State of West Bengal and Ors vs Anil Kumar Bhuiya

Anil K. Sen, J.—The respondents in a proceeding u/s 20 of the Indian Arbitration Act are the petitioners before us In this revisional application. The revisional application is being heard on notice to and en contest by the opposite party to this application who was applicant before the court below. The opposite party entered Into a contract on June 6, 1981 with the State of West Bengal, petitioner no. 1 before us, for relaying and raising the water main under the Durgapur Interim Water Supply Scheme. The estimated value of the contract work was Rs. 92,168.00 but the tender value was Rs. 57,144,00. Before the opposite party could take up the work, dispute arose between the parties While the petitioners accused the opposite patty of having failed to take up the work without any reasonable cause, the opposite party accused the petitioners for not fulfilling their part of the contract as a result whereof he could not undertake the work. In such a situation the petitioners rescinded the contract on November 30, 1981. Since the contract incorporated an arbitration clause, the opposite party filed an application u/s 20 of the Arbitration Act before the learned Subordinate Judge, Burdwan for filling the agreement In court for a reference to be made to the arbitrator in terms of the agreement.

Having filed such an application, the opposite party filed another application u/s 41(b) of the Arbitration Act praying for an order of induction restraining the petitioners from giving effect to the said rescission of the contract. The learned Subordinate Judge in issuing a show cause notice granted an ad interim injunction as prayed for by an order dated December 15, 1981. Feeling aggrieved by such an ad interim order of injunction the petitioners preferred an appeal before the learned District Judge being Misc. Appeal No. 224|14 of 1981. The learned District Judge has dismissed this appeal by an order dated March 8, 1982 not on merits but on the view that such an appeal is not maintainable in law. Two reasons have been assigned by the learned District Judge for holding as such. The first reason assigned by him is that since the value of the work under the contract is above Rs 92,000.00 he has not the pecuniary jurisdiction to entertain such an appeal, The second reason given by him is more important. According to the learned District Judge the order impugned in the, appeal having been made in exercise of powers u/s 41(b) of the Act no appeal lies therefrom since such an order is not appelable u/s 39(1) of the Act. Feeling aggrieved the petitioners have now moved this court in revision.

Mr. Banerjee, apearing in support of this revisional application, has first contended that the learned District Judge went wrong in thinking that no appeal lay before him against the order of the learned Subordinate Judge. Neither of the two reasons assigned by the learned District Judge is, according to Mr. Banerjee, a valid reason for refusal to entertain the appeal on its merits. Mr. Banerjee contends that when the opposite party himself valued the application u/s 20 of the Arbitration Act at Rs. 9,999|- assessing that amount to be the value of his relief, it was not open to the learned District Judge to say that the value of the proceeding was above Rs. 92,000|-. Secondly, it has been contended by Mr. Banerjee that the order of the learned Subordinate Judge is in substance one passed in exercise of his powers under Order 39 Rules 1 and 2 of the Code as invoked by section 41(a) of the Arbitration Act and not u/s 41(b) which clause could be invoked only in case of a reference to arbitration being made and thus bringing into existence the arbitration proceeding. The order being one made in exercise of his powers under Order 39 Rules 1 and 2 of the Code, according to Mr. Banerjee an appeal lies under Order 43 of the same Code. Mr. Banerjee has next assailed the propriety and the legality of the order of injunction as passed by the learned Subordinate Judge on the ground that since only available remedy for the plaintiff is in damage, no injunction could have been issued as done in the present case.

Mr. Motilal, appearing on behalf of the opposite party, has contested all the points raised by Mr. Banerjee. According to Mr. Motial, the order challenged in the appeal was one made u/s 41(b) of the Arbitration Act the powers whereunder are not limited to any arbitration proceeding arising on a reference but extends to proceedings leading to such arbitration as well. Hence, according to Mr. Motilal, no appeal lay against such an order as the same was not made appealable under the provisions of section 39(1) of the Arbitration Act. Mr. Motilal in his turn has supported the order of ad interim injunction as passed by the learned Subordinate Judge and has contended that the petitioners must be left to contest the application for injunction which is still pending before the learned Subordinate Judge.

So far as the objection as to pecuniary jurisdiction is concerned, we are unable to agree with the learned District Judge that he had not the pecuniary jurisdiction to entertain the appeal. It may be that the value of the contract was above Rs. 92, 000|- but that, in our view, is not the true criterion. In the present case, the applicant before the learned Subordinate Judge had valued his relief claimed in the application at Rs. 9, 999|- and has paid court fee accordingly. There is no reason why the valuation so made will not be the valuation for the purpose of jurisdiction as well. Such being the position, we are unable to agree with the learned District Judge that he had not the necessary pecuniary jurisdiction to entertain the appeal if the appeal otherwise be competent in law. This takes us to consider the more important objection regarding the maintainability of the appeal.

On a careful consideration of the rival contentions put forward before us, we find that there exists a divergence in judicial opinion on the point whether the powers u/s 41(b) of the Arbitration Act can at all be invoked until there is a reference to arbitration and such power is exercised for the purpose of and in relation to the arbitration proceeding initiated on such a reference. A Division Bench of the Patna High Court in the case of Nagarchand Goenka v. Surendra Nath Sarkar, AIR 1946 Patna 70 held that the term ''arbitration proceeding'' in section 41(b) of the Arbitration Act should be given a wide connotation to include all proceedings for arbitration from the very start and not to mean the proceeding which starts on a reference being made. Such a view is taken, as, according to the learned Judges any other view would render the court powerless to make any order for preservation and safety of the property, in dispute before the reference is made so that pending the making of the reference the other side may waste the property as well. This view was followed and accepted by a learned single Judge of the Allahabad High Court in the case of Sundarlal Haveliwala Vs. Smt. Bhagwati Devi and Others, . A contrary view has been expressed by the Kerala High Court in the case of Boby Pol v. Hindusthan Paper Corporation AIR 1978 Kerala 223 where it was pointed out that clauses (a) and (b) of section 41 contemplates two separate situations. While section 41(a) contemplates taking of necessary protective measure during the proceedings before the court and before any reference has been made to the arbitrator, section 41(b) covers the same filed when the dispute has once gone to the arbitrator on a reference. It was pointed out by the Kerala High Court that the only ground which led the Patna High Court to hold it otherwise cannot be said to be any ground because section 41(a) of the Act is there to confer the necessary power on the court to take the necessary protective measure before the reference. So far as this court is concerned, it appears to us that a Bench decision of this court in the case of Monoranjan Banerjee and others v. Tilakram Ghosh and others (Civil Revision No. 984 of 1958 disposed of on August 31, 1958) appears to be more consistent with the Kerala view than the view expressed by the Patna or the Allahabad High Court In the above case this court observed that the words used in clause (a) are sufficient to enable the court to make order in respect of the matters set out In the second schedule of the Arbitration Act. Another clause giving the court power to make orders in these matters was not therefore necessary in respect of the arbitration proceedings before the court, that is under Chapter III or IV of the Act.

It Is reasonable to think that in view of the peculiar nature of the arbitration proceedings the legislature thought fit to give the court the extraordinary powers of passing orders in some specified matters even though the arbitration proceedings may not be under ciders of the court and used the words In clause (b) to express their intention In this respect.'''' To us it appears that this court took the view that the two clauses of section 41 provide for same powers for two different contingencies; section 41 (b) was intended to confer power on the court to take protective measures in cases where the proceeding for arbitration la pending before the arbitrator even without any order of the court and that such a power was independent of clause (a) of section 41 Indeed, what was pointed out by this court lends support to the view that to adopt the Interpretation of section 41 (b) as made by the Patna High Court or the Allahabad High Court would render clause (a) to be nugatory because if the two clauses provide for the same power of taking protective measure, then clause (b) would cover the situation contemplated by clause (a) and no separate provision as in clause (a) would be necessary. The view expressed by this court therefore. Is more consistent with the view of the Kerala High Court and that again is supported by the decision of a learned single judge of the Madras High Court In the case of Veeramalal Chattiar and others v. Ramayee Ammal, AIR 1662 Mad. 437. Such being the position, we are unable to accept the contention of Mr. Motilal that the powers u/s 41 (b) are not limited to be exercised In cases of arbitration proceeding before the arbitrator but extends to proceedings leading to such a proceeding as well.

Although we may accept the contention of Mr. Banerjee that In the present case there being no reference and as such no arbitration proceedings as yet the learned Subordinate Judge could not have assumed any jurisdiction to make any order u/s 41 (b), yet we are unable to accept his further contention that the appeal as filed before the learned District Judge should be held to be maintainable on the footing that such en order was really made in exercise of jurisdiction u/s 41 (a) of the Arbitration Act First of ail there Is little scope for such an assumption when the order Impugned had been made on express Invocation of powers u/s 41 (b) of the Arbitration Act Reference May be made to a Bench decision of the Himachal Pradesh High Court In the case of The State of Himachal Pradesh and Another Vs. H.S. Sobti and Co., Secondly even an order made u/s 41(a) of the Arbitration Act would not be appelable for the very same reason for which we hold that an order u/s 41 (b) is not appelable. An order of Injunction made In exercise of powers under the Code as adopted by the Arbitration Act is an order under the Act and as such Is subject to the other provisions of the Act. Except for provisions in section 17 and section 39(1) there Is no right of "appeal conferred as against orders made under the Act. It has been observed by the Supreme Court that when the Arbitration Act limited the right of appeal in respect of orders specified In the aforesaid provision the necessary implication is that other orders are not so appelable. Reference may be made to the decision of the Supreme Court In the case of Union of India (UOI) Vs. Mohindra Supply Company, relied on by the learned District Judge. Such being the position, even If it be assumed that the order that was passed by the learned Subordinate Judge was really one made In exercise of powers u/s 41 (a) of the Arbitration Act, we are unable to accept the contention of Mr. Banerjee that such en order would be appelable under Order 43 Rule 1 of the Code. We, therefore, uphold the ultimate conclusion of the learned District Judge that the appeal filed by the petitioners before the learned District Judge was not maintainable in law.

Though the order of the learned District Judge may be upheld on the view expressed by us hereinbefore, we are unable to sustain the order passed by the learned Subordinate Judge. We would prefer in the facts and circumstances of the present case to exercise our revisional powers to set aside such an order which, according to us is clearly unsustainable in law. We have pointed out hereinbefore what was the contract between the parties. That contract was a contract for certain construction works On the provisions of sections 10 and 14 of the Specific Belief Act such a contract la not specifically enforceable except in exceptional cases. No exception has been made out to lake the case out of the said general rule. When such a contract is not specifically enforceable, we fail to appreciate how there can be an order of injunction which can only be issued in support of such performance

Further it Is the basic consideration for the court in the matter of granting an injunction that such injunction should be granted in order to prevent a loss which otherwise cannot be compensated by money and the mutual convenience of the parties has to be taken Into consideration for granting such an injunction. Judged from that aspect the Injunction as granted by the learned Subordinate Judge Is unsustainable, because the loss which the applicant may incur is not only capable of being compensated by damages but such damage la the real remedy open to the applicant There is yet another aspect, viz, that order of Injunction has held back a public utility work only to safeguard the individual interest of the plaintiff. None of these consideration were taken note of by the learned Subordinate Judge when he made the order. Such being the position, we are clearly of the opinion that the learned Subordinate Judge acted in material irregular exercise of his jurisdiction if not without jurisdiction when he made the order. We are conscious of the position that the application for injunction has not yet bean disposed of but since such an application has not been disposed for over four months and when sufficient mischief has been done by granting an ad interim injunction and thereby holding back a public utility service we feel impelled to exercise our revisional powers even suo moto to set aside such an order.

This revisional application is accordingly disposed of by vacating the ad Interim order of Injunction dated December 15, 1981, passed by the learned Subordinate Judge In Title Suit No. 224 of 1981.

There will be no order as to costs

S.N. Sanyal, J.

I agree.