State Of West Bengal & Ors. v. R.C Banerjee

Vinod Kumar Gupta, J.—This appeal is directed against the judgment/order dated 16.9.97 passed by the learned single Judge of this court (Sujit Kumar Sinha, J) whereby a decree in terms of an arbitration award has been passed. Facts leading to the filing of the appeal are that the respondent R.C Banerjee had lodged claims with the arbitrator Shri R.M Moitra in respect of Contract No. 57 of 1983–84 from the office of the Superintendent Engineer, public Works Department, Northern Circle, Govt. of West Bengal, Jalpaiguri. In a detailed speaking Award the said arbitrator awarded an amount of Rs. 25,04,520/- in favour of the respondent by allowing his various claims against the appellants. The arbitrator however had rejected all the counter claims of the appellants. The award was passed along with interest, including pendentelite interest. Whereas the principal sum award was Rs. 25,04,520/- the interest calculated was Rs. 34,25,360/-. In the award the arbitrator had also awarded costs of Rs. 60,000/-. Under the three heads therefore the following break-up of the amounts can be shown as having been awarded by the arbitrator in favour of the appellants;

Rs. 25,04,520/-

Rs. 34,25,360/-

Rs. 60,000/-

2. This award was filed in the court and, as observed above, on 16th September, 1997 Sujit Kumar Sinha, J. directed that a decree in terms of the award be passed. He also directed levy of simple interest @ 6% per annum from the date of the decree untill realisation. Costs assessed at 100 gms were also awarded in favour of the respondent. Award was made and published by the Arbitrator on 28th May, 1997 and was filed in the count on 23rd June, 1997. Notices of the filing of the award in the court were admittedly received by the appellants on 8th July, 1997. It is therefore admitted case of the parties that until 16th September, 1997 when the matter was taken up by Sujit Kumar Sinha, J and the decree in terms of the award was passed, the appellants had not filed any application for setting aside the award either under section 30 or section 33 of the Arbitration Act, 1940 nor had the appellants taken any other steps to object to the award or to ask the court in any other manner that the award be set aside. In other words when the matter came up before the court on 16th September, 1997, there was no request or prayer on behalf of the appellants that the award be set aside. Actually it also appears that on 16th September, 1997 when the impugned Judgment was passed by the learned single Judge, no one had in fact appeared before him on behalf of the appellants.

3. The first and the foremost point which has been raised by the learned Advocate appearing for the appellants is that Judgment/order dated 16th September, 1997 is without Jurisdiction because the award ought to have been filed before the Division Bench of the High Court because the order of reference to Arbitration originally was passed by the Division Bench on 5.7.1991 We are not impressed at all with the submission because undoubtedly on 16th September, 1997 when the judgment/order under challenged in this appeal was passed by the learned single Judge (Sujit Kumar Sinha, J), he had the jurisdiction to hear Arbitration matters, including the matters relating to the filing of the awards and passing Judgments upon the arbitration awards under section 17 of the Arbitration Act. It is nobody's case that the learned single Judge on 16th September, 1997 did not have the jurisdiction to deal with the matter. If therefore, merely because the order of reference as originally made was passed by a Division Bench of this court, it does not mean that the award also should have been filed before the Division Bench. Actually the award was filed before the Registrar, original side of this court as was required to be done by the original Side Rules and the Registrar, original side had sent the notices of the filing of the award to the parties and thereafter the matter was put up by him before the learned single Judge who undoubtedly had the jurisdiction in the matter.

4. ‘Court’ has been defined in section 2(c) of the Arbitration Act. Section 2(c) reads as under:

Section 2(c): “court” means a Civil Court having jurisdiction to decide the question forming the subject-matter of the reference if the same has been the subject-matter of a suit but does not, except for the purpose of Arbitration proceedings under section 21, include a Small Cause Court.

5. Undoubtedly the learned single Judge (S.K Sinha, J.) had the jurisdiction to deal with all Arbitration matters and therefore it cannot be said that he in any manner lacked the Jurisdiction in passing the judgment impugned in this appeal. When the original order of reference was passed by the Division Bench, even at that time the arbitration matters were being dealt with by a single Bench of this court. Since this matter had been remanded to this court from the Supreme Court, for some unknown reason the matter being remanded by the Supreme Court was taken up by the Division Bench presided over by the Hon'ble Chief Justice and the order of reference to arbitration was passed by the Division Bench. If, therefore, because of some peculiarity of circumstances a Division Bench passed an order of reference, even though at that time itself the single Bench had the jurisdiction to do so, it cannot be said that the arbitration award when passed pursuant to such an order of reference should have been placed before the Division Bench, even though at the relevant time itself the single Bench had the jurisdiction to deal with the matters relating to the award under section 17 of the Arbitration Act, 1940. The fact remains that the order of reference was passed by the High Court of Calcutta where also the award was filed and the judgment in terms of the award pronounced. There is no lack of jurisdiction. This plea accordingly is rejected.

6. Mr. Mitra, learned Senior Advocate appearing for the respondents has raised a preliminary objection with regard to the maintainability of the appeal, as according to him this appeal in view of section 39 of the Act against the judgment/order dated 16th September, 1997 is not at all maintainable. Section 39 of the Arbitration Act, 1940 reads as under:

Section 39

Applicable orders

(1) An appeal shall lie from the following orders passeed under this Act (and from no others) to court authorised by law to hear appeals from original decress of the court passing the order:

An order

(i) 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) under section 20, making to refusing a reference;

(vi) staying or refusing to stay legal proceedings where there is an arbitration agreement;

(vii) 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 to take away any right to appeal to the Supreme Court.

Section 17 of the Arbitration Act, 1940 is also reproduced herein below for ready reference:

Section 17

Judgment in terms of award

Where the court sees no cause to remit the award or any of the matter referred to arbitration for reconsideration or to set aside the award, the court shall, after the time for making an application to set aside the award has expired or such application having been made, after refusing it proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow the Judgment so pronounced a decree shall follow and no appeal shall lie upon such decree except on the ground that it is in excess of or not otherwise in accordance with the award.

7. A plain reading of the aforesaid two sections of the Arbitration Act, 1940 therefore clearly suggests that only such orders as are mentioned in section 39 are appealable. Because a specific provision has been made about the maintainability of the appeals against only particular types of orders mentioned in section 39, it can safely be said that no appeals are maintainable against other orders passed lie there under the Act. Similarly under section 17 of the Act it has clearly been provided that once a decree is passed in terms of the award on the basis of the Judgment pronounced under section 17 of the Act, no appeal shall lie against such a decree accept when it is alleged that the decree is either in excess of the award or not in accordance with the same. A combined reading of sections 17 and 39 therefore leaves no one in any manner of doubt that the judgment passed on and award in terms of section 17 can be appealed against, under section 39 of the Act only if the court has either set aside the award or refused to set aside the award. Appeal under section 17 of the Act in any case is not presently maintainable because it is not the case of the appellants before us that the decree as passed is either in excess of the award or not in accordance thereto. For maintaning an appeal under section 17 it is a necessary requirement of law that the appellant must urge that, the decree as passed is either in excess of the award or not in accordance thereto. A perusal of the memorandum of appeal does not suggest any such case of the appellants. Similarly the decree passed in terms of the award, based upon the said judgment passed under section 17 of the Act is also not appealable except to the extent indicated above. As will thus be noticed the Judgment passed under section 17 of the Act resulting in the passing of the decree in terms of the award is appealable only because section 39 of the Act provides for such an appeal, subject to the condition, expressly and specifically mentioned that the appeal shall be against either the setting aside of the award or the refusal to set aside the award. In other words if the judgment merely directs the passing of the Decree in terms of the Award, either setting aside the Award or refusing to set aside the Award, no appeal would lie against such a judgment in the present case however we clearly notice that the learned single Judge had merely passed the decree in terms of the award and the Judgment therefore, by which the said decree was passed had neither set aside the award not refused to set aside the award. We are saying so because the question of the court below setting aside the award of refusing to set aside the award would only arise if either of the parties to the proceedings in the court below would want, request or pray to the court for setting aside the award. Only if a request for setting aside the award is pending before the court, the court can either set aside the award, thus accepting the request for setting aside the award or refuse to set aside the award, thus rejecting such a prayer. A narration of the events indicated earlier however clearly suggests that as on 16th September, 1997 when the Judgment was pronounced by the learned single Judge passing decree in terms of the award, no such request or prayer was pending before the learned single Judge since admitted by the appellants had not filed any application till then for setting aside the award. Since admittedly the appellants had been served the notice of the filing of the award in the court on 8th July, 1997, the time for making any application for setting aside the award had expired by 16th September, 1997 and therefore, in terms of action 17 of the Act the learned, trial court had no option but to pronounce Judgment upon the award and pass decree in terms thereof.

8. Mr. Kundu, learned Advocate appearing for the appellants referred to a judgment of the Supreme Court in the case of Shah Babulal Khimji v. Jayaben D. Kanta reported in AIR 1981 SC 1786 to contend that even though the appeal may not be maintainable under section 39 of the Arbitration Act, clause 15 of the Letters Patent permits the appellant to maintain such an appeal. We do not agree with his contention because what we clearly find from a careful reading of this judgment is that their Lordships did not at all say that when a statute specifically prohibits an appeal in a particular situation, the provision in the letters Patent for such an appeal can be invoked. On the other hand in the case of Union Of India v. Mohindra Supply Co. reported in AIR 1962 SC 256, their Lordships clearly were of the opinion that an appeal under the Letters Patent cannot be held to be maintainable it the filing of such an appeal is prohibited under a specific law, such as the Arbitration Act. The following observations may be quoted with advantage:

“Section 39(2) expressly prohibits a second appeal from an order passed in appeal under section 39(1) except an appeal to this court. There is clear indication inherent in sub-section (2) that the expression “second appeal” does not mean an appeal under section 100 of the Code of Civil Procedure. To the interdict of a “second appeal”, there is an exception in favour of an appeal to this court; but an appeal to this court is not a second appeal. If the legislature intended by enacting section 39(2) merely to prohibit appeals under section 100 of the Code of Civil Procedure, it was plainly unnecessary to enact an express provision saving appeals to this court. Again an appeal under section 39(1) lies against an order superseding an award or modifying or correcting an award, or filing or refusing to file an arbitration agreement or staying or refusing to stay legal proceedings where there is an arbitration agreement or setting aside or refusing to set aside an award or on an award stated in the form of a special case. These orders are not decrees within the meaning of the Code of Civil Procedure and have not the effect of decrees under the Arbitration Act. Section 100 of the Code of Civil Procedure deals with appeals from appellate decrees and not with appeals from appellate orders.

The problem to which attention must then be directed is whether the right to appear under the Letters Patent is at all restricted by section 39, sub-section (1) and (2). Clause 10 of the Letters Patent of the High Court, in so far as it is material, provides:

“And we do further ordain that an appeal shall lie to the said High Court ……………… from the Judgment (not being a judgment passed in exercise of appellate jurisdiction in respect of a decree or order made in the exercise of appellate jurisdiction by a court subject to the superintendence of the said High Court and not being an order made in the exercise of revisional Jurisdiction ……………) of one Judge of the High Court ……………”

By this clause, a right to appeal except in the cases specified, from one Judge of the High Court to a Division Bench is expressly granted. But the Letters Patent are declared by CL. 37 subject to the legislative power of the Governor-General in Council and also of the Governor-in-Council under the Government of India Act, 1915, and may in all respects be amended or altered in exercise of legislative authority. Under section 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.”

9. The judgment in Union Of India v. Mohindra Supply Co. came to be considered in the case of State Of West Bengal v. M/S Gourangalal Chatterjee. reported in (1993) 3 SCC 1 where it was observed as under:

“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 bay 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 sub section(1) the ‘conclusion was inevitable that it was so done with a view to restrict the right of appeal within strict limits defined by 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.”

10. Regarding the specific applicability of sub-section (1) of section 39, in Contradistinction to sub-section (2) thereof, their Lordships observed as under:

“The learned counsel for the appeallant vehemently argued that since the decision by the Supreme Court was in respect of an appeal directed against an order passed by a learned single Judge in exercise of appellate Jurisdiction no second appeal lay but that principle could not be applied where the order of learned Single Judge was passed not in exercise of appellate Jurisdiction but original jurisdiction. The argument appears to be without any substance as sub-section (1) of section 39 which is extracted below:

……………………………………………………………………

……………………………………………………………………

……………………………………………………………………

provides that an appeal could lie only from the orders mentioned in the sub-section itself. Since the order passed by learned single Judge revoking the authority of the Chief Engineer on his failure to act as an arbitrator was not covered in either of the six clauses mentioned in section 39 it is obvious that no appeal could be filed against the order of the learned single Judge.”

11. Under the circumstances therefore, and in view of the clear bar contained in the Arbitration Act against preferring the present appeal, as also in the light of the ratio laid down by their Lordships of the Supreme Court in the aforesaid Judgments, we are convinced that the preliminary objection raised by Mr. Mitra, learned Senior Advocate appearing for the respondents deserves to be upheld. We accordingly hold that the appeal filed by the appellants is not maintainable. The Judgment under appeal accordingly is upheld and the appeal is dismissed, but without any order as to costs.

12. All parties are to act on a signed copy of the operative part of this judgment on the usual undertaking.

Appeal dismissed.

K.P