Bai Bachubai vs Trived Mohanlal Jatashanker

Baxi, J.—The present revision is preferred against the order of the Civil Judge, Senior Division, Jamnagar, refusing to file an award on the ground of want of jurisdiction. As the revision involves an important question of law, it has been referred to us by Chhatpar J. as a single Judge.

The parties originally resided in Karachi. By a conveyance dated 14-4-1947 the Plaintiff-applicant sold a certain Immovable property in Karachi to the opponent for Rs. 41,000/ -. Rs. 10,000/- were paid before the execution of the conveyance and the balance of Rs. 31,000/ - was kept with the opponent for one year and he was to pay interest at the rate of 7 annas per cent. per month. He executed a promissory note for the amount in favour of the applicant by way of collateral security and also deposited the title deeds of the property with her by way of equitable mortgage. An agreement in writing bearing the same date as the conveyance (14-4-1947) was executed by the parties with regard to the disposal of this amount. The material terras of the agreement were that the amount should be kept with the Respondent to be paid by him to the applicant for the purchase of Immovable property which must be of the value of Rs. 31,000/- and the applicant was not to demand its payment except for the purpose of purchasing such property. It was further agreed that if after the expiry of the period of one year the applicant failed to purchase the Immovable property, the question as to how the balance of Rs. 31,000/ - should be dealt with and how to carry out the purpose of the agreement including the question of the discharge of equitable mortgage should be decided by two arbitrators one to be appointed by each party.

About four months after this agreement, i.e., on 14-8-1947 Pakistan came into existence and the parties found themselves in India. The Respondent, however, managed to sell the property to Bandukwalla in Karachi.

As the applicant did not purchase any property, the parties signed a reference dated November 1948 Ex. 4 and referred the matters in dispute between them for the decision of two arbitrators whom they nominated. The applicant''s nominee however retired and she appointed in his place Mr. L.L. Thacker, an Advocate of Bhuj who, it appears, was advising her. The opponent''s nominee Mr. Mankodi next retired after entering upon arbitration. The opponent did not appoint Anr. arbitrator in place of Mr. Mankodi though he was called to do so and consequently Mr. Thacker proceeded with the arbitration in the absence of the opponent''s nominee and gave his award dated 23-11-1949. The applicant thereafter presented the application for filing the award to the Court of the Civil Judge, Senior Division, Jamnagar. It is necessary to mention here that at all material times is at the time of signing the reference and also when the application for filing the award was presented to the Court, the opponent resided in Jamnagar. He raised several objections against the Plaintiff''s application. One of the objections was that the learned Civil Judge had no jurisdiction to file the award. The learned Civil Judge accepted the objection and dismissed the application. This revision is against the above order.

Section 2(c), Arbitration Act, 1940 defines the Court as a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit. Section 31(1) of the Act enacts that an award may be filed in any Court having jurisdiction in the matter to which the reference relates. Therefore in order that the Jamnagar Court should have jurisdiction to file the award, the applicant has to show that it has jurisdiction to decide the question forming the subject-matter of the reference, and that it has jurisdiction in the matter to which the reference relates.

Now the reference recites the sale of the property for Rs. 41,000/- and the fact that Rs. 31,000/ - out of the sale price remained with the opponent with interest for a period of one year and also states that it was provided that if the applicant required the amount for the purchase of Immovable property the opponent should immediately return the said amount. The recital then continues as follows:

On the expiry of the said period of one year, if the amount still remained with the party of the second part, the question as to how the sum of Rs. 31,000/- should be dealt with thereafter and how to give effect to the agreement entered into on 14-4-1947 should be decided by arbitration.

The actual reference is in the following terms:

Now It Is Hereby Agreed between the parties hereto as follows:

All questions and matters in dispute, and difference hereto touching, the aforesaid claims including the question of the discharge of equitable mortgage and payment of Rs. 31000/- and the accrued interest are hereby referred to arbitration and final determination of the above mentioned arbitrators.

Now although under the agreement of 14-4-1947 the applicant was not to call upon the opponent to pay Rs. 31000/- except for the purpose of the purchase of Immovable property, the question as to how the amount was to be dealt remained to be decided. He had given a promissory note by way of collateral security for this amount and had also created an equitable mortgage over the property and these liabilities remained outstanding even after the year expired and the applicant did not purchase any Immovable property. The agreement provided for settlement of all these questions in the following terms:

On the expiry of the period of one year from today, in the event of the party of the first part failing to purchase an Immovable property as stated above within a period of one year, the question as to how the sum of Rs. 31,000/- in words rupees thirty one thousand should be dealt with thereafter how to carry out the purpose of this agreement including the question of the discharge of the equitable mortgage and the payment of interest for the subsequent period till the award is made shall be decided by two arbitrators one to be appointed by each of the parties to this agreement.

The agreement, therefore, can be deemed to have been carried into effect only if all these questions are finally decided by arbitration. It will thus be seen that the question of the discharge of equitable mortgage is not separable from the question of how the amount is to be dealt with and must be one of the questions to be decided by arbitration and must form an integral part of the matter to which the reference relates, if the agreement is to be carried into effect. This is why one of the objects stated in the reference Ex. 4 is "how to give effect to the agreement" and why the question of the discharge of the equitable mortgage has actually referred to the arbitrators for decision.

This being so the Court at Jamnagar can have no jurisdiction to decide the questions if they were made the subject of a suit because such a suit would be governed by the provisions of Section 16(b), Code of Civil Procedure, as being a suit "for the determination of any other right or interest in Immovable property". Similarly the matter to which the reference relates is the discharge of equitable mortgage and u/s 31(1), Arbitration Act the learned Civil Judge has no jurisdiction therein.

The applicant''s learned Advocate strenuously argued that the agreement created a personal liability against the opponent and it was open to her to sue the opponent for a money decree on the personal cause of action without reference to the mortgage. Such a suit he contended would be perfectly competent which the learned Civil Judge would have jurisdiction to try as the opponent resided in the jurisdiction of the Court. The proposition of law enunciated by the learned Advocate is quite correct and if the reference had been confined to the mere determination of the question of the opponent''s personal liability or in other words if the only question that was referred to arbitration had been how the sum should be dealt with, the award could have been filed in the learned Civil Judge''s Court. Unfortunately however the reference has for its object the carrying into effect the agreement of 14-4-1947 and requires the arbitrators to decide all questions ''including the question of the discharge of the equitable mortgage''. The question of equitable mortgage and its discharge are therefore an integral part of the reference and cannot be ignored.

The learned Advocate referred to- Cursetji Jamshedji Ardaseer Wadia Vs. Dr. R.d. Shiralee, . In that case a lease for a fixed period contained a term to the effect that on the expiration of the lease a valuation of the structure should be made by two panchas to be appointed by the lessors and the lessee each. The lessors did not appoint a panch but the lessee purported to appoint a sole panch who made a valuation and gave his report. The property was situated in Kurla outside the original jurisdiction of the High Court. On an application by the lessee to file the award, the High Court overruled the lessors'' objection that the Court has no jurisdiction, to file the award holding that the Court had jurisdiction to determine the subject-matter of the dispute between the parties as the parties resided within its jurisdiction. In that case, however, the subject-matter of the award was the valuation of the structures and did not involve any question to land. The care has, therefore, no application to the facts of the present case. The opponent had contended before us that even if this Court had jurisdiction to file the award the arbitration should be superseded on the ground of the arbitrator''s misconduct. The learned Civil Judge had overruled this objection. This question does not now survive for the decision. But it does not appear to us that misconduct on the part of the arbitrator has been made out.

The revision application must therefore fail. The order of the learned Civil Judge is confirmed and the application is ordered to be dismissed. In view of the nature of the question raised by the revision, we do not make any order for costs.

Shah, C.J.

I agree.