Full Judgment Text
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CASE NO.:
Appeal (civil) 981-983 of 2000
PETITIONER:
UNION OF INDIA & ORS.
Vs.
RESPONDENT:
ARADHANA TRADING CO & ORS.
DATE OF JUDGMENT: 01/04/2002
BENCH:
B.N. Kirpal, K.G. Balakrishnan & Brijesh Kumar
JUDGMENT:
BRIJESH KUMAR, J.
These appeals arise out of the Judgment and Order dated
19.3.1999 passed by the Division Bench of Calcutta High Court in
a bunch of appeals preferred by the present appellant before us.
We have heard the learned counsel for the parties. The main
question that falls for our consideration in these appeals is about
the maintainability of appeal before the Division Bench against the
judgment and order of the learned Single Judge of the Calcutta
High Court, rejecting the application under order 9 Rule 13 CPC
for setting aside the ex-parte decree making the Award Rule of the
Court. The other question is as to whether the High Court was
justified in entertaining the proceedings for making the award Rule
of the Court since the District Courts of Asansol had also been
moved by the appellant to issue notice to the Arbitrator, under
Section 14(2) of the Arbitration Act 1940, for filing of the award in
the Asansol Court.
It appears that the appellant, namely the Union of India
entered into agreements with the respondents for supply of certain
items to the Railways viz Chittranjan Locomotives. After the
supplies, the Department felt that the bills of exorbitant amount
were being raised by the respondents and an enquiry was also set
up in that connection. Since however, payments were not being
made, the respondents filed writ petitions in Calcutta High Court
for direction to the Government to make payment of bills. The
High Court passed a common order dated 24.11.1995 in the writ
petitions, directing the General Manager to appoint arbitrators to
settle the disputes, consequently on December 12,1995 four
Arbitrators were appointed. Parties filed their respective claims
before the Arbitrators and put forth their pleas and placed the
interim report of the Committee regarding rates of 42 items
involved in various purchases made under different agreements.
Since the time to make the Award had expired, the High Court on
being approached by the parties, extended time with their consent;
for a period of two months, by order dated 4.2.1997. The Awards
were published by Arbitrators on 14.8.1997 sending notices of the
same to the parties. The Awards had been filed by the Arbitrators
in the Calcutta High Court on 11.11.1997. Notices of the filing of
the Award had also been issued by the High Court which were
served upon the appellants on 11.12.1997. The appellants did not
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file any objection against the Award. The case was fixed on
27.1.1998. It appears that nobody appeared on behalf of the
Appellant despite notice and since no objections too, were
preferred by them against the award, the High Court passed Decree
in terms of the Award making the same Rule of the Court.
The Appellant moved an application on 24.2.1998 for
recalling the order dated 27.1.1998 passed by the High Court,
explaining its absence on the date of hearing and stating that it had
moved an application on 29.9.1997 under section 14(2) of the
Arbitration Act 1940 before the Assistant District Judge, Asansol,
praying for a direction to the Arbitrators to file Awards in the
Asansol Courts, therefore awards could not be filed in the High
Court..
It may be noted that no appeal was preferred against order
and decree dated 27.1.1998 passed by the learned Single Judge.
The High Court however, dismissed the application by order dated
23.4.1998, finding that since no objections were filed against the
Award, the Court had to pass the Orders making the Award Rule of
the Court in accordance with Section 17 of the Arbitration Act. It
had also been observed that Decree cannot be said to have been
passed ex-parte as it was with due notice to the appellant and that
on passing of the order according to Section 17 of the Arbitration
Act, the Court had become functus officio. It was also found that
Award was rightly filed in High Court. The appellant then filed
appeals before the Division Bench against the order dated
23.4.1998 passed by the Single Judge. The Division Bench
dismissed the appeals repelling the objections that the High Court
could not entertain the matter and also found that the appeal was
not maintainable before the Division Bench against the order of
Single judge of the High Court.
Coming to the question as to whether the arbitrators could
file the award under Section 14 (2) of the Arbitration Act 1940 in
the High Court of Calcutta or not, it has been submitted on behalf
of the appellant that the subject-matter of arbitration viz. supplies,
have been made to Chitranjan Locomotive which is situate in
District of Asansol. Therefore, it was only appropriate for the
arbitrator to have filed the award in the District Court of Asansol.
A reference has again been made to the application dated 24.9.1997
moved before the Assistant District Judge, Asansol for directions
to the Arbitrators requiring them to file the award in original along
with all records and documents within the time as may be fixed by
the Court in Asansol. It has no where been indicated by the
appellant that the Court of Assistant District Judge, Asansol had
ever issued any notice on the aforesaid application or any direction
to the Arbitrators as prayed. On the other hand, the award was
undisputedly filed in the High Court on 11.11.1997 in respect
whereof notice was issued, which was received by the appellant
on 11.12.1997. Despite service of notice, the appellant did not
seem to have moved any application informing the High Court or
the respondents that they had already moved any application before
Assistant District Judge, Asansol for a direction to the Arbitrators
to file the award in that Court or indicating any reservation about
filing of the award in the High Court.
Besides the above, it is to be noticed that the Arbitrators
were appointed in pursuance of an order passed by the High Court
on the writ petitions filed by the respondents as a consequence
whereof the Arbitrators proceeded in the matter and finally
published the award. On two occasions earlier, the parties
including the appellant had approached the High Court only for
extension of time for making the award. The orders were passed
by the High Court on 24,2,1997 and 28.7.1997 extending the time
that is to say much before the appellant moved application in the
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Court of the Assistant District Judge, Asansol for a direction to the
Arbitrator to file the award in Asansol. In the above
circumstances, it is too late in the day for the appellant to turn
around and say that that the High Court of Calcutta could not
entertain the filing of the award and to proceed with making it a
rule of the court. Needless to mention that Calcutta High Court
exercises its original civil jurisdiction as well. Therefore, perhaps
the appellant has not come up with the case that there was any
inherent lack of jurisdiction in the High Court of Calcutta to
entertain such suit or proceedings. As indicated earlier the
appellant itself had submitted to the jurisdiction of the High Court
while moving application for extension of time under Section 28 of
the Arbitration Act. We therefore do not find any fault in the
finding of the High Court negating the plea raised by the appellant
that Arbitrators should have filed the Award in the Asansol courts
and not in the High Court.
We may next consider the nature of the application moved
by the appellant for recalling the order dated 27.1.1998 passed by
the learned Single Judge of the Calcutta High Court. The
application dated February 24, 1998 does not indicate the provision
of law under which it was moved. The averments made in the
application are to the effect that the appellant had received a notice
from the Registry of the High Court in the original civil
jurisdiction informing that January 21, 1998 was fixed in the case.
The case however, it is stated, was fixed on 22.1.1998. The
counsel for the appellant remained in the Court concerned
throughout the day but the matter was not taken up. The next date
fixed was January 27, 1998 on which date also the counsel for the
appellant was present in Court up to 12 Noon whereafter he got
engaged in another Court. Therefore, he could not be present at
the time when the case was called out and the order was passed by
the Court. The counsel for the appellant made a mention about the
matter in the Court on 4.2.1998 and later moved an application in
that behalf stating that there was sufficient ground for not being
present at the time, the matter was called upon on 27.1.1998 and
ex- parte order was passed. The following prayers were made in the
application:
a) The order dated 27th January 1998 passed ex-
parte may be recalled;
b) Case may be restored to its file and may be
fixed for hearing as "Judgment upon Award"
in suitable date which is convenient for your
lordship so that the petitioner may take
necessary steps to challenge the Award;
c) Any other order or orders as your lordships
may deem fit and proper"
It is submitted that it would be treated as an application under
Order IX, Rule 13 C.P.C. in view of Section 41 of the Arbitration
Act which reads as under:
"41. Procedure and powers of the Court. Subject
to the provisions of this Act and of rules made
thereunder
(a) the provisions of the Code of Civil
Procedure, 1908, 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
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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."
It is thus submitted that subject to the provisions of the
Arbitration Act, provisions of the Code of Civil Procedure would
apply to all proceedings before the Court and the appeals under
the Act. Even taking it to be so, the rival contention of the
Respondents is that no appeal will lie against the order of the
Single Judge dated 23.4.1998 rejecting the application. Section 39
of the Arbitration Act enumerates the orders against which alone
an appeal would lie and against no other order. Section 39 of the
Arbitration Act 1940 reads as under:
"39. Appealable orders. (1) An appeal shall lie
from the following orders passed under this Act (and
from no others) to the Court authorised by law to hear
appeals from original decree of the Court passing the
orders:-
An order
(i) superseding an arbitration;
(ii) on an award stated in the form of a special
case;
(iii) modifying or correcting an award;
(iv) filing or refusing to file an arbitration
agreement;
(v) staying or refusing to stay legal proceedings
where there is an arbitration agreement;
(vi) setting aside or refusing to set aside an
award.
Provided that the provisions of this section shall not
apply to any order passed by a Small Cause Court.
(2) No second appeal shall lie from an order
passed under this section but nothing in this
section shall affect or take away any right to
appeal to [the Supreme Court]".
We find that prohibition against appeal is provided in two ways
one where it is indicated that appeal would lie against given orders
and from no other orders and secondly under sub-section (2) of
Section 39 that no second appeal shall lie from an order passed in
appeal under Section 39 of the Arbitration Act. In the alternate, the
Appellants’ contention is that in any case a Letters Patent Appeal
would lie against the original orders of the Single Judge of the
High Court to a Division Bench. A number of decisions have been
relied upon by the learned counsel for the parties in support of their
rival contentions.
Learned counsel for the Respondents has placed reliance
upon a decision reported in 1962 (2) S.C.R. 551 Neeilkantha
Shidramappa Ningashetti versus Kashinath Somanna
Ningashetti and others. It is a decision by a Bench of Four
Judges. The parties knew about the filing of the award in the Court
and on the date fixed the case was adjourned for "the parties’ say to
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the arbitrator’s report". No notice in writing was issued by the
Court of the filing of the award or objections thereto. The
objections were filed late beyond the time prescribed by limitation.
The court made the award rule of the Court. The plea which was
taken was that the period of limitation would start from the date of
service in writing of filing of the award. Such a contention was not
accepted by the court and it was held that notice in writing was not
necessary as the information to the parties of the award having
been filed and date adjourned for their say to the arbitrator’s report
was sufficient notice. It was held that award was not liable to be set
aside and no appeal was maintainable under Section 39(1) (vi) of
the Arbitration Act. In State of West Bengal versus
Gourangalal Chatterjee 1993 (3) S.C.C. 1 the appeal under
Section 39 was held to be not maintainable against an order
passed by the Single Judge appointing a new arbitrator since the
order was not covered under any of the clauses of Section 39 nor
even Letters Patent Appeal was held to be maintainable. In Union
of India versus Mohindra Supply Company 1962 (3) S.C.R.
497, a decision by a Bench of Four Judges, held that Section 39
applies to the appeals to superior courts as well as to intra-court
against the decree passed in terms of the award but against the
order passed in appeal, a Letters Patent Appeal was held to be
barred under sub-section (2) of Section 39 of the Arbitration Act
according to which no second appeal lies against an order passed
under Section 39(1) of the Act. It was further held that in view of
the said provision, appeal under Section 100 CPC was also
prohibited. We, however, find that so far as this case is concerned,
it stands on a different footing since in the present case it is not a
further appeal or a second appeal but an appeal against an order
passed by the learned Single Judge under Order IX Rule 13 CPC. It
would however be relevant for the purpose that restriction on
appeal under Section 39 of Arbitration Act shall be applicable to
appeals under any provision of law, may be CPC or Letters Patent.
So far the appellants are concerned they placed reliance on a
case reported in 1953 S.C.R. 1028 National Sewing Thread
Company Limited versus James Chadwick & Bros Ltd. It is a
decision by a Three Judge Bench. In this case the proceedings
related to the Trade Marks Act containing a provision of appeal to
the High Court under Section 76 (1) of the Act against an order of
the Registrar. It however contained no provision regarding
procedure to be followed by the High Court or as to whether the
order passed by the High Court was further appealable or not. It
was held that the High Court was to exercise the appellate power
in the same manner as it exercises its other appellate jurisdiction
and where such jurisdiction was exercised by a Single Judge, his
judgment was appealable under clause 15 of the Letters Patent.
The Court relied upon (1913) A.C. 546 quoting therefrom "When
a question is stated to be referred to established Court without more
Ordinary instance of the procedure of that court are to attach and
also that any general right of appeal from its decision like-wise
attaches." It also refers to (1947) 74 I.A. Page 264 quoting.
"Where a legal right is in dispute and the ordinary courts of the
country are seized of such dispute, the courts are governed by the
ordinary rules of procedure applicable there to and an appeal lies if
authorised by such rules, notwithstanding that the legal right
claimed arises under a special statute, which does not, in terms
confer a right of appeal". In Union of India and others versus
Manager, M/s. Jain & Associates 2001 (3) SCC 277 it was held
that by virtue of Section 41 of the Arbitration Act, Order IX of the
C.P.C. would be applicable and an application under Order IX,
Rule 13 CPC would lie and delay could be condoned under
Section 5 of the Limitation Act in filing objections under Section
30 of the Arbitration Act. The refusal to condone the delay
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amounts to refusal to set aside the award and the orders become
appealable under Section 39 (1)(vi) of the Act. A similar view
was taken in Essar Constructions versus Ramakrishna Reddy
2000 (6) S.C.C. 94.
On behalf of the appellant, reliance has also been placed in
Vinita M. Khanolkar versus Pragna M. Pai and others 1998 (1)
S.C.C. 500. In this case the High Court had passed an order in
exercise or its original jurisdiction under Section 6 of the Specific
Relief Act. An appeal filed before the Division Bench was held to
be maintainable under Clause 15 of the Letters Patent as it was held
that such powers are vested in the High Courts of Madras, Bombay
and Calcutta which are not whittled down by statutory provisions
of Section 6 (3) of the Specific Relief Act. It was observed that
power is in pursuance of Section 108 of the Govt. of India Act. It
is a decision by a Bench of two learned Judges.
So far the question as to whether the order passed by the
learned Single Judge rejecting the application for recalling/setting
aside ex parte order dated 27.1.1998 is concerned, it cannot be
treated as an order refusing to set aside the award. This position
would stand covered by the decision in the case of Neeilkantha
Shidramappa Ningashetti (supra) as it has been held if there was
no objection before the court for setting aside the award, no
question of refusal to set it aside could arise. Hence no appeal
under Section 39(1)(vi) of the Arbitration Act would be
maintainable. The ground of challenge of the award was that the
limitation to file the objection was to run with effect from the date
of service of a written notice for filing of the objection which
contention was repelled by the Bench consisting of four Hon’ble
Judges holding that the knowledge of the appellant of the award
having been filed and time allowed to file objections was
sufficient notice. In the present case also it is to be found that no
objections to the award had been filed despite due notice and nor
even subsequently while counsel is said to have been attending
the court on two dates fixed in the case. In this view of the matter
it would not be necessary to go into other aspect of the matter or
the view taken in some other cases as referred to in the earlier part
of the judgment. Some cases, a reference of which has been made
earlier relate to the question of maintainability of a second appeal
in Letters Patent against the appellate order passed under Section
39 (1) of the Arbitration Act as in the case of Mohindra Supply
Company (supra) where the Bench of four Hon’ble Judges held
that in view of clause (2) of Section 39 of the Arbitration Act, an
appeal against an appellate order under the Letters Patent was not
maintainable. The restriction to appeal contained under sub-sec.
(2) of Section 39 was applicable to Letters Patent. So restriction
contained under sub-sec.(1) of Sec.39 of Arbitration Act shall also
be applicable.
The question which thus remains to be considered is as to
whether an order passed on an application making the prayer like
one which could be referable to Order IX, Rule 13 CPC would be
appealable or not. Such an application could be made by virtue of
Section 41 of the Arbitration Act. An order under Order IX, Rule
13 CPC is appealable under Order 43, clause (c) read with Section
104 CPC. In the case of National Sewing Thread Co. Ltd.
(supra), a decision by a Bench of Three Hon’ble Judges, the matter
related to Trade Marks Act Section 76(1) of which provided for an
appeal against a decision of the Registrar under the Act to the High
Court but no further provision in regard to the procedure to be
applied was made. An appeal against the order of the Registrar
was decided by a learned Single Judge of the High Court against
which a Letters Patent Appeal was filed which was held to be
maintainable even though no such provision of further appeal was
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made under the Trade Marks Act. As indicated earlier the Court in
the above-noted case has relied upon certain decision and held as
follows:
"Though the facts of the cases laying down the above
rule were not exactly similar to the facts of the
present case, the principle enunciated therein is one
of general application and has an apposite application
to the facts and circumstances of the present case.
Section 76 the Trade Marks Act confers a right of
appeal to the High Court and says nothing more
about it. That being so, the High Court being seized
at such of the appellate jurisdiction conferred by
section 76 it has to exercise jurisdiction in the same
manner as it exercises its other appellate jurisdiction
and when such jurisdiction is exercised by a Single
Judge, his judgment becomes subject to appeal under
clause 15 of the Letters Patent there being nothing to
the contrary in the Trade Marks Act"
In view of what has been held above a Court while exercising
power by virtue of Section 41 of the Arbitration Act shall have all
other related powers of the ordinary civil court subject to the
constraints contained in the special Act itself. Normally, an
appeal would be maintainable but there are two constrains as
provided under the Special Act, namely, it should not be a second
appeal as provided under sub-section (2) of Section 39 of the Act
which position is also clear in the case of Mohindra Supply
Company (supra) where it was held that the second appeal under
Section 100 CPC or under the Letters Patent against an appellate
order was barred by virtue of sub-section (2) of Section 39. Here
we find that there is yet another constraint as provided under sub-
section (1) of Section 39 of the Arbitration Act itself and it is
emphatic too when it says that appeal shall lie against the orders
indicated in the provision and from no other order. Section 41 of
the Arbitration Act makes the provisions of CPC applicable
subject to the provisions of the Arbitration Act and the rules
framed thereunder. Therefore, the nature of an order against
which an appeal may lie must conform to the nature of the order
as enumerated under sub-section (1) of Section 39 of the
Arbitration Act. If it does not amount to such an order as
enumerated under sub-section (1) of Section 39, the prohibition as
contained in this sub-section "(against no other order") itself,
would become operative, subject to which alone provisions of
CPC apply under Section 41 of the Act. In the facts of the present
case we find that an order refusing to recall an order passed by the
court will not amount to refusal to set aside the award under clause
(vi) of sub-section (1) of Section 39 of the Arbitration Act as no
objections to set aside the award have ever been filed with or
without application for condonation of delay, challenging the
award. Admittedly, the appellant did not file any appeal against
the order dated 27.1.1998. In these circumstances and in view of
the provisions of the Arbitration Act, the decision in the case of
National Sewing Thread Co. Ltd. (supra) shall also not be
applicable as in the Trade Marks Act with which the court was
dealing, did not have any provision like the one contained in sub-
section (1) of Section 39 of the Arbitration Act restricting the right
of appeal only in respect of certain nature of orders and
prohibiting appeal against any other order whatsoever. Therefore,
in the case of National Sewing Thread Co. Ltd. (supra) it was
held that where a provision for appeal was made under Section 76
(1) of the Trade Marks Act to the High Court, with nothing more,
the other provisions relating to exercise of that jurisdiction by the
High Court would be applicable. The case of National Sewing
Thread Co. Ltd. (supra) is thus based on different provisions and
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is clearly distinguishable. The case in hand is covered by the
decisions in the cases of Neeilkantha (supra) and Mohindra
Supply Co.both decided by Bench of four Judges which do not
seem to have been noticed in other judgments.
In view of the discussion held above, we find no force in the
appeals and they are dismissed. There would however be no order
as to costs.
------------------------J
(B.N. Kirpal)
------------------------J
(K.G. Balakrishnan)
----------------------J
(Brijesh Kumar)
April 01, 2002