Gaya Electric Supply Co. Ltd. v. State Of Bihar

Lakshmikanta Jha, C.J:— This is an application by the plaintiff for leave to appeal to the Supreme Court from an order of a Bench of this Court dated the 30th March, 1951, directing the suit instituted by the petitioner to be stayed under section 34 of the Indian Arbitration Act. The relevant facts are these:—

The petitioner (hereafter referred to as the plaintiff) is a Company known as the Gaya Electric Supply Company, Limited, incorporated under the Indian Companies Act having its registered office at Gaya. The Company held a licence, called the “Gaya Electric Licence”, granted by the Province of Bihar for the supply of electric energy within the limits of the town of Gaya. On the 23rd June, 1949, the Government, for certain reasons, revoked the licence by a notification with effect from the 9th July, 1949. Thereupon the petitioner, on the 4th July, 1949, instituted Title Suit no. 58 of 1949 for a declaration that, the order revoking the licence was mala fide and ultra vires. This suit, however, was compromised and the Province of Bihar agreed to acquire the undertaking of certain terms and conditions and an agreement was executed by and between the parties on the 28th October, 1949. There was an arbitration clause in the agreement which provided that in case of any difference or dispute between the parties over the payment of balance which may be found due after valuation, such dispute shall be submitted to the sole arbitration of a single arbitrator who should be a high Government officer of the Provincial Government of rank equal to or higher than a Divisional Commissioner and his award shall be final and binding on both parties.

In pursuance of the agreement the plaintiff withdrew the suit on the 25th October, 1949, and the Government made payment of rupees five lakhs to the plaintiff on account and took possession of the under-taking on the 28th, October, 1949. It appears that the parties did not agree as to the valuation and thereupon the plaintiff instituted Title Suit no. 83 of 1950 for recovery of possession of the undertaking and for certain other reliefs. The case of the plaintiff, in short, is that the Government committed breach of the agreement in that it failed to make any, valuation of the undertaking within three months of taking over the undertaking as mentioned in the agreement and failed to pay the balance of the compensation within this period, although the time mentioned in the agreement was of the essence of the contract.

On the 9th October, 1950, the State of Bihar filed an application before the learned Subordinate Judge of Gaya under section 34 of the Indian Arbitration Act in order to have the matter in dispute referred to arbitration in accordance with the terms of the agreement and prayed for stay of further proceedings in the suit. The learned Subordinate Judge refused to stay the suit and rejected the application of the State of Bihar by his order dated the 18th December, 1950. The. State of Bihar thereupon preferred an appeal to this Court which was heard by Ramaswami and Rai, JJ., who by their order dated the 30th March, 1951, set aside the order of the court below and directed the suit to be stayed. The plaintiff has, therefore, filed the present application for leave to appeal to the Supreme Court.

The judgment of this Court is one of reversal and the amount or value of the subject-matter of the dispute in the court of first instance and still in dispute on appeal was and is more than Rs. 20,000. Therefore, under Article 133 of the Constitution leave can be granted if the order in question be held to be a final order.

The contention of Dr. Sultan Ahmad, for the petitioner, is that the order is final and leave should be granted as a matter of course, whereas the learned Advocate-General contends, on behalf of the State of Bihar, that the application is not maintainable because the order is interlocutory as the rights of the parties have not been finally determined.

In our opinion the order in question is an interlocutory order and the application is not maintainable. The expression “final order,” has been interpreted by the English Courts, the Judicial Committee and the courts in India, and its meaning is now well settled on authority. Brett, L.J, in Standard Discount Company v. Otard De La Grange(1) observed:—

“No order, judgment, or other proceeding can be final which does not at once affect the status of the parties, for whichever side the decision may be given; so that if it is given for the plaintiff it is conclusive against the defendant, and if it is given for the defendant it is conclusive against the plaintiff.”

In Salaman v. Warner(2) Lord Esher, M.R while interpreting the expressions “final order” observed:—

“If their decision, whichever way it is given, will, if it stands, finally dispose of the matter in dispute, I think that for the purposes of these rules it is final. On the other hand, if their decision, if given in one way, will finally dispose of the matter in dispute, but if given in the other, will allow the action to go on, then I think it is not final, but interlocutory.”

Fry, L.J, in the same case remarked:—

“I conceive that an order is ‘final’ only where it is made upon an application or other proceeding which must, whether such application or other proceeding fail or succeed, determine the action. Conversely, I think that an order is ‘interlocutory’ where it cannot be affirmed that in either event the action will be determined.”

Lopes, L.J, also in the same case said:—

“I think that a judgment or order would be final within the meaning of the rules, when, whichever way it went, it would finally determine the rights of the parties.”

The point came up for consideration before the Judicial Committee in Ramchand Manjimal v. Goverdhandas Vishindas Ratanchand. In that case the trial court granted a stay under section 19 of the Indian Arbitration Act of 1899, which substantially corresponds with section 84 of the Indian Arbitration Act of 1940, but on appeal the court of the Judicial Commissioner of Sind reversed the order and refused a stay of proceedings. The Judicial Committee held that the order of the appellate court was an interlocutory order. Viscount Cave, in delivering the judgment of the Board, observed, on the authority of the decisions of the courts in England, that “an order is final if it finally disposes of the rights of the parties”. Explaining this case in Abdul Rahman v. D.K Cassim and Sons, Sir George Lowndes said: “The finality must be a finality in relation to the suit. If, after the order, the suit is still a live suit in which the rights of the parties have still to be determined, no appeal lies against it under section 109(a) of the Code.” In Hori Ram Singh v. the Crown(3), Sulaiman, J., took the view that in cases in which the decision of the point in dispute either way did not result in finally disposing of the matter before the court the decision did not amount to a final order. A similar view, was taken by Kania, C.J, in S. Kuppuswami Rao v. the King and he held: “It must be an order which finally determines the points in dispute and brings the case to an end.” Applying the tests laid down in the cases noticed above, we are of opinion that the effect of the order under appeal is not finally to dispose of the rights of the parties even though it decides a cardinal point in the case. The suit is still alive because the order does not terminate the suit, a further order is necessary in order to determine the rights of the parties with respect to the matter in dispute which may terminate the suit one way or the other. Moreover, the case of the plaintiff is that the time was of the essence of the contract, and that the arbitration clause is not binding because the Government failed to make any valuation of the undertaking within the period mentioned in the agreement. This is a point on which the Subordinate Judge has to record his finding. Therefore, apart from any other consideration, if this point is still to be decided by the learned Subordinate Judge, the suit must be held to be a live suit. Dr. Sultan Ahmad has strenuously contended that in view of the finding of this Court, there is nothing left in the suit, and the learned Subordinate Judge is bound to dismiss it. Even assuming that the contention of Dr. Sultan Ahmad is right, the order is still an interlocutory order. For, if an order granting a stay of proceedings is interlocutory, it cannot be said to be final if a stay is granted, because an order is final only when, whichever way it goes, it finally determines the rights of the parties. The rights of the parties in the case before us have not been finally determined in relation to the suit. Therefore, judged from any point of view, the order in question cannot be said to be final. Leave must, therefore, be refused. The application is accordingly rejected hearing fee five gold mohurs.

Chatterji, J.:— I agree.

Leave refused.

G.N.P