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1999 DIGILAW 624 (CAL)

UNION OF INDIA v. MONORANJAN MONDAL

1999-12-06

P.K.SEN, VINOD KUMAR GUPTA

body1999
V. K. GUPTA, J. ( 1 ) - This appeal has been filed by the Union of India and General Manager, Eastern Railway against the judgment dated 25th September, 1998 passed by the learned single Judge of this Court in AP No. 161 of 1998 (reported in AIR 1999 Cal 117 ) whereby, applications filed under Ss. 10 and 11of the Arbitration and Conciliation Act 1996 (1996 Act for short) have been allowed and the Learned Single Judge has directed that the matter be referred to the Chief Justice of the High Court for appointing 5 several - sole Arbitrators in terms of S. 11 of 1996 Act in respect of the contract Agreements relating to the jurisdiction of 5 Courts at Howrah, Burdwan, Bolpur, Suriand the High Court of Calcutta. ( 2 ) AT the very outset the respondents in the appeal have raised the basic question of maintainability of the appeal, relying upon S. 37 of 1996 Act. The contention of the respondents is that in view of the clear language employed in S. 37 of 1996 Act, no appeal lies against an order passed under S. 11 of the Act since S. 37 is restrictive with respect to the filing of appeals and is specifically confined to appeals only in respect of such specific types of orders as are mentioned therein. Analogy is drawn to S. 39 of 1940 Act. ( 3 ) IN order to understand and appreciate the basic objection regarding the maintainability of the appeal, we have to look to S. 37 of the Act which reads thus :"37. Appealable orders (1) An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely :- (a) granting or refusing to grant any measure under S. 9. (b) setting aside or refusing to set aside an arbitral award under S. 34. (2) An appeal shall also lie to a Court from order of the arbitral tribunal. (a) accepting the plea referred to in sub-section (2) or sub-section (3) of S. 16; or (b) granting or refusing to grant as interim measure under S. 17. (b) setting aside or refusing to set aside an arbitral award under S. 34. (2) An appeal shall also lie to a Court from order of the arbitral tribunal. (a) accepting the plea referred to in sub-section (2) or sub-section (3) of S. 16; or (b) granting or refusing to grant as interim measure under S. 17. (3) 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 to the Supreme Court. ( 4 ) A bare look at S. 37 clearly suggests that only two kinds of orders passed by a Court are appealable to a Court authorised by law to hear appeals and those two orders are mentioned in Clauses (a) and (b) of sub-sec. (1) of S. 37, viz. granting or refusing to grant any measure under S. 9 of the Act or setting aside or refusing to set aside an arbitral award under S. 34 of the Act. In the very opening part of S. 37, namely in sub-section (1) the expression "and from no others" clearly suggests the legislative intent that no appeal other than those relating to the orders mentioned in S. 37 shall lie before an Appellate Court. ( 5 ) WHEN confronted with this situation the Learned Advocate for the appellant submitted that even if the appeal is not maintainable under S. 37 of 1996 Act, it lies under clause 15 of the Letters Patent. ( 6 ) A four Judge Bench of the Supreme Court in the case of Union of India v. Mohindra Supply Co. reported in, AIR 1962 SC 256 while dealing with similar question regarding the maintainability of appeal under S. 39 of Arbitration Act, 1940 vis-a-vis Letters Patent held as under :-"the problem to which attention must then be directed is whether the right to appeal under the Letters Patent is at all restricted by S. 39, sub-secs. (1) and (2 ). Clause 10 of the Letters Patent of the High Court, in so far as it is material, provides :"and we do further ordain that an appeal shall lie to the said High Court. . . . . . . (1) and (2 ). Clause 10 of the Letters Patent of the High Court, in so far as it is material, provides :"and we do further ordain that an appeal shall lie to the said High Court. . . . . . . from the judgment (not being a judgment passed in exercise of appellate jurisdiction in respect of a decree or order made in the exercise of appellate jurisdiction by a Court subject to the superintendence of the said High Court and not being an order made in the exercise of revisional jurisdiction. . . . . . .) of one Judge of the High Court. "by this clause, a right to appeal except in the cases specified, from one Judge of the High Court to a Division Bench is expressly granted. But the Letters patent are declared by Cl. 37 subject to the legislative power of the Governor-General in Council and also of the Governor-in-Council under the Government of India Act, 1915, and may in all respects be amended or altered in exercise of legislative authority. Under S. 39 (1), an appeal lies from the orders specified in that sub-section and from no others. The legislature has plainly expressed itself that the right of appeal against orders passed under the Arbitration Act may be exercised only in respect of certain orders. The right to appeal against other orders is expressly taken away. If by the express provision contained in S. 39 (1), a right to appeal from a judgment which may otherwise be available under the Letters Patent is restricted, there is no ground for holding that cl. (2) does not similarly restrict the exercise of appellate power granted by the Letters Patent. If for reasons aforementioned the expression "second appeal" includes an appeal under the Letters Patent, it would be impossible to hold that notwithstanding the express prohibition, anappeal under the Letters Patent from an order passed in appeal under sub-sec. (1) is competent. " ( 7 ) IT may be worthwhile to mention that clause 37 of Letters Patent of Punjab is in pari materia to Clause 44 of our Letters Patent. Mohindra Supply Co. (1) is competent. " ( 7 ) IT may be worthwhile to mention that clause 37 of Letters Patent of Punjab is in pari materia to Clause 44 of our Letters Patent. Mohindra Supply Co. ( AIR 1962 SC 256 ) came to be noticed in a later judgment of the Supreme Court in the case of State of West Bengal v. Gourangalal Chatterjee reported in (1993) 3 SCC 1 wherein their Lordships held as under :-"section 39 of the Arbitration Act came up for consideration in Union of India v. Mohindra Supply Co. ( AIR 1962 SC 256 ). The Court after going into detail and examining various authorities given by different High Courts held that no second appeal lay under S. 39 (2) against a decision given by a learned single Judge under S. 39 (1 ). In respect of the jurisdiction under Letters Patent the Court observed that since Arbitration Act was a consolidating and amending Act relating to arbitration it must be construed without any assumption that it was not intended to alter the law relating to appeals. The Court held that in view of bar created by sub-section (2) of S. 39 debarring any second appeal from an order passed in appeal under sub-section (1) the 'conclusion was inevitable that it was so done with a view to restrict the right of appeal within strict limits defined by S. 39'. Therefore, so far the second part is concerned, namely, the maintainability of the appeal under Letters Patent it stands concluded by this decision. " ( 8 ) LEARNED Advocate appearing for the appellants relied upon S. 85 of 1996 Act and submitted that since the disputes in this case had arisen prior to the coming into force of 1996 Act, 1996 Act has no applicability and that the provisions of Arbitration Act, 1940 shall have application and therefore the order passed by the Learned single Judge is appealable. Section 85 of 1996 Act reads thus :"85. Repeal and savings (1) The Arbitration (Protocol and Convention) Act, 1940 and the Foreign Awards (Recognition and Enforcement) Act, 1961 are hereby repealed. Section 85 of 1996 Act reads thus :"85. Repeal and savings (1) The Arbitration (Protocol and Convention) Act, 1940 and the Foreign Awards (Recognition and Enforcement) Act, 1961 are hereby repealed. (2) Notwithstanding such repeal (a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force; (b) all rules made and notifications published, under the said enactments shall, to the extent to which they are not repugnant to this Act, be deemed respectively to have been made or issued under this Act. " ( 9 ) SINCE applicability of Arbitration Act 1940, despite its repeal by S. 85 of 1996 Act has been made conditional with respect to such arbitral proceedings which had commenced before 1996 Act came into force, we have to look to S. 21 of 1996 Act to find out about the stage and the date as to when in respect of a particular dispute the arbitral proceedings shall be considered to have commenced. Section 21 reads thus :-"21. Commencement of arbitral proceedings unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. " ( 10 ) LEARNED Advocate appearing for the appellants referred to the decision of the Supreme Court in the case of Shetty's Constructions Co. Pvt. Ltd. v. Konkan Railway Construction reported in (1998) 5 SCC 599 : ( AIR 1999 SC 1535 ) wherein their Lordships held as under (at p. 1536 of AIR) :"a mere look at sub-section (2) (a) of S. 85 shows that despite the repeal of Arbitration Act, 1940, the provisions of the said enactment shall be applicable in relation to arbitration proceedings which have commenced prior to the coming into force of the new Act. The new Act came into force on 26-1-1996. The question therefore, arises whether on that date the arbitration proceedings in the present four suits had commenced or not. The new Act came into force on 26-1-1996. The question therefore, arises whether on that date the arbitration proceedings in the present four suits had commenced or not. For resolving this controversy we may turn to S. 21 of the new Act which lays down that unless otherwise agreed to between the parties, the arbitration suit in respect of arbitration dispute commenced on the date on which the request for referring the dispute for arbitration is received by the respondents. Therefore, it must be found out whether the requests by the petitioner for referring the disputes for arbitration were moved for consideration of the respondents on and after 26-1-1996 or prior thereto. If suchrequests were made prior to that date, then on a conjoint reading of S. 21 and S. 85 (2) (a) of the new Act, it must be held that these proceedings will be governed by the old Act. As seen from the aforenoted factual matrix, is at once becomes obvious that the demand for referring the disputes for arbitration was made by the petitioners in all these cases months before 26-1-1996, in March and April 1995. These suits were obviously filed prior to 26-1-1996 and hence they had to be decided under the old Act of 1940. This preliminary objection, therefore, is answered by holding that these four suits will be governed by the Arbitration Act, 1940 and that how the High Court in the impugned judgments has impliedly treated them. " ( 11 ) IN order to properly understand the true import of the argument raised by the learned Advocate for the appellant about the non-applicability of 1996 Act and the application of Arbitration Act 1940, we have to actually refer to the judgment of the Supreme Court in the case of the Secretary to the Govt. of Orissa v. Sarbeswar Rout reported in AIR 1989 SC 2259 wherein their Lordships while referring to the commencement of arbitral proceedings in terms of Arbitration Act 1940 held as under :"so far an action in a Court of law is concerned, it must be held that it commences on the filing of a proper claim in accordance with the prescribed procedure before the authority empowered to receive the same. If a plaint, drawn up in accordance with the prescribed law, is filed before a Civil Court, the suit must be deemed to have been instituted on that date, and not on a later date when the Court takes up the plaint and applies its mind. Ordinarily the plaint is examined by stamp reporter of the Court who scrutinises whether proper court-fee has been paid or not, and then makes a report. The Court generally takes up the plaint only later. Similar is the position with respect to other applications and memoranda of appeals. It must, therefore, be held that the proceeding is instituted when the claimant files his claim. We do not see any reason to apply a different approach in the case of an arbitration proceedings. As soon as the arbitrator indicates his willingness to act as such, the proceeding must be held to have commenced. This aspect did not arise for decision in the cases Executive Engineer (Irrigation) v. Abhaduta Jena, (1988) 1 SCC 418 : AIR 1988 SC 1520 or Gujarat Water Supply and Sewerage Board v. Unique Erectors (Gujarat) (P) Ltd. , (1989) 1 SCC 532 : AIR 1989 SC 973 and no assistance from them can be taken in the present appeal. The learned counsel for the appellant is, therefore, right in saying that the arbitrator in the present case, by directing on 20-4-1982 the parties to file their statements of claim, clearly indicated that he accepted the offer to arbitrate. The proceedings must, therefore, be deemed to have been instituted not later than this date. We accordingly hold that the award so far it allowed interest for the period after 20-4-1982, is without jurisdiction and must be excluded. The appeal is accordingly allowed in part. The parties shall bear their own costs. Appeal partly allowed. " ( 12 ) IN order therefore to find out as to whether arbitral proceedings as indicated in S. 85 of 1996 Act had commenced prior to the coming into force of 1996 Act we have to find out whether prior to 26th January 1996 when 1996 Act had come into force, in terms of the ratio laid down in the judgment of the Supreme Court in Sarbeswar Rout ( AIR 1989 SC 2259 ) (supra) the Arbitrators had entered upon the reference by indicating their willingness to act as such. Applicability of S. 21 of 1996 Act is not relevant in our case for determining the commencement of arbitral proceedings because S. 21 of 1996 Act relates to and deals with the commencement of arbitral proceedings under 1996 Act. The definition of "commencement of arbitral proceedings" as occurring in S. 21 of 1996 Act will have a bearing only to a point of time after 1996 Act had come into force and will have no relation to the commencement of arbitral proceedings at a point of time before 1996 Act had come into force. We are saying so because S. 21 does not deal with the scope of commencement of arbitral proceedings under Arbitration Act 1940 on the other hand when S. 85 of 1996 Act talks about the commencement of arbitral proceedings before the coming into force of 1996 Act, it clearly means that the arbitral proceedings should have commenced before the coming into force of 1996 Act, in the manner such commencement is understood under the Arbitration Act, 1940. The expression used in S. 85, viz. "which commenced before this Act came into force" clearly and conclusively suggests that the principles governing the scope of commencement of arbitral proceedingsas were applicable under 1940 Act were to be applied for understanding as to whether 1996 Act would have repealed 1940 Act with respect to such proceedings or not. We are therefore clearly of the opinion that S. 21 of 1996 Act will have no manner of application to decide and determine whether the arbitral proceedings had commenced before the coming into force of 1996 Act or not. We are saying so for a very logical and valid reason. If arbitral proceedings as contemplated under the Arbitration Act, 1940 had commenced before the coming into force of 1996 Act, in terms of S. 85 thereof, this Act will have no application and the provisions of the Arbitration Act 1940 will have applicability. But if the proceedings in terms of and as contemplated under the Arbitration Act 1940 had not commenced before the coming into force of 1996 Act, undoubtedly 1996 Act would apply. But if the proceedings in terms of and as contemplated under the Arbitration Act 1940 had not commenced before the coming into force of 1996 Act, undoubtedly 1996 Act would apply. With utmost respect therefore we have no hesitation in saying that their Lordships of the Supreme Court in the Case of Shetty's Construction (P) Ltd. (1998) 5 SCC 599 : ( AIR 1999 SC 1535 ), while noticing S. 21 of 1996 Act had no occasion to deal with this particular aspect of the matter, peculiar to the facts of our case because of the claim of the appellants that the provisions of Arbitration Act 1940 are attracted in this case, on the other hand the judgment by a larger bench of three Hon'ble Judges in the case of Sarbeswar Rout (supra) is apposite to this Case and the ratio as laid down in para 8 of the judgment regarding the stage when arbitral proceedings are deemed to commence under the Arbitration Act 1940 is fully applicable to the facts of our case. ( 13 ) IN the aforesaid legal backdrop therefore if we examine the factual matrix of this case we find that at no point of time prior to the coming into force of 1996 Act, in the light of law laid down by Sarbeswar Rout ( AIR 1989 SC 2259 ) (supra) the arbitral proceedings ever commenced in the sense that arbitrators ever appointed had ever indicated their willingness to act as such or had ever entered upon any reference. In that view of the matter therefore, we are clearly of the view that arbitral proceedings not having commenced under the Arbitration Act 1940 before 26th January, 1996 in any manner whatsoever, the provisions of the Arbitration Act 1940 cannot be held attracted in this case and therefore the present appeal cannot be held to be one under S. 39 of the Arbitration Act, 1940 also. In other words therefore, when we say that what we mean is that the 1996 Act is applicable in our case and therefore, S. 37 of that Act being a clear bar, the appeal is held not maintainable. The same accordingly is dismissed but without any order as to costs. ( 14 ) ). I agree. In other words therefore, when we say that what we mean is that the 1996 Act is applicable in our case and therefore, S. 37 of that Act being a clear bar, the appeal is held not maintainable. The same accordingly is dismissed but without any order as to costs. ( 14 ) ). I agree. ( 15 ) LET a xerox copy of this judgment, duly counter-signed by the Assistant Registrar of this Court be given to the parties upon their undertaking to apply for and obtain certified copy of the same upon usual undertakings. Appeal dismissed.