Globe Paper Mills Ltd. v. Printpak Machinery Ltd. — 1984 DIGILAW 48 (CAL)

JUDGMENT 1. This is a special suit under section 20 of the Arbitration Act taken out by Globe Paper Mills Ltd. for filing the arbitration agreement. The history of the case is as follows. The parties entered into an agreement dated 11th December, 1981. The contract contained an arbitration clause. Disputes and differences having arisen between the parties in respect of the said contract the petitioner made claims against the respondent and by a letter dated 3rd September, 1982 demanded the same. Thereafter on 1st October, 1982 the petitioner filed the present Special Suit No.67A of 1982 in this Court. Subsequently on 8th October 1982 the respondent filed a special suit in the Delhi High Court numbered as 1342A of 1982 praying for filing of the same arbitration agreement. Thereafter on the same day the respondent also filed an interlocutory application in the special suit filed in the Delhi High Court. On 3rd February, 1983, Globe Paper Mills Ltd. the petitioner herein, filed an application under section 31(4) of the Arbitration Act and section 10 of the Civil Procedure Code in the Delhi High Court for dismissal or stay of the Special Suit No.1342A of 1982 pending before the Delhi High Court. The said application is still pending. On 31st March, 1983 Delhi High Court passed an order in the application of Globe Paper Mills Ltd., for stay of Special Suit No.1342A pending before it holding that it was not necessary to decide the pending application till the framing of the issues. On the same day another order was passed by the Delhi High Court noting that Globe Paper Mills Ltd. did not file its Written Statement in the Special Suit pending before it. On 5th September, 1983 an order was passed by the Joint Registrar, Delhi High Court noting that Globe Paper Mills had not filed its Written Statement in the Special Suit No.1342A of 1982. Thereafter on 15th September, 1983 by an order the Delhi High Court struck out the defence of Globe Paper Mills in that special suit. On 6th October, 1983 an order was passed by the Delhi High Court in Special Suit No.1342A of 1982 for filing the arbitration agreement and appointing Mr. Joshi as arbitrator. 2. In the present application the respondent filed an affidavit on 7th September, 1983. On 6th October, 1983 an order was passed by the Delhi High Court in Special Suit No.1342A of 1982 for filing the arbitration agreement and appointing Mr. Joshi as arbitrator. 2. In the present application the respondent filed an affidavit on 7th September, 1983. The main defence in the affidavit-in-opposition is that in view of the order dated 6th October, 1983 already passed by the Delhi High Court in Special Suit No.1342A of 1982 appointing the arbitrator, this High Court has no jurisdiction to entertain the pending application being Special Suit No.67A of 1982. Mr. Chatterjee appearing for the petitioner submits that Calcutta Court has exclusive jurisdiction as the present application was made earlier than the application in Delhi Court. Hence, the order of reference dated 6.10.83 was without jurisdiction by virtue of the provision of section 31, sub-section (4) of the Arbitration Act. Mr. Khanna appearing in support of the respondent submits that section 31(4) of the Arbitration Act has no application in the facts and circumstances of this case because a special suit under section 20 is not an application within the meaning of “in any reference” mentioned in sub-section (4) of section 31 of the Arbitration Act According to him section 20 application are beyond the scope of section 31, sub-section (4). These are independent applications. After a reference will start pursuant to an order passed in a section 20 application all other application arising out of that reference or in connection with or in relation to that reference will come under the purview of sub-section (4) of section 31. In support of his contention Mr. Khanna cited the case of (1) Kumbha Mawji Vs. Dominion of India (now Union of India), AIR 1953 SC 313 , head note (c) of which stated. ‘In the context of section 31(4) it is reasonable to think that the phrase ‘in any reference’ mean ‘in any matter of a reference’. The word ‘reference’ having been defined in the act as ‘reference’ to arbitration’, the phrase ‘in a reference’ would mean ‘in the matter of a reference to arbitration’. The phrase ‘in a reference’ is therefore comprehensive enough to cover also an application first made after the arbitration is completed and a final award is made”. The word ‘reference’ having been defined in the act as ‘reference’ to arbitration’, the phrase ‘in a reference’ would mean ‘in the matter of a reference to arbitration’. The phrase ‘in a reference’ is therefore comprehensive enough to cover also an application first made after the arbitration is completed and a final award is made”. He also relied on paragraph 15 of this report which is as follows : - “As already stated the entire basis of the limited construction is the meaning of the phrase ‘in any reference’ used in sub-section (4) as meaning’ in the course of any reference’. But such a construction thereof is not in any ordinary sense compelling”. The preposition ‘in is used in various contexts and is capable of conveying various shades of meaning. In the Oxford, English Dictionary one of the shades of meaning of this preposition is: Expressing reference or relation to something’ in reference or regard to ; in the case of, in the matter, affair or province of.” 3. This case, in my opinion, is not supporting Mr. Khanna’s contention that section 20 application is an independent application and cannot be treated as an application “in any reference” as contemplated by the sub-section (4) of section 31 of the Arbitration Act. The vide shades of meaning of the preposition in as held by the Supreme Court stand in the way of construction put by Mr. Khanna. 4. Mr. Pratap Chatterjee, appearing in support of the application relied on (2) U.P. Electric Company Vs State of U.P., 1970 (1) Supreme Court Appeals, at page 21. He invited my attention at page 30. "There are different sections in the Arbitration Act whereby an application is to be made even before any reference has been made section 8 for instance, provides for an application to invoke the power of the Court, when the parties fail to concur in the appointment of an arbitrator to whom the reference can be made. So also section 20 provides for an application to file the arbitration agreement in Court so that an order of reference to an arbitrator can be made. These are clearly applications anterior to the reference by they lead to a reference. So also section 20 provides for an application to file the arbitration agreement in Court so that an order of reference to an arbitrator can be made. These are clearly applications anterior to the reference by they lead to a reference. Such application are undoubtedly applications “in the matter of reference" and any fall within the purview of section 31(4) of the Act even though these applications are made before any reference has taken place”. 5. He, therefore, submits that the Supreme Court has already held that a special suit under section 20 of the Arbitration Act comes within the purview of section 31, sub-section (4) of the Arbitration Act, and therefore such an application when it is first made in a particular Court would normally fix that Court with exclusive jurisdiction. On the facts and circumstances of this case the Special Suit No.67A of 1982 was first made in this Court on 1st October, 1982. The Special Suit No.1342A of 1982 was made in the Delhi High Court on 8th October, 1982. Therefore the Calcutta High Court has exclusive jurisdiction to deal with the arbitration contained in the agreement between the parties dated 11th December, 1981. He also invited my attention that in the decision of Kumbha Mawji Vs. Dominion of India (now Union of India), AIR 1953 SC 313 (Supra), cited by Mr. Khanna was considered by the Supreme Court in U.P. Electric Company Vs. State of U.P., (Supra). 6. Mr. Khanna, however, pointed out that in 1970 (1) Supreme Court Appeals at page 21, the main point for decision before the Court was whether section 34 application should be treated as an application within the meaning of section 31(4) of the Arbitration Act. Therefore the observation of the Supreme Court regarding section 20 application is nothing but an obiter dictum. There was no final decision by the Supreme Court on this point and as such the case cited by Mr. Pratap Chatterjee is not an authority of this point. 7. The principle of law enunciated by the Supreme Court by way of obiter dictum must be taken to be the law declared by the Supreme Court even if the pronouncement of such principle was not necessary for the decision of the case before it. What is to be determined is whether the Supreme Court intended to lay down any principle of law. What is to be determined is whether the Supreme Court intended to lay down any principle of law. If any principle of law is laid down after consideration by the Supreme Court, it amounts to declaration of law for the purpose of Article 141 of the Constitution even though such principle has been laid down by way of obiter dictum. The authorities on this points are: (3) Ram Narain v. S.B. & I. Co., AIR 1956 Supreme Court at page 614 and (4) Sardar Ajaib Singh, Calcutta v. Commissioner of Wealth Tax, AIR 1969 Calcutta 249 at page 253. In that view of the matter, even if the principle laid down in the case cited by Mr. Pratap Chatterjee is obiter dictum it is binding on all Courts in India. 8. Mr. Khanna also submits that the order passed by the Delhi High Court on 6th October, 1983 is final adjudication of the whole thing. That being so the same question for filing the arbitration agreement etc. cannot be agitated in this application. The present application is hit by the principle of res judicata. 9. I don't think that Mr. Khanna is correct or right in his submission. If the Delhi High Court has no jurisdiction at all to decide any matter regarding this arbitration agreement in view of the operation of sub-section (4) of section 31 of the Arbitration Act the decision of the Delhi High Court is a nullity and cannot be a final adjudication of the issues before it and cannot help Mr. Khanna in this matter. The principle of res judicata will not apply on the facts and circumstances of this case. 10. The third point raised by Mr. Khanna is that in all the invoices on the basis of which the payments were made there is express stipulation that in the case of dispute the Courts in Delhi will have jurisdiction. 11. While he was arguing on this point I asked him whether there was any such clause in the written agreement dated 11th December, 1982. He conceded that there was no such, clause in the written agreement between the parties and also admitted that the invoices were documents which came into existence after the agreement was concluded. He also expressly abandoned this argument when I pointed out to him that in absence of such a clause in the main agreement Mr. He conceded that there was no such, clause in the written agreement between the parties and also admitted that the invoices were documents which came into existence after the agreement was concluded. He also expressly abandoned this argument when I pointed out to him that in absence of such a clause in the main agreement Mr. Khanna had no basis for this submission, 12. Apart from the points referred to have no other point was pressed by Mr. Khanna in this application before me. 13. Under the circumstances I have no doubt in my mind that the entire proceedings before the Delhi High Court in Special Suit No. 1342A of 1982 including the order for Arbitration passed on 6th October, 1983 and all other orders passed by the Delhi High Court in that application or in that connection are without jurisdiction. In that view of the matter, there will be an order in terms of prayer (a) for filing the arbitration agreement dated 11th December, 1982. Parties are given 4 weeks' time to appoint their Arbitrator, in accordance with the arbitration agreement between the parties. The matter will appear in my list 5 weeks' hence marked "To be mentioned" for ascertaining whether the parties have agreed to any Arbitrator or not. It not then the Court will appoint an" Arbitrator. 14. It is submitted on behalf of the respondent that the undertaking given by the respondent on 7th December, 1983 was only until the disposal of this application. As the application has been disposed of the respondent should be absolved from that undertaking. Mr. Chatterjee however, submits that his client is apprehending that if the respondent is absolved from the undertaking, the respondent will proceed with the reference started by the Delhi High Court and that would mean another round of litigation. In that view of the matter he orally applies for an injunction restraining the respondent from proceeding with the reference. I am not inclined to pass any order on oral application. But the respondent through its Advocate-on-Record undertakes to Court to continue the undertaking up to this Friday, i.e., 24th February, 1984 and not to proceed with the reference started by the Delhi High Court. All parties to act on a signed copy of the minutes of this order.