Fort William Co Ltd. v. Chainrup — 1962 DIGILAW 212 (CAL)

JUDGMENT 1. THIS is an application for an injunction restraining the respondent from proceeding with Suit No. 403 of 1962 pending in the City Civil Court and also for an order for stay of this suit. The alternative prayers are that the City Civil city Court suit be transferred to this court and that the suit be stayed or an injunction be granted restraining the respondent from proceeding with the suit or taking any steps thereunder. I have already held and I am of opinion that my jurisdiction under sec. 34 of the Arbitration Act applies only to suits pending in this Court. I am unable to hold that I can make an order under section 34 of the Arbitration Act in respect of a suit pending in the City Civil Court. As to the contention on behalf of the petitioner that the suit should be transferred to this Court I am of opinion that the provisions of the city Civil Court Act contemplate removal for the purpose of hearing of the suit. In any event, I am of opinion that this is not a fit and proper case where the suit should be transferred to this Court and then the provisions of the Arbitration Act be applied for stay. It is well settled that what is directly forbidden can not be indirectly achieved. 2. THE facts of this case in short are that a suit was instituted by the respondent in this Court. There was an application for stay under section 34 and an order was made. The respondent thereafter instituted the aforesaid suit in the City Civil Court. The prayers in the City Civil Court suit are identical with the prayers in the suit which has been stayed. Counsel for the petitioner contends that it is manifest that the respondent instituted the suit mala fide and to harass the petitioner. Counsel on behalf of the respondent contended that an injunction should not be made unless there is a pending proceeding. Counsel on behalf of the petitioner relied on an un reported decision of G. K. Mitter, J. (1)in Suit No. 1614 of 1960 where an order of injunction was made restraining the respondent from proceeding with a. Bombay suit. It appears from the judgment that the parties to that suit carried on business in partnership. Disputes arose. Counsel on behalf of the petitioner relied on an un reported decision of G. K. Mitter, J. (1)in Suit No. 1614 of 1960 where an order of injunction was made restraining the respondent from proceeding with a. Bombay suit. It appears from the judgment that the parties to that suit carried on business in partnership. Disputes arose. A suit was instituted in Calcutta in the month of December 1960 and thereafter an application for stay under section 34 was made. Disputes between the parties in the suit were referred to arbitration under an order dated January 25, 1961: An application was made in the month of march, 1961 that there should be an injunction restraining the respondent from proceeding with the Bombay City civil Court suit inasmuch as the matters which were referred to arbitration were matters directly and substantially in issue in the Bombay suit in as much as that case was instituted on March 4, 1961, that is to say, a few months after the institution of the Calcutta suit and after the matters had been referred to arbitration by an order dated January 25, 1961. Mitter, J. relying on the decision in Snow White Food Products Co. Ltd. v. Messrs. Punjab Vanaspati Supply co. (2) 49 C. W. N. 172 held that the court has inherent power to grant a temporary injunction restraining the defendants from proceeding with their suit elsewhere if the two suits are parallel and if the balance of convenience is in favour of the suit in this Court beng proceeded with in preference to the suit in the other Court. Counsel for the petitioner also relied on the decision of Mallick, J., reported in (3)A. I. R. 1959 Cal. 583. In that case the parties to a suit in this Court referred the disputes to arbitration. While the arbitration was proceeding and pending one of the parties instituted a suit in the City Civil Court. Mallick, J. granted an injunction for a limited time as it was apparent in that case that the arbitration would be brought to termination within that period. While the arbitration was proceeding and pending one of the parties instituted a suit in the City Civil Court. Mallick, J. granted an injunction for a limited time as it was apparent in that case that the arbitration would be brought to termination within that period. Relying on these two decisions as also on the decision reported in (4) A. I. R. 1962 S. C. 527, Counsel for the petitioner rightly contended first that this court had inherent jurisdiction to grant an injunction irrespective of pendency of any suit in this Court, and secondly that where the facts and circumstances snowed that the suit was instituted mala fide and to harass and oppress the party an injunction should be issued especially if it appeared that the institution of the suit was intended for the purpose of circumventing orders of this Court. The respondent has served a notice of institution of the suit on the arbitration. As to whether this is a notice under section 35 of the Arbitration Act is not free from doubt. Counsel for the respondent is in my view right in his contention that sections 34 and 35 of the Arbitration Act are complementary. If the notice of the institution of the suit has to be a notice under section 35 of the arbitration Act a fortiori s. 34 of the Arbitration Act must apply. In the present case section. 34 of the Arbitration Act does not apply because the suit is pending in the City Civil Court and the arbitration Act is not applicable there. It follows logically that section. 35 does not apply. I have taken similar view in Award Case No. 185 of 1962, National Company Ltd. v. Biseswarlal and Co., (5) 66 C. W. N. 1078. 3. THE only question which now remains for consideration is whether I have jurisdiction to grant an injunction and whether I should do so in the facts of the case. As to jurisdiction Counsel for the respondent contended that a suit had to be pending or some proceeding had to be pending in this Court before I could grant an injunction. The suit here has been stayed and Counsel on behalf of the respondent contended that the present application was not intituled in that suit. Counsel for the petitioner contended that I had jurisdiction under section 41 of the arbitration Act to make an order for injunction. The suit here has been stayed and Counsel on behalf of the respondent contended that the present application was not intituled in that suit. Counsel for the petitioner contended that I had jurisdiction under section 41 of the arbitration Act to make an order for injunction. Section 41 of the Arbitration act read along with the schedule shows that the Court has jurisdiction to make an order of interim injunction or the appointment of a receiver. The order for interim injunction contemplated in the second schedule to the arbitration Act in my view relates to matters in dispute in arbitration. The reason is obvious. The arbitrators have no jurisdiction to appoint a Receiver or to make an order for interim injunction or to make other orders contemplated in the second schedule to the arbitration Act. Therefore, sec. 41 enables the Court to make such orders where arbitration is pending. The interim injunction contemplated in the second schedule does not in my opinion relate the nature of an order of injunction asked for in the present case. Section 151 of the Code is undoubtedly the head of jurisdiction. There is no fetter on this jurisdiction. See A. I. R. 1962 s. C. 527 (4). Counsel for the petitioner contended that though the application is not intituled in the matter of the suit in this court there was nothing to prevent the applicant from invoking jurisdiction in the matter of the suit. The further contention is that all facts and circumstances which give jurisdiction have been invoked. It is well settled that everything is permissible unless it is prohibited by the Code. I am, therefore, of opinion that I can exercise jurisdiction under sec. 151 in the present case. 4. AN almost similar question came up for consideration before S. R. Das, J. as he then was, in the decision in Chhedilal Hariniwas v. Britover Limited (6)reported in 52 C. W. N. 45. There disputes arose between two parties in respect of a letter of credit. The contract contained an arbitration clause. There was an application for injunction and there was also an application under section 34 of the Arbitration Act, in view of the urgency of the time mentioned in the letter of credit it was considered expedient to deal with the application for injunction first. The contract contained an arbitration clause. There was an application for injunction and there was also an application under section 34 of the Arbitration Act, in view of the urgency of the time mentioned in the letter of credit it was considered expedient to deal with the application for injunction first. It was contended there that section 41 of the arbitration Act read with second schedule thereto conferred power on the court to grant injunction. The application for injunction was made there in a suit which was pending and which had not yet been stayed and the Court had apart from section 41 of the Arbitration Act power to make an order for injunction in a pending suit. Das, J thereafter said "even if the Court thinks fit to exercise its discretion by granting a stay of proceedings, that fact does not oust the jurisdiction of the Court to give auxiliary relief e.g., by the appointment of a Receiver or by granting an injunction. The Court' can, in its discretion, grant such relief and then stay the action as regards all other matters. See Russell on Arbitration 13 Edn. p. 110 in Zalinoff v. Hammond (7) (1898) 2 Ch. 92 the Court appointed a Receiver and then stayed the suit. Even after an order for stay has been made and during the operation of the stay order the Court may exercise its power to grant an injunction as was done in Willesford v. Watson (8) (1873) 8 Ch. 473." This observation is an authority for the proposition that the Court has power to grant an injunction even after an order for stay has been made. In the facts and circumstances of the case I have no hesitation in coming to the conclusion that the suit instituted in the City Civil Court is malafide, vexatious, oppressive and has been instituted solely for the purpose of rendering the order of this Court ineffective, I, therefore, make an order that the respondent and its servants, be restrained by an injunction from proceeding with Title Suit No. 403 of 1962 pending in the City Civil Court. The petitioner is entitled to costs of this application.