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2010 DIGILAW 219 (GUJ)

VISHAL RETAIL LTD. v. KATARIA AUTOMOBILES LTD.

2010-04-22

AKIL KURESHI, SUDHANSU JYOTI MUKHOPADHAYA

body2010
JUDGMENT AKIL KURESHI J. ( 1 ) THIS appeal is directed against the judgment and order dated 27. 01. 2010 passed by the learned Single judge in First Appeal No. 4288 of 2009. (Reported in AIR 2010 (NOC) 472) ( 2 ) BETWEEN the appellant herein and the respondent, certain disputes arose out of the contractual relations. The respondents, therefore, filed Civil Misc. Application No. 990 of 2009 under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as Arbitration Act, 1996 for short ). In this application, the respondents herein had prayed for several interim orders pending commencement and conclusion of arbitration proceedings which respondents proposed to take out against the present appellants. Respondents herein prayed inter alia for restraining the present appellant from parting with possession of some of its properties and also for providing security for a sum of rupees six crores. The appellant herein upon service of the notice entered appearance and contested the application. After hearing the parties, Learned Judge of City civil Court, Ahmedabad by order dated 16th october 2009 allowed the Civil Misc. Application in favour of the respondents herein partly. Operative portion of the said order reads as under. ORDER application is partly allowed. Interim relief granted earlier is confirmed. (1) The respondent shall deposit before this Court an outstanding amount up to 31. 12. 2008 in terms of the two agreements calculated at the rate of Rs. 18,63,812/- (Rupees Eighteen Lacs Sixty Three Thousand eight Hundred Twelve only) per month from 1st August, 2008. This shall be subject to final outcome in the arbitral proceedings. (2) The respondent shall deposit a sum of rs. 10,21,000/- (Rupees Ten Lacs Twenty one Thousand only ) every month in this court effective from 01. 01. 2009 and upon such deposit, the applicant shall be entitled to withdraw the same. (3) The respondent shall execute solvent security in the sum of Rs. 2,50,00,000/- (Rupees Two Crore Fifty Lacs only) within a period 2 weeks from today. (4) The applicant shall initiate the arbitration proceedings by giving notice to the respondent within a period of 4 weeks from today. Application stand disposed of accordingly. Pronounced in the open Court today on this 16th day of October, 2009. 2,50,00,000/- (Rupees Two Crore Fifty Lacs only) within a period 2 weeks from today. (4) The applicant shall initiate the arbitration proceedings by giving notice to the respondent within a period of 4 weeks from today. Application stand disposed of accordingly. Pronounced in the open Court today on this 16th day of October, 2009. Said order was challenged by the present appellant before the learned Single Judge in the First Appeal No. 4288 of 2009 under Section 37 (1) of the Arbitration Act, 1996. Learned Single Judge, however, by his impugned judgment and order dated 27. 01. 2010 (reported in AIR 2010 (NOC) 472) dismissed the appeal. The present Letters Patent Appeal is, therefore, filed by the appellant. ( 3 ) AT the outset, the short legal question confronted us was with respect to the maintainability of the present appeal filed under clause 15 of the Letters Patent. Counsel for the appellant submitted that the appeal is maintainable since there is no bar against such appeal under the Arbitration Act, 1996 and introduction of Section 100-A of the code of Civil Procedure would not bar a letters Patent Appeal against a judgment by the learned Single Judge rendered in First appeal arising out of the proceedings under the Arbitration Act, 1996. ( 4 ) ON the other hand, learned counsel for the respondent submitted that in view of specific bar contained in Section 37 (3) of the arbitration Act, 1996, the Letters Patent appeal would not be maintainable. Strong reliance was placed on the decision of the apex Court in the case of The Union of India v. The Mohindra Supply Co. , reported at air 1962 SC 256 . Counsel for the respondent further submitted that the said decision though was rendered in the background of section 39 (2) of the Arbitration Act, 1940 (to be referred to as Arbitration Act, 1940), statutory provisions being pari materia, the same would apply to the Arbitration Act, 1996 also. He further pointed out that the decision in the case of The Union of India v. The Mohindra Supply Co. (supra) has been followed and reiterated by the Apex Court in the number of subsequent judgments. He further pointed out that the decision in the case of The Union of India v. The Mohindra Supply Co. (supra) has been followed and reiterated by the Apex Court in the number of subsequent judgments. ( 5 ) HAVING thus heard learned advocates for the parties, we find that Section 37 (3) of the arbitration Act, 1996 reads as under: 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. It can, thus, be seen that by virtue of the said provision, any Second Appeal is not maintainable except right to appeal to the supreme Court. This was also the language used in the Arbitration Act, 1940 under subsection (2) of Section 39 thereof which read as under: 37 (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 to the Supreme court. ( 6 ) SAID provisions of Section 39 (2) of the arbitration Act, 1940 came up for consideration before the Apex Court in the case of the Union of India v. The Mohindra Supply co. , air 1962 SC 256 (supra ). The Hon'ble supreme Court opined that the provision did not intend to prohibit Second Appeal only under the Civil Procedure Code and the Let-ters Patent Appeal would also be a second appeal for the purpose of sub-section (2) of section 39 of the Arbitration Act, 1940. The apex Court laid down the law as follows: (5) 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-ss. (l) 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. . . . . . . . . . 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 C1. 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 clause (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, an appeal under the Letters Patent from an order passed in appeal under sub-s. (l) is competent. (18) Under the Code of 1908, the right to appeal under the Letters Patent was saved both by S. 4 and the clause contained in S. 104 (1), but by the Arbitration Act of 1940, the jurisdiction of the Court under any other law for the time being in force is not saved; the right of appeal can therefore be exercised against orders in arbitration proceedings only under S. 39, and no appeal (except an appeal to this Court will lie from an appellate order. (19) There is no warrant for assuming that the reservation clause in S. 104 of the Code of 1908 was as contended by counsel for the respondents, superfluous or that its deletion from S. 39 (1) has not made any substantial difference: the clause was enacted with a view to do away with the unsettled state of the law and the cleavage of opinion between the Allahabad High Court on the one hand and Calcutta, Bombay and Madras High courts on the other on the true effect of S. 588 of the Code of Civil Procedure upon the power conferred by the Letters Patent. If the legislature being cognizant of this difference of opinion prior to the Code of 1908 and the unanimity of opinion which resulted after the amendment, chose not to include the reservation clause in the provisions relating to appeals in the Arbitration Act of 1940, the conclusion is inevitable that it was so done with a view to restrict the right of appeal within the strict limits defined by S. 39 and to take away the right conferred by other statutes. The Arbitration Act which is a consolidating and amending Act, being substantially in the form of a Code relating to arbitration must be construed without any assumption that it was not intended to alter the law relating to appeals. The words of the statute are plain and explicit and they must be given their full effect and must be interpreted in their natural meaning, uninfluenced by any assumptions derived from the previous state of the law and without any assumption that the legislature must have intended to leave the existing law unaltered. In our view the legislature has made a deliberate departure from the law prevailing before the enactment of Act X of 1940 by codifying the law relating to appeals in S. 39. ( 7 ) WE further find that as pointed out by the Counsel for the respondent the said decision in the case of The Union of India v. The Mohindra Supply Co. , ( AIR 1962 SC 256 ) (supra) has been followed subsequently in the case of State of West Bengal v. M/s gourangalal Chatterjee, reported at (1993)3 SCC 1 . The Court observed: 3. Section 39 of the Arbitration Act came up for consideration in Union of India v. Mohindra Supply Co. . , ( AIR 1962 SC 256 ) (supra) has been followed subsequently in the case of State of West Bengal v. M/s gourangalal Chatterjee, reported at (1993)3 SCC 1 . The Court observed: 3. Section 39 of the Arbitration Act came up for consideration in Union of India v. Mohindra Supply Co. . The Court after going into detail and examining various authorities given by different High Courts held that no second appeal lay under Section 39 (2)against a decision given by a learned Single judge under Section 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 Section 39 debarring any second appeal from an order passed in appeal under subsection (1) the 'conclusion was inevitable that it was so done with a view to restrict the right of appeal within strict limits defined by Section 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 ) IN the Constitution Bench judgment in the case of P. S. Sathappan (Dead) by LRs v. Andhra Bank Ltd. and others. , (2004) 11 SCC 672 : ( AIR 2004 SC 5152 ), the decision in the case of The Union of India v. The mohindra Supply Co. , ( AIR 1962 SC 256 ) (supra) was noted with approval and reiterated in the following terms. ( 9 ) THIS question was also considered by a four Judges Bench of this Court in the case of Union of India v. Mohindra Supply Company, ( AIR 1962 SC 256 ). In this case, a dispute between the parties was referred to Arbitration. The Arbitrator gave an award. An application was made for setting aside the award. That application was rejected. Against that order an Appeal was preferred to the high Court under Section 39 (1) of the Indian Arbitration Act, 1940. A single Judge of the High Court allowed the Appeal and set aside the award. Thereupon a Letters patent Appeal was filed. The question was whether a Letters Patent Appeal was barred. That application was rejected. Against that order an Appeal was preferred to the high Court under Section 39 (1) of the Indian Arbitration Act, 1940. A single Judge of the High Court allowed the Appeal and set aside the award. Thereupon a Letters patent Appeal was filed. The question was whether a Letters Patent Appeal was barred. Section 39 of the Arbitration Act reads as follows: "39. (1) An appeal shall lie from the following orders passed under this Act (and from no others) to the Court authorized by law to hear appeals from original decrees of the Court passing the order: an order - (1) 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 proceedings 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 to the Supreme court. " it is thus to be seen that Section 39 specifically barred a second Appeal. Also to be noticed that in Section 39 there is no saving clause similar to that in Section 104 (1) C. P. C. Further, in the Arbitration Act there is no provision similar to Section 4 C. P. C. It was submitted that, even though Section 39 barred a second Appeal, an analogy should be taken from Section 104 C. P. C. and it must be held that a Letters Patent Appeal was maintainable. In considering this submission the conflict of opinions amongst the various High courts regarding maintainability of a Letters patent Appeal, in spite of Section 104 C. P. C, was set out and this Court then held as follows : (SCR p. 511) (Para 12 of AIR 1962 sc 256 )"the legislature in this state of affairs intervened, and in the Code of 1908 incorporated S. 4 which by the first sub-section provided: "in the absence of any specific provision to the contrary, nothing in this Code shall be deemed to limit or otherwise affect any special or local law now in force or any special jurisdiction or power conferred, or any special form of procedure prescribed, by or under any other law for the time being in force. ' and enacted in S. 104 (1) that an appeal shall be from the orders set out therein 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 legislature also expressly provided that "no appeal shall lie from any order passed in appeal under this section. " section 105 was substantially in the same terms as S. 591 of the earlier Code. The intention of the legislature in enacting sub-s. (1) of S. 104 is clear: the right to appeal conferred by any other law for the time being in force is expressly preserved. This intention is emphasized by S. 4 which provides that in the absence of any specific provision to the contrary, nothing in the Code is intended to limit or otherwise affect any special jurisdiction or power conferred by or under any other law for the time being in force. The right to appeal against judgments (which did not amount to decrees) under the letters Patent, was therefore not affected by s. 104 (1) of the Code of Civil Procedure, 1908. " (Emphasis in original)* thus a four Judges Bench of this Court, as early in 1962, recognized that the Legislature had now specifically saved a Letters patent Appeal. The right to appeal against judgments (which did not amount to decrees) under the letters Patent, was therefore not affected by s. 104 (1) of the Code of Civil Procedure, 1908. " (Emphasis in original)* thus a four Judges Bench of this Court, as early in 1962, recognized that the Legislature had now specifically saved a Letters patent Appeal. This Court then went on to hold that Section 4 C. P. C. provided as follows : (SCR pp 503-04) (Para 5 of AIR 1962 sc 256 ): "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 CI. 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 (*not found in certified copy. . . . . . . . . . . . Ed.)legislative authority. Under S. 39 (1), an appeal lies from the orders specified in that subsection 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 (l), 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 CI. (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, an appeal under the Letters Patent from an order passed in appeal under sub-s. (l) is competent. " 8a. In view of the above binding decisions of the Apex Court, we find that the question of maintainability of the Letters patent Appeal under Section 37 (2) of the arbitration Act, 1996 is no longer open to debate. 9. " 8a. In view of the above binding decisions of the Apex Court, we find that the question of maintainability of the Letters patent Appeal under Section 37 (2) of the arbitration Act, 1996 is no longer open to debate. 9. On behalf of the appellant, however, reliance was placed on the decision in the case of Commissioner of Customs and Central Excise v. M/s Hongo India (P) Ltd. , and another reported at 2009 (4) SCALE 374 : (AIR 2009 SC (Supp) 2325), wherein the apex Court observed that the Letters Patent appeal would not be barred unless the concerned statute so provides. In the present case, we find that the Arbitration Act, 1996 provides for specific bar against the second appeal and second appeal has been interpreted by the Apex Court as already noted in the case of The Union of India v. The mohindra Supply Co. , ( AIR 1962 SC 256 ) (supra) to include the Letters Patent Appeals also. ( 10 ) COUNSEL for the appellant also placed reliance on the Full Bench decision of Gujarat high Court in the case of Nasik Hing Supplying Company v. Annapurna Gruh Udhyog bhandar, 2003 (2) GLR 926 : ( AIR 2003 Guj 275 ). However, in the said decision, this question was not required to be considered since the Court was examining the maintainability of the Letters Patent Appeal against a judgment rendered by Single Judge of the high Court in appeal arising out of the proceedings under the Trade and Merchandise act, 1958, where the provisions made were vastly different. Section 109 (5) of Trade and merchandise Marks Act, 1958 specifically provides for intra-court appeal in following terms : section 109 (5): Where an appeal is heard by a Single Judge, a further appeal shall lie to a Bench of the High Court. Thus, in that case, the special statute provided for a further appeal before the Division Bench of the High Court. The question before the Full Bench was, whether by virtue of Section 100a of Civil Procedure Code, such an appeal would also be barred. It was in this background, the Bench observed as under: 18. . . . . . . . . . The question before the Full Bench was, whether by virtue of Section 100a of Civil Procedure Code, such an appeal would also be barred. It was in this background, the Bench observed as under: 18. . . . . . . . . . This decision necessarily proceeds on the principle that in absence of any right of appeal conferred by a special statute, the provisions of Section 100a of the C. P. C. will hold the field to bar any further appeal, notwithstanding anything contained in the Letters Patent or any such general law, but where the special Act itself provides for a further appeal against the judgment of a single Judge of the High Court, such appeal would not be barred by the provisions of Section 100a of the C. P. C, notwithstanding the non obstante clause with which the said Section 100a begins. Statutory provisions in case on hand are quite different. Section 39 (3) of the Arbitration Act, 1996 prohibits second appeal and letters Patent Appeal is as held by the Apex court included in the expression second appeal. Thus, even without reference to Section 100a of the Civil Procedure Code, Letters Patent Appeal against the judgment of single Judge in First Appeal arising out of proceedings under the Arbitration Act, 1996 is not maintainable. ( 11 ) COUNSEL for the appellant also argued that the Division Bench of the Calcutta High court in the case of Great Eastern Shipping co. Ltd. v. Board of Trustees for the Port of calcutta reported at 2005 (1) Arb LR 389 has held that the Letters Patent Appeal against the decision of a single Judge in First appeal arising of proceedings under the Arbitration Act, 1996 would be maintainable. However, in view of the above noted Supreme Court decisions taking contrary view, we are unable to follow the view taken by the Calcutta High Court particularly when we find that the decision of the Apex Court in the case of The Union of India v. The mohindra Supply Co. ( AIR 1962 SC 256 ) (supra) was not brought to the notice of the calcutta High Court. ( 12 ) REFERENCE to the decision in the case of M/s. Orma Impex Pvt. Ltd. v. M/s Nissai asb Pte. Ltd. , AIR 1999 SC 2871 also would not change the position materially. ( AIR 1962 SC 256 ) (supra) was not brought to the notice of the calcutta High Court. ( 12 ) REFERENCE to the decision in the case of M/s. Orma Impex Pvt. Ltd. v. M/s Nissai asb Pte. Ltd. , AIR 1999 SC 2871 also would not change the position materially. In the said case, the Apex Court was considering maintainability of Letters Patent Appeal against the judgment of the Single Judge rendered in exercise of original jurisdiction and not appellate jurisdiction. The case did not involve interpretation of Section 37 (3) of the arbitration Act, 1996 or analogous provision of Section 39 (2) of the Arbitration Act, 1940. Even otherwise, we find that in subsequent judgments, particularly in case of p. S. Sathappan (Dead) by LRs v. Andhra bank Ltd. and others. , ( AIR 2004 SC 5152 ) (supra) the Larger Bench has already followed and approved the decision of The union of India v. The Mohindra Supply Co. , ( AIR 1962 SC 256 ) (supra ). ( 13 ) IN the result, we find that the present letters Patent Appeal is not maintainable. The same is, therefore, required and hereby dismissed. When we find that the appeal itself if not maintainable, the question of extending any interim order passed earlier, if at all, would not arise. Consequently, Civil application also stands rejected. Appeal dismissed. --- *** --- .