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Upendra Nath Basu v. Het Lal

Allahabad High Court
Mar 2, 1933
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Structured Summary of the Opinion (King and Niamat-ullah, JJ.)

Factual and Procedural Background

The defendant-appellant, Babu Upendra Nath Basu, purchased zamindari property in village Raitar (district Patna) in 1908. In 1912 he borrowed Rs. 61,000 from Ishwari Prasad and in 1914 the parties agreed that Ishwari Prasad should have a half share in the Raitar property in lieu of the loan; no conveyance was executed but the appellant managed the property and paid half the profits to Ishwari Prasad.

After Ishwari Prasad's death the heirs (including Het Lal) and the appellant entered into an agreement on 25 April 1925, under which the appellant would execute a conveyance of one-half of Raitar to the heirs and continue management; disputes were to be referred to arbitration. On 3 April 1928 the disputes were referred; the arbitrators were to examine accounts and the transfer of Raitar. The award of 1 August 1930 required the appellant to pay Rs. 61,400 (Rs. 15,350 to each of four heirs) to buy out their interests; until payment the heirs were to remain owners of one-half of Raitar; interest on the awarded sums was also provided for.

Het Lal applied under paragraph 20 of the Second Schedule (Code of Civil Procedure) to the Subordinate Judge of Benares for the award to be filed and a decree passed accordingly. The appellant resisted on several grounds, including that the Subordinate Judge had no jurisdiction over the subject-matter of the award. The Subordinate Judge treated the award as comprising (i) accounting and money awards (admitting jurisdiction) and (ii) a clause declaring ownership of a half share in Raitar, which the court held to be a nullity; the court ordered the award made a rule of court except for the portion dealing with ownership. The appellant appealed from that order.

Legal Issues Presented

  1. Whether the Subordinate Judge of Benares had jurisdiction over the subject-matter of the award within the meaning of Schedule II, paragraph 20 of the Code of Civil Procedure, when part of the award dealt with immovable property (Raitar) situated outside the court's territorial jurisdiction.
  2. Whether a court may, under paragraph 20, file an arbitration award and pass a decree in respect of only a portion of the award (for example, money awards) while treating as a nullity or disregarding the portion of the award that declares ownership of immovable property situated outside its territorial jurisdiction.

Arguments of the Parties

Appellant's Arguments

  • The court must have jurisdiction over the whole of the subject-matter of the award; because the Raitar property (subject of part of the award) is outside the territorial jurisdiction of the Subordinate Judge of Benares, that court had no jurisdiction under Schedule II, paragraph 20 to file the award.
  • The order below improperly treated the ownership clause of the award as a mere nullity and therefore wrongly assumed jurisdiction by confining the decree to monetary portions of the award.
  • Cited authority (Krishna Iyer v. Subbarama Iyer) supporting the proposition that "subject-matter of the award" means the whole and not a portion.

Respondents' Arguments

  • The court below correctly assumed jurisdiction at least in respect of the accounting and monetary parts of the award; the parties are residents of Benares, and those aspects are within the court's jurisdiction.
  • The question of jurisdiction should be decided with reference to sections 16 to 20 of the Code of Civil Procedure; presumably the respondents argued the proviso to section 16 or other provisions rendered the court competent to receive the award.
  • It was contended for the respondents that no question of title was raised or decided by the arbitrators and that therefore the territorial jurisdiction objections should not prevail.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Krishna Iyer v. Subbarama Iyer Holds that the expression "the subject-matter of the award" in paragraph 20 (Second Schedule, CPC) means the whole, not a portion; a court within whose jurisdiction a portion of the immovable properties forming the subject-matter of an award is not situated has no jurisdiction to entertain an application to file the award. The court noted this Madras ruling and observed that, on its strength, the Subordinate Judge was not justified in passing a decree confined to a portion only of the award; the court considered the lower court's treatment of the ownership clause as erroneous in light of that principle (while also stating it was unnecessary in this case to decide certain broader formulations of that rule).

Court's Reasoning and Analysis

The court began by construing Schedule II, paragraph 20, clause (1) (which permits any person interested in an arbitration award to apply to "any court having jurisdiction over the subject-matter of the award" to have the award filed). The panel identified the award's two principal elements: (a) monetary awards arising from accounts (sums due for profits), and (b) a disposition concerning the transfer/ownership of immovable property (whether the appellant should execute a conveyance of a half share in Raitar or buy out the heirs).

The principal question was whether the Subordinate Judge of Benares had jurisdiction "over the subject-matter of the award." The court observed the appellant's contention (supported by Krishna Iyer v. Subbarama Iyer) that "subject-matter" must be read as a whole and that a court lacking territorial jurisdiction over any portion of the immovable property involved cannot entertain an application under paragraph 20. The court regarded that Madras ruling as supportive of the proposition that a court should not file only part of an award where part concerns immovable property outside its territorial limits.

Rather than rest solely on that precedent, the court adopted what it described as a practical test drawn from sections 16 to 20 of the Code of Civil Procedure: to determine whether the court has jurisdiction over the subject-matter of the award one should consider the reliefs granted by the award and ask whether a regular suit seeking those reliefs could be tried by that court. Applying that test required examination of section 16(d), which provides that a suit "for the determination of any other right to or interest in immovable property" must be instituted where the property is situated.

The court concluded that the award in substance declared that the heirs of Ishwari Prasad had a legal title to a half share in Raitar and that they were entitled to retain that ownership until specified sums were paid. The respondents' contention that no question of title had been raised was rejected: the court pointed to the pleadings and the plaintiff's own application, which stated there was a dispute concerning the proprietorship of village Raitar. The court thus treated the arbitration as having determined proprietary rights.

Because the award effectively determined proprietary rights in immovable property located outside the Subordinate Judge's territorial jurisdiction, the court held that under section 16(d) a suit for such relief could only be instituted in the court where the Raitar property is situated. The proviso to section 16 was considered and rejected as inapplicable where the relief is a declaration of proprietary title or where the arbitrators' terms operate like a charge on property (the award here giving the heirs a charge until payment, akin to a decree for redemption).

Consequently, the court found the Subordinate Judge of Benares lacked jurisdiction over the subject-matter of the award and that the lower court was not entitled to file the award subject to the modification that disregarded the ownership clause.

Holding and Implications

APPEAL ALLOWED.

The court allowed the defendant's appeal, holding that the Subordinate Judge of Benares did not have jurisdiction over the subject-matter of the award within the meaning of Schedule II, paragraph 20, because the award determined proprietary rights in immovable property (the Raitar property) situated outside that court's territorial limits. The order of the lower court that had made the award a rule of court excepting the ownership portion was held impermissible.

As direct consequences, the appeal was allowed with costs in this court and in the court below, and the application filed in the lower court was ordered to be returned to the plaintiff-respondent.

The opinion does not state any broader precedent being set beyond the application of sections 16–20 to the facts; it confines its effect to the decision in this appeal and the return of the application. (No further implications were discussed in the provided opinion.)

Show all summary ...

King and Niamat-ullah, JJ.:— This is a defendant's appeal arising out of an order passed by the Subordinate Judge of Benares under paragraph 21 of the second schedule of the Code of Civil Procedure ordering an award to be filed and pronouncing judgment according to the award.

The appellant Babu Upendra Nath Basu was defendant No. 1 in the suit. In the year 1908 he purchased certain zamindari property in a village cabled Raitar in the district of Patna, which is in the province of Bihar and Orissa. In 1912 the appellant borrowed a sum of Rs. 61,000 from Ishwari Prasad and in 1914 Ishwari Prasad and the appellant agreed that Ishwari Prasad should have a half share in the Raitar property in lieu of his loan. No conveyance was executed in Ishwari Prasad's favour but the appellant continued to manage the Raitar property both for Ishwari Prasad and for himself and to pay a half share of its profits to Ishwari Prasad.

After Ishwari Prasad's death his sons and grandson entered into an agreement with the appellant on the 25th of April, 1925, in respect of the Raitar property. It was agreed that the appellant should execute a conveyance to the heirs of Ishwari Prasad in respect of one-half of the property and that he should continue to manage it on behalf of both parties. It was further agreed that in case of dispute, the dispute should be referred to arbitration. Disputes arose, and on the 3rd of April, 1928, the appellant and the heirs of Ishwari Prasad referred their disputes to arbitrators. The terms of reference required the arbitrators to go into the accounts and the transfer of the Raitar property. On the 1st of August, 1930, the arbitrators delivered their award. The appellant was to pay Rs. 61,400 to the heirs of Ishwari Prasad, i.e he was to pay Rs. 15,350 to each of the four heirs to buy out their interests in the Raitar property. It was further provided that until the heirs had been paid, they would remain owners in one-half of the Raitar property. Provision was also made for payment of interest on the sums awarded.

Het Lal, who is one of the sons and heirs of Ishwari Prasad, applied to the Subordinate Judge of Benares under paragraph 20 of the second schedule for an order that the award be filed in court and that a decree be passed accordingly. The appellant resisted the application on several grounds, one of which was that the Subordinate Judge of Benares had no jurisdiction over the subject-matter of the award. The court below remarked that the award related to two matters, namely to accounts and to transfer of Raitar property. So far as the accounting and the award of money to the plaintiff and defendants 2 to 4 were concerned, it was admitted that the court had jurisdiction. It may be here observed that the parties are residents of Benares. In so far as the award related to the transfer of Raitar property the court below came to the conclusion that in reality the heirs of Ishwari Prasad were not legally owners of a half share and that the clause in the award which declared the ownership of those persons in the Raitar property was a mere nullity. The learned Subordinate Judge therefore treated the award as granting merely certain sums of money to the heirs of Ishwari Prasad and treated the clause in the award relating to ownership in Raitar property as a mere nullity which could be ignored without affecting the rest of the award. The result was that the court below passed an order that the award be made a rule of the court, excepting the portion which deals with the ownership of the Raitar property.

The appellant challenges the order of the court below on several grounds, but for the purpose of disposing of this appeal it is only necessary for us to consider the objection that the court below had no jurisdiction to pass the order that the award be made a rule of the court subject to a certain modification.

The question raised depends upon the interpretation of schedule II, paragraph 20, clause (1) which lays down that “Where any matter has been referred to arbitration without the intervention of a court, and an award has been made thereon, any person interested in the award may apply to any court having jurisdiction over the subject-matter of the award that the award be filed in court.” The question is whether the Subordinate Judge of Benares had jurisdiction over the subject-matter of the award. The award, as we have already stated, dealt with two principal points, one was the sum of money due from the appellant to the heirs of Ishwari Prasad in respect of the profits of Raitar property; the other point related to the transfer of Raitar property, i.e the question whether the appellant should execute a conveyance in respect of a half share of the Raitar property in favour of the heirs of Ishwari Prasad, or whether he should buy out their interests in the property.

It is argued for the appellant that the court must have jurisdiction over the whole of the subject-matter of theft ward and that as the Raitar property, which forms the subject-matter of the award, is outside the territorial jurisdiction of the court, the court has no jurisdiction under paragraph 20. Several authorities have been cited for the proposition that the court must have jurisdiction over the whole of the subject-matter. In Krishna Iyer v. Subbarama Iyer(1) it was held that the expression “the subject-matter of the award” in paragraph 20 of schedule II of the Code of Civil Procedure means the whole, and not the whole or a portion, of the subject-matter of the award and that a court within whose jurisdiction a portion of the immovable properties forming the subject-matter of an award is not situated has no jurisdiction to entertain an application to file the award. That case related to the partition of joint family property which was situated partly in British India and partly outside British India. It was argued that the decree might be confined to the subject-matter of the award in so far as it was within the jurisdiction of the British Indian courts. The learned Judges held that it was not open to the court to direct the award to be filed in partis and to pass a decree in terms of portions only of the award under paragraph 20 of the second schedule. In the present case the court below has only been able to assume jurisdiction by treating the award as merely an award of money and by disregarding the portion relating to the ownership of the Raitar property. On the strength of the Madras ruling, the court below was not justified in passing a decree in terms of a portion only of the award and we think the court took an erroneous view in treating the portion relating to the ownership of Raitar property as a mere nullity. In the Madras ruling cited above a number of authorities on the same point are mentioned and relied upon and it is unnecessary for us to discuss the rulings separately. In the present case we think it is unnecessary to decide that where an award relates to immovable property, then the court has no jurisdiction under schedule II, paragraph 20, unless every item of the immovable property is within the territorial jurisdiction of the court. It appears to us that, even according to the respondents' contention, the question of jurisdiction must be decided against them. It was argued for the respondents that the question of jurisdiction must be decided with reference to the provisions of sections 16 to 20 of the Code of Civil Procedure. That contention seems to us sound. In order to decide whether the court has jurisdiction over the subject-matter of the award, it is necessary to consider the reliefs granted by the award and to determine whether the court would have jurisdiction to try a regular suit between the parties in which the reliefs claimed were the reliefs granted by the award. For the purpose of deciding the question it seems necessary to refer to sections 16 to 20 of the Code, as these seem to be the only rules of law applicable. If this test is applied, however, we think that the decision must be against the respondents. Under section 16, clause (d), it is laid down that a suit “for the determination of any other right to or interest in immovable property” must be instituted in the court within the local limits of whose jurisdiction the property is situate. It appears to us that the award did determine that the heirs of Ishwari Prasad had a legal title to a half share in the Raitar property and that they were entitled to retain their ownership until they had received certain sums of money from the appellant. It has been contended for the respondents that no question of title was raised or decided and that there never was any dispute regarding the ownership of the Raitar property. This is only true in a certain sense. The appellant apparently never contested the fact that the heirs of Ishwari Prasad were entitled to a half share in the Raitar property. If their rights had not been acknowledged, there could have been no meaning in the reference to arbitration regarding the share of profits due to the heirs of Ishwari Prasad. In another sense, however, there was a dispute regarding ownership. No deed of conveyance has been executed in favour of Ishwari Prasad's heirs and there was some dispute whether such a conveyance should be executed and, if so on what terms, or whether Ishwari Prasad's heirs should relinquish their interests in the Raitar property in lieu of hard cash and, if so, what amount. We think that in view of the pleadings it is not open to the plaintiff to argue that there never was any dispute regarding the proprietorship of village Raitar. In the very first paragraph of the plaintiff's application he states “that there was a dispute between the parties regarding the proprietorship of village Raitar in the district Patna.” On the plaintiff's own showing, therefore, there was such a dispute and we have already indicated the nature of the dispute. As the award declared the legal ownership of Ishwari Prasad's heirs in the Raitar property and declared that they were entitled to retain their ownership until the specified sums of money had been paid to them, we think that under section 16(d) the suit could only be instituted in a court within the local limits of whose jurisdiction the Raitar property is situated.

It has been contended that the proviso to section 16 is applicable, but in our opinion, when the relief granted by the award is a declaration of proprietary title to certain immovable property the proviso is not applicable. The arbitrators in effect gave Ishwari Prasad's heirs a charge over the immovable property until the specified sums were paid to them, and the terms of the award were similar in many respects to a decree for redemption.

In our opinion, therefore, the court below had no jurisdiction over the subject-matter of the suit within the meaning of schedule II, paragraph 20 and the appeal must be allowed. We allow the appeal with costs here and in the court below. The application filed in the lower court will be returned to the plaintiff respondent.