IMPORTANT POINTS
Supreme Court is not ‘court’ under Arbitration Act.
The principle that appellate court includes the court of first instance and it can exercise power of reference u/s 21 cannot be extended to Superior Courts retaining control over proceedings.
Where any application has been made in a reference, that court alone shall have the jurisdiction over the arbitration proceedings.
While interpreting a provision as per context, requirement of the valuable right of appeal statutorily provided must be kept in mind.
Supreme Court cannot assume original jurisdiction solely because of control over the proceedings.
Jurisdiction of a Court conferred under a statute cannot be allowed to shift or become flexible because of a superior court’s interference in the matter in a different manner.

JUDGMENT :

Dipak Misra, CJI.

A two-Judge Bench while hearing the present appeal found that there is difference of opinion in relation to the entertainability of an application by this Court for making an award passed by the arbitral tribunal, when it retains seisin over arbitral proceeding, as Rule of the Court and, therefore, referred the matter to the larger Bench for decision on the following question:-

“Whether this Court can entertain an application for making the award as Rule of the Court, even if it retains seisin over arbitral proceedings?”

2. The narration of the facts in detail is not necessary to answer the reference. Suffice it to state that as disputes had arisen between the parties, the matter was referred to an arbitrator for adjudication of the disputes and during the said period, the respondent had filed a suit in the High Court of Bombay seeking an interim injunction restraining the State from encashing the bank guarantee. As the time for making the award and the period of extension had expired, the proceeding for arbitration was abandoned. The State filed a money suit before the learned Sub-Judge I, Saraikella for realization of certain sum with interest. The respondent after appearing in the suit filed an application under Section 34 of the Arbitration Act, 1940 (for short, “the Act”) for stay of the suit. The said prayer was contested and the learned Sub-Judge allowed the application filed by the respondent. However, regard being had to the quantum of the claim, the Sub-Judge expressed the view that it was desirable that the parties should settle their disputes in an arbitration proceeding. Against the said order, an appeal was preferred under Section 39 of the Act before the High Court which dismissed the appeal vide order dated 06.08.2002.

3. Being aggrieved, the State of Jharkhand preferred the appeal which was disposed of by this Court vide order dated 10.01.2013. It is worthy to mention here that the learned counsel appearing for the parties agreed for the following order:-

“(i) The claim made by the respondent on January 7, 1994 pursuant to the contract dated April 25, 1989 between the parties which was earlier referred to the Arbitral Tribunal which commenced proceedings on February 15, 1995 and which had remained inconclusive is referred for adjudication to Hon’ble Mr. Justice S.B. Sinha, retired Judge of this Court.

(ii) The claim made by the appellant against the respondent in Money Suit No.4 of 1996 – State of Jharkhand and others vs. M/s. Hindustan Construction Company Limited filed by the appellant on April 10, 1996 in the court of Sub-Judge, Saraikella, Jharkhand is also referred for adjudication to Hon’ble Mr. Justice S.B. Sinha, retired Judge of this Court.

(iii) The terms and conditions shall be settled by the learned Arbitrator in consultation with the parties.

(iv) The parties shall appear before the learned Arbitrator on February 5, 2013.We request the learned Arbitrator to conclude the aforesaid arbitration proceedings expeditiously and further observe that the award shall be filed before this Court.” [Underlining is ours]

4. After reproducing settlement, the Court recorded thus:-

“We record and accept the statement of the learned senior counsel for the parties that learned Arbitrator may be requested to decide the claim on merits. We observe accordingly.”

5. Learned arbitrator concluded the arbitration proceedings and passed the award on 16.10.2015 and filed the same before this Court. The appellants challenged the said award by filing its objections before the Civil Court. Per contra, the respondent filed an affidavit dated 16.06.2016 requesting this Court to pronounce the judgment in terms of the award.

6. It was contended before the two-Judge Bench that when this Court had directed to file the award in this Court, an application for making the award Rule of the Court is to be filed in this Court, for this Court alone has the jurisdiction to pronounce the judgment in terms of the award. In this