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1985 DIGILAW 837 (RAJ)

Padam Chand Tambi v. Damodar Johar

1985-12-16

G.M.LODHA

body1985
G.M. LODHA, J.—This is a civil revision petition filed by the defendants-petitioners against the order of the District Judge, Jaipur City, Jaipur. 2. Having heard the learned counsel for the parties, I find that the principal question raised in this case, whether the order of the lower court directing that the applications, one under 0.39 R- 1 & 2 CPC and another under O. 40 R. 1, CPC filed by the plaintiff-non-petitioner No. 1, Damodar and the application under S. 34 of the Arbitration Act filed by the defendants-petitioners, would be decided simultaneously; suffers from any error of jurisdiction as contemplated by S. 115 C. P. C. 3. The lower court has come to the conclusion that the court has got jurisdiction to pass an order of injunction for appointment of the Receiver under S. 34 of the Arbitration Act inspite of the stay procedure and, therefore, ordered that the application under S. 34 of the Arbitration Act, will be heard and decided simultaneously so far as the injunction application and, application for appointment of Receiver are concerned. 4. The crucial question which has been canvassed by Shri D.D. Patodiya, the learned Advocate, on behalf of the applicant-petitioners, is that when there is arbitration clause in the partnership deed, the plaintiff-non-petitioner No. 1, should not have rushed to the court of law. He could have proceeded only under the provisions of the Arbitration Act. The defendants-petitioners filed application under S. 34, of the Arbitration Act for the stay of the proceedings. 5. According to him, the effect of such proceedings will be that the application under O. 39 Rr. 1 & 2 CPC and under 0.40 R. 1, CPC, would not be heard. In such circumstances, Shri Patodiya. argued that it was imperative for the lower court to hear and decide the application under S. 34 of the Arbitration Act; and the proceeding to hear the application for injunction and appointment of Receiver should only be taken if the same is dismissed. 6. Shri Patodiya, submitted that the finding of lower court that under S. 47 of the Arbitration Act inspite of the stay, under S. 34 of the Arbitration Act the court can proceed, is in excess of its jurisdiction. 6. Shri Patodiya, submitted that the finding of lower court that under S. 47 of the Arbitration Act inspite of the stay, under S. 34 of the Arbitration Act the court can proceed, is in excess of its jurisdiction. According to him, S, 41 empowers for the appointment of Receiver or bearing of the injunction application only for the purposes of arbitration proceedings before the court, and not otherwise. 7. In support of his contention, Shri Patodiya relied upon the judgment of the Apex Court in M/s. H.M. Kamaiuddin Ansari & Co. vs. Union of India (1). 8. S. 41 of the Arbitration Act 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 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". 9. The Apex Court, while interpreting S. 41 of the Arbitration Act, observed as under:- "In view of clause (b) of Section 41 the Court has been given power of passing orders in respect of any of the matters set out in second schedule for the purpose of and in relation to any proceedings before the Court. The second Schedule of the Arbitration Act interalia includes interim injunction and the appointment of receiver. But the Court has got the power to pass an order of injunction only for the purpose of and in relation to a arbitration proceedings before the Court." 10. The emphasis is that the injunction can be granted only for the purpose and in relation to the proceedings under the provisions of the Arbitration Act before the Court. 11. Shri R. C. Kasliwal, the learned Advocate, on behalf of the non-petitioners-plaintiff, on the contrary relied upon the judgment of this Court in M/s. Bhonri Lal Hira Lal Vs, Prabhu Dayal (2). 12. 11. Shri R. C. Kasliwal, the learned Advocate, on behalf of the non-petitioners-plaintiff, on the contrary relied upon the judgment of this Court in M/s. Bhonri Lal Hira Lal Vs, Prabhu Dayal (2). 12. I find that so far as the above judgment of this Court in M/s. Bhonri-lal Hiralal Vs. Prabhu Dayal (Supra) is concerned, it has not interpreted S. 41, and, therefore, is of no relevance. 13. Shri Kasliwal, also relied upon the judgment of the Calcutta High Court in Arjun Agarwalla Vs. Baidya Nath Roy (3), which again is not a case of interpretation of S. 41 of the Arbitration Act, therefore, case assist this Court in proper decision of this revision petition. In Arjun Agarwalla Vs. Baidya Nath Roy (Supra), what was held that, what is incidental and supplementary proceedings, and the participation in which can debar a person raising objection under S. 34 of the Arbitration Act. 14. Yet another judgment referred to by Shri Kasliwal, is of Gujarat High Court, in State of Gujarat Vs. Ghanshyam Salt Works (4) which, again is of S. 34 of the Arbitration Act and the meaning of taking of steps in the proceedings. Next judgment relied upon by Shri Kasliwal, if of Allahabad High Court in Ram Shah Vs. Master Singh (5) wherein again the question is whether by using the injunction applications person who wants to take an advantage of S. 34 of the Arbitration Act, cannot be said to have waived his right under S. 34. 15. Shri Kasliwal, also argued that apart from S. 41 of the Arbitration Act, the Code of Civil Procedure empowers the Court to consider the application under O. 39 Rr. 1 & 2 CPC, and application under O. 40 R. 1, CPC and, therefore, the lower court was justified in taking the view that all the applications should be decided together. 16. In my opinion, when an objection regarding bar of civil proceedings on account of arbitration clause is taken by a party; unless the objection on the face of it is frivolous or vexatious, a civil court should not postpone hearing of that a application on any pretext including reason of simultaneous consideration with other application. 17. The Arbitration Act, provides O. 41 and, therefore, it is comprehensive. 17. The Arbitration Act, provides O. 41 and, therefore, it is comprehensive. In that view of the matter, as held by their Lordships of the Supreme Court in M/s H. M. Kamaluddin Ansari & Co. Vs. Union of India (Supra) the application for injunction of appointment of Receiver, should be connected with, or related to the arbitration proceedings only. 18. This, of course, is subject to the exception that if the Court comes to the conclusion that either there is no such arbitration clause or for any other reasons that clause cannot be enforced or that clause cannot prohibit the civil proceedings, then and then only other question regarding Receiver, or injunction or other matters of another categories or any other questions which can be raised by a party in a civil case can be considered In this view of the matter, I am firmly of the view that the lower court committed serious error of jurisdiction in refusing to decide the application under S. 34 of the Arbitration Act, and, postponing its decision on the ground that it would be simultaneously decided with other application for injunction and appointment of Receiver. 19. Shri Kasliwals submission that the above finding of the lower court cannot be called an error of jurisdiction or in any case it cannot result in failure of justice as contemplated by S. 115 CPC is equally untenable. 20. In the very nature of things, if the Court would accept the objection under S. 34 Arbitration Act, then all the proceedings would end and permitting the proceedings to continue would certainly be the result in serious failure of justice as contemplated by S. 115 CPC. 21. I am, therefore, convinced that all the requirement of S. 115 C. P. C. for entertaining this revision petition are fulfilled. 22. Consequently, this revision petition is accepted. The impugned judgment/order dated 5th October, 1985, is set-aside. The lower court is directed to first decide the application under S. 34, Arbitration Act and then as a legal and logical consequences of the decision of the application under S. 34, of the Arbitration Act, the other consequence would only follow.