Messrs. Great Arts Private Ltd vs Shri Har Gopal Kapur

This petition for revision arises out of the following facts. Messrs. Great Arts (Private) Limited, the Petitioners, are a concern which distribute films by acquiring rights from the producers. In the present case the film in question is ''Anpadh''. It was produced by Messrs Kiran Productions and the distribution rights were acquired by the Petitioner for the territory of Delhi and Uttar Pradesh. For this purpose they had to pay certain amounts to the producers and in order to raise these funds the Petitioners entered into an agreement with Messrs Kapur and Company, the Respondents, on the Ist of February, 1961. According to the Respondents they paid to the Banks and the Petitioners the amounts contemplated under the agreement while according to the Petitioners the entire amount due under the agreement was not paid and only a sum of Rs. 10,000/- was paid. The film was got released from the Bank and was exhibited. A suit was filed by the Petitioners on the 20th of August, 1962 against the Respondents for a declaration that the Petitioners are the distributors of the film and that the Respondents had no right, title and interest in the same and for a permanent injunction restraining the Respondents not to interfere with the exhibition of the film. This suit was filed in the Court of the Subordinate Judge 2nd Class and was valued for purposes of jurisdiction at Rs, 400/-. When this suit was pending an application u/s 34 of the Arbitration Act was filed on the basis that the matter between the parties was the subject-matter of reference by one Des Raj Mahajan. I am told that no orders have been passed on this Section 34 application. In the mean time the Respondents made an application u/s 41 of the Arbitration Act and prayed for an injunction against the Petitioners. Reply to this application was filed by the Petitioners on the 2nd November, 1962, but in the meantime when the application was filed on the 10th September, 1962, the opposite party''s counsel appeared in Court and agreed that the film will not be exhibited up to the 15th September, 1962. On the basis of this stand an ex-parte injunction was granted valid up to the 15th September, 1962. On the 16th September. 1962, the parties entered into a compromise whereby the Petitioners agreed to pay a sum of Rs. 10,000/- and another sum of Rs. 9,350/-by the 31st of October, 1962. The sum of Rs. 10,000/- was paid on the 17th September, 1962. On the 17th September, 1962, the Court passed an order that the injunction would not be operative. However, the amount of Rs. 9,350/- was not.paid on the due date with the result that the injunction was granted and it is against this order that the present revision has been filed in this Court.

The contention of counsel for the Petitioners is that the Subordinate Judge 2nd Class could not entertain the application u/s 41 of the Arbitration Act because the value of the subject-matter of reference was more than Rs. 6,000/-, that is, more than his pecuniary jurisdiction. For that purpose he relied on paragraph 6 of the application u/s 41 of the Arbitration Act. Paragraph 6 is in these terms:

That the claims made by the Respondent in the aforesaid suit are, on the face of it, untenable in law and the sole object of the suit is to deprive the Petitioner of his rights to enforce his charge against the picture ''Anpadh'' to the extent of Rs. l9,350/-, the amount advanced by the Petitioner to the Respondent under the said agreement plus interest there on and the liquidated, damages amounting to Rs. 10,000/- which is the subject matter of the reference.

At this stage it will be useful to refer to Section 2(c) of the Arbitration Act which defines ''Court'' in the following terms:

(c) ''Court'' means 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, but does not, except for the purpose of arbitration proceedings u/s 21, include a Small Cause Court;

It will also be useful to refer to Section 31 of the Arbitration Act which determines the jurisdiction of the Court with regard to matters in that Act. It would, therefore, be obvious that according to paragraph 6 referred to above, the subject matter of dispute in the arbitration proceedings was above Rs. 5,000/- and that being so, the application u/s 41 of the Arbitration Act was only entertainable by a Subordinate Judge of the 1st Class, and not by a Subordinate Judge of the 2nd Class. Therefore, a Subordinate Judge of the 2nd class would have no jurisdiction to entertain the same. In this connection reference may be made to the decision of the Supreme Court in Kiran Singh and Others Vs. Chaman Paswan and Others, , where at page 342 the following observations were made by their Lordships ;

The answer to these contentions must depend on what the position in law is when a Court entertains a suit or an appeal over which it has no jurisdiction, and what the effect of Section 11 of the Suits Valuation Act is on that position. It is a fundamental principle well-established that a decree passed by a court without jurisdiction is a nullity and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction whether it is pecuniary or territorial or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree, and such a defect cannot be cured even by consent of parties. If the question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was ''coram non judice'' and that its judgment and decree would be nullities. The question is what is the effect of Section 11 of the Suits Valuation Act on this position.

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With reference to objections relating to territorial jurisdiction, Section 21 of the CPC enacts that no objection to the place of suing should be allowed by an appellate or revisional Court, unless there was a consequent failure of justice. It is the same principle that has been adopted in Section 11 of the Suits Valuation Act with reference to pecuniary jurisdiction. The policy underlying Section 21 and 99, CPC and Section 11 of the Suits Valuation Act is the same, namely, that when a case had been tried by a Court on the merits and judgment rendered, it should not be liable to be reversed purely on technical grounds, unless it had resulted in failure of justice, and the policy of the legislature has been to treat objections to jurisdiction both territorial and pecuniary as technical and not open to consideration by an appellatte Court, unless there has been a prejudice on the merits. The contention of the Appellants, therefore, that the decree and judg-ment of the District Court, Monghyr, should be treated as a nullity cannot be sustained u/s 11 of the Suits Valuation Act.

(1) Notwithstanding anything in Section 578 (now Section 99 of the CPC of 1908) of the Code of Civil Procedure, an objection that by reason of the over-valuation or undervaluation of a suit or appeal a Court of first instance or lower appellate Court which had no jurisdiction with respect to the suit or appeal exercised jurisdiction with respect thereto shall not be entertained by an Appellate Court unless:

(a) the objection was taken in the Court of first instance at or before the hearing at which issues were first framed and recorded, or in the lower appellate Court in the memorandum of appeal to that Court, or

(b) the Appellate Court is satisfied for reasons to be recorded by it in writing, that the suit or appeal was over-valued or under-valued, and that the over-valuation or under-valuation thereof has prejudicially affected the disposal of the suit or appeal on its merits.

(2) If the objection was taken in the manner mentioned in Clause (a) of Sub-section (1) but the Appellate Court is not satisfied as to both the matters mentioned in Clause (b) of that Sub-section and has before it the materials necessary for the determination of the other grounds of appeal to itself, it shall dispose of the appeal as if there had been no defect of jurisdiction in the Court of first instance or lower Appellate Court.

(3) If the objection was taken in that manner and the Appellate Court is satisfied as to both those matters and has not those materials before it, it shall proceed to deal with the appeal under the rules applicable to the Court with respect to the hearing of appeals: but if it remands the suit or appeal, or frames and refers issues for trial, or requires additional evidence to be taken, it shall direct its order to a Court competent to entertain the suit or appeal.

(4) The provisions of this section with respect to an Appellate Court shall so for as they can be made applicable apply to a Court exercising revisional jurisdiction u/s 622 (now Section 115) of the CPC or other enactment for the time being inforce.

(5) * * * *

It would be apparent from the plain language of this provision that it only deals with cases of over-valuation or under-valuation, that is, the suit as valued has been filed in a proper Court, that is, in a Court which according to the value indicated is competent to entertain it, but in fact the value indicated is either more or less than it should in fact and in law be The section does not deal with suits which have been correctly valued- If no question of over-valuation or under-valuation arises and the suit was framed is correctly valued, but has been filed in a Court not competent to entertain it because it does not possess the pecuniary jurisdiction to entertain it, it is obvious that the suit has been filed in a Court not competent to entertain the same. The distinction in the cases of over-valuation and under-valuation and cases where the valuation has been correctly fixed is obvious. In the formertype of cases, the provision of Section 11 of the Suits Valuation Act do cure the defect because if objection to jurisdiction on the basis of over-valuation and under-valuation had been taken at the very outset the correct value would have been fixed and the case would have been tried by a Court competent to try it. If on the other hand, no objection is raised and the case has been determined on merits for on the valuation indicated it would be within the jurisdiction of that Court to determine it, Section 11 steps in and forbids the matter of valuation to be reopened The reason seems to be that when the suit was filed on the face of it, it was competent and could be tried by the Court in which it had been filed. But this would not be the case when the suit as valued has been filed in a Court not competent to entertain it. It would be a case where a suit has been filed in a Court which has no jurisdiction to deal with the same and, therefore, the case would not fall within the scope and ambit of Section 11 of the Suits Valuation Act. This distinction is clearly pointed out in the judgment of the Supreme Court in Kiran Singh and Others Vs. Chaman Paswan and Others, It is almost axiomatic to state that parties by their consent or waiver cannot confer jurisdiction on a Court which has none. There is ample authority for the proposition that Section 11 of the Suits Valuation Act is limited to cases of under-valuation or over-valuation and is not applicable to cases where the suit has been properly valued and then the plaint is presented in a Court which on the face of it has no jurisdiction to proceed with the suit. See in this connection the decisions in V. Ramaswami Aiyar and Another Vs. Veerarayan Raja alias Kuttunni, the present Eralpad Raja and Another, , Sitanam Singh v. Tika Ram Singh A. I. R, 1942 Oudh. 421 and Mt. Sunder Vs. Kandhayia Lal and Another, No case to the contrary has been brought to my notice wherein it has been held that where a suit has been correctly valued and the plaint has been presented in a Court which has no pecuniary jurisdiction to entertain it and has determined the suit, the decision will be of a Court with jurisdiction and the defect would be curable by recourse to Section 11 of the Suits Valuation Act.

So far as the present case is concerned, there was no question of the claim in arbitration being either over-valued or under-valued. The Petitioner in his application clearly stated that he was due an amount of Rs. 19,350/-, which was the subject-matter of reference. Therefore, only a Subordinate Judge of the 1st Class could have entertained the application u/s 41 of the Arbitration Act in view of the clear provisions of Section 31 in that Act. The argument of the learned Counsel for the Respondents that Section 11 of the Suits Valuation Act cured the defect is of no consequence and must be repelled.

Faced with this situation, the learned Counsel for the Respondents contended that as the application u/s 34 of the Arbitration Act had been made to the Subordinate Judge 2nd Class by reason of Section 31 of the Arbitration Act, it was that Court alone which could deal with any application arising or concerning the arbitration agreement or the disputes which have to be settled by arbitration. This argument though attractive is without substance. In a similar case before the Calcutta High Court, namely, Ghotevlal Shamlal v. Cooch Behar Oil Mills I. L. R. (1954) 1 Cal. 419, it was held that an application u/s 34 cannot be treated as an application under the Arbitration Act for purposes of Section 31. I am in respectful agreement with the observations made by the learned Judge of the Calcutta High Court. That being so, this contention also fails

I would accordingly set aside the orders passed by the Court below on the petition u/s 41 and direct that the petition be returned to the Petitioner for presentation to the proper Court. In view of the difficult nature of the question involved there will be no order as to costs.