# UNION OF INDIA v. SURJEET SINGH ATWAL ,4.pril 22, 1969

- **Citation:** [1970] 1 S.C.R. 351
- **Court:** Supreme Court of India
- **Decided:** 1970
- **Bench:** S. M. S!KllI, R. S. Bachawat, V. Ramaswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-v-surjeet-singh-atwal-4-pril-22-1969-4772
- **Pages:** 7

## Headnote

Indian Arbitration Act o/ :1940, $. 31(4)
11nd 34-Arbirration
agreement entered at Delhi-Suit filed in Calcutta-Application in suit
under s. 34-Whethei· an application wi~~in mea;iing of•· 31(4)-Ju~
diction of Dtlhi Court.
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An aareement, containing a clause for settlement of the disputes by reference to an Arbitrator at Calcutta was executed at Delhi between the
appellant-Union of India, and the respondent for certain constructions at
Da"'lbhumgarh.
lll!'oring the arbitration clause, the respondent filed a suit ,,-
on the original 11de of the Calcutta High Court claiming certain amount
under the agreement.
The appellant filed an applic'ation under s. 34 of
the Arbitration Act for the stay of the suit. The suit was stayed and the
matter was referred to the Arbitrator in Calcutta before whom the appellant made a- counter..claim. The respondent objected to the ente:rtairunent
of the ccunter-claim. The stay granted by the Calcutta High Court was
vacated. Pending the suit the appellant filed an application under s. 20
of the Act before the 'Subordinate Judge, Delhi, for making the referenc"
to the Arbitrator. The respondent opposed the application on the ground
that the Subordinate Judge, Delhi had no jurisdiction to entertain the
application and· that the appellant having filed an applicafon under s. 34
df the Act in the Calcutta High Court, the subsequent application should
be filed in the Calclltta High Court.
The Subordinate Judge Delhi, referred the disputes to· the Arbitrator holding that the Delhi Court had
jurisdiction as the contract was concluded and signed at Delhi. The respondent filed an appeal to the Punjab High Court, which the High Court
allowed holding that !lie Delhi Court had no jurisdiction to entertain the
application. In appeal~ this Court,
HELD : The Subordinate Judge, Delhi was right in holding that the
application under s. 20 was maintainable , in his court and for mak.'ng a
reference of the disputes to the arbitrator mentioned in the a&reement.
Two conditions must be fulfilled in order to give a court exclusive
jurisdiction under s. 31(4) of the Act.
In the first place an application
under the Arbitration Act must be 1,iade to the Court competent to entertain it. and, in the second place, it must be made "in any reference". The
application for stay of suit under s. 34 in tb,e present case was not an
application in a reference within the wider meaning given to that. phrase
by this Court in Kumhha Mawji's case. There are different sections in
the Arbitration Act whereby an application is to be made even before any
reference has been made. Section 8 for instance,· provides for an application to invoke the power of the court, when the parties fail to concur in
the appointment qf a.n arbitrator to whom the reference· can be made. So
also s. 20 provides for '~n application to file the arbitration agreement in
court so that an order <>f reference to an arbitrator can be made. These
are Clearly applications anterioc ·to the reference but they lead to a reference. Such aPl'lications are undoubtedly applications "in the matter of a
referenc~" and' may fall within the purview of s. 31 ( 4) of the A<t even
though these applications are made before any reference has taken place.
But an application under s. 34 is clearly not an application belonging t<>
352
SUPREME COURT REPORTS
(1970] I SC.R
the same category. It has nothing to do with any reference.
It is only
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intended to make an arbitration agreement effective and prevent a party
from going to court contrary to his own agreement that the dispute is to
bo adjudicated by a private tribunal. [355F-356C]
Kumbha Mawji v. Union of India, [1953] S.C.R. 878, referred to.
The other condition imposed by s. 31 ( 4) is that the
application for
stay must be made to a coun competent to entertain it.
In s. 34 the expression "judicial authority" is used. The section provides for an application to a Judicial authority before whom a legal proceeding is pending for
the stay of that

## Text

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UNION OF INDIA
v.
SURJEET SINGH ATWAL
,4.pril 22, 1969
[S. M. S!KllI, R. S. BACHAWAT AND V. RAMASWAMI, JJ.]
Indian Arbitration Act o/ :1940, $. 31(4)
11nd 34-Arbirration
agreement entered at Delhi-Suit filed in Calcutta-Application in suit
under s. 34-Whethei· an application wi~~in mea;iing of•· 31(4)-Ju~
diction of Dtlhi Court.
·
An aareement, containing a clause for settlement of the disputes by reference to an Arbitrator at Calcutta was executed at Delhi between the
appellant-Union of India, and the respondent for certain constructions at
Da"'lbhumgarh.
lll!'oring the arbitration clause, the respondent filed a suit ,,-
on the original 11de of the Calcutta High Court claiming certain amount
under the agreement.
The appellant filed an applic'ation under s. 34 of
the Arbitration Act for the stay of the suit. The suit was stayed and the
matter was referred to the Arbitrator in Calcutta before whom the appellant made a- counter..claim. The respondent objected to the ente:rtairunent
of the ccunter-claim. The stay granted by the Calcutta High Court was
vacated. Pending the suit the appellant filed an application under s. 20
of the Act before the 'Subordinate Judge, Delhi, for making the referenc"
to the Arbitrator. The respondent opposed the application on the ground
that the Subordinate Judge, Delhi had no jurisdiction to entertain the
application and· that the appellant having filed an applicafon under s. 34
df the Act in the Calcutta High Court, the subsequent application should
be filed in the Calclltta High Court.
The Subordinate Judge Delhi, referred the disputes to· the Arbitrator holding that the Delhi Court had
jurisdiction as the contract was concluded and signed at Delhi. The respondent filed an appeal to the Punjab High Court, which the High Court
allowed holding that !lie Delhi Court had no jurisdiction to entertain the
application. In appeal~ this Court,
HELD : The Subordinate Judge, Delhi was right in holding that the
application under s. 20 was maintainable , in his court and for mak.'ng a
reference of the disputes to the arbitrator mentioned in the a&reement.
Two conditions must be fulfilled in order to give a court exclusive
jurisdiction under s. 31(4) of the Act.
In the first place an application
under the Arbitration Act must be 1,iade to the Court competent to entertain it. and, in the second place, it must be made "in any reference". The
application for stay of suit under s. 34 in tb,e present case was not an
application in a reference within the wider meaning given to that. phrase
by this Court in Kumhha Mawji's case. There are different sections in
the Arbitration Act whereby an application is to be made even before any
reference has been made. Section 8 for instance,· provides for an application to invoke the power of the court, when the parties fail to concur in
the appointment qf a.n arbitrator to whom the reference· can be made. So
also s. 20 provides for '~n application to file the arbitration agreement in
court so that an order <>f reference to an arbitrator can be made. These
are Clearly applications anterioc ·to the reference but they lead to a reference. Such aPl'lications are undoubtedly applications "in the matter of a
referenc~" and' may fall within the purview of s. 31 ( 4) of the A<t even
though these applications are made before any reference has taken place.
But an application under s. 34 is clearly not an application belonging t<>
352
SUPREME COURT REPORTS
(1970] I SC.R
the same category. It has nothing to do with any reference.
It is only
A
intended to make an arbitration agreement effective and prevent a party
from going to court contrary to his own agreement that the dispute is to
bo adjudicated by a private tribunal. [355F-356C]
Kumbha Mawji v. Union of India, [1953] S.C.R. 878, referred to.
The other condition imposed by s. 31 ( 4) is that the
application for
stay must be made to a coun competent to entertain it.
In s. 34 the expression "judicial authority" is used. The section provides for an application to a Judicial authority before whom a legal proceeding is pending for
the stay of that proceeding.
An application for stay of legal proceedi!li
lo a judicial authority before whom it is pending is an application under
the Arbitration Act to a judicial authority competent to entertain it. But
the judicial authority need not necessarily be a court competent under
s. 2(c) to decide the 'luestion forming the subject matter of the reference.
A party to an arbitration agreement may choose to file a suit in a court
which has no jurisdiction to go into the matter at all and merely because
the defendant in such a suit has to make an application to that court under
s. 34 of the Act for the stay of the suit it cannot be said that the court
which otherwise has no jurisdiction in the matter becomes a court within
the meanin& of s. 2(c) of the Act.
(3560]
Cliotey Lal Sham/al v. Cooch Bihar Oil Mills Ltd.
I.LR. [1954] 1
Cal. 418. Britannia Bui/din~ & Iron Co, Ltd. v. Bobinda Chc.ndra Bhatia·
charjee, J..XIV C.W.N. 325; Basant/ Cotton Mills Ltd. v. Dhingra Brothe,..,
A.LR. 1949 Cai. 684, approved.
CIVIL APPELLATE JUR!SD!CTION: Civil Appeal No. 760 of
1966.
Appeal by special leave from the judgment and order dated
January 11, 1 965 of the Pun jab High Court, Circuit Bench at
Delhi in F.A.O. No. 82-D of 1963.
L. M. Singhvi and B. D. Sharma, for the appellant.
M. C. Chag/a, C. B. Agarwala, Rameshwar Nath, Mahinder
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Narain and P. L. Vo,hra, for the respondent.
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The Judgment of the Court was delivered by
Ramaswami, J. This appeal is brought by special leave lrom
the judgment of the Punjab High Court dated March 20, 1965 in
FAO no. 82-D of 1963.
The said appeal was filed under s. 39 of the Arbitration Act,
1940 (hereinafter referred to as the Act) against the order of
the Subordinate Judge, First Class, Delhi dated January 29, 1963
passed on an application under s. 20 of the Act by the Union of
India for filing the arbitration agreement in court and to make a
reference of the dispute to the officer mentioned in the agreement.
In the year 1942 tenders were invited by the Union of India
for construction of certain runways and roads in an aerodrome
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UNION 11. s. s. ATWAL (Rama.swami, 1.)
353
at Dalbhumgarh. The tender of the respondent, Surjeet Singh
Atwal, was accepted and the agreement was executed on August
19 ·1944. Clause 25 of the agreement provided for the settlem~nt of the disputes by reference to the arbitration of the Superintending Engineer of the Circle for the time being, according to
law. The res~ a1lcged .that he had completed the work
entrusted· to him under the contract and made a claim of
Rs. 50,000 on the basis of his last bill. On the other hand the·
Union of India made a demand against the contractor for a sum
of Rs. 5,09, 164 on the ground that the amount had been overpaid to the respondent. Ignoring the arbitration clause respondent filed a suit on the original side of the Calcutta High Court
for the recovery of Rs. 50,000, being suit no. 531 of 1951. The
Uriion of India made an application under s. 34 of the Act for
the stay of the suit. The suit was consequently stayed and the
matter was referred to the arbitration of the Superintending
Engineer, Calcutta Aviation Circle, C.P.W.D. Calcutta. Before
the arbitrator the Union of India made its counter-claim for a
~um of Rs. 5,09,164. The contractor objected to the entertainment of the countet'-claim. The stay of the suit which was granted
by the Calcutta High Court was later on vacated. Pending the
suit of the respondent in the Calcutta High Court, the Union of
India filed an application under s. 20 of the Act in the Court of
the Subordinate Judge, First Class,
Delhi for getting the agreement of reference filed in the Court and for making the reference
of the disputes between the parties to the arbitration of the
Superintending Engineer, Central Circle No.
1,
C.P.W.D.
Calcutta.
The respondent opposed the petition mainly on the
sround that the court of Subordinate Judge, First Class, Delhi
had no jurisdiction to entertain the application. It was contended
that the appellant had filed an application under s. 34 of the Act
for stay of the suit filed in the Calcutta High Court, and, therefore any subsequent application relating to arbitration under the
agreement should be filed in the Calcutta High Court. By its judg-
.ment dated January 29, 1963 the Subordinate Judge, First Class,
Delhi allowed the application of the appellant and ordered that .
the disputes between the parties be referred to. the Superintending Engineer, Calcutta Circle No. 1, C.P.W.D.
The learned
Subordinate Judge held that the contract of the parties was concluded at Delhi llnd it was signed at Delhi on behalf of the respondent and, therefore, the Delhi court had jurisdiction to try
the suit. Aggrieved by the judgment of the Subordinate Judge,
First Class the respondent filed an appeal under s. 39 of the Act
in the Punjab High Court. By his judgment dated January 11,
1965 D. K. Mahajlln J., allowed the appeal and set aside the
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order ofl the SUbordinate Judge, First Class and dismissed the
applicatihn of. the 'appellan.t 'oo the ground that the Delhi court
had no Jurisdiction to entertain an application under s. 20 of the
!<ct.
354
SVPREMI! COURT REPORTS
[ 1970) 1 S.C.R
The question involved in this appeal is whether the application made by the appellant under s. 34 of the Act before the Cil!-
cutta High Court was an application in a reference within the
meaning of s. 31 ( 4) of the same Act. Section 2 ( c) of the Act
defines "Court" thus :
"Court' means a Civil Court having jurisdiction to
decide the questions forming the subject-matter of the
reference if the same had been the subject-matter of a
suit, but does not, except for the purpose of arbitration
proceedings under section 21, include a Small Causes
Court;"
Section 14 provides that the award may be filed in the court.
Section 31 (I ) enacts that an award may be filed in any Court
having jurisdiction in the matter to which the reference relates.
Sectbn 3 I (2) provides that all questions regarding the validity.
eft'ect or existence of an award or an arbitration agreement between the parties to the agreement shall be decided by the Court
in which the award has been filed and by no other Court. Section
31 (3) states that all applications regarding the conduct of arbitration iiroceedings shall be made to the Court where the award
has been filed and to no other Court. Section 3 I ( 4) reads as
follows :
"Notwithstanding anything contained elsewhere in
this Act or in any other law for the time being in force,
where in any reference any application under this Act
has been made in a Court competent to entertain it.
that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising
out of that reference and the arbitration
proceedings
shall be made in that Court and in no other Court."
Section 34 states :
"Where any party to an arbitration agreement or
any person claiming under him commences any legal proceedings against any other party to the agreement or
any person claiming under him in respect of any matter
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agreed to be referred, any party to such legal proceedG
ings may, at any time before filing a written statement
or taking any other steps in the proceedings, apply to
the judicial authority before which the proceedings are
pending to stay the proceedings, and if satisfied
that
there is no sufficient reason why the matter should not
be referred in accordance _with the arbitr!ltion agreeH
ment and that the applicant was, at the time when the
proceedings were commenced, and still remains, ready
and willing to do all things necessary to the proper con-
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UNION v. s. s. ATWAL (Ramaswami, !.)
355
duct of the arbitration, such authority may make an
order staying the proceedings."
Two conditions must be fulfilled in order to give a Court exclusive jurisdiction under s. 31 ( 4) of the Act. In the first place
an application under the Arbitration Act must be made to the
Court competent to entertain it. In the second place, the application must be made "in· any reference." It was contended on
behalf of the respondent that an application for stay of suit under
s. 34 of the Act was an application made "in a reference" within the meanin,I!; of s. 31 ( 4) of the Act. In support of this proposition reference Will! made to the decision of this Court in
Kumbha Mawji v. Union .of India(') in which it was held that
the phrase "in any reference'' in s. 31 ( 4) of the Act was comprehensive enough to cover an application first made after the
arbitration is completed and a final award made and the subi>ection is not confined to applications made during the pendency
of the arbitration proceCding. It was pointed out that sub-s. ( 1)
of s .. 31 determines the jurisdiction of the court in which an
award can be filed and that sub-ss. (2), (3) and (4) of s. 31
were 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 proceedinits 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
mattef was filed.
The context, therefore, of sub-s. ( 4) wonld
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 these 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 is completed or before the arbitration is commenced. It was, therefore.
held that the expression "in any reference" in s. 31 ( 4) should
be construed as "in the course of a reference". Even so, we are
of opinion that the application for stav of suit under s. 34 in
the present case is not an application in a reference within the ·
wider me.aning given to that phrase by this Court in Kumbha
Mawji's ease(1). There are different sections in the Arbirtation
Act whereby an application is to be made even before any reference has l)een made. Section 8 for instance, provides for an
application to invoke the power of the Court, when the parties
(l) (1953] s.c.R. 878.
356
SUPREME COURT llBPOllTS
[1970] 1 S.c.R.
fail to concur in the appointment of an arbitrator to whom the
reference can be made. So also s. 20 provides for an application
to file the arbitration agreement in Court so that an order of
reference to an arbitrator can be made. These are clearly applications anterior to the reference but they lead to a reference. Such
applications are undoubtedly applications "in the matter of a
reference" and may fall within the purview of s. 31 ( 4) of the
Act even though these applications are made before any ref.erence has taken place. But an application under s. 34 is clearly
not an 11pplication belonging to the same category. It has nothing to do with any reference. It is only intended to make an arbitration agreement effective and prevent a party from ~oing to
Court contrary to his own agreement that the dispute IS to be
adjudicated by a private tribunal.
We do not, therefore, consider that an application for
stay
of suit under s. 34 is an application in a reference even within
the wider meaning given tr' that phrase by this Court in Kumbha
Mawjfs case( 1 ). The second condition imposed bys. 31(4)
is that the application for stay must be made to a Court competent
to entertain it. It should be noticed that in s. 34 the expression
"judicial authority" is used.
The section provides for an application to a judicial authority before whom a legal proceeding is
pending for the stay of that proceeding. An application for stay
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of legal proceeding to a judicial authority before whom it is
pending IS an application under the Arbitration Act to a judicial s
authority competent to entertain it.
But the judicial authority
need not necessarily be a court competent under s. 2 ( c) to decide
the question forming the subject matter of the reference. A party
to an arbitration agreement may choose to file a suit in a court
which has no jurisdiction to go into the matter at all and merely
because the defendant in such a suit has to make an ,application
to that Court under s. 34 of the Act for the stay of the suit it
cannot be said that the Court which otherwise has no jurisdiction
in the matter becomes a Court within the meaning of s. 2(c) of
the Act.
The view that we have expressed is borne out by the
decisions of the Calcutta High Court in Chotey/al Sham/al v.
Cooch Behar Oil Mills Ltd.('); Britannia Building &: Iron Co.
Ltd. v. Gobinda Chandra Bhattacharjee (1) and Basanti Cotton
Mills Ltd. v. Dhingra Brothers(').
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For these reasons we consider that the application for stay
under s. 34 of the Act cannot be treated as an applicatiOlll in a
reference under s. 31 ( 4) of the Act. Therefore, tile Subordinate
Judge, F'JISt Class, Delhi was right in holding that the application
H
(1) (19531 S.C.R. 878.
13) LXTV C.W.N. 325.
(2) J.L.R. [195411 Oil. 418,
(4) A.LR. 1949 Cal.. 684.
UNION v. s. S. ATWAL (Ramaswami, 1.)
357
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under s. 20 of the Act was maintainable in his Court and for making a referelllCe of the dispute to the arbitrator mentioned in the
agreement.
Accordingly we set aside the order of the Punjab
High Court and restore the order of the Subordinate Judge, First
Class, Delhi dated January 29, 1963 allowing the application filed
by the appellant llilder s. 20 of the Arbitration Act, 1940. The
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appeal is allowad with costs.
.
Y.P.
Appeal allowed.
L13 Sup, Cl/67-9. ·