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HIGH COURT OF CALCUTTA
P. C. Mallick
KAMAL BROTHERS - Appellant
Versus
HANSRAJ KAPUR - Respondent
Award Case 19 Of 1959
Decided On : MAY 19, 1959
ARBITRATION - Stay of suit - City Civil Court - Jurisdiction - Arbitration Act, 1940, S. 34 - City Civil Court Act, S. 5 (4) - Whether City Civil Court has jurisdiction to grant stay under S. 34 of the Arbitration Act - Whether an application for stay under S. 34 is a proceeding under the Arbitration Act - Whether a party to an arbitration agreement can be restrained by injunction from proceeding with a suit in the City Civil Court - Whether an injunction can be issued against a party to an arbitration agreement to restrain him from proceeding with a suit in the City Civil Court - Whether an injunction can be issued against a party to an arbitration agreement to restrain him from proceeding with a suit in the City Civil Court for a limited period.
Fact of the Case:
The petitioner and the respondent entered into a partnership agreement on April 19, 1951, which contained an arbitration clause. Disputes arose between the parties, and the respondent filed a suit in the City Civil Court, Calcutta, claiming tenancy right in the premises where the partnership business was carried on. The petitioner entered appearance in the suit and filed his written statement. Thereafter, the disputes between the parties were referred to arbitration, and an Umpire was appointed to adjudicate the disputes. During the pendency of the arbitration proceedings, the respondent instituted a second suit in the City Civil Court, claiming tenancy right in the same premises. The petitioner filed an application in the Calcutta High Court under Section 34 of the Arbitration Act, 1940, seeking an order restraining the respondent from proceeding with the second suit.
Finding of the Court:
The Calcutta High Court held that the City Civil Court had no jurisdiction to grant a stay under Section 34 of the Arbitration Act, 1940. The Court further held that the petitioner was not entitled to an injunction restraining the respondent from proceeding with the second suit, as he had taken steps in the suit by entering appearance, filing his written statement, and taking part in the settlement of the issues. However, the Court held that an injunction could be issued against the respondent to restrain him from proceeding with the second suit for a limited period of four months, to allow the Umpire to make his award.
Issues: 1. Whether the City Civil Court has jurisdiction to grant a stay under Section 34 of the Arbitration Act, 1940? 2. Whether an application for stay under Section 34 is a proceeding under the Arbitration Act? 3. Whether a party to an arbitration agreement can be restrained by injunction from proceeding with a suit in the City Civil Court? 4. Whether an injunction can be issued against a party to an arbitration agreement to restrain him from proceeding with a suit in the City Civil Court for a limited period.
Ratio Decidendi: 1. The City Civil Court does not have jurisdiction to grant a stay under Section 34 of the Arbitration Act, 1940, as Item 11 of Schedule I to the City Civil Court Act, 1953, specifically excludes suits and proceedings under the Arbitration Act, 1940, other than suits and proceedings under Chapter IV of that Act. 2. An application for stay under Section 34 of the Arbitration Act, 1940, is a proceeding under the Arbitration Act. 3. A party to an arbitration agreement can be restrained by injunction from proceeding with a suit in the City Civil Court, if the party has not taken any step in the suit or proceeding sought to be stayed. 4. An injunction can be issued against a party to an arbitration agreement to restrain him from proceeding with a suit in the City Civil Court for a limited period, to allow the Umpire to make his award.
Final Decision: The Calcutta High Court issued an injunction against the respondent restraining him from proceeding with the second suit in the City Civil Court for a period of four months, to allow the Umpire to make his award.
( 1 ) THIS is an application for an order restraining the respondent Sreechand Agarwalla his servants or agents from proceeding with Suit No. 398 of 1958 filed in the City Civil Court. The application is made by Hansraj Kapur and is instituted In the Matter of the Arbitration Act and In the Matter of Arbitration Agreement dated April 19, 1951 (Sreechand Agarwalla v. Hansraj Kapur ). The arbitration clause is to be found in a partnership agreement dated April 19, 1951 a copy of which is annexed to the affidavit of Jitesh Chandra Sanyal. The parties to the agreement are the parties to this proceeding,
( 2 ) CLAUSE 2 o the Partnership Deed indicates that Kamal Bros, the new partnership will be carried on at No. 13, Manohardas Street in which the respondent Agarwalla was already carrying on his own business.
( 3 ) CLAUSE 12 provides that the goodwill of the firm will always belong to Kapur the petitioner.
( 4 ) CLAUSE 14 is the arbitration clause and reads as follows :"any dispute regarding the partnership business will be decided by Arbitrator appointed by each of the partners, In case of difference of opinion between the Arbitrators the decision of the Umpire appointed by the partners will be final and binding on the partners. "
( 5 ) THE respondent Agarwalla filed a suit in this Court which was stayed under Section 34 of the Arbitration Act. Subsequently, the disputes between the parties were referred to arbitration. It is not necessary for me to trace the history of the arbitration proceedings. It is enough for me to state that pursuant to an order passed by me ultimately the disputes between the parties are being adjudicated by Mr. Tarun Bose, Barrister-at-Law as Umpire.
( 6 ) DURING the pendency of the proceeding before the Umpire the respondent Agarwalla has instituted a suit in the City Civil Court Calcutta, claiming tenancy right in the premises No. 13, Manohardas Street. It appears that the petitioner Kapur entered appearance in the said suit and filed his written statement on November 21, 1958. Thereafter, on December 11, 1958 issues were settled and the suit was ready for hearing. In fact, February 7, 1959 was the date fixed for the determination of that suit. Subsequently however it was twice adjourned to April 14, and May 6, 1959 respectively. In the meantime this present notice was taken out by the petitioner on April 6, 1959 and pursuant to an interim injunction issued by this Court nothing further has been done in the City Civil Court proceeding.
( 7 ) DR. Das, the learned counsel, appearing in support of the application, submitted that under Section 5 of the City Civil Court Act read with Item No. 11 of Schedule I thereto, the City Civil Court has no jurisdiction to make an order for stay under Section 34 of the Indian Arbitration Act, and he has therefore made this application in this Court.
( 8 ) IN the case of Radhakissen Dhanuba v. Bombay Co. Ltd. , ILR 56 Cal 755 : (AIR 1930 Cal 51), Lort-Williams J. held that the Small Cause Court had no jurisdiction to grant a stay under Section 34 of the Arbitration Act. It may be noted that the case was under the Old Act and not under 1940 Act. The present Arbitration Act however has changed the language. This alteration in the language of the Statute had been noticed by K. C. Das Gupta J. as he then was in the case of Basanti Cotton Mills Ltd. v. Dingra Bros. , (AIR 1949 Cal 684), where he held that the Small Cause Court has jurisdiction under the new Act to make an order for stay under Section 34. He pointed out that having regard to the language of the old section the decision of Lort-Williams J. was correct and having regard to the change in the language it must be held now that the Small Cause Court has got jurisdiction to make an order for stay under Section 34 of the Indian Arbitration Act. The instant case is however a case of a suit pending not in the Court of Small Causes but in the City Civil Court. There is no decided authority on this
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