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.

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. (!) (!)