Santosh Kumar Agarwal v. Phalguni Banerjee — 1993 DIGILAW 200 (CAL)

JUDGMENT PRABIR KUMAR MAJUMDAR, J. 1. This is an appeal from an order dated 5th April, 1993 passed by a learned Judge of this court taking arbitration matters. The order under appeal is an order on the application taken out by the appellant under s. 41 of the Arbitration Act, 1940. 2. When the stay application and also the application for admission of the appeal was moved the respondents raised an objection as to the maintainability of the appeal. The objection is that the order under appeal is not an order appealable under s. 39 of the Arbitration Act, 1940. The appellant, however, contends that s. 39 takes within its ambit an order made under this Act. The submission of the appellant is that the order under appeal being an order made under s. 41 of the Arbitration Act is not an order under this Act, viz., the Arbitration Act, 1940. Therefore, according to the learned counsel for the appellant, s. 39 of the Arbitration Act is not applicable to the order from which this appeal is preferred. It is submitted on behalf of the appellant that if the order under appeal satisfies the test of judgment within the meaning of clause 15 of the Letters Patent then this court can entertain this appeal under clause 15 of the Letters Patent. 3. Learned counsel for the appellant has also taken us to the scheme of the Arbitration Act, 1940 and he submits that the provisions in Chapter I and other Chapters till Chapter V are the provisions relating to the matters which can only be considered under the Arbitration Act and some exclusive powers are conferred on this Court by the Arbitration Act when the court considers matters relating to arbitration. Now, the expression used in s. 39 of the Arbitration Act i.e., under this Act contemplates orders made by the Court while exercising jurisdiction under the Arbitration Act in the matters contained under any of the provisions from Chapter I to Chapter V. 4. The learned counsel for the appellant also submits that Chapter VII of the Arbitration Act deals with miscellaneous provisions and any order passed by the court under any of the provisions contained in Chapter VII will be an order not under the Arbitration Act but an order made under the general provision of law. The learned counsel for the appellant also submits that Chapter VII of the Arbitration Act deals with miscellaneous provisions and any order passed by the court under any of the provisions contained in Chapter VII will be an order not under the Arbitration Act but an order made under the general provision of law. It is also the submission of the learned counsel for the appellant that if any order is made under any of the provisions contained in Chapter VII, i.e., from s. 40 to s. 47, then such order would not be an order under the Arbitration Act, and as such s. 39 of the Arbitration Act would not be attracted to those orders. It is also his submission that if such order made under Chapter VII of the Arbitration Act, 1940 is a judgment within the meaning of clause 15 of the Letters Patent then this court being a Chartered High Court can entertain an appeal from such order. It is also the submission on behalf of the appellant that Letters Patent cannot be abrogated by the Arbitration Act nor can the Arbitration Act fetter any right conferred under the Letters Patent. The learned Counsel for the appellant submits that there is a clear judicial pronouncement on this and that is contained in the decision reported in Shah Babulal Khimji vs. Jayaben D. Kanta & another, AIR 1981 SC 1786 . The learned counsel also submits that this view has also been accepted by the Division Bench of this court in a decision reported in M/s. Unit Construction Co. Pvt. Ltd. vs. University of North Bengal, 1996 (2) CHN 275. 5. The learned counsel for the respondent has submitted that this impugned order made under s. 41 of the Arbitration Act is an order in aid of matters, enumerated in the Second Schedule of the Arbitration Act. It is his submission that the appellant has made an application praying for an order of injunction restraining the respondents from doing certain acts and also for appointment of Receiver. According to the learned counsel appearing for the respondent this application is for an order in respect of the matters enumerated in the Second Schedule to the Arbitration Act, 1940 which, inter alia, provides the matters on which the power can be exercised by the court under s. 41 of the Arbitration Act. According to the learned counsel appearing for the respondent this application is for an order in respect of the matters enumerated in the Second Schedule to the Arbitration Act, 1940 which, inter alia, provides the matters on which the power can be exercised by the court under s. 41 of the Arbitration Act. The Second Schedule inter alia, refers to powers namely preservation, interim custody or sale of any goods, securing the amount in difference in the reference, the detention, preservation or inspection of any property or thing which is the subject of the reference and also other related matters including interim injunctions or the appointment of a Receiver. It is submitted on behalf of the respondents that s. 41 gives the power, inter alia, to the court for the purpose of, and in relation to, arbitration proceedings, 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. 6. Learned counsel for the respondents has also referred to s. 104(1) of the Code of Civil Procedure, which provides that an appeal shall lie from the orders mentioned thereunder, and save as otherwise expressly provided in the body of the Code or by any law for the time being in force, from ho other orders. 7. Referring to s. 39 of the Arbitration Act, learned counsel for the respondents submits that the power which was earlier contained in the Code of Civil Procedure has not been fully conferred by s. 39 of the Arbitration Act while enacting this Act in 1940. Section 39(1) of the Arbitration Act, 1940 provides that an appeal lies from the orders mentioned thereunder under the Act and from no others. Learned counsel for the respondents, therefore, submits that s. 39 of the Arbitration Act does not contain the clause by any law for the time being in force. It is, therefore, the submission of the learned counsel for the respondents that whatever order is made under the Arbitration Act, will only be appealable if it comes within the categories of orders mentioned in s. 39 of the Arbitration Act. 8. Several cases have been cited on the point both by the appellant and the respondents, to which we shall refer in this judgment. 9. 8. Several cases have been cited on the point both by the appellant and the respondents, to which we shall refer in this judgment. 9. The sole question which we have been called upon to consider is whether this appeal can be entertained under the Letters Pan tent when, admittedly, the order sought to be appealed from, is not an appealable order under s. 39 of the Arbitration Act. 10. Section 39 of the Arbitration Act is as follows:- "39. (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 decrees of the court passing the 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 proceeding 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 in appeal under this section, but nothing in this section shall affect or take away any right to appeal in the Supreme Court." 11. Section 41 of the Arbitration Act is as follows:- "41. 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. (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." 12. The order sought to be appealed from is an order under s. 41(b) of the Arbitration Act. 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." 12. The order sought to be appealed from is an order under s. 41(b) of the Arbitration Act. This order is not appealable under s. 39 of the Arbitration Act, because it does not come under any of the categories of orders mentioned under s. 39 of the Act. 13. The Supreme Court in the case of H.M. Kamaluddin Ansari & CO. vs. Union of India & other, AIR 1984 SC 29 , observed that clause (a) of s. 41 of the Arbitration Act made only the procedural rules of the Civil Procedure Code applicable to the proceedings in court under the Arbitration Act. This clause, according to the Supreme Court, did not authorise the court to pass an order of injunction or of appointment of Receiver. This power, the Supreme Court observed, was conferred by clause (b) of s. 41 of the Arbitration Act read with the Second Schedule to the Arbitration Act. Therefore, the source of power was referable to clause (b) of s. 41 of the Act and was not or could not be, according to the Supreme Court, an order under clause (a) of s. 41 of the Arbitration Act. 14. Quoting the observation of the Supreme Court in an earlier case, viz., Union of India vs. Raman Iron Foundary, AIR 1974 SC 1265 , the Supreme Court in Ansari's case has observed that the court has power under s. 41(b) of the Arbitration Act read with the Second Schedule thereto to issue interim injunction or give any other reliefs mentioned in the said Second Schedule, but such relief can only be for the purpose of and in relation to arbitration proceedings. 15. It appears, therefore, that the order sought to be appealed from has been made for the purpose of and in relation to arbitration proceedings. This power of court is only exercisable under the Arbitration Act and not under the general provisions of law as sought to be contended on behalf of the appellant. It, therefore, appears to us that this is an order under the Act, viz., Arbitration Act, 1940. This power of court is only exercisable under the Arbitration Act and not under the general provisions of law as sought to be contended on behalf of the appellant. It, therefore, appears to us that this is an order under the Act, viz., Arbitration Act, 1940. That being so, it would only be appealable if it comes within any of the categories of orders mentioned in s. 39 of the Arbitration Act. Admittedly, this order is not an order appealable under s. 39 of the Arbitration Act. 16. It has been contended on behalf of the appellant that if any order is not appealable under s. 39 of the Arbitration Act, 1940, but if it is a judgment within the meaning of Letters Patent, then the court can entertain such appeal although not appealable under the Arbitration Act, 1940. It has also been contended as indicated above, that the Arbitration Act does not fetter any right conferred under the Letters Patent Therefore, if it is a judgment within the meaning of clause 15 of the Letters Patent, the appeal therefrom is entertain able by the court under clause 15 of the Letters Patent. Learned counsel for the respondents has, however, drawn our attention to clause 44 of the Letters Patent, which reads as follows:- "44. POWER OF INDIAN LEGISLATURE PRESERVED – And we do further ordain and declare, that all the provisions of these OUR Letters Patent are subject to the legislative powers of the Governor-General in Legislative Council and also of the Governor General in Council under s. 71 of the Government of India Act, 1915, and also of the Governor-General in cases of emergency under s. 72 of that Act, and may be in all respects amended and altered thereby." It appears from clause 44 of the Letters Patent that the Letters Patent is subject to the legislative powers of the Governor-General in Legislative Council and also of the Governor-General in Council under the provisions of the Government of India Act, 1915. 17. A Division Bench of this court in the case of R. Wright & Partner Ltd. vs. Governor General in Council, 52 CWN 224, has observed that the right of appeal under clause 15 of the Letters Patent is by clause 44 subject to the legislative powers of the Governor-General in Council and s. 39 of the Arbitration Act, 1940, has explicitly taken away the right. B.K. Mukherjea, J. (as he then was), speaking for the Bench, made the following observation:- "Our conclusion, therefore, is that s. 39 of the Arbitration Act is sufficiently explicit to include an appeal under clause 15 of the Letters Patent as well and as the provisions of clause 15 of the Letters Patent have to be taken subject to the Legislative Powers of the Governor-General in Legislative Council we must hold that to this extent the right of appeals has been curtailed and modified." 18. The Division Bench, in the said case, also accepted the view expressed by the Madras High Court in a case, viz., Penugouda Radha Krishna Murthy vs. V.A.J. Ethirajulu Chetty, AIR 1945 Madras 184, where Leach, C.J. (as he then was), speaking for the Bench, observed as follows:- "It is true that clause 15, Letters Patent, if it stood alone, would allow the appeal, but clause 44 Letters Patent, says, that the provisions are subject inter alia to the Legislative powers of the Governor-General in Legislative Council. The Indian Arbitration Act is an Act of the Central Legislature and the provisions of s. 39 must prevail." 19. It also appears that in s. 104 of the Code of Civil Procedure it is provided that an appeal shall lie from the following orders and save as otherwise expressly provided in the body of the Code or by any law for the time being in force, from no other orders. The clause by any law for the time being in force is, however, excluded by s. 39 of the Arbitration Act while adopting the other clauses, viz., save as otherwise expressly provided in the body of this Code, (here the expression used is under this Act) and from no others. It is contended by the learned counsel for the respondents that the Legislature deliberately excluded that clause by any law for the time being in force so as to exclude the operation of Letters Patent. According to the learned counsel for the respondents, it was, therefore, the intention of the Legislature that the Arbitration Act should be a Code by itself and no other law should interfere with the rights or powers conferred under this Act, i.e., the Arbitration Act, 1940. According to the learned counsel for the respondents, it was, therefore, the intention of the Legislature that the Arbitration Act should be a Code by itself and no other law should interfere with the rights or powers conferred under this Act, i.e., the Arbitration Act, 1940. It is submitted that this view has also found acceptance in the decision of the Supreme Court in the case of Union of India vs. Mohindra Supply Co., AIR 1962 SC 256 . It may be mentioned that this decision of the Supreme Court rested on the consideration of the applicability of the Letters Patent of sub-section (2) of S. 39 of the Arbitration Act. 20. The respondents have also referred to another decision of the Division Bench of this court in the case of Rebati Ranjan Chakravarti vs. Suranjan Chakravarti & other, AIR 1963 Cal. 642 . It is observed, inter alia, by the Division Bench in that case that an application for appointment of Receiver in an arbitration proceedings can only be made under the Arbitration Act and this power is exercisable under S. 41(b) of the Arbitration Act read with Second Schedule thereto and this cannot be made under any other provision of law, because the Arbitration Act is the complete Code in itself. This view has also found favour by another Division Bench of this Court in the case of State of West Bengal & other vs. Anil Kumar Bhuniya, 86 CWN 856. There, it has been observed, inter alia, that an order of injunction made in excercise of powers under the Code of Civil Procedure as adopted by the Arbitration Act is an order under the Act (i.e., the Arbitration Act) and as such is subject to the other provisions of the Act, and that there is no right of appeal conferred against such orders made under the Arbitration Act. 21. Another decision has also been cited on behalf of the respondents, i.e., the case of Madhavdas Devidas & other vs. Vithaldas Vasudeodas & other, AIR 1952 Bombay 229. 21. Another decision has also been cited on behalf of the respondents, i.e., the case of Madhavdas Devidas & other vs. Vithaldas Vasudeodas & other, AIR 1952 Bombay 229. In that case, it has been observed, inter alia, by the Bombay High Court that s. 39(1) of the Arbitration Act is modeled upon S. 104 of the Code of Civil Procedure and the words which were added deliberately in order to save the right under the Letters Patent in s. 104 of the Code of Civil Procedure, were specifically omitted when the Arbitration Act was enacted in 1940. 22. There is also another unreported decision cited by the learned counsel for the respondents, i.e., in Uttar Pradesh State Electricity Board vs. Benaras Light & Power Company Ltd., Appeal arising out of Matter No. 3258 of 1989 (In voluntary liaudation), judgment dated April 9, 1992 delivered by the Division Bench presided over by N.P. Singh, C.J. (as he then was). There, it was held that the order under appeal before that Bench was neither an order appealable under s. 39 of the Arbitration Act nor an order under clause 15 of the Letters Patent. The Bench observed, inter alia, that from a bare reference to the judgment in Union of India vs. Mohindra Supply Co., AIR 1962 SC 256 , it appeared that the question therein was expressly considered and it was held by the Supreme Court in that case that against an order under s. 39 of the Arbitration Act no appeal was maintainable either under the Arbitration Act or under the Letters Patent of this court. 23. Learned counsel for the appellant has, however, heavily relied on a decision of the Supreme Court in the case of Shah Babulal Khimji vs. Jayaben D. Kanta & another, AIR 1981 SC 1786 . Learned counsel has referred to in particular, paragraph 34 of the said Report, which is as follows:- "34. 23. Learned counsel for the appellant has, however, heavily relied on a decision of the Supreme Court in the case of Shah Babulal Khimji vs. Jayaben D. Kanta & another, AIR 1981 SC 1786 . Learned counsel has referred to in particular, paragraph 34 of the said Report, which is as follows:- "34. It cannot be contended by any show of force that the Order passed by the Trial Judge being an interlocutory order, no appeal would lie to the Division Bench or that the provisions of the Arbitration Act giving a right of appeal to a litigant from the order of a Trial Judge to the Division Bench in any way fetter or override the provisions of the Letters Patent." Relying on the above observation of the Supreme Court, learned counsel submits that the provisions of the Arbitration Act giving a right of appeal to a litigant from the order of the Trial Judge to the Division Bench, does not in any way fetter or override the provisions of the Letters Patent. Learned counsel submits that even if it is obiter in nature, it is binding on this court. It may be mentioned that in this case it is not in issue whether the order, though not appealable under the Arbitration Act, may be entertained by the court in appeal if it is a judgment within the meaning of clause 15 of the Letters Patent. 24. Learned counsel for the appellant has also relied on another decision of the Division Bench of this court in the case of M/s. Unit Construction Co. Pvt. Ltd. vs. University of North Bengal, 1996 (2) CHN 275 and it has been submitted that the Division Bench in that case has entertained an appeal, though not appealable under the Arbitration Act as, according to the Division Bench, it was a judgment within the meaning of clause 15 of the Letters Patent and as such it is appealable. In that case before the Division Bench of this court, there was an order refusing to entertain an award on the ground of jurisdiction and from that order an appeal had been preferred. In that case before the Division Bench of this court, there was an order refusing to entertain an award on the ground of jurisdiction and from that order an appeal had been preferred. The Division Bench while deciding the appeal, held that this was not an order under the Arbitration Act as it was at the threshold stage and it was in the nature of an order under Order 7, Rule 10 of the Code of Civil Procedure, for which there was no corresponding provision in the Arbitration Act, 1940 and if that was not an order under Arbitration Act, then it could be entertained if it satisfied the test of the judgment within the meaning of clause 15 of the Letters Patent. 25. In our view, this decision in the case of Unit Construction Co. (supra) is distinguishable as the order under that appeal was at the threshold stage of the arbitration proceedings and it was not an order under the Arbitration Act and could not be an order under the Arbitration Act as there was no provision for making an order to return the award for being filed in the proper court as contained in Order 7, Rules 10 of the Code of Civil Procedure. Therefore, it is not an authority in this case when we are confronted with the question that when an order is made under the Arbitration Act, 1940, whether such order is appealable under s. 39 of this Act. 26. In the case of Unit Construction Co. (supra), the Division Bench of this court also noticed another decision of the Division Bench of this court in the case of Tobu Enterprises Pvt. Ltd. vs. Camco Industries Ltd., AIR 1984 Cal. 24 , where it was held that the order refusing to grant leave under Letters Patent on an application under s. 20 of the Arbitration Act, was not an order under the Arbitration Act, and therefore, whether it was appealable or not could only be considered in the context of clause 15 of the Letters Patent. But, in the instant appeal, there is no doubt that the order under appeal as made under s. 41(b) of the Arbitration Act is an order under the Act, i.e., the Arbitration Act, 1940. But, in the instant appeal, there is no doubt that the order under appeal as made under s. 41(b) of the Arbitration Act is an order under the Act, i.e., the Arbitration Act, 1940. If it is an order under the Arbitration Act, then it can only be appealable if it is brought under the purview of s. 39 of the Arbitration Act. 27. Admittedly this order is not appealable under the Arbitration Act. If this order being an order under the Arbitration Act is not appealable under s. 39 of the Arbitration Act, 1940, this appeal cannot be entertained as not being appealable under s. 39 of the Arbitration Act. In this appeal, we are not going into the controversy whether the Arbitration Act fetters or overrides any right or power conferred by the Letters Patent. Since we have held that this being an order made under the Arbitration Act and the Arbitration Act being complete Code by itself, is not appealable under s. 39 of the Arbitration Act, we are, therefore, unable to entertain this appeal. We do not express however, any opinion as to whether the Arbitration Act fetters any right or power given under the Letters Patent. 28. As we are of the view that this appeal as sought to be preferred is not entertainable, we need not go into the merits of this application for stay of operation of the order under appeal. This application is, therefore, dismissed. 29. There will be no order as to costs. 30. Learned counsel for the appellant prays for stay of operation of this Judgment & Order. The interim order dated 20.4.1993 is modified to the effect that the status quo order of that day i.e., 20.4.1993, with regard to the shares will further continue till 7.5.1993. All parties are to act on a signed copy of the minutes of the operative part of this judgment upon usual undertaking. I agree. Appeal dismissed.