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[Supreme Court (A J & K)

Present: Raja Muhammad Khurshid Khan, CJ. And Sardar Said Muhammad Khan, J

Messrs UNITED BUILDERS CORPORATION Petitioner versus

AZAD JAMMU & KASHMIR MINERAL AND INDUSTRIAL

DEVELOPMENT CORPORATION and another Non Petitioners

Civil Miscellanous Petition No.l of 1989, decided on 17th June, 1989.

Ss.33, 31 & 21 Arbitration proceedings were already in progress without intervention of any Court No appeal was pending in Supreme Court out of the terms of the agreement which could be referred to the arbitration, rather appeal had arisen out of a judgment of the High Court passed in writ jurisdiction in which the terms of the agreement or arbitration clause were not in dispute Petitioner had only sought a writ of prohibition restraining respondents from transferring the property in dispute Merely because, Supreme Court took steps under its inherent powers for early finalisation of arbitration proceedings which were already in progress or subsequently extending time for doing the same would not be deemed that Supreme Court had referred any dispute to arbitration Supreme Court, in view of provisions contained in Ss.31 and 33, Arbitration Act, 1940 would have no jurisdiction to entertain miscellaneous petition with regard to such arbitration.

In the present case there was no appeal pending in Supreme Court nor the questions referred to the arbitration were directly invloved in the appeal. The appeal against the judgment of the High Court, delivered in exercise of writ jurisdiction, was against the findings of the High Court whereby the non-petitioners, herein, were restrained from transferring the Mills before the completion of the arbitration proceedings. When the appeal in the instant case was disposed of by Supreme Court, the Arbitrators had already completed the arbitration proceedings but they could not give a unanimous award and thus in view of the terms of the agreement they had to appoint an Umpire which was also appointed by them before the disposal of the appeal. Neither any application was made to Supreme Court to refer any dispute for reference to the Arbitrators nor there was any such occasion. The appeal was accepted by Supreme Court on the ground that the writ jurisdiction was not available in case of dispute arising out of contractual obligations. It was in exercise of the inherent powers that Supreme Court took steps for the early finalisation of the arbitration proceedings by Umpire. That would not imply that any matter in dispute between the parties in appeal was referred by Supreme Court to arbitration. Thus, the contention of the petitioner that Supreme Court would be deemed to have made reference to the arbitration and thus had the jurisdiction to decide the miscellaneous application on merits was not tenable.

Sayed Sajid Ali v. Sayed Wajid Ali PLD 1975 BJ 29 and Ct. A.Ct. Nachiappa Chettiar and others v. Ct. A.Ct. Subramaniam Chettiar AIR 1960 SC 307 distinguished.

Ss.33 & 2(c) "Court" Meaning Word "Court" appearing in S.33 read with S.2(c) would mean a Civil Court having jurisdiction to decide question forming the subject matter of the reference if the same had been made the subject matter of the suit Only such Court would have jurisdiction to resolve the controversy between the parties in which an award had been filed or may be filed and no other Court Court which would have jurisdiction to try a civil suit would have jurisdiction in respect of the question forming the subject matter of a. reference. [Words and phrases].

S.21 Word "suit" in S.21 is though used in wider sense but does not include every type of judicial proceedings but includes an appeal, revision and then it would include Appellate or Revisional Court, as the case may be Trial Court or the Appellate Court, as the case may be, is competent to refer a case for arbitration under S.21 in pursuance of the relevant clause of the agreement.

Thakur Prasad v. Baleshwar Ahir and others AIR 1954 Pat. 106; Lakhshmi Narain v. Ram Babu and another AIR 1953 All. 9; Messrs M.M. Ispahani Ltd. v. Messrs Pakistan Trading Co. PLD 1966 Dacca 54; Bundi Municipal Board v. The Bundi Electric Supply Co. Ltd. AIR 1957 Raj. 278; Subramannaya Bhatta v. Devadas Nayak and others AIR 1955 Mad. 693 and Prcm Nath L. Ganesh Dass v. Prem Nath L. Ram Nath and others AIR 1963 Punj. 62 ref.

S: 1 Whether writ or an appeal. arising out of a writ can be regarded as a "suit" within meanings of S.21, Arbitration Act, 1940 [Ouaere].

Terms suit", . action" and "application" Meanings and distinction elaborated.

Dr. Abdul Basit, Advocate assisted by Raja Ishfaque Hussain Kiyani, Advocate for Petitioners.

Kh. Shahad Ahmad, Advocate for Non Petitioner.

SARDAR SAID MUHAMMAD KHAN, J. The present miscellaneous application arises out of the following circumstances:

The petitioner who is a registered firm with the name of United Builders Corporation constructed two buildings; namely, Textile Mills and Vegetable Ghee Mills Mangla. According to the terms of the contracts, in case a dispute arose between the parties the matter was to be referred to the arbitration: Each of the parties was to nominate one Arbitrator and the Arbitrators so appointed were to appoint an Umpire. It so happened that a dispute arose between the parties and consequently, in view of the terms of the contract, the matter was referred to the Arbitration. The parties appointed two Arbitrators, as stipulated in the relevant agreement, but they failed to appoint an Umpire at any early date and. thus the arbitration proceedings were delayed. Thus, the petitioner was obliged to file a writ petition in the High Court seeking a writ of prohibition against the non petitioners restraining them from transferring the aforesaid Mills before the completion of the arbitration proceedings. The learned single Judge in the High Court accepted writ petition and issued a direction in the form of a writ of prohibition against the non petitioners not to transfer the aforesaid Mills before the settlement of the dispute through arbitration. Consequently, the non-petitioners filed a petition for leave to appeal which was converted into appeal and, the same was disposed of as such. It was held by this Court that as the dispute had arisen out of a contractual obligation, the writ petition filed by the petitioner, herein, was not competent. However, during the course of arguments the counsel for the petitioner submitted that if the arbitration proceedings were concluded speedily, he would have no objection if the judgment of the High Court was set aside. In the interest of justice, we sent for the Arbitrators so as to know about the reasons for not appointing the Umpire for such a long time. The Arbitrators appeared in the Court and staled that they had already appointed an Umpire The appeal was disposed of on merits. While disposing of the appeal it was observed that arbitration proceedings should be completed as early as possible. The Arbitrators took necessary proceedings but a difference of opinion arose between them and consequently the matter was referred to the Umpire for giving his verdict. During the pendency of the matter before the Umpire a miscellaneous application was filed in this Court praying that time should be fixed within which the Umpire should finalise the award. In view of the observations made by this Court in its judgment dated 27 5 1986, the Umpire was directed to finalise the matter within four and a half months. Subsequently, on the request of the Umpire the time was again extended. The proceedings were pending before the Umpire when the present application, under section 33 of the Arbitration Act 1940, was preferred to this Court.

We have heard the arguments and gone through the file. The learned counsel for the petitioner has contended that the observations made by this Court regarding the speedy finalisation of the arbitration proceedings in its judgment dated 27 5 1986 and the subsequent orders, whereby the period fixed by this Court was extended, imply that the reference for arbitration was made by this Court and as such it was competent under section 33 of the Arbitration Act to resolve the point raised by the learned counsel for the petitioner because the same was necessary to give effect to the arbitration agreement as envisaged under the aforesaid provisions. The learned counsel has contended that only the Court making the reference could decide the points in controversy between the parties in this Court, Le:

(i) whether non petitioners were competent to challenge the competency of Munir Ahmad Khan, one of the Arbitrators, to act as such after participating in the proceedings before the Arbitrators; and

(ii) whether the Umpire was legally justified to observe that if the petitioner failed to produce the measurement register, an adverse inference would be drawn against them, especially so when no such register was in possession of the petitioner.

The first question which needs determination is 8s to whether the observations made by this Court in its judgment dated 27 5 198,6 and the time limits subsequently fixed by this Court regarding the decision of the Umpire in the matter would imply that the reference for arbitration was made by this Court within the meaning of the Arbitration Act.

The learned counsel for the petitioner has contended that an appellate revisional Court has the jurisdiction to make a reference for arbitration like the trial Court because the appeal or revision, as the case may be, would be deemed to be proceedings in continuation of the suit and as such would be deemed to be a suit within the meaning of section 21 read with, section 2(c) of the Arbitration Act. He has referred some authorities in support of his contention:

In Sayd Sajid Ali v. Sayd Wajid Ali PLD 1975 BJ 29, it was held that an appeal is a continuation of the original cause and it is implicit in the exercise of the appellate jurisdiction that the appellate authority can pass all those orders which the authority trying the original case should or ought to have passed. It was further observed that the term suit" used in section 21 of the Arbitration Act includes appeal" and the appellate Court also has the power to refer dispute to arbitration.

The facts of this case were that one Sayed Wajid Ali brought a suit for declaration regarding certain piece of land and also sought permanent injunction against his rival. The suit was decreed by the trial Court. The defendant filed an appeal which was dismissed and consequently a second appeal was preferred to the High Court. During the pendency of the appeal the parties agreed to refer their dispute to the arbitration and appointed a sole arbitrator to whom the dispute was referred by the High Court. Subsequently, on the request of, the parties, instead of sole arbitrator two arbitrators, one by each party, were appointed. It wag agreed that in case of disagreement the matter shall be referred to Allama Arshad, ex M.PA., as Umpire. Consequently, a reference was ordered to be drawn in accordance with the terms of the agreement between the parties and was sent to the arbitrators. It so happened that arbitrators gave confecting awards and the matter was referred to the Umpire. Sayed Wajid Ali, respondent, filed an application wherein he challenged the jurisdiction of the Court to make a reference to the arbitration on the ground that only the trial Court had the jurisdiction to make a reference and not the High Court. It was in these circumstances that the aforesaid observations were made by the High Court and it was held that an appellate Court can make a reference under the provisions of Arbitration Act.

In Ct. A.Ct. Nachiappa Chcttiar and others v. Ct. A.Ct. Subramaniam Chettiar AIR 1960 SC 307, the facts were that in a suit a preliminary decree was passed against which an appeal was preferred. It was observed that the preliminary decree was still pending with the trial Court, whereas the appeal against the same was pending before the Supreme Court and thus both fort the trial Court and the Supreme Court were possessed of the matter in dispute in part and it was open both the trial Court as well as the Supreme Court to make a reference in the matter.

It may be observed that the authorities relied upon by the learned counsel for the petitioner are distinguishable. In the aforesaid cases the appeals were pending in the appellate Court and it was during the pendency of the said appeals that the matter in controversy in the al2ncals was referred to arbitration in pursuance of the provisions contained in the Arbitration Act. In the instant case there was no appeal pending in this Court nor the questions referred to the arbitration were directly involved in the appeal. The appeal against the judgment of the High Court, delivered in exercise of writ jurisdiction was against the findings of the High Court whereby the non petitioners herein were restrained from transferring the Mills before the completion of the arbitration proceedings. When the appeal in the instant case was disposed of by this Court, the Arbitrators had already completed the arbitration procecdini1,,s but they could not give a unanimous award and thus in view of the terms of the agreement they had to appoint an Umpire which was also appointed by them before the disposal of the appeal. It is evident that neither any application was made to this Court to refer any dispute for reference to the Arbitrators nor there was any such occasion. The appeal was accepted by this Court on the ground that the writ jurisdiction is not available in case of dispute arising out of contractual obligations. It was in exercise of the inherent powers that we took steers for the early finalisation of the arbitration proceedings by Umpire. That would not imply that any_ matter in dispute between the parties in appeal was referred by this Court to arbitration.

Thus, the contention of the learned counsel for the petitioner that this Court" would be deemed to have made reference to the arbitration and thus has the jurisdiction to decide the present application on merits is not tenable

Next, it is to be seen as to which of the Courts would have the jurisdiction in the matter. For the sake of convenience Section 31 of the Arbitration Act is reproduced as under:

"31. (1) Subject to the provisions of this Act, an award may be filed in any Court having jurisdiction in the matter to which the reference relates.

(2) Notwithstanding anything contained in any other law for the time being in force and save as otherwise provided in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been, or may be, filed and by no other Court

(3) All applications regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings shall be made to the Court where the award has been or may be filed and no other Court

(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference any application under this Act has been made in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitrations, proceedings shall be made in that Court and in no other Court."

It is evident from the provisions, referred to above, that only such Court II would have jurisdiction to resolve the controversy between the parties in which an; award has been filed or may be filed and no other Court. The word Court" B appearing in Section 33 read with Section 2(c) of the Arbitration Act would mean a Civil Court having jurisdiction to decide the question forming, the subject matter of the reference if the same had been made the subject matter of the suit. In other words the Court which would have jurisdiction to try a civil suit would" have jurisdiction in respect of the question forming the subject matter of a reference. .

It may be observed that as the word suit" used in Section 21 of the" Arbitration Act .includes an appeal; revision; thus it would include appellate or C revisional Court, as the case may be. We are supported. in our view by cases reported as Thakur Prasad v Baleshwar Ahir and others AIR 1954 Pat. 106 and Lakhshmi Narain v. Ram Babu and another AIR 1953 Al1.9. Identical view has been expressed in the authorities referred to by the learned counsel for the petitioner in his written arguments, i.e. Messrs M.M. Ispahani Ltd. v. Messrs Pakistan Trading Co. PLD 1966 Dacca 54, The Bundi Municipal Board v. The Bundi Electric Supply Co. Ltd. AIR 1957 Rajasthan 278 and Sub . amannaya Bhatta v. Devadas Nayak and others AIR 1955 Mad: 693. However, the trial Court or the appellate Court, as the case may be, is competent to refer a case for arbitration under section 21 of the Arbitration Act in pursuance of the relevant clause of the agreement in that regard subject to the provisions of the Arbitration Act. In the instant case when the appeal was pending in this Court the arbitration proceedings had been already started by the parties as has been already stated. Therefore neither any prayer was made to this Court to refer any dispute to the arbitration nor such prayer could be made as the arbitration proceedings were already in progress. Therefore, the argument advanced by the learned counsel for the petitioner that this .Court by making observations for speedy finalisation of the arbitration proceedings or subsequently extending time for doing the same should be assumed to have referred the dispute between the parties to the arbitration is misconceived and is not tenable. In fact the arbitration proceedings had started without the intervention of any Court as envisaged under Chapter II of the Arbitration Act.

It may also be observed that the word suit" in Section 21 of the Arbitration Act is used in wider sense and includes appeal etc. yet every judicial. proceedings cannot be termed as suit". The meaning of word suit" used in . Section 21 came up for consideration in Prem Nath L. Ganesh Pass v. Prem Nath : L. Ram Nath and others AIR 1963 Punjab 62, wherein it was held that although the word suit" appearing in Section 21 of the Arbitration Act is to be assigned wider meaning, but it does not include every type of judicial proceedings. The relevant. observations made by the learned judges are reproduced as under:

"In our view, this case hinges exclusively on the construction of the language of Section 21 depending upon the meaning of "suit" occurring, there. Regardless of the context in which the term has been used, "suit" in its common parlance is a term of wide amplitude. Broadly, a "suit" is a proceeding in a Court of justice for the enforcement of a right denoting a legal proceeding of a civil Kind. It is a proceeding in a Court according to the forms of law to enforce the remedy to which a patty deems itself entitled. Lord Coke defines a suit to be "actio nihil aliud est, quam jus persequcndi in judicio quod sibi debetur" meaning "an action is nothing else than the right of pursuing in a Court of justice, that which is due to one". Blackstone simply says that a "suit" or "action" is a legal demand of one"s rights. In its generic sense, a "suit" is the pursuit or prosecution of some claim. The term "suit" in its comprehensive sense may be treated as applying to any original proceeding in a Court of justice by which a party

pursues the remedy which the law grants him. The modes of proceedings. may be various depending upon the different stages in the .litigation, that is, proceedings in the original Court, Court of appeal, proceedings in the r nature of review or revision and execution proceedings. This legal . signification of the word "suit" is very broad, and the term., has also a much narrower meaning when it is examined in the procedural sense.

"Suit"" is no doubt a judicial proceeding, but every such proceeding cannot be termed a suit. As observed by Lord Russel of Killowen in Hansrj Gupta v. Dehra Dun Mussoorie Electric Tramway Co. Ltd., 60 " Ind App 13: (A.1.R. 1933 PC 63).

"The word "suit" ordinarily means, and apart from some context must be taken to mean a civil proceedings instituted by the presentation of a plaint:"

That case related to the meaning of the word "suit" as used in section 2 of the Limitation Act, which provision distinguishes a suit from an appeal or application. The term "suit" is not defined in the" Code of Civil Procedure and the above observations of the Privy Council furnish a working principle. There are, however, a large number of authorities" drawing a distinction between a "suit" on the one hand and "applications", "appeals" and "executions" on the other. It is also true that for certain matters, appeals are treated as continuation of a "suit". The safe guide in all such matters is the context in which the term "suit" has been employed as it is capable of both flexibility and strict construction. Apart from this, there are also specific provisions treating proceedings under other Acts as a suit under the Code of Civil Procedure; inter alia, vide sections 295 and 299 of Indian Succession Act, section 63 of the Administrator General"s Act (2 of 1874)."

The question arises as to whether writ or an appeal arising out of a writ i jurisdiction can be regarded as a "suit" within the meanings of Section 21 of the Arbitration Act. It may also be observed here that as we are of the opinion that" this Court did not make any reference to the arbitration nor it could do so, it .is not necessary for us to give any opinion on the point because the application can be otherwise conveniently disposed of.

The conclusion of the above discussion may be summarised as under:

(i) that this Court cannot be said to have referred any dispute to the arbitration merely, because it took steps under its inherent powers for the early finalization of arbitration proceedings. The arbitration proceedings were already in progress without the intervention of any Court;

(ii) that even otherwise no appeal was pending in this Court arising out of the terms of the agreement which could be referred to the arbitration; rather the appeal had arisen out of judgment of the High Court passed in writ jurisdiction in which the terms of the agreement or the arbitration clause were not in dispute. The petitioner had only sought a writ of prohibition restraining the respondents from transferring the property in dispute. Thus, it cannot be said that the appeal in this Court being in continuation of the suit relating to the terms of agreement, this Court had the jurisdiction to refer the dispute to arbitration or in fact it had referred the suit to arbitration; and

(iii) that in view of the provisions contained in Section 31 of the Arbitration Act read with Section 33 of the said Act this Court has no jurisdiction to hear the present petition.

The upshot of the above discussion is that the petition is misconceived. We believe that the petitioner has misconstrued the proceedings maintained in this Court. The petition, therefore, stands dismissed. In the circumstances of the case we make no order as to the costs. The petitioner is, however, at liberty to seek the redress before a .Court of competent jurisdiction, if so advised.

M.B.A./260/S.CA Petition dismissed.

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