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IN THE HIGH COURT OF ALLAHABAD
S. R. SINGH
I.T.I.LTD., ALLAHABAD - Appellant
Versus
DISTRICT JUDGE, ALLAHABAD - Respondents
C. M. W. P. 39970 Of 1997
Decided On : 05/15/1998
ARBITRATION AND CONCILIATION ACT, 1996 - SECTION 2 (E), 34, 42 - BENGAL, AGRA AND ASSAM CIVIL COURTS ACT, 1887 - SECTION 8 (2) - JURISDICTION OF ADDITIONAL DISTRICT JUDGE TO ENTERTAIN APPLICATION UNDER SECTION 34 OF THE ACT - TRANSFER OF APPLICATION BY DISTRICT JUDGE TO ADDITIONAL DISTRICT JUDGE - VALIDITY.
Fact of the Case:
Petitioner, a Government of India Undertaking, engaged in the business of manufacturing and supplying telephones and transmission equipment, had a dispute with Respondent No. 3, a supplier of components and assemblies, regarding overpayment. The dispute was referred to arbitration, and the arbitrator awarded in favor of the petitioner. Respondent No. 3 filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 (the Act) in the Court of District Judge for setting aside the award. The District Judge transferred the application to the Court of 3rd Additional District Judge, Allahabad, who overruled the objection of lack of jurisdiction. The petitioner filed a petition challenging the jurisdiction of the Additional District Judge.
Finding of the Court:
The Court held that the Court of Additional District Judge is not a court within the meaning of Section 2 (e) of the Act and that the District Judge cannot transfer an application under Section 34 of the Act to the Court of an Additional District Judge under Section 8 (2) of the Bengal, Agra and Assam Civil Courts Act, 1887. The Court further held that an application for setting aside an award under Section 34 of the Act is an application "with respect to an arbitration agreement" and must be made to the principal Civil Court of original jurisdiction or the High Court, and that the Court to which the application is made has exclusive jurisdiction over the arbitral proceedings and all subsequent applications arising out of the agreement.
Issues: 1. Whether the Court of Additional District Judge is a court within the meaning of Section 2 (e) of the Arbitration and Conciliation Act, 1996? 2. Whether the District Judge can transfer an application under Section 34 of the Act to the Court of an Additional District Judge under Section 8 (2) of the Bengal, Agra and Assam Civil Courts Act, 1887?
Ratio Decidendi: 1. The definition of "court" in Section 2 (e) of the Act is exhaustive and restricts the meaning of the term to the principal Civil Court of original jurisdiction in a district, the High Court in exercise of its ordinary original civil jurisdiction, and any other court specified in the definition. The Court of Additional District Judge is not included in this definition. 2. Section 8 (2) of the Bengal, Agra and Assam Civil Courts Act, 1887, which empowers the District Judge to assign functions to Additional District Judges, does not confer on the Court of an Additional District Judge the status of the principal Civil Court of original jurisdiction in a district. 3. Section 42 of the Act provides that where an application with respect to an arbitration agreement has been made in a court, that court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement. This provision ousts the jurisdiction of any other court, including the Court of an Additional District Judge.
Final Decision: The petition was allowed. The impugned orders dated 28-8-97 and 8-10-97 were quashed. The learned 3rd Additional District Judge, Allahabad was directed to send back the record of the case to the Court of District Judge, Allahabad for its disposal in accordance with law.
( 1 ) PRESENT petition has its advent to this Court begging answer to the question whether the Additional District Judge is a Court within the meaning of Section 2 (e) of the Arbitration and Conciliation Act, 1996 and if not, can the District Judge-transfer the application moved for setting aside the Arbitration Award u/s. 34 of the said Act.
( 2 ) THE minimal facts as bear on the controversy involved in this petition, are that the petitioner is a Government of India Undertaking and company engaged in the business of manufacture, sale and supply of telephones and transmission equipments, apparatus and other allied components and M/s. K. V. Electronics (respondent No. 3) was engaged in the venture of supplying various components and assemblies of telephones and transmission equipments to the petitioner as per indents (purchase and supply orders) issued from time to time by the petitioner. It transpires that a dispute between the petitioner and the third respondent arose in the year 1995 regarding over-payment of about Rs. 12. 81 lacs by the petitioner to the third respondent as a consequence of few purchase orders of the years 1991, 1992 and 1993. The dispute was referred to the arbitration for adjudication in pursuance of the Arbitration Clause encapsulated in the covenant on the respective purchase orders and Sri M. K. Sakeeja, Addl. General Manager (C. N. S.) of the petitioners company was appointed as sole Arbitrator vide order dated 9-2-1996. The Arbitrator gave award on 10-3-1997 to the effect that M/s. K. V. Electronics (the respondent No. 3) will pay Rs. 1281,500. 95 p. to the petitioner. Dissatisfied by the award dated 10-3-1997, the 3rd respondent filed an application dated 19-5-97, under Section 34 read with Section 16 (VI) of the Arbitration and Conciliation Act, 1996 (In short the act) in the Court of District Judge for setting aside the said award. The Munsarim scribed a report on the said application that it should have been filed before the Civil Judge. The District Judge, however, differed with the report and overruled the objection of the Munsarim and held vide order dated 25-5-97, that the application was rightly presented in the Court of District Judge and directed the application/petition to be registered and transferred to the Court of 3rd Addl. District Judge, Allahabad for disposal.
( 3 ) ON 28-8-1997, an objection having the complexion of preliminary objection, was raised before the 3rd Addl. District Judge, Allahabad that the said Court had no jurisdiction to entertain the application. The Addl. District Judge by his order dated 28-8-1997 overruled the objection holding that the expression "but does not include any civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes" used in Section 2 (e) of the Act, implies that in addition to the District Judge there may be other principal Civil Courts of original jurisdiction in a district and Addl. District Judge not being inferior in grade to the District Judge, comes within the purview of the term "court" as defined in Section 2 (e) of the Act. The petitioner then moved an application u/s. 42 dated 16-9-1997 praying therein that the case be remitted to the District Judge for disposal on the hypothesis that since the application for setting aside the award was moved under part I of the Act in the Court of District Judge and hence that Court alone shall have jurisdiction over the arbitral proceedings and "the arbitral proceedings shall be made in that Court and in no other Court" as envisaged by Section 42 of the Act. In substance, the plea raised was that since M/s. K. V. Electronics has moved the application under Section 34 of the Act for setting aside the award in question in the Court of District Judge, which is the principal Civil Court of original jurisdiction, all subsequent arbitral proceedings would be held in that Court. The learned 3rd Addl. District Judge, Allahabad clung to and expressed itself in
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