Union Of India v. Mohammad Usman

Satish Chandra, J.:— This is an appeal by the defendant, the Union of India. It is directed against an order of the learned Additional Civil Judge, Jhansi, granting an application under Secs. 8 and 20, Arbitration Act.

2. Mohammad Usman, the plaintiff-respondent, on 8-3-1945 entered into a contract with the Union of India to supply meat to the Military Regiment between 1-4-1946 and 31-3-1947. The plaintiff alleged that he made the requisite supplies, but was not fully paid. According to him, a sum of Rs. 8,38,994/10/6 was still payable to him by the Union of India. He made several representations to the appellant for payment, as also for arbitration of the dispute by the General Officer Commanding In Chief, Headquarters, Eastern Command, Lucknow, who was the officer named in the contract as arbitrator to settle the differences arising between the parties under the arbitration clause of the contract. By his letter dated 10-7-1953, which was served on the plaintiff on 15-7-1958, the G.O.C In Chief, Headquarters Eastern Command, Lucknow, informed the plaintiff that there was no valid reason for holding the arbitration in the case. The plaintiff on 20-4-1961 issued a notice under Sec. 80, C.P.C and on 11-7-1961 filed in court, an application under Secs. 8 and 20, Arbitration Act, praying that the arbitration agreement be directed to be filed in court, and that an arbitrator be appointed for giving an award. The application was contested on the grounds, inter alia, that the application was not maintainable in the name of the plaintiff, that it was barred by Sec. 69, Indian Partnership Act, that the notice under Sec. 80, C.P.C was invalid, that the application was barred by Article 181, Indian Limitation Act, and that the plaintiff had been paid in full for the supplies made by him and nothing was due.

3. The learned Additional Civil Judge by his judgment dated 13-9-1963 repelled all the pleas in bar and granted the application. Aggrieved, the Union of India has come to this Court in appeal under Sec. 39, Arbitration Act. The memorandum of appeal prays that the judgment of the court below be set aside and the application under Secs. 8 and 20 of the Arbitration Act be dismissed.

4. Sec. 8, Arbitration Act, 1940, provides for the appointment of an arbitrator by the court under the diverse contingencies mentioned in that section. Sec. 39, Arbitration Act, does not provide for an appeal against an order made under Sec. 8, Arbitration Act. Sec. 39 enumerates the various orders against which an appeal lies and it further provides that an appeal shall not lie from any other order passed under this Act. It is apparent that no appeal lies against the order passed under Sec. 8, Arbitration Act; and the prayer in this appeal that the application under Sec. 8, Arbitration Act, be dismissed cannot be granted. In so far as this appeal seeks to challenge the order under Sec. 8, Arbitration Act, it is incompetent and is dismissed.

5. In respect of the order passed under Sec. 20, Arbitration Act, the learned Senior Standing Counsel appearing for the appellant, has urged only one point, that the application was barred by time under Art. 181, Indian Limitation Act.

6. Before considering this contention, we may dispose of a preliminary objection taken by Ft. Gopi Nath Kunzru for the respondent. He urged that as the Additional Civil Judge did not in terms direct the filing of the arbitration agreement, and inasmuch as Sec. 39(1)(iv), Arbitration Act, provides for an appeal from an order filing or refusing to file an arbitration agreement alone, the present appeal was not competent.

7. The learned Civil Judge held that the plaintiff had established a right to an order under Secs. 8 and 20, Arbitration Act, and that the application was within time. The learned Civil Judge further held that:

“In view of the above findings, I have no option but to hold that the plaintiff's application is entitled to be allowed and that the opposite party is liable to file the arbitration agreement.”

8. The ultimate order passed by learned Civil Judge is:

“The petition of the applicant-plaintiff is, hereby, allowed. Parties are hereby given 10 days time to express their wishes about the selection of the arbitrator and if they fail to arrive at the decision, an arbitrator shall be appointed by this court suo moto.”

9. It is, therefore, clear that the learned Judge directed the filing of the award and proceeded to the next step, namely, the appointment of an arbitrator. Sec. 20, Arbitration Act, contemplates these two kinds of orders. Unless the court directs the filing of the award, the further order as to the appointment of an arbitrator will not arise. In the context of the finding recorded by the learned Judge that the opposite party is liable to file the arbitration agreement, the ultimate order that the petition is allowed, is clearly an order directing the filing of the arbitration agreement. The order is covered by the provisions of Sec. 39(1)(iv), Arbitration Act, and, as such, the present appeal is competent.

10. Pt. Kunzru relies on the learned Judge's following observation:

“As the arbitration agreement has already been filed, it needs no further orders and the only question which remains for decision is the appointment of a new arbitrator.”

11. This observation does not take the case out of the provisions of Sec. 39(1)(iv) of the Arbitration Act. Here the learned Judge has only taken note of the actual fact that during the course of the hearing of the application, the Union of India has filed in court the arbitration agreement. This observation does not take away the force of the order allowing the application and cannot legitimately found an argument that an order under Sec. 20, Arbitration Act, for the filing of the arbitration agreement was not passed. In our opinion, the preliminary objection has no force.

12. On the merits, the question is whether the application under Sec. 20, Arbitration Act was barred by time, for the appellant, it is urged that Art. 181, Indian Limitation Act, applies to such an application. In support, the decision of a Division Bench of this Court in Amarnath v. Union of India A.I.R 1957 All 206 is cited. In this case it was held that:

“It can, therefore, no longer be contended that the third division is restricted to application to be made under the Civil Procedure Code and that consequently Art. 181 cannot apply to an application made under any other Code or Act. On the contrary the opposite view is to be taken and Art. 181, which is a residuary article, must be held to apply to applications not only under the Code of Civil Procedure but also under the Arbitration Act, for which no provision is made elsewhere in the third division.”

13. The soundness of this decision was doubted by a later Division Bench in Sarwat Yar Khan v. State of Uttar Pradesh A.I.R 1959 All 493. Raghubar Dayal, J. (as he then was) speaking for the Bench held that the “rationable of this decision loses much of its force in view of the observations of their Lordships of the Supreme Court in Shah Mule hand and Co., Ltd. v. Jawahar Mills Ltd., Salems A.I.R 1963 S.C 98.. His Lordship went on to quote the following observations from the Supreme Court decision:—

“It does not appear to us quite convincing, without further argument, that the mere amendment of Arts. 158 and 178 can ipso facto alter the meaning which, as a result of a long series of judicial decisions of the different High Courts in India, come to be attached to the language used in Art. 181. This long catena of decisions may well be said to have as it were, added the word ‘under the Code’ in the first column of that Article. If those words had actually been used in that column then a subsequent amendment of Arts. 158 and 178 certainly would not have affected the meaning of that Article. If however as a result of judicial construction, those words have come to be read into the first column as if those words actually occurred therein, we are not of opinion, as at present advised, that the subsequent amendment of Arts. 158 and 178 must necessarily and automatically have the effect of altering the long-acquired meaning of Art. 181 on the sole and simple ground that after the amendment the reason on which the old construction was founded is no longer available.”

14. Recently the Supreme Court had an occasion to consider its decision in Shah Mulchand's case. In Smt. Prativa Bose v. Kumar Rupendra Deb Raikat C.A No. 539 of 1960 decided on 10-5-1963. the Supreme Court quoted with approval the above passage from Shah Mulchand's case and said “we respectfully agree with these observations and feel no doubt that even now Article 181 had to be read as confined to the applications under the Code.”

15. In view of this declaration of the law by the Supreme Court, the contrary view expressed in Amarnath's case that Article 181 applied to an application made not only under the Code of Civil Procedure, but also under other Acts, cannot be accepted as correct.

16. Faced with this situation, the learned Senior Standing Counsel urged an alternative argument. The contentions is that Arbitration Act, 1940 repeals and re-enacts the Second Schedule to the Code of Civil Procedure, 1908. Sec. 20, Arbitration Act, re-enacts para. 17 of the Second Schedule to the Code with slight modifications. By virtue of Sec. 8, General Clauses Act, reference to the Civil Procedure Code in any enactment should be treated as meaning the Arbitration Act. Learned Senior Standing Counsel proceeded that the Supreme Court having held that Art. 181, Arbitration Act, should be so construed as if the words “under the Code” actually occurred therein, and Sec. 20, Arbitration Act, repealed and re-enacted para. 17 to the Second Schedule, Sec. 8 of the General Clauses Act applied and reference to the Code in Article 181 would mean reference to the Arbitration Act, 1940.

17. Pt. Kunzru for the respondent countered this argument and urged that Sec. 8, General Clauses-Act, applies only when the enactment actually refers or cites the repealed enactment and, secondly, that in the Arbitration Act, which repealed and re-enacted the Second Schedule to the Code, a different intention appears. He states that the Arbitration Act while repealing the Second Schedule to the Code also amended and substituted Articles 158 and 178, Indian Limitation Act, so as to make them applicable to the corresponding provisions of the Arbitration Act, but it did not amend Article 181 of the Limitation Act. That clearly shows a different intention.

18. The admitted position is that Sec. 49, Arbitration Act, repealed the Second Schedule to the Code of Civil Procedure. It also amended and substituted Articles 158 and 178 of the Limitation Act. Paragraph 17 of the Second Schedule to the Code has, with minor modifications, been re-enacted in Sec. 20 of the Arbitration Act, 1940. It is also beyond controversy that prior to the Arbitration Act, 1940, applications under para. 17 of the Second Schedule to the Code were governed by Art. 181, Limitation Act.

19. Sec. 8(1), General Clauses Act, runs as follows:—

“Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals and re-enacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision or repealed, shall, unless a different intention appears, be construed as references to the provision so re-enacted.”

20. The question arises as to the exact connotation and scope of the words “references in any other enactment” as used in this section. Does it mean that there must be an actual reference or citation of the repealed statute by the legislature itself, or whether a reference by necessary implication or by a process of construction, is also included?

21. In attempting to answer this question it will be profitable to remember, as the Supreme Court said in Chief Inspector of Mines v. Karam Chand Thapar A.I.R 1961, S.C 838, 843 para. “the purpose of the General Clauses Act is to place in one single statute different provisions as regards interpretations of words and the legal principles which would otherwise have to be specified separately in many different Acts and regulations. Whatever the General Clauses Act says, whether as regards the meanings of words or as regards legal principles, has to be read into every statute to which it applies.”

22. Sec. 8, General Clauses Act, is an illustration of a general and well established principle of interpretation that the repeal and reenactment should normally not upset the scheme and provisions of other enactments which relate to the repealed enactment. In National Sewing Thread Co. Ltd. Chidambaran v. James Chadwick and Bros. Ltd. A.I.R 1953 S.C 357 at p. 363 Para. 9. the Supreme Court held that the canon of construction enunciated in Sec. 38, Interpretation Act, and reiterated with some modifications in Sec. 8, General Clauses Act, is one of the general application where statutes or Acts have to be construed and that there is no justification for holding that the principles of construction enunciated in those provisions will apply only where these provisions in terms are inapplicable.

23. The doctrine of ejusdem generis is a well established rule of legislation. Under it, when the legislature uses words of a general nature following specific and particular words, they are meant and intended to be limited to things as those specified by the particular words. In the whole scheme of legislation, by the application of the doctrine of ejusdem generis the legislation is presumed to use the general words in a restricted sense. The effect is the same as if the specific or the particular words were actually enacted by the legislature itself. Hence, whenever by applying the doctrine of ejusdem generis certain words of limitation or restriction are read in a statute they should be treated as having been enacted. The effect and consequence should be the same where the words are actually mentioned by the legislature and where they are presumed to be so mentioned under the rule of ejusdem generis. The object and intent of the legislature having been so determined, it should be properly given effect to in applying the principle of interpretation illustrated by Sec. 8, General Clauses Act.

24. The Supreme Court in the case of Smt. Prativa Bose observed that: “the pre-ponderating view adopted by the High Courts in regard to this article (Art. 181) and its corresponding provision in the earlier Limitation Act of 1877 is that applications mentioned in them are applications under the Code of Civil Procedure only. The reason for this view is that as the article is in general terms, it must be construed ejusdem generis and so construed it must be applicable only to applications under the Code, as all the other articles in the Act providing periods of limitation for applications deal with applications under the Code.”

25. The object and intent of Article 181, Limitation Act, being to cover applications under the Second Schedule to the Code and in view of the Supreme Court's verdict that Article 181 has to be read as if the words “under the Code” actually occurred in its first column, it must be held that the Code was referred or cited in Art. 181, Limitation Act. In that view, Sec. 8, General Clauses Act, or the principle underlying it would apply and reference to the Code would read as reference to the Arbitration Act.

26. It remains to deal with the Argument of the respondent that a different intention appears. Sec. 46, Arbitration Act, amended the various enactments mentioned in the Fourth Schedule. So far as the Indian Limitation Act is concerned, Articles 158 and 178 were amended and substituted. The pre-existing Article 158 provided a period of ten days in its second column. This was changed, after amendment, to thirty days. The first and the third columns were also radically changed. Article 178 prior to its amendment provided a period of six months in its second column. This was changed to ninety days. The first and the third columns of the Article were also substantially modified. Since the legislature wanted to radically change these Articles, it specifically amended them. Articles 159 and 179 were also amended. The amendment in these Articles became necessary because of the amendment to the preceding Articles, namely, Articles 158 and 178. Articles 158 and 178 prior to the amendment mentioned “under the Code of Civil Procedure, 1908.” The succeeding Articles respectively, namely, Articles 159 and 179 used the words “same Code,” as they were also applicable to matters under the Code of Civil Procedure. After the amendment of Articles 158 and 178 by substituting the words “under the Code of Civil Procedure, 1908” by the words “under the Arbitration Act, 1940,” it became necessary to amend Articles 15S and 179 also. That is why under Articles 159 and 179 for the words “same code” in the first column, the words “Code of Civil Procedure, 1908” were substituted.

27. All these amendments, therefore, were necessary as the provisions sought to be amended were themselves sought to be altered by the legislature. The legislature did not desire any change in Article 181. It did not want to orange the period of limitation provided by Article 181. It was hence not specifically amended. This omission, in our opinion, does not lead to the, inference of any different intention. There is nothing to indicate that the object and intent of the legislature was that applications under Sec. 20, Arbitration Act, could be made to courts at any time without any limitation.

28. The fourth Schedule to the Arbitration Act shows that certain provisions of the Religious Endowment Act, 1863, the Specific Relief Act, 1877, the Indian Electricity Act, 1910, and the Indian Companies Act, 1913 were also amended. All these provisions were such as were not repealed and re-enacted by the Arbitration Act and, as such, a specific amendment of these provisions became necessary. We are unable to accept this argument of the counsel for the respondent.

29. In our opinion, an application under Sec. 20, Arbitration Act is governed by Article 181, Indian Limitation Act. This Article provides for a period of three years from the time “when the right to apply accrues.” Under Sec. 29(1), Arbitration Act, a person can apply to a court, instead of proceedings under Chap. II, where a difference has arisen. Chapter II of the Arbitration Act covers Secs. 3 to 19 and deals with arbitration without intervention of a court. In that Chapter, under Sec. 8, a person can ask a court to appoint an arbitrator in situations mentioned in it. Under Sec. 20, instead of that, a person can apply immediately on differences arising. The right to apply accrues when differences arise. Under Article 181, Limitation Act, a person will have three years period from such a date. In the instant case, in February, 1958 the plaintiff-respondent applied to the authorities for settlement of the dispute. The refusal is contained in the letter dated 10-7-1958.

30. It is apparent that the differences arose, in any event, prior to 10-7-1958. The application under Sec. 20, Arbitration Act, was filed in court on 11-7-1961, and was clearly time barred.

31. In the result, the appeal succeeds in part. The order of the court below in so far as it relates to proceedings under Sec. 20, Arbitration Act, is set aside and the petition in so far as it relates to Sec. 20, Arbitration Act, is dismissed. Under the circumstances, the parties shall bear their own costs of both the courts.

32. Appeal partly allowed.