S.J. Vazifdar, J.
1. A Division Bench of this Court, by an order dated 13th March, 2012, directed the office to place the papers before the Chief Justice for appropriate orders. The Division Bench opined that the following question ought to be referred for consideration to a larger bench.
âWhether an appeal under the provisions of clause 15 of the Letters Patent, against an order passed by the learned Single Judge of this Court in a civil suit in an application filed in that civil suit because of the provisions of section 8 of the Arbitration and Conciliation Act, is maintainable or not ?â
The learned Chief Justice constituted this Full Bench and referred the above question to it.
2. We have held that an appeal against an order in an application under section 8 is not maintainable under clause 15 of the Letters Patent. Our conclusion is based on principle and on authority. It is based on our interpretation of the Arbitration and Conciliation Act, 1996 in the framework in which it now stands. It is also based on precedent. The precedents are under the Arbitration Act, 1940 and under the 1996 Act.
3. It is not necessary to deal with the merits of the case and it is sufficient to refer to the facts only briefly. The appellant filed the above suit to recover a sum of about Rs.4.19 crores together with interest from the first defendant. No relief has been claimed against the second and third defendants. The reference to the respondent / defendant in this judgment will be to respondent No.1 / defendant No.1. The respondent filed the above Notice of Motion for an order that the disputes raised in the suit be referred to arbitration in accordance with the arbitration agreement between the parties as stipulated in the sales contracts dated 28th April, 2010, and for an order terminating the above suit. In the affidavit in support, the respondent stated that the Notice of Motion was also for an order referring the parties to arbitration in view of the arbitration agreement.
The learned single Judge granted the prayers in the Notice of Motion. The above appeal is filed against that order.
4. The respondent raised a preliminary objection as to the maintainability of the appeal. The respondent contended that the appeal is not maintainable in view of section 37 of the Arbitration and Conciliation Act, 1996. The Division Bench, after recording the submissions and noting the authorities relied upon, passed the said order dated 13th March, 2012, which ultimately lead to the present reference. The contentions raised before the Division Bench were reiterated before us.
5. Several High Courts, have taken the view that an appeal against an order under section 8 of the Act is not maintainable. We are in respectful agreement with the judgments. Dr. Saraf, the learned counsel appearing on behalf of the appellant, however, submitted that none of the judgments have considered his submissions before us. He invited us to take a different view, also on the ground that most of these judgments relied upon the judgments rendered under the Arbitration Act, 1940. This, according to him, is impermissible, both on authority and in principle.
6. Sections 8 and 37 of the Arbitration and Conciliation Act, 1996, read as under :
â8. Power to refer parties to arbitration where there is an arbitration agreement.-
(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.
(2) The application referred to in sub-section 1 shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.
(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.
... ... ... ...
37. Appealable orders.-(1) An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:-
(a) Granting or refusing to grant any measure under section 9;
(b) Setting aside or refusing to set aside an arbitral award under section 34.
(2) An appeal shall also lie to a Court from an order of the arbitral tribunal â
(a) Accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or
(b) Granting or refusing to grant an interim measure under section 17.
(3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court."
7. It would be appropriate first to refer to some of the judgments under the 1996 Act relied upon by Mr. V.P. Sawant, the learned counsel appearing on behalf of the respondent in support of his submission that an appeal from an order under section 8 of the Act is not maintainable in view of section 37 of the Act.
8. In Canbank Financial Services Limited vs. Punjab and Haryana Papers Chemical and another, 2008(2) Arb.LR 365 (Delhi), a Division Bench of the Delhi High Court dealt with an identical issue. The appeal was against an order of the learned single Judge allowing the first respondent's application for referring the disputes in the suit to arbitration. It was contended that the impugned order amounted to the plaint being rejected and therefore, the appeal was maintainable under section 96 of the Code of Civil Procedure and under section 10 of the Delhi High Court Act, 1966. The Division Bench held that the embargo on appeals in section 37 is absolute and categorical ; that the Act which is a special Act dealing with arbitrations, specifically limits the extent of judicial intervention. It was further held that the language of section 37 consciously takes away the right of the appellant against the orders other than those mentioned thereunder and that any other interpretation would render the expression âand from no othersâ otiose or nugatory. The Division Bench referred to the similar provisions in section 39 of the Arbitration Act, 1940 and to the judgment of the Supreme Court in Union of India vs. Mohindra Supply Company AIR 1962 SC 256, and the judgments of the Delhi High Court also under the 1940 Act in support of the conclusions. We are in respectful agreement with the observations even without recourse to section 5.
9. A Division Bench of this Court by a judgment dated 19th March, 2009 in the case of International Technology Kirchner Italia Branch, S.P.A. vs. Esteem Projects Pvt. Ltd. in Appeal No.485 of 2005 in Notice of Motion No.1238 of 2003 in Summary Suit No.332 of 2003 dealt with a similar case. That was an appeal against the order of the learned single Judge, dismissing the appellant's motion for referring the disputes under section 8 of the Act. The Division Bench held that on a plain construction of the provisions of section 37, it is clear that an appeal is provided only from the orders specified therein. The Division Bench held in paragraphs 4 and 5 :-
â4. The words in parenthesis (and from no others), are equally important. These words are intended to remove any doubt that might arise about the maintainability of an appeal from any order other than those specified. The words emphasise that an appeal only lies from orders specified in the section and no others. The only thing that needs to be seen therefore is whether an appeal lies from an order under section 8 of the Arbitration and Conciliation Act, 1996. It is clear that an appeal is not provided under section 37. An order refusing to refer the dispute to arbitration under section 8 is not an order which falls in any of the categories specified in section 37 and therefore is not appealable.
5. The view taken by us finds support in a decision of a Division Bench of the Punjab and Haryana High Court in the case of Hind Samachar Limited, Jalandhar â Smt.Sudarshan Chopra and others V. Vijay Kumar Chopra and others, reported in (2002) 4 Company Law Journal 1, pointed out by Ms Shah, the learned Counsel for the respondent. The Division Bench of Punjab and Haryana High Court observed in para 36 as follows:-
"Having dealt with all issues canvassed by learned counsel, we now endeavour to draw conclusions based on our interpretation of section 37 of the Arbitration Act, 1996. In the absence of judicial precedent on the pointed issue, we will embark upon the controversy on first principles. We have already concluded above that even a remedy of appeal would not be available unless expressly provided for, while interpreting section 5 of the Arbitration Act, 1996. We have also concluded that the term "orders" referred in Section 37 of the Arbitration Act, 1996, refers to orders passed under Part I of the Arbitration Act, 1996. The question then is whether the remedy of appeal is excluded against an order passed by a "judicial authority" under section 8 of the Arbitration Act, 1996? In our view, it is. The reason for the aforesaid conclusion are the words and from no others qualifying the word orders it leaves no doubt that section 37 (1) of the Arbitration Act, 1996, does not delineate an inclusive list of appealable order, but defines the exhaustive list of orders from which an appeal under the provisions of the Arbitration Act, 1996, is competent. Since the list is exhaustive, and since an order passed by a "judicial authority" under section 8 of the Arbitration Act, 1996, is not included therein, it would been enevitable to conclude that the remedy of appeal there from is expressly excluded."
Dr. Saraf relied upon the judgment of the Supreme Court in P. Anand Gajapathi Raju vs. P.V.G. Raju, AIR 2000 SC 1886 in support of his contention that an application taken out pursuant to the provisions of section 8 is not one under Part I of the 1996 Act. We will refer to this judgment of the Supreme Court in another context later. Suffice it to note at this stage that that in our view the Supreme Court did not hold that an order under section 8, does not fall under Part I of the Act.
10. In Rites Limited vs. JMC Projects (India) Ltd. 2009 (2) Arb. LR 64 (Delhi), another Division Bench of the Delhi High Court considered the appeal against an order of the learned single Judge dismissing the application under section 8. The Division Bench relied upon several judgments, including the earlier judgment of the Division Bench of the Delhi High Court in Canbank (supra). The contention that the judgment in Canbank was per-incuriam was rejected. The Division Bench held :-
â17. It is, therefore, clear that no appeal could be maintained from an order of the Court passed under the old Act, by resort either to the Letters Patent or Section 104 CPC, unless the same fell within Section 39 of the old Act, even though the order passed by the Court may qualify as being a âjudgmentâ within the meaning ascribed to that term in Shah Babulal Khimji (supra). The Act, having adopted the same terminology in so far as it defines the scope of the right to appeal against the orders of the Court passed under the Act, as used in the old Act, in our view the decision in Mohindra Supply Co. (supra) is squarely applicable, and resort cannot be had by the appellant to either the Letters Patent or Section 104 of the CPC to maintain the present appeal.
20. Reliance placed by the appellant on the Constitution Benchs decision in P.S. Sathaappan (supra) appears to be misplaced. Firstly, we may notice that in P.S. Sathaappan (supra), the earlier decision of the Supreme Court in Mohindra Supply Co. (supra) was approved. Secondly, the Supreme Court in P.S. Sathaappan (supra) observed âa specific exclusion may be clear from the words of a statute even though no specific reference is made to Letters Patentâ.
In the face of a specific exclusion of the right to appeal contained in Section 37 of the Act, except in respect of orders passed by the Court:
(a) Granting or refusing to grant any measure under Section 9
(b) Setting aside or refusing to set aside any arbitral award under Section 34;
it cannot be said that a Letters Patent appeal is maintainable against an order passed under Section 8 of the Act. In our view the legislative intent to exclude a Letters Patent appeal from orders passed under the Act, except those specifically mentioned in Section 37(1) of the Act is clear.
22. We find no merit in the appellants submission that the impugned order having been passed in a civil suit, Section 37 of the Act cannot be invoked to bar the appeal. The order has been passed by the learned Single Judge on an application preferred by the appellant by invoking Section 8 of the Act. Obviously, it is an order passed under the Act. This submission of the appellant is, therefore, rejected.â
11. In Tandav Films Entertainment Pvt. Ltd. vs. Four Frames Pictures 2010(1) Arb.LR, 79 (Delhi), the appeal was against the order allowing the application under section 8 in the appellant's suits which were actions, inter-alia, for infringement of copyright. Following the earlier judgment of the Delhi High Court in Canbank (supra), the Division Bench held :-
â12. A bare reading of the provisions of the aforesaid section is sufficient to show that the only orders of a court arising out of the Act against which an appeal lies under Section 37(1) of the Act are those granting or refusing to grant any measure under Section 9 [clause(a)] and setting aside or refusing to set aside an arbitral award under Section 34 of the Act [clause (b)]. The legislature in order to place matters beyond the pale of controversy has mandated that âan appeal shall lie only from the orders covered by clause (a) and clause (b) of sub-section (1) of Section 37 and from no othersâ. There is no manner of doubt that the impugned order passed by the learned Single Judge under Section 8 of the Act is neither an order granting or refusing to grant any measure under Section 9 of the Act nor an order setting aside or refusing to set aside an arbitral award under Section 34. Sub-section (2) of Section 37 clearly has no application since the said sub-section deals with the appeals to the court from orders of the arbitral tribunal. Mr. Sagar, the learned counsel for the appellant, when faced with this situation contended that even if the impugned order was otherwise a correct order under Section 8 of the Act (and not erroneous as it is), the decision to dismiss the appellant's suit would still be appealable in view of the fact that the Arbitration and Conciliation Act, 1996 does not contemplate such an order of dismissal nor even requires stay of the suit upon reference to arbitration.
18. In a recent Division Bench judgment of this court in RITES Limited vs. JMC Projects (India) Ltd. in FAO (OS) No.173/2007 decided on 18.03.2009 (reported as 2009(2) Arb. LR 64 (Del.) (DB) another Division Bench of the Delhi High Court while dealing with the scope and ambit of Section 37 of the 1996 Act, after referring to several judgments of the Hon'ble Supreme Court and the Delhi High Court, including Groupe Chimique Tunisien SA vs. Southern Petrochemicals Industries Corpn. Ltd., (2006) 5 SCC 275=2006 SCACTC 332 (SC) = 2006(2) Arb. LR 435 (SC); P.S. Sathappan (Dead) by LRs. vs. Andhra Bank Ltd. and others, AIR 2004 SC 5152; Vanita M. Khanolkar vs. Pragna M. Pai, AIR 1998 SC 424; R.K. Sharma vs. Ashok Nagar Welfare Association and Co., AIR 2001 Delhi 272; Gurmauj Saran Baluja vs. Joyce C. Salim and others, AIR 1990 Delhi 13; Jugal Kishore Paliwal vs. Sat Jit Singh, (1984) 1 SCC 358; Shah Babulal Khimji; Mohindra Supply Co.; A.S. Dhupia; and Banwari Lal Radhey Mohan expressed concurrence with the view taken by the Division Bench in the Canbank case. The Division Bench also rejected the contention of the respondent that the judgment rendered in Canbank was per incuriam. In paragraph 22 of its judgment, it held as follows (at p.73 of Arb.LR ) :
â22. We find no merit in the appellant's submission that the impugned order having been passed in a civil suit, Section 37 of the Act cannot be invoked to bar the appeal. The order has been passed by the learned Single Judge on an application preferred by the appellant by invoking Section 8 of the Act. Obviously, it is an order passed under the Act.
This submission of the appellant is, therefore, rejected.â
12. In Maruti Clean Coal and Power Limited vs. Kolahai Infotech Pvt. Ltd. MANU/DE/1387/2010, the Division Bench considered the maintainability of an appeal against an order allowing an application under section 8. The Division Bench held that the appeal was not maintainable in view of section 37 of the Act. The earlier decisions of the Delhi High Court, some of which we have referred to were followed. The Division Bench also held that section 39 of the 1940 Act is analogous to section 37 of the 1996 Act. This view has also been taken by the Supreme Court in a judgment we will refer to later.
13. A learned single Judge of this Court dealt with this issue in considerable detail, in an order and judgment dated 6th November, 2012 in a group of matters, the first of which was in Masusmi SA Investment LLC vs. Keystone Realtors Pvt. Ltd. and Ors., Company Appeal (Lodging) No.47 of 2012 in Company Law Board No.57 of 2012 and came to the same conclusion. The learned Judge referred to the above judgments and to other judgments as well in coming to this conclusion. We are entirely in agreement with this submission.
14. We are in respectful agreement with the above judgments.
15. As we also noted earlier, Dr. Saraf however, contended that reliance cannot be placed upon the provisions of the Arbitration Act, 1940 and the judgments, even of the Supreme Court rendered thereunder. He submitted therefore, that the judgment of the Supreme Court in Union of India vs. Mohindra Supply Company AIR 1962 SC 256, can be of no assistance in answering this reference. The opening words of section 39(1) of the 1940 Act are identical to section 37(1) of the 1996 Act. Only the orders against which appeals are maintainable are different. It is settled law that an appeal against an order not referred to in section 39 of the 1940 Act is not maintainable even under clause 15 of the Letters Patent. There is no reason to take a different view with respect to section 37(1). We are bound by the judgment of the Supreme Court in Union of India vs. Mohindra Supply Company.
16. In support of his contention that neither the provisions of the 1940 Act nor the judgments rendered in respect of the provisions thereunder are relevant or can be relied upon while construing the provisions of the 1996 Act, Dr. Saraf relied upon the following observations of the Supreme Court in M/s. Sudaram Finance Ltd. vs. M/s.
NEPC India Ltd., (1999) 2 SCC 479 = AIR 1999 SC 565.
â9. The 1996 Act is very different from the Arbitration Act, 1940. The provisions of this Act have, therefore, to be interpreted and construed independently and in fact reference to the 1940 Act may actually lead to misconstruction. In other words, the provisions of the 1996 Act have to be interpreted being uninfluenced by the principles underlying the 1940 Act. In order to get help in construing these provisions, it is more relevant to refer to the UNCITRAL Model Law rather than the 1940 Act.â
We do not read the judgment as laying down an absolute proposition that the provisions of the 1940 Act and the judgments rendered thereunder can never be relied upon while construing the provisions of the 1996 Act. The Supreme Court held that the provisions of the 1940 Act âmayâ actually lead to misconstruction and not that the provisions of the 1940 Act necessarily would in all cases lead to misconstruction. If the provisions of the two Acts are almost identical and if there is nothing in the framework in the new Act that suggests that the provisions of the old Act are different, we see no reason why the provisions of the old Act and the judgments rendered thereunder cannot be relied upon to construe or at least to indicate the possible construction of the provisions of the 1996 Act.
Dr. Saraf has not invited our attention to any other aspect of the 1996 Act in general or of section 37 thereof in particular that would be contrary to or even at a variance with the provisions of section 39 of the 1940 Act and the construction thereof in the judgment of the Supreme Court in Union of India vs. Mohindra Supply Company, (1962) 3 SCR 497 = AIR 1962 SC 256. The ratio of the judgment is applicable to section 37 of the 1996 Act and has, with respect, been rightly relied upon by the judgments of the various High Courts in deciding this issue.
17. This view is also supported by the judgment of the Supreme Court in Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. (2011) 8 SCC 333. We will be dealing with this judgment on the main issue later. We find it convenient, however, to deal with this judgment even on the present aspect towards the end of our judgment.
18. Dr. Saraf contended that the 1940 Act does not have a provision similar to section 8 of the 1996 Act and therefore, the judgments regarding the maintainability of an appeal under the 1940 Act ought not to be relied upon.
The fallacy in this argument is that what must be seen is whether the 1940 Act has a provision similar to section 37 of the 1996 Act and not whether it has a provision similar to section 8. This is obvious for we are here concerned with the maintainability of an appeal and not with the rights of a defendant or respondent seeking enforcement of the right under an arbitration agreement.
19. Dr. Saraf relied upon the following observations from the judgment of the Privy Council in The Administrator - General of Bengal vs. Premlal Mullick, 1895(22), ILR 788. "The respondent maintained this singular proposition, that, in dealing with a consolidating Statute, each enactment must be traced to its original source, and when that is discovered must be construed according to the state of circumstances which existed when it first became law. The proposition has neither reason nor authority to recommend it. The very object of consolidation is to collect the statutory law bearing upon a particular subject, and to bring it down to date, in order that it may form a useful code applicable to the circumstances existing at the time when the consolidating Act is passed."
We do not read the judgment as having held that the provisions of the previous enactments cannot be relied upon and that the judgments rendered in respect of the previous enactments can never be of any assistance in interpreting a consolidating statutes. The Privy Council merely held that the consolidating Statutes must be interpreted considering inter-alia the circumstances existing at the time when the consolidating act is passed. We have done so. Having done so, we see no reason to take a view in respect of section 37 of the 1996 Act different from the view taken in respect of section 39 o the 1940 Act.
20. Dr. Saraf also relied upon the following observations of Lord Wrenbury in Food Controller vs. Cork, 1923 All ER 463 (HL):-
"I listened with interest to the historical review which the Attorney-General gave your Lordships of the development of the statute law relevant to the matter before the House. But I derive little, if any, assistance from the knowledge that, for instance, a particular section is in terms identical with a section which, as the law previously stood, was found in a framework different from that in which it is now found. To ascertain the present law it is necessary to consider such a section in the framework in which it now stands."
The judgment does not hold that the provisions of an enactment and the judgments rendered in respect thereof can never be relied upon while construing similar or identical provisions of a subsequent enactment. If the framework of two enactments is different, it would be another matter. It is indeed necessary to consider section 37 in the framework in which now it stands. There is nothing in the framework of the 1996 Act that persuades us to take a different view in respect of section 37 of the 1996 Act different from the one taken by the judgments rendered in respect of section 39 of the 1940 Act.
21. This brings us to Dr. Saraf's contention which he says has not been considered in detail in any of the above cases. His submission is as follows: Section 8 is only a provision whereby a defendant /respondent brings to the notice of the judicial authority the fact that the subject matter of the proceedings are covered by an arbitration agreement between the parties. If the contention is accepted, the judicial authority declines to entertain the proceeding. Such an order is akin and similar to the orders upholding objections as to the maintainability of a proceeding or jurisdiction of the Court raised in the proceedings. The bar contained in section 37 is to the orders in the applications made and decided under the 1996 Act. An order on an objection taken on the basis of section 8 is not under the 1996 Act. Section 37 would not be a bar to an appeal from such an order. Therefore, the order in cases where section 8 is invoked are passed in the proceedings (in this case the above suit) and are not orders under the Arbitration and Conciliation Act, 1996. The reference is only by refusing to entertain the suit. (For the purposes of our judgments, we will presume that to be so.) Section 37 only relates to the applications which originate under the Act and are contemplated to be made to the Court as defined under section 2(e) of the 1996 Act, which reads as under :-
â2. Definitions.â
(1) In this Part, unless the context otherwise requires,â
(e) âCourtâ means the Principal Civil Court of Original Jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such Principal Civil Court, or any Court of Small Causes;â
Section 8 is not an application that originates under the Act. It is but a permissible objection to the proceeding which is not under the Act, such as a suit. The order is on an objection in the proceedings, which are sought to be terminated. It follows therefore, that the order is not on an application under the Act but in the proceeding. An application under section 8 is not an application under Part-I of the Act. Section 37 is applicable only to the orders passed by the Court on the applications made under Part-I and the application must be made under the Act. If it is held that an order passed on an application taken in view of the provisions of section 8 is not an application under the Act, it must follow that section 37 is inapplicable to such an order. In other words, the bar under section 37 does not apply to the orders which are the passed in applications not made under the Act although they may be made on the basis of the provisions of the Act.
Relying upon the judgment of the Supreme Court in State of Goa vs. Praveen Enterprises, JT 2011 (8) 359, Dr. Saraf contended that the Court does not actually make a reference to the Arbitral Tribunal inter-alia by appointing the arbitrator and compelling the parties to proceed with the arbitration.
As section 8 does not empower the judicial authority to refer the parties to arbitration establishes that the authority decides only an objection and not an application.
22. Before we deal with these submissions, we must note that Dr. Saraf rightly conceded that if the order under section 8 is held to be one under the Act and it is found that the appeal against the same is barred by the provisions of section 37 of the Act, no appeal would lie against it under clause 15 of the Letters Patent. The crucial question therefore, is whether an order under section 8 is one under the Act or not. The impugned order was passed in an application in terms of section 8 made in the above suit. The question therefore, is whether the impugned order was passed under the provisions of section 8 or not. We are of the view that it is.
23. We come to the conclusion that the impugned order was passed "under" section 8 in two stages. Firstly section 8 confers upon the judicial authority the power to pass the order referring the parties to arbitration. Secondly, an application made pursuant to such a provision and the order passed thereon are "under" and are said and considered to be "under" that provision. The word "under" in an enactment signifies that the application made in accordance with or pursuant to the provisions thereof is authorized by the provisions and initiated under it.
24. The first indication that the application is under section 8 is contained in the section itself. Sub-section (3) of section 8 itself establishes that an application to refer a party to arbitration is under sub-section (1) of section 8. This is clear from the opening words of sub section (3) : âNotwithstanding that an application has been made under sub-section (1) â¦...
(emphasis supplied).
Dr. Saraf however, submitted that the use of the expression âunder sub-section (1)â in sub-section (3) of section 8 is not conclusive of the matter and the Court must determine whether in law it can be said that the application is under section 8.
25. Firstly, we see no reason to ignore or brush aside the language used in the legislation. It clearly indicates that the application referred to in sub-section (1) of section 8 is "under" section 8(1). This is the language of the section. There is nothing either in the Act generally or in section 8 in particular that suggests that the word âunderâ is used casually.
26. Even otherwise an application pertaining to the reliefs claimed in section 8 is clearly under section 8 and thereby is one under the provisions of the Act and in particular Part-I thereof which relates to domestic arbitrations. Where a matter is subject of an arbitration agreement, sub-section (1) of section 8 requires a party, (in this case the defendant / respondent,) to apply to the judicial authority (in this case this Court) before which the action (in this case the suit) is brought to refer the parties to arbitration. The application is therefore, undoubtedly to be made in the action but the power to refer the parties to arbitration as mandated by sub-section (1) is conferred by and flows from section 8 (1).
27. The present suit is filed to recover money. The suit obviously is not filed under the Arbitration and Conciliation Act, 1996. It makes no difference which enactment the suit is filed under or pursuant to. It is filed neither under the 1996 Act nor pursuant or in relation to any of the provisions thereof. The application to refer the parties to arbitration is not and could never have been under any enactment or other law in force under which the suit was filed. To refer the parties to arbitration upon an application for the same, the court must derive its power from an enactment or other law in force. It was not even suggested that there is any enactment or law in force other than the 1996 Act which entitles the Court to refer the parties to arbitration where the action is brought in a matter which is the subject of an arbitration agreement. It follows, therefore, even by elimination that the power of the Court to refer the parties to arbitration is contained in section 8 alone. Once section 8 (1) is held to be the source of power to pass such an order, it must follow that the application in which such an order is passed is under section 8 in general and under sub-section (1) thereof in particular.
28. Section 8 being mandatory, it must follow that an order made on an application under section 8 (1) is under the section, albeit in the application. It is not even suggested that such an order is made under any other provision of law, statutory or otherwise. Even assuming that the order is made in the action in which the section 8 application is taken out as contended by Dr. Saraf, it would make no difference. Merely because the order is made in the action and the effect thereof operates on the application, it does not follow that the order is not under section 8. There is nothing inconsistent or incongruous in the finding that an application under section 8 is made in the action in which it is taken out. Nor is there any inconsistency or incongruity in the finding that the effect of the order under section 8 is on the application in which it is made.
29. That section 8 confers the power upon a Court to also pass an order referring the parties to arbitration has been recognized in a series of judgments which we now refer to. In fact section 8 has been held to be mandatory.
30. In Hindustan Petroleum Corpn. Ltd. vs. Pinkcity Midway Petroleums, (2003) 6 SCC 503, the Supreme Court referred to judgment in P. Anand Gajapathi Raju v. P.V.G. Raju, 2 (2000) 4 SCC 539 and held that the language of section 8 is peremptory in nature where there is an arbitration clause, it is obligatory for the Court to refer the parties to arbitration in terms of the arbitration agreement and nothing remains to be decided in the original action. Where there is an arbitration agreement between the parties, it is mandatory for the Civil Court to refer the dispute to an arbitrator. The Civil Court has no jurisdiction to entertain the suit after an application under section 8 is made.
31. That the Court has the power to pass an order under section 8 and that an order in an application pursuant to or in accordance with section 8(1) is one "under" section 8, is clear from the judgment of the Supreme Court in SBP and Co. vs. Patel Engineering Ltd., 2005 (8) SCC 618, where it was held :-
â5. Section 8 confers power on a judicial authority before whom an action is brought in a matter which is the subject of an arbitration agreement, to refer the dispute to arbitration, if a party applies for the same.â
(emphasis supplied)
32. In Rashtriya Ispat Nigam Ltd. vs. Verma Transport Co. (2006) 7 SCC 275, the Supreme Court held as under :-
â19. Section 8 confers a power on the judicial authority. He must refer the dispute which is the subject-matter of an arbitration agreement if an action is pending before him, subject to the fulfillment of the conditions precedent. The said power, however, shall be exercised if a party so applies not later than when submitting his first statement on the substance of the dispute.
... ... ...
34. Thus, they did not submit themselves to the jurisdiction of the court. They did not waive their right. They in effect and substance questioned the jurisdiction of the court in proceeding with the matter. In fact, in its application filed under Section 8 of the 1996 Act, the appellant raised a contention that the suit was liable to be dismissed and the order of injunction vacated in view of the arbitration clause.
... ... ...
36. The expression âfirst statement on the substance of the disputeâ contained in Section 8(1) of the 1996 Act must be contradistinguished with the expression âwritten statementâ. It employs submission of the party to the jurisdiction of the judicial authority. What is, therefore, needed is a finding on the part of the judicial authority that the party has waived its right to invoke the arbitration clause. If an application is filed before actually filing the first statement on the substance of the dispute, in our opinion, the party cannot be said to have waived its right or acquiesced itself to the jurisdiction of the court. What is, therefore, material is as to whether the petitioner has filed his first statement on the substance of the dispute or not, if not, his application under Section 8 of the 1996 Act, may not be held wholly unmaintainable. We would deal with this question in some detail, a little later.â
(emphasis supplied)
33. In Ardy International (P) Ltd. vs. Inspiration Clothes and U, (2006) 1 SCC 417, the Supreme held as under :-
â4. We have extensively heard the learned counsel for both the sides and at the end of the day we are satisfied that the whole proceedings were started, continued and concluded under misconception of law. In the first place, Section 8 is not intended to restrain arbitration proceedings before an Arbitral Tribunal. The situation contemplated by Section 8 can arise only at the first instance of an opponent and defendant in a judicial proceeding, or, at the highest, suo motu at the instance of the judicial authority, when the judicial authority comes to know of the existence of an arbitration agreement. In either event, there is no question of the court under Section 8 of the 1996 Act restraining the arbitral proceedings from commencing or continuing. In fact, Section 8 is intended to achieve, so to say, the converse result. Unfortunately, in this case the application for interim relief was made by the respondent who was the plaintiff before the civil court. The relief sought therein is the restraint of arbitral proceedings. It could only have been decided as an application under Order 39 Rules 1 and 2 for whatever it was worth.
Once the objection to this application was filed by the appellant bringing to the notice of the court the existence of an arbitration agreement, thereafter the proceedings could have been continued only within the parameters of Section 8 of the 1996 Act. A proceeding under Section 8 could never result in an order restraining the arbitral proceedings, which is what finally the impugned order before us does.â
(emphasis supplied)
This judgment puts the point beyond doubt. The Supreme Court held that the proceedings under section 8 bringing to the notice of the Court the existence of an arbitration agreement could be continued only within the parameters of section 8. This clearly indicates that such proceedings, i.e., the proceedings under section 8 continued only within the parameters of section 8. It follows therefore that such proceedings are under section 8 and that is precisely the language of the Supreme Court in the last sentence of paragraph 4, quoted above.
34. In Agri Gold Exims Ltd. vs. Sri Lakshmi Knits and Wovens, (2007) 3 SCC 686, the Supreme Court held as under :-
â22. Section 8 of the 1996 Act is peremptory in nature. In a case where there exists an arbitration agreement, the court is under obligation to refer the parties to arbitration in terms of the arbitration agreement. (See Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums (2003) 6SCC 503 and Rashtriya Ispat Nigam Ltd.(2006) 7 SCC 275) No issue, therefore, would remain to be decided in a suit."
The Court, it is held, is under an obligation to refer the parties to arbitration in terms of the arbitration agreement. This obligation arises from and under section 8. It does not arise from or under any other provision of law, statutory or otherwise. It certainly does not arise from the provisions of law that may have entitled the plaintiff to file the above suit.
35. A Full Bench of this Court in Fountain Head Developers vs. Mrs.Maria Arcangla Sequeira (since deceased through LRs.) and Ors., AIR 2007 Bom. 149, held that section 8 confers power to refer the parties to arbitration where there is an arbitration agreement and that such power under section 8 can be exercised by a judicial authority.
36. The Supreme Court in State of Goa vs. Praveen Enterprises, JT 2011 (8) SCC 359, held as under :-
â12 'Reference to arbitration' can be in respect of reference of disputes between the parties to arbitration, or may simply mean referring the parties to arbitration. S. 8 of the Act is an example of referring the parties to arbitration. While s. 11 contemplates appointment of arbitrator [vide sub-sections (4), (5) and (9)] or taking necessary measure as per the appointment procedure under the arbitration agreement [vide sub-section (6)], s. 8 of the Act does not provide for appointment of an arbitrator, nor referring of any disputes to arbitration, but merely requires the judicial authority before whom an action is brought in a matter in regard to which there is an arbitration agreement, to refer the parties to arbitration. When the judicial authority finds that the subject matter of the suit is covered by a valid arbitration agreement between the parties to the suit, it will refer the parties to arbitration, by refusing to decide the Action brought before it and leaving it to the parties to have recourse to their remedies by arbitration. When such an order is made, parties may either agree upon an arbitrator and refer their disputes to him, or failing agreement, file an application u/s. 11 of the Act for appointment of an arbitrator. The judicial authority 'referring the parties to arbitration' under s. 8 of the Act, has no power to appoint an arbitrator. It may however record the consent of parties to appoint an agreed arbitrator.â
These findings do not militate against and are not contrary to what we have held. The Supreme Court in this case merely held the nature of the orders that can be passed under section 8. The Supreme Court did not deal with the question whether such an application can be said to have been made under section 8 and the order passed thereunder can be said to be one under section 8.
37. This leads to the second stage. Mr. Sawant's reliance upon the judgment of the Full Bench of the Calcutta High Court in Rabindra Nath vs. Gour Mondal (FB), AIR 1957, Calcutta 274 in this regard is well founded. The Full Bench held as under :-
â(21) In my opinion, the Act suffers from the same limitations as the Ordinance. The material section is Section 2. It is in the same terms as Cl. 2 of the Ordinance except that a second proviso, which is not material for our present purpose, has been added at the end of the provision and that in sub-sec. 1 (a) (i), corresponding to sub-cl. 1 (a) (i) of the Ordinance, the words "or any application for revision" have been added. The words added do not in any way alter the position I have found in regard to the Ordinance. Like the proceedings set out under items (i), (ii) and (iii) of Cl. 2 (1) (a) of the Ordinance, the different kinds of proceedings set out under items (i), (ii) and (iii) of S. 2 (1) (a) of the Act are all proceedings "under the West Bengal Bargadars Act, 1950". That qualification, expressly made in the prefatory paragraph of sub-section and sub-clause 2(1), controls the rest of the provision in both the Act and the Ordinance. In view of the collocation of the words "under the West Bengal Bargadars Act, 1950" as placed in the Ordinance and now in the Act, it is not even possible to argue that they have been used loosely in a general sense and are really intended to refer to all proceedings to which the Act is relevant, whether they were initiated under the Act or under other laws, because such a meaning can never be conveyed by the form of expression adopted which is "where, under the West Bengal Bargadars Act, 1950, any appeal or application..........was pending". What such an expression can comprise and cover are only appeals and applications authorised by and initiated under the Act itself.
(28) I would only add that having regard to the provisions of the Bargadars Act, 1950, which is a complete code by itself and lays down the rights as also the procedure by which the same can be enforced, and the way in which the material section in this Act has been worded, the expression "under the Act" can only mean "authorised by the Act."
âWe are entirely in agreement with the view that where the legislature uses the word âunderâ in relation to an enactment, it signifies not only that the application is authorized by the enactment but also that it is initiated under that particular enactment. The application authorized by an enactment is made under that enactment and an order passed on such an application is one under that enactment. As we mentioned earlier, section 8 authorizes an application of the nature stipulated in sub-section (1) thereof. The Court is not only authorized but bound to pass an order allowing the application under section 8. When a Court has the power to pass an order in terms stipulated in an enactment, the order is one passed under that enactment.
38. We find support for this view in the judgment of a Division Bench of the Punjab and Haryana High Court in Smt.Sudershan Chopra vs. Vijay Kumar Chopra, (2003) 117, Company Cases 660. The Division Bench considered a case where the respondent had filed a company petition under sections 397 and 398 of the Companies Act before the Company Law Board (CLB) and in which the appellant filed an application under section 8 of the 1996 Act. The CLB held that the application was not sustainable and refused to refer the disputes to arbitration. The decision of the CLB was challenged in the appeal under section 10-F of the Companies Act. The respondent contended that the appeal was not maintainable. The Division Bench considered the issue of maintainability. The appellant contended that while considering the issue of jurisdiction, reference must be made to the Companies Act. The respondent on the other hand contended that the answer to the question of maintainability must be decided on the basis of the provisions of the 1996 Act. The Division Bench first determined which of the two statues was applicable to determine the question of maintainability of the appeal under section 10-F. The Division Bench held :-
âIn our view, in order to adjudicate upon the aforesaid contention, it would be imperative for us to first determine the legislative provision under which the impugned order dated December 8, 2000, has been passed. If in the aforesaid determination, this court arrives at the conclusion that the order was passed by the CLB in exercise of its jurisdiction to settle a dispute flowing out of the provisions of the Companies Act, 1956, then and only then, the instant plea advanced on behalf of the appellants would merit acceptance. In such an eventuality, it would have to be concluded that the search for the appellate forum would have to be restricted to the Companies Act, 1956. However, if this court arrives at the conclusion that the impugned order dated December 8, 2000, had been passed by the CLB in its capacity of 'judicial authority' in exercise of obligations flowing out of the Arbitration Act, 1996, in furtherance of the provisions of the Arbitration Act, 1996, then certainly, the remedy must be searched for, from within the provisions of the Arbitration Act, 1996. In such an eventuality, the contention advanced on behalf of the appellants would not merit acceptance.
Undoubtedly, when the petition was filed by the respondents (herein) before the CLB, the CLB was exercising jurisdiction under the provisions of Sections 397 and 398 of the Companies Act, 1956.
However, when the appellants (herein) moved an application under Section 8 of the Arbitration Act, 1996, before the CLB, the CLB while deciding the said application acted in its capacity as âjudicial authority'' under Section 8 of the Arbitration Act, 1996. There can be no doubt that the impugned order determines rights flowing out of the provisions of the Arbitration Act, 1996, and not the provisions of the Companies Act, 1956. Since the CLB did not adjudicate the dispute between the parties under Sections 397 and 398 of the Companies Act, 1956 (which was really the subject matter of Company Petition No. 76 of 1999) through the order impugned before us it is not possible for us to accept the contention advanced on behalf of the appellants that in disposing of the application filed under Section 8 of the Arbitration Act, 1996, the CLB was exercising jurisdiction vested in it under the Companies Act, 1956. The conclusion has to be, as noticed in the foregoing paragraphs, that the right to prefer an appeal against an order passed by the CLB in its capacity as âjudicial authorityâ while deciding an application filed under Section 8 of the Arbitration Act, 1996, must be searched for, from within the provisions of the Arbitration Act, 1996, more so, because the impugned order is not referable to any provision of the Companies Act, 1956.â
We are in respectful agreement with these observations. The Court exercises powers under the provisions of law pursuant to which the proceedings are filed. However, the application under section 8 is decided in accordance with the provisions thereof. The order on such an application is passed in view of the power conferred by the section to do so.
We are also in respectful agreement with the conclusion that the 1996 Act is exhaustive and comprehensive code. This, as noted, is evident from section 5 of the 1996 Act, which reads as under :-
â5. Extent of judicial intervention.â
Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.â
In Union of India vs. Mohindra Supply Company AIR 1962 SC 256, it was held that the Arbitration Act 1940 was an exhaustive and comprehensive code which had consolidated the law relating to arbitration. The provisions of the 1996 Act, including section 5 thereof, make it abundantly clear that it is a self-contained code of the matters relating to domestic arbitration. We are not concerned with an international arbitration in this case. We are in respectful agreement with the observation insofar as it holds that the order under section 8 is in exercise of powers âflowing out ofâ the Arbitration Act, 1996, in furtherance of the provisions of that Act and therefore, the remedy of an appeal must be sought from within the provisions of that Act. In other words, the order of the CLB was under section 8 of the Arbitration Act, 1996 and determined the rights flowing out of the provisions thereof and not the provisions of the Companies Act, 1956. On parity of reasoning, we hold that the order impugned in the above appeal was one passed under section 8 of the Arbitration Act, 1996. In that view of the matter, the appeal is not maintainable in view of section 37 of the 1996 Act.
39. In that view of the matter, the judgment of the Supreme Court in Shyam Sundar Sarma vs. Pannalal Jaiswal, 2005(1) SCC 436 is of no assistance to the appellant. Dr. Saraf relied upon the judgment to contend that the impugned order was passed in the suit. In paragraph 10, the Supreme Court observed that an appeal filed along with an application for condoning the delay in filing that appeal when dismissed on the refusal to contend the delay is nevertheless a decision in the appeal. Our views are not contrary to this judgment.
Even assuming on a parity of reasoning that the impugned order is a decision in the suit, it does not follow as suggested by Dr. Saraf that the impugned order is not a decision under section 8.
40. Dr. Saraf relied upon the judgment of the Supreme Court in P. Anand Gajapathi Raju vs. P.V.G. Raju, (2000) 4 SCC 539 = AIR 2000 SC 1886, in support of his contention that an application under section 8 is not under Part I of the Arbitration and Conciliation Act, 1996.
In an appeal before the Supreme Court, the parties had entered into an arbitration agreement by which they referred their disputes to a sole arbitrator. The agreement was in the form of an application signed by all the parties and met the requirements of section 7. The question that arose for consideration was whether the Supreme Court in an appeal could refer the parties to arbitration under the 1996 Act. In paragraph 5 the Supreme Court enumerated the conditions required to be satisfied under sections 8(1) (2) before the Court could exercise its powers. The Supreme Court held that the phrase in âwhich is subject of an arbitration agreementâ does not necessarily require the agreement to be already in existence before an action is brought in the Court and that the phrase also connotes an arbitration agreement being brought into existence while an action is pending. Dr. Saraf relied upon the following observations in paragraph 8 of the judgment :-
â8. In the matter before us, the arbitration agreement covers all the disputes between the parties in the proceedings before us and even more than that. As already noted, the arbitration agreement satisfies the requirements of Section 7 of the new Act. The language of Section 8 is peremptory. It is, therefore, obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement. Nothing remains to be decided in the original action or the appeal arising therefrom. There is no question of stay of the proceedings till the arbitration proceedings conclude and the award becomes final in terms of the provisions of the new Act. All the rights, obligations and remedies of the parties would now be governed by the new Act including the right to challenge the award. The court to which the party shall have recourse to challenge the award would be the court as defined in clause (e) of Section 2 of the new Act and not the court to which an application under Section 8 of the new Act is made. An application before a court under Section 8 merely brings to the courts notice that the subject-matter of the action before it is the subject-matter of an arbitration agreement. This would not be such an application as contemplated under Section 42 of the Act as the court trying the action may or may not have had jurisdiction to try the suit to start with or be the competent court within the meaning of Section 2(e) of the new Act.â
Dr. Saraf placing strong reliance upon the last sentence in paragraph 8, contended that an application under section 8 is not an application under Part-I. Section 42 of the Arbitration and Conciliation Act, 1996 reads as under :-
â42. Jurisdiction.âNotwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court.â
The last sentence in paragraph 8 and section 42 of the 1996 Act has been read out of context by Dr. Saraf. It does not support his contention. The question before us was neither raised before nor decided by the Supreme Court. The observations relied upon by Dr. Saraf were obviously in relation to what is to happen to future applications. It is true that section 42 refers to any application âunder this partâ, i.e., Part I. The Supreme Court does not state that the application under section 8 is not one under Part I of the Act. What the judgment holds is that an application under section 8 would not be âsuch an application as contemplated under section 42 of the Actâ.
What is held therefore, is not that an application under section 8, is not one under Part I, but that it is not an application as contemplated under section 42. The reason is obvious. Section 42 mandates that all the subsequent applications arising out of an arbitration agreement and that arbitral proceeding shall be made in the Court, in which any application under Part I has been made. The object was to consolidate all the applications in the same Court rather than have parties filing the applications before the different Courts all over the country in respect of the same arbitration agreement and the same arbitral proceedings. Now an application under the section is by its very nature not one which deals with the arbitral proceedings per-se but an application to compel the parties to refer the disputes in accordance with the arbitration agreement. Nowhere in the judgment, has the Supreme Court held that an application under section 8 is not an application under Part I of the 1996 Act.
In fact the judgment read as a whole indicates quite clearly that the application is one under section 8 and that the Court exercises its powers upon being satisfied that the conditions in section 8 are met.
The judgment is authority for the proposition that an application under section 8 is not an application as contemplated by section 42 and not that it is not an application under Part I of the Act or under the 1996 Act. This is clear from the concluding words from the last sentence ; âas the Court trying the action may or may not have had jurisdiction to try the suit to start with or be the competent Court within the meaning of Section 2(e) of the new Act......â The basis of the judgment is obvious and is furnished in these words. It would otherwise lead to the absurdity that merely because the action is filed in a Court without territorial, pecuniary or subject matter jurisdiction, all the applications in respect of the arbitration agreement and in relation to the arbitral proceedings must be filed in the Court. A view to the contrary would entitle a party to subject the other parties to the jurisdiction of his choice although the Courts within that jurisdiction, lack jurisdiction by the simple expedient of filing an application in such a Court.
41. By filing the application under section 8, the party does not subject itself to the jurisdiction of the Court - pecuniary, territorial or subject matter. A party merely brings to the notice of that Court the existence of the arbitration agreement and seeks an order referring the party bringing the action to arbitration in accordance therewith.
42. This view is supported by a judgment of the Supreme Court in Bahrein Petroleum Co. Ltd. vs. P.J. Pappu and Ors., (1966) 1 SCR 461. = AIR 1966 SC 634. The Supreme Court held in paragraph 6 :-
â6. The High Court was of the view that the effect of Sections 2(c), 34 and 39 of the Indian Arbitration Act was that by filing the appeal under Section 39 against the order of the Cochin Court refusing to stay the suit the defendants must be deemed to have conceded that the Cochin Court was a Court having jurisdiction to try the suit. An application under Section 34 lies to the judicial authority, before which the suit is pending. Section 39(1) permits an appeal from an order of a Court under Section 34. Section 2(c) defines a âCourtâ as 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. On a combined reading of Sections 2(c), 34 and 39, the High Court concluded that by filing the appeal under Section 39(1) the defendants conceded that the Cochin Court before which the application under Section 34 was made was a Court as defined in Section 2(c), and, therefore, a Court having jurisdiction to try the suit. We are unable to accept this line of reasoning. Even substituting the word âCourtâ for the words âjudicial authorityâ in Section 34, it would appear that the general definition of âCourtâ in Section 2(c) cannot be imported into Section 34. An application for stay of a suit must be made to the Court before which it is pending. That Court may or may not be the 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. Still, the application must be made to the Court and to no other. An application to the Court before which the suit is pending for stay of the suit under Section 34 is in no way a recognition that that Court has jurisdiction to try the suit, nor can an appeal from an order of the Court under Section 34 have that effect. We, therefore, hold that the defendants did not waive their objection as to the territorial jurisdiction of the Cochin Court.â
43. The decision of the Supreme Court in Fuerst Day Lawson Ltd. vs. Jindal Exports Ltd., (2011) 8 SCC 333, virtually concludes the matter against the appellant. That the judgment dealt with section 50 of the 1996 Act makes no difference. In fact, the ratio applies with greater force as the language of section 37 is far stricter and restrictive than that of section 50.
Paragraphs 1, 2, 3, 89 and 90 of the judgment read as under :-
â1. Leave granted in SLP (C) No. 31068 of 2009 and SLP (C) No. 4648 of 2010. The common question that arises for consideration by the Court in this batch of cases is whether an order, though not appealable under Section 50 of the Arbitration and Conciliation Act, 1996 (hereinafter âthe 1996 Actâ), would nevertheless be subject to appeal under the relevant provision of the Letters Patent of the High Court. In other words even though the Arbitration Act does not envisage or permit an appeal from the order, the party aggrieved by it can still have his way, bypassing the Act and taking recourse to another jurisdiction.
2. Mr C.A. Sundaram, Senior Advocate, however, who led the arguments on behalf of the appellants, would like to frame the question differently. He would ask whether there is any provision in the 1996 Act that can be said to exclude the jurisdiction of the High Court under its Letters Patent either expressly or even impliedly. He would say that the jurisdiction of the High Court under the Letters Patent is an independent jurisdiction and as long as the order qualifies for an appeal under the Letters Patent an appeal from that order would be, undoubtedly, maintainable before the High Court.
3. A correct answer to both the questions would depend upon how the 1996 Act is to be viewed. Do the provisions of the 1996 Act constitute a complete code for matters arising out of an arbitration proceeding, the making of the award and the enforcement of the award? If the answer to the question is in the affirmative then, obviously, all other jurisdictions, including the Letters Patent jurisdiction of the High Court would stand excluded but in case the answer is in the negative then, of course, the contention of Mr Sundaram must be accepted.
... ... ... ...
89. It is, thus, to be seen that Arbitration Act, 1940, from its inception and right through to 2004 (in P.S. Sathappan) was held to be a self-contained code. Now, if the Arbitration Act, 1940 was held to be a self-contained code, on matters pertaining to arbitration, the Arbitration and Conciliation Act, 1996, which consolidates, amends and designs the law relating to arbitration to bring it, as much as possible, in harmony with the UNCITRAL Model must be held only to be more so. Once it is held that the Arbitration Act is a self-contained code and exhaustive, then it must also be held, using the lucid expression of Tulzapurkar, J., that it carries with it âa negative import that only such acts as are mentioned in the Act are permissible to be done and acts or things not mentioned therein are not permissible to be doneâ. In other words, a letters patent appeal would be excluded by the application of one of the general principles that where the special Act sets out a self-contained code the applicability of the general law procedure would be impliedly excluded.
90. We, thus, arrive at the conclusion regarding the exclusion of a letters patent appeal in two different ways; one, so to say, on a micro basis by examining the scheme devised by Sections 49 and 50 of the 1996 Act and the radical change that it brings about in the earlier provision of appeal under Section 6 of the 1961 Act and the other on a macro basis by taking into account the nature and character of the 1996 Act as a self-contained and exhaustive code in itself.â
The Supreme Court answered the questions posed in paragraph 3 as to whether the Act constitutes a complete code in the affirmative.
In view of paragraph 3 of the judgment, it would follow that the Letters Patent jurisdiction of the High Court stands excluded.
Paragraphs 3 and 89 read together puts the matter beyond controversy.
In paragraph 3, it is held that if the 1996 Act constitutes a complete code for matters arising out of an arbitration proceeding, other jurisdictions, including the Letters Patent jurisdiction of the High Court would stand excluded. In paragraph 89, the Supreme Court held that the 1996 Act is exhaustive and a self-contained code. This ratio is irrespective of whether the case deals with the provisions of Part I or Part II of the 1996 Act. That section 50 of the 1996 Act fell for consideration makes no difference. In fact the ratio would apply with greater force to section 37. Section 50 of the 1996 Act reads as under :-
â50. Appealable orders.â
(1) An appeal shall lie from the order refusing toâ
(a) refer the parties to arbitration under Section 45;
(b) enforce a foreign award under Section 48;
to the Court authorised by law to hear appeals from such order.
(2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.â
Section 50 does not even contain the words â(and from no others)â.
These words in parenthesis appears in section 37.
44. The contention that there is an absolute bar against a reference to the provisions of the 1940 Act and the judgments rendered thereunder while considering the provisions of the 1996 Act is not well founded. In Fuerst Day Lawson Ltd. vs. Jindal Exports Limited's case (supra) for instance, the Supreme Court in fact referred to the judgment under the 1940 Act on the question whether an appeal is maintainable from the orders passed under section 45 in view of section 50. In paragraph 38, the Supreme Court referred to its earlier judgment in Union of India vs. Mohindra Supply Company (supra) in considerable detail in paragraphs 86, 87 and 88. In paragraph 39 of the judgments of the Supreme Court in State of W.B. vs. Gourangalal Chatterjee, (1993) 3 SCC 1 and Union of India vs. Aradhana Trading Co. (2002) 4 SCC 447, the were referred to.
Paragraph 62 reads as under :-
â62. Having come to this conclusion, it would appear that the decisions rendered by the Court on the interplay between Section 39 of the 1940 Act and the Letters Patent jurisdiction of the High Court shall have no application for deciding the question in hand.
But that would be only a superficial view and the decisions rendered under Section 39 of the 1940 Act may still give the answer to the question under consideration for a very basic and fundamental reason.â
The Supreme Court therefore, clarified that though it would appear that the decisions referred under section 39 of the 1940 Act shall have no application for deciding the question under sections 45 and 50 of the 1996 Act; it is not so. That would be only a superficial view and that the decisions referred under section 39 of the 1940 Act may still give the answer to the question as to whether an appeal from the order against under section 45 is barred in view of section 50 of the 1996 Act. It is important to note that the Supreme Court in Fuerst Day Lawson Ltd. vs. Jindal Exports Limited's case (supra), in paragraph 37, set out section 39 of the 1940 Act and observed as under :-
â(Insofar as relevant for the present, Section 37 of the 1996 Act, is very similar to Section 39 of the previous Act as quoted above.)â
In paragraph 52, the Supreme Court again observed that section 39 of the 1940 Act is equivalent to section 37 of the 1996 Act. The reliance upon the judgments under section 39 of the 1940 Act is, therefore, justified.
45. In the circumstances, the reference is answered as follows :-
An appeal against an order passed in an application under section 8 of the Arbitration and Conciliation Act, 1996 is not maintainable under clause 15 of the Letters Patent being barred by the provisions of section 37 of the Arbitration and Conciliation Act, 1996.
46. The appeal shall be placed before the appropriate Bench for disposal in accordance with this judgment.