Union Of India vs Surjeet Singh Atwal

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1969 Supreme(SC) 193

SUPREME COURT OF INDIA
S.M. SIKRI, R.S. BACHAWAT AND V. RAMASWAMI, JJ.
Union of India, Appellant
Versus
Surjeet Singh Atwal, Respondent.
Civil Appeal No. 760 of 1966, D/- 22-4-1968.
Advocates appeared
Dr. L. M. Singhvi, Senior Advocate, Mr. B. D. Sharma, Advocate, with him, for Appellant; M/s. M. C. Chagla and C. B. Agarwala, Senior Advocates, (M/s. Rameshwar Nath, Mahinder Narain and P. L. Vohra, Advocates of M/s. Rajinder Narain and Co., with them), for Respondent.

Advocates:
For the Petitioner:Mr. Tariq M. Shah, Advocate.
For the Respondent Nos. 1 to 4: Mr. Shah Aamir, Dy. AG vice Mr. S. A. Naik, AAG.
For the Respondent No. 5: Mr. N. H. Shah, AAG.
For the Respondent No. 6: Mr. Bilal A. Malla.

Headnote:
Arbitration Act, 1940 - Sections 20, 31 (4), 34 and 39 - Arbitration clause - Award - Lien on arbitral award and deposits as to costs - Respondent alleged that he had completed work entrusted to him under contract and made a claim of Rs.50,000 on basis of his last bill. On other hand Union of India made a demand against contractor amount on ground that amount had been overpaid to respondent. Ignoring arbitration clause respondent filed a suit on original side of the Calcutta High Court for recovery of amount being suit - Held, A party to an arbitration agreement may choose to file a suit in a Court which has no jurisdiction to go into matter at all and merely because the defendant in such a suit has to make an application to that Court under Section 34 of the Act for stay of the suit it cannot be said that Court which otherwise has no jurisdiction in the matter becomes a Court within the meaning of Section 2 (c) of Act - For these reasons we consider that the application for stay under S.34 of Act cannot be treated as an application in a reference under S.31 (4) of Act. Therefore Subordinate Judge, First Class, Delhi was right in holding that the application under Section 20 of Act was maintainable in his Court and for making a reference of the dispute to the arbitrator mentioned in the agreement - Appeal allowed.

Judgement Key Points

Key Points

The appeal arises from a judgment of the Punjab High Court dated January 11, 1965, in F.A.O. No. 82-D of 1963. (!)
The appeal was filed under Section 39 of the Arbitration Act, 1940, against the order of the Subordinate Judge, First Class, Delhi dated January 29, 1963, on an application under Section 20 of the Act by the Union of India to file the arbitration agreement and refer disputes to the arbitrator. [1000138150001]
In 1942, tenders were invited for construction of runways and roads at Dalbhumgarh aerodrome; respondent's tender accepted, agreement executed on August 19, 1944, with Clause 25 providing for arbitration by the Superintending Engineer. [1000138150002]
Respondent claimed Rs.50,000 based on last bill after completing work; Union of India counter-demanded Rs.5,09,164/- for alleged overpayment. [1000138150002]
Respondent filed suit No. 531 of 1951 in Calcutta High Court original side ignoring arbitration clause; Union of India applied under Section 34 for stay, which was granted then vacated; counter-claim raised before arbitrator but objected to. [1000138150002]
Union of India filed Section 20 application in Delhi Subordinate Judge court to file agreement and refer disputes to Superintending Engineer, Central Circle No. 1, C.P.W.D., Calcutta. [1000138150002]
Respondent opposed Delhi court's jurisdiction, arguing prior Section 34 application in Calcutta High Court required subsequent applications there; Subordinate Judge allowed application, holding contract concluded and signed in Delhi. [1000138150002]
Punjab High Court allowed respondent's appeal under Section 39, holding Delhi court lacked jurisdiction. [1000138150002]
Core issue: Whether Union of India's Section 34 stay application in Calcutta High Court constituted an application "in any reference" under Section 31(4), giving that court exclusive jurisdiction. [1000138150003]
"Court" defined under Section 2(c) as a Civil Court having jurisdiction to decide the subject-matter of the reference if it were a suit, excluding Small Cause Courts except for Section 21 proceedings. (!)
Section 31(1) allows award filing in any court with jurisdiction over the matter; subsections (2) and (3) address questions on award/agreement validity and conduct of proceedings in the court where award filed. (!)
Section 31(4) grants exclusive jurisdiction to a court where an application under the Act is made "in any reference" by a competent court, over arbitration proceedings and subsequent applications. (!)
Section 34 allows a party to apply to the judicial authority before whom legal proceedings are pending to stay them if matter agreed to be arbitrated, subject to conditions like readiness for arbitration. (!)
For Section 31(4) exclusive jurisdiction: (1) application under Act to competent court; (2) application made "in any reference." [1000138150004]
A Section 34 stay application is not made "in any reference"; it precedes or stays a suit, not arising within ongoing arbitration reference proceedings. [1000138150004][1000138150005]
Section 34 uses "judicial authority" (not necessarily "Court" under Section 2(c)); a party may sue in a court lacking subject-matter jurisdiction, and defendant's stay application there does not confer "Court" status under Section 2(c). [1000138150005]
Thus, Section 34 application neither triggers Section 31(4) nor vests exclusive jurisdiction in that judicial authority for subsequent applications like Section 20. (!)
Delhi Subordinate Judge correctly held Section 20 application maintainable and referred disputes to arbitrator; Punjab High Court order set aside, Subordinate Judge order restored. (!)
Appeal allowed with costs. (!) (!)

Judgment

RAMASWAMI, J.:- This appeal is brought by special leave from the judgment of the Punjab High Court dated January 11, 1965 in F.A.O. No. 82-D of 1963.

2. The said appeal was filed under S.39 of the Arbitration Act, 1940 (hereinafter referred to as the Act) against the order of the Subordinate Judge, First Class, Delhi dated January 29, 1963 passed on an application under Section 20 of the Act by the Union of India for filing the arbitration agreement in Court and to make a reference of the dispute to the officer mentioned in the agreement.

3. In the year 1942 tenders were invited by the Union of India for construction of certain runways and roads in an aerodrome at Dalbhumgarh. The tender of the respondent, Surjeet Singh Atwal, was accepted and the agreement was executed on August 19, 1944. Clause 25 of the agreement provided for the settlement of the disputes by reference to the arbitration of the Superintending Engineer of the Circle for the time being, according to law. The respondent alleged that he had completed the work entrusted to him under the contract and made a claim of Rs.50,000 on the basis of his last bill. On the other hand the Union of India made a demand against the contractor for a sum of Rs.5,09,164/- on the ground that the amount had been overpaid to the respondent. Ignoring the arbitration clause respondent filed a suit on the original side of the Calcutta High Court for the recovery of Rs.50,000/-, being suit No.531 of 1951. The Union of India made an application under Section 34 of the Act for the stay of the suit. The suit was consequently stayed and the matter was referred to the arbitration of the Superintending Engineer, Calcutta Aviation Circle, C.P.W.D. Calcutta. Before the arbitrator the Union of India made its counter-claim for a sum of Rs.5,09,164/-. The contractor objected to the entertainment of the counter-claim. The stay of the suit which was granted by the Calcutta High Court was later on vacated. Pending the suit of the respondent in the Calcutta High Court, the Union of India filed an application under S.20 of the Act in the Court of the Subordinate Judge, First Class, Delhi for getting the agreement of reference filed in the Court and for making the reference of the disputes between the parties of the arbitration of the Superintending Engineer, Central Circle No. 1, C.P.W.D. Calcutta. The respondent opposed the petition mainly on the ground that the court of Subordinate Judge, First Class, Delhi had no jurisdiction to entertain the application. It was contended that the appellant had filed an applications under Section 34 of the Act for stay of the suit filed in the Calcutta High Court, and, therefore any subsequent application relating to arbitration under the agreement should be filed in the Calcutta High Court. By its judgment dated January 29, 1963 the Subordinate Judge, First Class, Delhi allowed the application of the appellant and ordered that the disputes between the parties be referred to the Superintending Engineer, Calcutta Circle No. 1, .C.P.W.D. The learned Subordinate Judge held that the contract of the parties was concluded at Delhi and it was signed at Delhi on behalf of the respondent and, therefore, the Delhi court had jurisdiction to try the suit. Aggrieved by the judgment of the Subordinate Judge, First Class the respondent filed an appeal under Section 39 of the Act in the Punjab High Court. By his judgment dated January 11, 1965 D. K. Mahajan J., allowed the appeal and set aside the order of the Subordinate Judge, First Class and dismissed the application of the appellant on the ground that the Delhi court had no jurisdiction to entertain an application under Section 20 of the Act.

4. The question involved in this appeal is whether the application made by the appellant under Section 34 of the Act before the Calcutta High Court was an application in a reference within the meaning of S.31 (4) of the same Act. Section 2(c) of the Act defines "Court" thus:

"Court mea

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1969 Supreme(SC) 193

Key Points

Cases Referred (1)