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Case Number

Award No. 57 of 1959

Attorney(S)

Sachin Sinha and Banerjee
Santosh Kumar Basu and Purnendu Sekhar Basu

Judges

P.C Mallick, J.

Acts

Section 31 of the Indian Arbitration Act. Sec. 31, sub-sec. (4)
Section 42 of the Arbitration Act and R. 14 of the Rules
Section 5 of the Indian Arbitration Act.3.
Section 14 of the Indian Arbitration Act.
SECTION 5 ARBITRATION ACT
SECTION 11 ARBITRATION ACT

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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

This is an application to set aside the judgment entered upon an arbitration award made by the arbitrator D.B. Sen on 25-9-1958 and the subsequent judgment on the award passed by the court on 6-1-1959. The dispute arose from the contractor's claim for construction of certain residential buildings at Garividi. The contractor (respondent) referred the dispute to arbitration in July 1958 under an arbitration clause naming D.B. Sen as arbitrator. The company (petitioner) contended that D.B. Sen was financially interested and therefore not competent. The company filed a written statement in the arbitration but did not participate further despite notices of meetings.

On 10-9-1958 the company applied to the Subordinate Judge at Srikakulam for leave to revoke the arbitrator's authority under Section 5 of the Indian Arbitration Act. No stay or injunction was obtained in that proceeding. The arbitrator made an award on 25-9-1958 and forwarded it to the Registrar of the Calcutta High Court to be filed under Section 14 of the Indian Arbitration Act. The contractor paid fees and, following the Registrar's directions, served notice under Section 14(2) on the company at its Calcutta office (No. 7C, Lower Circular Road) on 28-11-1958 by tendering the notice to one B.P. Mallick; Mallick refused to sign the back of the original and no affixation followed. The company did not apply to set aside the award in that court, and a judgment on the award was entered by the presiding judge on 6-1-1959.

The present application by the company seeks to set aside that decree and to have the award taken off the file of the Calcutta High Court.

Legal Issues Presented

Whether the judgment entered on the arbitration award on 6-1-1959 should be set aside because notice under Section 14(2) of the Arbitration Act was not validly served on the company.
Whether the Calcutta High Court had jurisdiction to file the award and pass judgment on it in the face of a prior pending application under Section 5 of the Arbitration Act made on 10-9-1958 in the Subordinate Judge's Court at Srikakulam — i.e., whether Section 31(4) of the Indian Arbitration Act gave exclusive jurisdiction to the Srikakulam Court over the arbitration proceedings and all subsequent applications arising out of the reference.

Arguments of the Parties

Company / Applicant (as reflected in the opinion)

The company contended that D.B. Sen was financially interested and therefore not competent to act as arbitrator.
The company asserted, in effect, that notice served at the Calcutta office was not properly served — the petition alleged facts (including that one L.P. Moulner had an office at 7C, Lower Circular Road) intended to challenge the validity of service.
The company had applied under Section 5 on 10-9-1958 to revoke the arbitrator's authority; that pending application was relevant to the jurisdictional question under Section 31(4).

Contractor / Opposing Party (arguments presented by Mr. Santosh Kumar Basu, learned counsel)

Mr. Basu contended that notice under Section 14(2) had been properly served at the company's Calcutta office and that the company did not make out a clear case that it had no Calcutta office.
He argued that B.P. Mallick was identified as an employee and that there was no denial that Raghubans Sahai was an employee; thus service by tender to Mallick should be upheld.
On the law of service, Mr. Basu relied on Section 42 of the Arbitration Act and Rule 14 of the Rules framed under the Act and Chapter VIII, Rule 26 of the Court's Rules, submitting that the procedure set out in Order V of the Code of Civil Procedure would not apply where the Act itself provides for how notice is to be served. He submitted Section 42 is wide enough to cover service of notice under Section 14(2).
On jurisdiction, Mr. Basu submitted that Section 31(4) related only to proceedings up to the making of the award and did not oust the court's jurisdiction to deal with filing and judgment after an award is made; he sought to draw a distinction between filing of an award by a party and filing by the arbitrator.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Ganesh-mull v. Kesoram Cotton Mills, 55 Cal W.N. 349 : AIR 1952 Cal. 10	Authority where Bachawat, J. held that service of notice under Section 14(2) of the Arbitration Act is to be governed by the provisions of Order V of the CPC.	The opinion notes this authority and Mr. Basu's reliance upon it. The judge observed that Bachawat, J. did not consider whether Section 42 of the Arbitration Act provides for service under Section 14(2); the judge treated the decision as not directly dispositive on the present facts and proceeded to give the company an opportunity to contest the award.
Re Charu Chandra Das, 50 Cal W.N. 547	Held that an application under the Arbitration Act made in a court competent to entertain it takes away the jurisdiction of all other courts over such arbitration proceedings; the court making the application alone has jurisdiction.	The judge agreed with Khundkar, J.'s view in this case and applied the principle to conclude that, because an application under Section 5 had been made in the Subordinate Judge's Court at Srikakulam prior to the filing and judgment on the award, the Srikakulam Court had exclusive jurisdiction and the Calcutta judgment on the award must be set aside and the award transmitted to that court.

Court's Reasoning and Analysis

The court proceeded in two principal strands of analysis: (A) validity of service under Section 14(2) and related service provisions, and (B) jurisdictional competence in light of a prior Section 5 application and Section 31(4) of the Arbitration Act.

A. Service of Notice under Section 14(2)

The court examined the facts and documentary evidence showing the company had a Calcutta office (e.g., company letters annexed to the petition) and observed that the petition's allegation that the company had no Calcutta office was equivocal in the face of that evidence.
B.P. Mallick was shown to be an employee associated with L.P. Moulner, a director and technical adviser; Raghubans Sahai was not denied to be an employee. The court was not prepared to find that the notice was not tendered to Mallick, who was held to be an important official in charge of the Calcutta office.
Mr. Basu argued that Section 42 of the Arbitration Act and the Court and Act Rules provided the appropriate mode of service and that Order V CPC did not apply; the court noted there was an authority (Ganesh-mull) that had taken the opposite view but also noted that the issue whether Section 42 covered notices under Section 14(2) had not been considered in that decision.
On the facts, however, the court found Mallick had not been apprised of the arbitration proceedings and had denied authority to accept the notice. In view of this, and because all prior arbitration notices had been served at the company's registered office, the judge gave the company the benefit of doubt and held that properly the Section 14(2) notice should have been served at the company's registered office rather than treated as effectively served at the Calcutta office.

B. Jurisdiction in Light of a Prior Section 5 Application and Section 31(4)

The court disclosed that it had not been informed, when it passed judgment on the award, that the company had already moved the Subordinate Judge at Srikakulam on 10-9-1958 under Section 5 of the Arbitration Act and that that application remained pending before that court.
The court cited Section 31, sub-section (4) of the Indian Arbitration Act which provides that where any application under the Act has been made in a court competent to entertain it, "that Court alone would have jurisdiction over the arbitration proceedings and all applications arising out of that reference, and the arbitration proceeding shall be made in that Court and in no other court." The court quoted the words of the subsection.
The judge analyzed competing contentions: Mr. Basu sought to limit sub-sec. (4) to proceedings up to the making of the award and to distinguish between filing by the party and filing by the arbitrator. The court rejected any such distinction, observing that the arbitrator "causes the award to be filed" and that the procedures following receipt of the award (Registrar's notices, payment of fees, Section 14(2) notice, and application to set aside) all arise from the reference and fall within the subsection's comprehensive wording.
The court relied upon and agreed with Khundkar, J.'s ruling in Re Charu Chandra Das to the effect that an application under the Arbitration Act made in a competent court takes away jurisdiction from other courts over the arbitration proceedings; the court concluded that the Srikakulam Court alone had jurisdiction over the reference and related proceedings.
Accordingly, had the court known of the pending Section 5 application in Srikakulam, it would not have passed judgment on the award; instead it would have directed the Registrar to forward the award to that court for determination.

Holding and Implications

Holding: The court set aside the judgment on the award previously passed on 6-1-1959 and ordered that the award be transmitted to the Subordinate Judge at Srikakulam for that court to deal with it in the exercise of its exclusive jurisdiction. The opinion concludes with the clear operative line: "Award set aside."

Implications / Consequences:

The immediate legal consequence is that the judgment on the award entered by the Calcutta court is vacated and the arbitration award is to be sent to the Subordinate Judge at Srikakulam for that court to deal with the pending Section 5 application and all matters arising out of the reference.
On the question of service, the court found on these facts that the Section 14(2) notice should properly have been served at the company's registered office (where prior arbitration notices had been served), giving the company the benefit of doubt with respect to the sufficiency of the Calcutta service.
Costs: the petitioners (the company) were directed to bear their own costs of the application to set aside the decree. All costs of the contractor, including costs of the application now before this court, will abide the result of the proceedings in the Srikakulam Court (i.e., they will be determined by that court).
The court expressly applied and endorsed the view that where a competent court is seized of an application under the Arbitration Act, that court has exclusive jurisdiction over the arbitration reference and subsequent applications arising from it. The court implemented that rule by transmitting the award to the Srikakulam Court.

Note: This summary is confined strictly to matters and statements appearing in the provided opinion. No information has been added or inferred beyond the text of the opinion supplied.

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Ferro Alloys Corporation Ltd. v. A.K Ghosh And Bros. .

1. This is an application for an order that a judgment upon award passed by me on 6-1-1959 be set aside and that the award be taken off the file.

2. Subject matter of dispute between the parties is the claim of the contractor for the construction of certain residential buildings at Garividi. The respondent is the contractor. One D.B Sen, Architect, is named as the arbitrator in the contract who would adjudicate whatever disputes that might arise between the parties with respect to this contract. The contractor's claim for the construction work having been disputed, sometime in July, 1958 the contractor referred the dispute to the arbitration of the said D.B Sen. The company contended that D.B Sen was not competent ta arbitrate on the ground that he was financially interested in the matter. Nevertheless the company filed a Written Statement but took no further step in the arbitration proceedings even though due notice was given by the arbitrator of all meetings held by him. On 10-9-1958 the company made an application to the Subordinate Judge at Srikakulam for leave to revoke the authority of the arbitrator under Section 5 of the Indian Arbitration Act.

3. No order for stay or injunction was, however, obtained in the said proceedings though notice of this proceeding was given both to the contractor and the arbitrator. In due course, the arbitrator made his award in favour of the contractor on 25-9-1958 and sent the award to the Registrar of the Calcutta High Court for being filed under Section 14 of the Indian Arbitration Act. The contractor thereupon took steps, paid the necessary fees and having been directed by the Registrar to serve notice, served notice under S. 14(2) of the Act on the company at Calcutta. I should have stated that even though the registered office of the company is at Tumsar in the State of Bombay, the company had a Calcutta office at No. 7C, Lower Circular Road. According to the affidavit of service filed by Prodyot Kumar Banerjee, a clerk in the employ of the Supreme Court Advocate of the contractor, the notice was served on November 28, 1958 by tendering a copy of the notice to one B.P Mallick alleged to be the Calcutta Manager of the said company. B.P Mallick was identified as such by one Sri Raghubans Sahai, one of the employees of the company. The said B.P Mallick, however, after receipt of the notice, refused to sign the acknowledgment on the back of the original. Notice was not thereafter served by affixing. That is how this notice is alleged to have been served. The company did not make any application to set aside the award. In the usual course the matter came up for judgment on award and on the application of the contractor a judgment was passed by me on January 6, 1959.

4. The present notice is taken out by the company to set aside the decree passed by me on January 6, 1959 and for a further order that the award be taken off the file of this Court.

5. Mr. Santosh Kumar Basu, learned Counsel appearing to oppose the application, contended that notice has been properly served and the present application does not lie. It is clear from the letters of the company, copies of which have been annexed to the petition that the company had a Calcutta office. Having regard to this evidence the company did not make out a clear case that the company had no Calcutta office. The case made in the petition is equivocal. It is stated in the petition that one Lazalo Paul Moulner was one of the Directors and Technical Adviser of the company and he had an office at 7C, Lower Circular Road. This sort of allegation is not enough to enable a court to hold that the company had no Calcutta office, in the face of the evidence to the contrary to be found in the company's own letters. B.P Mallick admits to be an employee of the said L.P Moulner, the Director and Technical Adviser, though he denies that he had authority to accept the notice or in fact the notice was tendered to him as alleged by Banerjee. There is no denial that Raghubans Sahai was an employee of the company. On the materials placed before me I am not prepared to hold that the notice was not tendered to B.P Mallick who I hold is an important official in charge of the Calcutta office of the company. On this finding, can I hold that notice has been served according to law having regard to the fact that the copy of notice was not affixed at a conspicuous part of the premises? Mr. Basu contended that under Section 42 of the Arbitration Act and R. 14 of the Rules framed under the Act as also under Chapter VIII, R. 26 of the Rules of this Court, the procedure for service as laid down in O. 5 of the CPC would not apply to the instant case. The procedure as laid down in O. 5 would have applied had there been no provision as to how the notice is to be served in the Act itself. But Sec. 42 provides how such notice is to be served. The section provides that notice required by the Act to be served otherwise than through the court may be served either by delivering it to the person on whom it is to be served or by sending it by post in a letter addressed to that person at his usual or last known place of abode or business in India. Notice required to be served under Sec. 14(2) is to be served by the party and not through the Court. In Mr. Basu's submission, Sec. 42 is not limited to service of notice during the pendency of arbitration proceeding but is wide enough to cover cases of service of notice under S. 14(2) of the Act. In the case of Ganesh-mull v. Kesoram Cotton Mills, reported in 55 Cal W.N 349 : (AIR 1952 Cal. 10), Bachawat, J. held that the service of notice under Sec. 14(2) of the Act is to be governed by the provisions of O. 5 of the CPC. Mr. Basu submitted that Sec. 42 itself provides the manner of service and therefore the provisions of the Code as to service are not applicable. Bachawat, J. did not consider whether Sec. 42 of the Act provides for the service of notice under Sec. 14(2) of the Act. There may be something to be said in favour of this argument advanced by Mr. Basu. But on the facts of this case I am inclined to give an opportunity to the company to contest the award. All notices in the Arbitration proceedings were served in the Registered office. Only for the purpose of serving notice under Sec. 14(2), the cause title of the proceedings before the arbitrator was amended so as to indicate that the company carries on business at Calcutta. The notice might have been made over to B.P Mallick, but admittedly he was not apprised of the Arbitration proceedings. He states that he had no authority to accept. I would therefore give the benefit of doubt to the company and hold that properly the notice should have been served in the Registered office of the company as all the previous notices were served in the Arbitration proceedings.

6. In the instant case, while I passed judgment on award it was not brought to my notice that prior to the award having been filed in this Court, an application under S. 5 was made by the company in another court and the same was still pending there. As stated before, that application was made on 10-9-1958 and I passed judgment on award in January 1959. Had this fact been brought to my notice, I would certainly have considered how far I had jurisdiction to pass a judgment on award, having regard to Section 31 of the Indian Arbitration Act. Sec. 31, sub-sec. (4) lays down that

“….. where in any reference any application under this Act has been made in a Court competent to entertain it, that Court alone would have jurisdiction over the arbitration proceedings and all applications arising out of that reference, and the arbitration proceeding shall be made in that Court and in no other court.”

7. I am apt to think that once an application is made with reference to an arbitration agreement in one Court, no matter whether before or after filing of the award, that Court will have the exclusive jurisdiction to deal with all matters in connection with the reference including filing the award and passing judgment in terms of the award. In that view of the matter, I would not have passed a judgment on award, had I known at the time that already an application had been pending in another court in connection with the self-same arbitration. I would gave directed the Registrar of this Court to forward that award to the learned Subordinate Judge who is dealing with the application under Section 5 of the Arbitration Act.

8. Mr. Basu submitted that sub-sec. (4) of Sec. 31 relates to proceedings upto the making of the award. The previous sub-sections deal with the jurisdiction of the Courts after the award is made. There are innumerable authorities to the effect that the making of the award is an end of the arbitration proceedings. Subsequent proceeding in connection with the reference is the filing of the award and making it a Rule of the Court. These subsequent proceedings are dealt with in sub-secs. (1), (2) and (3) of Sec. 31 and the last sub-section deals with all proceedings prior, to the making of the award. In the case of Re. Charu Chandra Das, reported in 50 Cal W.N 547. Khundkar, J. held that an application in any reference made under the Arbitration Act to any court competent to entertain it, takes away the jurisdiction of all other courts over such arbitration proceedings. In the above case an application was made in a court at Dacca, before the award was made, under Section 11 of the Arbitration Act for removal of the Arbitrator. The application was not proceeded with and was eventually dismissed. There was a second application for removal in the same court. But during the pendency of the second application the arbitrator made his award and caused it to be filed in this court. Thereupon an application was made in this Court for setting aside the award, Khondkar, J. held that this Court had no jurisdiction to pass a judgment on award and the only court competent to do it is the Dacca Court, The learned Judge directed the Registrar to send the award to the Dacca Court to be dealt with by that court which alone had jurisdiction in the matter. Apart from this decision no other authority was cited on the point Mr. Basu submitted that the decision does not appear to be a well-considered judgment. Mr. Basu sought to make a distinction between filing of an award by the party and filing of an award by the arbitrator. He is prepared to concede that the court will not have jurisdiction under sub-sec. (4), if the award is filed by the party but the court will have jurisdiction if the award is filed by the arbitrator. In my judgment no such distinction can be and has been made in the Act. The arbitrator does not file the award but only “causes the award to be filed” He only forwards the award under Sec. 14 to the court and according to the Act and the Rules of our Court, on receipt of the award the Registrar causes notices to the parties to enable either of the parties to pay the necessary fees and costs so that the award may be filed. Then notice under Sec. 14(2) is directed to be issued by the Registrar to enable either party to make an application for setting aside the award. If no such application is made or if such an application is dismissed when made the court “proceeds to pass judgment on award.” The judgment on award is made on. The application of the award holder. There must be an application for judgment on award even though such an application need not be by petition: such an application for judgment on award may not be an application in the arbitration proceeding but if certainly arises out of the reference. Wording of sub-s. (4) is very comprehensive. The words are:

“that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall be made in the court and no other court”.

9. The intention to be gathered from the words used in the section is that only one court will deal with, all matters in relation to a reference whether during the pendency of the arbitration proceedings or after its termination by an award. With respect I agree with the views expressed by Khundkar, J. in the case cited above. In the result, the judgment upon award passed by me must be set aside. I direct the Registrar to transmit the award to the Court of Subordinate Judge at Sarikakulam. In the facts of this case the petitioners will bear their own costs. All costs of the contractor including the costs of this application will abide by the result of the proceedings in the Sarikakulam Court.

JC/V.R.B

10. Award set aside.

Ferro Alloys Corporation Ltd. v. A.K Ghosh And Bros. .

Structured Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Company / Applicant (as reflected in the opinion)

Contractor / Opposing Party (arguments presented by Mr. Santosh Kumar Basu, learned counsel)

Table of Precedents Cited

Court's Reasoning and Analysis

A. Service of Notice under Section 14(2)

B. Jurisdiction in Light of a Prior Section 5 Application and Section 31(4)

Holding and Implications

Ferro Alloys Corporation Ltd. v. A.K Ghosh And Bros. .

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