M/S. Ravi Engineering Works Vs. Firm Narang Steel Rolling Mills and Another - Court Judgment

Excerpt:
- sections 100-a [as inserted by act 22 of 2002], 110 & 104 & letters patent, 1865, clause 10: [dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] letters patent appeal order of single judge of high court passed while deciding matters filed under order 43, rule1 of c.p.c., - held, after introduction of section 110a in the c.p.c., by 2002 amendment act, no letters patent appeal is maintainable against judgment/order/decree passed by a single judge of a high court. a right of appeal, even though a vested one, can be taken away by law. it is pertinent to note that section 100-a introduced by 2002 amendment of the code starts with a non obstante clause. the purpose of such clause is to give the enacting part of an overriding effect in the case of a conflict with laws mentioned with the non obstante clause. the legislative intention is thus very clear that the law enacted shall have full operation and there would be no impediment. it is well settled that the definition of judgment in section 2(9) of c.p.c., is much wider and more liberal, intermediary or interlocutory judgment fall in the category of orders referred to clause (a) to (w) of order 43, rule 1 and also such other orders which poses the characteristic and trapping of finality and may adversely affect a valuable right of a party or decide an important aspect of a trial in an ancillary proceeding. amended section 100-a of the code clearly stipulates that where any appeal from an original or appellate decree or order is heard and decided by a single judge of a high court, no further appeal shall lie. even otherwise, the word judgment as defined under section 2(9) means a statement given by a judge on the grounds of a decree or order. thus the contention that against an order passed by a single judge in an appeal filed under section 104 c.p.c., a further appeal lies to a division bench cannot be accepted. the newly incorporated section 100a in clear and specific terms prohibits further appeal against the decree and judgment or order of a single judge to a division bench notwithstanding anything contained in the letters patent. the letters patent which provides for further appeal to a division bench remains intact, but the right to prefer a further appeal is taken away even in respect of the matters arising under the special enactments or other instruments having the force of law be it against original/appellate decree or order heard and decided by a single judge. it has to be kept in mind that the special statute only provide for an appeal to the high court. it has not made any provision for filing appeal to a division bench against the judgment or decree or order of a single judge. no letters patent appeal shall lie against a judgment/order passed by a single judge in an appeal arising out of a proceeding under a special act. sections 100-a [as inserted by act 22 of 2002] & 104:[dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] writ appeal held, a writ appeal shall lie against judgment/orders passed by single judge in a writ petition filed under article 226 of the constitution of india. in a writ application filed under articles 226 and 227 of constitution, if any order/judgment/decree is passed in exercise of jurisdiction under article 226, a writ appeal will lie. but, no writ appeal will lie against a judgment/order/decree passed by a single judge in exercising powers of superintendence under article 227 of the constitution. - , drug, 1972 mplj 46. 4. the opposite party failed to appear in the revision petition and it was proceeded ex parte.order1. this revision is directed against the appellate order dated 10-2-1993 of the additional district judge, amritsar, affirming the trial court's order dated 24-10-1988 allowing the application under sec. 20 of the arbitration act made by m/s. narang steel roiling mills.2. brief facts of the case, about which there is no dispute, are that narang steel rolling mills was let out to m/s. ravi engineering works under a written lease-deed dated 6-4-1977 on certain terms and conditions. the lease continued till 2-8-1980 when the lease-deed was terminated and possession of the rolling mills was delivered back to the lessor. at that time a writing ex. dx was prepared. inter alia in that writing, it was mentioned that accounts had been settled between the parties. later on 6-5-1981, a bill was received from the electricity department of the municipal committee raising a demand of rs. 92509.58 for the period september, 1976 to march, 1981. the prorata amount for the period during which the mills were in occupation of the lessor worked out to rs. 48,938. in the original agreement of lease there was an arbitration clause. petitioner narang steel rolling mills, therefore, made an application in the court of senior subordinate judge, amritsar, under section 20 of the arbitration act for calling upon the opposite party to file the agreement and to refer the dispute to the arbitrator. the application was contested. the trial court allowed the application and appeal against the order was dismissed by the learned additional district judge, amritsar, as already stated. hence this revision.3. the contention of mr. r. k. battas, learned counsel for the petitioner, is that with the writing (ex. dx) at the time of restoring possession of the demised mills to the lessor, the contract between the parties came to an end and the arbitration clause, which was part of the contract, could not independently survive and, therefore, there was no question of referring the dispute to the arbitrator. he placed reliance of hindustan steel limited, bhilaiv. m/s. ramdayal dau and co., drug, 1972 mplj 46.4. the opposite party failed to appear in the revision petition and it was proceeded ex parte.5. a perusal of the authority relied on by mr. battas in my view does not advance the case of the petitioner. the question for consideration in that case was whether the extinction of the contract was a matter for the arbitrator to decide or the court to decide. it was held that such a question in the nature of things was for the court to decide as the arbitrator derives his jurisdiction on the existence of the contract itself. there is no such dispute as far as the present case is concerned as the question whether the contract survives or has become extinct has been decided by the civil court itself. incidently, in the aforesaid authority in hindustan steel's case (1972 mplj 46) (supra) reference is made to union of india v. kishori lal, air 1959 sc 1362, in which after a review of a case law on the point their lordships of the supreme court enunciated certain settled propositions. for the present purposes, principles at sr. nos. (v) and (vi) appear to be relevant and they are as under :'(v) in the former case, if the original contract has no legal existence, the arbitration clause also cannot operate, for along with the original contract, it is also void; in the latter case, as the original contract is extinguished by the subsequent one, the arbitration clause of the original contract perishes with it; and (vi) between the two, fall many categories of disputes in connection with a contract, such as the question of repudiation, frustration, breach etc. in those cases it is theperformance of the contract that has come to an end, but the contract is still in existence for certain purposes in respect of disputes arising under it or in connection with it. as the contract subsists for certain purposes, the arbitration clause operates in respect of these purposes,'6, if the present case is taken to fall in proposition no. (v) i.e., if the original contract has no legal existence, the arbitration clause cannot operate. if, on the other hand, the proposition no. (vi) is applicable a distinction has to be made between performance of the contract on the one hand and existence of the contract itself on the other hand. in terms of proposition, where performance of the contract has come to an end, but the contract is still in existence for certain purposes in respect of disputes arising under it or in connection with it, the arbitration clause survives and further action in terms thereof has to be taken. in my view it is proposition no. (vi), which is applicable to the facts and circumstances of the present case. i am supported in reaching this conclusion by clause-9 of the lease-deed which reads as under:--'9. the lease shall pay in time all electricitybills, telephone bills, excise duty, sale tax andother charges and levies of all types relating tothe period of lease. if the lessor is obliged todischarge any such liability he shall be entitledto recover the same from lessee with interestat the rate of 12% per annum thereon. thelessors shall discharge all liabilities of whatever nature incurred prior to 6-4-77 themselves.'the observation of the apex court in union of india v. m/s. l. k. ahuja and co., air 1988 sc 1172, extracted by the trial court, further supports the above conclusion. these may be set out for facility of reference as under :--'... in order to be entitled to ask for a reference under s. 20 of the act, there must be an entitlement to money and a difference or dispute in respect of the same. it is true that on completion of the work, right to gel payment would normally arise and it is also true that on settlement of the final bill the right to get further payment gets weakened but the claimsubsists and whet her it does subsist, is a matter which is arbitrable.' 7. again, the observations of the supreme court in m/s. bharat heavy elec-tricals limited v. m/s. amar nath bhan parkash, 1982 (1) scc 625, which have also been relied on by the trial court, deserve to be. set out as under :--'it appears from the order of the high court impugned in the appeal that the high court has not correctly recited the position that the question whether there was discharge of the contract by accord and satisfaction or not, is a dispute arising out of the contract and is liable to be referred to arbitration and hence the application of the respondent under sec-tion 20 of the indian arbitration act should have been allowed and the matters in dispute between the parties, including the question whether or not there was discharge of the contract by accord and satisfaction should have been referred to arbitration.' 8. for those reasons, i find no informity in the order passed by the trial court and affirmed by the learned additional district judge and accordingly the revision petition is dismissed with no order as to costs. the trial court will now take further action in terms of the order passed by it.9. petition dismissed.

Judgment:
ORDER

1. This revision is directed against the appellate order dated 10-2-1993 of the Additional District Judge, Amritsar, affirming the trial Court's order dated 24-10-1988 allowing the application under Sec. 20 of the Arbitration Act made by M/s. Narang Steel Roiling Mills.

2. Brief facts of the case, about which there is no dispute, are that Narang Steel Rolling Mills was let out to M/s. Ravi Engineering Works under a written lease-deed dated 6-4-1977 on certain terms and conditions. The lease continued till 2-8-1980 when the lease-deed was terminated and possession of the Rolling Mills was delivered back to the lessor. At that time a writing Ex. DX was prepared. Inter alia in that writing, it was mentioned that accounts had been settled between the parties. Later on 6-5-1981, a bill was received from the electricity department of the municipal committee raising a demand of Rs. 92509.58 for the period September, 1976 to March, 1981. The prorata amount for the period during which the Mills were in occupation of the lessor worked out to Rs. 48,938. In the original agreement of lease there was an arbitration clause. Petitioner Narang Steel Rolling Mills, therefore, made an application in the Court of Senior Subordinate Judge, Amritsar, under Section 20 of the Arbitration Act for calling upon the opposite party to file the agreement and to refer the dispute to the Arbitrator. The application was contested. The trial Court allowed the application and appeal against the order was dismissed by the learned Additional District Judge, Amritsar, as already stated. Hence this revision.

3. The contention of Mr. R. K. Battas, learned Counsel for the petitioner, is that with the writing (Ex. DX) at the time of restoring possession of the demised Mills to the lessor, the contract between the parties came to an end and the arbitration clause, which was part of the contract, could not independently survive and, therefore, there was no question of referring the dispute to the Arbitrator. He placed reliance of Hindustan Steel Limited, Bhilaiv. M/s. Ramdayal Dau and Co., Drug, 1972 MPLJ 46.

4. The opposite party failed to appear in the revision petition and it was proceeded ex parte.

5. A perusal of the authority relied on by Mr. Battas in my view does not advance the case of the petitioner. The question for consideration in that case was whether the extinction of the contract was a matter for the arbitrator to decide or the Court to decide. It was held that such a question in the nature of things was for the Court to decide as the Arbitrator derives his jurisdiction on the existence of the contract itself. There is no such dispute as far as the present case is concerned as the question whether the contract survives or has become extinct has been decided by the Civil Court itself. Incidently, in the aforesaid authority in Hindustan Steel's case (1972 MPLJ 46) (supra) reference is made to Union of India v. Kishori Lal, AIR 1959 SC 1362, in which after a review of a case law on the point their Lordships of the Supreme Court enunciated certain settled propositions. For the present purposes, principles at Sr. Nos. (v) and (vi) appear to be relevant and they are as under :

'(v) in the former case, if the original contract has no legal existence, the arbitration clause also cannot operate, for along with the original contract, it is also void; in the latter case, as the original contract is extinguished by the subsequent one, the arbitration clause of the original contract perishes with it; and

(vi) between the two, fall many categories of disputes in connection with a contract, such as the question of repudiation, frustration, breach etc. In those cases it is theperformance of the contract that has come to an end, but the contract is still in existence for certain purposes in respect of disputes arising under it or in connection with it. As the contract subsists for certain purposes, the arbitration clause operates in respect of these purposes,'

6, If the present case is taken to fall in proposition No. (v) i.e., if the original contract has no legal existence, the arbitration clause cannot operate. If, on the other hand, the proposition No. (vi) is applicable a distinction has to be made between performance of the contract on the one hand and existence of the contract itself on the other hand. In terms of proposition, where performance of the contract has come to an end, but the contract is still in existence for certain purposes in respect of disputes arising under it or in connection with it, the arbitration clause survives and further action in terms thereof has to be taken. In my view it is proposition No. (vi), which is applicable to the facts and circumstances of the present case. I am supported in reaching this conclusion by clause-9 of the lease-deed which reads as under:--

'9. The lease shall pay in time all electricitybills, telephone bills, Excise duty, sale tax andother charges and levies of all types relating tothe period of lease. If the lessor is obliged todischarge any such liability he shall be entitledto recover the same from lessee with interestat the rate of 12% per annum thereon. Thelessors shall discharge all liabilities of whatever nature incurred prior to 6-4-77 themselves.'

The observation of the apex Court in Union of India v. M/s. L. K. Ahuja and Co., AIR 1988 SC 1172, extracted by the trial Court, further supports the above conclusion. These may be set out for facility of reference as under :--

'... In order to be entitled to ask for a reference under S. 20 of the Act, there must be an entitlement to money and a difference or dispute in respect of the same. It is true that on completion of the work, right to gel payment would normally arise and it is also true that on settlement of the final bill the right to get further payment gets weakened but the claimsubsists and whet her it does subsist, is a matter which is arbitrable.'

7. Again, the observations of the Supreme Court in M/s. Bharat Heavy Elec-tricals Limited v. M/s. Amar Nath Bhan Parkash, 1982 (1) SCC 625, which have also been relied on by the trial Court, deserve to be. set out as under :--

'It appears from the order of the High Court impugned in the appeal that the High Court has not correctly recited the position that the question whether there was discharge of the contract by accord and satisfaction or not, is a dispute arising out of the contract and is liable to be referred to arbitration and hence the application of the respondent under Sec-tion 20 of the Indian Arbitration Act should have been allowed and the matters in dispute between the parties, including the question whether or not there was discharge of the contract by accord and satisfaction should have been referred to arbitration.'

8. For those reasons, I find no informity in the order passed by the trial Court and affirmed by the learned Additional District Judge and accordingly the revision petition is dismissed with no order as to costs. The trial Court will now take further action in terms of the order passed by it.

9. Petition dismissed.