Anil Kumar Sharma, J.—Challenge in this appeal u/s 37 of Arbitration & Conciliation Act, 1996 (to be referred as the Act hereinafter) read with Order XLIII Rule 1 and Section 104 CPC is to the order dated 28.3.2011 passed by Additional District Judge (Court No. 1), Sonebhadra in Misc. Case No. 12 of 2009 filed u/s 34 of the Act in respect of award dated 25.8.2007. At the time of hearing of appeal a preliminary jurisdictional objection was raised on behalf of the appellant contending that the Court of Additional District Judge is not a Court within the definition of Section 2(1)(e) of the Act, therefore, it has no jurisdiction to dispose of objections u/s 34 of the Act filed by the appellant before the District Judge, Sonebhadra against the impugned award dated 25.8.2007. In these circumstances, presently we are confined only to this issue and are not dealing with the merits of the case. Reliance has been placed by the appellant on the case of I.T.I. Ltd., Naini, Allahabad Vs. District Judge, Allahabad and others, . Per contra learned counsel for the respondent fairly conceding that the view of this Court in the above noted case is contrary to the findings of trial Court has valiantly tried to contend that the Court of Additional District Judge in a district is not inferior to the Court of District Judge and thus the impugned order does not suffer from any jurisdictional error.
2. It is not disputed that the appellant, a Government company engaged in the mining operation for extraction of coal in the States of M.P. and U.P. awarded a contract worth Rs. 29,73,31,100.00 and works & services for Rs. 18,35,59,000.00 to the respondent company for construction of 4-million ton per year capacity Coal Handling Plant at Khadia District Sonebhadra (U.P.) on turn key basis. The contract was. The schedule period of completion of plant was 24-months from the date of handing over the site i.e. 22.11.1993. However, agreed revised date of completion was fixed as 25.6.1994 due to delay in handing over of site by the appellant. Later on by way of mutual agreement the plant was divided in two phases. After completion of both phases it was mutually agreed to conduct the performance guarantee test of total place from 2.3.1998 to 31.3.1998. A committee of officers was constituted and test was completed on 31.3.1998. The committee thereafter recommended to take over the total plant for commercial operation w.e.f. 1.4.1998. The respondent was however, given time to remove short comings and complete balance work within one year i.e. up to 31.3.1999.
3. As per agreement above the balance work/deficiencies which remained unattended within one year may be dealt as per contract on risk and cost of respondent or adjustment of cost price available in the contract. However, due to financial crisis the respondent could not complete the balance work/deficiencies within guarantee period of one year and the appellant decided to take up work on risk and cost of respondent from cost price available in the contract. The appellant also encashed bank guarantee of the respondent and imposed penalty due to delay in completion of work. The respondent approached this Court by way application dated 7.3.2000 for appointment of sole Arbitrator to resolve the dispute as per the arbitration clause contained in the contract. Consequently vide order dated 8.2.2001 Justice R.M. Sahai, Former Judge Supreme Court was appointed sole Arbitrator. The parties participated in the arbitration proceedings and the award u/s 31 of the Act was pronounced on 25.8.2007. The operative part of the said award is as under:
(1) The claimant is entitled to reduction of liquidated damages levied by the respondent by 50%.
(2) The claimant shall, further be entitled to the amount found due on recalculation of interest, on extra ordinary advance. The exercise shall be completed within one month from 25.8.2007, the date the award is being made.
(3) The claimant shall be entitled to refund on final accounting after recalculation of interest in the manner indicated while dealing issue No. 5.
(4) The claimant shall be entitled to interest u/s 31(7)(a) of the Arbitration and Conciliation Act, 1997 on the amount found due in paragraphs 2 and 3 of this order to be payable at the rate of 10% from 16.4.2001 i.e. the date of Arbitrator took cognizance of these proceedings till 25.8.2007 the date when the award is being made.
(5) The claimant shall be entitled to interest u/s 31(7)(b) of the Arbitration and Conciliation Act, 1997 at the rate of 12% from 25.8.2007 the date of award till the date of payment.
(6) In view of divided success the parties shall bear their own cost.
4. On 15.12.2007 the appellant filed objections u/s 34 of the Act in this Court, which were subsequently withdrawn on 29.5.2009. The appellant then filed instant objections u/s 34 of the Act before the District Judge, Sonebhadra on 1.7.2009, who vide order dated 24.9.2009 excluded the period from 15.12.2007 to 29.5.2009 in computation of limitation in filing objections u/s 34 of the Act. After exchange of objections/rejoinder etc. the District Judge heard arguments of counsel for the appellant on 28.4.2010 and 25.5.2010 and after few adjournments the case was transferred by the District Judge to the Court of Additional District Judge, Court No. 1 on 5.10.2010. The Presiding Officer of the transferee Court asked the parties counsel whether this Court has jurisdiction to hear the objections u/s 34 of the Act since both the counsel agreed that the Court has jurisdiction, so the case was fixed for argument on 1.12.2010. Thereafter arguments were heard by the Additional District Judge but could not be concluded and then on 4.3.2011 the appellant filed application for transfer of the case to the Court of District Judge on the strength of case law reported in I.T.I. Ltd., Naini, Allahabad Vs. District Judge, Allahabad and others, . Similar application was also filed by the appellant in the Court of District Judge for stay of the proceedings. However, after hearing the parties counsel, the trial Court through impugned order has dismissed the appellants objections u/s 34 of the Act. Aggrieved, they have come up in appeal.
5. We have heard arguments of parties counsel at length regarding jurisdictional issue raised before us as also perused the law cited at the Bar.
6. Learned counsel for the appellant has argued that in view of the provisions of Section 2(e) & 42 of the Act of 1996 and Section 3(17) of the General Clauses Act, the Additional District Judge has no jurisdiction to decide the application u/s 34 of the Act of 1996, for the reasons that as per Section 2(e) of the Act of 1996 the "Court" means the Principal Civil Court of the district and as per Section 3(17) of General Clauses Act the District Judge is the Judge of a Principal Civil Court and in view of Section 42 when any application with respect to an arbitration agreement is filed before the District Judge, he or she has no authority to transfer the said application and District Judge has to decide the application. Reliance has been placed on the case of I.T.I., Allahabad (supra) in support of their contention.
7. Per contra learned counsel for the respondent countering the above argument submits that the appellants counsel has acquiesced to the jurisdiction of the Additional District Judge at the initial stage of the proceeding, thereafter they now cannot take a u-turn to contend that the Court of Additional District Judge lacks jurisdiction in deciding the application u/s 34 of the Act. He further submitted that the Additional District Judge has been authorized to discharge any of the functions of a District Judge, including the functions of Principal Civil Court of original jurisdiction which the District Judge may, by general or special order, assign to him and in the discharge of such functions he shall exercise the same powers as of the District Judge. Therefore, the District Judge has rightly transferred the case to the Additional District Judge for disposal according to law. Learned counsel for the respondent has relied upon the following cases:
(i) Valliappa Software Technological Park (Private) Limited Vs. C. Sundaram and Others, ;
(ii) I.T.I. Ltd. Vs. Siemens Public Communications Network Ltd., ;
(iii) Macro Tech India and others v. Uma Roy, C.O. No. 2285 of 2002 decided on 29.11.2002;
(iv) Globsyn Technologies Ltd. Vs. Eskaaycee Infosys, ;
(v) Fountain Head Developers v. Maria Arcangela Sequeira with Fountain Head Developers Vs. Mrs. Maria Arcangela Sequeira (since deceased through LRs.) and Others, ;
(vi) Madhya Pradesh State Electricity Board and Another Vs. ANSALDO Energia, S.P.A. and Another, ;
(vii) Nand Contr. and Engr. Thr. G.D. Ahuja Vs. Northern Coal Field Ltd. and Another, .
8. In order to appreciate the rival contentions, it is necessary to have a quick Soak on the relevant provisions regarding the point in issue. Section 2(1)(e) of the Act defines Court as under:
"Court" means the Principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such Principal Civil Court, or any Court of Small Causes.
Thus, the definition of Court in section 2(1)(e) is narrower than the ordinary definition of Court. It is both inclusive and exclusive. It defines Court to mean the principal Civil Court of original jurisdiction in a district. The definition specifically includes the High Court in exercise of its ordinary original civil jurisdiction within its ambit but excludes Civil Courts of a grade inferior to such principal Civil Court and Court of Small Causes. Thus under the Act, Court means and includes the district Court and High Court in exercise of its ordinary original civil jurisdiction. The only condition is that it should have jurisdiction to decide the questions forming the subject-matter of the arbitration if the same would have been the subject-matter of a suit. In the case of M/s. Mahalakshmi Oil Mills Vs. State of Andhra Pradesh, , the Apex Court has observed as under:
By using the words means, Includes and does not include in Section 2(1)(e) of the Act, the Parliament has exhaustively explained the meaning of the term Court in that the words means is a term of restriction, while the word Includes is a term of enlargement and when the words means and includes are used together to define a thing, the intendment of the legislature is to supply restricted meaning to the terms.
Section 3(17) of the General Clauses Act, 1897 defines the term "District Judge" as the Judge of a principal Civil Court of original jurisdiction but shall not include a High Court in the exercise of its ordinary or extraordinary original civil jurisdiction. Thus the definition of Court of District Judge and Principal Civil Court of original jurisdiction are similar and there is no distinction between the two. The Courts of Civil Judges Senior and Junior Division may also be Civil Court of original jurisdiction, but none of them can be termed as principal Civil Court of original jurisdiction for the purposes of the Act.
9. It is not in dispute that the Court of an Additional District Judge is, a class of Civil Court as enunciated by Section 3 of the Bengal, Agra and Assam Civil Court Act, 1887, and it exercises the same power as the District Judge in relation to the functions assigned to it by the District Judge u/s 8(2) of the aforesaid Act but that by itself, would not invest it with the trapping of the principal Civil Court of original jurisdiction in a district. Section 8 of the afore-stated Act reads as below:
8. Additional Judges.--(1) when the business pending before any District Judge requires the aid of Additional Judges for its speedy disposal. State Government may, having consulted High Court, appoint such Additional Judges as may be requisite.
(2) Additional Judges so appointed shall discharge any of the functions of a District Judge which the District Judge may assign to them and in the discharge of those functions they shall exercise the same power as the District Judge.
The word principal means; the first in importance: chief, main; and the word "grade" used in Section 2(e) of the Act signifies status and importance and it does not refer to a, class or particular class inasmuch as the grade of a Court depends on the pecuniary or other limitations of the jurisdiction of the particular Court.
Section 42 of the Act of 1996 envisages that:
42. Jurisdiction.--Notwithstanding anything contained elsewhere in this part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court. Thus, Section 42 of the Act is an overriding provision and it provides that in respect of arbitration proceedings a single Court shall have exclusive jurisdiction. The words Court must be read in the context in which it is used in the statute and it would not be proper for the Courts to give a liberal meaning to it. Therefore, a conjoint reading of Sections 2(1)(e) & 42 of the Act, leaves no manner of doubt that the Legislature intended to make only one Court the Principal Civil Court of original jurisdiction or, as the case may be, the High Court in exercise of its ordinary original jurisdiction, whichever Court is approached earlier, as the venue for all matters connected with an arbitration agreement; and award, and all arbitral proceedings. Sections 2(e) & 42 of the Act in simple language, would mean that, any application with respect to an arbitration agreement will have to be filed in the Principal Civil Court of original jurisdiction in a district, or, as the case may be, in the original civil jurisdiction of the High Court, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit and that Court alone to which the application is filed shall have the jurisdiction over the entire arbitral proceedings to the exclusion of any other Court, having jurisdiction to decide the questions forming the subject-matter of arbitration.
10. This Court in the case of I.T.I. Allahabad (supra) taking note of Section 3(17) of General Clauses Act, 1897 which defines District Judge as the judge of Principal Civil Court of original jurisdiction also considered the provisions of Section 8(2) of the Bengal, Agra and Assam Civil Courts Act, 1897 under which the District Court was constituted. It was held that in para-12 as under:
As a result of the foregoing discussion and on regard being had to the definition of the term "Court" as elucidated in Section 2(e) and the overriding effect of Section 42 of the Act, I am persuaded to the view that the Court of the Additional District Judge is shorn of jurisdiction to entertain an application u/s 34 of the Act and the District Judge cannot, by invoking the provisions contained in Section 8(2) of the Bengal, Agra and Assam Civil Courts Act, 1887, transfer the application for its disposal to the Court of an Additional District Judge. An application for setting aside an award u/s 34 of the Act is as much an application "with respect to an arbitration agreement" as it is for "setting aside the arbitral award" and it is a matter of statutory compulsion that such application is made to the principal Civil Court of original jurisdiction in a district or the High Court in exercise of its ordinary original civil jurisdiction having jurisdiction to decide the questions forming the subject-matter of arbitration if the same had been the subject-matter of a suit and it is again a matter of statutory mandate that the Court to which the application is made alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement, and the arbitral proceedings shall be made in that Court and in no other Court except the appellate Court being in seisin over the matter. The power to transfer/assign the application to any other Court, otherwise having jurisdiction to decide the questions forming the subject-matter of arbitration had it been the subject-matter of a suit, has been impliedly taken away by Section 42 of the Act which is couched in a language fraught with overriding effect. I am conscious of the fact that the view I am taking, may result in adding burden to the District Judge but the plain or unambiguous words of the statute, i.e., words which are reasonably susceptible to only one meaning will have to be given effect irrespective of consequences--See Nelson Motis Vs. Union of India and another, .
The facts of the aforesaid case are quite similar to the instant case. An application u/s 34 of the Act was filed in the Court of the District Judge for setting of the award. After entertaining the application, the District Judge transferred the same to the Court of III Additional District Judge, Allahabad for disposal. An objection was raised before the transferee Court that it has no jurisdiction to entertain the application. The Additional District Judge over-ruled the objections holding that the expression but does not include any Civil Court of a grade inferior to such Principal Civil Court or any Court of Small Causes used in Section 2(e) of the Act, implies that in addition to the District Judge there may be other Principle Civil Courts of original jurisdiction in a district and Additional District Judge not being inferior in grade to the District Judge comes within the purview of the term Court as defined u/s 2(e) of the Act. Then an application was filed before the District Judge stating that as the application u/s 34 of the Act was originally presented in the Court of the District Judge, therefore, in view of provisions Section 42 of the Act, that Court alone should deal with arbitral proceedings and transfer of the said application from the Court of District Judge to the Court of III Additional District Judge was not proper. The said objection was over-ruled. It is against the said order, the matter was taken to this Court.
11. The Karnataka High Court in the case of Valihappa Software Technological Park (Put.) Ltd., Bangalore case (supra) distinguished the case of M/s. ITI Industries (supra) on the premise that pursuant to the orders of the High Court, the Principal City Civil Court Judge has allotted all the arbitration proceedings filed in the City Civil Court of Bangalore to the 6th Additional City Civil Judge. It was not a case of Principal City Civil Judge entertaining the application u/s 9 of the Act and then transferring the same to the Court of 6th Additional City Civil Judge.
12. The core question in the case of ITI Ltd. v. Siemens Public Communications Network Ltd., (supra), before the Apex Court was whether a revision u/s 115 CPC lies to the High Court as against an order made by a Civil Court in an appeal preferred u/s 37 of the Act against an interim order made by the arbitral tribunal The definition of Court provided in Section 2(1)(e) of the Act was not in issue before the Apex Court.
13. Before Calcutta High Court in the case of Macro Tech India and others (supra), the decision of this Court in M/s. ITI, Ltd. Allahabad (supra) was not pressed into service. Even the statement of objects and reasons viz. - to minimise the supervisory role of Courts in arbitral process as given in the Arbitration and Conciliation Bill, 1995 was not considered, which was instrumental in narrowing down the definition of Court in the Act of 1996 as given in the Arbitration Act, 1940.
14. The Andhra Pradesh High Court in the case of Globsyn Technologies Ltd., Calcutta (supra) although took note of the case of M/s. ITI Ltd., Allahabad (supra) but without considering the provisions of General Clauses Act or Bengal, Agra and Assam Civil Courts or the provisions of Section 42 of the Act and their joint impact on the jurisdictional issue took a different view.
15. The Full Bench of Bombay High Court in the case of Fountain Head Developers (supra) opined that the principal Civil Court of original jurisdiction in a district for the purpose of a petition u/s 34 of the Act is a District Court and does not include any other Court inferior to the District Court. In this case the Court was considering whether Court of Civil Judge Senior Division is inferior to principal Civil Court of original jurisdiction in a district i.e. District Judge or not The full bench found itself in agreement with the view expressed by Honble Single Judge of this Court in the M/s. I.T.I., Allahabad (supra).
16. In the case of Madhya Pradesh State Electricity Board (supra) a division bench of Madhya Pradesh High Court as noted in para-22 of the report observed that as far as Madhya Pradesh is concerned, the Additional District Judge is equated with the Principal Civil Court of original jurisdiction. Section 21(1)(e) does not include any Civil Court of grade inferior to such Principal Civil Court or any Court of Small Causes. It means that the verdict has been squeezed to the territory of Madhya Pradesh only.
17. The case of Nand Contractors and Engineers through G.D. Ahuja (supra) does not deal with the controversy in hand as the issue involved in the case was with regard to award of interest. In view of the aforestated discussion we are in full agreement with ratio given by an Honble Single Judge of this Court in the case of M/s. I.T.I., Allahabad (supra) and hold that the Court of Additional District Judge is not the Principal Civil Court for the purpose of Section 2(1)(e) of the Act and the District Judge can not transfer the case under the Arbitration and Conciliation Act, 1996 to the Court of Additional District Judge by invoking the provisions of either Section 8(2) of Bengal, Agra and Assam Civil Courts Act or Section 24 of Code of Civil Procedure, therefore, the Court of Additional District Judge no jurisdiction to dispose of objections u/s 34 of the Act. The impugned order thus being without jurisdiction cannot be sustained. The appeal succeeds and is allowed. The impugned order is set aside and the matter is remitted back to the District Judge, Sonebhadra with the request to dispose of the case expeditiously preferably within three months from the date of receipt of certified copy of this order. The interim-order dated 3.5.2011 is vacated. The parties would bear their own costs.
Final Result : Allowed
