Case: Union Of India Vs. Mohindra Supply Company

1. A dispute arising under a contract relating to the supply of solidified fuel between Messrs. Mohindra Supply Company hereinafter referred to as the respondents and the Governor-General of India in Council was referred to arbitration of two arbitrators. On March 19, 1946, the arbitrators made and published an award directing the Governor-General to pay to the respondents Rs. 47,250/- with interest at 3 per cent from July 17, 1944, till payment. This award was filed in the Court of the Subordinate Judge First Class, Delhi. The Governor-General applied for an order setting aside the award on certain grounds which for the purposes of this appeal are not material. The Subordinate Judge refused to set aside the award on the grounds set up and rejected the application. Against the order refusing to set aside the awarded, the Governor-General preferred to the Lahore High Court an appeal which after the setting up of the Dominions of India and Pakisthan was transferred to the Circuit Bench of the East Punjab High Court at Delhi. Falshaw, J. who heard the appeal set aside the order, because in his view the dispute could not be referred to arbitration under the contract which gave rise to the dispute and "that was sufficient to invalidate the award." Against that order an appeal was preferred under Cl. 10 of the Letters Patent of the High Court of Lahore, which by the High Court (Punjab) Order, 1947, applied to the East Punjab High Court. Before the Appellate Bench, the Governor-General contended that the appeal under the Letters Patent was prohibited by S. 39 (2) of the Indian Arbitration Act. The question whether the appeal was maintainable was referred to a Full Bench of the High Court. The Full Bench opined that an appeal from the judgment of a Single Judge exercising appellate powers did lie under Cl.10 of the Letters Patent, notwithstanding the bar contained in S. 139 (2) of the Arbitration Act After the opinion of the Full Bench was delivered, a Division Bench considered the appeal on its merits and set aside the order of Falshaw, J. The Union of India appeals against the, decision of the High Court.

Court's reasoning:
If by enacting S. 39 (2) appeals from appellate decrees were intended to be prohibited, the provision was plainly otiose; and unless the context or the circumstances compel, the Court will not be justified in ascribing to the legislature an intention to enact a sterile clause. In that premises the conclusion is inevitable that the expression second appeal used in S. 39 (2) of the Arbitration Act means a further appeal from an order passed in appeal under S.39 (1) and not an appeal under S. 100 of the Civil Procedure Code. This view was expressed by Bavdekar, J., in ILR (1952) Bom 570   : (AIR 1952 Bom 229  ) and by Rajamannar, C. J., in 71 Mad L W 40S (FB); and we agree with the learned Judges that the adjective "imports a further appeal, that is, numerically second appealThe legislature has not so enacted and the context does not warrant such an interpretation. The clause merely indicates the forum of appeal, if from the decision of a Court hearing a suit or proceeding an appeal will lie to a Judge or more Judges of the same Court, by virtue of S. 39 (1) the appeal will lie from the order passed under the Arbitration Act, if the order is appealable, to such Judge or Judges of that Court. The argument that the right to file an appeal to the Supreme Court from orders in arbitration proceedings would be seriously restricted has in our view no substance. If an order passed in a proceeding on the original side of the High Court is appealable under S. 39 (1), an appeal will lie to a Division Bench of the High Court and from the order passed by the Division Bench, an appeal, by the express provision contained in sub-s.(2) will lie subject to the restrictions contained in the relevant articles of the Constitution to the Supreme Court. If the order is not one falling within S. 39 (1), no appeal will evidently lie. It is true that against an order passed in arbitration proceeding, by a Division Bench of a High Court in an appeal, an appeal to this Court as a matter of right may lie, if the requirements of Art. 133 are fulfilled; but if the same case is heard by a single Judge no such appeal will lie. But the right to appeal is a creature of statute; no litigant has an inherent right to appeal against a decision of a Court. The anomaly relied upon by the appellant occurs in second appeals, and revision applications as well. If these proceedings are heard and disposed of by single Judges, there is no right of appeal to this Court hut against decisions of Division Benches the right to appeal may be exercisedBut we do not propose to dispose of the argument merely on these general considerations. In our view, even the legislative history viewed in the light of the dictum of the Privy Council in Hurrish Chunders case, 10 Ind App 4 does not afford any adequate justification for departing from the plain and apparent intendment of the statuteIt is true that under the Code of 1908, an appeal did lie under the Letters Patent from an order passed by a single Judge of a Chartered High Court in arbitration proceedings even it the order was passed in exercise of appellate jurisdiction, but that was so, because, the power of the Court to hear appeals under a special law for the time being in operation was expressly preserved17. There is in the Arbitration Act no provision similar to S. 4 of the Code of Procedure which preserves powers to courts under special statutes. There is nothing in the expression "authorised by to hear appeals from original decrees of Court" contained in S. 39 (1) of the Arbitration Act which by implication reserves jurisdiction under the Letters Patent to entertain an appeal against the order passed in arbitration proceedings. Therefore, in so far as Letters Patent deal with appeals against orders passed in arbitration proceedings, they must be read subject to the provisions of S. 39 (1) and (2) of the Arbitration Act18. Under the Code of 1908, the right to appeal under the Letters Patent was saved both by S. 4 and the clause contained in S. 104 (1), but by the Arbitration Act of 1940, the jurisdiction of the Court under any other law for the time being in force is not saved; the right of appeal can therefore be exercised against orders in arbitration proceedings only under S. 39, and no appeal (except an appeal to this Court) will lie from an appellate order19. There is no warrant for assuming that the reservation clause in S.104 of the Code of 1908 was as contended by counsel for the respondents, "superfluous" or that its "deletion from S. 39 (1) has not made any substantial difference" : the clause was enacted with a view to do away with the unsettled state of the law and the cleavage of opinion between the Allahabad High Court on the one hand and Calcutta, Bombay and Madras High Courts on the other on the true effect of S. 588 of the Code of Civil Procedure upon the power conferred by the Letters Patent. If the legislature being cognizant of this difference of opinion prior to the Code of 1908 and the unanimity of opinion which resulted after the amendment, chose not to include the reservation clause in the provisions relating to appeals in the Arbitration Act of 1940, the conclusion is inevitable that it was so done with a view to restrict the right of appeal within the strict limits defined by S. 39 and to take away the right conferred by other statutes. The Arbitration Act which is a consolidating and amending Act, being substantially in the form of a code relating to arbitration must he construed without any assumption that it was not intended to alter law relating to appeals. The words of the statute are plain and explicit and they must be given their full effect and must be interpreted in their natural meaning, uninfluenced by any assumptions derived from the previous state of the law and without any assumption that the legislature must have intended to leave the existing law unaltered. In our view the legislature has made a deliberate departure from the law prevailing before the enactment of Act X of 1940 by codifying the law relating to appeals in S. 394. Section 39 (2) expressly prohibits a second appeal from an order passed in appeal under S. 39(1) except an appeal to this Court. There is clear indication inherent insubs.(2) that the expression "second appeal" does not mean an appeal under S. 100 of the Code of Civil Procedure. To the interdict of a "second appeal," there is an exception in favour of an appeal to this Court; but an appeal to this Court is not a second appeal. If the legislature intended by enacting S. 39 (2) merely to prohibit appeals under S. 100 of the Code of Civil Procedure, it was plainly unnecessary to enact an express provision saving appeals to this Court. Again an appeal under S. 39(1) lies against an order superseding an award or modifying or correcting an award, or filing or refusing to file an arbitration agreement or staying or refusing to stay legal proceedings where there is an arbitration agreement or setting aside or refusing to set aside an award or on an award stated in the form of a special case. These orders are not decrees within the meaning of the Code of Civil Procedure and have not the effect of decrees under the Arbitration Act. Section 100 of the Code of Civil Procedure deals with appeals from appellate decrees and not with appeals from appellate orders.By this clause, a right to appeal except in the cases specified, from one Judge of the High Court to a Division Bench is expressly granted. But the Letters Patent are declared by Cl. 37 subject to the legislative power of thel in Council and also of thel under the Government of India Act, 1915, and may in all respects be amended or altered in exercise of legislative authority. Under S. 39(1), an appeal lies from the orders specified in thatn and from no others. The legislature has plainly expressed itself that the right of appeal against orders passed under the Arbitration Act may be exercised only in respect of certain orders. The right to appeal against other orders is expressly taken away. If by the express provision contained in S. 39 (1), a right to appeal from a judgment which may otherwise be available under the Letters Patent is restricted, there is no ground for holding that cl. (2) does not similarly restrict the exercise of appellate power granted by the Letters Patent. If for reasons aforementioned the expression "second appeal" includes an appeal under the Letters Patent, it would be impossible to hold that notwithstanding the express prohibition, an appeal under the Letters Patent from an order passed in appeal undersubs.(1) is competentFor instance, under the Bombay Civil Courts Act, certain decisions of Assistant Judges are made appealable to the District Courts. An Assistant Judge is a Judge of the District Court, and under the Bombay Civil Courts Act, appeals against his orders and decrees in certain cases lie to the District Court. If the argument that an appeal under cl. (1)of S. 39 means an appeal to a superior Court, be accepted, an appeal from an order under S. 39 (1) by an Assistant Judge will not lie at all. There are similar provisions in the Civil Courts Acts in the other States as well. The qualifying expression to the Court authorised by law to hear appeals from original decrees of the Court passing the order" in S. 39 (ii does not import the concept that the appellate Court must be distinct and separate from the Court passing the order or the decree.The legislature has not so enacted and the context does not warrant such an interpretation. The clause merely indicates the forum of appeal, if from the decision of a Court hearing a suit or proceeding an appeal will lie to a Judge or more Judges of the same Court, by virtue of S. 39 (1) the appeal will lie from the order passed under the Arbitration Act, if the order is appealable, to such Judge or Judges of that Court. The argument that the right to file an appeal to the Supreme Court from orders in arbitration proceedings would be seriously restricted has in our view no substance14. The intention of the legislature in enactingsubs.(1) of S. 104 is clear : the right to appeal conferred by any other law for the time being in force is expressly preserved. This intention is emphasised by S. 4 which provides that in the absence of any specific provision to the contrary, nothing in the Code is intended to limit or otherwise affect any special jurisdiction or power conferred by or under any other law for the time being in force. The right to appeal against judgments (which did not amount to decrees) under the Letters Patent, was therefore not affected by S. 104 (1) of the Code of Civil Procedure, 190815. Under the Code, as amended, the view has consistently been taken that interlocutory judgments (i.e., decisions though not amounting to decrees which affect the merits of the questions between the parties by determining some right or liability) passed by single Judges of Chartered High Courts were appealable under the Letters Patent : Ruldu Singh v. Sanwal Singh, ILR 8 Lah 188 : (AIR 1922 Lah 380 (2) ), Paramasivan v. Ramasami, ILR 56 Mad 915   : (AIR 1933 Mad 570  ) (FB), Vaman Ravji v. Nagesh Vishnu, ILR (1940) Bom 426 : (AIR 1940 Bom 216  ) and Ram Sarup v. Mt. Kaniz Ummehani, ILR (1937) All 386 ( A I R 1937 All 165)17. There is in the Arbitration Act no provision similar to S. 4 of the Code of Procedure which preserves powers to courts under special statutes. There is nothing in the expression "authorised by to hear appeals from original decrees of Court" contained in S. 39 (1) of the Arbitration Act which by implication reserves jurisdiction under the Letters Patent to entertain an appeal against the order passed in arbitration proceedings. Therefore, in so far as Letters Patent deal with appeals against orders passed in arbitration proceedings, they must be read subject to the provisions of S. 39 (1) and (2) of the Arbitration Act18. Under the Code of 1908, the right to appeal under the Letters Patent was saved both by S. 4 and the clause contained in S. 104 (1), but by the Arbitration Act of 1940, the jurisdiction of the Court under any other law for the time being in force is not saved; the right of appeal can therefore be exercised against orders in arbitration proceedings only under S. 39, and no appeal (except an appeal to this Court) will lie from an appellate order19. There is no warrant for assuming that the reservation clause in S.104 of the Code of 1908 was as contended by counsel for the respondents, "superfluous" or that its "deletion from S. 39 (1) has not made any substantial difference" : the clause was enacted with a view to do away with the unsettled state of the law and the cleavage of opinion between the Allahabad High Court on the one hand and Calcutta, Bombay and Madras High Courts on the other on the true effect of S. 588 of the Code of Civil Procedure upon the power conferred by the Letters Patent. If the legislature being cognizant of this difference of opinion prior to the Code of 1908 and the unanimity of opinion which resulted after the amendment, chose not to include the reservation clause in the provisions relating to appeals in the Arbitration Act of 1940, the conclusion is inevitable that it was so done with a view to restrict the right of appeal within the strict limits defined by S. 39 and to take away the right conferred by other statutes. The Arbitration Act which is a consolidating and amending Act, being substantially in the form of a code relating to arbitration must he construed without any assumption that it was not intended to alter law relating to appeals. The words of the statute are plain and explicit and they must be given their full effect and must be interpreted in their natural meaning, uninfluenced by any assumptions derived from the previous state of the law and without any assumption that the legislature must have intended to leave the existing law unaltered. In our view the legislature has made a deliberate departure from the law prevailing before the enactment of Act X of 1940 by codifying the law relating to appeals in S.