Madras High Court
The State Of Tamilnadu vs R. Sundaram on 23 December, 2005
Author: P.K. Misra
Bench: P.K. Misra
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 23/12/2005 CORAM THE HONOURABLE MR. JUSTICE P.K. MISRA AND THE HONOURABLE MR. JUSTICE AR. RAMALINGAM C.M.A.NO.1463 OF 2001 1. The State of Tamilnadu, Rep. by the Superintending Engineer, P.W.D./ W.R.O. Periyar Vaigai Basin Circle, 46, North Chithirai Street, Madurai. 2. The Executive Engineer, P.W.D. / W.R.O. Periyar Dam Special Division, Kumbum 625 616. ... Appellants Vs. 1. R. Sundaram, Contractor, No.6, Ganapathypuram, Karungalpalayam, Erode -3. 2. Poniphase Stephen Arbitrator SE/PWD, Thamiraparani Basin Circle, Tirunelveli - 2. ... Respondents Appeal filed under Section 39 of the Arbitration Act against the judgment dated 11.12.2000 made in Arbitration O.P.No.22/98, on the file of the Principal Subordinate Judge, Madurai. !For Appellants ... Mr.C. Selvaraj Addl. Govt. Pleader ^For Respondent-1 ... Mr.K. Rajasekaran :JUDGMENT
P.K. MISRA, J The State Government has filed this appeal against the judgment dated 11.12.2000 passed by the Principal Subordinate Judge, Madurai in O.P.No.22 of 1998 filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act").
2. The facts, so far as necessary for the decision in the present appeal, are as follows :-
On 21.7.1995, there was an agreement executed between the State Government and the contractor (present Respondent No.1) relating to the work of strengthening of Periyar Dam. Such work commenced on 9.8.1995. However, on 22.11.1995, the officials of the Forest Department of the Kerala Government stopped quarrying work done by the contractor and thereafter the earthwork was also stopped in December. The State of Tamil Nadu identified a fresh place for quarrying about 67 kms. away from the worksite at Periyar Dam and thereafter the work resumed on 8.1.1997. Thereafter, the work was again stopped on 6.2.1997 and the contractor moved the High Court of Kerala and after intervention of the Judiciary, the work resumed on 24.5.1997. Even before the work was resumed, the contractor had made a claim towards compensation for loss of idle machinery and labour and as per the contract, a Superintending Engineer was nominated on 7.5.1997 to resolve. On 30.6.1997, the Adjudicator passed an order directing payment of Rs.93,09,575/- as compensation towards loss of idle machinery and labour between the period 21.11.1995 and 8.1.1997. However, neither the Department nor the contractor accepted such determination by the Adjudicator and as per the provisions of the contract, a Superintending Engineer was appointed as the sole arbitrator by the Department. Such arbitrator passed an award dated 19.1.1998 awarding a total sum ofRs.1,49,98,396/- as compensation. Thereafter, the State Government filed a petition under Section 34 of the Arbitration and Conciliation Act before the Principal Sub Court, Madurai, which was numbered as O.P.No.22 of 1998. The Principal Sub Court, under the impugned judgment dated 11.12.2000, confirmed the award. Such a decision is under challenge in the present appeal.
2. During pendency of such appeal, C.M.P.No.22390 of 2001 has been filed by the appellant seeking permission to raise an additional ground. The contention raised in such petition is to the effect that the Principal Sub Court, Madurai had no jurisdiction to deal with the petition filed by the State Government challenging the validity of the award under Section 34 of the Act.
It is contended that even though such petition had been filed by the State Government before the Principal Sub Court, Madurai, in view of the provisions contained in the Act, such Court did not have any jurisdiction and such petition was to be filed before the Principal Civil Court of original jurisdiction of the district, namely, the District Judge, and not the Subordinate Judge. It is therefore contended that the court below had inherent lack of jurisdiction to deal with the matter and, therefore, the decision of the court below is liable to be set aside.
3. At the time of hearing of the appeal, the said contention has been pressed into service. It has been further contended that in case the aforesaid submission is not accepted, the contentions raised in the appeal on merit may be considered.
4. Learned counsel appearing for the contractor / Respondent No.1 has submitted that the petition under Section 34 of the Act was filed by the State Government before the Sub Court and, therefore, it is not open to the appellants to turn around and now contend that such a proceeding was not maintainable. Learned counsel has also submitted that the judgment passed by the Sub Court does not suffer from any error or illegality and, therefore, such order should be confirmed on merit. Learned counsel has also submitted that it cannot be said that the Principal Sub Court, Madurai, did not have any inherent jurisdiction to deal with the matter.
5. The expression "jurisdiction" is a verbal cask of several hues and colours. In the context of a litigation, the expression "jurisdiction" has primarily three meanings. A court may lack territorial jurisdiction to deal with a matter in the sense that, as per the relevant provisions, the cause of action has not arisen within the territorial jurisdiction of such a court. Similarly, a court may lack pecuniary jurisdiction to deal with a matter in the sense that the value of the litigation is beyond the pecuniary jurisdiction of the court, as laid down by any relevant law.
6. Law is well settled that if there is any lack of territorial jurisdiction or pecuniary jurisdiction, such objection should be taken at the earliest possible opportunity in the Court of first instance. Moreover, the order passed by such Court not having territorial or pecuniary jurisdiction need not be set aside by the appellate court unless it is found that the person raising such objection has been prejudiced in any manner. However, when there is lack in inherent jurisdiction of a Court to deal with a matter, the position is otherwise, as the decision of such a Court may be considered as non-est. Where a Court has no inherent jurisdiction to deal with a matter in the sense that subject matter of the dispute is not within the scope of determination by a particular court, the question relating to lack of jurisdiction goes to the root of the matter and it can be raised before the appellate court or even subsequently at the stage of execution.
7. Therefore, it is first to be decided as to whether the Principal Sub Court had competence or inherent jurisdiction to deal with the matter. If it is found that the Court lacked competence to deal with the matter, obviously the decision of the Sub Judge cannot be confirmed.
8. To consider the above question, it is necessary to refer to the relevant provisions contained in the Act. Section 34 of the Act enables a person aggrieved by the award of the arbitrator to raise objection challenging the validity of the award before the Court.
The expression "Court" has been defined in Section 2(1)(e), which is to the following effect :-
" 2(e) "Court" means the principal civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil Court of a grade inferior to such principal civil Court, or any Court of Small Causes;"
9. The Tamil Nadu Civil Courts Act, 1873 (hereinafter called the Civil Courts Act) is an Act to consolidate and amend the law relating to the Civil Courts of the Madras Presidency Subordinate to the High Court. Part II of such Act contains the provisions relating to establishment and constitution of Civil Courts. As per Section 3, the number of District Courts to be established shall be fixed by the State Government.
Under Section 3-A, when the state of business pending before the Judge of any District Court (District Judge) so requires, the State Government may appoint one or more Additional District Judges to that Court. The Additional District Judges so appointed shall discharge all or any of the functions of the District Judge under this Act or any other law for the time being in force which the District Judge may assign them and, in the discharge of those functions, they shall exercise the same powers as the District Judge. Section 4 empowers the State Government to fix the number of Subordinate Judges and District Munsifs. Under Section 4-A, when more than one Subordinate Judge is appointed to a Subordinate Judge's Court, one of the Subordinate Judge shall be appointed the Principal Subordinate Judge.
Part III of the Civil Courts Act relates to jurisdiction. Under Section 10, local limits of jurisdiction of District Judge or Subordinate Judge may be fixed from time to time by the State Government. Section 12 relates to jurisdiction of District Judge or Subordinate Judge in original suits. The jurisdiction of a District Judge or a Subordinate Judge extends to all original suits and proceedings of a civil nature. Under Section 13, the appeals from decrees of District Courts lie to the High Court. Appeals from the decrees and orders of Subordinate Judges and District Munsifs shall lie to the District Court or to the High Court depending upon the valuation. These provisions make it clear that the Court of Subordinate Judge is obviously a court inferior to that of the District Court or the District Judge.
10. Section 2 of the Code of Civil Procedure, 1908 contains the definition clause. As per section 2(4), "district" means the local limits of the jurisdiction of principal Civil Court of original jurisdiction (hereinafter called a District Court) and includes the local limits of ordinary original civil jurisdiction of a High Court. In other words, the jurisdiction of a District Court extends to the entire district. Under Section 3, the District Court is subordinate to the High Court and every Civil Court of a grade inferior to that of a District Court and every Court of Small Causes is subordinate to High Court and District Court. Therefore, any Civil Court of a grade inferior to that of a District Court cannot obviously be considered as a District Court or principal Civil Court of original jurisdiction. It is of course true that Section 15 of the Code of Civil Procedure provides that every suit shall be instituted in the Court of the lowest grade competent to try it. But, such provision will be applicable only where different Courts of different grades are competent to try the matter and not where by the provisions of any particular statute, jurisdiction is conferred only on a particular type of court. Even though in respect of ordinary civil suits, by applying Section 15, a Court of Subordinate Judge can be said to have jurisdiction (subject to its pecuniary jurisdiction), this general principle cannot be made applicable to the special provisions contained in different statutes such as the Indian Companies Act and other such specific Acts.
11. By examining the matter from any angle, it is thus apparent that the court in which application under Section 34 of the Arbitration and Conciliation Act can be filed is the principal Civil Court of original jurisdiction in a district. Moreover, as per the definition clause contained in the Arbitration and Conciliation Act, any civil Court of a grade inferior to the principal civil Court is specifically excluded. In view of the specific provision contained in Section 2(e) of the Act read with Section 2(4) of the Code of Civil Procedure, it must be taken that the expression "court" as contained in Sections 34 and 36 of the Act is the principal Civil Court of original jurisdiction in a district, that is to say, the District Court or the District Judge.
12. The view expressed above by us, apparent from the plain language contained in the Arbitration and Conciliation Act and even the Code of Civil Procedure, receives considerable support from the decisions of several High Courts.
13. In SULEKHA v. UNION OF INDIA (2000(1) K.L.T. 691), the Kerala High Court struck down the Rule framed by the High Court specifying the Principal Subordinate Judge as the authority to deal with the matters under Sections 9, 34 and 36 of the the Arbitration and Conciliation Act, by observing as follows :-
"Therefore, it is clear that the Court is the Principal Civil Court of original jurisdiction in a District. Rule specifically says that it "does not include any civil court of a grade inferior to such Principal Civil Court ..."
Principal Civil Court in a district is the District Court. This is clear from the definition given in Section 2(4) of the Code of Civil Procedure. The District Court has got original jurisdiction in certain types of civil matters. There can be no dispute for the proposition that Principal Civil Court of original jurisdiction in a District is the District Court. Therefore, the 'Court' for the purpose of the Act is only the District Court being the Principal Civil Court of the District and not the Subordinate Court which is inferior in statute to the District Court. Since the Court of inferior character of Principal Civil Court cannot be treated as a 'Court' in view of the specific exclusion under Section 2(e) of the Act, Rule 2(c) of the Rules is inconsistent with the provisions of the Act and invalid. Hence it is declared that Rule 2(c) of the Rules is invalid and in view of Section 2(e) of the Act the District Court - Principal Civil Court in the District - will continue to exercise jurisdiction until rules are amended otherwise on all matters which are to be decided by a 'Court' under the Arbitration and Conciliation Act, 1996 except the appointment of an Arbitrator under Section 11 of the said Act. Therefore, I am of the opinion that fourth respondent District Court has jurisdiction to decide the Arbitration O.P. and the Arbitration O.P. has to be decided according to law by that Court itself without transferring the same to the Sub Court."
14. Similar views were expressed in the decision of Karnataka High Court reported in A.I.R. 2001 Karnataka 364 (ICDS LTD. v. MANGALA BUILDERS PVT. LTD.), while considering the scope of Section 36 of the the Arbitration and Conciliation Act.
15. The Allahabad High Court in the decision reported in A.I.R. 1998 All.313 (M/s. I.T.I. LTD., ALLAHABAD v. DISTRICT JUDGE, ALLAHABAD AND OTHERS) has even gone one step further and observed that the Court competent to decide a proceeding under Section 34 is only the District Judge and it does not include even the Additional District Judge. Even though the question as to whether the Court of District Judge would include the Additional District Judge for the purpose of the Arbitration and Conciliation Act is not necessary to be decided in the present appeal, the ratio of the said decision is applicable at least to exclude the Court of Subordinate Judge from the purview of the meaning "Court" for the purpose of Sections 9, 34 and 36 of the Arbitration and Conciliation Act, 1996.
16. In our opinion, the clear language indicated in the Arbitration and Conciliation Act as well as the Code of Civil Procedure leaves no room for any doubt that only the Principal Civil Court of a district, namely, the Court of District Judge has jurisdiction in such matters and not a Subordinate Judge.
17. Apart from the clear language, it is also to be kept in view that under the Arbitration Act, 1940, which was replaced by the present Act, the expression "Court" had been defined differently. Under the definition clause contained in the Arbitration Act, 1940, the "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. As apparent from the above, the "Court" under the Arbitration and Conciliation Act, 1996 means a Court of Principal Civil Court of original jurisdiction in a district, but does not include any court of grade inferior to that of a Principal Civil Court. A comparison of the two definitions makes it clear that not only there is a specific reference to "Principal Civil Court of original jurisdiction in a district", but there is an exclusionary clause, which excludes any Civil Court of a grade inferior to such Principal Civil Court. Whatever doubt could have been entertained, such doubt has been dispelled by the specific exclusion to the effect that the expression "Court" does not include any Civil Court of a grade inferior to that of a Principal Civil Court.
18. Learned counsel appearing for the contractor / Respondent No.1 has brought to our notice a decision of the Division Bench of this Court in 2004(3) CTC 754 (TECHMO CAR SPA, ITALY v. THE MADRAS ALUMINIUM COMPANY LTD., METTUR DAM). In the said case, an application under Section 9 of the Arbitration and Conciliation Act seeking for interim measure or protection had been filed before the Principal District Judge of Salem District. However, such matter came to be decided by the Additional District Judge. Against the order passed by the Additional District Judge, appeal was filed before the High Court. A contention was raised stating that the Court of Additional District Judge was not competent to try the petition under Section 9 of the Act. The Division Bench considered the matter only from the point of view of Section 12 of the Tamil Nadu Civil Courts Act, 1873 before it was amended by Act 1 of 2004 and observed that :
"... subject to the rules contained in the Code of Civil Procedure, to all original suits and proceedings of a civil nature. Accordingly, as rightly claimed, inasmuch as the petition under Section 9 having been filed on 12.3.1993 i.e., prior to Act 1/2004, the proper Court is either the District Court or the Subordinate Judge's Court concerned. However, as per Section 15 of the Code of Civil Procedure, suit shall be instituted in the Court of the lowest grade competent to try it. Accordingly, at the relevant time, Subordinate Judge's Court is the competent Court to try the petition filed under Section 9 of the Act. As per Section 19 of the Arbitration and Conciliation Act, 1996, the Arbitral Tribunal shall not be bound by the Civil Procedure Code, 1908, or the Indian Evidence Act, 1872. The said provision cannot come into operation when a petition under Section 9 is filed before the competent Civil Court. These aspects were not at all considered by the learned District Judge. We sustain the objection raised regarding jurisdiction and hold that the Additional District Judge, Salem, who passed the impugned order, was not having jurisdiction on the date on which the petition was filed."
19. The only aspect which was considered therein was whether a Court of Subordinate Judge was a Civil Court of original jurisdiction. Emphasis was on Section 15 of CPC. The reasoning of the expression principal Civil Court of a district was not at all considered. There cannot be any two opinion about the fact that so far as ordinary suit or proceeding of civil nature is concerned, when two courts have jurisdiction, the suit is required to be filed in the court of lowest grade competent to try. In other words, if the court of District Judge as well as Subordinate Judge have jurisdiction to deal with a suit, the Subordinate Judge's Court being the inferior, court is required to try the matter. This principle, however, not applicable where jurisdiction is conferred only on a particular court.
20. Under the new Arbitration Act, a "Court" has been specifically defined. It provides that the "Court" means the principal Civil Court of original jurisdiction in a district. It does not refer to every court of civil jurisdiction in a district but, "principal Civil Court of original jurisdiction"
in a district. Similarly the definition also excludes any court which is inferior to such principal Civil Court of original jurisdiction in a district. The definition, therefore, read as a whole, clearly excludes the court of Subordinate Judge, which is inferior to the court of District Judge. These aspects were not at all brought to the notice of the court. The decision rendered is thus distinguishable.
21. Learned counsel appearing for the respondent has relied upon a decision of a learned single Judge of Patna High Court reported in 2001(4)Recent Arbitration Judgments 397 (Patna) (BHOPAL SINGH & OTHERS v. NAGENDRA NARAIN SINGH), wherein after relying upon two other earlier decisions of Patna High Court, it has been observed :-
"6. Having considered the rival submissions, I am of the view that this appeal ought to be dismissed. Section 2(1)(e) of the Act defines "Court" and reads as follows :-
"Court" means the principal civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject- matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil Court of a grade inferior to such principal civil Court, or any Court of Small Causes."
The provision fell for consideration of this Court on two occasions and it has been held in the cases of Mohd. Sadiq vs. State of Bihar, 2000(4) PLJR 815 and Thakur Prasad Singh vs. State of Bihar, 2000(4) PLJR 843, that the Subordinate Judge of a District is the principal Civil Court of original jurisdiction for entertaining a suit and not the District Judge. In that view of the matter, the trial court has erred in observing in the impugned order that this Court is not the principal Civil Court within the meaning of Section 2(1)(e) of the Act."
22. There is no reference to the decisions of other High Courts in such decision and even there is no analysis of the relevant provisions. With respect, we are unable to agree with the views expressed by the learned single Judge in the aforesaid case.
23. For the aforesaid reasons, it is obvious that the Principal Subordinate Judge, Madurai had no inherent jurisdiction to deal with the application filed under Section 34 of the Act. Since it had no inherent jurisdiction, as distinct from the territorial or pecuniary jurisdiction, the decisions rendered by such Court obviously cannot operate as res judicata and the findings rendered are of no consequence.
24. In the above view of the matter, the judgment of the Subordinate Judge has to be set aside only on the ground of maintainability of such a petition before the Subordinate Judge. It is made clear that we have not expressed any opinion on the merits of the contentions raised as, in our view, the question has to be decided only in a fresh proceedings filed before the proper court.
25. Learned counsel appearing for the appellants has submitted that delay in filing the application afresh before the proper court should be condoned. We do not think it is necessary for us to make any observation. As and when any fresh application is filed before the proper court, it is for the said court to consider as to whether there is any jurisdiction or justification to condone the delay after hearing both the parties. We can rest content by setting aside the order passed by the Subordinate Judge.
26. The appeal is accordingly disposed of. No costs.
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