Calcutta High Court
Kolkata Hotels Private Ltd. vs United Builders And Anr. on 17 March, 2003
Equivalent citations: (2003)1CALLT549(HC)
Author: D.K. Seth
Bench: Dilip Kumar Seth
JUDGMENT D.K. Seth, J.
1. An application under Section 34 of the Arbitration & Conciliation Act, 1996 (Act) was made before the learned District Judge, Barasat. This application was dismissed on the ground that the Arbitrator was nominated by the learned Chief Justice under Section 11 Sub-section (6) of the Act, and as such; it is this Court alone has jurisdiction and the jurisdiction of all other Courts including Barasat Court are excluded by reason of Section 42 of the Act. This order has since been challenged in this appeal. Notices were issued to the respondents who had appeared in this matter. The question involves a question of law on admitted facts. Therefore, the Court proposed to hear out the appeal itself.
2. By consent of the parties, this matter is treated as on day's list for hearing. The parties had addressed the Court on merits of the case.
3. Dr. Tapas Banerjee, learned senior counsel appearing for the appellant, had contended that while discharging function under Section 11 Sub-section (6) of the Act, the Hon'ble Chief Justice discharges an administrative function. The mischief of Section 42 is attracted only when an application is made and that too before a Court. Such Court must be a Court within the meaning of Section 2(e) of the Act. Unless these tests are satisfied, the mischief of Section 42 will not be attracted. A plain reading of Sub-section (6) of Section 11 of the Act clearly indicates that the function provided under Sub-section (6) is not a function of a Court. He had elaborated his submission. He had relied on some decisions to support his contention. We shall refer to those decisions at appropriate stage.
4. Learned counsel for the respondents, on the other hand, contended that so far as this case is concerned, the High Court in its Original Side is the Principal Civil Court. Inasmuch as the appellant has its office within the Ordinary Original Civil Jurisdiction of this Court and that payments were received within the said jurisdiction by the respondents. Therefore, according to him, the Chief Justice exercised the power under Sub-section (6) of Section 11 as a Principal Court within the meaning of Section 2(e) of the Act, attracting the mischief of Section 42 thereof. He further contended that the word "application" used in Section 42 of the Act includes a letter. That apart, in the present case, a petition was made to this High Court. This petition, after some hearing, was ultimately referred to the learned Chief Justice. Therefore, here, the learned Chief Justice exercised power on the basis of a petition, which satisfies the test of application provided for in Section 42. According to him, in the present case, the test of Principal Civil Court defined in Section 2(e) is satisfied. Therefore, there is no escape from the mischief of Section 42. He further contended that when Sub-section (6) of Section 11 clearly mentions that the learned Chief Justice has to nominate an Arbitrator or the learned Chief Justice could designate someone else to nominate Arbitrator. Therefore, the action of the Chief Justice is judicial action and when discharging such action, the Chief Justice is a Court within the meaning of Section 2(e). He thus supported the order appealed against.
5. The question seems to be very simple. It is only to be examined as to whether while discharging function under Sub-section (6) of Section 11 of the Act, the Chief Justice functions as a Court within the meaning of Section 2(e) of the 1996 Act. Such interpretation is not dependent on the basis of the facts of a particular case. It has to be interpreted on the general principle.
6. Section 11 does not postulate that it is only in respect of matters in respect of which the High Court is a Principal Court, a reference is to be made to the Chief Justice. Sub-section (6) of Section 11 can be resorted to, as is apparent from Sub-section (12) thereof, even in respect of matters in respect of which this High Court is not a Principal Court within the meaning of Section 2(e) and as such the mischief of Section 42 cannot be attracted.
7. It cannot be so distinguished that the Chief Justice while discharging function under Section 11(6) would be a Court when the subject matter falls within Chief Justice, who is only the administrative head of the Court. Therefore, reference to the learned Chief Justice as explained in Clause (b) of Section 11(12) does not satisfy the test of Section 2(e). Unless it satisfies the test under Section 2(e), Section 42 cannot be attracted.
8. That apart, Section 42 conceives of an application under Part 1 of the 1996 Act whereas Section 11 does not refer to any application but a request to be made to the Chief Justice. While repealing the Arbitration Act, 1940, a provision similar to Section 20 of the repealed 1940 Act has since been incorporated in the 1996 Act. When the enactment has provided for a different mode for appointment of Arbitrator, without filing the agreement in Court and such appointment being made without the assistance of the Court, then the power discharged under Section 11 cannot be treated to be a function discharged by a Court within the meaning of Section 42 read with Section 2(e).
9. The only exception with regard to the pre-arbitral matter is in Section 8 of the 1996 Act. But that provision has to be read with reference to Section 34 of the 1940 Act. It was a discretion of the Court vested under Section 34 of the 1940 Act. But Section 8 of the 1996 Act made it mandatory to the Court. The language of Section 8 is peremptory. No discretion is left to the Court. As soon it is brought to the notice of the Court that there exists an arbitration agreement, the Court cannot proceed with the suit but has to refer the parties to arbitration. It does not decide any question in between the parties. This provision applies to any Court before which the existence of arbitration agreement is brought to notice irrespective of the fact whether such Court is a Court within the meaning of Section 2(e) having jurisdiction or not. Section 8 is a process through which Court's attention is drawn to the fact that the subject matter forms a subject matter of an arbitration agreement. Therefore, an application under Section 8 is not an application contemplated under Section 42 of the Act as the Court trying the action to try the suit. While discharging functions under Section 8, the Court is not a Court within the meaning of Section 2(e). Inasmuch as it has no power to adjudicate the dispute. It was so held in the decision in P. Anand Gajapathi Raju and Ors. v. P.V.G. Raju (Dead) and Ors., . The ratio decided therein lays down that in order to attract the application of Section 42, the function must be adjudicatory even when discharged by a Court.
10. The function exercised under Section 11 is not an adjudicatory one. It is only after the expiry of the stipulated time a request is made to the Chief Justice to make the appointment. The Chief Justice or his designate does not perform any adjudicatory function. Even if the word 'decision' is used, even then a request to nominate an Arbitrator does not convert an administrative function into an adjudicatory one. Such a view was taken by the Apex Court in Konkan Railway Corporation Ltd. and Anr. v. Rani Construction Put. Ltd., cited by Mr. Banerjee.
11. In case we bring the mischief of Section 42 into Section 11, when the Chief Justice delegates the power to some other person or an institution and the Arbitrator is nominated by such person or institution, then all subsequent applications are to be made before such person or institution. There is nothing to indicate that while nominating such person or institution, the Chief Justice would be taking into account the definition of Court in Section 2(e). The power to delegate by the Chief Justice is to persons and institutions. It is not restricted to a Court within the meaning of Section 2(e). If the contention of the learned counsel for the respondents is accepted, the result would be incompatible and incomprehensible. Such an analogy was echoed by the Andhra Pradesh High Court in Chief Engineer (Construction) South Central Railways, Secunderabad and Anr. v. M.V.V. Satyanarayana and Anr., 2001 (1) Arb LR 253 (AP). We are fully in agreement with the view taken by the Andhra Pradesh High Court in the said decision where it was found that persons or institutions so designated by the Chief Justice under Section 11 would not be a Court to attract the mischief of Section 42 of the Act.
12. Dr. Banerjee had relied on a decision in Deepak Mitra v. District Judge, Allahabad and Ors., AIR 2000 Allahabad 9. Mr. Banerjee wanted to rely on only one sentence by which it had held "As soon the reference is made, the Court becomes functus officio and, therefore, it cannot be a Court under Section 37 of the Act." But that decision does not help us in the present context since there the reference was made pursuant to an order passed in a writ proceeding, which was not a Principal Civil Court within the meaning of Section 2(e) capable of determining the subject matter of the arbitration and as such the said decision is distinguishable.
13. In the circumstances, we hold that the function discharged by the learned Chief Justice under Section 11(6) of the Arbitration & Conciliation Act, 1996 is not a judicial function nor it is a Court even when the High Court in the Ordinary Original Civil Jurisdiction of this Court is the Principal Civil Court within the meaning of Section 2(e). As such, the mischief of Section 42 will not be attracted in a case where Arbitrator is nominated by the learned Chief Justice under Section 11(6).
14. In the result, the appeal succeeds. The judgment and order No. 5 dated July 24, 2002 passed in Miscellaneous Case No. 588 of 2001 by the learned District Judge, Barasat is hereby set aside. The matter is remanded to the learned District Judge, Barasat. The learned District Judge, Barasat shall decide the case on merit on grounds other than the question of Jurisdiction dealt with herein, as early as possible preferably within a period of three months from the date of communication of this order. The appeal is thus allowed.
There will be no order as to costs.
Urgent xerox certified copy of this order, if applied for, office is directed to deliver the same on priority basis.
R.N. Sinha, J.
15. I agree.