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Union Of India v. Rup Kishore
Factual and Procedural Background
This Civil Revision concerns whether a civil court in district Moradabad was competent to dispose of an objection to an arbitral award. Rup Kishore, a contractor, had disputes with the Union of India and the Deputy Chief Engineer, Northern Railway. On 1-6-1963 Rup Kishore applied to the Civil Judge, Moradabad for reference to arbitration under Sec. 20 of the Arbitration Act; the learned Civil Judge made a reference. The case was later transferred to the Judge, Small Cause Court, Moradabad (with powers of an Additional Civil Judge). The arbitrator rendered an award on 14-5-1965, which was submitted to court. On 5-7-1965 the Union of India filed an objection to the award in the same court (Judge, Small Cause Court). On 4-8-1965 the proceedings were transferred to the file of the Additional Civil Judge, Moradabad. On 30-9-1965 the Union of India raised a preliminary objection that the court (i.e., after transfer) had no jurisdiction; that objection was rejected by the Additional Civil Judge on 12-10-1965. The Union of India filed the present civil revision against the order dated 12-10-1965.
Legal Issues Presented
- Whether a court other than the court in which an award was filed (specifically, the Additional Civil Judge, Moradabad after valid transfer) can entertain and dispose of an objection to that award, in view of Sec. 31 of the Arbitration Act, 1940.
- Whether Sec. 24, Code of Civil Procedure (C.P.C.), permitting valid transfer of suits/proceedings between courts, applies to arbitration proceedings and thereby allows transfer of jurisdiction despite the exclusivity language of Sec. 31(4) of the Arbitration Act.
Arguments of the Parties
Applicant (Union of India) — Mr. Sanyal
- Contended that because the award and the objection (dated 5-7-1965) were filed in the court of the Judge, Small Cause Court, that court alone had jurisdiction over the arbitration proceedings under Sec. 31(4) of the Arbitration Act.
- Argued that Sec. 31 places restrictions that render Sec. 24, C.P.C. inapplicable to arbitration proceedings; therefore the transfer to the Additional Civil Judge was not competent.
Respondent / Lower Court
- The lower court relied on Sec. 24, C.P.C. to justify the transfer. It invoked Sec. 41 of the Arbitration Act (stated in the opinion as making certain provisions of the Code of Civil Procedure applicable to proceedings under the Act) to support applicability of C.P.C. provisions to arbitration proceedings.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Shukrullah v. Mst. Rahmat Bibi A.I.R 1947 Alld. 304. | Held that procedure in which two different courts dealt with arbitration matters was not permitted by Sec. 31 of the Act; the court which had the award filed before it should dispose of objections. | The court distinguished Shukrullah on the ground that in the present case only one court (the Additional Civil Judge, Moradabad) was dealing with the entire arbitration question after valid transfer; the court relied on Shukrullah to show the prohibition when different courts concurrently deal with arbitration matters, but found the present facts different. |
| Ferro Alloys Corporation Ltd. v. A.K Ghosh A.I.R 1960 Cal. 421. | Illustrated that when two different courts are engaged in arbitration proceedings, Sec. 31 of the Act prohibits such procedure (the High Court had no jurisdiction because subordinate court had pending proceedings under Sec. 5). | Used to show that Sec. 31 aims to prevent two courts from handling the same arbitration matter; the court treated the case as another example of the prohibition against concurrent jurisdiction, not as direct authority preventing transfer to a single competent court. |
| Kumbha Mawji v. Dominion of India A.I.R 1953 S.C 313. | Affirmed that Sec. 31(4) vests exclusive jurisdiction in the court in which an application under Sec. 14 had been made; emphasised necessity of clothing a single court with effective and exclusive jurisdiction to avoid conflict and scramble. | The court acknowledged this principle as reflecting the idea underlying Sec. 31, but proceeded to interpret Sec. 31(4) liberally to permit jurisdiction to follow a valid transfer under Sec. 24, C.P.C., thereby avoiding the rigid consequences that a strict reading would produce. |
Court's Reasoning and Analysis
The court began by stating the purpose of Sec. 31: to vest exclusive control of arbitration-related questions in a single court to avoid conflict. It reviewed precedents showing that Sec. 31 prohibits two different courts from dealing with the same arbitration matters (Shukrullah; Ferro Alloys; Kumbha Mawji).
The court then considered the practical consequences of a strict interpretation of Sec. 31(4). It observed that if "that Court alone" were read rigidly to bar any change in the presiding court, absurd or unworkable situations could arise — for example, where an additional court is abolished or the presiding officer becomes disqualified — making it impossible to conclude arbitration proceedings. The court stated it did not believe the Legislature intended such a result.
To avoid those consequences, the court adopted a liberal interpretation of Sec. 31(4): the phrase "that court" should be read to include any court to which proceedings have been validly transferred under Sec. 24, C.P.C. The court observed there is no clear indication in Sec. 31 or Sec. 41 (the opinion cites Sec. 41 of the Act, which makes provisions of the C.P.C. applicable) that Sec. 24, C.P.C. should not apply to arbitration proceedings. Consequently, the district judge's order transferring the proceedings from the Judge, Small Cause Court to the Additional Civil Judge, Moradabad was valid.
Applying this reasoning to the facts, the court concluded that, as matters stood, the Additional Civil Judge, Moradabad had jurisdiction to dispose of the objection dated 5-7-1965; therefore the order dated 12-10-1965 (rejecting the preliminary objection) was correct.
Holding and Implications
Holding: The civil revision application is dismissed; the order dated 12-10-1965 of the Additional Civil Judge, Moradabad is correct, and the Additional Civil Judge has jurisdiction to dispose of the objection dated 5-7-1965. The proceedings validly stood transferred under Sec. 24, C.P.C.
Implications: The direct effect is that the Union of India's civil revision is dismissed and the lower court's order is affirmed; costs were awarded to respondent No. 1. The opinion does not announce that it sets a new binding precedent beyond the conclusions drawn about the applicability of Sec. 24, C.P.C. to permit legitimate transfers in arbitration proceedings in order to avoid impractical results from a strict reading of Sec. 31(4).
Oak, J.:— The question for consideration in this Civil Revision is whether a certain civil court in district Moradabad is competent to dispose of an objection against an award. The question arises under the following circumstances.
2. Rup Kishore is a contractor of district Moradabad. There were certain disputes between Rup Kishore on one side and the Union of India and the Deputy Chief Engineer, Northern Railway, on the other side. On 1-6-1963 Rup Kishore applied to the court of the Civil Judge, Moradabad for referring the dispute to arbitration under Sec. 20 of the Arbitration Act (hereinafter referred to as the Act). In pursuance of that application, the learned Civil Judge made a reference to Arbitration. Later the case was transferred from the file of the Civil Judge, Moradabad to the file of the Judge, Small Cause Court, Moradabad, who had powers of an Additional Civil Judge. The Arbitrator gave his award on 14-5-1965. The award was submitted to court. On 5-7-1965 the Union of India filed an objection against the award. On 4-8-1965, the case was transferred from the file of the Judge, Small Cause Court, Moradabad to the file of the Additional Civil Judge, Moradabad. On 30-9-1965 the Union of India filed a preliminary objection that the court had no jurisdiction in the matter. That preliminary objection was rejected by the Additional Civil Judge, Moradabad on 12-10-1965. The present civil revision by Union of India is directed against that order, dated 12-10-1965.
3. Mr. Sanyal appearing for the applicant points out that, whereas the award was filed in the court of the Judge, Small Cause Court, and the objection dated 5-7-1965 against the award was filed in the same court, it is the Additional Civil Judge, Moradabad who is now trying to dispose of that objection. It was urged for the applicant that this procedure is prohibited by Sec. 31 of the Act.
4. Sec. 31 of the Act deals with jurisdiction. Sec. 31 states:—
“(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 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 applications arising out of that reference and the arbitration proceedings shall be made in that Court and in no other Court.”
5. Relying on sub-Sec. (4) of Sec. 31 of the Act, Mr. Sanyal contended that the objection having been filed in the court of the Judge, Small Cause Court, that court alone has jurisdiction over the arbitration proceedings. On the other hand, the lower court has relied on Sec. 24, C.P.C Sec. 41 of the Act states:—
“Subject to the provisions of this Act and of rules made thereunder (a) the provisions of the Code of Civil Procedure, 1908 shall apply to all proceedings before the Court…” Mr. Sanyal conceded that certain provisions of the Code of Civil Procedure are applicable to proceedings under the Arbitration Act. But he contended that in view of the restrictions placed by Sec. 31 of the Act, Sec. 24, C.P.C is not applicable.
6. In Shukrullah v. Mst. Rahmat Bibi A.I.R 1947 Alld. 304. there were three connected suits before the Civil Judge of Gorakhpur. In those suits he passed three separate orders. Against those stay orders, appeals were filed in the High Court. During the pendency of the three appeals before the High Court, parties arrived at a compromise, and the court decided that the dispute should be referred to arbitration. In due course, the arbitrator gave an award. Both parties filed objections in the High Court against the award. The High Court took the view that the award ought to have been filed before the Civil Judge of Gorakhpur. It was, therefore, ordered that the award and objections be referred to the Civil Judge for disposal. The Civil Judge dismissed both sets of objections, and directed that a decree in terms of the award be prepared. Against that order, an appeal was filed in the High Court under Sec. 30 of the Arbitration Act. The appeal was allowed, and the decree of the lower Court was set aside. It will be noticed that in Shukrullah's case the High Court appointed the arbitrator, and the award was filed in the High Court. Yet, it was the Civil Judge, who proceeded to dispose of objections against the award. It was held that procedure was not permitted by Sec. 31 of the Act. In the present case, we are not dealing with a situation where two different courts are dealing with any arbitration-matter. At present there is only one court, namely the Additional Civil Judge, Moradabad, which is dealing with the entire question of arbitration.
7. In Ferro Alloys Corporation Ltd. v. A.K Ghosh A.I.R 1960 Cal. 421. one party moved an application before a subordinate Judge for leave to revoke the authority to an arbitrator under Sec. 5 of the Arbitration Act. Later an award was filed in the High Court. The High Court delivered judgment on that award. Subsequently, an application was moved for vacating the judgment upon the award. The application was allowed on the ground that the High Court had no jurisdiction to pass judgment on an award, in view of the proceedings pending before the subordinate Judge under Sec. 5 of the Act. It will be seen that in that case also two different courts were engaged in dealing with arbitration proceedings, that procedure is prohibited by Sec. 31 of the Act.
8. In Kumbha Mawji v. Dominion of India A.I.R 1953 S.C 313. there was an application under Sec. 14 of the Arbitration Act before the subordinate Judge of Gauhati. Later the arbitrator filed his award before Calcutta High Court. It was held by a Division Bench of Calcutta High Court that the High Court could not take action on the award. That decision was upheld in appeal by the Supreme Court. It was held that Sec. 31(4) would vest exclusive jurisdiction in the court in which application for filing of award has been made under Sec. 14 of the Act. It was observed on page 317: “the necessity for clothing a single court with effective and exclusive jurisdiction, and to bring about by the combined operation of these three provisions the avoidance of conflict and scramble is equally essential whether the question arises during the pendency of the arbitration or after the arbitration is completed of before the arbitration is commenced.”
9. That appears to be the idea underlying Sec. 31 of the Act. Sub-Sec (4) of Sec 31 requires that a single court should deal with arbitration proceedings at different stages. If the strict interpretation suggested by Mr. Sanyal is accepted, serious difficulties would arise in practice. Suppose, an additional court dealing with a case under the Act is abolished; or the Presiding Officer of a certain court becomes personally disqualified on account of bias or some other reason, it would be impossible to conclude the proceedings under the Act. I do not think that the Legislature intended that Sec. 31(4) should have such a curious result. Such a result can be avoided by giving a liberal interpretation to sub-Sec. (4) of Sec. 31 of the Act. On this liberal interpretation, the expression “that court” would include any court to which proceedings have been validly transferred under the provisions of Sec. 24, C.P.C There is no clear indication either in Sec. 31 or Sec. 41 of the Act that Sec. 24, C.P.C should not apply to proceedings under the Act. I am, therefore, of the opinion that Sec. 24, C.P.C does apply to proceedings under the Act, The order of the District Judge, Moradabad transferring the proceedings from the file of the Judge, Small Cause Court to the file of the Additional Civil Judge, Moradabad was valid. It follows that, as the matter stands today, the Additional Civil Judge, Moradabad has jurisdiction to dispose of the applicant's objection, dated,. 5-7-1965. The order dated 12-10-1965 is correct.
10. The application is dismissed with costs to respondent No. 1.
Application dismissed.
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