The Judgment of the Court was as follows:—
The Petitioner before me is the East Bengal Bank, Ltd., (hereinafter called the Bank), a Company registered under the Indian Companies Act. The said Bank filed a suit in the Court of the Small Causes for the recovery of Rs. 408 from the Defendant Opposite Party on the basis of a promissory note executed by the latter in its favour. The suit was filed on the basis of a vakalatnama executed by the Local agent of the Bank on its behalf. The plaint was also verified by the said local agent. On the 28th July, 1939, a joint petition was filed on behalf of the Bank and by the Defendant, asking the Court to refer the matter to arbitration. The petition was signed by the legal agent of the Bank but it was approved of by the pleader engaged by the Bank and was moved by him in Court. On the said petition an order was passed by the learned Small Cause Court Judge referring the dispute to the named arbitrators. The arbitrators filed their award in Court on the 3rd August, 1939, and in accordance with the award the suit was dismissed by the lower Court after overruling the two material objections of the Bank which are material for the purposes of the present Rule.
One objection was that the Court could not make the reference in view of the provisions of sec. 152 of the Companies Act which, according to the Petitioner, required an arbitration, in which a Company was interested, to be made in accordance with the provisions of the Indian Arbitration Act and to which the procedure laid down in the said Act was to be followed. The second objection was that the local agent had no authority to apply for referring the matter to arbitration on behalf of the Bank.
The Rule has been issued on the aforesaid two points. I do not think that any of those contentions raised by the Bank in the lower Court and overruled by it can be given effect to.
The preamble of the Indian Arbitration Act makes it clear that Act has application only to arbitrations without the intervention of the Court. Having regard to the provisions of sec. 89 of the Civil Procedure Code, the rules contained in the second Schedule relating to arbitrations with the intervention of the Court would be applicable in such a case and not the provisions of the Indian Arbitration Act. Sec. 2 of the Indian Arbitration Act limits the applicability of the said Act, in the absence of a notification by the Local Government, to private arbitrations, that is arbitrations out of Court, if a suit either with or without leave, could have been instituted in a Presidency town relating to the subject-matter of the dispute. Sec. 152 of the Indian Companies Act deals with the matter, of arbitration in which a Company is interested.
As I pointed out in the case of Jhirighat Native Tea Co., Ltd. v. B. Gupta , (a case of arbitration out of Court), sub-sec. (3) of sec. 152 of the Companies Act is of prime importance and it gives a clue to the meaning of sec. 152(1) of the Indian Companies Act. That section was interpreted in that judgment and according to the interpretation there given, the scope of sec. 152 of the Companies Act is that the provisions of secs. 3 to 22 of the Indian Arbitration Act would apply, where one or both the parties to arbitration are companies registered under the Companies Act, by force and effect of the Indian Companies Act itself, irrespective of the provisions of sec. 2 of the Indian Arbitration Act; that is to say, the said Act would apply in a case falling within the scope of the Act even when the locus of the subject-matter was outside a Presidency town, provided one of the parties or both of them were companies registered under the Indian Companies Act. As the Indian Arbitration Act has no application to arbitration with the intervention of the Court, the contention raised by the Petitioner cannot be given effect to.
I accordingly overrule the first point raised before me and also before the lower Court.
I do not also see any substance in the second ground. The local agent of the Bank had undoubtedly authority to engage a pleader and to deliver a vakalatnama on behalf of the Bank. In fact it is on the vakalatnama so delivered that the suit had been instituted in the name of the Bank. That vakalatnama contained a power given to the pleader to enter into arbitration on behalf of the Bank. The vakalatnama is not the vakalatnama of the Agent but the vakalatnama of the Bank itself. The Bank is bound by the terms of that vakalatnama and although the agent may not have the power from the Bank to refer the matters in dispute to arbitration, the pleader, on the basis of that vakalatnama, had authority to apply for referring the matter to arbitration. The pleader himself approved of the arbitration and he, in fact, moved the petition on which the reference was made. Before the arbitrator, he took part in the proceedings on behalf of the Bank and now that the award is against the Bank, the Bank is not entitled to repudiate the authority of the pleader for the purpose of nullifying the proceedings. The second ground is accordingly overruled.
This Rule is discharged with costs, hearing-fee being assessed at one gold mohur.
P.C