# THE STATE OF JHARKHAND & ORS v. MIS HINDUSTAN CONSTRUCTION CO. LTD

- **Citation:** [2017] 13 S.C.R. 1009
- **Court:** Supreme Court of India
- **Decided:** 2017
- **Case number:** Civil Appeal No. I 093 of2006
- **Bench:** Dipak Misra, Cjt, A.K. Sikri, A.M. Khanwilkar, Dr. D.Y. Chandrachud, Ashok Bhushan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-state-of-jharkhand-ors-v-mis-hindustan-construction-co-ltd-31785
- **Pages:** 44

## Headnote

Arbitration and Conciliation Act, 1996: ss. 31, 30 and 33 -
Jurisdiction of the Courts - Entertainability of application by
Supreme Court for making an award passed by the arbitral tribunal,
when it retains seisin over arbitral proceeding, as Rule of the Court
-
Held: Superior court is not expected in law to assume jurisdiction
on the foundation that it is a higher court and further opining that
all contentions are open - Solely because a superior court appoints
A
B
c
the arbitrator or issues directions or has retained some control over
D
the arbitrator by requiring him to file the award in this Court, it
cannot be regarded as a court of.first instance as that would go
contrary to the definition of the term 'court' as used in the dictionary
clause as well as in s. 31 ( 4) - This Court cannot curtail the right of
a litigant to prefer an appeal by stating that the doors are open to
this Court and to consider it as if it is an original court - When
arbitrator is not appointed under the Act and the matter is challenged
before the High Court or, Supreme Court and, eventually, an
arbitrator is appointed and some directions are issued, it will be not
be appropriate to say that the superior court has the jurisdiction to
deal with the objections .filed u/ss. 30 and 33 - Jurisdiction of a
Court conferred under a statute cannot be allowed to shift or become
flexible because of a superior courts interference in the matter in a
different manner.
Disposing of the appeal, the Court
HELD: 1.1 Section 31 of the Arbitration and Conciliation
Act, 1996 deals with the jurisdiction of the Courts. Sub-section
(1) stipulates that subject to the provisions of the Act, an award
may be filed in any court having jurisdiction in the matter to which
the reference relates. Sub-section (2) Jays down that
1009
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1010
A
B
c
D
E
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SUPREME COURT REPORTS
[2017] l 3 S.C.R.
notwithstanding anything contained in any other law for the time
being in force and save as otherwise provided in this 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. IPara 47] 11044-D-F]
1.2 Interpreting section 31(4), the three-Judge Bench in
* K11mbha Mawji case held that the object of the said sub-section
is apparently to go further than sub-section (3), that is, not merely
casting on the party concerned an obligation to file all applications
in one court for vesting exclusive jurisdiction for such applications
in the court in which the first application has been already made.
The interpretation placed by the three-Judge Bench is to the
effect that on a comprehensive view of Section 31 that while the
first sub-section determines the jurisdiction of the court in which
an award can be filed, sub-sections (2), (3) and (4) are intended
to make that jurisdiction effective in three different ways, (1) by
vesting in one court the authority to deal with all questions
regarding the validity, effect or existence of an award or an
arbitration agreement, (2) by casting on the persons concerned
the obligation to file all applications regarding the conduct of
arbitration proceedings or otherwise arising out of such
proceedings in one court, and (3) by vesting exclusive jurisdiction
in the court in which the first application relating to the matter is
filed. The further analysis of the Court is that the context of subsection (4) would seem to indicate that the sub-section was not
meant to be confined to applications made during the pendency
of an arbitration. The necessity for clothing a single court with
effective and exclusive jurisdiction, and to bring about by the
combined operation of the three provisions the avoidance of
conflict and scramble is equally essential whether the question
arises during the pendency of the arbitration or after the arbitration
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## Text

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[2017] 13 S.C.R. 1009
THE STATE OF JHARKHAND & ORS.
v.
MIS HINDUSTAN CONSTRUCTION CO. LTD.
(Civil Appeal No. I 093 of2006)
DECEMBER 14,2017
[DIPAK MISRA, CJT, A.K. SIKRI, A.M. KHANWILKAR,
DR. D.Y. CHANDRACHUD AND ASHOK BHUSHAN, JJ.]
Arbitration and Conciliation Act, 1996: ss. 31, 30 and 33 -
Jurisdiction of the Courts - Entertainability of application by
Supreme Court for making an award passed by the arbitral tribunal,
when it retains seisin over arbitral proceeding, as Rule of the Court
-
Held: Superior court is not expected in law to assume jurisdiction
on the foundation that it is a higher court and further opining that
all contentions are open - Solely because a superior court appoints
A
B
c
the arbitrator or issues directions or has retained some control over
D
the arbitrator by requiring him to file the award in this Court, it
cannot be regarded as a court of.first instance as that would go
contrary to the definition of the term 'court' as used in the dictionary
clause as well as in s. 31 ( 4) - This Court cannot curtail the right of
a litigant to prefer an appeal by stating that the doors are open to
this Court and to consider it as if it is an original court - When
arbitrator is not appointed under the Act and the matter is challenged
before the High Court or, Supreme Court and, eventually, an
arbitrator is appointed and some directions are issued, it will be not
be appropriate to say that the superior court has the jurisdiction to
deal with the objections .filed u/ss. 30 and 33 - Jurisdiction of a
Court conferred under a statute cannot be allowed to shift or become
flexible because of a superior courts interference in the matter in a
different manner.
Disposing of the appeal, the Court
HELD: 1.1 Section 31 of the Arbitration and Conciliation
Act, 1996 deals with the jurisdiction of the Courts. Sub-section
(1) stipulates that subject to the provisions of the Act, an award
may be filed in any court having jurisdiction in the matter to which
the reference relates. Sub-section (2) Jays down that
1009
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1010
A
B
c
D
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SUPREME COURT REPORTS
[2017] l 3 S.C.R.
notwithstanding anything contained in any other law for the time
being in force and save as otherwise provided in this 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. IPara 47] 11044-D-F]
1.2 Interpreting section 31(4), the three-Judge Bench in
* K11mbha Mawji case held that the object of the said sub-section
is apparently to go further than sub-section (3), that is, not merely
casting on the party concerned an obligation to file all applications
in one court for vesting exclusive jurisdiction for such applications
in the court in which the first application has been already made.
The interpretation placed by the three-Judge Bench is to the
effect that on a comprehensive view of Section 31 that while the
first sub-section determines the jurisdiction of the court in which
an award can be filed, sub-sections (2), (3) and (4) are intended
to make that jurisdiction effective in three different ways, (1) by
vesting in one court the authority to deal with all questions
regarding the validity, effect or existence of an award or an
arbitration agreement, (2) by casting on the persons concerned
the obligation to file all applications regarding the conduct of
arbitration proceedings or otherwise arising out of such
proceedings in one court, and (3) by vesting exclusive jurisdiction
in the court in which the first application relating to the matter is
filed. The further analysis of the Court is that the context of subsection (4) would seem to indicate that the sub-section was not
meant to be confined to applications made during the pendency
of an arbitration. The necessity for clothing a single court with
effective and exclusive jurisdiction, and to bring about by the
combined operation of the three provisions the avoidance of
conflict and scramble is equally essential whether the question
arises during the pendency of the arbitration or after the arbitration
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is completed or before the arbitration is commenced. There is
no conceivable reason that the legislature has intended to confine
the operation of sub-section (4) only to applications made during
the pendency of arbitration because the phrase "in any reference"
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THE STATE OF JHARKHAND & ORS. v. MIS HINDUSTAN
1011
CONSTRUCTION CO. LTD.
is to be taken as meaning "in the course of a reference".[Para A
48) (1044-H; 1045-A-E)
1.3 The Court has interpreted the phrase 'in any reference'
to connote 'in the matter or course of a reference' which would
mean in the matter of a reference to arbitration and also include
the stage when the final award is made. This has been distinguished
in **Guru Nanak Foundation by referring to Section 31(4) of the
Act as regards the meaning of the word 'Court' and assuming
the premise that the Supreme Court can also become the court
of first instance if it has retained control over the proceedings.
On a perusal of the definition of the term 'Court' in the dictionary
clause and the meaning of the word 'Court' as employed in Section
31(4) of the Act and appreciating the same in the context of the
provisions and also taking note of the scheme of the Act, the
construction placed in **Guru Nunak Foundation's cuse suffers
from a fundamental fallacy. The language used in Section 31(4) of
B
c
the Act commences with the non-obstante clause. The said part D
of the provision has to be understood in the textual context
because primarily the provision is an enabling one and the real
intendment that is conveyed through the vehicle of expressive
language is that where any application has been made in a
reference under the Act as regards the Court which has
competence to entertain an application, that court alone shall have
E
the jurisdiction over the arbitration proceedings. The purpose
behind the said provision is to avoid conflict in the exercise of
jurisdiction and to inject the intention of certainty of the
jurisdictional court keeping in view the scheme of the Act which
is meant to facilitate the process of arbitration and see the finality
of the post award proceedings. Therefore, it is difficult to accept
that the Supreme Court can assume original jurisdiction, solely
because of control over the proceedings, for original jurisdiction
has been conferred upon the Supreme Court under Articles 32
and 131 of the Constitution. The said original jurisdiction is not
available to this Court in respect of a dispute that finds mention
in Article 262. [Para 49) (1045-F-H; 1046-A-D)
1.4 The question that is required to be posed is whether
this Court by using the expression "keep controls over the arbitral
proceeding" can assume original jurisdiction. The Court has
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SUPREME COURT REPORTS
[2017] 13 S.C.R.
assumed the jurisdiction by interpreting the word 'Court' as used
in s. 31(4). Interpretation is not in accord with the language used
in the provision and the intention of the legislature. It is clear
that the court competent to entertain the reference will have the
jurisdiction to deal with the objections to the award or any post
award proceeding. [Para 51] [1047-C-D]
1.5 The statement that the door is being held wide ajar for
him to raise all contentions which one can raise in a proceeding
in an originating summons, is not correct because the superior
court is not expected in law to assume jurisdiction on the
foundation that it is a higher court and further opining that all
contentions are open. The legislature, in its wisdom, has provided
an appeal under Section 39 of the Act. Solely because a superior
court appoints the arbitrator or issues directions or has retained
some control over the arbitrator by requiring him to file the award
in this Court, it cannot be regarded as a court of first instance as
that would go contrary to the definition of the term 'court' as
used in the dictionary clause as well as in Section 31(4). Simply
put, the principle is not acceptable because this Court cannot
curtail the right of a litigant to prefer an appeal by stating that the
doors are open to this Court and to consider it as if it is an original
court. Original jurisdiction in this Court has to be vested in law.
Unless it is so vested and the Court assumes, the court really
scuttles the forum that has been provided by the legislature to a
litigant. That apart, the said principle is also contrary to what has
been stated in Kumbha Mawji. This Court may make a reference
to an arbitrator on consent but to hold it as a legal principle that
it can also entertain objections as the original court will invite a
fundamental fallacy pertaining to jurisdiction. [Para 57] [1050-FG; 1051-A-C]
1.6 The Court that has jurisdiction to entertain the first
application is determinative by the fact as to which the court has
G the jurisdiction and retains the jurisdiction. When arbitrator is
not appointed under the Act and the matter is challenged before
the High Court or, for that matter, the Supreme Court and,
eventually, an arbitrator is appointed and some directions are
issued, it will be inappropriate and inapposite to say that the
superior court has the jurisdiction to deal with the objections
H
filed under Sections 30 and 33. The jurisdiction of a Court
THE STATE OF JHARKHAND & ORS. v. MIS HINDUSTAN
1013
CONSTRUCTION CO. LTD.
conferred under a statute cannot be allowed to shift or become A
flexible because of a superior court's interference in the matter
in a different manner. [Para 58] [1051-E-G] [1051-E-G
1. 7 The direction would have been issued to list the matter
before the appropriate Bench. But it is not necessary since the
appellant-State has filed the objection before the Civil Court. If B
the objection of the State is not there on record, liberty is granted
to the State as well as the respondent to file their respective
objections within the stipulated period. The objections shall be
decided on their own merits. [Para 60] [1052-B]
State of Madhya Pradesh v. Saith and Skelton (P) Ltd.
(1972) 1 SCC 702 : [1972] 3 SCR 233; **Guru Nanak
Foundation v. Rattan Singh and Sons [1982] 1 SCR
842 - Overruled.
Bharat Coking Coal Limited v. Annapurna Construction
(2008) 6 SCC 732 : [2008] 3 SCR 1124; State of West
Bengal and others v. Associated Contractors (2015) 1
SCC 32 : [2014] 10 SCR 426; State of Rajasthan v.
Nav Bharat Construction Company (2) (2010) 2 SCC
182 : [2010] 1 SCR 312; Mcdem10tt International INC.
v. Burn Standard Co. Ltd. and others (2005) 10 SCC
353; State of Karnataka v. Union of India and another
(1977) 4 SCC 608 : [1978] 2 SCR 1; A.R. Antu/ay v.
R.S. Nayak and another (1988) 2 SCC 602 : [1988] 1
Suppl. SCR 1; Garikapati Veeraya v. N. Subbiah
Chaudhry and others 1957 SCR 488 : AIR 1957 SC
540; Commissioner of Gijl Tax, Madras v. N.S. Getty
Chettiar (1971) 2 SCC 741; Commissioner of Sales Tax,
State of Gujarat v. Union Medical Agency (1981) 1 SCC
51 : [1981] 1 SCR 870; Whirlpool Corporation v.
Registrar of Trade Marks, Mumbai and others (1998)
8 SCC 1 : (1998) 2 Suppl. SCR 359; *Kumbha Mawji
v. Dominion of India (Now the Union of India) (1953)
SCR 878 : AIR 1953 SC 313; Punjab State Electricity
Board and others v. Ludhiana Steels Private Ltd. (1993)
1 sec 205 : (1992) 3 Suppl. SCR 275; Ct. A. Ct.
Nachiappa Chettiar and others v.
Ct. A. Ct.
Subramaniam Chettiar (1960) 2 SCR 209 : AIR 1960
c
D
E
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SUPREME COURT REPORTS
(2017) 13 S.C.R.
A
SC 307; State of Karnataka v. State of Tamil Nadu and
others (2017) 3 SCC 362 : [2016) 8 SCR 499; State of
Orissa v. Government of India and another (2009) 5
SCC 492 : [2009) 1 SCR 992; Networking of Rivers,
Jn re (2012) 4 SCC 51 : [2012) 1 SCR 1118; Prem
B
Chand Garg and another v. The Excise Commissioner,
UP and others [1963) Supp. l SCR 885 : AIR 1963
SC 996; Shiv Shakti Coop. Housing Socie(v, Nagpur v.
Swarey Developers and others (2003) 6 SCC 659 :
[2003) 3 SCR 762; Vikas Yadav v. State of Uttar Pradesh
and others (2016) 9 SCC 541 : [2016] 8 SCR 872;
c
Nahar Industrial Enterprises Limited v. Hong Kong and
Shanghai Banking Corporation (2009) 8 SCC 646 :
[2009] 12 SCR 54 - referred to.
Case Law Reference
[2008) 3 SCR 1124
referred to
Para6
D
[2014) 10 SCR 426
referred to
Para6
[2010] 1 SCR 312
referred to
Para6
(2005) 10 sec 353
referred to
Para7
E
[1978] 2 SCR 1
referred to
Para 10
[1988] l Suppl. SCR 1
referred to
Para 10
[ 1957] SCR 488
referred to
Para 10
(1971) 2 sec 741
referred to
Para 11
F
[1981] l SCR 870
referred to
Para 11
[1998] 2 Suppl. SCR 359
referred to
Para 11
[1953] SCR 878
referred to
Para 12
[1992] 3 Suppl. SCR 275
referred to
Para 12
G
[1960] 2 SCR 209
referred to
Para 16
[2016] 8 SCR 499
referred to
Para 49
[2009] 1 SCR 992
referred to
Para 49
[2012] 1 SCR 1118
referred to
Para 49
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[1963] Supp. 1 SCR 885
referred to
Para 54
THE STATE OF JHARKHAND & ORS. v. MIS HINDUSTAN
1015
CONSTRUCTION CO. LTD.
[2003] 3 SCR 762
referred to
Para 56
[2016] 8 SCR 872
referred to
Para 56
[2009] 12 SCR 54
referred to
Para 56
[1972] 3 SCR 233
overruled
Para 59
[1982] 1 SCR 842
overruled
Para 59
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1093
of2006.
From the Order dated 06.08.2002 of the High Court of Jharkhand
at Ranchi in Arbitration Appeal No. 6 of 2002.
Ajit Kumar Sinha, Sr. Adv., Gopal Prasad, Devashish Bharuka,
Ameyavikrama Thanvi, Ravi Bharuka, Jayesh Gaurav, Advs. for the
Appellants.
A
B
c
K. V. Viswanathan, Sr. Adv., Jayant K. Mehta, Prateek Kumar,
Anushak Sharda and Ms. Sneha Janakiraman (for Khaitan & Co.),Advs.
D
for the respondents.
The Judgment of the Court was delivered by
DIPAK MISRA, CJI 1. A two-Judge Bench while hearing the
present appeal found that there is difference of opinion in relation to the
entertainability of an application by this Court for making an award passed
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by the arbitral tribunal, when it retains seisin over arbitral proceeding, as
Rule of the Court and, therefore, referred the matter to the larger Bench
for decision on the following question:-
"Whether this Court can entertain an application for making the
award as Rule of the Court, even if it retains seisin over arbitral
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proceedings?"
2. The narration of the facts in detail is not necessary to answer
the reference. Suffice it to state that as disputes had arisen between the
parties, the matter was referred to an arbitrator for adjudication of the
disputes and during the said period, the respondent had filed a suit in the
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High Court of Bombay seeking an interim injunction restraining the State
from encashing the bank guarantee. As the time for making the award
and the period of extension had expired, the proceeding for arbitration
was abandoned. The State filed a money suit before the learned SubJudge I, Saraikella for realization of certain sum with interest. The
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B
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SUPREME COURT REPORTS
[2017] 13 S.C.R.
respondent after appearing in the suit filed an application under Section
34 of the Arbitration Act, 1940 (for short, "the Act") for stay of the suit.
The said prayer was contested and the learned '>ub-Judge allowed the
application filed by the respondent. However, regard being had to the
quantum of the claim, the Sub-Judge expressed the view that it was
desirable that the parties should settle their disputes in an arbitration
proceeding. Against the said order, an appeal was preferred under Section
39 of the Act before the High Court which dismissed the appeal vide
order dated 06.08.2002.
3. Being aggrieved, the State of Jharkhand preferred the appeal
which was disposed of by this Court vide order dated 10.01.2013. It is
worthy to mention here that the learned counsel appearing for the parties
agreed for the following order:-
"(i) The claim made by the respondent on January 7, 1994 pursuant
to the contract dated April 25, 1989 between the parties which
was earlier referred to the Arbitral Tribunal which commenced
proqeedings on February 15, 1995 and which had remained
inconclusive is referred for adjudication to Hon 'ble Mr. Justice
S.B. Sinha, retired Judge of this Court.
(ii) The claim made by the appellant against the respondent in
Money Suit No.4of1996- State of Jharkhand and others vs. Ml
s. Hindustan Construction Company Limited filed by the appellant
on April 10, 1996 in the court of Sub-Judge, Saraikella, Jharkhand
is also referred for adjudication to Hon'ble Mr. Justice S.B. Sinha,
retired Judge of this Court.
(iii) The terms and conditions shall be settled by the learned
Arbitrator in consultation with the parties.
(iv) The parties shall appear before the learned Arbitrator on
February 5, 2013. We reauest the learned Arbitrator to conclude
the aforesaid arbitration proceedings expeditiously and further
observe that the award shall be filed before this Court."
[Underlining is ours]
4. After reproducing settlement, the Court recorded thus:-
"We record and accept the statement of the learned senior counsel
for the parties that learned Arbitrator may be requested to decide
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the claim on merits. We observe accordingly."
THE STATE OF JHARKHAND & ORS. v. MIS HINDUSTAN
1017
CONSTRUCTION CO. LTD. [DIPAK MISRA, CJI]
5. Learned arbitrator concluded the arbitration proceedings and
A
passed the award on 16.10.2015 and filed the same before this Court.
The appellants challenged the said award by filing its objections before
the Civil Court. Per contra, the respondent filed an affidavit dated
16.06.2016 requesting this Court to pronounce the judgment in terms of
the award.
B
6. It was contended before the two-Judge Bench that when this
Court had directed to file the award in this Court, an application for
making the award Rule of the Court is to be filed in this Court, for this
Court alone has the jurisdiction to pronounce the judgment in terms of
the award. In this regard, the decisions in Bharat Coking Coal Limited
v. Annapurna Constrnction' and State of West Bengal and others v.
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Associated Contractors' were placed reliance upon. Resisting the said
submissions, it was urged by the appellant-State that if the Court decides
the objections to the award, the party will lose its rigbt of appeal. It was
also contended that by referring the matter to arbitration this Court had
not really retained control of the proceedings of the arbitrator. To bolster
D
the said submissions, heavy reliance was placed on State of Rajasthan
v. Nav Bharat Construction Company (Z)' .
7. The Court noted the decision in Nav Bharat Construction
Company (supra) which had followed the judgment in Mcdermott
International INC. v. Burn Standard Co. Ltd. and others' and further
apprised itself of the principles enunciated in Bharat Coking Coal
Limited (supra) which has held that right to appeal is a valuable right
and unless there exists cogent reasons, a litigant should not be deprived
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of the same. The Division Bench referred to the principle enunciated in
Associated Contractors (supra) wherein the three-Judge Bench had
opined that this Court cannot be considered to be a Court within the
meaning of Section 2(i)(e) of the Arbitration and Conciliation Act, 1996
(for brevity, 'the 1996 Act'). The referral judgment noted the view
taken in State of Madhya Pradesh v. Saith and Skelton (P) Ltd.' and
Guru Nanak Foundation v. Rattan Singh and Sons' wherein it has
been held that when an arbitrator is appointed by this Court and further
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1 r2008) 6 sec 732
'(2015) 1 sec 32
'r201oi2 sec 182
• (2005) 10 sec 353
s (1972) 1 sec 702
'(1981) 4 sec 634
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SUPREME COURT REPORTS
[2017] 13 S.C.R.
A
directions are issued, it retains seisin over the arbitration proceedings
and in such circumstances, the Supreme Court is the only court for the
purposes of Section 2( c) of Act.
8. The two-Judge Bench perceived the difference of opinion with
regard to the entertainability of the application before this Court and
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directed the matter to be placed before the Chief Justice of India for
appropriate orders. That is how the matter has been placed before us.
9. We have heard Mr. Ajit Kumar Sinha, learned senior counsel
appearing for the appellants and Mr. K.V. Viswanathan, learned senior
counsel for the respondent.
c
l 0. It is submitted by Mr. Sinha, learned senior counsel appearing
for the appellant-State, that the view expressed in Guru Nanak
Foundation (supra) does not state the law correctly and it will be
inappropriate to annul the right ofappeal of the appellants solely on the
ground that this Court, on the consent of the parties, had accepted that
the award shall be filed before this Court and, therefore, this Court alone
D
has the jurisdiction to decide the objections for making the award Rule
of the Court. According to Mr. Sinha, the definition of the Court under
Section 2( c) of the Act has to be appropriately appreciated and on proper
construction of the meaning of the word "Court", it cannot be said to
include the Supreme Court. It is additionally propounded by Mr. Sinha
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that under the scheme of the Act, the appellants are entitled under law
to file the objections before the Sub-Judge whose order is assailable in
an appeal before the High Court under Section 39 of the Act, and, if this
Court becomes the original Court for dealing with the objection/s filed
by the parties, then the right of appeal would stand nullified without any
intervention of the legislature. In this context, reliance has been placed
F
on State of Karnataka v. Union of India and another', A.R. Antulay
v. R.S. Nayak and another" and Garikapati Veeraya v. N. S11bbiah
Choudhry and others'. Mr. Sinha, learned senior counsel, has urged
that the position has been made clear in Associated Contractors (supra)
wherein the Court has expressed the view that the principles enunciated
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in Saith and Skelton (supra) and G11r11 Nanak Foundation (supra)
are open to doubt and on dealing with the decisions in entirety, it would
be clear that it has laid down the principle that the term 'Court' cannot
include the Supreme Court.
7 (1977)4 SCC608
"(1988) 2 SCC602
H
' 1957 SCR 488 : AIR 1957 SC 540
THE STATE OF JHARKHAND & ORS. v. MIS HINDUSTAN
1019
CONSTRUCTION CO. LTD. [DIPAK MISRA, CJI]
11. Mr. Viswanathan, learned senior counsel appearing for the
A
respondent, in his tum, contends that Section 2( c) of the Act defines
Court and the definition when read in an apposite manner shows that the
word "Court" can be assigned a different meaning depending on the
context. For the said purpose, he has commended us to the authorities in
Commissioner of Gift Tax, Madras v. N.S. Getty Chettiar' 0,
B
Commissioner of Sales Tax, State of G11jarat v. Union Medical
Agency", Saith & Skelton (supra) and Whirlpool Corporation v.
Registrar of Trade Marks, M11mbai and others". It is urged by the
learned senior counsel for the respondent that Section 14(2) of the Act
indicates that there may be a case where the Court itself can direct the
award to be filed in the court and once the superior court has retained
control and passed a specific direction to file an award in terms of Section
14(2) before the Court, then all other courts cease to have jurisdiction
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·for determination of the controversy. Emphasizing on the hierarchical
structure, he contends that judicial discipline and respect has to prevail
and, therefore, no proceeding can be initiated in any court other than the
superior court. It is his submission that when this Court retains control
over the arbitration proceedings, any proceeding flowing from the Act
has to be initiated before this Court. In this regard, he has drawn
inspiration from few passages in Saith & Skelton (supra) and G11r11
Nanak Fo11ndation (supra). According to him, the submission advanced
on behalf of the appellants that they would lose the right of appeal has
been squarely rejected in Guru Nanak Foundation (supra) and there
is no necessity to dislodge the said principle.
12. Drawing our attention to Section 31(4) of the Act, Mr.
Viswanathan would contend that the said provision is intended to deal
only with those situations where even after compliance with the first
three sub-sections of Section 31, there may be two or more courts wherein
proceedings under those sub-sections may be taken. But it has no
application in those cases where a superior/higher court has retained
control and passed a direction to file the award in that court. The concept
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of choice as enjoined in Section 31(4) has to be understood as courts of
equal status. Learned senior counsel would further submit that the control
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of superior courts has to be given primacy. To sustain the said proposition,
"(1971) 2 sec 741
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12 (!998) s sec 1
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he has placed reliance upon Kumbha Mawji v. Dominion of India
(Now the Union of India)". He has laid stress that once the superior
court retains control which is permissible under the Act, there is no further
right to appeal and, therefore, the submission that the right to appeal is
extinguished is without merit. To bolster the aforesaid proponement, he
has drawn immense support from the decision in Punjab State Electricity
Board and others v. Ludhiana Steels Private Ltd. 14. Commenting on
Associated Contractors (supra), it is contended by Mr. Viswanathan,
that the said authority overlooks the main reason in Saith & Skelton
(supra) and Gur11 Nanak Foundation (supra) and the principal reason
in the said authority relates to the definition of "Court" under Section
2( 1 )( e) of the 1996 Act and that makes the decision rendered therein
distinguishable. It has also been urged by him that the decisions which
have been referred to in Associated Contractors (supra) are factually
different and when the factual backdrop differs, the Court has to look at
the ratio in the context of the case. He has also urged that the authorities
relied on by the learned counsel for the appellants are not relatable to
the controversy at hand because in the said cases the court had not
retained control of the proceedings with it.
13. To appreciate the controversy, it is crucial to appreciate the
scheme of the Act. Section 2 is the dictionary clause. It commences
with the words "unless there is anything repugnant in the subject or
context". The contention before us is that the use of such words clearly
evinces that the term "Court" can be assigned a different meaning
depending on the context. In Union Medical Agency (supra), a threeJudge Bench, while dealing with the concept of statutory interpretation
when the subject matter or context is different, has held:-
"14. It is a well-settled principle that when a word or phrase has
been defined in the interpretation clause, prima facie that definition
governs whenever that word or phrase is used in the body of the
statute. But where the context makes the definition clause
inapplicable, a defined word when used in the body of the statute
may have to be given a meaning different from that contained in
the interpretation clause; all definitions given in an interpretation
clause are, therefore, normally enacted subject to the usual
qualification -
"unless there is anything repugnant in the subject
" 1953 SCR 878 : AIR 1953 SC 313
"(1993) l SCC205
THE STATE OF JHARKHAND & ORS. v. MIS HINDUSTAN
1021
CONSTRUCTION CO. LTD. [DIPAK MISRA, CJI]
or context", or "unless the context otherwise requires". Even in
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the absence of an express qualification to that effect such a
qualification is always implied."
14. In the case of Saith and Skelton (supra), the Court was
dealing with Section 2(c) and Section 14(2) of the Act and in that context,
the three-Judge Bench, keeping in view the language employed in the
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beginning of Section 2, opined:-
" 18 .... Therefore the expression "Court" will have to be
understood as defined in Section 2( c) of the Act, only if there is
nothing repugnant in the subject or context. It is in that light that
the expression "Court" occurring in Section 14(2) of the Act will c
have to be understood and interpreted. . .. "
15. In the aforesaid case, the Court had appointed the arbitrator
on the consent of the parties and had directed him "to make his award".
That apart, no further direction was given in the said case. The arbitrator
after passing the award had filed the same before this Court and in that
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context, the Court held:-
" 18 .... Surely the law contemplates further steps to be taken
after the Award has been made, and quite naturally the forum for
taking the further action is only this Court. There was also direction
to the effect that the parties are at liberty to apply for extension of E
time for making the Award. In the absence of any other court
having been invested with such jurisdiction by the order, the only
conclusion that is possible is that such a request must be made
only to the court which passed that order, namely, this Court."
And again:-
"19. That this Court retained complete control over the arbitration
proceedings is made clear by its orders, dated February 1, 1971
and April 30, 1971. On the former date, after hearing counsel for
both the parties, this Court gave direction that the record of the
arbitration proceedings be called for and delivered to the Sole
Arbitrator Mr V.S. Desai. On the latter date, again, after hearing
the counsel, this Court extended the time for making the Award
by four months and further permitted the arbitrator to hold the
arbitration proceedings at Bombay. The nature of the order passed
on January 29, 1971, and the subsequent proceedings, referred to
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above, clearly show that this Court retained full control over the
arbitration proceedings."
16. Thereafter, the three-Judge Bench referred to the decision in
Ct. A. Ct. Nachiappa Chettiar and others v. Ct. A. Ct. Subramaniam
Chettiar15 and placing reliance on the same, expressed the view that
this Court is the "Court" under Section 14(2) of the Act where the
arbitration award could be validly filed.
17. In Guru Nanak Foundation (supra) case, since differences
arose between the parties, an applicatiop was filed before the High Court
under Section 20 of the Act which appointed retired Chief Engineer as
the sole arbitrator to whom the reference was made. When the reference
was pending, an application was moved before the Delhi High Court for
removal of the arbitrator and the High Court thought it appropriate to
reject the application. Guru Nanak Foundation assailed the soundness of
the order passed by the High Court and this Court removed the arbitrator
and appointed another arbitrator and directed the arbitrator to commence
the proceedings within 15 days and to dispose of the same as expeditiously
as possible. After the newly appointed arbitrator commenced the
proceedings, it directed the parties to file their pleadings stating that he
had desired to begin the arbitration proceedings afresh which impliedly
meant that the pleadings filed before the former arbitrator and the
evidence led before him were to be ignored. That led the first respondent
therein to move an application before this Court seeking the relief that
the learned arbitrator should commence the arbitration proceedings from
the stage where it was left by the previous arbitrator. After hearing both
the parties, the Court directed thus:-
"CMP No. 1088 of 1977: We have heard counsel on both sides. It
is absolutely plain that the new arbitrator in tune with the spirit of
the Order passed by this Court should proceed with speed to
conclude the arbitration proceedings. In the earlier directions by
this Court it had been stated that the proceedings should commence
within 15 days and that the arbitrator 'shall try to dispose of the
same as expeditiously as possible'. We direct the arbitrator, bearing
in mind the concurrence of the counsel on both sides, that he shall
conclude the proceedings within four months from today.
A grievance is made that the arbitrator is calling for fresh
pleadings which may perhaps be otiose since pleadings have
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THE STATE OF JHARKHAND & ORS. v. MIS HINDUSTAN
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already been filed by both sides before the earlier arbitrator Mr A
Nanda. Jfany supplementary statement is to be filed it is certainly
open to the parties to persuade the arbitrator to receive them in
one week from today. The arbitrator will remember that already
some evidence has been collected and he is only to consider and
conclude. With this directive we dispose of the application."
18. After the award was passed, the arbitrator approached the
Registry of this Court for filing of the award and he was advised by an
officer of this Court that the award should be filed before the Delhi High
Court. The arbitrator filed the award in Delhi High Court. At that juncture,
the respondent therein filed the petition seeking a declaration that the
award was required to be filed before the Supreme Court in view of the
provisions contained in Section 14(2) read with Section 31(4) of the
Act. It was contended before the High Court that as the reference was
made to the arbitrator by the Supreme Court and further directions were
given, this Court was in seisin of the matter and it alone had the jurisdiction
to entertain the award in view of the provisions of Section 31(4) of the
Act. The matter came to be challenged before this Court and the
proceedings before the High Court were stayed.
19. The two-Judge Bench, after narrating the facts, posed the
followingquestion:-
"The narrow question in this case therefore is: in view of the
circumstances herein delineated, which is the court which would
have jurisdiction to entertain the Award; in other words which is
the court having jurisdiction in which the Award should be filed by
the arbitrator?"
20. Analysing the meaning of the expression "Court" as engrafted
under Section 2( c) and keeping in view the words occurring in the
beginning of Section 2, the Court stated thus:-
" 13. The dictionary meaning of expression "court" in Section 2( c)
has to be applied wherever that word occurs in the Act, but with
this limitation that ifthere is anything repugnant in the subject or
context, the dictionary meaning may not be applied to the
expression "court". Assuming that there is nothing repugnant in
the subject or context the expression "court" in the Act would
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mean that civil court which would have jurisdiction to decide the
question forming the subject-matter of the reference ifthe same
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had been the subj eel-matter of a suit but does not include a Small
Cause Court though it is a civil court except for the arbitration
proceedings under Section 21. Section 14, sub-section (2) provides
for filing of the Award in the court and in view of the definition of
the expression "court" the arbitrator will have to file the Award in
that court which would have jurisdiction to entertain the suit
forming the subject-matter of reference."
21. As the discussion in the judgment would show, the Court
observed that there was some controversy between the High Courts
whether the expression "Court" would comprehend appellate court in
which the award can be filed but it was finally resolved in the decision in
CT. A. CT. Nachiappa Chettiar (supra) which held that the expressions
"suit" and "Court" in Section 21 of the Act would also comprehend
proceedings in "appeal" and "appellate court" respectively because the
expression "Court" in Section 21 includes the appellate court proceedings
which are generally recognized as continuation of the suit, and the word
"suit" would include such appellate proceedings.
22. After so stating, Guru Nanak Foundation (supra) proceeded
to advert to Section 31 ( 4) of the Act and, in that context, held that the
non-obstante clause excludes anything anywhere contained in the whole
Act or in any other law for the time being in force if it is contrary to or
inconsistent with the substantive provision contained in sub-section ( 4).
It further ruled that to that extent it carves out an exception to the general
question of jurisdiction of the court in which Award may be filed
elsewhere provided in the Act in respect of the proceedings referred to
in sub-section ( 4). The provision contained in sub-section ( 4) will have
an overriding effect in relation to the filing of the Award ifthe conditions
therein prescribed are satisfied. If those conditions are satisfied, the
court other than the one envisaged in Section 14(2) or Section 31 ( 1) will
be the court in which Award will have to be filed. Elaborating the effect
of the non-obstante clause in sub-section (4) of Section 31, it has been
opined that Sub-section ( 4) invests exclusive jurisdiction in the court, to
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which an application has been made in any reference and that court is
competent to entertain as the court havingjurisdiction over the arbitration
proceedings and all subsequent applications arising out of reference and
the arbitration proceedings shall have to be made in that court and in no
other court. Therefore, sub-section ( 4) not only confers exclusive
jurisdiction on the court to which an application is made in any reference
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but simultaneously ousts the jurisdiction of any other court which may as
well have jurisdiction in this behalf. Illustrating further, the Court held
that if an Award was required to be filed under Section 14(2) read with
Section 31 (I) in any particular court as being the court in which a suit
touching the subject-matter of Award would have been required to be
filed, but if any application in the reference under the Act has been filed
in some other court which was competent to entertain that application,
then to the exclusion of the first mentioned court the latter court alone, in
view of the overriding effect of the provision contained in Section 31 (4),
will have jurisdiction to entertain the Award and the Award will have to
be filed in that court alone and no other court will have jurisdiction to
entertain the same.
23. After so stating, the Court observed that the provision contained
in sub-section (2) of Section 14 will neither be rendered otiose nor stand
in disharmony with the construction that has been placed by it on subsection (4) of Section 31 because the expression "Court" as defined in
Section 2( c) needs to be adhered to unless there is anything repugnant in
the subject or context in which it is used. It is further opined that on a
pure grammatical construction as well as a harmonious and overall view
of the various provisions contained in the Act, it is quite clear that ordinarily
the Court will have jurisdiction to deal with the questions arising under
the Act, except the one in Chapter IV in which the suit with regard to
the dispute involved in the arbitration would be required to be filed under
the provisions of the Code of Civil Procedure. Elucidating further, the
two-Judge Bench ruled that when an application is made in any reference
to a court competent to entertain it, that court will have jurisdiction over
the arbitration proceeding and all subsequent applications arising out of
the reference and the arbitration proceedings shall be made to that court
alone and in no other court. Analysing the facts, the learned Judges
expressed that this Court had complete control over the proceedings
before the arbitrator. In view of the fact that the reference was made
by this Court and further directions were issued with regard to the manner
and method of conducting the arbitrations proceedings and fixing the
time for completion of the same, this Court alone had the jurisdiction to
entertain the award.