Baba Construction Company vs Punjab State and Another

S.S. Sudhalkar, J.—The petitioner had made an application in the Court of Sub-Judge 1st Class Patiala. The said court referred the matter to the Arbitrator. The Arbitrator gave his award in favour of the petitioner. An application u/s 14(2) and 17 of the Arbitration Act, 1940 (hereinafter referred to as ''the Act'') was filed by the petitioner before the Sub-Judge 1st Class, at Ludhiana. The respondents filed objections to the said application and the learned Sub Judge at Ludhiana allowed the application and made the award of the Arbitrator the rule of the Court. Against the said order, the respondent preferred an appeal in the Court of District Judge, Ludhiana. Learned Additional District Judge vide its order dated 27.4.1995 accepted the appeal and the order of learned Sub Judge 1st Class, Ludhiana was set aside and it was ordered that the file he sent back to the trial Court with a direction to return the application filed by the petitioner u/s 14(2) and 17 of the Act for presentation before the competent Court at Patiala. Being aggrieved by the said judgment of learned Additional District Judge, Ludhiana, the petitioner has come in revision before this Court.

I have heard learned counsel for the parties and perused the record.

The only question that arises for my determination in this case is whether the learned Additional District Judge was justified in passing the impugned order and holding that the court at Ludhiana had no jurisdiction.

It has been argued by learned counsel for the petitioner that the award was passed by Superintending Engineer, Ludhiana, who gave the award after 15 years and the time was extended by mutual consent and by sanction of the Court at Ludhiana and, therefore, the Ludhiana court has jurisdiction. He also argued that no objection as to the jurisdiction of Ludhiana courts was raised at any earlier stage or even before the learned Additional District Judge, Ludhiana when the appeal was presented, and therefore, the jurisdiction of Ludhiana courts was accepted by the respondents and hence the order of learned Additional District Judge is erroneous.

An Arbitrator can be appointed in three different categories of cases.

(i) Arbitration without intervention of the Court;

(ii) Arbitration with the intervention of the Court where there is no suit pending; and

(iii) Arbitration in suits.

This is a case of second category of the cases mentioned above where Arbitrator was appointed with the intervention of the Court.

Learned counsel for the petitioner has cited before me the case of Housing Board v. National Construction Co. 1991 2 P.L.R. 183. It is a judgment of learned Single Judge of this Court. Relying upon the said judgment, learned counsel for the petitioner argued that the objection regarding jurisdiction ought to have been taken at the earlier stage but the same was not taken and having consented in extension of time also, the respondents have by their implied consent, consented also the jurisdiction of the Ludhiana Court. The learned Single Judge has dealt with the question of jurisdiction in the aforesaid judgment and has held that regarding the question of jurisdiction, no objection was taken by the petitioner of that case before the trial Court. It has held that by virtue of Section 41 of the Act, the provisions of CPC have been made applicable. It was also held by the learned Single Judge that the objection with regard to the territorial jurisdiction ought to have been taken by the petitioner in that case at the first instance and that too when the petitioner of that case filed petition u/s 30 of the Act.

Learned counsel for the petitioner has also cited before me the case of Pathumma and Others Vs. Kuntalan Kutty Dead by Lrs. and Others, . The Hon''ble Supreme Court has held in that case that in view of provisions of Section 21 of the CPC (hereinafter referred to as ''the Code'') the objection to the territorial jurisdiction cannot be entertained in absence of evidence of failure to do so by the appellant court.

The learned counsel for the petitioner has also cited before me the case of Shah Hari Chand Rattan Chandvirbal and Ors. AIR 1975 Guj 150. The Gujarat High Court held in that case that the order of a court is not liable to be set aside unless there is failure of justice.

With respect, the principles laid down in the above judgments are not applicable to the facts of the present case. In the case of Housing Board, Haryana (supra) the learned Single of this Court was dealing with a case where the petitioner in that case i.e. Housing Board, Haryana, had appointed a Superintending Engineer (Retired) as an Arbitrator for adjudication of a dispute between the parties and that was not a case where an Arbitrator was appointed by a Court on an application made as is in the present case.

The principles in the case of Koopilan Uneen''s daughter Pathumma and others (supra) and Shah Haiichand Ratanchand (supra) are not applicable because in those cases the provisions regarding the jurisdiction as contained in the act were not the issues to be decided and those were the judgments dealing with the question of territorial jurisdiction only as per the Code. Of course Section 41 of the Act has made the provisions of the Code applicable to all the proceedings before the Court but this applicability is made subject to the provisions of the Act and the rules made thereunder.

Section 31 of the Act deal with the jurisdiction of the Courts. Sub-sections 1 and 2 of Section 31 of the Act deal with the situations which are not otherwise provided in the Act and they are subject to the provisions of the Act. Sub-section (3) of Section 31 of the Act provides that the 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. This sub-section does not specifically lay down as to in which Court the award has to be filed but is dealing with the applications as to where the applications have to be filed. Sub-section 4 of Section 31 of the Act reads as under :-

"Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force wherein 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."

In the light of the provisions of Section 31 of the Act and specifically those of Sub-section 4 above. I would like to deal with the question of jurisdiction of Ludhiana Court for deciding this revision petition.

Learned counsel for the respondents has cited before me the case of Ferro Alloys Corporation Ltd. Vs. A.K. Ghosh and Bros., In that case it was held by the Calcutta High Court that once an application is made with reference to an arbitration agreement in one Court, no matter whether before or after filing of the award, that Court will have the exclusive jurisdiction to deal with all matters in connection with the reference including filing the award and passing judgment in terms of the award. He has also cited before me the case of Kumbha Mawji Vs. Union of India (UOI), This citation cannot be said to be directly applicable to the facts of the present case in view of the fact that it was not a case where arbitration proceedings had arisen on filing of an application in the court for appointing an arbitrator. To quote the exact words of their Lordships'' "difference having, in fact, arisen the dispute was referred to two arbitrators and on their disagreement the matter went up to an umpire, one Mr. P.C. Chowdhury". Further in that case, an application was made by the respondent in that case before the Court of Subordinate Judge of Gauhati in Assam praying that the umpire, Mr. Chowdhury, be directed to file both the awards in Court so that the petitioner might get an opportunity for filing objections thereto. On this application, notice was issued to the umpire to the Court. In that case the Hon''ble Supreme Court held that Section 31(4) of the Act would vest exclusive jurisdiction in the Court in which an application for the filing of an award has been first made u/s 14 of the Act. As stated earlier that was not a case in which the arbitration proceedings arose because of an applica tion for appointing art Arbitrator being filed in any Court.

In the case of Guru Nanak Foundation Vs. Rattan Singh and Sons, , an application was made to Delhi High Court u/s 20 of the Act for a direction to file the arbitration agreement to the court. The proceeding was numbered as a suit which ended in an order of reference to the Arbitrator. A subsequent application was made to Delhi High Court u/s 5 of the Act for removal of the Arbitrator. On this application being dis missed, the matter was brought to the Supreme Court in appeal. By the decision of the Supreme Court in the appeal, the arbitrator was removed and another person was appointed as sole arbitrator. Indisputedly, therefore the arbitrator was ap pointed by the Supreme Court and the appeal was accordingly disposed of. In that case, it was held by the Supreme Court:

"that the disposal of the appeal by the Supreme Court by appointing another arbitrator would not mean that the Supreme Court was not in seisin of the matter. Consequently, in view of the provision of Section 31(4) the Supreme Court alone would have jurisdiction to entertain the award and it could not be filed before the Delhi High Court."

Applying the principles also, it is the Court which appointed the Arbitrator has to deal with the subsequent applications. Therefore, also the Patiala Court which appointed the Arbitrator has jurisdiction.

A plain reading of Section 31 of the Act also would go to show that where any application under the Act is made that Court alone will have the jurisdiction. In the present case, the application was made to Patiala Court and this being so the Patiala Court alone will have the jurisdiction over the arbitration proceedings.

In view of the discussion, this revision petition is held to be without merit and the same is hereby dismissed with no order as to costs.