Indian Oil Corporation Ltd. v. India Carbon Limited
1995-04-13
NIKHIL NATH BHATTACHARJEE
body1995
DigiLaw.ai
Judgment In this matter arising under Section 34 of the Arbitration Act for stay of suit No. 180 of 1994 India Carbon Ltd. v Indian Oil Corporation Ltd., pending in this bench, defendant's preliminary objection as to lack of jurisdiction of this bench to deal with the matter was taken up for hearing and order. 2. The question for consideration is whether an application under Section 34 of the Arbitration Act for stay of a suit is a matter under the Arbitration Act or a proceeding in the suit. The question assumes importance because; as now by Determination, there are two different benches to deal with suits and arbitration matters exclusively. 3. Mr. Samaradittya Pal, learned counsel appearing for the defendant-objector submitted that the Arbitration Act, as its preamble shows, is a consolidating and amending act and is intended to be an exhaustive law on the subject. In this connection he placed his reliance on a decision of the Madras High Court reported in (1) AIR 1968 Madras 335 (page 340). His contention was that since the Act is an exhaustive law on the subject an application under Section 34 of the Act or as a matter of fact any petition under any of the provisions of the Arbitration Act has to be taken as a matter arisen under Arbitration Act and should therefore be dealt with by the Bench dealing with the Arbitration matters. Mr. Pal submitted that jurisdiction of a Court is conferred by law and in respect of High Court it is the Letters Patent and various other special Acts like the Companies Act, Arbitration Act etc. which determine jurisdiction. Mr. Pal argued that extensive conferment of jurisdiction on a court requires a number of judges to deal with such matters and it is for convenient functioning that distribution of subject matters to different benches becomes necessary. Such distribution, Mr. Pal said, is commonly known as Determination which the Hon'ble Chief Justice has the prerogative to do and a judge dealing with the matter which is not as per determination made by the Hon'ble Chief Justice, acts irregularly in the exercises of jurisdiction and in this sense the jurisdictional error is committed. In this connection Mr.
Such distribution, Mr. Pal said, is commonly known as Determination which the Hon'ble Chief Justice has the prerogative to do and a judge dealing with the matter which is not as per determination made by the Hon'ble Chief Justice, acts irregularly in the exercises of jurisdiction and in this sense the jurisdictional error is committed. In this connection Mr. Pal placed his reliance on a decision of this court reported in (2) 1989(2) CLJ 433 where Chief Justice, Desai sitting in a Division Bench held that decision by a judge without having jurisdiction as per determination is void and of no consequence. Mr. Pal submitted that as presently the Hon'ble Mr. Justice Altamas Kabir has been dealing with matters under the Arbitration Act as per determination made by the Hon'ble the Chief Justice, this bench dealing with suits has no jurisdiction to deal with this matter and that the Hon'ble Mr. Justice Kabir or whoever is in-charge of arbitration matters shall only be competent to take up this matter. Mr. Pal said the expressions, 'judicial authority' and 'legal Proceeding' in section 34 should indicate the judicial authority before which the legal proceeding is pending. According to him, the suit is pending not before a particular bench out before the High Court and the application under Section 34 has to be made before the High Court. And which judge of the High Court will deal with the application is a matter of determination. Since by determination this Court has no jurisdiction to try the, arbitration matters, the instant application under Section 34 of the Arbitration Act should go to the Bench which has the jurisdiction to deal with arbitration matters. 4. Mr. Hirak Mitter, learned counsel appearing for the petitioner on the other hand submitted that we need not have to be rambling and desultory as there are direct decisions on this point. He referred to the decisions of (3) Basanti Cotton Mills Ltd. v. M/s. Dhingra Brothers, AIR 1949 Calcutta 684 and (4) Badri Narayan Lal v. Union of India and Ors., 67 CWN page 627.
He referred to the decisions of (3) Basanti Cotton Mills Ltd. v. M/s. Dhingra Brothers, AIR 1949 Calcutta 684 and (4) Badri Narayan Lal v. Union of India and Ors., 67 CWN page 627. In the first decision, in a pending suit before the Small Causes Court which, strictly speaking, has no jurisdiction over proceedings under the Arbitration Act, an application for stay of the suit was tiled and it was held that it is the Small Causes Court which is to consider the application for stay, for exercising jurisdiction to pass stay order is not exercising jurisdiction over arbitration proceedings. In the second decision an application under Section 34 of the Arbitration Act was filed in a suit pending before the City Civil Court and objection having been raised, on an interpretation of Section 5 of City Civil Court Act dealing with jurisdiction of City Civil Court which expressly bars suits and proceedings under the Arbitration Act, 1940 other than suits and proceedings under Chapter IV of the Act, it was held that the application under Section 34 is a proceeding in the suit and the City Civil Court is competent to entertain and deal with the same. Hon'ble Judges of the Division Bench delivered two separate judgments. Bachawat, J. held that the ancillary proceeding in the suit for a stay under Section 34 of the Arbitration Act is not covered by the expression suits and proceedings under the Arbitration Act 1940 to debar the said court from dealing with Section 34 application for stay of the suit. Liak J. agreeing with Justice Bachawat observed that the principles enunciated in the case of Basanti Cotton Mills (Supra) are applicable to the instant case. In his view application under Section 34 of the Arbitration Act filed in a suit should be entertained, dealt with and decided by the said court as the same is not a proceeding under Arbitration Act to attract the mischief of taking it beyond the jurisdiction of the City Civil Court. 5. Mr. Pal in his reply tried to distinguish the aforesaid decisions by stating that the ratio decidendi of the said decisions have no direct bearing on the points under consideration. But with due respect to Mr. Pal, I must say, I have no reason to agree with him. 6.
5. Mr. Pal in his reply tried to distinguish the aforesaid decisions by stating that the ratio decidendi of the said decisions have no direct bearing on the points under consideration. But with due respect to Mr. Pal, I must say, I have no reason to agree with him. 6. What Section 34 of the Arbitration Act, shorn of details, lays down is that where any party to an arbitration agreement commences any legal proceeding against any other party to the agreement in respect of any matter to be referred, any party to such proceeding may apply to the judicial authority before which the proceeding is pending to stay the proceeding. The underlined expressions clearly indicate that the application for stay has to be filed before the Court or bench or authority before which the legal proceeding, i.e. the suit, as herein, is pending. No other authority can have any competence to deal with the matter. The language is plain and simple and there should be no difficulty to understand the implications. 7. Having considered the submissions of the learned counsels of both sides and keeping in view the wordings of Section 34 of the Arbitration Act, I am of the view that an application under Section 34 of the Arbitration Act for stay of a suit is a proceeding or an interlocutory application in the carriage of the suit and has to be dealt with by the Court or bench having jurisdiction to try the suit. It is not an application arising independently of the suit to be dealt with by the bench dealing with Arbitration matters. 8. The preliminary objection fails and stands overruled without any cost. Let the application under Section 34 of the Arbitration Act be taken up for hearing on merits on Wednesday next.