Kerala High Court
Asya vs M/S.Sundaram Finance Limited on 16 November, 2015
Author: Anil K. Narendran
Bench: P.R.Ramachandra Menon, Anil K.Narendran
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON
&
THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN
FRIDAY, THE 8TH DAY OF APRIL 2016/19TH CHAITHRA, 1938
Un-numbered Arb.Appeal(ZARBA No. 88 of 2016)
----------------------------------------------------
AGAINST THE ORDER IN OPARB 91/2014 of ADDL. D.C. & SESSIONS COURT - II,
MANJERI DATED 16-11-2015
APPELLANT/RESPONDENT NO.1 IN O.P (ARB.):
--------
ASYA, D/O MOHAMMEDKUTTY, AGED 47,
KOMBAN HOUSE, KALIKAVU P.O.,
PUTTAMANNA, KALIKAVU AMSOM DESOM,
MALAPPURAM DISTRICT, PIN 676 525.
BY ADVS.SRI. K. JAYAKUMAR (SENIOR ADVOCATE)
SRI.P.B.KRISHNAN
SRI.P.B.SUBRAMANYAN
SRI.SABU GEORGE
SRI.S.NITHIN (ANCHAL)
RESPONDENTS - PETITIONER & RESPONDENTS 2 AND 3 IN O.P (ARB.):
------------------------------------------------------------
1. M/S.SUNDARAM FINANCE LIMITED,
REPRESENTED BY POWER-OF-ATTORNEY SARATH,
PALLIPPUTAM, AGED 35, S/O DEVASIA, BRANCH MANAGER,
MANJERI BRANCH, MANJERI P.O., REGISTERED OFFICE
AT NO.21, PATTULLOS ROAD, CHENNAI - 600 002.
2. ABDUL KAREEM, S/O AHAMMEDKUTTY, AGE NOT KNOWN,
EASWARATH HOUSE, KALIKKAVU P.O., PUTTAMANNA, KALIKAVU
AMSOM, MALAPPURAM DISTRICT, PIN 676 525
3. P. ABDURAHIMAN, S/O MOOSA HAJI, AGE NOT KNOWN,
PAZHAYEDATH HOUSE, KALIKAVU P.O., PUTTAMANNA,
KALIKAVU AMSOM DESOM, MALAPPURAM DISTRICT,
PIN 676 525.
THIS UNNUMBERED ARBA HAVING BEEN FINALLY HEARD ON 08-03-2016
ALONG WITH ZARBA Nos. 3, 41 AND 247 OF 2016, THE COURT ON 08-04-2016
PASSED THE FOLLOWING:
[CR.]
P.R. RAMACHANDRA MENON
&
ANIL K. NARENDRAN, JJ.
~~~~~~~~~~~~~~~~~~~~~~~~~
Un-numbered Arbitration Appeals
(ZARBA Nos.3, 41, 88 and 247 of 2016)
~~~~~~~~~~~~~~~~~~~~~~~~~~
Dated, this the 8th day of April, 2016
O R D E R
Ramachandra Menon, J.
The issue involved in these cases is mainly in respect of the actual court fee payable for challenging the orders passed by the concerned District Court either under Section 9 of the Arbitration and Conciliation Act 1996 ('New Act' in short) or the Awards passed under Section 34 of the Act in an appeal preferred under Section 37 (1) (a) (in respect of interim order) and those coming within the purview of Section 37 (1) (b) in respect of the final awards.
2. The matter necessitated elaborated consideration in view of the amendment of the Statute (Kerala Court Fees and Suits Valuation Act) as per the Finance Act 2013 w.e.f. 01.04.2013, stipulating payment of court fee as provided under Article 4 (i) or (4) (ii) of the ZARBA Nos.3, 41, 88 and 247 of 2016 : 2 : Second Schedule. On an earlier occasion, when objection was noted by the Registry as to the adequacy of court fee, a detailed order was passed by this Court as reported in 2015 (5) KHC 929 [Syndicate Bank Vs. Nishad Mathew and Ors.] insisting to pay 'ad valorem' court fee in terms of Article 4 (ii) of the Second Schedule. In some subsequent cases, this Court permitted numbering of the appeals (arising from interim orders in terms of Section 9, r/w Section 37(1) (a) of the Act) observing that the objection raised by the Registry will be considered in the due course. Since the issue requires more clarity, these matters have been heard in detail.
3. Mr. K. Jayakumar, the learned senior counsel appearing for the appellant in the unnumbered arbitration appeal (ZARBA No. 88 of 2016) led the arguments on behalf of the appellants situated on similar pedestal and was supported by other learned counsel, to the extent they are involved. Argument on behalf of the respondent State was made by Mr. K. A. Jaleel, the learned Additional Advocate General.
4. To understand the basic issue involved, a scrutiny of the scope and object of the Arbitration Act 1940 ('Old Act' in short), ZARBA Nos.3, 41, 88 and 247 of 2016 : 3 : which governed the field of Arbitration earlier, and the substantial change brought about as per the Arbitration and the Conciliation Act 1996 ('New Act' in short) will be worthwhile to be noted. Though there is substantial change in different aspects between the two Acts, we confine the scrutiny only with reference to those provisions which are more connected with the payment of court fees. Similarly, though there were amendments to the Kerala Court Fees and Suits Valuation Act at different points of time, we are confining the discussion with reference to the position as prevailed prior to the amendment brought about w.e.f 01.04.2013 and the position now available after 01.04.2013. Under the 'Old Act', the right of appeal conferred upon the party by virtue of Section 39, is reproduced below :
"39. Appealabe orders - (1) An appeal shall lie from the following orders passed under this Act ( and from no others) to Court authorised by law to hear appeals from original decrees of the Court passing the order:-
An order -
(i) supereseding an arbitration;
(ii) on an award stated in the form of a special case;
ZARBA Nos.3, 41, 88 and 247
of 2016 : 4 :
(iii) modifying or correcting an award;
(iv) filing or refusing to file an arbitration agreement;
(v) staying or refusing to stay legal proceedings where there is an arbitration agreement;
(vi) setting aside or refusing to set aside an award:
Provided that the provisions of this Section shall not apply to any order passed by a Small Cause Court.
(2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall effect or take away any right to appeal to the Supreme Court.
5. The scope of appeal was not seemingly in connection with passing of interim orders granting or refusing to grant attachment, injunction etc, but from the final verdicts, except the specific instances mentioned therein. Under the 'New Act', by virtue of Section 9, a party is set at liberty to apply to a Court to get an interim order in respect of a situation envisaged under Section 9 (i) or for getting an interim orders in respect of specific matters specified as (a) to (e) under Section 9 (ii). Section 9 is extracted ZARBA Nos.3, 41, 88 and 247 of 2016 : 5 : below :
"9. Interim measures, etc, by Court - A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court
-
(i) for the appointment of a guardian for a minor or a person of unsound mind for the purpose or arbitral proceedings; or
(ii) for an interim measure of protection in respect of any of the following matters, namely;-
(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subject-
matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, ZARBA Nos.3, 41, 88 and 247 of 2016 : 6 : which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the court to be just and convenient.
and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.
When it comes to the right of appeal, the appelable orders are specified under Section 37, which is extracted below:
37. Appealable orders - (1) An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:-
(a) granting or refusing to grant any measure under section 9
(b) setting aside or refusing to set aside an arbitral award under Section 34 (2) An appeal shall also lie to a Court from an order granting of the arbitral tribunal -
(a) accepting the plea referred in sub-section (2) of sub-section (3) of Section 16; or ZARBA Nos.3, 41, 88 and 247 of 2016 : 7 :
(b) granting or refusing to grant an interim measure under section 17 (3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.
On a reading of the above two provisions of the New Act together, it quite evident that, after commencement of the New Act, it is open for the litigant to get an interim order by way of attachment, injunction etc. as stipulated under Section 9 (ii) and the aggrieved party is free to challenge the order by filing an appeal under Section 37 (1) (a), if it is in respect of a interim measure; and under Section 37 (1) (b), if it is a final verdict under Section 34. Question is, whether the significant turn of events as to the scope of passing interim orders and chance to file an appeal was taken note of by the legislature of the State, when it came to the payment of court fee under the Kerala Court Fees and Suits Valuation Act.
6. So as to analyse the position with more clarity, Articles 3 and 4 of the II Schedule to the Kerala Court Fees and Suits Valuation Act, as they existed prior to 01.04.2013 and the position ZARBA Nos.3, 41, 88 and 247 of 2016 : 8 : as it exists after the amendment w.e.f. 01.04.2013 are to be looked into, and hence they are extracted below:
Before the amendment:
3. Memorandum of appeal from an order inclusive of an order determining any question under Section 47 or Section 144 of the Code of Civil Procedure, 1908, and not otherwise provided for when presented-
(i) to any Court other than the High Court or to the Board of Revenue or the Chief Executive Authority or to any Executive Officer - Ten rupees
(ii) xxxx
(iii) to the High Court (A) From an order other than an order under the Kerala Agriculturists Debt Relief Act, 1958 (1) Where the order was passed by a Subordinate Court or other Authority -
(a) If the order relates to a suit or proceeding, the value of which exceeds one thousand rupees - Twenty five rupees
(b) In any other case - Ten rupees (2) Where the appeal is under Section ZARBA Nos.3, 41, 88 and 247 of 2016 : 9 : 5 of the Kerala High Court Act, 1958 -
(a) From an order passed in exercise of appellate jurisdiction - Twenty five rupees
(b) From an order passed in exercise of original jurisdiction, which would be appelable under the Code of Civil Procedure, 1908, had it been passed by a Subordinate Court - Twenty five rupees
(c) In any other case - Two hundred rupees per appellant.
(3) Where the appeal is under Section 45-B of the Banking Companies Act 1949 - Two hundred and fifty rupees.
(4) Where the appeal is under Section 411-A of the Code of Criminal Procedure 1898 - Ten rupees (B) From an order under the Kerala Agriculturists Debt Relief Act 1958 - Five rupees (C) From an order of the Appellate Tribunal under the Income Tax Act, 1961 or the Wealth Tax Act, 1957
(a) Where the total income of the a ssessee as computed by the ZARBA Nos.3, 41, 88 and 247 of 2016 : 10 : Assessing Officer, in the case to which the appeal relates is one lakh rupees or less - five hundred rupees
(b) Where such income exceeds one lakh rupees but does not exceed two lakh rupees - One thousand and five hundred rupees
(c) Where such income exceeds two lakh rupees - One per cent of the assessed income, subject to a maximum of ten thousand rupees.
(d) Where the subject matter of an appeal relates to any matter, other than those specified in sub clauses
(a) to (c) above Five hundred rupees.
(iv) to the Government in pursuance of a statutory right to appeal for which no court-fee is leviable under any other enactment Twenty five rupees
4. Memorandum of appeal under Section 39 of the Arbitration Act, 1940
(i) Where the appeal is from an order of a Munisff's Court or an order ZARBA Nos.3, 41, 88 and 247 of 2016 : 11 : of a Superior Court in a case where the value for the purpose of jurisdiction does not exceed rupees fifteen thousand Fifty rupees
(ii) in other cases where the amount or value of the subject matter -
(a) does not exceed rupees one lakh, for every hundred rupees, or part thereof, upto rupees one lakh Two rupees
(b) exceeds rupees one lakh, for every hundred rupees, or part thereof, in excess of rupees one lakh upto rupees five lakhs Four rupees
(c) exceed rupees five lakhs, for every hundred rupees or part thereof, in excess of rupees five lakhs One rupee After the amendment, from 01.04.2013
3. Memorandum of appeal from an order inclusive of an order determining any question under Section 47 or Section 144 of the Code of Civil Procedure, 1908, and not otherwise provided for when presented-
(i) to any Court other than the High Court or to the Board of Revenue or the Chief ZARBA Nos.3, 41, 88 and 247 of 2016 : 12 : Executive Authority or to any Executive Officer - Ten rupees
(ii) xxxx
(iii) to the High Court -
(A) From an order other than an order under the Kerala Agriculturists Debt Relief Act,1958 (1) Where the order was passed by a Subordinate Court or other Authority -
(a) If the order relates to a suit or proceeding, the value of which exceeds one thousand rupees - Twenty five rupees
(b) In any other case - Ten rupees (2) Where the appeal is under Section 5 of the Kerala High Court Act, 1958 -
(a) from an order passed in exercise of appellate jurisdiction - Twenty five rupees
(b) from an order passed in exercise of original jurisdiction, which would be appealable under the Code of Civil Procedure, 1908, had it been passed by a Subordinate Court - Twenty five rupees
(c)in any other case - Two hundred rupees per appellant.
(3) Where the appeal is under Section 45-B ZARBA Nos.3, 41, 88 and 247 of 2016 : 13 : of the Banking Companies Act 1949 - Two hundred and fifty rupees.
(4) Where the appeal is under Section 411-A of the Code of Criminal Procedure, 1898 - Ten rupees (B) From an order under the Kerala Agriculturists Debt Relief Act 1958 - Five rupees (C) From an order of the Appellate Tribunal under the Income Tax Act, 1961 [xxxx]
(a) Where the total income of the assessee as computed by the Assessing Officer, in the case to which the appeal relates is one lakh rupees or less - five hundred rupees
(b) Where such income exceeds one lakh rupees but does not exceed two lakh rupees - One thousand and five hundred rupees
(c) Where such income exceeds two lakh rupees - One per cent of the assessed income, subject to a maximum of ten thousand rupees.
ZARBA Nos.3, 41, 88 and 247 of 2016 : 14 :
(d) Where the subject matter of an appeal relates to any matter, other than those specified in sub clauses
(a) to (c) above Ten per cent of relief sought for, subject to a minimum of five hundred rupees (D) From an order of the Appellate Tribunal under the Wealth Tax Act, 1957
(a) Where the total net wealth of the assessee as computed y the Assessing Officer, in the case to which the appeal relates is one lakh rupees of less Five hundred rupees
(b) Where such net wealth exceeds one lakh rupees but does not exceed two lakhs rupees One thousand and five hundred rupees
(c) Where such net wealth exceeds two lakhs rupees One per cent of the assessed net wealth, subject to a maximum of ten thousand rupees.
(d) Where the subject-matter of an appeal relates to any matter, other than ZARBA Nos.3, 41, 88 and 247 of 2016 : 15 : those specified in Clauses (a) to (c) above Ten per cent of the relief sought for, subject to minimum of five hundred rupees.
(iv) to the Government in pursuance of a statutory rights to appeal for which no Court-fee is leviable under other enactment Twenty five rupees
4. Memorandum of appeal under the Arbitration and Conciliation Act, 1996
(i) Where the appeal is from an order of a Munisff's Court or an order of a Superior Court in a case where the value for the purpose of jurisdiction does not exceed rupees fifteen thousand Fifty rupees
(ii) in other cases where the amount or value of the subject matter -
(a) does not exceed rupees one lakh, for every hundred rupees, or part thereof, upto rupees one lakh Two rupees
(b) exceeds rupees one lakh, for every hundred rupees, or part thereof, in excess of rupees ZARBA Nos.3, 41, 88 and 247 of 2016 : 16 : one lakh upto rupees five lakhs Four rupees
(c) exceed rupees five lakhs, for every hundred rupees or part thereof, in excess of rupees five lakhs One rupee
7. An issue came up for consideration before the Apex Court as to whether interim order can be sought for, even before the commencement of the arbitration proceedings and whether issuance of notice to the opposite party was a condition precedent for filing an application under Section 9 for getting an interim order. Referring to the provisions of the New Act (Sections 9 and 21) the Apex Court held in Sundaram Finance Ltd. v. NEPC India Ltd., [(1999) 2 SCC 479] that the interim order may be sought for from the Court even before commencement of the arbitration proceedings and that issuance of notice to the opposite party was not a pre-condition for filing an application under Section 9. It was however alerted that the Court, before passing interim order, must be satisfied about the existence of arbitration agreement and the applicant's intention to take up the matter for arbitration, thus ZARBA Nos.3, 41, 88 and 247 of 2016 : 17 : pointing out that, it will be appropriate to pass 'conditional order' to ensure that effective steps are taken by the applicants in this regard.
8. With regard to the question whether 'ad valorem' court fee as stipulated under Article 4 of Schedule II of the Kerala Court Fees and Suits Valuation Act is to be satisfied for filing an appeal against an order passed by the court below, either granting or refusing to grant any relief under Section 9 of the New Act or whether satisfaction of the court fee in terms of Article 3 (iii) (A) (1) (a) of Schedule II (i.e. Rs. 25) was enough, this Court held in Jaisu Shipping Co. (P) Ltd. Vs. OILCORP Oil Marketing Corporation [2001 (2) KLT 772] that the Arbitration and Conciliation Act 1996 ('New Act') was not incorporated in Article 4 of Schedule II of the Kerala Court Fees and Suits Valuation Act, but for referring to 'Arbitration Act 1940' and hence it was held that Article 3 (iii) (A) (1) (a) of the Schedule II of the said Court Fees Act was to be applied, as no separate or specific court fee was specified elsewhere. Reference was also made to Section 52 of the Kerala Court Fees and Suits Valuation Act to hold that the appellant cannot be called upon to pay more than what was paid by ZARBA Nos.3, 41, 88 and 247 of 2016 : 18 : the party before the court below. The observations made, as reflected from paragraphs 5 and 6 of the said verdict, are in the following terms :
"5. We are of the view Art. 4 of Schedule II of the Court Fees Act is not applicable to this case. Evidently Art. 4 of the Court Fees Act refers to memorandum of appeal under S. 39 of the Arbitration Act, 1940. Arbitration Act, 1940 has already been repealed by Arbitration and Conciliation Act, 1996. There is nothing to show that Art. 4 of Schedule II of the Court Fees Act would still be made applicable. There is no amendment in the Court Fees Act incorporating new Act as part of Schedule II of Court Fees Act. Under such circumstance we are of the view the contention that Art. 4 of Schedule II of the Act would be applicable cannot be sustained.
6. We are of the view counsel for the appellant is right in his contention since Arbitration and Conciliation Act, 1996 has not been incorporated under Art. 4 of Schedule II of Court Fees Act, the provision which is applicable is Art. 3 of Schedule II of the Court Fees Act which deals with memorandum of appeal from an order to the High Court. An order was passed by the Subordinate court or any other authority and if the order relates to a ZARBA Nos.3, 41, 88 and 247 of 2016 : 19 : suit or proceeding the value of which exceeds one thousand rupees court fee need be paid is only Rs. 10/-. We are of the view it is that article which applies. We may further add even before the court below only Rs. 10/- has been paid towards court fee in a petition filed under S. 9 of the Arbitration and Conciliation Act, 1996. Under such circumstance going by S. 52 of the Court Fees Act the appellant cannot be called upon to pay more than that was paid by the first respondent herein before the Court below. Under such circumstance objection raised by the registry is overruled. We are of the view the court fee paid by the appellant is sufficient. Number the M.F.A. and post for admission."
9. The absence of specific provisions to satisfy court fee in an appeal preferred under Section 37 (1) (a) of the New Act before the High Court, (against an order passed by the Court below under Section 9 of the new Act) came to be considered in detail by another Bench of this Court and as per the decision reported in 2003 (3) KLT 289 [Sundaram Finance Ltd Vs. Radhamma], it was held that since there was no other specific provision in this regard, court fee was payable in appeal against such orders under Article 3 (iii) (A) (i) (a) of schedule II of the Court Fees and Suits ZARBA Nos.3, 41, 88 and 247 of 2016 : 20 : Valuation Act.
10. Question regarding the quantum of court fee payable, in an appeal under Section 37 (1) (b) [against the final verdict passed under Section 34 of the New Act] came up for consideration of this Court in Elsie Felix Vs. Larsen & Toubro Limited [2004 (1) KLT 619]. The decision rendered by the very same Bench earlier in Sundaram Finance's case (cited supra) was referred to and it was observed in paragraph 9 of the above verdict, that the former verdict rendered with reference to Section 9 and Section 37 (1) (a) of the Act 'New Act' would not be applicable to a case when an appeal is filed under Section 37 (1) (b) of the 'New Act' [the provision shown as Section 37 (1) (a) in the last sentence of the said paragraph obviously appears to be a mistake/typographical error, which in fact was to be Section 37 (1)
(b)] against an order setting aside or refusing to set aside the arbitral award under Section 34 of the New Act. It was asserted from the part of the Government that, court fee in such case was liable to be paid under Article 4 of schedule II of the Kerala Court Fees and Suits Valuation Act and reliance was sought to be placed on Section 85 of the New Act 1996 dealing with 'repeal and ZARBA Nos.3, 41, 88 and 247 of 2016 : 21 : savings', whereby the 'Old Act' [Arbitration Act, 1940] was repealed. Sub section 2 of Section 85 stipulates that, notwithstanding such repeal, the 'Old Act' would apply to the arbitral proceedings commenced before the 'New Act' came into force, unless otherwise agreed to by the parties and that the 'New Act' would apply in relation to the arbitration proceedings commenced on or after commencement of the 'New Act', further stipulating under Clause (b) of Sub Section 2 that all Rules made and Notifications published, under the 'Old Act' shall, to the extent they are not repugnant to the 'New Act', be deemed respectively to have been made or issued under the 'New Act'. The Bench observed that the Kerala Court Fees and Suits Valuation Act and its schedules were not rules made or notifications published under the Arbitration Act 1940 and as such, Section 85 had no application. We are in full agreement with the said declaration.
11. It was still asserted from the part of the Government, that non-mentioning of the name of the 'New Act' under Article 4 of Schedule II of the Kerala Court Fees and Suits Valuation Act [but for mentioning the Arbitration 1940], was not of much relevance, as by virtue of Section 7 of the Kerala Interpretation and General ZARBA Nos.3, 41, 88 and 247 of 2016 : 22 : Clauses Act (as amended in 1957), the provisions of the 'New Act' will simply step into the slot provided by the 'Old Act'. Similar provision as existing under the General Clauses Act 1987 (Central Act) was also adverted to. But the Bench did not accept the said contention, for the reason that the provisions in the General Clause Act can be banked upon only if the Legislature had omitted to take note of the commencement of the 'New Act' while amending the Kerala Court Fees and Suits Valuation Act. The 'New Act 1996' was already taken note of by the Legislature, when it stipulated the court fee payable on application to set aside an award under Section 34 of the 'New Act', as provided under Article 11 (m) of the Schedule II. Still, when it came to the court fee payable in an appeal in terms of Section 37 of the 'New Act', no amendment or reference was made in this regard under Article 4 of the Schedule II of the Kerala Court Fees and Suits Valuation Act and hence it could not be said that the Legislature was not aware of the commencement of the New Act. It was accordingly held that, in the absence of specific provision for payment of court fee in an appeal under Section 37 of the 'New Act' and since Article 4 of Schedule II of the Court Fees Act was not applicable, the court fee ZARBA Nos.3, 41, 88 and 247 of 2016 : 23 : payable could have been only with reference to Article II (3) (A) (i)
(a) of the schedule II. It was thus held that the Court fee payable in appeal (in the absence of any specific provision prescribed in this regard) was to be same as payable before the Court below. The Bench however observed that, at the time of filing the appeal, the court fee payable under Article 11 (m) of the II Schedule, as amended by the Kerala Court Fees and Suits Valuation Act (amendment Act 2013) was Rs.400/-, if the value exceeded Rs.10,000/-. But at the time of filing the application before the Court below to set aside the Award in the said case, it was only Rs.250/- and as such, in view of Section 52 of the Act, the Bench held that the appellant could not be compelled to pay more than what was paid before the Court below, in the absence of specific provision. Reliance was also placed on the decisions rendered in State of Bombay v. Supreme General Films Exchange [AIR 1960 SC 980], Usha v. Food Corporation of India [1997 (1) KLT 264], Procurator, R.C. Diocese, Calicut v. State of Kerala [2003 (1) KLT 618] and Abdulla v. State of Kerala [2003 (1) KLT 961]. It was accordingly held that the court fee payable for maintaining the appeal in the said case was only Rs.250/- as paid ZARBA Nos.3, 41, 88 and 247 of 2016 : 24 : under Article (11) (m) of the Second Schedule at the time of filing the application to set aside the Award under Section 34 of the 'New Act'.
12. The Apex Court in State of Bombay v. Supreme General Films Exchange [AIR 1960 SC 980], considered the controversy involving impairment of the right of appeal by imposing a more stringent or onerous condition and whether it is a matter of 'procedure' alone or was it a matter of 'substantive' right. Placing reliance on the decisions already on the point, it was held that the appellant was having a vested right of appeal when the proceedings were initiated and the right of appeal was to be governed with reference to the position as it stood at that point of time. The finding as contained in paragraphs 11 and 12 is in the following terms :
"11. The question was considered in reverse in Delhi Cloth and General Mills Company Limited v.Income-tax Commissioner. Delhi, 54 Ind App 421 : (AIR 1927 PC
242), and the principle of colonial Sugar Refining Co. v.
Irving, 1905 AC 369, was applied. Another decision in point is that of Nagandra Nath Bose v. Mon Mohan Singh, 34 Cal WN 1009: (AIR 1931 Cal 100). In that ZARBA Nos.3, 41, 88 and 247 of 2016 : 25 : case the plaintiff instituted a suit for rent valued at Rs. 1,306-15-0 and obtained a decree. In execution of that decree the defaulting tenure was sold on November 20, 1926, for Rs. 1,600. On December 19, 1928, an application was made under O. 21, R. 90 of the Code of Civil Procedure by the petitioner who was one of the judgment-debtors for setting aside the sale. That application having been dismissed for default of his appearance, the petitioner preferred an appeal to the District Judge, Hoogly, who refused to admit the appeal on the ground that the amount recoverable in execution of the decree had not been deposited as required by the proviso to S. 174 (c)of the Bengal Tenancy Act as amended by an amending Act of 1928. The contention of the petitioner was that the amending provision, which came into force on February 21, 1929, could not affect his right of appeal from the decision on an application made on December 19, 1928, for setting aside the sale. Mitter, J. said:
"We think the contention of the petitioner is well- founded and must prevail. That a right of appeal is a substantive right cannot now be seriously disputed. It is not a mere matter of procedure. Prior to the amendment of 1928 there was an appeal against an ZARBA Nos.3, 41, 88 and 247 of 2016 : 26 : order refusing to set aside a sale (for that is the effect also where the application to set aside the sale is dismissed for default) under the provisions of Order 43, Rule 1 of the Code of Civil Procedure. That right was unhampered by any restriction of the kind now imposed by S. 174 (5), proviso. The Court was bound to admit the appeal whether the appellant deposited the amount recoverable in execution of the decree or not. By requiring such deposit as a condition precedent to the admission of the appeal, a new restriction has been put on the right of appeal, the admission of which is now hedged in with a condition. There can be no doubt thatthe right of appeal has been affected by the new provision and in the absence of an express enactment this amendment cannot apply to proceedings pending at the date when the new amendment came into force. It is true that the appeal was filed after the Act came into force, but that circumstance is immaterial - for the date to be looked into for this purpose is the date of the original proceeding which eventually culminated in the appeal. This decision was approved by this Court both in Hossein Kasam Dada, 1953 SCR 987: (AIR 1953 Sc 221) and Garikapatti Veeraya, 1957 SCR 488: ((S) AIR 1957 SC 540) (supra).
ZARBA Nos.3, 41, 88 and 247 of 2016 : 27 :
12. It is thus clear that in a long lime of decisions approved by this Court and at least in one given by this Court, it has been held that an impairment of the right of appeal by putting a new restriction thereon or imposing a more onerous condition is not a matter of procedure only; it impairs or imperils a substantive right and an enactment which does so is not retrospective unless it says so expressly or by necessary intendment."
The above decision was relied on by the Division Bench of this Court in the decision reported in 2004 (1) KLT 619 (cited supra).
13. Section 21 of the Kerala Court Fees and Suits Valuation Act deals with the provision as to how the court fee is to be reckoned, which in fact is in accordance with the provisions of Chapters IV, VI, IX and schedules I and II. As mentioned already, Section 52 of the said Act, provides that, fees payable in appeal shall be the same as the fee that shall be paid in the Court of first instance, on the subject matter of appeal. If a specific court fee is mentioned in the schedule (schedule I or II, as provided under Section 21 of the Kerala Court Fees and Suits Valuation Act), the court fee payable will be the figure as given in the concerned schedule, more so since the schedule forms an integral part of the ZARBA Nos.3, 41, 88 and 247 of 2016 : 28 : Act, as held by this Court in Ayyappan Manuvel Vs. Annal Joice [1993 (2) KLT 509]. A question came up for consideration before a Full Bench of this Court as to whether 'ad valorem' court fee could be collected in an appeal, when there is no such stipulation with regard to the court fee payable at the first instance, in an application for issuance of a succession certificate. The Full Bench held in Kurian Vs. Ayyappan [1982 KLT 434] that, merely because the court fee payable in the first instance in an application for issuance of succession certificate was not 'ad valorem', it did not follow that Article I of Schedule I could not apply to an appeal from that order, in spite of the specific provision under Article 4 of Schedule I of the Kerala Court Fees and Suits Valuation Act. It was also made clear by the Full Bench that, Section 52 of the Kerala Court Fees and Suits Valuation Act stipulating payment of court fees on appeals to be the same as that was paid in the first instance, must be read and understood as a general provision, subject to the special provisions in the Act. Article 4 of the Schedule I of the Kerala Court Fees and Suits Valuation Act was held as a specific provision dealing with appeal against orders passed under the Indian Succession Act and hence in an appeal ZARBA Nos.3, 41, 88 and 247 of 2016 : 29 : arising therefrom, the court fee had to be paid in terms of Article 4 Schedule I of the Kerala Court Fees and Suits Valuation Act . As such, it cannot but be held that the court fee payable in respect of an application filed for the necessary reliefs, paying the court fees in the court of first instance under Article 11 (m) need not be the same court fees payable in the appeal, if a separate provision as available under Article 4 stipulating 'ad valorem' court fees is in existence.
14. Coming to the scope of appeals under the Old Arbitration Act, appealable orders were specified under Section 39 (which is already extracted). From the above provision, it is quite obvious that the scope of challenging an interim order of a Court was only to a very limited extent, which did not envisage any such step or situation as visualised under Section 9 of the 'New Act'. This being the position, the Court fee payable was also prescribed mainly with reference to the final Awards and it was in the said circumstances, that a finding was rendered by a Bench of this Court in Jaisu Shipping's case (cited supra), that there was no such provision for separate court fee in an appeal against interim order, holding that the court fee had to be paid only in terms of Section 3 (iii) (A) ZARBA Nos.3, 41, 88 and 247 of 2016 : 30 :
(i) (a) of the second schedule. To make it more clear, there was no corresponding provision in the 'Old Act' (1940 Act) as similar to the one now in existence by way of Section 37 (1) (a) of the 'New Act', enabling to file appeal against an order granting or refusing to grant any interim relief under Section 9 of the 'New Act'. As such, Article 4 of the second schedule of the Kerala Court Fees and Suits Valuation Act was not originally intended to govern the field of appeal against any interim order. Since the field was governed by the decision rendered by a Division Bench of this Court in Jaisu Shipping's case (cited supra), holding that Article 4 of the Schedule II to the Kerala Court Fees and Suits Valuation Act (as it existed earlier) did not refer to the 'New Act', but for referring to the 'Old Act' (1940 Act), Court fee on appeal against an interim order having not been provided elsewhere had to be paid under Article 3 (iii) (A) (i) (a) of the 2nd Schedule. The question now comes to be considered is the consequence of the amendment to the Schedule, by incorporating the 'New Act', in Article 4 of Schedule II, w.e.f. 01.04.2013.
15. The effect of the amendment was considered by this Court on an earlier occasion in 2015 (5) KHC 929 (cited supra) ZARBA Nos.3, 41, 88 and 247 of 2016 : 31 : wherein it was held that, by virtue of the amendment with effect from 01.04.2013 'ad valorem' court fee had to be satisfied in the said case, making it clear that the decision rendered by the Bench earlier in Jaisu Shipping's case (cited supra) and sought to be relied on by the appellant had no application. The declaration given in the said case [2015 (5) KHC 929 (cited supra)] was in view of the factual position involved in the said case and the nature of relief sought for (for clarity of thoughts and expression, we called for the 'Judges Papers' of the said case and perused the entire records). It is true that the said appeal arose from an order passed by the concerned District Court in a petition for interim reliefs filed under Section 9 of the New Arbitration Act. But the contention of the appellant Bank was that, it was as good as a 'final relief' and that the District Court had no jurisdiction to pass any such order interfering with the rights of the appellant Bank under the SARFAESI Act, at the instance of a third party to the loan transaction with the Bank, that too, without the Bank in the party array and thus without hearing. This Court was of the view (going by the contents of the impugned order), that the Bank was in no way affected adversely, in so far as the interim order passed by the ZARBA Nos.3, 41, 88 and 247 of 2016 : 32 : Court stipulating the settlement terms between the contesting litigants was subject to the approval of the Bank and also subject to the approval of the DRT where the concerned cases were pending; as made clear in the order itself. It was further made clear in the said order that the order will be having no effect, if the conditions therein were not complied with by the concerned party on or before the stipulated date. Still, if the appellant Bank wanted to challenge the same, value of the subject matter had to be considered, and court fee had to be satisfied in terms of Article 4 (ii) of Schedule II of the Kerala Court Fees and Suits Valuation Act (as amended with effect from 01.04.2013). Since the factual position was not discussed in the order passed by this Court [reported in 2015 (5) KHC 929 (cited supra)], there arose a doubt as to whether 'ad valorem' court fee has to be satisfied in all appeals, after the amendment in the Kerala Court Fees and Suits Valuation Act and hence the present attempt, to deal with the issue in its enterity.
16. In the aforesaid case [2015 (5) KHC 929 (cited supra)], the appellant Bank had provided financial assistance to one Mr. Joseph and his wife Tresa Joseph, on the basis of the security interest created in favour of the Bank. The borrowers turned to ZARBA Nos.3, 41, 88 and 247 of 2016 : 33 : be defaulters, when the Bank proceeded with steps under SARFAESI Act, which was sought to be challenged by the borrowers by filing S.A. No. 116 of 2013, before the DRT Ernakulam. While so, the daughter and son-in-law of the borrowers, by name Nice Moly Nishad and Nishad Mathew approached the DRT by filing S.A. 102 of 2014, stating that, they were the partners of another firm in which the borrowers were also partners and that, by virtue of some agreement in between, they had made investments in the property/building belonging to the borrowers upon which security interest was created and hence they might be heard in connection with the recovery proceedings initiated by the Bank under the SARFAESI Act. The prayer was resisted by the Bank stating that there was no privity of contract. While so, the Bank filed O.A. No. 202 of 2015 for realization of the amount due from the borrowers (which was stated as of about 10.80 crores, as on that date) and the said case was also pending before the DRT. In connection with some dispute among the partners, Arbitration O.P. No. 155 of 2014 came to be filed before the Additional District Court V, Ernakulam and the son-in-law and his wife (daughter of the borrowers) sought for various interim ZARBA Nos.3, 41, 88 and 247 of 2016 : 34 : reliefs in the petition filed under Section 9 of the Arbitration and Conciliation Act 1996. In the course of the proceedings, the parties wished to settle the liability to the Bank and restart the business. On expressing the desire, the District Court directed both the sides to file written proposals. The proposals submitted were considered and the District Court modified the same in the manner as given in paragraph 4 onwards, which is extracted below:
"4. Today heard both sides. The proposals suggested by the parties are modified as follows :
(1) The petitioner shall pay an amount not less than Rupees three crores at the lender Bank which is the Syndicate Bank Shanmugham road branch on or before 30.04.2015.
(2) The petitioner shall take over the management of the hotel business after clearing the overdue amount and after preparing an inventory of materials, equipments implements, including furniture, vessels etc. available at the Marrios hotel and its premises.
(3) The running of the business and management of the Marrios Hotel shall be subject to the following conditions.
(i) The petitioners shall maintain a true ZARBA Nos.3, 41, 88 and 247 of 2016 : 35 : and correct account of the daily business.
(ii) The petitioners shall pay interest portion of the remaining amount outstanding to the bank every month on or before 5th day of each month, for a period of 12 months regularly and thereafter pay the loan installment with interest and other charges as directed by the bank with in a period of 2 years (within 3 years from today)
(iii) The amount spent for paying the overdue amount and towards the loan installment shall be treated as investment of the petitioners in the partnership business.
(iv) If the petitioners have not complied with first condition regarding payment of over due amount to the bank the proposal of the petitioners shall automatically stand vacated.
(v) If the proposal satisfactorily works and the liability towards the bank is cleared the respondent shall convey the title of the building and property in favour of the petitioners who are the son in law and the daughter of the respondents.
4. As a token of acceptance of the above ZARBA Nos.3, 41, 88 and 247 of 2016 : 36 : condition the petitioner shall deposit Rs.25,00,000/- on or before 09.04.2015 in the loan account at the above bank and if the bank for any reason refused to receive the same petitioner shall make fixed deposit in the official name of the Special Judge, Idamalayar Investigations and produce the FD receipt before court which shall be kept in safe custody until further direction.
5. The petitioners here after shall not create any additional liability in the name of the respondent or in the name of the existing partnership firm. The petitioners are at liberty to open a new bank account in any of the banks of their choice in the name of the business but the existing partnership firm or the respondents shall not be made liable for any of the transaction made by the petitioners with the bank or outsiders.
6. The above proposal shall be implemented subject to the approval of the Syndicate Bank, Shanmugham road branch and the DRT were SA 102/2014 is pending. If for any reason the proposal has become impracticable, the parties at liberty to find out a purchaser and dispose off the property at the maximum market price and also clear of the entire loan ZARBA Nos.3, 41, 88 and 247 of 2016 : 37 : due to the above bank and other liabilities, if any and deposit the balance amount in a Nationalised bank jointly in the name of the Special Judge, Edamalayar Investigation and for a period of five years and produced F.D. receipt which will be kept in safe custody until the partnership is dissolved as per law. After dissolving the firm the F.D. shall be encashed and the amount shall be disposed as per the account of the firm.
The parties are directed to approach the bank and DRT and obtain no objection in implementing the above proposal. The case will considered against on 09.04.2015."
From the above, it is quite evident that, though the Bank was not a party to the proceedings, it was categorically made clear by the District Court that the above proposal shall be implemented subject to the approval of the Bank, Shanmugham Road Branch and the DRT, where the S.A. No. 102 of 2014 was pending. The parties were accordingly directed to approach the Bank and the DRT and obtain 'no objection' in implementing the above proposal and the case was listed for further consideration on 09.04.2015, as stated in the last paragraph of the order. In the said circumstances, it ZARBA Nos.3, 41, 88 and 247 of 2016 : 38 : was not at all necessary for the Bank to feel aggrieved and still, if the Bank wanted to challenge the order, which even according to them was a 'final verdict' and not an interim order, this court held that they had to satisfy 'ad valorem' court fee in terms of Article 4
(ii) of schedule II. In other words, the said judgment did not mean and intend that in all cases where appeals arise under Section 37 of the 'New Act' 'ad valorem' court fee had to be paid under Article 4 (ii) Schedule II of the Kerala Court Fees and Suits Valuation Act. It has now been revealed that the above matter came to be listed again before the Bench on 05.04.2016; on which day, it was submitted by the appellant Bank that the matter was settled and accordingly, the proceedings were ordered as closed.
17. Coming back to the issue in hand, as mentioned already, different types of appeals are envisaged under the 'New Act'. While Section 37 (1) (a) deals with appeals from interim orders, 37 (1)
(b) deals with appeals from the final verdict. Section 37 (2) deals with other instances of appeal arising from the orders passed by the Arbitral Tribunal, with reference to Sections 16 and 17 of the New Act.
18. With regard to Article 4 (i) of the second schedule of the ZARBA Nos.3, 41, 88 and 247 of 2016 : 39 : Court Fees Act, it is to be noted that the same makes a reference to 'value for the purpose of jurisdiction', where as under sub Article
(ii) of Article 4, it is with reference to the 'amount or value of the subject matter'. It is also to be noted that, there may be cases where valuation is not possible or orders passed even before quantification; by virtue of which no 'ad valorem' court fee is computable or payable. There may be orders solely with intent to protect the property, and not with regard to any appropriation, where also the amount or value of the subject matter may be irrelevant. Value for the 'purpose of jurisdiction' was having some relevance under the Old Act, as discernible from the words appearing in Article 4 (i) of the second schedule, where reference is also there as to the order of a Munsiff's Court or of a Superior Court, which is not the position under the New Act (1996 Act).
19. Yet another important aspect to be noted is that, there is an ocean of difference between the Scheme of the 'Old Act' (Arbitration Act 1940) and the 'New Act' (Arbitration and Conciliation Act 1996). 'Chapter II' of the Old Act deals with Arbitration, without intervention of a Court while 'Chapter III' (Section 20) deals with Arbitration with the intervention of a Court. ZARBA Nos.3, 41, 88 and 247 of 2016 : 40 : The provisions under the 'Old Act' show that the Court had larger power under the 'Old Act'; whereas it is not so under the 'New Act' where the power of the Court is limited. Article 4 (i) of the Schedule II of the Kerala Court Fees and Suits Valuation Act was introduced with reference to the 'Old Act', because of Section 20 under the 'Old Act' providing for Arbitration with the involvement of a Court and such Court under the 'Old Act' used to vary among the Munsiff's Curt, Sub Court and District Court, based on the valuation or such other relevant aspects, in turn giving chance to result in an appeal where court fee was payable either under Article 4 (i) or under Article 4 (ii) of the Schedule II. When it came to the 'New Act', power and jurisdiction of the Munsiff's Court and Sub Court have disappeared and power is vested only with the District Court.
20. Section 41 of the 'Arbitration Act 1940' deals with the procedure and powers of the Court, which reads as follows :
"41. Procedure and powers of Court - Subject to the provisions of this Act and of rules made there under -
(a) the provisions of the Code of Civil Procedure, 1908 (5 of 1908) shall apply to all proceedings before the Court, and to all appeals, ZARBA Nos.3, 41, 88 and 247 of 2016 : 41 : under this Act, and
(b) the Court shall have, for the purpose of, and in relation to, arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of, and in relation to, any proceedings before the Court.
Provided that nothing in clause (b) shall be taken to prejudice any power which may be vested in an arbitrator or umpire for making orders with respect to any of such matters."
21. When Clause (a) of Section 41 deals with such powers with reference to Civil Procedure Code, Clause (b) deals with such powers in relation to second schedule of the Arbitration Act 1940. Second schedule to the Arbitration Act 1940 reads as follows :
THE SECOND SCHEDULE (See Section 41) POWERS OF COURT
1. The preservation, interim custody or sale of any goods which are the subject matter of the reference.
2. Securing the amount in difference in the reference.
ZARBA Nos.3, 41, 88 and 247
of 2016 : 42 :
3. The detention, preservation or inspection of any property or thing which is the subject of the reference or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon or into any land or building in the possession of any party to the reference, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence.
4. Interim injunctions or the appointment of a receiver.
5. The appointment of a guardian for a minor or person of unsound mind for the purposes of arbitration proceedings.
From the above, it is quite evident, that under the 'Old Act', power was there for granting interim relief in relation to preservation of property or for securing the amount or interim injunction and the like, as now available under Section 9 of the new Act. Eventhough power was vested with the Court under the 'Old Act', no right of appeal was provided against such orders, except those coming within the purview of Section 39 (extracted already). Evidently, ZARBA Nos.3, 41, 88 and 247 of 2016 : 43 : the 'New Act' provides remedy by way of appeal even against interim orders as well, to the extent as dealt with under Section 37 (1) (a). Because of this vital distinction, appropriate provisions ought to have been there with regard to the payment of court fee as well. Now, reading Article 4 (i) and (ii) of the Second Schedule once again in the above backdrop, the Article 4 (i) can be given effect to, in so far as the orders under challenge in appeal are those passed by the District Court (which is also included in the said provision though it makes a reference to Munsiff's Court as well and where the value for the purpose of the jurisdiction does not exceed fifteen thousand), stipulating the court fee as Rs.50/-. Same is the court fee payable in respect of an original application preferred before the District Court under Article 11 (l) (ii) of the second schedule. We are of the view that, in respect of the interim orders passed under Section 9 of the New Act, which do not finally adjudicate the issue fixing the liability or where the valuation is not possible or not quantified, court fee payable in such appeals has to be paid as provided under Article 4 (i) of the Second Schedule. In other cases, when it comes to appeals arising from the final verdicts coming within the purview of Section 37 (1) (b), it shall be ZARBA Nos.3, 41, 88 and 247 of 2016 : 44 : 'ad valorem' court fee, payable as per Article 4 (ii) of the same Schedule. For the very same reasoning, appeal under Section 37 (2) both (a) and (b) arising from the orders passed by the Arbitral Tribunal shall also attract court fee only in terms of Article 4 (i) of the second Schedule and not on the 'ad valorem' basis.
22. In view of the above declaration, this Court draws the following conclusions :
(i) By virtue of the amendment of the Kerala Court Fees and Suits Valuation Act 1959 w.e.f 01.04.2013 the court fee payable in respect of appeals preferred under Section 37 (1) (a) of the Arbitration and Conciliation Act arising from interim orders passed by the District Court need not be on 'ad valorem' basis and it shall be in terms of Article 4 (i) of the second schedule, to the extent it is applicable.
(ii). If any factual situation arises wherein such interim order cannot be fit into the slot of Article 4 (i) of the Second Schedule, the Court Fee payable in the appeal shall be in terms of Article 3 (iii) (A) (1) (a) of the second schedule.
ZARBA Nos.3, 41, 88 and 247 of 2016 : 45 :
(iii). If the order, though styled as an interim order, is as good as a final order granting the relief to a quantified extent, court fee shall be payable on 'ad valorem' basis, in terms of Article 4 (ii) of the second schedule.
(iv). In respect of all the verdicts of the District Court coming within the purview of Section 37 (1) (b) of the Arbitration and Conciliation Act 1996, court fee payable shall be on 'ad valorem' basis, in terms of Article 4 (ii) of the Second schedule.
(v). Appeal preferred under Section 37 (2) of the New Act against orders of the Arbitral Tribunal arising from Section 16 (2) and 16 (3) or under Section 17 does not require satisfaction of 'ad valorem' court fee and it will be governed by the points answered above.
(vi). Section 52 of the Kerala Court Fees and Suits Valuation Act, being only a general provision, it cannot place any hurdle in calculating and realizing the court fee payable on appeal in terms of Article 4 ZARBA Nos.3, 41, 88 and 247 of 2016 : 46 : of the IInd schedule, it being a special provision and has full effect after the amendment w.e.f. 01.04.2013.
(vii). Non prescription of 'ad valorem' court fee on the original side or a different slab, if it be so, cannot adversely affect the prescription of separate court fee on 'ad valorem' basis in respect of appeals.
23. In the light of the above conclusions, the Registry is directed to assign proper number to:
(i) Arbitration Appeal now bearing No. ZARBA 88 of 2016; subject to satisfaction of court fee in terms of Article 4 (i) of the Schedule II of the Kerala Court Fees and Suits Valuation i.e. on satisfaction of Rs. 50/-;
(ii) Arbitration appeal now bearing No. ZARBA 3 of 2016, subject to satisfaction of court fee in terms of Article 4(i) of the Schedule II of the Kerala Court Fees and Suits Valuation i.e. on satisfaction of Rs.50/-;
ZARBA Nos.3, 41, 88 and 247 of 2016 : 47 :
(iii) Arbitration appeal now bearing No. ZARBA 41 of 2016, subject to satisfaction of court fee in terms of Article 4 (i) of the Schedule II of the Kerala Court Fees and Suits Valuation i.e. on satisfaction of Rs.50/-;
(iv) Arbitration appeal now bearing No. ZARBA 247 of 2016, subject to satisfaction of 'ad valorem' court fee in terms of Article 4 (ii) of the Schedule II of the Kerala Court Fees and Suits Valuation Act.
P. R. RAMACHANDRA MENON, JUDGE ANIL K. NARENDRAN, JUDGE kmd