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Rajendra Prasad And Another v. Smt. Suraj Mukhi Singh And Other

Allahabad High Court
Aug 6, 1984
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Structured Summary of the Opinion (Delivered by Hon’ble K.N. Misra, J.)

Factual and Procedural Background

The dispute concerns properties situated at Lucknow, Kheri and Bahraich. The parties agreed to refer their dispute to a named arbitrator, Sri Baij Nath Prasad Agrawal. An application under Section 20 of the Arbitration Act for reference to that arbitrator was filed and registered as Suit No. 18 of 1958 in the Court of Civil Judge, Lucknow. A regular suit for partition (also identified as Suit No. 18 of 1958) had earlier been filed by the plaintiffs Mangal Prasad and Rajendra Prasad.

The Civil Judge, Lucknow, by order dated 9.9.1961, made a reference to the named arbitrator under Section 20. Appeals against earlier interlocutory orders and the reference were heard in this Court, and by judgment dated 14.12.1977 this Court upheld the order making the reference and ordered that proceedings in the partition suit be stayed.

On 31.8.1979 an application (C-224) was moved in the Regular Suit No. 18 of 1958 (before the Civil Judge, Bahraich) by the defendant-appellants requesting revocation of the arbitrator's authority and a decision of the suit on merits. The Civil Judge, Bahraich allowed that application ex parte by order dated 12.11.1979, revoked the arbitrator's authority and directed the suit to proceed ex parte against the respondents. A later order dated 19.2.1980 directed the plaintiffs to propose a new arbitrator and required certain service steps.

Before a new arbitrator could be appointed, the defendants filed an objection (C-239) on 7.10.1980 asserting that the authority of the arbitrator could not be revoked by that Court and seeking recall of the ex parte order. The Civil Judge, Bahraich by order dated 29.11.1980 set aside the earlier orders (12.11.1979 and 19.2.1980) and directed proceedings to remain stayed in view of this Court's earlier decision dated 14.12.1977. The plaintiffs-appellants appealed against that impugned order by the First Appeal From Order No. 32 of 1981, which is the subject of this opinion.

Legal Issues Presented

  1. Whether the Civil Judge, Bahraich had jurisdiction to entertain an application under Sections 5 and 11 of the Arbitration Act (for revocation of an arbitrator's authority or removal of an arbitrator) where the reference had been made by the Civil Judge, Lucknow under Section 20, in light of Section 31(4) of the Arbitration Act which contemplates exclusive jurisdiction of the court making the reference over subsequent applications arising out of that reference.
  2. Whether the Civil Judge, Bahraich could recall or set aside the stay of proceedings imposed under Section 34 of the Arbitration Act, given that this Court had earlier ordered the proceedings to remain stayed by its order dated 14.12.1977.

Arguments of the Parties

Respondents' Arguments (as summarised by the Court)

  • The application C-224 moved by the petitioners (appellants) for removal of the arbitrator and revocation of his authority was not maintainable before the Civil Judge, Bahraich.
  • Applications under Sections 5 and 11 of the Arbitration Act can be filed only before the court that made the reference to the arbitrator.
  • Reliance was placed on sub-clause (4) of Section 31 of the Arbitration Act: since the reference was made by the Civil Judge, Lucknow, no other court could entertain applications arising out of that reference.

Appellants' Arguments (as summarised by the Court)

  • The partition suit was pending in the court of Civil Judge, Bahraich; an application under Section 34 had been moved in that suit, so the Bahraich court could entertain an application under Sections 5 read with 11 of the Arbitration Act for removal of the arbitrator and revocation of his authority.
  • The arbitrator could file the award in the pending suit before the Civil Judge, Bahraich; therefore sub-clause (4) of Section 31 should not operate to oust the jurisdiction of the Bahraich court.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Harbans Singh v. Union of India, AIR 1961 Cal. 659 The view that two conditions must be satisfied to give a court exclusive jurisdiction under Section 31(4) of the Arbitration Act: (a) an application must be made in a court under the Arbitration Act, and (b) the application must be made "in any reference." An application under Section 34 is not necessarily an application "in reference" for purposes of Section 31(4). The Court relied on this decision to support its conclusion that jurisdiction under Section 31(4) is exclusive to the court which made the reference, and to hold that an application under Sections 5 and 11 could not be entertained by the Civil Judge, Bahraich where the reference had been made by the Civil Judge, Lucknow.

Court's Reasoning and Analysis

The Court examined the Arbitration Act's provisions, in particular Section 31 (sub-sections (1) to (4)), Section 11 and the provisions requiring leave under Section 5 for revocation of an arbitrator's authority. The text of Section 31(4) was discussed at length: it expressly provides that where an application under the Act has been made in a court competent to entertain it in any reference, that court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference.

The Court analysed Section 11, which permits the court that made the reference to remove an arbitrator who fails to proceed with or conclude the award with reasonable dispatch. The Court observed that revocation of an arbitrator's authority requires leave of the court making the reference as contemplated by Section 5.

Applying these statutory provisions, the Court concluded that because the reference was made by the Civil Judge, Lucknow under Section 20, any application for removal of the arbitrator under Section 11 or revocation of authority under Section 5 must be made to the court that made the reference (i.e., Civil Judge, Lucknow). Section 31(4) thus bars other courts from entertaining such applications.

The Court relied on Harbans Singh v. Union of India to explain that the exclusivity under Section 31(4) requires an application to have been made in a court competent to entertain it and that an application under Section 34 (stay of suit) is not equivalent to an application "in reference" such that it would confer jurisdiction under Section 31(4) on the court where the stay application was filed.

Consequently, the Civil Judge, Bahraich had no jurisdiction to consider the application under Sections 5 and 11 to remove or revoke the arbitrator's authority, and could not properly recall the stay of proceedings which this Court had ordered to remain in place by its judgment dated 14.12.1977.

Holding and Implications

Core Holding: APPEAL DISMISSED.

Direct consequences for the parties:

  • The impugned order of the Civil Judge, Bahraich dated 29.11.1980 (which set aside prior Bahraich orders and directed proceedings to remain stayed in view of this Court's 14.12.1977 decision) stands upheld by this Court's dismissal of the appeal.
  • The Civil Judge, Bahraich was held to lack jurisdiction to entertain the application under Sections 5 and 11 for revocation/removal of the arbitrator because the reference had been made by the Civil Judge, Lucknow under Section 20 and Section 31(4) confers exclusive jurisdiction on the court making the reference.
  • The plaintiffs-appellants were advised (by the Court's direction) that they may seek their remedy before the competent court, if so advised.
  • Each party was directed to bear their own costs.

Broader legal implications: The opinion applies and enforces the statutory exclusivity in Section 31(4) of the Arbitration Act and follows the reasoning in Harbans Singh. The opinion does not purport to lay down new precedent beyond its application of the Act and the cited authority to the facts before the Court.

Show all summary ...

(Delivered by Hon’ble K.N. Misra, J) – This First Appeal From Order No. 32 of 1981 is directed against the judgment and order dated 29.11.80 passed by the Civil Judge, Bahraich, on an application moved by the plaintiff-appellant (C-224) which was filed on 31st August, 1979 in Regular Suit No. 18 of 1958. Briefly stated, the facts of the case are as follows:- 2. In respect of the properties situate at Lucknow, Kheri and Bahraich, an agreement was arrived at between the parties to refer the dispute to the named Arbitrator Sri Baij Nath Prasad Agrawal. An application under section 20 was filed by the respondents for reference to the Arbitrator which was registered as suit No. 18 of 1958. This application under section 20 of the Arbitration Act was filed in the Court of Civil Judge. Lucknow. It appears that prior to the filing of this suit under section 20 a Regular’Suit for partition (Suit No. 18 of 1958) was filed by the “plaintiffs Mangal Prasad and Rajendra Prasad. The learned Civil Judge. Lucknow, by his order dated 9.9.1961, made a reference of the dispute to the said named Arbitrator under Section 20 of the Act. Against this order an appeal (FAFO No. 57 of 1961) was filed in this Court. It appears that in the meantime an application, under section 34 was moved by the defendants-respondents in the aforesaid Suit No. 18 of 1958 for staying proceedings in the suit, on the, ground that an agreement vas entered into between the parties for reference of dispute to the arbitrator and in pursuance of it reference petition under section 20 of the Act has been made and, as such, proceedings in the suit be stayed. This application was rejected by the Civil Judge by his order dated 19.9.1959. Aggrieved by that Order the respondents filed appeal (FAFO No. 35 of 1959) in this Court and further proceedings in the said suit were ordered to be stayed by this Court, The aforesaid appeals along with Appeal No. FAFO 48 of 1960 were heard and disposed of by this Court by judgment and order dated 14th December, 1977, and the order making reference to the Arbitrator under section 20 was upheld and the proceedings in the aforesaid regular suit for partition were stayed. 3. It appears that on 31.8.1979 an application (C-224) was moved by the defendant-appellants in the present Regular Suit No. 18 of 1958 for revoking the authority of the Arbitrator and for deciding the case on merits. This application was allowed ex-parte by the learned lower court by order dated 12.11.79 and the authority of the said Arbitrator was revoked and the ease was directed to proceed ex-parte against the respondents. Subsequently, by order dated 19.2.80 the plaintiffs were directed to propose the name of another Arbitrator within ten days and notices were directed to be sent to defendant Sukhbir Singh through registered cover and rest of the defendants were ordered, to be served by publication because it was observed that they are not interested It in proceeding with the suit and the steps by ordinary process would be futile. 4. It appears that Sri Raghubir Saran Srivastava, Advocate, whose name the plaintiffs proposed as an Arbitrator in this case, expressed his consent by noting on the margin of the order sheet of 19.5.80, but before the Arbitrator could be appointed, an objection (C-239) was filed by the defendants on 7.10.80 wherein it was asserted that the authority of the Arbitrator could not be revoked by this Court and the ex-parte order dated 12.11.79 be recalled. The learned Civil Judge, Bahraich by the impugned order dated 29th November, 1980 set aside the aforesaid order and directed the proceedings to remain stayed in view of the decision of this Court dated 14.12.77 passed in the aforesaid appeals,and also in w FAFO No. 48 of 1960. Aggrieved by this order the plaintiffs-appellants have preferred this appeal. 5. We have heard the learned counsel for the parties at some length and have perused the impugned orders as well as the relevant record. 6. Learned counsel for the respondent, Sri P.N. Mathur, urged that the application (C-224) moved by the petitioner for the removal of the Arbitrator and for revocation of his authority, was not maintainable before the learned Civil Judge, ‘in the aforesaid suit. His contention was that an application under Section 5 and 11 of the Arbitration Act could be filed only before the Court making reference to the Arbitrator. Placing reliance on sub clause (4) of Section 31, the learned counsel urged that since the reference was made by the learned Civil Judge, Lucknow, to the Arbitrator under Section 20 of the Act and as such no other court could entertain any application in the matter arising out of that reference. In reply, the learned counsel for the appellants, Sri H.S. Sahai, urged that the suit for partition was filed in the court of Civil Judge, Bahraich which is still pending. He has urged that since the application under Section 34 of the Arbitration Act was moved in the aforesaid suit, as such the application for the removal of the Arbitrator and for the revocation of his authority be filed before the learned Civil Judge, Bahraich under section 5 read with section 11 of the Act, He urged that since the Award could be filed by the Arbitrator in, the aforesaid pending suit before the Civil Judge, Bahraich, and as such, the application for removal of the Arbitrator could be filed in the said Court and that the said referred provision, sub-Clause (4) of Section 31, would not operate to oust the jurisdiction of that Court, We have given our anxious consideration to the arguments advanced by the learned counsel for the appellants and we find much substance in the submissions made by the learned counsel for the respondents. -- 7. Section 31 relating to jurisdiction reads as follows; -- “31 (1) Subject to the provisions of this Act, an award may be filed in any Court having jurisdiction in the matter to which the reference relates. (2) Notwithstanding anything contained in any other law for the time being in force and.save as otherwise provided in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been, or may be filed and by no other Court. (3) All applications regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings shall be made to the Court where the award has been or may be filed and to no other Court. (4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference any application tinder this Act has been made in a Court competent to entertain it, 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 that Court, and in no other Court.” Sub-section (1) of Section 31 provides that an award may be filed in any court having jurisdiction in the matter to which the reference relate (emphasis supplied by us). Sub-section (4) of Section 31 provides that notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference any application under this Act has been made in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent application arising out of that reference and the arbitration proceedings shall be made in that Court and in no other Court (Emphasis supplied by us). 8. These provisions do indicate that all subsequent applications arising out of that reference and the arbitration proceedings can only be filed in the Court making the reference and in no other court. 9. Section 11 of the Arbitration Act provides that the Court may, on tile application of any party to a reference remove an arbitrator who fails to use all reasonable dispatch in entering on and proceeding with the reference and making an award. It, thus, appears that an Arbitrator, who, id the absence of any reasonable cause and justification, fails to decide the case, within a reasonable time, can be removed on an application of any party to a reference by the court which had made reference to the Arbitrator. And the authority of the appointed arbitrator in proceeding with the reference and making the Award can be revoked only with leave of the Court making the reference as is envisaged by section 5 of the said Act. In the present case since reference under section 20 was made by the learned Civil Judge, Lucknow, and, as such, any party to that reference could move an application only in that Court for the revocation of the authority of the Arbitrator or for his removal on the grounds stated in section 11 of the Act. Section 31 (4) of the Act clearly bars the jurisdiction of other court in entertaining an application under sections 5 and 11 of the Arbitration Act. 10. In Harbans Singh v. Union of India (AIR 1961 Cal. 659) P.C. Mallick, J. expressed the view, with which we respectfully agree, that the two conditions must be fulfilled to give the Court exclusive jurisdiction under section 31 (4) of the Arbitration Act. First, an application must be made in the court under the Arbitration Act and, second, the application must be made “in any reference.” Application under Section 34 is, no doubt an application under the Arbitrator Act. But it is not an application under the Act in reference in a court competent to entertain it-as contemplated by section 31 (4) of the Act. 11. In this view of the matter we find that although the application under Section 34 was moved in the aforesaid Regular Suit No. 18 of 1958 in the court of Civil Judge, Bahraich but that Court does not get jurisdiction to entertain application under sections 5 and 11 of the Act for the removal of the Arbitrator and for revocation of the arbitrator’s authority and for recalling the reference to the Arbitrator. 12. In Harbans Singh’s case (supra) a suit filed by the plaintiff in the Calcutta High Court was stayed under section 34, Arbitration Act at the instance of the defendant, Union of India, Thereafter the Government referred the dispute to the arbitration of ‘M’ under the arbitration clause in the contract. The arbitrator could not make the award within the prescribed time owing to the delaying tactics adopted by the plaintiff. Extension of time to make the award was granted by the Dhanbad Court which had jurisdiction in relation to the subject-matter of the reference. Before the expiry of the extended time the plaintiff filed an application in the Calcutta High Court to supersede the arbitration agreement, to revoke the authority of the arbitrator and to vacate the order of stay of suit. 13. On these facts it was held that the application insofar as it related to the prayer for superseding the arbitration agreement or revoking the authority of the arbitrator could not be entertained as the Calcutta High Court had no jurisdiction over the arbitration proceedings within the meaning of section 31 (4) of the Arbitration Act. It was only the Dhanbad Court which had exclusive jurisdiction-fender section 31 (4) to entertain any application in respect of the reference. 14. In the present case it is not disputed that the reference was made under section 20 of the Act by the Civil Judge, Lucknow and as such the application for revocation of the authority of the Arbitrator and the removal of the Arbitrator could only be made before the learned Civil Judge, Lucknow and not in the aforesaid suit pending before the Civil Judge, Bahraich. The learned Civil Judge, Bahraich has, therefore, rightly re-called his earlier orders dated 12.11.79 and 19.2.80. 15. The learned counsel urged that since the Arbitrator has not completed arbitration proceedings which are pending ever since 1961 and, as such, the order staying proceedings under section 34 in, the aforesaid suit deserves to be recalled and the suit deserves to be decided on merits by revoking the authority of the Arbitrator. We are unable to agree with this contention. 16. So far as revoking the authority of the Arbitrator is concerned we have already observed that the learned Civil Judge, Bahraich could not consider that prayer as he had no jurisdiction to entertain the said application for revocation of the authority of the Arbitrator or for removal of the Arbitrator and appointing another one in his place. 17. So far as recalling the stay order passed under Section 34 of the Arbitration Act is concerned, we find that this Court by order dated 14.12.77 has directed the proceedings in the aforesaid suit to remain stayed. The learned Civil Judge, therefore, could not proceed to decide the case oh merits by recalling the order of stay. The suit can be decided and disposed of on merits only if the arbitration-reference has been decided on merits and the Arbitrator files the Award before the competent court or the arbitration becomes in-fructuous. The proceedings in the aforesaid suit were ordered to be stayed by order of this Court dated 14.12.77 and, as such, the learned Civil Judge, in our opinion, committed no error in refusing the prayer of the plaintiff-appellants. 18. In view of what has been stated above, we find that.the appeal is devoid of any merit and is accordingly dismissed. We however, make it clear that the plaintiffs-appellants, may seek their remedy in the matter before the competent court, if they are so advised. In the circumstances of the case we direct the parties to bear their own costs. (Appeal dismissed) _____________