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Shiv Kumar Chopra v/s Beas Construction Board

    Civil Revn. 7 Of 1993

    Decided On, 18 April 1996

    At, High Court of Himachal Pradesh


    For the Appearing Parties: Ramakant Sharma, Devyani Kuthiala, P.A. Sharma, Advocates.

Judgment Text

(1) This petition for revision has been directed against the judgment dated 1-9-1992 of the District Judge, Mandi, passed in appeal under Section 39(1) of the Arbitration Act, 1940, against the judgment dated 8-3-1990 of the Senior Sub-Judge, Mandi.

(2) The work of "construction of structure foundation, cable trenches covers and retaining walls for 132 KV Switchyard at Slapper" was awarded in favour of the petitioner by the respondent - Beas Construction Board vide agreement No. 5/1976 dated 8-12-1976.

(3) On a dispute having arisen between the parties, the matter was referred to arbitration. Initially vide order dated 3-5-1982 of the Senior Sub-Judge, Mandi, the matter was referred to the arbitration of Shri S. T. Minhas of Dehar Power Circle, Sundernagar. The said arbitrator entered upon the reference but he could not make his award. Therefore, one Shri H. S. Baweja came to be appointed as an arbitrator. He too could not make the award. Ultimately, the Senior Sub-Judge, Mandi, on 22-8-1986 appointed Shri J. R. Kainth, Superintending Engineer (Arbitration), Solan as arbitrator. The said arbitrator after having entered upon the reference made his award on 25-5-1988, whereby a sum of Rs. 42,488/- was awarded in favour of the petitioner. This award was filed in the Court of Senior Sub-Judge, Mandi for being made the rule of the Court.

(4) Objections to the award were preferred by both the parties inter alia on the ground that the arbitrator had misconducted himself and the proceedings. While the respondents had challenged the competency of the arbitrator to award interest, the petitioners had averred that interest ought to have been awarded from the year 1977.

(5) On the pleadings of the parties, issues were framed by the Senior Sub-Judge. No evidence was led by the petitioner in support of his objections. One witness was examined on behalf of the respondent. The Senior Sub Judge, Mandi, vide his judgment, dated 8-3-1990 had dismissed the objections of both the parties. The award was accordingly made the rule of the Court and a decree in terms there of was passed in favour of the petitioner and against the respondents. The Senior SubJudge also allowed future interest on the amount awarded from the date of the award till the date of payment of the amount by the respondents.

(6) Both the parties felt dissatisfied with the award. The respondent went up in appeal before the District Judge, Mandi, while the petitioner had filed cross-objections to the appeal filed by the respondent. The appeal as well as cross-objections were disposed of by a common judgment dated 1-9-1992, which is under challenge in this petition. The District Judge dismissed the appeal of the respondent. The cross-objections of the petitioner were partly allowed to the extent that the petitioner was held entitled to interest on the amount of Rs. 20,380/ - with effect from 3-5-1982 to the date of award at the rate of 12% per annum instead of from 17-8-1986 as awarded by the arbitrator.

(7) The petitioner still feeling dissatisfied, has come up before this Court by virtue of the present petition. It has been averred that the two Courts below have not properly appreciated the evidence with regard to misconduct on the part of the arbitrator. Besides, interest was payable with effect from 7-1-1977 when the amount of Rs. 20,380 / - had become due.

(8) I have heard Shri Ramakant Sharma, Advocate with Ms. Devyani Kuthiala, Advocate, for the petitioner and Shri P. A. Sharma, Advocate, the learned Senior Standing Counsel for the respondents and have also gone through the record of the case.

(9) The learned Senior Standing Counsel for the respondents at the very outset has raised an objection with regard to the jurisdiction of the Senior Sub-Judge, Mandi, firstly in appointing an arbitrator under Section 20, Arbitration Act, 1940 and secondly, in making the award the rule of the Court. According to the learned counsel the Senior Sub-Judge did not possess the pecuniary jurisdiction in the matter.

(10) Section 20(1), Arbitration Act, 1940 provides:-"Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court."(Emphasis supplied)

(11) The words "Court having jurisdiction in the matter" are very material. Therefore, before an application can be filed under Section 20, it is essential that the agreement to refer should relate to matters which the Court is competent to try and has jurisdiction to pass a final decree upon it.

(12) There is no denying that the pecuniary jurisdiction of the Senior Sub-Judge was restricted to Rs. 50,000/- in the year 1982 when an arbitrator came to be appointed by the said Court. When in 1986 when the arbitrator was appointed, the pecuniary jurisdiction of the Senior Sub-Judge was Rs. 50,000 /-.

(13) A perusal of the award shows that the claim of the petitioner which was in dispute and referred to arbitration was to the extent of Rs. 4,42,067 /-. Therefore, the claim made was beyond the pecuniary jurisdiction of the Senior Sub-Judge. The matter has, thus, came to be referred to arbitration by a Court which lacked pecuniary jurisdiction.

(14) The mere fact that an award of less than Rs. 50,000/- has came to be made by the Arbitrator would not confer jurisdiction on the Senior Sub-Judge to make the award the rule of the Court. Pecuniary jurisdiction has to be determined on the basis of the claim involved and not on the basis of the amount which has been awarded under the award. Section 31 of the Arbitration Act, provides :-"Subject to the provisions of this Act, an award may be filed in any Court having jurisdiction in the matter to which the reference relates. " (Emphasis supplied)

(15) Section 2(c) defines the "Court" as meaning a 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, but does not, except for the purpose of arbitration proceedings under Section 21, include a Small Cause Court.

(16) Having regard to the definition of the word "Court" in Section 2(c) and the terms of Section 31, the jurisdiction of a Court for passing a decree in terms of the award would depend upon the question which form the subject-matter of reference to the arbitration and not on the terms of the award.

(17) The proposition has been admirably stated by the Madras High Court in Venkatasamiappa v. Srinidhi Ltd., (1950) 1 Mad LJ 709, in the following terms:-

"In order to determine which is the Court having jurisdiction in the matter, you should "first of all ascertain what the questions are, which form the subject-matter of the reference to arbitration. "You then proceed to ask; supposing these questions had arisen in a suit, which is the Court which would have jurisdiction to entertain the suit? That Court would be the Court having jurisdiction under the Arbitration Act also. "

(18) The above ratio was followed by High Court of Punjab in Indar Chand v. Pooran Chand, AIR 1959 Punjab 614 as well as by the Delhi High Court in

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S. Surrinder Singh Rosha v. Rathi Steels, (1976) 12 Delhi LT 73 : (AIR 1976 Delhi 261). To the similar effect, it has been held by the Calcutta High Court in Union of India v. Sri Kedar Somani, 1966 (1) Cur Civ Cas 205. (19) In the present case not only arbitrator was appointed by a Court having no pecuniary jurisdiction, the award has been filed and made a rule of the Court as well by a Court having no jurisdiction. (20) As a result, the present petition it allowed. The orders dated 1-9-1992 of the District Judge and that of the Senior SubJudge Mandi, dated 8-3-1990 are set aside. Consequently, the award dated 25-5-1988 is set aside being invalid. Parties are left to bear their own costs. C. M.P. No. 73 of 1996 : (21) Infructuous in view of the orders passed in the main matter.Order accordingly.