedings before the Court and to all appeals, under this Act, except that the provisions of Rules 1 to 5 of Order XXXIX and Section 151 in so far as it relates to issuance of Interim orders by way of injunction-stay or in any other manner whatsoever, shall not apply to proceedings, before the Court, in which arrears due to the Government are involved.'

Besides amending Section 41 another Clause (f) was added to Section 13 of the Act, which reads this :

Amendment of Section 13, Act II of 2002-- The full stop at the end of Clause (e) of Section 13 of the Jammu and Kashmir Arbitration Act, 2002 (hereinafter referred to as 'the principal Act')' shall be substituted by semi-colon and thereafter the following clause shall be added, namely :

'(f) issue an interim order by way of an injunction or stay or appointment of a receiver or in any other manner as provided in the Civil P. C. Samvat 1977.'

9. Mr. Amar Chand appearing for the State has in support of the aforesaid applications contended that amendment of Section 41 being retroactive in operation the orders passed by the court staying recovery of Govt. dues ceased to have any force, and therefore, deserved to be immediately vacated, adding that, such orders after the Amending Act could be passed by the Arbitrator alone. The contentions raised on behalf of the lesees on the other hand are that the Amending Act was beyond the competence of the State Legislature inasmuch as if had the effect of overruling the orders passed by the courts from time to time, that the Amending Act contravenes Article 14 of the Constitution of India inasmuch as it made a hostile discrimination between the Government and a private individual praying for the same relief and that it has taken away legal rights as well as remedies of the litigans in arbitration proceedings, In the alter-native, it has been argued that even if the Amending Act is held to be constitutionally valid, powers of the courts to issue interim injunctions etc. under Clause (b) of Section 41 have remained totally unaffected.

10. It is now well settled that Legislature is competent to make laws adding to or abridging or even taking away the powers of Courts with retrospective operation, provided it has competence to legislate over the subject matter and provided further that by doing so, it does not itself directly decide cases pending before courts of Taw or overrule those earlier decided by them. It may alter the law in retrospect so as to affect the decisions of the pending cases or even cases already decided on the basis of the law as it stood at the time of their decision but it cannot over-rule such decisions. It must acknowledge the correctness of the decisions already rendered though it may amend the law with retrospective operation whereby such decisions are automatically neutra-lized. In short its acts should be merely legislative and not judicial. The well-known distinction between a 'legislative act' and a 'judicial act' was succinctly brought out by Spens C. J. in Basanta Chandra v. Emperor, AIR 1944 FC 86 wherein legislative competence of the Governor of Bihar to amend Sub-section (2) of Section 10 of Restriction and Detention Ordinance (3 of 19441 fell for determination. This Sub-section read as under :

'If at the commencement of this Ordinance there is pending in any Court any proceeding by which the validity of an order having effect by virtue of Section 6 as if it had been made under this Ordinance is called in question, that proceeding is hereby discharged.'

The court answered the question in the following words :

'The distinction between a legislative' act and a 'Judicial' act is well-know Chough in particular instances it might not be easy to say whether an act should be held to fall in one category or in the other. The Legislature Is only authorised to enact laws. Some of the pending proceedings hit at by Clause (2) of Section 10 may raise questions of fact and their determination may wholly depend upon questions of fact and not upon any rule of law, as, for Instance, when it is alleged that an order of detention was not really the act of the authority by whom it purports to have been made or that it was a mala fide order or one made by a person who had not been authorised to make it. A direction that such a proceeding is discharged is clearly a judicial act and not the enactment of a law. This question was discussed at some length in the judgment of this Court in 1944 FCR 61: (ATR 1944 FC 1). The nature of the provision then considered was essentially different from d. (2) of Section 10 of the prseent Ordiance. As explained in that judgment, the position there was that certain cases had in fact been tried by Tribunals constituted under an earlier Ordinance and decisions had been pronounced by those Tribunals, but the jurisdiction of those Tribunals was negatived by a decision of this Court. The later Ordinance provided that those decisions should be treated as decisions of duly constituted Tribunals. Applying the test laid down in (1926) 38 Com LR 153 this Court held that that did not constitute an exercise of judicial power by the Ordinance making authority. But here there has been no investigation or decision by any Tribunal which the legislating authority can be deemed to have given effect to. It is a direct disposal of cases by the Legislature itself.

A similar question arose in Tirath Ram Rajindra Nath v. State of U. P., ATR 1973 SC 405 wherein the Court held : 'Now coming to the 2nd contention of Dr. Singhvi. we fail to see how the question of lack of power now arises in view of Section 3AB. While developing his contention No. 2 Dr. Singhvi urged that the legislature has unauthorisedly encroached on the judicial power. The amended Section 3AB merely intradicts the decision rendered by the High Court and has not removed the want of power noticed by the High Court. We are unable to accede to this contention. The legislature has not purported either directly or by necessary implication to overrule the decision of the Allahabad High Court in Krishna Brick Field's case, 29 STC 15: (1971 Tax LR 1057) (FB) (All). On the other hand it has accepted the decision as correct but has sought to remove the basis of the decision by retrospectively changing the law. This court has pointed out in several cases the distinction between encroachment on the judicial power and the nullification of the effect of a judicial decision by changing the law retrospectively. The former is outside the competence of the legislature but latter is within its permissible limits. In the instant case what the legislature has done is to amend the law retrospectively and thereby remove the basis of the decision rendered by the High Court. Such a course cannot be considered as an encroachment on the judicial power.'

11. Similarly in Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality, AIR 1970 SC 192 certain tax imposed by Gujarat Municipality had been declared invalid by the Gujarat High Court on the ground that the Municipality did not have power to impose the said tax under the existing statute. Thereafter, the legislature passed a validating Act adding a provison to the existing Act under which power in retrospect was given to the Municipality to levy such a tax and including in it another section validating the tax previously imposed by it. It was conceded that the legislature did have the competence to invest the Municipality with the power to levy tax, The Supreme Court negatived the contention of the tax payers that the provision validating the tax previously imposed by the Municipality and declared valid under the validating Act was a judicial act which was beyond the competence of the legislature with this observation:

'.........A Court's decision must always hind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a Court holds a tax to be in-validly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the ground of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the re-enacted law. Sometimes the legislature gives its own meaning and interpretation of the law under which the tax was collected and by legislative fiat makes the new meaning binding upon Courts. The legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the Court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the legislature and legal and adequate to attain the object of validation. If the legislature has the power over the subject-matter and competence to make a valid law, it can at any time make such a valid law and make it retrospectively so as to bind even past transactions. The validity of a validating law, therefore, depends upon whether the legislature possesses the competence which it claims over the subject-matter and whether in making the validation it removes the defect which the Courts had found in the existing law and makes adequate provisions in the validating law for a valid imposition of the tax.'

The Full Bench decision of the Kerala High Court in V. N. Narayanan v. State of Kerala, AIR 1971 Ker 98 relied upon by the learned counsel for the lessees, is clearly distinguishable. In this case Sub-section (7) of Section 125 of Kerala Land Reforms Act (No. 1 of 1964) as amended by Act No. 35 of 1969 was declared beyond the competence of the State Legislature on the ground that it cancelled all previous orders passed by the courts issuing temporary injunctions or making appointment of Receivers.

12. Viewed thus, the State Legislature did not transgress its limits by amending Clause (a) of Section 41 with retrospective operation. It admittedly had the competence to make law in regard to arbitration and prescribe procedure therefor. The Amending Act does not overrule the previous orders passed by the courts, but it only takes away the legal basis of those orders leaving it to the courts themselves to say whether or not they could have passed such orders, had the law at the relevant time been the one which has been declared by the Amending Act. The first ground urged on behalf of the lessees is, therefore, overruled.

13. Turning now to the other two grounds, the same also appear to be equally untenable. To begin with, the object behind the amendment of Section 41 (a) appears to be speedy realisation of public money for meeting the day to day needs of the Government. There is a clear nexus between the object and the right conferred upon the Government to realise its dues without temporary legal hurdles. Needs of the State are undoubtedly far more important than those of a private individual. The differentia which distinguishes Government from a private individual thus becomes quite intelligible. The Government as such has to be treated as a class by itself and this classification cannot be said to be violative of Article 14 of the Constitution of India.

14. As regards the third ground, suffice it to say that right of a litigant, who obtained stay order, or injunction has not been taken away; only the forum has been changed. By adding Clause (f) to Section 13 the Arbitrator has been empowered to stay recoveries of Government dues. What orders could be obtained from a court prior to the Amending Act can now be obtained from the Arbitrator. It cannot, therefore, be reasonably contended that the Amending Act has taken away the said rights or remedies of the litigants in any manner.

15. This brings me to the last contention of the lessees that in spite of the amendment made in Clause (a) powers of the court under Clause (b) to issue interim injunctions etc. have remained unaffected. A court according to them, has still all the powers vested in it under Sch. B of the Act including power to issue temporary injunctions which have not been specifically taken away by the Amending Act. Three expressions, namely, 'proceedings before the court', 'arbitration proceedings' and 'appeals under the Act' occur in Section 41. There can be no difficulty in distinguishing the expression 'appeals under the Act' from the other two expressions as this expression contains a clear reference to Section 39 of the Act. Some difficulty may, however, arise in distinguishing the other two expressions from each other, but here too I am clearly of the opinion that they have been used in contradistinction to each other. The very fact that both these expressions occur in Clause (b) fortifies the inference that the legislature would not have used in this provision two different expressions intending to convey the same meaning.

Another consequence which would flow from giving the same meaning to these two expressions or in other words making them interchangeable is that it would bring Clauses (a) and (b) into conflict with each other and create an anomalous situation wherein a court will have and at the same time will not have power to issue temporary injunction in similar circumstances. The expression 'arbitration proceedings' has been used in a limited sense to mean the proceedings pending before an Arbitrator, These may be pending before him through the intervention of the Court or without such intervention. On the other hand the expression 'proceedings before the Court' have been used to denote all other proceedings under the Act other than appeals provided under Section 39. These may be as for example, proceedings to supersede a reference under Sec-lion 5, proceedings to file the agreement under Section 20 or proceedings to sat aside an award under Section 30 or 33 of the Act. The jurisdictional areas of the court to exerdse powers under Clauses (a) and (b) have thus been clearly demarcated

Under Clause (a) a court can exercise alt the powers which it may ordinarily exercise under the Civil P. C. besides those mentioned in Schedule B provided they are not inconsistent with any other provision of the Act. A court acting under Clause (b) may, however exercise only those powers which are contained in Schedule B provided further that the power which it may exercise is such as it could have exercised in relation to any other proceedings under the Act coming before if. This is amply borne out from the words 'as it has for the purpose of, and in relation to any proceedings before the Court' used in Clause (b). It follows that If the court could not have exercised a particular power in other proceedings under the Act, which might come before if then surely it could no! exerdse that very power in relation to a proceedings pending before an Arbitrator, no matter it was one of the powers mentioned in Schedule (B). This is further borne out from the opening words of Section 41 : 'subject to the provisions of this Act and the Rules made thereunder... ...' Clause (a) of Section 41 Is one of such provisions within the meaning of these words. If, therefore, a court has no power to stay recovery of Government dues under Clause (a) it has no such power under Clause (b) as well.

16. The conclusion is therefore, inescapable that by virtue of the Amending Act, the basis for staying recoveries of Govt dues in all the aforesaid cases having been taken away, none of the orders passed by the court staying recoveries of such dues can possibly survive, C. M. Ps. Nos. 99, 103 and 168 of 1977 and application dated 9th Dec. 1977 in Arbitration application No, 59 of 1968 are, therefore, allowed and the orders passed by the court staying recovery of Govt. dues In the aforesaid cases, are hereby vacated, As already pointed out no order staying any such recovery in Arbitration application No. 63 of 1970 having been passed by the Court, C.M.P. No. 100 of 1977 is hereby dismissed


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