SRI MADHAB SUNDER GAJAPATI NARAYAN DEB v. JAYSHREE CHEMICALS LTD.
1983-05-12
B.N.MISRA
body1983
DigiLaw.ai
JUDGMENT : B.N. Misra, J. - This revision is directed against the order dated 10-11-1982 passed by the learned Subordinate Judge, Parlakhemundi in M.J.C. No. 18 of 1982 appointing opposite party No. 1 as the receiver to work out the disputed salt factory subject to the conditions noted in the order. On 17-3-1982 opposite party No. 1 filed M.J.C. No. 12 of 1982 in the Court of the Subordinate Judge, Parlakhemundi against the present Petitioners and opposite parties 3 to 5 praying for a mandatory injunction restraining the Petitioners and opposite parties 3 to, 5 from interfering with the smooth running of the salt factory. During the pendency of M.J.C. No. 12 of 1982, on 31-3-1982 opposite party No. 1 filed a petition for interim injunction which was registered as M.J.C. No. 18 of 1982. After hearing counsel for the parties, the learned Subordinate Judge by his order dated 10-11-1982 appointed opposite party No. 1 as the receiver and this order is under challenge in this revision. 2. The facts of the case may be briefly stated. The Petitioners are the lessees under the Government of India in respect of the salt lands on which the Pundi Salt Factory is situated. The lessees obtained licence from the Salt Commissioner (opposite party No. 2) for manufacture of salt. At the instance of the Petitioners and with the approval of the Salt Commissioner, opposite party No. 1 was included as a joint licensee along with the Petitioners for the purpose of manufacture of salt. On 3-12-1970, the late Maharaja of Parlakhemundi and Petitioner No. 1 entered into an agreement with opposite party No. 1 for the purpose of manufacture and production of salt at the Pundi Salt Factory by the latter and other ancillary matters. The agreement also noted the fact that opposite party No. 1 had been permitted by the Salt Commissioner to be a joint licensee along with the late Maharaj and his son, Petitioner No. 1. On 20-12-1972 the late Maharajaa of Parlakhemundi and Petitioner No. 1 executed a power-of-attorney in favour of opposite party No. 1, though the Petitioners contend that the power-of-attorney was executed in favour of the three individuals named therein and not in favour of opposite party No 1. Around the year 1978, differences arose between the Petitioners and opposite party No. 1.
Around the year 1978, differences arose between the Petitioners and opposite party No. 1. The Petitioners gave notice to opposite party No. 1 on 6-6-1979 that the agreement between them executed on 3-12-1970 would terminate with effect from 1-7-1980 (document No. 10). On 28-6-1980 the Petitioners again wrote to opposite party No. 1 that the agreement dated 3-12-1970 would stand terminated on 30-6-1981. As the differences between the Petitioners' and opposite party No. 1 could not be resolved, the latter filed a petition before the Salt Commissioner (opposite party No. 2) requesting him to arbitrate on the disputes between the Petitioners and opposite party No. 1 as per Clause 21 of the licence for the manufacture of salt. In his letter dated 24-2-1982 (document No. 15), the Salt Commissioner informed opposite party No. 1 that the matter is receiving his attention and his decision shall be intimated in due course. Thereafter on 17-3-1982 opposite party No. 1 filed M.J.C. No. 12 of 1982 in the Court of the Subordinate Judge. Parlakhemundi. 3. The impugned order passed by the learned Subordinate Judge appointing opposite party No. 1 as the receiver is obviously one made u/s 41(b) of the Arbitration Act, 1940 (hereinafter referred to as the 'Act'). According to Section 41(b), if the Act, the Court shall have for the purpose of, and III 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. The appointment of a receiver is enumerated in Clause 4 of the Second Schedule. The power to appoint a receiver is controlled and regulated by Section 41 and 1983 the Court has no power and jurisdiction to appoint a receiver independently of the provisions contained in Section 41. Learned Counsel appearing for the Petitioners has urged that unless arbitration proceedings have been commenced and are pending, the Court will not have any jurisdiction to pass an interim order u/s 41(b) of the Act. This contention of the learned Counsel is correct and is accepted. I would only add that the said power of the Court can be exercised even in a case when the reference to arbitration has been made without the intervention of the Court and no proceedings are pending in connection there with in any Court.
This contention of the learned Counsel is correct and is accepted. I would only add that the said power of the Court can be exercised even in a case when the reference to arbitration has been made without the intervention of the Court and no proceedings are pending in connection there with in any Court. In Union of India v. Air Foam Industries (P) Ltd. AIR 1974 S.C. 1265 , it was held that the Court had power u/s 41(b) read with the Second Schedule to issue interim injunction but such interim injunction could only be "for the purpose of and in relation to arbitration proceedings". In Dayaram Gupta & D.R. Gupta v. Hindusthan Steel Ltd. 1974 (2) C.W.R. 1081 it was held that the pre-requisite condition to be flufilled before the power of a civil court was invoked u/s 41 of the Act was that there must be an arbitration proceeding as contemplated in the Act and then only the civil court could be asked to exercise its power of granting temporary injunction. In Baby Paul Vs. Hindustan Paper Corporation Ltd. and Another it was held that an order u/s 41(b) of the Act could not be made before and in anticipation of a reference to arbitration and that an arbitrator's authority to act arose by actual submission of particular dispute or disputes to the authority of a particular arbitrator by the parties, or by one of the parties to an arbitration agreement requesting the arbitrator appointed by the arbitration agreement itself or subsequent thereto enter upon the reference, or by the Court making an order of reference to the arbitrator as contemplated by Section 20 of the Act or where the Court referred the matters in difference to the arbitrator as provided for in Chapter IV of the Act. With respect, I agree with the principles of law enunciated in the aforesaid decisions. 4. In the present case, on the basis that Clause 21 of the licence is the arbitration clause and the Salt Commissioner is the arbitration, opposite party No. 1 has cased upon the Salt Commissioner to decide the disputes existing between itself and the Petitioner. The matter is pending with the Salt Commissioner.
4. In the present case, on the basis that Clause 21 of the licence is the arbitration clause and the Salt Commissioner is the arbitration, opposite party No. 1 has cased upon the Salt Commissioner to decide the disputes existing between itself and the Petitioner. The matter is pending with the Salt Commissioner. Learned Counsel for the Petitioners has submitted that Clause 21 of the licence is not an arbitration clause, the Salt Commissioner is not the arbitrator, no arbitration proceedings are pending before him and Clause 21 does not contemplate resolution of any disputes inter-se between the licences themselves. It is contended that in these circumstances, the learned Subordinate Judge acted in excess of his jurisdiction in appointing opposite party No. 1 as the receiver. Clause 21 of the licence provides: 21. Penalty: Violation of any of the conditions of the licence or failure to manufacture salt for two consecutive seasons without valid reasons shall render the licensee liable to suspension or shall make the licence liable to penalty not exceeding Rs. 500/- lieu thereof. Repeated violation of the conditions of the licence or in the event of the licensee having been convicted of criminal offence under the Indian Penal Code will render the licence liable to cancellation. The Salt Commissioner's decision shall be final in case of any dispute arising between the parties to this licence as to the interpretation of the terms of this licence or the obligations thereunder and such decision shall be final and binding on the licensee. Challenge as to the jurisdiction of the learned Subordinate Judge had also been made in the lower Court arid in this context the learned Subordinate Judge has observed: However, that may be, it is no doubt true, that the Petitioner now claims that the dispute is pending between the parties before the Salt Commissioner who has been appointed as sole arbitrator to decide the dispute as per Clause 21(b) of the licence whereas according to O.Ps. 1 to 6 no such dispute is pending before the said Salt Commissioner and the Salt Commissioner refused to intervene in the matter. So whether any proceeding between the parties is actually pending before the Salt Commissioner or not, is no doubt an issue of fact or a mixed question of law and fact.
1 to 6 no such dispute is pending before the said Salt Commissioner and the Salt Commissioner refused to intervene in the matter. So whether any proceeding between the parties is actually pending before the Salt Commissioner or not, is no doubt an issue of fact or a mixed question of law and fact. If any proceeding is pending before the Salt Commissioner, then definitely petition u/s 41 of the Arbitration Act filed by the Petitioner is maintainable. If no proceeding is pending before him, then the present case u/s 41 of the Arbitration Act is not maintainable in this Court. So at this stage, without taking down evidence, it cannot be said that the court has no jurisdiction to entertain the case.... It is clear from the above observation of the learned Subordinate Judge that he has not finally decided the question of jurisdiction and in order to arrive at a decision on that question he considers it necessary to call for evidence. Since the issue of jurisdiction is yet to be decided by the learned Subordinate Judge, I do not think it would be proper on my part to prejudge and express any opinion in the matter. It is open to the parties to urge all the points on the issue of jurisdiction before the learned Subordinate Judge at the hearing of M.J.C. No. 12 of 1982. 5. The next question to be considered is whether pending final determination on the question of jurisdiction, the learned Subordinate Judge was competent to appoint a receiver u/s 41(b) read with the Second Schedule of the Act. On a scrutiny of the impugned order I find that the learned Subordinate Judge has considered the pleadings of the parties as well as the materials placed before him and being prima-facie satisfied that he has jurisdiction and in view of the urgency of the situation has decided that opposite party No. 1 should be appointed as the receiver. There can be no doubt that mixed questions of fact and law involved in the issue of jurisdiction cannot always be decided at once. There is nothing wrong in a Court requiring evidence and needing time to decide the issue.
There can be no doubt that mixed questions of fact and law involved in the issue of jurisdiction cannot always be decided at once. There is nothing wrong in a Court requiring evidence and needing time to decide the issue. It does not seem just or proper that the Court after being prima-facie satisfied that it has jurisdiction would be completely powerless to pass any order for the observation of safety of the property in disputed during the time that is required to arrive at a final decision on the question of jurisdiction. In appointing opposite party No. 1 as the receiver subject to, the conditions contained in the impugned order, pending final decision on the question, the learned Subordinate Judge has done his best in safe-guarding the property in dispute and the interests of all concerned. I am not convinced that the impugaed order calls for interference. 6. In the result, this revision is dismissed and the order dated 10-11-1982 passed by the learned Subordinate Judge in M.J.C. No. 18 of 1982 is confirmed. The learned Subordinate Judge is directed to dispose of M.J.C. No. 12 of 1982 by 31-8-1983 under intimation to this Court. There will be no order as to costs. The records be sent back to the lower court immediately. Final Result : Dismissed