Prakash Narain, C.J:— Briefly stated, the facts of the case are these. A contract for supply of superior Basmati Sela Rice of Indian origin was entered into between the State Trading Corporation of India Ltd. (hereinafter referred to as the STC) and M/s Suleman-Al-Mohammad. Al-Rashid of Saudi Arabia (hereinafter referred to as the foreign buyer) on May 14, 1981. The STC in its turn entered into agreements with various parties in India, including the respondent for supply of diverse quantities of the said rice in order to honour its contract with the foreign buyer. The respondent thereupon by an agreement dated June 29, 1981, entered into between it and the appellant, secured supply of 2000 metric tones of rice by the appellant. According to the terms of the said agreement between the appellant and the respondent the appellant had to give a bank guarantee to the extent of Rs. 5.27 lakhs for performance of the contract of supply. The appellant furnished the requisite bank guarantee of the State Bank of Patiala, Sharadha Nand Marg Branch, Delhi. Towards fulfillment of its obligation under the contract, the appellant supplied 13, 71, 923, 215 kgs of rice. The respondent paid to the appellant a sum of Rs. 49,18,286.74, towards price of part of the supply. The appellant made a demand for payment of the balance amount of Rs. 24,39,431.96. In reply the respondent took up the stand that the rice supplied was not in accordance with the specifications given in their contract, it was sub-standard and, in consequence has been rejected by the foreign buyer. The appellant contended that the rice supplied by it was of the correct specifications which was duly inspected, passed and delivery taken.
2. It appears that the foreign buyer had got the rice supplied by the appellant inspected at Bombay and had informed the STC that he will not take delivery as the rice sub-standard. The STC in its turn had raised a claim against the respondent which the respondent had refuted. In consequence, a petition under Section 20 of the Arbitration Act, bearing Suit No. 235-A of 1982, was filed in this Court on February 24, 1982. Inasmuch as the STC was pressing its claim against the respondent, the respondent in its turn sought to encash the bank guarantee given by the appellant by writing a letter dated April 24, 1982 to the Manager, State Bank of Patiala. In the said letter the respondent took up the stand that inasmuch as the appellant had failed to supply rice in accordance with the specifications, they were entitled to encash the bank guarantee.
3. The appellant, as a result of their dispute with the respondent, had filed a petition under Section 20 of the Arbitration Act in this court bearing Suit No. 1392-A/81. In that they had moved I.A 4316/81 under Section 41, read with the second schedule of the Arbitration Act, asking for issue of a temporary injunction restraining the respondent from encashing the bank guarantee. The application was decided by H.L Anand, J, who held that it was well-settled that the performance guarantees, even though having other genesis in the primary contract between the parties, are nevertheless autonomous and independent contracts, that a bank which gives a performance guarantee must honour that a bank which gives a performance guarantee must honour that guarantee according to its terms and that it is not concerned in the least with the relations between the supplier and customer, nor with the questions whether the supplier has performed his contract obligations or not and that the only exceptions is when there is a clear fraud of which the bank has notice. In respect of the guarantee involved in the case it was held that it was absolute and the same could be got encashed by way of making a demand in accordance with its terms by the respondent. Accordingly, the application was dismissed. A review application, preferred by the appellant, was also dismissed. Thereafter they filed O.M.P No. 62 of 1982 and I.A No. 1719 of 1982, which has been disposed of by a learned Single Judge of this court and is now the subject-matter of the present appeal. It may be noticed here that when I.A No. 4316 of 1981 was moved by the appellant no demand for encashment of the guarantee had been made by the respondent. The application, therefore, could be regarded as having been premature.
4. The learned Single Judge while disposing of O.M.P No. 62 of 1982 and I.A 1719 of 1982 has proceeded on the assumption that the earlier application for interim injunction, moved by the appellant, was premature. He has noticed that the allegations in the application, which he was considering vis-a-vis perpetration of fraud, had not been raised earlier and so could be examined. The learned Judge took the view that the dismissal of the earlier application was no bar to the moving of the fresh application. Despite that the learned Judge has taken the view that the proposition of law in respect of encashment of bank guarantee was well-settled and irrespective of the stand taken by the appellant no relief could be granted in respect of the encashment of the bank guarantee. Aggrieved by the order of learned Single Judge, the appellant preferred an appeal under Clause X of the Letters Patent. That is how the matter came before us.
5. Prima facie, we were of the view that the law regarding encashment of bank guarantees was rightly held settled by the learned Single Judge but we were persuaded to issue notice to show cause why the appeal be not admitted as it was contended that if it could be shown that the respondent was perpetrating a fraud and was guilty of legal fraud in the circumstances of the case, relief could not be denied to the appellant. The respondent took time to file reply and ultimately opposed the admission of the appeal. Arguments were heard for some time but could not be concluded for diverse reasons. In the meanwhile when the matter came up before us on December 8, 1982 the appeal was dismissed for default on account of non-appearance of the appellant. It was, however, restored and we proceeded to hear the remaining arguments. After a few adjournments were granted on the request of parties' counsel. We reserved the judgment. Before, however, we could proceed to judgment, the respondent moved C.M No. 157 of 1983 contending that it may be allowed to raise a further plea to the effect that, no appeal was at all competent in view of the provisions of Section 39 (1) of the Arbitration Act, 1940. We gave notice of this application to the appellant and have re-heard the matter.
6. There are two aspects which arise in the present case. The first is about the maintainability of the appeal in view of the provisions of Section 39 (1) of the Arbitration Act, and the second, if the appeal is maintainable, whether the view taken by the learned Single Judge with regard to the law relevant to encashment of bank guarantees is the correct view to take, or it requires reexamination.
7. We will first take up the question about the maintain ability of the appeal.
8. As noticed earlier, the appeal has been filed by invoking Clause X of the Letters Patent, as applicable to this court, namely, the Letters Patent of the Lahore High Court, which was applicable to the Punjab High Court and in consequence is applicable to this court. It is not necessary to dilate on whether an appeal under Clause X of the Letters Patent is maintainable as the learned counsel for the appellant has very frankly conceded that no appeal would be maintainable under that provision of law. Learned counsel, however, contends that this may be treated as an appeal under Section 10 (1) of the Delhi High Court Act, 1966, hereinafter referred to as the High Court Act.
Section 10 of the High Court Act reads as under: —
10 (1) Where a single Judge of the High Court of Delhi exercises ordinary original civil jurisdiction conferred by sub-section (2) of section 5 on that Court, an appeal shall lie from the judgment of the single Judge to a Division Court of that High Court.
(2) Subject to the provisions of sub-section (1), the law in force immediately before the appointed day relating to the powers of the Chief Justice, single Judges and Division Courts of the High Court of Punjab and with respect to all matters ancillary to the exercise of those powers shall, with the necessary modifications, apply in relation to the High Court of Delhi.
9. The contention on behalf of the appellant is that inasmuch as the order under appeal has been passed by a learned Single Judge of this court exercising ordinary original civil jurisdiction conferred by sub-section (2) of section 5 of the High Court Act, an appeal lies from the said judgment of the learned Single Judge to a Division Bench of this Court. It will be opposite, therefore, to read Section 5 of the High Court Act, which reads as under: —
“5. (1) The High Court of Delhi shall have in respect of the Territories for the time being included in the Union territory of Delhi, all such original, appellate and other jurisdiction as, under the law in force immediately before the appointed day, in exercisable in respect of the said territories by the High Court of Punjab.
(2) Notwithstanding anything contained in any law for the time being in force the High Court of Delhi shall also have in respect of the said territories ordinary original civil jurisdiction in every suit the value of which exceeds fifty thousand rupees (since amended to read one lakh rupees.)
10. Shri P.R Mridul, learned counsel for the appellant, has stressed three aspects to support his contention that the appeal is entertainable under Section 10(1) of the High Court Act. These contentions are: —
(1) Section 10(1) of the High Court confers an independent right of appeal. Rights conferred or envisaged by other statutes of laws, like the Code of Civil Procedure, the Letters Patent and Arbitration Act, are merely additional rights and remedies and do not attract or impair the rights guaranteed by Section 10 (1) of the High Court Act.
(2) It may be that under Section 5(2) of the High Court Act jurisdiction now conferred is the same as was being exercised by the subordinate courts earlier, even so the birth marks of earlier trappings are lost and the situation in the present case is governed by Section 10(1) of the High Court alone.
(3) The High Court Act being a later and a special Act, its provisions override the inhibitions contained in Section 39 of the Arbitration Act. The limiting factors of Section 39 of the Arbitration Act might be projected in proceedings under the Code of Civil Procedure or in the Letters Patent but do not bring in its lethal fold the categorical and unconditional right of appeal, which is controlled only by Section 10 (1) of the High Court Act.
11. As opposed to the contentions raised on behalf of the appellant, Mr. Kapil Sibal and Mr. A.C Jain, appearing for the respondents, have contended that the jurisdiction exercised by the High Court Act only enables the High Court to entertain a matter of a particular valuation which otherwise would have been, prior to the enactment of the High Court Act, entertain a matter of a particular valuation which otherwise would have been, prior to the enactment of the High Court Act, entertained by a subordinate Court. Which Court entertains a particular matter is a question of territorial or pecuniary jurisdiction. Once the matter is a question of territorial or pecuniary jurisdiction. Once the matter is entertained, it has, however, to be dealt with in accordance with the law relevant to that matter. In other words, the contention is that if the matter is entertained is a suit, within the meaning of Section 9 of the Code of Civil Procedure, then the provisions of the Code would be attracted, including the relevant provisions for appeal. If the matter is referable to Arbitration Act, then the Law of Arbitration in force in the country would be attracted. Likewise, if the matter pertains to insolvency proceedings or any other such proceedings, then that relevant law would govern the future course of the action, including the right of filing an appeal. It has further been contended that right of appeal is a creature of a statue. No doubt, the right vis-a-vis filing of an appeal in the context of the law, which is attracted, would crystalise on the date on which the matter was originally instituted and a later amendment may not adversely affect the right of appeal. Nevertheless, if there is no right of appeal at all, then it cannot be inferred by invoking provisions of any other law. With regard to general or special law or a later enactment or an earlier enactment that is relevant but which is the special law. Section 10 of the High Court Act is claimed to be general law, whereas the Arbitration Act is claimed to be special law.
12. Learned Counsel for the respondents have relied on The Union Of India v. Mohindra Supply Co. , AIR 1962 S.C 256 (1). University of Delhi and another v. Hafiz Mohd. Said and others, A.I.R 1972 Delhi 102 (2), and Union of India and others v. M/s. N.K Private Ltd. and another, A.I.R 1972 Delhi 202 (3).
13. In Mohindra Supply Co.'s case the Supreme Court considered the question of Section 39 (2) of the Arbitration Act in the context of what was contended to be a conflict between that provision and Clause X of the Letters Patent, applicable to the Punjab High Court. It was held that the second appeal, postulated by Section 39(2) of the Arbitration Act, does not mean an appeal under Section 100 of the Code of Civil Procedure but means a further appeal from an order passed in appeal under Section 39 (1) of the Arbitration Act. Their Lordships observed that though Clause X of the Letters Patent of the Punjab High Court gave a right of appeal except in the cases specified from the judgment of one Judge of the High Court to a Division Bench of that High Court, yet Clause 37 of the Letters Patent specifically declared the Letters Patent to be 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. In consequence, it was held that when Section 39(1) of the Arbitration Act in terms stated that an appeal lay only from specified orders and from none others, the Legislature had plainly expressed itself that the right of appeal against orders passed in proceedings under the Arbitration Act may be exercised only in respect of those specified orders. The right of appeal against other orders was expressly taken away. Further, the second appeal contemplated by Section 39(2) of the Arbitration Act included an appeal under the Letters Patent. So, it was held that no Letters Patent Appeal was competent. Referring to Section 4 of the Code of Civil Procedure what their Lordships said in paragraphs 17 and 18 of the report: —
“17. There is in the Arbitration Act no provisions similar to S. 4 of the Code of Civil Procedure which preserves powers reserved to courts under special statutes. There is also nothing in the expression authorized by law to hear appeals from original decrees of the Court contained in S. 39 (1) of the Arbitration Act which by implication reserves the jurisdiction under the Letters patent to entertain an appeal against the order passed in arbitration proceedings. Therefore, in so far as Letters Patent deal with appeals against orders passed in arbitration proceedings, they must be read subject to the provisions of S. 39 (1) and (2) of the Arbitration Act.
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. 101 (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.”
14. In University of Delhi's case a Full Bench of this Court apart from holding that the term “judgment” in section 10 (1) of the High Court had the same connotation as the term ‘judgment’ in the Code of Civil Procedure, thereby the Legislature continued the existing law and practice resulting in appeals being permissible under Section 10 (1) of the High Court Act only against judgments and decrees and order referred to in Section 104, read with Order 41, Rule 1 of the Code of Civil Procedure, was also concerned with dilating upon whether Section 10 of the High Court Act was a general law or a special law. It held that it was a special law.
15. In M/s. N.K Private Ltd.'s case, a Division Bench of this Court specifically dealt with the question as whether an appeal under Section 10 of the High Court Act could be preferred against a judgment of a learned Single Judge sitting on the Original Side of this Court, given in proceedings under Section 10 of the Arbitration Act or under Section 41, read with Second schedule of the Arbitration Act, in the context of the provisions of Section 39 of the Arbitration Act. In this case the question whether an order passed on an interim application or grant of temporary injunction was a “judgment” within the meaning of Section 10 of the High Court Act also came up for consideration. After a conspectus of all the law on the point the conclusions of the Bench were as under: —
“Our conclusions are, therefore, as follows: —
(1) The order varying temporary injunction passed by the learned Single Judge was prima facie a “judgment” within the meaning of Section 10 of the Delhi High Court Act, 1966 and an appeal would ordinarily have been competent thereunder to Division Bench of this Court.
(2) This right of appeal under the general law was, however, subject to the special law, namely, Section 39 of the Arbitration Act, which bars an appeal from such an order altogether.
(3) No right of appeal against the said order was available under the ‘procedure’ contained in the Code of Civil Procedure made applicable by Section 141 of the said Code.
(4) The order under appeal was passed under Section 41 of the Arbitration Act and was thus governed by Section 39 of the said Act. It was not passed outside the Act and under the Code of Civil Procedure alone.
(5) An order under the Arbitration Act passed by a Court subordinate to the High Court would be amenable to revision under Section 115 of the Code of Civil Procedure if it is not appealable under Section 39 of the Arbitration Act. But an order passed by learned Single Judge of this Court under the Arbitration Act is either appealable under Section 39 of the said Act or is not appealable at all. The question of revision does not arise.”
16. Mr. Mridul, learned counsel for the appellant, contends that the decisions of this court in University of Delhi's case and M/s. N.K Private Ltd.'s case are no longer good law in view of the judgment of the Supreme Court in Shah Babulal Khimji v. Jayaben D. Kania and another, A.I.R 1981 S.C 1786 (4). In this case their Lordships of the Supreme Court reversed and set aside the judgment of a Division Bench of the Bombay High Court which had held that the order of a trial Judge sitting on the Original Side of the High Court passed in an application under Order 43, Rule 1, Order 39, Rule 1, Order 40, Rule 1 and Order 49, Rule 3 of the Code of Civil Procedure was not appealable under Clause XV of the Letters Patent of; the Bombay High Court as the order was not a judgment within the meaning of the said Clause XV. On the same ratio and to the same extent the decision of the full Bench of this Court, learned counsel contends, in University of Delhi's case and N.K Private Ltd.'s case stood overruled. There can be quarrel with this proposition. In point of fact, in M/s. N.K Private Ltd.'s case this court had come to the conclusion that an order passed on an application under Section 41, read with the Second schedule of the Arbitration Act, would be a judgment within the meaning of the term in Section 10 of the High Court Act. In consequence, it could well be said that the word ‘judgment’ in Section 10(1) of the High Court Act or in Clause XV of the Letters Patent, applicable to this court, or Clause XV of the Letters patent of the Bombay High Court would have the same connotation. Beyond this it cannot be said that Shah Babulal Khimji's case, in any way, furthers the argument of the appellant. Likewise, the observations of a Bench of this court in The The Public Trustee… v. Rajeshwar Tyagi & Others…S, A.I.R 1972 Delhi 302 (5), also do not help the appellant. In this case also two questions that came up for consideration were whether the matter could be entertained by the High Court under its Ordinary Original Civil Jurisdiction, postulated by Section 5 of the High Court Act, and whether the order appealed against could be regarded as a judgment within the meaning of Clause X of the Letters Patent. The learned Single Judge had held that the suit, as filed, was entertainable by the High Court of Delhi as a part of the cause of action for the suit had arisen in Delhi by the exercise of the powers by the Public Trustees under Section 187-B of the Companies Act. On a Letters Patent Appeal being competent, it was held that the order appealed against was neither a decree nor an order appealable under the Code of Civil Procedure, as was held in the University of Delhi's case and, therefore, the appeal was not competent. With regard to Section 10 (1) of the High Court Act it was held that an appeal was only competent if those conditions were satisfied. This view is no longer good law but in the case relied upon there was no consideration at all of the effect of the provisions of the Arbitration Act. In both, this case and Shah Babulal Khimji's case the argument only turned on as to what is the meaning of the word ‘judgment’. Relying on the ratio in Shah Babulal Khimji's case to the effect that whenever a trial Judge decides a controversy which affects valuable rights of one of the parties it must be treated to be a judgment, it was urged that since Section 10 (1) of the High Court Act makes a judgment given by the trial Court appealable, all that has to be seen is whether the judgment or order under appeal was delivered by a trial Judge exercising Ordinary Original Civil Jurisdiction vested in the High Court and such order or judgment decided a controversy which affects valuable rights of one of the parties. Lex fori, it is urged, is the only aspect which is required to be seen at this stage. It was not permissible, it is contended, to investigate whether from such an order an appeal could be preferred or not either under the Code of Civil Procedure of any other enactment. The context in which the Supreme Court has followed the observations of the Judicial Committee of the Privy Council in Hurrish Chunder Chowry's case, 1882 (10) Indian Appeals 4 has, however, been missed by learned counsel for the appellant. The Judicial Committee was concerned with examining the scope of Sections 588 and 591 of the Code of Civil Procedure, 1877, to find out whether those provisions were inconsistent with Clause XV of the Letters Patent of the Bombay High Court. The Supreme Court observed that the Privy Council intended to lay down clearly, when it made its observations in Hurrish Chunder Chowdry's case that section 588 of the code of 1877 did not affect nor was it consistent with the provisions of the Letters Patent and hence those orders of the trial Judge which fell beyond Section 588 would be appealable to a larger Bench under the Letters Patent if those orders amounted to judgment within the meaning of Clause XV of the Letters Patent. Adverting to Section 117 of the Code of Civil Procedure, 1908, it was noticed that provisions makes the provisions of the Code of Civil Procedure applicable to High Courts also and that is why appeals from orders covered by Order 43, Rule 1 C.P.C, passed by a trial Judge in the High Court, were appealable to a larger Bench in the High Court. In Bombay, Calcutta, and Madras the appeal to the larger Bench lies by virtue of Section 10 of the High Court Act. Therefore, it is urged, orders passed by a trial Judge, so long as those orders can be regarded as judgment, would be appealable to a Division Bench of this court.
17. All the above arguments fail to notice one salient feature and that is that appeals from the judgment order of a trial Judge to a larger Bench of the High Court would be maintainable unless otherwise so provided either expressly or by implication by any law. Section 4 of the Code of Civil Procedure in terms lays down that when anything in the Code of Civil Procedure is in conflict with anything in the special or local law or with any special jurisdiction or power conferred or any special forum or procedure prescribed by or under any other law, the Code will not, in the absence of specific provision to the contrary, prevail so as to override such inconsistent provision. In the cases cited and considered by the Supreme Court in Shah Babulal Khimji's case no inconsistency was pointed out between the provisions of the Code or the provisions of the Letters Patent. In the present case it is not so. Section 39 of the Arbitration Act in terms says that no other orders would be appealable except those specified in the section. Therefore, on the ratio of Shah Babulal Khimji's case, which approves the rule enunciated by the Judicial Committee of the Privy Council in Chowdry's case, it has to be held that no appeal is competent from the judgment under appeal before us. Indeed, if we are to read paragraphs 33 and 34 of the judgment in Shah Babulal Khimji's case it would become apparent that the Supreme Court while upholding the right of first appeal against judgment of a trial Judge from orders from which appeal is permissible under Section 39 of the Arbitration Act impliedly also held that the provisions of Section 39 of the Arbitration Act would apply in appeals from orders from which appeal is permissible under Section 39 or was impermissible. Their Lordships in Shah Babulal Khimji's case, a decision rendered by a Division Bench of the Supreme Court, comprising of three Hon'ble Judges, noticed with approval the decision of the Supreme Court in the Mohindra Supply Co.'s case, given by a Bench of four Hon'ble Judges. As noticed earlier, maintainability of an appeal from an order amounting to a judgment from which appeal is not permissible on a reading of Section 39 of the Arbitration Act was specifically ruled out in Mohindra Supply Co.'s case. We are bound by that decision.
18. On the same reasoning reliance on Gulab Bai and another v. Puniya, A.I.R 1966 S.C 637 (6), by the learned counsel for the appellant is misplaced. Indeed, a mere reading of paragraph 12 of the report supports the view that we have taken.
19. It was then urged that the High Court Act being a special law or a latter law, it would prevail over the provisions of the Arbitration Act. In order to support the contention that the High Court Act is special law, reliance was placed on Life Insurance Corporation of India v. D. J. Bahadur, 1981 (1) S.C.C 315 (7). In this case it was held that the Life insurance Corporation Act would be a general statute whereas the Industrial Disputes Act was a special law in the context of industrial disputes involving matters covered by a settlement. In our view, applying the ratio of this very case the High Court Act would be the general law and the Arbitration Act would be a special law. Therefore, which is earlier or which is later is not relevant. Indeed, one will have to keep in view the principle whether the right created, by a law for example Section 10 of the High Court Act, being later in point of time, can confer a right of appeal without repealing Section 39 of the Arbitration Act, which was earlier in point of time. The doctrine of repeal by implication is also not available. Both Section 39 of the Arbitration Act and Section 10 of the High Court Act have to be construed harmoniously. On the principle of harmonious construction, therefore, it has to be that where the trial Judge while exercising power under Section 50 of the Act makes an order which may be pursued a judgment within the meaning of Section 10 of the Court Act, an appeal would be competent unless specifically barred. In the present case, it is specifically barred being impermissible on a mere reading of Section 39 of the Arbitration Act.
20. In the view that we have taken it is not necessary for us to dilate on the correctness or otherwise of the learned Single Judge's order/judgment though arguments were addressed at some length on this point. We were requested to give our judgment on this point also.
We, however, feel that it will neither be appropriate nor proper for us to make any observations on merit once we hold that the appeal itself is not maintainable. We, therefore, dismiss the appeal. The matter being still at the show cause stage, there will be no order as to costs.
Appeal dismissed.