Bishundeo Ojha and Another vs Ramesh Choubey and Another

S.N. Jha, J.—The delay in filing Civil Revision No. 1153 of 1997 is condoned and the limitation petition is allowed.

These two cases between the same parties involving the same dispute have been heard together and are disposed of by this common order.

Civil Revision No. 1153 of 1997 is directed against order dated 5.12.92 passed by the 1st Additional District Judge, Rohtas in Misc. Appeal No. 68/2 of 1987/92 appointing receiver after setting aside the order of the 1st Subordinate Judge, Sasaram, dated 11.9.87 in Title Suit No. 135 of 1985. Misc. Appeal No. 290 of 1997 is directed against order dated 10.6.97 passed by the Xth. Additional District Judge, Rohtas, in Misc. Case No. 10 of 1993 refusing to re-hear Misc. Appeal No. 68/2 of 1987/92.

It is not necessary to set out the facts of the case except to mention that the plaintiff, opposite party-respondent herein, filed Title Suit No. 135 of 1985 for appointment of persons named in the petition as arbitrators and to refer the dispute as to rendition of account of them. He filed an application for appointment of receiver for the proper upkeep and management of Adarsh Rice Mills. The petitioner-appellants objected to the prayer, inter alia, on the ground that the Rice Mill was not the subject-matter of the suit nor any relief regarding rendition of accounts or dissolution of the partnership had been sought. The 1st Subordinate Judge rejected the application by his order dated 11.9.87. According to the petitioners-appellants, the plaintiff preferred Misc. Appeal No. 68 of 1987 about which they had no knowledge until they received a communication from Sri Bhagwan Singh, advocate of Sasaram, intimatingthem that he had been appointed as receiver by the 1st Additional District Judge, Rohtas in the aforementioned appeal and he proposed to take possession of the Rice Mill. The petitioners-appellants made enquiries and after ascertaining the facts filed Misc. Case No. 10 of 1993 for rehearing of the appeal. As indicated at the outset, by the impugned order dated 10.6.97 the miscellaneous case has been dismissed.

After hearing the counsel for the parties and perusing the records of the miscellaneous appeal, 1 am satisfied that the petitioners-appellants were not duly represented and the impugned order dated 5.12.92 was passed without giving opportunity of hearing to them and the matter therefore requires to be reheard. The submission of the counsel for the petitioners-appellants, however, is that having regard to the limited scope of the suit which was filed by the plaintiff under Sections 8 and 20 of the Arbitration Act, 1940, the Court had no jurisdiction to appoint receiver. It is contended that the only order which the Court may possibly pass in the suit is to appoint arbitrator and refer the so-called dispute to him. The Court has no power to pass any further order beyond that.

6.The submission, prima facie, appears to be in the teeth of the provisions of Section 41(b) read with the Second Schedule of the Arbitration Act. Section 41(b) lays down:

Subject to the provisions of this Act and of rules made thereunder-

(a) xx xx xx xx (b) the Court shall have, for the purpose of, and in relation to, arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of, and in relation to, any proceedings before the Court:

Provided that nothing in Clause (b) shall be taken to prejudice any power which may be vested in an arbitrator or umpire for making orders with respect to any of such matters.

The Second Schedule appended to the Act enumerates different matters in relation to which the Court can pass orders. Paragraph-4 of the said Schedule refers to "interim injunction or appointment of receiver". Although the petition in the Court below (Title Suit No. 135 of 1985) was labelled under both Sections 8 and 20 of the Arbitration Act, prima facie, having regard to the relief sought, it appears to be a petition u/s 20. From conjoint reading of Section 8 and Section 20 it is clear that while the former refers to appointment of arbitrator, latter refers to the filing of the arbitration agreement in Court and thereafter reference to the arbitrator. In order words, a proceeding u/s 8 comes to an end with the appointment of an arbitrator, the proceeding u/s 20 remains pending; the proceeding is finally disposed of only by accepting the award to be filed by the arbitrator or setting it aside. The Court, therefore, has jurisdiction to appoint receiver u/s 41(b) read with paragraph-4 of the Second Schedule of the Act for the preservation or safety of the subject-matter of the dispute. From perusal of the petition (T.S. No. 135/85) there is hardly a scope for doubt that the partnership business giving rise to the dispute relates to Adarsh Rice Mill and the same therefore is subject-matter of the dispute or the suit. As regards the power of the Court to appoint receiver reference may be made to Nagarchand Goenka Vs. Surendra Nath Sarkar, ; Daulatram Phoolchand v. Shriram AIR 1964 MP 21; Jammu Forest Co. v. State of Jammu & Kashmir AIR 1968 J&K 86 and Maheswari and Co. Pvt. Ltd. and Another Vs. The Corporation of Calcutta, . This, however, is not the end of the matter.

It is well settled that an order passed u/s 41(b) of the Arbitration Act is not appealable u/s 39 of that Act. There was difference of opinion as to whether an order of the kind, that is, an order of injunction or appointment of receiver could be made u/s 41(a) of the Act. Clause (a) makes the provisions of the CPC applicable to all proceedings before the Court and to all appeals under that Act. While this Court in Nagarchand Goenka Vs. Surendra Nath Sarkar, , had held that the Court can exercise power mentioned in the Second Schedule by virtue of the provisions of Section 41(v), no sooner the application is moved and registered u/s 20(2), the Kerala High Court in Gokuldas Vs. Union of India (UOI) and Another, , has taken the view that in a case u/s 20, before reference is made, injunction can be granted u/s 41(a) and not u/s 41(b), as Section 41(b) applies only after reference is made. The controversy stands settled by the following observations of the Supreme Court in H.M. Kamaluddin Ansari and Co. Vs. Union of India (UOI) and Others, :

Clause (a) of Section 41 makes only the procedural rules of the Civil P.C. applicable to the proceedings in Court under the Arbitration Act. This clause does not authorise the Court to pass an order of injunction. The power is conferred by Clause (b) of Section 41. The source of power, therefore, cannot be traced to Clause (a). If the contention of Shri Kacker is accepted, the appeals would lie under Sections 96, 100 and 104 of the C.P.C. but the Arbitration Act itself provides for appeal u/s 39. Besides, if Clause (a) of Section 41 gave wide powers to pass an order of injunction, Clause (b) of Section 41 would become otiose.

If that is so, it is doubtful that Misc. Appeal No. 68 of 1987 was maintainable in the Court below. It is true that the application for appointment of receiver was made under Order, XL Rule 1 of the CPC but in view pf the decision of this Court in Nagar Chand Goenka v. Surendranath Sarkar (supra) and that of the Supreme Court in H.M. Kamaluddin Ansari and Co. v. Union of India (supra), it would be deemed to be an application u/s 41(b) read with paragraph-4 of the Second Schedule of the Act. This aspect of the matter was not argued at the Bar before me. I therefore do not want to record my concluded opinion on the point. In the circumstances of the case in which the appeal was disposed of, as I have already indicated above, I am inclined to take the view that the matter should be re-heard. It would only be proper if, besides the merits of the case, the question of maintainability of the appeal is also heard and decided.

Before I conclude, I would clarify that the observation made in this order should be construed as limited for disposal of the present appeal and revision. It should not be interpreted as concluded opinion of this Court on the points involved.

In the result, both the appeal and the civil revision are allowed, the orders impugned therein are set aside, Misc. Appeal No. 68/2 of 1987/92 is restored to its original file with a direction to dispose of the same in accordance with law and in the light of the observations made hereinabove. There will be no order as to cost. Let the lower Court records be sent down to the Court concerned forthwith.