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PATNA HIGH COURT
V.Ramaswami and B.P.Jamuar JJ.
Thakur Prasad
Versus
Baleshwar Ahir
Appeal From Appellate Decree No. 444 of 1951 ;
Decided On : MARCH 10, 1953
ARBITRATION - REFERENCE TO ARBITRATION - APPELLATE COURT - POWER TO MAKE REFERENCE - ARBITRATION ACT (10 OF 1940), SECS. 2(C), 21.
Fact of the Case:
During the pendency of an appeal, the parties agreed to refer the matter in difference to arbitration and executed a deed of agreement to that effect. They applied to the appellate court for an order of reference under Section 21 of the Arbitration Act, 1940.
Finding of the Court:
The court held that the term "Court" in Section 2(c) of the Arbitration Act, 1940, must be construed to include an appellate court, and that, therefore, the appellate court may also pass an order for reference to arbitration under Section 21 of the Act.
Issues: Whether an appellate court has the power to make a reference to arbitration under Section 21 of the Arbitration Act, 1940.
Ratio Decidendi: The court interpreted the definition of "Court" in Section 2(c) of the Arbitration Act, 1940, and found that it does not exclude an appellate court. The court also considered the previous law on the matter and found that appellate courts had the power to make an order for reference to arbitration. The court concluded that the legislature did not intend to deprive parties to a civil litigation from settling their disputes by arbitration after the termination of a suit and when an appeal is pending.
Final Decision: The court referred the entire dispute, which was the subject-matter of the appeal, to the arbitrators named in the petitions for arbitration in accordance with the agreement arrived at between the parties.
Jamuar, J.
1. During the pendency of this appeal before this Court, the parties have filed applications stating that they have agreed that the matter in difference between them should be referred to arbitration, and, in pursuance of that agreement, they have executed a deed of agreement, which has been duly registered, to refer that matter to arbitration. Accordingly, under Sec.21, Arbitration Act (10 of 1940), they have prayed for an order of reference.
2. The important question for consideration is whether an order of reference under Sec.21, Arbitration Act can be made by an appellate Court. As there appears to be a divergence of opinion on this point between the Calcutta and the Allahabad High Courts, and there being no decision of this Court, this Question has been referred to a Division Bench.
3. Sec.21, Arbitration Act is as follows:
"Where in any suit all the parties interested agree that any matter in difference between them in the suit snail be referred to arbitration, they may at any time before judgment is pronounced apply in writing to the Court for an order of reference."
The term "Court" has been defined in Sec.2(c) of the Act, and it is in the following terms:
" Court means a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit, but does not, except for the purpose of arbitration proceedings under Sec.21, include a Small Cause Court."
4. The point which arises for consideration is whether the term "Court" includes an appellate Court.
5. The Calcutta view has been expressed in --Abani Bhusan V/s. Hem Chandra, AIR 1947 Cal 93 (A). There it was pointed out that the question was not free from difficulty and required careful consideration, and it was held that the term "Court" as denned in the Arbitration Act does not include an appellate Court, and, consequently, there is nothing in the Arbitration Act which enables an appellate Court to refer to arbitration matters in dispute between the parties.
6. It will be useful to examine the legal position before the passing of the Arbitration Act, 1940 . The general provisions for arbitration were then contained in para. 1 of Schedule 2, Civil P. C., 1908. This second schedule was repealed as a result of the passing of the Arbitration Act. Paragraph 1(1) of Schedule 2 was as follows:
"Where in any suit all the parties interested agree that any master in difference between them shall be referred to arbitration, they may at any time before judgment is pronounced, apply to the Court for an order of reference."
7. It will be noticed that the only difference between this paragraph of the repealed Schedule 2 and Sec.21, Arbitration Act is that, in the latter, there appear the words "in the suit" after the words "between them". There is no doubt that the addition of the words "in the suit" in Sec.21, Arbitration Act is in order to emphasise that the differences which can be referred to arbitration must be confined to differences in the suit, and matters which are outside the scope of the suit must be excluded. Paragraph 1 of Schedule 2. Civil P. C. 1908, was construed to apply to appellate Courts as well, and that was because of the terms of Sec.107(2) of the Code which are as follows:
"......the Appellate Court shall have the same powers and shall perform as nearly as may be the same duties as are conferred and imposed by this Code on Courts of original jurisdiction in respect of suits instituted therein."
8. In the Calcutta case, referred to above, it was pointed out that it was by reason of the provisions of Sec.107, Civil P. C., 1908, that the appellate Court was enabled to exercise the powers which were conferred upon the original Court in para. 1 of Schedule 2, Civil P. C., 1903, and, as no provision of the nature of Sec.107, Civil P. C., 1908, has been made in the Arbitration Act, 1940, to enable such reference to be made at the appellate stage, under the Arbitration Act
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