# 3 S.C.R. SUPREl'lffi COURT REPJRTS JAWAHAR LAL BURMAN v. UNION· OF INDIA - **Citation:** [1962] 3 S.C.R. 769 - **Court:** Supreme Court of India - **Decided:** 1962 - **Bench:** B. P. Sinha, P. B. Gajendragadkar, Raghubar Dayal - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/3-s-c-r-suprel-lffi-court-repjrts-jawahar-lal-burman-v-union-of-india-2476 - **Pages:** 18 ## Headnote Arbitration-Denial of validity of contract contai1ting arbitration agreement-Petition for dedarati011 that there ia valid contract and to afffirm exiatence of arbit1ation agreementMaintainability-&ope and effeci-Juritdictio•-Arbitration Act, 1940 (10 of 1~40) "· 28, 31, 32, 33. The appellant and.the respondent nominated their arbitrator. who heard the matter at length and. the proceedings had reached a •tage when an award might have been pronounced. It was then that the appellant chose to obstruct the further progress of the proceedings by raising the plea that there was no concluded contract. The appellant refused to apply under s. 33 and so a stalemate issued became the arbi· trators were not entitled to proceed further with the arbitration proceedings. - , The respondent moved the court under s. 28 along with 1. 33, for a decision of the question about the existence and validity of the arbitration agreement, and also prayed that extension of time be granted to the arbitrators for making the award. The appellant pleaded in defence that there was no concluded contract, and there was no juri.!idiction iri the court to grant extension under $~ 28 of the Act. The High Court confirmed the finding of the trial court that there was a concluded contract which contained a valid , arbitration ag_reement. As for jurisdiction it held that since the petition had been filed as cornposit application und j ss.c.R. SUPREME OOURT REPORTS 771 chararcter of the application. It is an application for obtaining a declaration about the existence and validity of an arbitration agreement. Held, also that the powers to enlarge time for making the award which is the subject matter of s. 28 does not include .a power to entertain a petition for declaration that there wa• a concluded contract between the partie• containing a valid arbitration agreement. HaymaJt v. Darwins. Ltd., ( 19~2) A. C. 356, referred to. Messrs. M. Gulamali Abdulhussain &! Go. v. Messti!. VMhtcambhar!al Ruiya, I.L.R. (1950) Born. 333, approved. Bajranglal Laduram v. Agarwal Brothers, A I.R. 1950 Cal. 267 and Stau of Bombay v. Adamjee Haju Dawood &! Go. Ltd. I.L.R. (1952) 2 Cal. 39, disapproved. CIVIL APPELJ,ATE JURISDICTION: Civil Appeal No. 328 of 1961. Appeal by special leave from the judgment and order dated February 2, 1961, of the Punjab High Court (Circuit Bench), at Delhi in Civil Revision Application No. 135-D of 1957. Din Dayal Sharma and N. N. Ke.~wani, for the appellant. 0. K. Daphtary, Solicitor-General of India, V. D. Mahajan and T.M. Sen, for the respondent. 1961. September 25. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-The principal point which this appeal by special leave raises for our decision relates to the construction of ss. 32 and il3 of the Arbitration Act, 1940 (10 of 1940) (hereafter called the Act). That question arises in this way. The respondent, Union of India, filed a petition in the Court of the First Class Sub-Judge at Delhi against the appellant M/s. J. Burman & Co., through its proprietor Jawahar Lal Burman under ss. 33 and 28 of the Act. The respondent s.Jleged that a concluded contract had been entered into between the partiee on August 31, 1949 for supply of t 70-1 /2 Cwt. of eocoanut oil by the appellant to the respondent. The respondent had advertised in the Indian Trade J oumal for the said supply and the appellant had submitted itll tender No. SM-I/104524. IHI J awahad'.,ol s ....... v. Unilm of Iniia JIU/ J°"'oltar I.../ B,,,,,... v. Uniott of l11dia • 772 SUPREME COURT REPORTS [1962] This tender was accepted by the respondent which concluded a contract bctwocn tho parties. The respondent's oase was that the said contract wae governed by general conditions of contract Form W.S.B. 133. These conditions included an arbitration agreement. Disputes arose betwceJ) the parties regarding tho~id contract, and so in pursuance of tbe arbitration agreement they were reforrcd to the two arbitrators appointed by the parties. After the a.rbitra.ti~n proceedings had gone on for a. considerable time before the arbitrators the appellant objected to their jurisdiction to deal with the disputes on the ground that thero was no concluded contract between the parties. This pica. made it necessary for the respondent to move the Court for a decision of tho question about the existence and validity of the arbitration agreement. It was on those allcgatibns that tho respondent in its petition claimed that it may be held that there was a. concluded contra.ct between tho parties containing a valid arbitration agreement. The petition having been made under s. 28 along withs. 33 the respondent prayed . that suitable extension of time be granted to the arbitrators for making the a.ward. The appellan~ pleaded in defence that no concluded contract had been made between the parties and that thPre was no jurisdiction·in the Court to grant extension under s. 28. The o~her allegations made by the respondent in its petition wore also traversed. · · On the11e pleading.~ the learned trial judge framed appropriate iBBues. He found that a concluded contract had been proved between the parties as alleged by the respondent, that there wa.s a valid arbitration agreement in the said contract and that the Court had jurisdiction to try tho petition. Incidentally it may be pointed out at this stnge ihat no specific point had been raised in tho pleadings of the appellant that the Court ha.cl no jurisdiction to ent?rtain the . petition under s. 33 or s. 32 of t4e Act. ~n faot the trial judge has observed tbnt it waa not shown to him how the • .J ·*- ) -~ ~ S.C.R. SUPREME COURT REPORTS 773 applica.tion was incompetent. Consistently with the findings recorded by him the learned trial judge declared that there was a concluded contract between the parties under which the matter was duly referred .to arbitration through an arbitration agreement .clause in the contract. Ae a result of the declaration he held th11.t there wu a valid reference to arbitration between the parties. Consequently be granted & month's time to the arbitrators to m&ke their award. This decision was challenged by the &ppellant by its revision petition preferred in the High Court of Punjab at Ch&ndigarh. The High Court has confirmed the finding of the trial court that there was a concluded contract which contaimid an arbitration agreement. The question of jurisdictiop. under s. 33 of the Act was argued before the High Court &nd iUI attention wae drawn to the conflict of judicial decieions on the point. The High Court, however, held that einee the petition has been filed as a composite &pplication under es. 28. and 33 it was open to the Court under a. 28 to enter upon the .~ q 11estion of the existence or validity of the contract and so there was no substance in the point of jurisdiction raised by the appellant. · In the result the appellant's revision application was dismissed. It is against this deciition that the appella.nt has come to this Court by special leave ; and on his . - beha.lf Mr. Din Dayal ha11 raised the same two ~~ points for our decision. He contends that the High Court wa11 in error in holding that the tl'ial court ha.d jurisdiction to entertain the respondent's petition, &nd he argues that even if the point of jurisdiction raised by him fails it should be held tha.t there was no concluded contract between the parties and so there was no scop3 or room for making any reference to arbitration. . The first of ~ - these two contentione has been seriously pressed before us. · • Before plea. that there was no concluded contra.ct. Even then he refused to apply under s. 33 and so a stalemate issued becauso the arbitrators were not entitled to proceed further with the arbi· tration procoedings in •iew of the point raised by the appellant. 'It is necesee.ry to bear in mind thi11 backgrow1d of the dispute in considering tho pointof jurisdiction. The question of jurisdiction raised by the appellant has to be answered in the light of tho construction which can be reasonably placed on the material provisions of as. 32 and 33 of the Act. It may be concerled at the outset that the question thus rniscd presents some difficulty. Sections 32 and 33 read thus: "32. Notwithstanding any law for the time being in force, no suit shall lie on any ground wh[l,tsoevcr for a decision upon tho existence, effect or validity of an arbitr[l,tion ngreemont or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwiso than as provided in thie Act. 33. Any party to an arbitration agreement or any person claiming under hiJ:J?- ?-csiring to challenge the existence or validity of an -arhitration agreement or an a~ard or to b1we the eff<>ct of either detcrmmed shall apply to the Court and tho Court shall decide the question on affidavitB: -'.-- Provided that whcro the Court deems it just and oxnedient, it may set down tho application for hearing cm other evidence • ' . ,. • f • \ ' •• > 3S.C.R. SUPREME COURT REPORTS 775 also, and it may pass such orders for discovery and particulars as it may do in a suit." In appreciating the effect of these two provisions it would be relevant to remember that the object of the Legislature in enacting the two sections quite clearly was to prevent the abuse of the process of the Court. Before the present Act was passed experience showed that unscrupulous and dishonest parties to the arbitration agreements frequently chose to deny the existence of the said agreements even after the arbitration proceedings had concluded and ended in awards and that tended to make all arbitration proceedings futile. More often than not these pleas ultimately failed but it meant considerable delay and waste of time and substantial expense. That is why ss. 32 and 33 have been enacted with the object of bringing the relevant disputes for decision before the specified Courts in the form of petitions. It is significant that under s.31(2) of the Act all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been, or may be, filed, and by no other Court. Indeed, s.2(c} defines a 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 s. 21, include a Small Cause Court. Therefore, stated broadly, it would be correct to assume that the main object of introducing the new provisions of ss. 31, 32 and 33 was to entrust the decision of the relevant disputes to the specified Court and to require the parties to bring the said disputes for the decision of the said Court in the form of petitions. Remedy by a regular suit is intended to be excluded . 1111 Ja-i-L•/ B.,..,, v. UttiOIC of lUi• c.;..a..,....,. J. 1961 Jawaliar Lal B""""" v. Union o.f !Mia G•;1n 3 S.C.R. SUPREME COURT REPORTS 777 which we have to consider is whether a person affirming an arbitration agreement can apply under the latter part of s. 33. Even assuming that the requirement that an application can be made under the first part of s. 33 only by persons desiring to challenge the arbitration agreement does not apply to its latter part, it is difficult to hold that an application to have the effect of the arbitration agreement determined can legitimately cover the dispute as to the existence of the said arbitration agreement. It is clear that the first part of s. 33 refers to the existence or validity in 1lerms and ss. 31 and 32 also refer separately to the existence effect or validity. Therefore, the effect of an arbitration agreement is treated as distinct from the existence of the agreement, and where it was intended to refer to the existence as well as the effect of such an agreement both the words "existence and effect" have been specifically used. Thus, under the latter part of s. 33 an application can he made to have the effect or purport of the agreement determined but not its existence. That means that an application to have the effect of the agreement can be made provided the existence of the agreement is not in dispute. Besides, if a. person affirming the existence of an agreement is held entitled to apply to the Court under the latter part of s.33 for getting a declaration about the said existing agreement then the first part of s. 33 would be wholly superfluous. Therefore, it seems to us that a party affirming the existence of an arbitration agreement cannot apply under s. 33 for obtaining a decision that the agreement in question exists. In fairness we ought to add that the learned Solicitor-General, who appeared for the respondent, did not dispute this position. If the party affirming the existence of an arbitration agreement cannot apply under s.33 what is the remedy open to him? This question takes us back to s. 32. If s. 32 has created a bar against the institution of a suit for obtaining 1961 Jawahar Lal Burman v. Union of Indifl Gajtrira:ridk'1' J. 1~1 Jawnioa• Lal Bu~rruvt v. Union of India Goj,..,J•aiadka• J. 778 SUPREME COURT REPORTS (1962) a declaration a.bout the existence or an arbitration a.greoment, unless it is held that the creation of the said absolute bar itself involves the right to make an application undrr the Act it would lead to the anomalous result that a party is given no remedy to enforce the rig:ht ; and it is a.n ordinary rule of construction that such an unreasonable and unconscionable result should as far as possible be avoided because the Legislature could not have intended such a. result. In our opinion, having regard to the scheme of ss. 31, 32 and 33 it would not be unrea.s·onable to bold that in matters which fall within the· bar created by s.32 if a suit cannot be filed it is necessarily intended that an application can be made and such an application can be made under tho Court's powers provided for by s.31 and impliedly recognised hy s. 32. On this construction s. 33 cannot be treated a.s exhaustive of a.II cases where appli<'.ations can be made. The Legislature has provid•d for the ea.id cases under s. 33 because it waH thought that they represented the usual type • of caseR whieh arise under the arbitration agreements. A contrary view would lead either to a. -{ stalemate or would in substance compel the party affirming the existence of an agreement to forego the procedure prescribed by the said agreement and sue on thfl contract itself. We are satisfied that a. fair construction of es. 31, 32 and 33 does not lead to such an anomalous position. Mr. Din Dayal contends that there is really a. lacuna. in the Act ... inasmuch as having created a. bar by s. 32 the Legislature ha.a failed to provide a remodyby way of an application. On reading 88. 31, 32 and 33 together we do not think the Court is driven to the conclusion that there is a. lacuna. in the Act. In this connection it is material to remember that even in de:iling with applications under the first part of s. 33 tho Court may accept the oppo: °" ncnt's plea and hold that the arbitration agreement exists if tho challenge to the said existence set out in the petition is rejected. In other words, in many - 3 S.C.R. SUPREME COURT REPORTS 779 cases applications made under the first part of s. 33 may end in the finding that the arbitration agreement exists. Similarly, in applications made under s.20 of the Act, if a dispute arose as to the existence of the arbitration agreement the Court may find in favour of the existence and make an order of reference as contemplated by s. 24. Thus, it is clear that in the applications expressly provided for by these two sections a party affirming the existence of the agreement would be entitled to prove the said existence, and if he succeeds he would obtain a decision to that effect. Therefore, in holding that s, 32 impliedly recognises the inherent jurisdiction of the Court to entertain applications made by the parties affirming the existence of arbitration agr~ements we are bringing the provisions of s.32 in line with the provisions of ss. 33 and 20. Indeed, s. 33 is a corollary of s. 32 and in a sense deals by way of illustration with the most usual type of cases arising in arbitration proceedings. Section 28 of the Act has no material bearing on the decision of this point. The power to enlarge time for making the award which is the subject-matter of the provisions of s. 28 cannot be held to include a power to entertain petitions like the present. Indeed, the learned Solicitor-General has not attempted to justify the conclusion of the High Court that s.28 confers such a power. Even if it is held that there is inherent juris_,. diction in the Court to entertain an application in support of the existence of an arbitration agreement the question still remains whether an application can be 'made under such inherent jurisdiction for a declaration that the contract which includes the arbitration agreement as defined by s. 2( a) includes cases where the arbitration agreement is made a part of the contract itself. The argument is that 7 · though an application may be made under the inherent jurisdiction of the Court to obtain a declaration about the existence or validity of an arbitration agreement, no such application can be jg~, J awahar Lal Burman v. Union of India Gajendragadka' J. 1911 Jauoiuff 1-rtation of gold except with the permission of the Reserve Bank. Section 23A of the Act, which was introduced by an amendment in 1952, provided that " .. the restrictions imposed by s. 8( I) .. shall be deemed to have been imposed under s. 19 of the Sea Customs Act, 1878, and all the provi1ions of the Act shall have effect accordi~gly .. " Section 19 of the Sea Custom• Act, 1878, enabled the Central Government, by notification, to prohibit or restrict the bringing goods of any specified description into .-- '