Municipality of Quilon and Another vs S. Viswambharan

M.M. Pareed Piilay, J.—Revision petitioners are the defendants in O.S. (Arbitration) 160/85 of the Addl. Sub Court, Quilon. The respondeut(plaintiff) filed LA. 724/86 for deputing a commissioner to ascertain the extent of the work done, to make measurements of the work done and to prepare an inventory of the materials belonging to him and kept at the work site. The learned Sub Judge allowed the petition. Aggrieved by the same, the above C.R.P. has been filed by the defendants. The question to be considered is as to whether a court exercising powers under Sec. 20 of the Arbitration Act, 1940 has power to allow a commission application before arbitration proceedings have started. Revision petitioners contend that Sec. 41(a) of the Arbitration Act relates only to procedures to be followed by the court and that the applications for appointment of receiver and for the grant of injunction and commission are dealt with under Sec. 41(b) of the Act which can be exercised only when the matter is pending before the Arbitrator and not before the arbitration proceeding''s have started Admittedly, arbitrator has not been appointed in this case. Commission application has been filed by the respondent at a stage when the court has not decided whether arbitrator should be appointed or not.

Sec, 41 of the Arbitration Act deals with the procedure and powers of the court. Sec. 41 reads:

Subject to the provisions of this Act, and of rules made there-under-

(a) the provisions of the Code of Civil Procedure. 1908 shall apply to all proceedings before the Court, and to all appeals, under this Act and

(b) the Court shall have, for the purpose of, and in relation to arbitration proceedings, the same powers of making orders in respect of any of the matter set out in the Second Schedule as it has the purpose of, and in relation to any proceedings before the Court." Clause 3 of the 2nd Schedule of Act reads:

The detention, preservation or inspection of any property or thing which is the subject of reference or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon or into any land or building in the possession of any party to the reference, or authorising any samples to be taken or any observation to be made or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence.

Sec. 41 (a) provides that the provisions of the C.P.C. shall apply to all proceedings before the Court, and to all appeals under the Arbitration Act. Thus it can be seen that Sec. 41 (a) relates only to procedures to be followed by the court. The contention of the petitioners is that the court can appoint a commissioner only in arbitration proceedings i.e., in the proceedings at a stage after the arbitrator has been appointed and not before that.

Counsel for the respondent relied on Gokuldas Vs. Union of India (UOI) and Another, wherein it is held that in a proceeding under Sec. 20 which is a proceeding under the Act the Court will have the power to grant injunction, if a prima facie case is made out and other conditions for the grant of injunction are satisfied. On an analogy it is contended that the court below validly exercised its power in granting the commission application. Counsel for (he respondent relied on Baby Paul Vs. Hindustan Paper Corporation Ltd. and Another, wherein it has been held that "arbitration proceedings" do not commence from the stage of arbitration agreement and that Sec. 41 (b) cannot be invoked from that stage. In the Baby Paul Vs. Hindustan Paper Corporation Ltd. and Another, case, the contractor moved for interim injunction restraining the respondent from altering or modifying the work he had already done. That was dismissed by the lower court and this court held that any orders contemplated by Sec. 41 (b) read with clauses 1 to 3 in the Second Schedule can be made only when there has been a reference of the dispute for arbitration. The Supreme Court had occasion to consider the exact scope and ambit of Sec 41 of the Arbitration Act. In H.M. Kamaluddin Ansari and Co. Vs. Union of India (UOI) and Others, it is held as follows:

Under Section 41 (b) the court has been given power to issue interim injunction. But the court has got the power to pass an order of injunction only ''for the purpose of and in relation to arbitration proceedings'' before the court. It cannot be said that as Clause (a) of Section 41 empowers the court to pass interim injunction even if the conditions of Clause (b) of Section 41 were not satisfied. Such construction will render Clause (b) of Section 41 otiose.

The above decision settles the controversy in issue. In view of the Supreme Court decision the respondent cannot get any assistance from the decision in Gokuldas Vs. Union of India (UOI) and Another, .

There cannot be any doubt That Sec. 41(a) of the Arbitration Act makes only the procedural rules of the C.P.C. to the proceedings in the court under the Arbitration Act. Section 41 (b) postulates that the Court shall have, for the purpose of, and in relation to, arbitration proceedings, the same powers of making orders in respect of any of the matter set out in the Second Schedule as it has for the purpose of, and in relation to any proceedings before the Court. Second Schedule of the Arbitration Act empowers the Court to depute a commissioner for inspection of any property or thing which is the subject of reference. If under Sec. 41 (a) the court has the power of granting commission application there is no necessity to make specific provision under sec. 41(b) of the Act. In H.M. Kamaluddin Ansari and Co. Vs. Union of India (UOI) and Others, , the Supreme Court held that Clause (a) of Section 41 makes only the procedural rules of the C.P.C. applicable to the proceedings in Court under the Arbitration Act. Obviously therefore Sec. 41(a) of the Arbitration Act docs not enable the court to pass an order of injunction. Same is the position with regard to a commission application as the power for issuing a commission cannot be traced to Sec. 41(a) of the Act. In Baby Paul Vs. Hindustan Paper Corporation Ltd. and Another, it is held as follows:

The expression "for the purpose of in Sec. 41(b) is of no assistance to contend that the court can make orders in respect of any of the matters set out in clauses 1 to 4 in the Second Schedule to the Act before and in anticipation of a reference to arbitration.

I am in respectful agreement with the above decision.

Thus the position is that in a case where a court exercises powers under Sec. 20 of the Arbitration Act, it gets power to allow commission application only after a reference to arbitration and not before. The order of the court below in allowing the commission application at a stage prior to the commencement of the arbitration proceedings is not sustainable. Power under Sec. 4[(b) can be invoked only at a stage when arbitration proceedings have commenced and not at a stage prior to it.

In the result, the order of the court below is set aside and the commission application is rejected C. R. P. is allowed with no order as to costs.

After pronouncing the order, learned counsel for the respondent submitted that this court may issue a direction to the court below to dispose of the Section 20 application as expeditiously as possible. The court below is directed to dispose of the same with utmost expedition.