Case: Kumbha Mawji Vs. Union Of India

1. On 28-1-1948 the appellant, Khumba Mawji entered into an agreement with the respondent, the Dominion of India (as it then was) to manufacture and supply to the Bengal Assam Railway, stone boulders and belast from Chutiapara quarry. The agreement was entered into at Calcutta, though the work was to be carried out in Assam. It was a term of the agreement that if any differences arose between the parties, they were to be referred to the arbitration of two persons, one to be nominated by each side, and that if the arbitrators were not able to agree, the matter was to be decided by an umpire to be nominated by both the arbitrators. Differences having, in fact arisen, the dispute was referred to two arbitrators and on their disagreement the matter went up to an umpire, one Mr. P. C. Chowdhury. The umpire made two awards on or about 20-7-1949 in favour of the appellant. By one of them he directed a sum of Rs. 3,67,000 to be paid by the respondent to the appellant on or before 19-8-1949 with interest thereafter at 6 per cent, per annum in case of default. By the other award, he directed a sum of Rs. 83,000 to be similarly paid by the respondent to the appellant. The umpire is said to have made over each of the two awards, in original, to each of the parties. On 10-8-1949 the respondent filed an application under S. 14, sub-s. (2), Arbitration Act, 1940, before the Court of the Subordinate Judge of Gauhati in Assam praying that the umpire, Mr. Chowdhury, might be directed to file both the awards in Court so that the petitioner might get an opportunity for filing objections thereto. On this application notice was issued to the umpire to file the awards into that Court beforeThe umpire sent a letter dated 18-8-1949 to the Subordinate Judge, which is as, follows with copies of the awards;Dear Sir,With reference to your notice in money suit No. 83 of 1949 requiring me to submit the awards made by me in the above mentioned dispute on 20-7-1949 I beg to submit that the two awards were made and signed by me in the presence of the parties and handed over to me onAs directed by you I am sending herewith copies of the same signed by me. On the back of each of these copies occurs the receipt of the parties to the awards."On receipt thereof, the Subordinate Judge trade an order on 24-8-1949 in the followingon the Umpire served. Seen his report forwarding copies of the award of which the originals are said to have been made over to the parties. Applicant to file his copy on3-9-1949 the respondent filed the awards which were handed over to it by the umpire, and the matter was being proceeded with, by issue of further notices and filing of objections in the Court of the Subordinate Judge, Gauhati.Meanwhile on 17-8-1949, i.e., a week after the respondent made its first application in the Gauhati Court, the appellants solicitors, Messrs. Mukherjee and Biswas, sent a letter to the Registrar of the High Court Original Side, asbehalf of our Client Mr. Kumbha Mowjee we beg to enclose herewith two original Awards duly stamped and bath dated 20-7-1949 for the respective sums of Rs. 3,67,000 and Rs. 83,000 duly signed by the Umpire Mr. P. C. Chaudhury fortherefore direct the office to file the said two Awards and, to issue notices in respect thereofsome correspondence between the Deputy Registrar and the solicitors calling for some further papers, the Deputy Registrar informed the solicitors by his letter dated 29-4-1949 that the award had been filed and asked the solicitors to take out from the Court and serve on the parties concerned the statutory notice fixing a date for judgment upon the said award by the Commercial Judge of the Court, Notices were thereupon issued to both the parties in the following2. The Dominion of India represented by the Assam Railway.Take notice that the Award of the Umpire appointed in the matter of the above Arbitration Agreement had been filed on the 29th day of August 1949 and that the Court hearing the commercial causes will proceed to pronounce judgment on such Award on 7-11-1949.Datednotice was served on the respondent onThus in respect of these awards, proceedings were initiated purporting to be under S. 14 (2), Arbitration Act, simultaneously both in the Court of the Subordinate Judge of Gauhati in Assam as well as on the Origina1 Side of the High Court at Calcutta.The appellant in answer to the notice issued by the Gauhati Court on, 3-9-1949 appeared before that Court on 28-10-1949, and obtained adjournments from time to time untilOn that date we Gauhati Court rejected his prayer for any further adjournment and fixed 20-1-1950 for anex partehearing. Meanwhile, the respondent after receiving the notice issued to him by the Calcutta High Court filed on 24-11-1949, an affidavit dated 15-11-1949 stating his objections to the jurisdiction of the Calcutta Court and to the validity of the awards. On the same date a counter affidavit thereto dated 19-11-1949 was filed on behalf of the appellant. On these affidavits the matter was taken up for consideration by the Commercial Judge of the Calcutta High Court onThe learned Judge overruled the objections of the respondent and passed Judgments on the two awards. On appeal therefrom by the respondent to the Division Bench the learned Judges reversed the judgment of the single Judge. They held that there had been no proper application under S. 14 (2), Arbitration Act, before the High Court of Calcutta, and that consequently that Court had no jurisdiction to deal with the matter.Before the learned single Judge of the High Court the main objection taken and set out in para. 14 of the respondents affidavit dated l5-11l949 was assubmit further that inasmuch as the application of the Dominion of India under S. 14 (2), Arbitration Act was made as aforesaid to the said Court at Gauhati before the award was filed in this Honble Court by Kumbha Mawji, the Court at Gauhati alone has jurisdiction."Under S. 31 (1), Arbitration Act, an award may be filed in any Court having jurisdiction in the matter to which the reference relates. The reference in this case arose out of contract which, as already stated, was entered into at Calcutta and had to be performed in Assam. Thus the Gauhati Court as well as the Calcutta High Court admittedly had jurisdiction over the subject-matter of the reference. The point taken, however, on behalf of the respondent in their objections was that, having regard to S. 31, Sub-s. (4) of the Act and to the fact that an application under S. 14, Sub-s. (2) for a direction to the umpire to file the award was made to the Gauhati Court as early as the 10th August, that Court was seized of the matter from that date, and that therefore any application under S. 14 on a later date to another Court, though otherwise competent, was barred under S. 31, Sub-s. (4) This was the main question that was seriously pressed before the learned single Judge. But the learned Judge was of the opinion that S. 31 (4) related only to applications made during the pendency of a reference to arbitration and not to applications made subsequent to the making of an award. He thought that in respect of applications for filing an award the exclusive jurisdiction was determined with reference to the question as to which was the competent Court in which the award was, in fact, first filed under S. 14 Sub-s. (2) (as distinct from when the application for the filing of the award was first presented). In this view, the learned judge held on the facts that the award must be taken to have been filed earlier in the Calcutta Court and not in the Gauhati Court. He accordingly held that the Calcutta High Court had exclusive jurisdiction having regard to S. 31 (3), and hence proceeded to judgment on the award, the respondent not having filed any objections before him in time.On appeal, the learned Judges considered it unnecessary for them to dispose of the case on either of the above grounds considered by the single Judge. and held that on the facts it was quite clear that there had been no due filing of the award at all in the Calcutta Court under S. 14 (2) inasmuch as the awards which were claimed to have been duly filed were, in fact, not filed by the umpire; nor was it shown that they were filed under his authority. On this limited ground they reversed the decision of the learned single Judge and vacated the judgment given in favour of the appellant on the basis of the two awards. Hence these two appeals to us.

Court's reasoning:
The argument stressed before us is that in para 7 of the affidavit dated 19-11-1949 filed on behalf of the appellant in the High Court on 24-11-1949 it is stated that "On or about 21-7-1949 the said Umpire made over the said original award to this deponent for filing." It is urged that this is an averment of the requisite authority from the umpire, and it is pointed out that this assertion has not been contradicted on the other side by any reply affidavit. It is contended therefore that the filing was valid. The learned Judges in coming to the contrary conclusion relied on two facts, namely, that the umpire in his letter to the Gauhati Court dated 18-8-1949 when sending copies of the awards in compliance with the notice issued to him by that Court merely stated that he handed over the awards to both the parties, but did not say that he authorised any of them to file the same into Court on his behalf. The learned Judges were also of the opinion that the umpire as a person of commonsense could not be supposed to have authorised both the parties to file the awards into Court on his behalf. We are inclined to agree with this reasoning. Where, as in this case, the originals are said to have been handed over to both the parties, it cannot be assumed that the mere handing over of the awards to the parties necessarily implies the authority of the umpire to file the same into Court on his behalf. That authority has to be specifically alleged and proved. In the present case the statement in the affidavit relied on by learned counsel before us is no more than an assertion that the umpire handed over the original awards to the appellant for filing, but there is no allegation that they were so handed over to him for filing on behalf of the umpire. The umpire may not have been aware that the awards should be filed into Court only by himself or Under hisit is somewhat difficult to see how the question raised can be said to be a pure question of law, it is quite clear from the above extract that no objection was taken by the respondent to the point being raised, it has not been suggested before us that this statement in the judgment was in any way erroneous. Appellants counsel argued that if the learned Judges on appeal felt inclined to dispose of the case on this point alone, they should have called upon the umpire to clarify whether or not the appellant had his authority, or given an opportunity for production of his affidavit in support of the authority. Learned counsel presses that an opportunity should now be allowed. It does not appear, however, that it is either necessary or desirable at this stage and after this lapse of time to allow this matter to go back for that purpose. Because, apart from the question of mere want of proof of authority, it is clear that in a case of this kind and on the facts above stated, it was incumbent on the appellant to allege categorically that, in terms of Sub-s. (2) of S. 4, he had the requisite authority of the umpire. That allegation is wanting not only in the affidavit dated 19-11-1949, but what is more important is that when the awarded were filed into Court on 17-8-1949 by the solicitors on behalf of the appellant with a letter which might be treated as the initial application to the Court, there is not a word to suggest that the awards were being flied under the authority of the umpire. The letter contained only a bald statement that the two original awards duly signed by the umpire were enclosed therewith for filing, with a request to direct the office to file the two awards and to issue notices in respect thereof expeditiously. In those circumstances, there has been clearly no sufficient compliance with the terms of S. 14, Sub-s. (2) of the Act to constitute the filing of the awards by the appellants solicitors the filing thereof by the umpire.It appears to its, therefore, clear that the filing of the awards in the Gauhati Court must be taken to be on 24-8-1949. So far as the Calcutta Court is concerned, though no doubt the awards were put into that Court by the appellants solicitors on 17-8-1949, it appears clearly from the notice issued by the Registrar dated 30-8-1949 that the awards were treated as filed only on 29-8-1949. Paragraphs 8 and 9 of the respondents affidavit filed in the Calcutta Court on 24-11-1949 contain categorical assertions that so far as the Gauhati Court is concerned, the copies of the awards were filed by the umpire on 24-8-1949, while as regards the Calcutta High Court the awards were filed on 29-8-1949. These assertions have not been contradicted on behalf of the appellant in the counter-affidavit filed on the same day. From these facts, it is clear that the earlier filing for the purposes of S. 31 (3) is in the Gauhati Court and not in the Calcutta Court as held by the learned single Judge under an erroneous impression as to the facts. We may as well mention at this stage that it was not suggested before us that for legal purposes the filing at the awards in the Calcutta High Court (on the assumption of existence at authority in the appellant for such filing on behalf of the umpire) is not 29-8-1949 but only 10th of August when the letter was sent by the solicitors to the Registrar enclosing the awards. We mention this because it appears from the judgment at the Division Bench of the Calcutta High Court that some such Point was raised there, but before us the contrary was assumed. We are accordingly of the opinion that even if the authority of the umpire for the filing of the award into Court on his behalf by the appellant is to be taken for granted, it was in the Gauhati Court that the awards must be taken to have been filed earlier. On this ground, therefore, we are inclined to hold that the Gauhati Court alone has jurisdiction under S. 31 (3) of the(3) is intended to provide that all applications regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings are to be made only in one Court, and lays on the concerned party the obligation to do so. Then comes sub-s. (4), the object of which apparently is to go further than sub-s. (3), that is, not merely casting on the party concerned an obligation to the all applications in one Court but vesting exclusive jurisdiction for such applications in the Court in which the first application has been already made.Thus it will be seen on a comprehensive view of S. 31 that while the first sub-section determines the jurisdiction of the Court in which an award can be filed, sub-ss. (2), (3) and (4) are intended to make that jurisdiction effective in three different ways, (1) by vesting in one Court the authority to deal with all questions regarding the validity, effect or existence of an award or an arbitration agreement, (2) by casting on the persons concerned the obligation to file all applications regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings in one Court, and (3) by vesting exclusive jurisdiction in the Court in which the first application relating to the matter is filed. The context therefore, of sub-s. (4) would seem to indicate that the sub-section was not meant to be confined to applications made during the pendency of an arbitration. The necessity for clothing a single Court with effective and exclusive jurisdiction, and to bring about by the combined operation of these three provisions the avoidance of conflict and scramble is equally essential whether the question arises during the pendency of the arbitration or after the arbitration is completed or before the arbitration is commenced. There is no conceivable reason why the Legislature should have intended to confine the operation of sub-s. (4) only to applications made during the pendency of an arbitration, if as is contended, the phrase "in any reference" is to be taken as meaning "in the course of a reference.It may be noticed that the Arbitration Act deals with arbitrations of three different categories: (1) arbitration without intervention of the Court dealt with in Ss. 3 to 19 comprising chap. II; (2) arbitration with the intervention of a Court where there is no suit pending provided in S. 20 which is a separate chap.III; and (3) arbitration in suits dealt with in Ss. 21 to 25 comprising chap. IV. The jurisdiction as regards the later two classes of arbitrations in respect of certain matters is provided in the very provision relating to those two classes of arbitrations, that is, S.20. Sub-s. (1) and S.Sub-section (1) of S. 31 appears to refer only to the first class. It may, therefore, have been plausibly, suggested that Sub-Ss. (2),(3) and(4) refer only to this class. But no such position was taken up before us. Indeed, having regard to the wide language employed in these sub-sections it has been assumed that sub ss. (2) and (3) cover all three classes in all their stages. If so, is there any sufficient reason to think that sub-s. (4) was meant to have a very restricted operation? On the view of this sub-section suggested for the appellant, not only would an application made after the award was pronounce be excluded from sub-s. (4) but also an application made before the commencement of the arbitration i.e., for the filing of an agreement of reference and for a direction thereupon. It must be remembered that S. 31 is one of the group of sections headed "General" which by virtue of S. 26 are applicable to all arbitrations. Unless therefore me wording in sub-s. (4) of S. 31 is so compelling us to confine the scope thereof to applications during the pendency of an arbitration, such a limited construction must be rejected.16.It is undisputed that the application by the respondent Union of India was made before the Gauhati Court on 10-8-1949, and the earliest move by the appellant before the Calcutta Court was on 17-8-1949. On these facts and on the view of the interpretation of S. 31, sub-s.(4) which we are inclined to take, it is clear that the Gauhati Court only has the jurisdiction and not the Calcutta High Court as regards the present dispute.