Patna High Court
The State Of Bihar vs Damodar Valley Corporation And Ors. on 27 September, 1973
Equivalent citations: AIR1974PAT354, AIR 1974 PATNA 354
Author: N.L. Untwalia
Bench: N.L. Untwalia
JUDGMENT S.K. Jha, J.
1. This is an appeal by the State of Bihar purporting to have been filed under Section 39(vi) of the Indian Arbitration Act, 1940(hereinafter referred to as 'the Arbitration Act'). It is directed against the judgment and decree, passed by the learned Additional Subordinate Judge, Hazaribagh in purported exercise of his power under Sec. 17 of the Arbitration Act on an application of the Damodar Valley Corporation (hereinafter referred to as 'the Corporation') for filing the award dated 14-8-1963 made by Shri B. Jagannadha Das, a Retired Judge of the Supreme Court of India. This award for the sake of brevity is hereinafter referred to as 'the Das Award'. The learned Additional Subordinate Judge by the impugned judgment has passed a decree in terms of the Das Award.
2. The short facts relevant for the disposal of this appeal are as follows, On 19-2-1962 in exercise of the powers conferred by S. 49 of the Damodar Valley Corporation Act 1948 (Act XIV of 1948) (hereinafter referred to as 'the D.V.C. Act') the Chief Justice of India appointed Shri B. Jagannadha Das the sole Arbitrator to decide all questions, disputes and differences between the Corporation on the one hand and the Governments of the States of West Bengal and Bihar on the other on the question of allocation of the cost of the four D.V.C. Dams to the three main objects of irrigation, power and flood control as contemplated by Section 33 of the D.V.C. Act. Subsequently, however, it appears that the Union of India was also added as a party to the aforesaid arbitration proceedings before Shri Das. The four D.V.C. Dams abovementioned were Tilaiya, Konar, Maithon and Panchet. Shri Das after hearing all the parties concerned gave his award on 14-8-1963. In the meantime, however, on 6-3-1962 in exercise of the powers conferred by Section 49 of the D.V.C. Act, the Chief Justice of India also appointed Dr. P.V. Rajamannar. Retired Chief Justice of the Madras High Court as the Sole Arbitrator for deciding all the questions, disputes or differences between the Corporation on the one hand and the participating Governments of the States of West Bengal and Bihar on the other, in regard to the interpretation of the words 'common expenditure' used in Section 32 of the D.V.C. Act and in relation to other matters in connection with the said disputes, Though Dr. Rajamannar was appointed an arbitrator at a later date than Shri Das, the former gave his award on 20-5-1963 about three months prior to the Das Award. For the sake of brevity the award given by Dr. Rajamannar will be referred to hereinafter as 'the Rajamannar Award',
3. In this background when the Das Award was given, the Corporation made an application for the filing of this award under Section 14 of the Arbitration Act and the award was accordingly filed in the court of the learned Subordinate Judge, Hazaribagh and registered as Title Suit No. 60 of 1963 and on transfer it came to be finally heard as Title Suit No. 60/6 of 1963/1965 by the learned Additional Subordinate Judge after due notices to the different parties, namely, the Corporation, the Union of India, the State of Bihar and the State of West Bengal. The Corporation supported the award wholly and prayed that a decree be passed in terms thereof. The Union of India raised no objection nor did the State of West Bengal do so. The appellant (the State of Bihar) filed an objection to the effect that the proceedings before the learned Subordinate Judge were without jurisdiction, inasmuch as, the matter in question, was outside the preview of the Arbitration Act. Alternatively, it was claimed that if a decree in terms of the Das Award be ultimately passed, then there should be a joint decree in terms of both the Das Award and the Rajamannar Award. It seems the point with regard to jurisdiction was not argued by the counsel for the appellant in the court below, as no reference to such an argument finds place in the judgment under appeal. With regard to the alternative plea of the appellant before the court below, the learned Additional Subordinate Judge rejected the plea mainly on the grounds that the Das Award mentions that such an objection was raised before Shri Das and was rejected by him while arbitrating upon the present dispute under Section 33 of the D.V.C, Act: and secondly, on the ground that there was a limitation prescribed for the filing of an award for making it a decree of the court and the State of Bihar could not be allowed to circumvent the period of limitation by way of an objection in the present proceedings so as to pray for a decree to be passed in terms of the Rajamannar Award also. On these two main grounds the court below held that the two awards could not be amalgamated and thus the alternative objection of the appellant was overruled and a decree in terms of the Das Award was passed.
4. The learned Solicitor General of India appearing on behalf of the appellant has urged the following two points in support of this appeal:--
(1) That the entire proceeding before the learned Subordinate Judge was wholly misconceived, as the Arbitration. Act was not applicable since the D.V.C. Act was a self-contained Act and contained provisions which would render the applicability of the Arbitration Act wholly inconsistent with the scheme of the D.V.C. Act.
(2) If at all a decree were to be pass ed, it must be passed on the basis of both the awards made by Dr. Rajamannar as well as Shri Das, since the Rajamannar Award must be deemed to have been incorporated in the Das Award.
Learned Solicitor General has elaborated the aforesaid two points by formulating the following 'three propositions:--
(i) Sections 2 (c) and 31 of the Arbitration Act require that an award must be filed in a court having jurisdiction in the matter to which the reference relates, i.e.. the 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.
(ii) The subject-matter of the reference was the dispute regarding allocation of costs of the construction of the Dams with reference to the principles embodied in Sections 12, 22, 27 and 30 to 36 of the D.V.C. Act and such dispute must be decided by an Arbitrator appointed by the Chief Justice of India under Section 49 of the D.V.C. Act and not by a Civil Court. If such dispute must be decided by the Arbitrator and not by the Civil Court, then there is no Civil Court within the meaning of Section 2 (c) which can entertain the award under Section 31 (1) of the Arbitration Act.
(iii) Section 33 of the D.V.C. Act directs the allocation of total capital expenditure to the three main objects, namely, irrigation, power and flood control. The total expenditure necessarily includes the expenditure on objects other than irrigation, power and flood control dealt with by Section 32 of the D.V.C. Act. The issue of allocation of the total capital expenditure is a single indivisible problem to be answered by the joint application of Sections 32 and 33 of the aforesaid Act. The two aspects of the single question are inseparable and the decisions of the two Arbitrators constitute a single complete decision about the allocation of the total capital expenditure. The two awards, therefore, must be read together as being supplementary to each other, and so viewed, the Das Award must be held to incorporate the binding nature of the Rajamannar Award also and as such a decree if at all it can be passed must incorporate both the awards.
5. At the outset I must point out that if the contention of the learned Solicitor General on the question of jurisdiction be held to be not sustainable in law, then his last point will present insurmountable difficulties and will be hard to accept. This is for the simple reason that if the Rajamannar Award be held to be incorporated in the Das Award itself, then a decree in terms of the Das Award will also be deemed to incorporate all such parts of the Rajamannar Award as may be deemed to be incorporated in the Das Award. On the other hand, if it be held that the two awards are not supplementary to each other, and there are parts of the one which are irreconcilable with the other, then there must be separate proceedings for the filing of the Rajamannar Award, so that a decree in terms thereof could be passed. This cannot be done by way of an objection to the filing of the Das Award. Be that as it may, I am not expressing any concluded opinion with regard to the validity of the last contention put forward by the learned Solicitor General, as in my view, fox the reasons hereinafter given, his contention with regard to the question of jurisdiction must be accepted.
6. While dealing with the question of jurisdiction of the civil Court under the Arbitration Act. I shall first refer to some of the provisions of the D.V.C. Act. Section 3 of this Act provides for the establishment of the Corporation. Section 12 defines its functions. Section 22 lays down the general powers of the Corporation to do anything necessary or expedient for the purpose of carrying out its functions. Section 24 provides for the overriding effect of this Act over certain provisions of the Acts mentioned in the Schedule, Parts I and II thereto in so far as the Corporation may have to carry out any of its functions in the Damodar Valley and for that purpose the Corporation has been empowered to act as if it were a State Government, a Canal Officer, Collector, or Forest Officer for the purposes of the Acts mentioned in the Schedule. Section 27 provides that all expenditure incurred by the Central Government for and in connection with the establishment shall be treated as the capital provided by the Central Government to the Corporation and such capital shall be adjusted between the participating Governments in accordance with the provisions of Sections 30 to 36. Section 29 provides for the setting up of a fund of the Corporation. Section 30 lays down that the participating Governments shall provide the entire capital required by the Corporation for the completion of any project undertaken by it in accordance with the provisions contained in subsequent sections. Section 31 provides for payment by participating Governments of their share of the capital on the dates specified by the Corporation and on the failure to provide such share on such dates, the Corporation is empowered to raise loan to make up the deficit at the cost of the Government concerned.
Section 32 contemplates that the Corporation shall have power to spend such sums as it thinks fit on objects authorised under the and other than irrigation, power and flood control and such sums will be treated as common expenditure payable out of the fund of the Corporation before an allocation of expenditure chargeable to projects on main objects is made in accordance with the provisions of Section 33. Sections 34, 35 and 36 deal with the capital allocated to irrigation, power and flood control respectivelv Section 37 provides for the disposal of profits and deficits by crediting and debiting, as the case may be, to the participating Governments in proportion to their respective shares in the total capital cost attributable to a particular object. Section 41 entitles the Corporation to have a share in the betterment levy if imposed by a participating Government. Section 43 while on the one hand makes the Corporation liable to pay taxes on income levied by the Central Government as if it were a Company, on the other hand, disentitles the State Government to any refund of any such taxes paid by the Corporation. Section 48 lays down that the Corporation shall be guided on questions of policy by instructions of the Central Government and in the event of any dispute regarding any question of policy the decision of the Central Government has been said to be final. Section 49, then provides for the resolving of disputes between the Corporation and the participating Governments.
It reads thus:
"49(1). Save as otherwise expressly provided in this Act, any dispute between the Corporation and any participating Government regarding any matter covered by this Act or touching or arising out of it shall be referred to an arbitrator who shall be appointed by the Chief Justice of India.
(2) The decision of the arbitrator shall be final and binding on the parties."
Section 58 lays down that the provisions of the D.V.C. Act or any Rule made thereunder shall have an overriding effect wherever there is any inconsistency between the D.V.C. Act and any other Act or instrument having the effect of an Act. It will thus be seen that the D.V.C. Act is a self-contained Act defining the special rights, privileges and obligations of the Corporation, the Central Government, and the participating Governments. Any right or liability with regard to the allocation of expenditure chargeable to project on main objects is a special feature of Section 33 of the D.V.C. Act. Section 49 which has already been quoted above in extenso lays down in express terms that the Arbitrator shall give his decision with regard to any dispute between the Corporation and any participating Government regarding any matter covered by the Act or touching or arising out of it and such decision shall be final and binding on the parties. It would thus be seen that the Arbitrator appointed under Section 49 of the D.V.C. Act has been empowered to give his "decision" which shall have a binding effect by its own force without anything else to be followed. The decision does not require to be made a rule of the Court before it can have a binding effect.
7. It is true that Section 46 of the. Arbitration Act lays down that the provisions of the Arbitration Act excepting certain sections with which we are not concerned shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as the! Arbitration Act is inconsistent with that1 other enactment or with any rules made thereunder. In order to see whether by virtue of the operation of Section 46 of the Arbitration Act, the provisions of this Act may be said to be applicable to the decisions of an Arbitrator under Section. 49 of the D.V.C. Act, the matter will have to be judged from two points of view.
8. Section 2 (c) of the Arbitration Act defines "Court" as a Civil Court having jurisdiction to decide the question forming the subject-matter of the reference if the same had been the subject-matter of a suit. It would therefore, have to be seen whether the rights and Liabilities created by special statutory provisions of Section 33 of the D.V.C. Act are such that can be enforced by resorting to a suit by either the Corporation or the Union of India or any of the participating States in the ordinary Civil Court. In my view, Section 33 creates rights and liabilities not existing at common law enforceable by ordinary civil remedy. It deals with special types of rights and obligations as between the Corporation, the Union of India and the participating States. Where a right or liability is created by a Statute which provides for a special remedy, the remedy provided by that Statute alone can be availed of. The law has been well laid down :n the case of Wolverhampton New Water Works Co. v. Hawkesford. (1859) 6 CB (NS) 336 at p. 356, which has also been approved by the Supreme Court in the case of N. P. Ponnuswami v. Returning Officer, Namakkal Constituency, 1952 SCR 218 at p. 231 = (AIR 1952 SC 64) where it has been held as follows:--
"There are three classes of cases in which a liability may be established founded upon statute. One is where there was a liability existing at common, law, and that liability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law; there, unless the statute contains words which expressly or by necessary implication exclude the common law remedy, the party suing has his election to pursue either that or the statutory remedy. The second class of cases is where the statute gives the right to sue merely, but provides no particular form of remedy; there, the party can only proceed by action at common law. But there is a third class, viz., where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it ......... The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to."
I think the present case must fall in the third category enunciated above and as such it is not competent to any of the contesting parties to adopt any course other than the statutory remedy provided for in Section 49 of the D.V.C. Act. The learned Solicitor General has relied upon quite a number of cases in order to bring home the point under consideration. Reliance has been placed on the case of Secretary of State v. Kameshwar Singh Bahadur, AIR 1936 Pat 87 which was a case under the Bengal Ferries Act (1 of 1885) for the proposition that if any private right is interfered with under the authority of any Statute and no remedy is provided in the Statute itself, the aggrieved party has none. But if remedy has been given in the Statute, the aggrieved party can get that remedy only in the manners stated. If a right is given to an individual by a Statute and the mode of obtaining that right is provided in the Statute itself, a suit to enforce the right is not maintainable in the Civil Court. The same principle has also been enunciated and followed in the case of Subodh Gopal Bose v. Mines Tribunal, Gaya, 1966 BLJR 968 = (AIR 1967 Pat 257) where while dealing with the provisions of Sections 9 and 12 of the Bihar Land Reforms Act (Bihar Act 30 of 1950), this Court held that the right conferred by Section 9(1) is a new right expressly conferred by the Act. It was, therefore, held that the special remedy provided in the Act for the determination of that right will exclude the ordinary Jurisdiction of the Civil Court. The right of the parties concerned being a pure creature of the Statute, it was further held that the remedy provided in the Act will impliedly exclude the jurisdiction of the Civil Court to that extent. The case of CT. A. CT. Chidambaram v. CT. A. CT. Subranianian, AIR 1953 Mad 492 was also referred to by learned Counsel and reliance was placed on the principle laid down by Venkata Rama Aiyar, J., as he then was, at page 497, paragraph 12 of 'the report. Though this was a case in which properties situate in a foreign territory were involved and the question for decision was whether the Court which had no territorial jurisdiction over the matter could refer to arbitration the matter which it could not entertain directly by way of a suit. The distinguishing feature of this case was that the Madras High Court was dealing with the territorial jurisdiction of the Civil Court, but the principle enunciated by the learned Judge in that case may equally be applied to the point at issue in the present case. A Court which has no jurisdiction to determine any matter in controversy in a suit has no jurisdiction to refer it for determination by Arbitrators, for it will be illogical to hold that what a Court cannot do directly it can do indirectly. The same principle has been laid down in the case of Balakrishna Mehta v. Corporation of Madras, AIR 1962 Mad 7 (FB) and in Narayan Prasad Ganesh Prasad v. Mohan Lall Sheodutt, AIR 1951 Nag 297. In the case of Lachhman Das v. Jaimni Das. AIR 1933 Lah 732 (2) the Lahore High Court was dealing with a case of joint owners of certain movable property and immovable property including agricultural land who had referred their dispute regarding partition of the joint properties to an Arbitrator. The Arbitrator made an award partitioning the joint properties by metes arid bounds and one of the joint owners made an application to the Court of first instance asking it to file the award in Court and to pass a decree in accordance therewith. While dealing with the legality of the procedure Shadi Lal, C.J. held that since such a suit if filed would not be maintainable before the Civil Court in view of the provisions of the Punjab Land Revenue Act. an application to file the award for passing a decree in accordance therewith was not maintainable.
9. It will thus be seen that the two well-established principles of law that emerge are--
(1) That where rights and liabilities are the creatures of a statute and a remedy is provided for the enforcement of the same, then that remedy alone can be availed of and no suit will lie before the ordinary Civil Court for their enforcement.
(2) If an ordinary Civil Court is not competent to entertain a suit for the enforcement of any such rights, privileges or liabilities, then it is not a Court within the meaning of Section 2(c) of the Arbitration Act and it cannot exercise its powers under the Arbitration Act by virtue of the provisions of Section 46 of that Act. It has been argued by Mr. Prem Shankar Sahay, learned counsel for the Corporation that since there was no express bar laid down in the D.V.C. Act, the jurisdiction of the Civil Court should not be deemed to have been excluded. Learned counsel further urged that there was no machinery provided in the D.V.C. Act for the effective enforcement of the rights and liabilities created under Section 33 of the D.V.C. Act. I must state here that in so far as a special remedy has been provided for a decision of a binding nature of an Arbitrator duly appointed by the Chief Justice of India under Section 49 of the D.V.C. Act, it is futile to urge that the ordinary Civil Court will still have the jurisdiction to embark upon and settle the disputes arising out of the statutory provisions incorporated in Section 33 of that Act. It is true that no machinery has been provided under the Act by which the final and binding decision of the Arbitrator can be executed. But that alone will not confer any jurisdiction on the ordinary Civil Court to decide matters regarding allocation of costs, in the manner provided under Section 33. It is clear that the Legislature in its wisdom had envisaged that the parties being a statutory Corporation controlled by the Government of India, the participating States of West Bengal and Bihar and the Union of India itself, the disputes arising between them out of the special statutory provisions would not be dragged into ordinary courts of law but would be settled outside Court by acknowledging and honouring the decision of an Arbitrator under Section 49 of the Act. If instead of implementing the legislative intent any of such parties does not honour the decision of the Arbitrator, then that decision by itself becomes the foundation of rights. Those rights are not on account of the provisions of Section 33 of the D.V.C. Act, but by sheer force of the binding nature of the decision of the Arbitrator. If any of the parties does not honour and implement the decision of the Arbitrator, then the aggrieved party has at once a right to go to the ordinary Civil Court of competent jurisdiction for enforcing the rights emanating from the decision of the Arbitrator. In such a suit it will not be open to any party to challenge the validity of the decision of the Arbitrator on any of the grounds enunciated in the Arbitration Act for vitiating an award.
10. Mr. Chuni Lal, learned Counsel for the State of West Bengal rather supported the case of the appellant in so far as he submitted that the Court of competent jurisdiction to pass a decree in terms of the award in the present case would be the Supreme Court of India and not the Court of the Subordinate Judge, Hazaribagh. His argument was that since the reference to the Arbitrator had been made by the Chief Justice of India, therefore, it should be deemed to have been made by the Supreme Court of India and so the application to file the award and to pass a decree in terms thereof ought to have been filed before the Supreme Court. This argument has been taken notice of merely to be rejected outright, for it proceeds upon an ignorance of the provisions of Article 124 (1) of the Constitution of India. Article 124 (1) of the Constitution of India clearly lays down that "there shall be a Supreme Court of India consisting of a Chief Justice of India and. ......... other Judges", so that the Chief Justice alone cannot be equated with the Supreme Court of India.
11. It would thus be clear that the court below had no jurisdiction to entertain the application for filing the decision in the Das Award and to pass a decree in terms thereof. Since I have held that the provisions of the Arbitration Act will not be applicable to the decision of the Arbitrator in question, it follows as a necessary corollary that no appeal under Section 39 of the Arbitration Act could lie to this Court. Since the matter goes to the root of jurisdiction. I would treat this appeal as a civil revision and in exercise of this Court's power under Section 115 of the Code of Civil Procedure set aside the order and the decree purported to have been passed under the Arbitration Act by the Court below. This application is accordingly allowed, but in the circumstances of this case, there will be no order as to costs N.L. Untwalia, C.J.
12. I agree.