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Union Of India v. K. Satyanarayan & Co. .
Structured Summary of the Opinion delivered by Sinha, J. (Full Bench)
Factual and Procedural Background
The parties entered into a contract dated 15.6.1973 containing an arbitration clause (Clause 63(1)) prescribing procedures for appointment of a sole arbitrator or two arbitrators and an umpire in specified circumstances. The respondent filed an application on 2.3.1982 under Section 20 of the Arbitration Act, 1940 seeking an order directing the respondents to file the arbitration agreement and for appointment of an arbitrator in terms thereof.
By an order dated 23.6.1982 Pratibha Bonnerjea, J. directed the filing of the arbitration agreement, permitted the parties to appoint arbitrators in terms of the agreement within one month, directed the defendant to submit a panel of names within three weeks, and ordered reference to arbitrators with timelines for award. The signed minutes were served on the appellant on 8.7.1982.
On 28.7.1982 the Single Judge (Pratibha Bonnerjea, J.), after rejecting the appellant's prayer for a three-week extension, appointed Sri P.K. Pal, Barrister-at-Law, as sole arbitrator by a separate order dated 28.7.1982 and fixed timelines for the award. The two orders (23.6.1982 and 28.7.1982) were drawn up separately.
The appellant appealed under Clause 15 of the Letters Patent of the Calcutta High Court only against the second order dated 28.7.1982 (the order appointing the sole arbitrator). A Division Bench raised a preliminary objection on maintainability and referred questions of law to a Full Bench for determination.
Legal Issues Presented
- Does the Arbitration Act, 1940 permit an appeal under Section 39(1) from an order directing reference to an arbitrator not appointed under the arbitration agreement (i.e., an arbitrator not agreed to by the parties) when the Court by an earlier order already directed filing of the arbitration agreement and directed reference to an arbitrator against which no appeal was preferred?
- If the answer to Question 1 is in the negative, is such an order appealable as judgment under Clause 15 of the Letters Patent?
- Does an appeal lie from an order passed under the Arbitration Act, in cases not covered by Section 39(1) of the Act, under Clause 15 of the Letters Patent where no question of jurisdiction is involved?
- Was the decision in Unit Construction Co. (Pvt.) Ltd. v. University of North Bengal (1986) 2 CHN 275 correctly interpreting the decision of the Supreme Court in Babulal Khimji's case (1981) 4 SCC 8 : AIR 1981 SC 1786 and the case of Union of India v. Mohindra Supply Co., AIR 1962 SC 256?
- Has Unit Construction Co. Pvt. Ltd. v. University of North Bengal correctly decided that although no appeal lies under Section 39(1) of the Arbitration Act, there may be an appeal under Clause 15 of the Letters Patent?
Arguments of the Parties
Appellant's Arguments (as advanced by Mr. S.K. Mitra)
- The impugned order of 28.7.1982 should be regarded as an order under Section 20(4) of the Arbitration Act because appointment of an arbitrator de hors (outside) the arbitration agreement amounts to a refusal to direct filing of the arbitration agreement.
- The Single Judge lacked jurisdiction to appoint the sole arbitrator on the mention for extension (28.7.1982), because the appellant had not had adequate time to comply with the prior order (23.6.1982) and had come only to seek an extension.
- The impugned order is vitiated because no reasons were assigned in support of the appointment.
- Clause 15 of the Letters Patent should prevail over Section 39 of the Arbitration Act; reliance placed on Unit Construction Co. v. University of North Bengal (1986) 2 CHN 275 and the Supreme Court decision in Babulal Khimji's case (1981) 4 SCC 8 : AIR 1981 SC 1786.
- Relied upon Calcutta High Court decisions (AIR 1965 Cal 404 and AIR 1968 Cal 333) to support contention that appointment outside the agreement can be treated as refusal to file the arbitration agreement.
Respondent's Arguments (as advanced by Mr. Pratap Chatterjee)
- The appellant did not challenge the first order dated 23.6.1982 which directed filing of the arbitration agreement and allowed appointment in terms thereof; having not appealed against that order, the appellant cannot contend that the later appointment order is a refusal to file the agreement.
- The impugned order dated 28.7.1982 is not a composite order under Section 20(4) and is not an order refusing to file the agreement; the two orders were drawn separately.
- The Calcutta High Court decisions cited by the appellant (1965 Cal. 404 and 1968 Cal. 333) are inapplicable to the present facts.
- The impugned order cannot be said to be without jurisdiction since the matter had been fixed to be placed before the Judge five weeks after the first order and was placed on 28.7.1982; reliance was also placed on Union of India v. Mohindra Supply Co. (AIR 1962 SC 256) and Union of India v. Gauranga Chatterjee (1993) 3 SCC 1 to submit that Clause 15 appeals are not entertainable if outside Section 39 of the Arbitration Act.
- Pointed out subsequent Calcutta High Court decisions (Santosh Kumar Agarwal v. Phalguni Banerjee, 1994 1 CHN 113) that explained Unit Construction's decision and indicated narrow circumstances where Clause 15 might apply.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Unit Construction Co. Pvt. Ltd. v. University of North Bengal (1986) 2 CHN 275 | Invoked by appellant to support that Clause 15 Letters Patent may permit appeal although Section 39(1) disallows it. | The Full Bench held that the Division Bench in Unit Construction wrongly interpreted Shah Babulal Khimji's case; Unit Construction is distinguishable and its ratio was subsequently explained in Santosh Kumar Agarwal. |
| Shah Babulal Khimji v. Jayaben D. Kania ((1981) 4 SCC 8 : AIR 1981 SC 1786) | Discussed interplay of Letters Patent appeals and provisions of the Code (Section 104 and Order 43) — appellant relied on an observation in this case. | The Court held Khimji concerned Section 104/Order 43 and did not state that Clause 15 appeals override Section 39 of the Arbitration Act; Khimji does not support appellant's contention that Clause 15 can circumvent Section 39. |
| Union of India v. Mohindra Supply Co., AIR 1962 SC 256 | Interpreted Section 39(1) and (2) of the Arbitration Act; relevant to whether Letters Patent appeals survive the Arbitration Act regime. | The Court regarded Mohindra as laying down the correct law that Section 39 restricts appeal rights and that Letters Patent appeals must be read subject to Section 39; Mohindra is treated as binding under Article 141 and preferred over obiter in Khimji when relevant. |
| Union Of India v. M/S Himco (India) Pvt. Ltd., AIR 1965 Cal 404 | Addressed whether a composite order under Section 20(4) leads to modification of the arbitration agreement. | The Court distinguished the present facts because here the two orders were separate; it noted that the appellant filed appeal only against the second order and therefore could not challenge the earlier filing order. |
| Union Of India v. M.S. Grewal & Co., AIR 1968 Cal 333 | Followed the Himco position regarding composite orders under Section 20(4). | The Court observed that those cases dealt with composite orders; because the orders here were separate, the reasoning of those cases did not entitle appellant to treat the second order as a refusal to file the agreement. |
| Dhanrajmal Govindram v. Shamji Kalidas & Co., AIR 1961 SC 1285 | Explained the scope of Section 20(4): distinguished the judicial function of ordering filing of the agreement and the ministerial/procedural function of making a reference or appointing an arbitrator. | The Court relied on Dhanrajmal to show Section 20 contemplates two distinct kinds of acts (judicial decision to file and ministerial reference/appointment) and that an appeal under Section 39 lies only against the decision on filing/refusal to file the agreement. |
| R. Wright & Partner, Ltd. v. Governor General In Council, ILR 1948 (2) Cal. 265 : 52 CWN 224 | Held that Clause 15 appeals are subject to legislative curtailment, and Section 39 of the Arbitration Act may take away the right of appeal under Letters Patent to that extent. | The Court cited this case to support the proposition that Clause 15 must be read subject to Section 39 and that Section 39 curtailed appeals that otherwise existed under Letters Patent. |
| Penugouda Radhakrishna Murthy v. V.A.Y. Ethirajulu Chetty, AIR 1945 Mad. 184 | Quoted in support of the view that Section 39 curtails Letters Patent appeals to the extent Parliament intended. | The Court noted that the Madras High Court quoted R. Wright's conclusion approvingly, supporting the view that Section 39 limits Letters Patent appeals. |
| Ranchhoddas Purshottam & Co. v. Ratanji Virpal & Co., AIR 1943 Bom 196 | Division Bench view that Section 39(2) precluded certain further appeals (to Privy Council) where Section 39 provides no appeal. | The Court referred to this case as part of a body of authority showing Section 39 restricts further appeals under Letters Patent-type provisions. |
| Madhavdas Devidas v. Vithaldas Vasudeodas, AIR 1952 Bom 229 | Held that Section 39(2) bars further right of appeal under Letters Patent after an appeal under Section 39(1). | Cited to show historical judicial treatment of the interaction between Section 39 and Letters Patent appeals; used to support restrictive construction of Clause 15 in arbitration matters. |
| Union of India v. Prafulla Kumar Sanyal ((1979) 3 SCC 631 : AIR 1979 SC 1457) | Discussed whether certain orders passed by a Single Judge were outside the scheme of appealability in Section 39. | The Division Bench had relied on it to say the second order was not without jurisdiction; the Full Bench considered that reliance irrelevant to maintainability under Clause 15 once Section 39 bars appeal. |
| State of West Bengal v. M/S Gourangalal Chatterjee ((1993) 3 SCC 1) | Confirmed that only orders listed in Section 39(1) are appealable under the Arbitration Act and no appeal lies otherwise. | The Court relied on this Supreme Court authority to reinforce that orders not covered by Section 39 are not appealable and thus Clause 15 cannot be used to circumvent Section 39. |
| Shah Babulal Khimji v. Jayaben D. Kania ((1981) 4 SCC 8 : AIR 1981 SC 1786) | (See entry for same case earlier) — addressed whether certain orders were appealable by reference to Section 104/Order 43 of the Civil Procedure Code and Letters Patent. | The Court held Khimji did not establish that Clause 15 appeals override Section 39; Khimji's observations related to Section 104/Order 43 and were not authority for the appellant's proposition. |
| Santosh Kumar Agarwal v. Phalguni Banerjee & Anr., 1994 (1) CHN 113 | Division Bench explained Unit Construction and held that some orders (not being orders under the Arbitration Act) might be appealable under Clause 15 if they satisfy the definition of "judgment" in Clause 15. | The Full Bench noted Santosh Kumar Agarwal clarifies and limits Unit Construction: it distinguished threshold interlocutory orders (not under Arbitration Act) from orders made under the Arbitration Act; Santosh supported the view that Arbitation Act is a complete code and Clause 15 cannot be used to bypass Section 39. |
| Tobu Enterprises Pvt. Ltd. v. Cameo Industries Ltd., AIR 1984 Cal 24 | Held that an order refusing leave under Letters Patent on an application under Section 20 was not an order under the Arbitration Act and thus the question of appealability had to be considered under Clause 15. | The Full Bench observed that Tobu concerned orders not under the Arbitration Act; in the present case the impugned order was within the Arbitration Act and therefore subject to Section 39's limits. |
| Upadhaya Hargovind Devshankar v. Dhirendrasinh Virbhadrasinhji Solanki ((1988) 2 SCC 1 : AIR 1988 SC 915) | Held that where a special statute provides for appeal limitations, Letters Patent appeals may be barred by necessary implication. | The Full Bench cited this authority to support the proposition that a self-contained code may restrict internal High Court appeals by necessary implication. |
| R. v. Middlesex Justices, Ex parte Schock ((1965) 2 All ER 68) | Illustrated that a self-contained statutory appeal scheme may be exclusive. | Used as comparative authority to illustrate principle that specialized statutory regime can preclude other modes of appeal. |
| General Electric Co. v. Renusagar Power Co. ((1987) 4 SCC 137) | Authority for the proposition that words in a judicial decision are not to be construed like statutory language and that a judgment's words are not to be treated as statute. | Quoted to support the court's approach that Khimji's observations should not be read beyond what they decide and that obiter dicta cannot be treated as binding on the present point. |
| Rajeshwar Prasad Mishra v. State of West Bengal, AIR 1965 SC 1887 | Explained that Article 141 empowers the Supreme Court to decide law but not to enact it; ratio decidendi is the binding part. | Quoted to support the distinction between ratio and obiter and to caution against over-reading judicial statements as statutory rules. |
| Central Coalfields Ltd. v. State of Bihar, 1993 (1) PLJR 617 | Authority for the proposition that a judgment is not to be read as a statute. | Cited to reinforce the limited scope of Khimji's observations and the necessity to extract ratio only. |
| State Bank of India Staff Association v. Election Commission of India, 1993 (2) BLJ 500 | Quoted for the principle that a decision is an authority for what it decides and not for what can logically be deduced. | Used to underline the Court's approach to precedent and to reject expansive readings of Khimji. |
| Uttar Pradesh State Electricity Board v. Banerjee Electric Light & Power Co. Ltd. (unreported decision dated 9.4.92) | Held that an order under appeal was neither appealable under Section 39 nor under Clause 15 of the Letters Patent. | The Full Bench cited it as an example of a Division Bench holding that an order may not be appealable either under Section 39 or Clause 15. |
Court's Reasoning and Analysis
The Full Bench undertook a textual and doctrinal analysis centred on the Arbitration Act, 1940 (especially Sections 20 and 39) and the scope of Clause 15 of the Letters Patent of the Calcutta High Court. The reasoning proceeded in these principal steps (based only on the material in the opinion):
- Examined the arbitration clause (Clause 63(1)) in the contract and the procedural history: application under Section 20 (file the agreement and appoint arbitrator), order dated 23.6.1982 directing filing and appointment in terms of the agreement, and a subsequent separate order dated 28.7.1982 appointing a sole arbitrator when an extension request was refused.
- Emphasised that the two orders (23.6.1982 and 28.7.1982) were drawn up separately, and therefore the second order could not correctly be characterized as an order refusing to file the arbitration agreement.
- Analysed Section 20(4) (text quoted in the opinion) and relied on the Supreme Court decision in Dhanrajmal Govindram v. Shamji Kalidas & Co. to show that Section 20 involves two distinct kinds of functions: (a) a judicial function to decide whether an arbitration agreement should be filed (which may be appealed under Section 39), and (b) a ministerial/procedural act of making a reference or appointing an arbitrator (which is not necessarily an appealable judicial decision under Section 39).
- Considered Section 39(1) — which enumerates six categories of orders appealable under the Arbitration Act — and concluded that only orders directing filing or refusing to file an arbitration agreement are appealable under Section 39; orders of appointment or reference made after filing are not included among the appealable categories.
- Addressed the argument that Clause 15 of the Letters Patent could be invoked to appeal the second order. The Bench examined the interaction between Clause 15 and Section 39, reviewed authorities (including Mohindra Supply Co., Prafulla Kumar Sanyal, and Gourangalal Chatterjee) and concluded that Section 39 is a self-contained code limiting appeal rights; Clause 15 must be read subject to the limitations imposed by Section 39.
- Rejected the contention that Khimji's case (Shah Babulal Khimji) supports a broader reading of Clause 15 that would override Section 39. The Court explained that Khimji dealt with Section 104 and Order 43 of the Code of Civil Procedure and did not decide that Clause 15 could circumvent Section 39. The Court emphasised that judicial statements should not be read as statutes and that ratio decidendi is binding, not obiter dicta.
- Distinguished Unit Construction Co. on the ground that the Division Bench there misinterpreted Khimji; the Full Bench accepted that Unit Construction was wrongly interpreted by that Division Bench and observed that Prabir Kumar Majumdar, J. later explained the decision in Santosh Kumar Agarwal (1994) and limited Unit Construction's scope.
- Concluded that because Section 39 specifies the exclusive categories of appealable orders under the Arbitration Act, appeals under Clause 15 of the Letters Patent are not maintainable where Section 39 disallows appeal; the second order (appointment of the arbitrator) was not appealable under Section 39 and therefore the Letters Patent appeal could not be sustained.
- Noted that whether the second order was without jurisdiction was irrelevant to maintainability of an appeal under Clause 15 if Section 39 barred such appeal.
Holding and Implications
Holding: The Full Bench answered Question No. 1 in the negative. Questions Nos. 2 to 5 were also answered in the negative. The appeal preferred by the appellant was held to be not maintainable and therefore it was dismissed.
Core Ruling: APPEAL DISMISSED AS NOT MAINTAINABLE
Implications and consequences explicitly stated in the opinion (limited to what the opinion itself contains):
- The order of 28.7.1982 (appointment of a sole arbitrator) was not appealable under Section 39(1) of the Arbitration Act because Section 39 enumerates exclusive categories of appealable orders and does not include mere appointments or references made after filing an agreement.
- Clause 15 of the Letters Patent cannot be invoked to circumvent the appeal restrictions contained in Section 39 of the Arbitration Act; Clause 15 must be read subject to the statutory limitations imposed by Section 39.
- The Division Bench decision in Unit Construction Co. (1986) insofar as it was read to permit Clause 15 appeals despite Section 39 was wrongly interpreted; that decision was distinguishable and later clarified in Santosh Kumar Agarwal.
- Because the appeal was not maintainable, it was dismissed; in the circumstances of the case the Court ordered that there would be no order as to costs.
- The Full Bench treated the Arbitration Act as a self-contained code that restricts appeals to the categories specified in Section 39; the decision reiterates the principle that express legislative limitation on appealability must be respected.
Disposition
The appeal is dismissed as not maintainable. There will be no order as to costs.
This summary is prepared strictly from the content of the provided opinion. No information has been inferred beyond what appears in the opinion text.
The Judgment of the Court was delivered by
Sinha, J.:— This matter has been referred to the Full Bench by a Division Bench of this Court for answering the following questions of law:—
“1. Does the Arbitration Act, 1940 permit an appeal under Section 39(1) of the said Act from an Order directing reference of the disputes to an Arbitrator not appointed under the Arbitration Agreement not agreed to by the parties when the Court by an earlier Order already directed filing of the said Arbitration Agreement and directed reference to an Arbitrator against which no appeal has been preferred?
2. If the answer to the above question is in the negative, is such an order appealable as judgment under Clause 15 of the Letters Patent?
3. Does an appeal lie from an Order passed under the Arbitration Act, in case not covered by Section 39(1) of the said Act, under Clause 15 of the Letters Patent where no question of jurisdiction involved?.
4. Was the case of (1) Unit Construction Co. (Pvt.) Ltd. v. University of North Bengal, reported in 1986 (2) Calcutta High Court Notes 275, correctly interpreted the decision of Supreme Court in () Babulal Khimji's case, reported in (1981) 4 SCC 8 : AIR 1981 SC 1786 and the case of the (3) Union of Indian v. Mohindra Supply Co., reported in AIR 1962 SC 256?
5. Has the case of Unit Construction Co. Pvt. Ltd. v. University of North Bengal, (ibid) correctly decided that although no appeal lies under Section 39(1) of the Arbitration Act, there may be an appeal under Clause 15 of the Letters Patent”.
2. The fact of the matter lies in a very narrow compass. The parties, admittedly, entered into an agreement on 15.6.73 for execution of earth work in formation, bridge work and miscellaneous works. The said contract contains an arbitration agreement, which reads as follows:—
“Clause 63(1):
“If the contractor be dissatisfied with the decision of the Railway on any matter in question dispute or difference on any account or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to or if the Railway fails to make a decision within a reasonable time, then and in any such case but except in any of the Excepted Matters referred to in Clause 63 of those conditions, the contractor shall within 10 days of the receipt of the communication of such decision or after the expiry of the reasonable time as the case may be, demand in writing that such matter in question, dispute or difference be referred to Arbitration. Such demand for Arbitration shall be delivered to the Railway by the Contractor and shall specify the matters which are in question, dispute or difference and only such dispute or difference for which the demand has been made and no other shall be referred to Arbitration.
(2) Work under contract, shall unless otherwise directed by the Engineer, continue during the Arbitration proceedings, and no payment due or payable by the railway shall be withheld on account such proceedings provided however it shall be open for the Arbitrator or Arbitrators to consider and decide whether or not such work should continue during Arbitration proceeding.
(a) Matter in question, dispute or difference to be Arbitrated upon shall be referred for decision to:
(i) A Sole Arbitrator who shall be the General Manager or a person nominated by him in that behalf in cases where the claim in question is below Rs. 3,00,000 and case where the issues involved are not a complicated nature. The General Manager, shall be the sole judge to decide whether or not the issues involved are of a complicated nature.
(ii) Two Arbitrators, who shall be Gazetted Railway Officers of equal status to be appointed in the matter laid down in Clause (3)(b) for all claim of Rs. 3,00,000 and above, and for all claims irrespective of the amount or value of such claims if the issues involved are of a complicated nature, the General Manager shall be the sole judge to decide whether the issues are of a complicated nature or not. In the event of the two Arbitrators being divided in their opinions the matter under dispute will be referred to an Umpire to be appointed in the manner laid down in Clause (3)(b) for his decision.
(b) For the purpose of appointing two Arbitrators as referred to in sub-clause (a)(ii) above, the Railway will send a panel of more than three names of Officers of the appropriate status of different departments of the Railway to the contractor, who will be asked to suggest, panel of three names out of the list so sent by the Railway, the General Manager will appoint one Arbitrator out of this panel as the Contractor's nominee and then appoint a second Arbitrator of equal status as the Railway's nominee either from the panel or from outside the panel ensuring that one of the two Arbitrators so nominated is invariably from the Account Department. Before entering into reference, between the two Arbitrators.
(c) The Arbitrator or Arbitrators or the Umpire shall have power to call for such evidence by way of affidavit or otherwise as the Arbitrator or Arbitrators or Umpire shall think proper, and it shall be the duty of the parties what to do or cause to be done all such things as may be necessary to enable the Arbitrator or Arbitrators or Umpire to make the Award without any delay.
(d) It will be no objection that the person appointed as Arbitrator, Arbitrators the Umpire are Government Servants and that in the course of their duties as Government servants they have expressed any view on all or any of the matter in dispute.
(e) Subject as aforesaid, Arbitration Act, 1940, and the Rules thereunder and any statutory modification thereof shall apply to the Arbitration Proceedings under this Clause”.
3. The respondent-firm filed an application on 2.3.82 before this Court under Section 20 of the Arbitration Act praying therein that the respondents be directed to file the aforementioned arbitration agreement dated 15.6.73 and for appointment of an Arbitrator in terms thereof. Pratibha Bonnerjea, J., by an order dated 23.6.82 directed the respondent to file the said Arbitration Agreement. It was further directed therein that the Arbitrators would be appointed in terms of the arbitration agreement and the appellant was directed to submit a panel of names of Arbitrators to the claimant within three weeks from the said date whereupon the Arbitrators were to enter upon reference forthwith and to pass an award within 6 months from the date of entering into reference. According to the appellant the Law Offer of the South Eastern Railways requested the Ministry of Law for extension of time for three weeks on 28.7.82 so as to enable them to comply with the said order: whereupon the matter was mentioned and by an order dated 28.7.82 Pratibha Bonnerjea, J. while rejecting the prayer of the appellant appointed Sri P.K Pal, Barrister-at-Law as the Sole Arbitrator and directed him to make an award within 6 months. The appellant preferred an appeal under Clause 15 of the Letters Patent of this Court against the second order dated 28.7.82 and not against the first order, i.e, the order dated 26.3.82 The appeal came up for hearing before a Division Bench of this Court wherein a preliminary objection was taken with regard to the maintainability of the said appeal.
4. Before the Division Bench, the appellant, inter alia, relied upon a decision of this Court in Unit Construction Co. Pvt. Ltd. v. University of North Bengal, reported in (1986) 2 CHN 275. The Division Bench doubted the correctness of the said decision and referred the matter to a larger Bench.
5. Mr. S.K Mitra, Learned Counsel appearing on behalf of the appellant, has, inter alia, submitted that the impugned order would be deemed to be an order passed under Sub-section (4) of Section 20 of the Arbitration Act, inasmuch as any appointment of an Arbitrator de hors the arbitration agreement amounts to an order refusing to direct filing of the arbitration agreement. The Learned Counsel submitted that from a perusal of the order of reference of the Division Bench, it would appear that it was held therein that the order passed by the Learned Single Judge on merit could not be sustained. The Learned Counsel submitted that keeping in view the fact that the appellant received the copy of the said order dated 23.6.82 after two weeks, it was not in a position to comply with the said order within the time granted by it. It was pointed out that the matter was brought under the heading. “To be Mentioned” only for the purpose of obtaining an extension of time on 28.7.82 and, in that view of the matter, the Learned Judge had no jurisdiction to pass an order appointing Mr. P.K Pal, Barrister-at-Law, as the Sole Arbitrator. The Learned Counsel in support of his contention that appointment of an Arbitrator de hors the arbitration agreement amounts to refusal to direct filing of arbitration agreement relied upon two Division Bench decisions of this Court, viz. (4) Union Of India…Plaintiff v. M/S. Himco (India) Private Ltd.…Defendant-;, AIR 1965 Cal. 404 and (5) Union Of India… v. M.S Grewal & Co.…., AIR 1968 Cal 333. It was further submitted that the impugned order passed by the Learned Single Judge is vitiated in law as no reason has been assigned in support thereof.
6. Mr. Mitra further submitted that Clause 15 of the Letters Patent of this Court must be held to prevail over the provisions of Section 39 of the Arbitration Act. The Learned Counsel submitted that this Court is bound by the decision of the Supreme Court of India in Babulal Khimji's case (supra), (1981) 4 SCC 8 : AIR 1981 SC 1786; wherein, however the decision of the Supreme Court in the case of The Union Of India v. Mohindra Supply Co. , reported in AIR 1962 SC 256 was not referred to. It was submitted that the decision of the Supreme Court in Mohindra Supply Co. (supra) has no application to the facts and circumstances of the present case inasmuch as the Supreme Court in that case was considering the effect of the sub-section (2) of Section 39 of the Arbitration Act.
7. Mr. Pratap Chatterjee Learned Counsel appearing on behalf of the respondent, on the other hand, submitted that in view of the fact that the appellant did not question the order dated 23.6.82 passed by this Court and having preferred an appeal only against the order dated 28.7.82, it cannot be said that the said order is a composite order under Section 20(4) of the Arbitration Act. The Learned Counsel further submitted that the decisions of this Court reported in 1965 Cal. 404 and 1968 Cal. 333 are not applicable to the facts and circumstances of this case. Mr. Chatterjee submitted that the impugned order cannot be said to be without jurisdiction inasmuch as in terms of the order dated 23.6.82, the matter was to be placed before the Court 5 week thereafter and pursuant thereto the matter was placed before the Learned Single Judge on 28.7.82
8. Mr. Chatterjee next contended that the decision of the Supreme Court of India in Union Of India v. Mohindra Supply Co. 1962 SC 256 has laid down the law within the meaning of Article 141 of the constitution of India and, thus, the same being binding upon this Court should be preferred to the ‘obiter dictum’ of the Supreme Court in Babulal Khimji's case (supra)
9. Mr. Chatterjee submitted that the Supreme Court subsequently in the case of (6) Union of India v. Gauranga Chatterjee, reported in (1993) 3 SCC 1, has clearly held that an appeal under Clause 15 of the Letters Patent of any High Court would not be entertainable if the same does not come within the purview of any of the clauses referred to in Section 39 of the Arbitration Act. Mr. Chatterjee contended that the judgment of this Court in Unit Construction's case has subsequently been explained by another Division Bench of this Court in (7) Santosh Kumar Agarwal v. Phalguni Banerjee & Anr., reported in (1994) 1 CHN 113. It was pointed out that in both, the aforementioned decisions, Prabir Kumar Mazumdar, J. was a party.
10. The order dated 23.6.82 passed by the Learned Single Judge of this Court reads thus:—
“It is ordered that the Arbitration agreement contained in the agreement No. DCE/BC/5/73 dated the fifteenth day of June one thousand nine hundred and seventy three being Annexure ‘C’ to the said petition be filed as of records herein. And it is further ordered that the parties herein be at liberty to appoint Arbitrators in terms of the said agreement within a month from the date hereof. And it is further ordered that the defendant do within three weeks from the date hereof submit a panel of the names of the Arbitrators to the plaintiff. And it is further ordered that all matters in difference in this suit between the parties hereto including the question of the costs of this suit and of the reference hereby directed be referred to the Arbitration of the Arbitrators so appointed. And it is further ordered that the Arbitrators so appointed do enter upon the reference forthwith and make their award in writing and submit the same to this Court together with all proceedings and depositions recorded and exhibits filed before them within six months from date of entering upon such reference. And it is further ordered that in case of difference of opinion between the said Arbitrators the matters involving such difference be referred to the decision of an Umpire to be nominated by the said Arbitrators before they take up such reference who, in the event of a reference being made to him shall make his award in writing and shall submit the same in the like matter to this Court within two months from the date of such reference to him or within such further time as he may allow himself by an endorsement on the office copy of this order. And it is further ordered that the said Arbitrators or the Umpire as the case may be, be at liberty to examine the parties to this suit and their witnesses upon oath or Solemn affirmation which they are hereby empowered to administer. And it is further ordered that the said Arbitrators or the Umpire as the case may be, shall have such powers as are vested in an Arbitrator under the provisions of the Arbitration Act, 1940. And it is further ordered that this application be placed in the list of marked to be mentioned on the expiry of five weeks from the date hereof. And it is further ordered that the costs of and incidental to this application be costs in the Arbitration proceedings. And it is further ordered that the said Arbitrators and all parties concerned do act on a copy of the minutes of the order signed by an officer of this Court being produced before them”.
11. It is stated that the signed copy of the minutes of the said order was served on the Law Officer of the appellant on 8.7.82 On 26.7.82 the Law Officer of the appellant requested the Ministry of Law to pray for extension of time. The matter appeared in the list on 28.7.82 whence a prayer was made on behalf of the appellant for three weeks' extension to comply with the said order. The said prayer was rejected by the learned Trial Judge by the following order:—
“It is ordered that all matters in dispute and difference in this suit between the parties hereto including the question of the costs of the reference hereby directed be referred to the Arbitration of Mr. P.K Pal, Barrister-at-law, who is hereby appointed the sole Arbitrator in this suit at a remuneration of thirty Gold Mohurs per each effective sitting irrespective of hours to be shared equally by both the parties. And it is further ordered that the said Arbitrator shall enter upon the reference forthwith and shall make his award in writing and submit the same to this Court together with all proceedings and depositions recorded and exhibits filed before him within six months from the date of entering upon such reference aforesaid. And it is further ordered that the said Arbitrator be at liberty to examine the parties to this suit and their witnesses upon oath of Solemn affirmation which he is hereby empowered to administer. And it is further ordered that the said Arbitrator shall have such powers as are vested in an Arbitrator under the provisions of the Arbitration Act, 1940. And it is further ordered that the costs of and incidental to this application be costs in the Arbitration proceedings. And it is further ordered that all parties including the said Arbitrator do act on a copy of the minutes of this order signed by an officer of this Court being produced before them”.
12. It may be stated that both the aforementioned orders were drawn up separately as two separate orders. It would not, therefore, be correct to contend that the second order could be an order refusing to file an arbitration agreement.
13. In the case of Union Of India…Plaintiff v. M/S. Himco (India) Private Ltd.…Defendant-; reported in AIR 1965 Cal 404, the question which arose for consideration before this Court was as to whether by reason of the composite order passed by the Court in terms of Sub-section (4) of Section 20 of the Arbitration Act, the arbitration agreement stood modified or not. The said decision was followed in the case of Union Of India… v. M.S Grewal & Co.…. reported in AIR 1968 Cal 333. In this case, however, as noticed hereinbefore the aforementioned two orders have been drawn up separately and the appellant has chosen to file appeal only as against the second order being dated 28.7.82 The appellant cannot, therefore, raise any grievance as against the first order whereby and whereunder the arbitration agreement was directed to be filed. Once the arbitration agreement was directed to be filed in respect whereof the appellant did not raise any grievance, in my opinion, it would not be correct to contend that the subsequent order dated 28.7.82 would be deemed to be an order of this Court refusing filing of the arbitration agreement for the reason that the arbitrator appointed by the Court was not an arbitrator named is the arbitration agreement entered into by the parties and as contained in clause 63(1) of the contract.
14. Section 20 of the Arbitration Act reads as follows:—
“Section 20. Application to file in Court Arbitration agreement:
(1) Where any persons have entered into an Arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court.
(2) The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintiff or plaintiffs and the remainder as defendant or defendants, if the application has been presented by all the parties, or, if otherwise, between the applicant as plaintiff and the other parties as defendants.
(3) On such application being made, the Court shall direct notice thereof to be given to all parties to the agreement other than the applicants, requiring them to show cause within the time specified in the notice why the agreement should not be filed.
(4) Where no sufficient cause is shown, the Court shall order the agreement to be filed, and shall make an order of reference to the Arbitrator appointed by the parties, whether in the agreement or otherwise, or, where the parties cannot agree upon an Arbitrator, to an Arbitrator appointed by the Court.
(5) Thereafter the Arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act so far as they can be made applicable”.
15. Section 20 of the Act is, therefore in two parts.
16. In the case of (8) Dhanrajmal Govindram v. Shamji Kalidas & Co., reported in AIR 1961 SC 1285, the Supreme Court of India while considering the scope of Sub-section (4) of Section 20 of the Arbitration Act held as follows:—
“But the crux of the argument is that the provisions of Sub-section (4) of Section 20 read with Sub-section (1), ibid, cannot apply, and the Court, after filing the agreement, will have to do nothing more with it, and this shows that Section 20 is not applicable. This argument overlooks the fact that this is a statutory arbitration governed by its own rules, and that the powers and duties of the Court in Sub-section (4) of Section 20 are of two distinct kinds. The first is the judicial function to consider whether the arbitration agreement should be filed in Court or not. That may involve dealing with objections to the existence and validity of the agreement itself. Once that is done, and the Court has decided that the agreement must be filed the first part of its powers and duties is over. It is significant that an appeal under Section 39 lies only against the decision on this part of Sub-section (4). Then follows a ministerial act of reference to Arbitrator or Arbitrators appointed by the parties. That also was perfectly possible in this case, if the parties appointed the Arbitrator or Arbitrators. If the parties do not agree, the Court may be required to make a decision as to who should be selected as an Arbitrator, and that may be a function either judicial, or procedural, or even ministerial; but it is unnecessary to decide which it is. In the present case the parties by their agreement have placed the power of selecting an Arbitrator or Arbitrators (in which we include also the umpire) in the hands of the chairman of the Board of Directors of the East India Cotton Association Ltd. and the Court can certainly perform the ministerial act of sending the agreement to him to be dealt with by him. Once the agreement filed in Court is sent to the Chairman, the Bye-laws lay down the procedure for the Chairman and the appointed Arbitrator or Arbitrators to follow, and that procedure, if inconsistent with the Arbitration Act, prevails. In our opinion, there is no impediment to action being taken under Section 20(4) of the Arbitration Act.”
(Underlining is mine for emphasis)
17. In view of the aforesaid decision there cannot be any doubt that four situations are contemplated in terms thereof mainly (1) the circumstances under which a party may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court. Sub-section (2) provides as to how the said application is to be dealt with. Sub-section (3) provides giving of notice to all parties requiring them to show cause why the agreement should not be filed. Sub-section (4) provides that where no sufficient cause is shown the Court shall order the agreement to be filed. It further provides that the Court shall thereupon make an order of reference to the Arbitrator appointed by the parties, whether in the agreement or otherwise or where the parties cannot agree upon an Arbitrator, to an Arbitrator appointed by the Court. The said provisions, therefore, contemplate two kinds of order although the same may be composite one. In terms of Section 39 of the Act only an order directing filing or refusing to file an arbitration agreement has been made appealable in terms of Clause ‘iv’ thereof.
18. However, this Court is not concerned in this case as to whether an order would be appealable as against a composite order as was the case in the decisions reported in AIR 1965 Cal. 404 and AIR 1968 Cal. 333.
19. However, I agree with the following observation of the Division Bench:—
“In our opinion, the order appealed against, that is, the second order which merely provides for appointment of Arbitrator and does not provide for filing or refusing to file the agreement is not appealable under Section 39 of the Act. The scheme of the Act shows different kinds of orders which can be passed under the same. It starts with leave to revoke the authority of the Arbitrator, that is, Section 5. Power for appointment or removal of Arbitrator under various circumstances is provided in Sections 8 to 11. Power to remit award is under Section 16. Power to pass interim orders is provided in Section 18. Power to make order of reference in pending suits is provided in Section 21, Section 30 read with Section 33 provides for power to set aside the award. Only in respect of some of these orders appeal has been provided and in cases of other orders no such appeal is provided. In this context it has to be pointed out that all orders relating to appointment or removal of Arbitrator generally under Sections 8 to 11 have been excluded from the scope of appeal. In our opinion, the Legislature has intended that the order of appointment under Section 20 shall be treated at par with orders of appointment generally under Sections 8 to 11 and intentionally appointment of Arbitrator under Section 20 after direction for filing of the agreement has been excluded from the scope of appealability of order. What has been excluded is, in our opinion, impliedly barred. In this context it may be pointed out that in certain cases orders can be passed under a section either allowing or disallowing the prayer. In the case of filing of Arbitration Agreement both kinds of orders, viz., the order for filing and the order refusing to file have been made appealable but any order of reference or any order of appointment of Arbitrator has not been made appealable. Power has been given to supersede an arbitration under the Act but when an application for supersession is rejected that has not been made appealable.”
20. The Division Bench further observed that in view of the decision of the Supreme Court in the case of (9) Union of India v. Prafulla Kumar Sanyal, reported in (1979) 3 SCC 631 : AIR 1979 SC 1457, the second order passed by the Learned Single Judge cannot be said to be without jurisdiction. I am, however, of the view that the said question is irrelevant inasmuch as if an appeal does not lie in terms of Clause 15 of the Letters Patent of this Court, such an appeal would not be maintainable although order passed by the trial judge may be without jurisdiction.
21. In this view of the matter, question No. 1 referred to by the Learned Division Bench must be rendered in negative.
22. Question Nos. 2 to 5 being inter-related, they are being dealt with together hereinafter.
23. Clause 15 of the Letters Patent of this Court reads as follows:—
“And we do further ordain that an appeal shall lie to the said High Court of Judicature at Fort William in Bengal from the judgment (not being a judgment passed in the exercise of appellate jurisdiction in respect of a decree or order made in the exercise of appellate jurisdiction by a Court subject to the superintendence of the said High Court, and not being an order made in the exercise of revisional jurisdiction and not being a sentence or order passed or made in the exercise of the power of superintendence under the provisions of Section 107 of the Government of India Act or in the exercise of criminal jurisdiction) of one Judge of the said High Court or one Judge of any Division Court, pursuant to Section 108 of the Government of India Act and notwithstanding anything hereinbefore provided an appeal shall lie to the said High Court from a judgment of one Judge of the said High Court or one Judge of any Division Court, pursuant to Section 108 of the Government of India Act made on or after the first day of February, One thousand nine hundred and twenty-nine in the exercise of appellate jurisdiction in respect of a decree or order made in the exercise of appellate jurisdiction by a Court subject to the superintendence of the said High Court, where the Judge who passed the judgment declares that the case is a fit one for appeal, but the right of appeal from other judgments of Judges of the said High Court or of such Division Court shall be to Us, Our heirs or successors in Our or Their Privy Council as hereinafter provided”.
24. Section 39 of the Arbitration Act reads as follows:—
“39. Appealable orders: (1) An appeal shall lie from the following orders passed under this Act (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order:—
An order—
(i) superseding an Arbitration;
(ii) on an award stated in the form of a special case;
(iii) modifying or correcting an award;
(iv) filing or refusing to file an Arbitration agreement;
(v) staying or refusing to stay legal proceedings where there is an Arbitration agreement;
(vi) setting aside or refusing to set aside an award;
provided that provisions of this Section shall not apply to any order passed by a Small Cause Court.
(2) No second Appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.”
25. There cannot be any doubt whatsoever that the Arbitration Act is a special statute and is a self-contained Code. The provisions of the Code of Civil Procedure apply to the cases filed under the Arbitration Act as the Arbitration Act expressly provides therefor as also in terms of Section 141 of the Code of Civil Procedure.
26. An appeal is a creature of a statute. The Parliament in its wisdom may not provide for an appellate forum against some orders and may provide appeals on limited ground against the orders passed by a Court or Tribunal. Such appeals may also be conditional ones. Even an appeal may be maintainable at the instance of one party; but only a limited appeal may be maintainable at the hands of the other e.g an appeal under the Motor Vehicles Act. The right of appeal when it is provided is a substantive right. However, as indicated hereinbefore, an impairment of the right of appeal by putting restriction therein is permissible in law.
27. The right of appeal of a litigant being aggrieved by the order passed by the Court under the Arbitration Act vis-a-vis right of appeal under Clause 15 of the Letters Patent came up for consideration before various Courts. In the case of (10) R. Wright & Partner, Ltd.… v. Governor General In Council…* in Council reported in ILR 1948 (2) Cal. 265 : 52 CWN 224, it has been observed that the right of appeal under Clause 15 of the Letters Patent is by Clause 44 subject to the legislative powers of the Governor General in Council and Section 39 of the Arbitration Act, 1940 has explicitly taken away the right. B.K Mukherjea, J. (as His Lordship then was) in the aforementioned case made the following observation:—
“Our conclusion, therefore, is that Section 39 of the Arbitration Act is sufficiently explicit to include an appeal under Clause 15 of the Letters Patent as well and as the provisions of Clause 15 of the Letters Patent have to be taken subject to the Legislative Powers of the Governor General in Legislative Council. We must hold that to this extent the right of appeals has been curtailed and modified.”
28. The said decision has been quoted with approval by the Madras High Court in the case of (11) Penugouda Radhakrishna Murthy v. V.A.Y Ethirajulu Chetty, reported in AIR 1945 Mad. 184. In the case of (12) Ranchhoddas Purshottam & Co. v. Ratanji Virpal & Co. reported in AIR (30) 1943 Bom 196, the Division Bench of the Bombay High Court felt that in view of the provisions contained in Sub-section (2) of Section 39 of the Arbitration Act no appeal lies to the Privy Council from an order passed by a single Judge under Section 33 challenging the validity of an Arbitration agreement as no appeal is provided for against it by Section 39(1). In the case of (13) Madhavdas Devidas v. Vithaldas Vasudeodas, reported in AIR 1952 Bom 229 a Division Bench of the Bombay High Court again held that if a Single Judge of the High Court disposes of an appeal under Sub-section (1) of Section 39 of the Arbitration Act, Sub-section (2) thereof bars further right of appeal under Clause 15 of the Letters patent. The matter came up for consideration before the Supreme Court in the case of Union of India v. Mohindra Supply Co., reported in AIR 1962 SC 256. The Supreme Court although, was concerned with regard to the right of second appeal under Letters Patent in view of Section 39(2) of the Arbitration Act but there cannot be any doubt that the question involved therein was that where a single Judge of the Punjab High Court disposed of an appeal under Section 39(1) of the Arbitration Act, whether there could be any further right of appeal under Clause 10 of the Letters Patent of that High Court or not. The Supreme Court considered the provisions of Section 39 of the Arbitration Act vis-a-vis Clause 10 of the Letters Patent of the Punjab High Court and held as follows:—
“There is in the Arbitration Act no provision similar to Section 4 of the Code of Civil Procedure which preserves powers reserved to Courts under special statutes. There is also nothing in the expression “authorised by law to hear appeals from original decrees of the Court” contained in Section 39(1) of the Arbitration Act which by implication reserves the jurisdiction under the Letters Patent to entertain an appeal against the order passed in arbitration proceedings. Therefore, in so far as Letters Patent deal with appeals against orders passed in Arbitration proceedings, they must be read subject to the provisions of Section 39(1) and (2) of the Arbitration Act.
Under the Code of 1908, the right to appeal under the Letters Patent was saved both by Section 4 and the clause contained in Section 104(1), but by the Arbitration Act of 1940, the jurisdiction of the Court under any other law for the time being in force is not saved; the right of appeal can therefore be exercised against orders in arbitration proceedings only under Section 39 and no appeal (except an appeal to this Court) will lie from an appellate order”.
29. It further held:—
“If the legislature being cognizant of this difference of opinion prior to the Code of 1908 and the unanimity of opinion which resulted after the amendment, chose not to include the reservation clause in the provisions relating to appeals in the Arbitration Act of 1940, the conclusion is inevitable that it was so done with a view to restrict the right of appeal within the strict limits defined by Section 39 and to take away the right conferred by other statutes. The Arbitration Act which is a consolidating and amending Act, being substantially in the form of a code relating to arbitration must be construed without any assumption that it was not intended to alter the law relating to appeals. The words of the statute are plain and explicit and they must be given their full effect and must be interpreted in their natural meaning, uninfluenced by any assumptions derived from the previous state of the law and without any assumption that the legislature must have intended to leave the existing law unaltered. In our view the legislature has made a deliberate departure from the law prevailing before the enactment of Act X of 1940 by modifying the law relating to appeals in Section 39”.
30. The Supreme Court followed the aforementioned decision and reiterated its views in no uncertain terms in the case of State Of West Bengal v. M/S Gourangalal Chatterjee., reported in (1993) 3 SCC 1 wherein it was clearly held as follows:—
“The argument appears to be without any substance as Sub-section (1) of the Section 39 which is extracted below:—
(1) An appeal shall lie from the following orders passed under this Act (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order:—
(i) superseding an arbitration;
(ii) on an award stated in the form of a special case;
(iii) modifying or correcting an award;
(iv) filing or refusing to file an arbitration agreement;
(v) staying or refusing to stay legal proceedings where is an arbitration agreement;
(vi) setting aside or refusing to set aside an award;
Provided that the provisions of this section shall not apply to any order passed by a Small Cause Court.
(2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court”.
Provides that an appeal could lie only from the orders mentioned in the sub-section itself. Since the order passed by the Single Judge revoking the authority of the Chief Engineer on his failure to act as an arbitrator was not covered in either of the six clauses mentioned in Section 39 it is obvious that no appeal could be filed against the order of the learned Single Judge.”
31. In Shah Babulal Khimji v. Jayaben D. Kania, reported in (1981) 4 SCC 8 : AIR 1981 SC 1786 the Supreme Court was considering the question as to whether an appeal against the order of a Single Judge would be maintainable under clause 15 of the Letters Patent of the Bombay High Court refusing to appoint a receiver and passing an order of injunction. In that case the Division Bench of the Bombay High Court refused to entertain the Letters Patent appeal from an order passed by, the learned Single Judge on the ground that such an order was not a judgment within the meaning of clause 15 of the Letters Patent. Before the Supreme Court it was only submitted that such an order is appealable in terms of Section 104 and Order 43 Rule 1 of the Code of Civil Procedure.
32. The Supreme Court upon taking into consideration the provisions of Section 104 and other provisions of the Code of Civil Procedure, inter alia, held: “Thus, the test contained in Section 4 is not applicable in the instant case because even if the Letters Patent of the High Court be deemed to, be a special law as contemplated by Section 4, the provisions of Section 104 do not seek to limit or affect the provisions of the Letters Patent”. Dealing with the provisions of Section 104 of the Code of Civil Procedure and other provisions of the Code, it was observed: “Thus, a combined reading of the various provisions of the Code of Civil Procedure referred to above leads to the irresistible conclusion that Section 104 read with Order 43, Rule 1 clearly applies to the proceedings before the Trial Judge of the High Court”.
33. Upon the aforesaid findings the Supreme Court came to the following conclusion:—
“We find ourselves in complete agreement with the arguments of Mr. Sorabjee that in the instant case Section 104 read with Order 43, Rule 1 does not in any way abridge, interfere or curb the powers conferred on the Trial Judge by Cl. 15 of the Letters Patent. What Section 104 read with Order 43, Rule 1 does is merely to give an additional remedy by way of an appeal from the orders of the Trial Judge to a larger Bench. Indeed, if this is the position then the contention of the respondent that Section 104 will not apply to internal appeals in the High Courts cannot be countenanced. In fact, the question of application of the Code of Civil Procedure to internal appeals in the High Court does not arise at all because the Code of Civil Procedure merely provides for a forum and if Order 43 Rule 1 applies to a Trial Judge then the forum created by the Code would certainly include a forum within the High Court to which appeals against the judgment of a Trial Judge would lie. It is obvious that when the Code contemplates appeals against orders passed under various clauses of Order 43, Rule 1 by a Trial Judge, such an appeal can lie to a larger Bench of the High Court and not to any Court subordinate to the High Court. Hence, the argument that Order 43 Rule 1 cannot apply to internal appeals in the High Court does not appeal to us although the argument has found favour with some of the High Courts”.
34. The Supreme Court having held so, considered the question as to whether the provisions of Section 104 of the Code of Civil Procedure was merely an additional or supplemental remedy by way of appeal. It, in this connection, referred to the provisions of the Companies Act as also the Arbitration Act and observed:—
“It cannot be contended by any show of force that the Order passed by the Trial Judge being an interlocutory order, no appeal would lie to the Division Bench or that the provisions of the Arbitration Act giving a right of appeal to a litigant from the order of a Trial Judge to the Division Bench in any way fetter or override the provisions of the Letters Patent”.
35. Mr. Mitra relying upon the observations of the Supreme Court in paragraphs 33 and 34 in Khimji's case submitted that from a perusal thereof it would appear that the Supreme Court has clearly held that Section 39 of the Arbitration Act would not be a bar in entertaining an appeal under clause 15 of the Letters Patent. The contention of the learned Counsel cannot be accepted for more than one reasons. As indicated hereinbefore the Supreme Court in that case was concerned with the interpretation of the word ‘Judgment’ in clause 15 of the Letters Patent vis-a-vis the provisions of Section 104 and Order 43 of the Code of Civil Procedure. It is now well known that a decision is an authority for what it decides and not what can logically be deduced therefrom.
36. It is also a trite law that a judgment cannot be read as a statute. In (14) State Bank of India Staff Association, Local Head Office Unit, Patna v. Election Commission of India, reported in 1993 (2) BLJ 500, a Division Bench of the Patna High Court (of which I was a member), observed as follows:—
“It is well known, as was observed by Lord Halsbury in (15) Quinn v. Leathem, (1901) 3 All England Law Reports (Reprint) page 1 at page 6 that a decision is an authority for what it decides and not what logically can be deduced therefrom.
It is also known that a judgment of the Supreme Court has to be read in a reasonable manner and like any other documents in its entirety”.
37. In (16) Central Coalfields Ltd. v. State of Bihar, 1993 (1) PLJR 617, a Division Bench of this Court (of which I was a member), observed as follows:—
“It is also well known that judgment of a court is not to be read as a statute”.
38. In (17) General Electric Co. v. Renusagar Power Co., (1987) 4 SCC 137, it was held:—
“As often enough pointed by us, words and expressions used in a judgment are not to be construed in the same manner as statutes or as word and expressions defined in statutes. We do not have any doubt that when the words, adjudication of the merits of their controversy in the suit were used by this court in State of U.P v. Janki Saran Kailash Chandra, the words were not used to take in every adjudication which brought to an end the proceeding before the court in whatever manner but were meant to cover only such adjudication as touched upon the real dispute between the parties which have rise to the action. Objections to adjudication of the disputes between the parties, on whatever grounds, are in truth not aids to the progress of the suit but hurdles to such progress. Adjudication of such objections cannot be termed as adjudication of the merits of the controversy in the suit. As we said earlier, a broad view has to be taken of the principles involved and narrow had technical interpretation which tends to defeat the object of the legislation must be avoided”.
39. It is also well settled that a point not argued does not create a binding precedent with regard thereto.
40. In (18) Rajeshwar Prasad Mishra v. The State of West Bengal, AIR 1965 SC 1887; it was held:—
“Article 141 empowers the Supreme Court to decide the law and not enact it. Hence the observation of the Supreme Court should not be read as statutory enactments. It is also well known that ratio of a decision is the reasons assigned therein”.
41. Dias on ‘Jurisprudence’ at page 139 observed:—
“Knowing the law.—What is ‘law in a precedent is its ruling or ratio decidendi, which concerns future litigants as well as those involved in the instant dispute. Knowing the law in this context means known how to extract the ratio decidendi from cases. Statements not part of the ratio decidendi are distinguished as obiter dicta and are not authoritative. Three shades of meaning can be attached to the expression ratio decidendi. The first, which is the translation of it, is the reason for (or of) deciding. Even a finding of fact may in this sense be the ratio decidendi. Thus a judge may state a rule and then decide that the facts do not fall within it. Secondly, it may mean the rule of law preferred by the Judge as the basis of his decision, or thirdly it may mean the rule of law which others regard as being a binding authority”.
42. There is temptation to suppose that a case has one fixed ruling which is there and discoverable here and now and once and for all. This is not so, for the ratio is not only the ruling given by the deciding Judge for his decision, but any one of a series of rulings as elucidated by subsequent interpretations. The pronouncement of the Judge who decided the case is a necessary step towards ascertaining the ratio, but the process by no means ends there, subsequent interpretation is at least as significant, sometimes more so. ‘It is not sufficient’, said Jessel M.R
43. That the case should have been decided on a principle is not itself a right principle, or one not applicable to the case; and it is for a subsequent Judge to say whether or not it is a right principle, and, if not, he may himself lay down the true principle.”
44. The observation of the Supreme Court in paragraph 34 of the judgment in Khimji's case is, in my opinion not even an obiter on the point at issue.
45. The Supreme Court in Khimji's case nowhere stated that an appeal under clause 15 of the Letters Patent would be maintainable despite the bar contained in Section 39 of the Arbitration Act. The Supreme Court merely while considering the question of right of appeal of a litigant under Section 104 of the Code of Civil Procedure gave some illustrations. What the Supreme Court intended to convey was that an appeal before a Division Bench from the judgment of the learned Single Judge would lie before the same High Court under Section 104 of the Code of Civil Procedure as well as the provisions of the Companies Act or Arbitration Act which are special statutes. There cannot be any doubt that an appeal from the order passed by the Learned Single Judge of a High Court would be maintainable before the Division Bench of the said High Court, in terms of the relevant provisions of the Letters Patent thereof; but the same shall be subject to the restrictions imposed by special statutes. If an appeal does not lie from an order passed by the learned Single Judge in terms of Section 39 of the Arbitration Act, there cannot be any doubt whatsoever that such an appeal would not be maintainable under clause 15 of the Letters Patent. It is therefore evident that the Division Bench of this Court in Unit Construction Co. (P) Ltd. v. University of North Bengal reported in 1986 (2) Calcutta High Court Notes page 275 wrongly interpreted the decision of the Supreme Court in Khimji's case (supra). However, Prabir Kumar Majumdar, J. who spoke for the Division Bench in Unit Construction Co. (P) Ltd. case (supra) himself explained the said decision in Santosh Kumar Agarwal v. Phalguni Banerjee & Anr., reported in 1994 (1) Calcutta High Court Notes page 113, holding that the Arbitration Act is a complete Code in itself. The Learned Judge also referred loan unreported decision dated 9.4.92 of the Division Bench of this Court presided over by N.P Singh, C.J, (as His Lordship then was) in the case of Uttar Pradesh State Electricity Board v. Banerjee Electric Light & Power Co. Ltd., wherein it was held that the order under appeal before that Bench was neither an order appealable under Section 39 of the Arbitration Act nor an order under clause 15 of the Letters Patent. The Division Bench in Santosh Kumar Agarwal (Supra) distinguished Unit Construction Co. (P) Ltd.'s case stating therein that the impugned order therein was passed at the threshold stage and same was in the nature of an order under Order 7, Rule 10 of the Code of Civil Procedure for which there was no corresponding provision in the Arbitration Act, 1940 and if that was not an order under the Arbitration Act, an appeal then can be entertained if it satisfied the test of the ‘judgment’ within the meaning of clause 15 of the Letters Patent. In view of the subsequent decision of Prabir Kumar Majumdar, J. in Santosh Kumar Agarwal case, it must be held that the reliance placed by Mr. Mitra in Unit Construction Co.'s case (supra) before us is wholly misplaced. The Division Bench observed as follows:—
“In our view, this decision in the case of Unit Construction Co. (supra) is distinguishable as the order under that appeal was at the threshold stage of the arbitration proceedings and it was not an order under the Arbitration Act and could not be an order under the Arbitration Act as there was no provision for making an order to return the award for being filed in the proper court as contained in Order 7, Rule 10 of the Code of Civil Procedure. Therefore, it is not an authority in this case when we are confonted with the question that when an order is made under the Arbitra ion Act, 1940, whether such order is appealable under Section 39 of this Act.
In the case of Unit Construction Co. (supra), the Division Bench of this Court also noticed another decision of the Division Bench of this Court in the case of (19) Tobu Enterprises Pvt. Ltd. v. Cameo Industries Ltd., reported in AIR 1984 Cal 24, where it was held that the order refusing to grant leave under Letters Patent on an application under Section 20 of the Arbitration Act, was not an order under the Arbitration Act, and therefore, whether it was appealable or not could only be considered in the context of clause 15 of the Letters Patent. But, in the instant appeal there is no doubt that the order under appeal as made under Section 41(b) of the Arbitration Act is an order under the Act, i.e the Arbitration Act, 1940. If it is an order under the Arbitration Act, then it can only be appealable if it brought under the purview of Section 39 of the Arbitration Act”.
46. It may be noticed that the Supreme Court of India in the case of (20) Upadhaya Hargovind Devshankar v. Dhirendrasinh Virbhadrasinhji Solanki, reported in (1988) 2 SCC 1 : AIR 1988 SC 915 while considering as to whether the appeal would lie against the order passed by a Single Judge before a Division Bench of the High Court under the Representation of. People Act or not, held that such an appeal would not be maintainable in view of the constitutional provisions as also the provisions of the Representation of people Act and as such a Letters Patent appeal would be barred by necessary implication. In (21) R. v. Middlesex Justices, Ex Parte Schock, reported in (1965) 2 All ER 68, Queen's Bench Division held that the provisions of the Betting, Caming and Lotteries Act, 1963, is a self contained Code dealing with the procedure on appeal against the refusal of a betting licensing committee to grant a betting office licence. In this view of the matter, it must be held that the Arbitration Act 1940 having laid down as to which orders would be appealable in terms of Sub-section (1) of Section 39 of the Act, no appeal under clause 15 of the Letters Patent of this Court would lie which does not come within the purview of the clauses ??? to ??? thereof.
47. For the reasons aforementioned, I have no hesitation in holding that the appeal preferred by the appellant is not maintainable and the question Nos. 2 to 5 referred to by the Division Bench must be answered in the negative. In this view of the matter the appeal is dismissed as not maintainable. In the facts and circumstances of the case, however, there will be no order as to costs.
48. Misia, J.: I agree.
49. Nand, J.: I agree.
50. S.K.G
Section 39 of the Arbitration Act.Alert