the exclusion of a letters patent appeal in two different ways; one, so to say, on a micro basis by examining the scheme devised by sections 49 and 50 of the 1996 Act and the radical change that it brings about in the earlier provision of appeal under section 6 of the 1961 Act and the other on a macro basis by taking into account the nature and character of the 1996 Act as a self-contained and exhaustive code in itself. 74. In light of the discussions made above, it must be held that no letters patent appeal will lie against an order which is not appealable under section 50 of the Arbitration and Conciliation Act, 1996. 75. In the result, Civil Appeal No.36 of 2010 is allowed and the division bench order dated May 8, 2007, holding that the letters patent appeal is maintainable, is set aside.

                                                               REPORTABLE


              IN THE SUPREME COURT OF INDIA


               CIVIL APPELLATE JURISDICTION


      SPECIAL LEAVE PETITION (CIVIL) NO.11945 OF 2010


FUERST DAY LAWSON LTD.                      ... PETITIONER


                          VERSUS


JINDAL EXPORTS LTD.                         ... RESPONDENT


                           WITH




     SPECIAL LEAVE PETITION (CIVIL) NO.13625 OF 2010


FUERST DAY LAWSON LTD.                      ... PETITIONER


                          VERSUS


JINDAL EXPORTS LTD.                         ... RESPONDENT




                           WITH


SPECIAL LEAVE PETITION (CIVIL) NOS.13626-13629 OF 2010


JINDAL EXPORTS LIMITED                      ... PETITIONER


                          VERSUS


FUERST DAY LAWSON                           ... RESPONDENT


                                  2





                                WITH


SPECIAL LEAVE PETITION (CIVIL) NOS.22318-22321 OF 2010


ITE INDIA P. LTD.                           ... PETITIONER


                               VERSUS


MUKESH SHARMA & ORS.                        ... RESPONDENTS




                                WITH


                     CIVIL APPEAL NO.5156 OF 2011

        [ARISING OUT OF SLP (CIVIL) NO.31068 OF 2009]


SHIVNATH RAI HARNARAIN

INDIA COMPANY                               ... APPELLANT


                               VERSUS


GLENCORE GRAIN ROTTERDAM                    ... RESPONDENT


                                WITH


                     CIVIL APPEAL NO.5157 OF 2011

         [ARISING OUT OF SLP (CIVIL) NO.4648 OF 2010]


TINNA FINEX LTD.                            ... APPELLANT

                               VERSUS


NATIONAL ABILITY S.A. & ANR.                ... RESPONDENTS


                                            3





                                          AND


                          CIVIL APPEAL NO.36 OF 2010


SEA STREAM NAVIGATION LTD.                                   ... APPELLANT


                                        VERSUS


LMJ INTERNATIONAL LTD.                                       ... RESPONDENT





                                   J U D G M E N T





AFTAB ALAM, J.





1.       Leave granted in SLP (C) No.31068 of 2009 and SLP (C) No.4648 of


2010.


2.       The common question that arises for consideration by the Court in this


batch of cases is whether an order, though not appealable under section 50 of


the Arbitration and Conciliation Act, 1996 (hereinafter "1996 Act"), would


nevertheless be subject to appeal under the relevant provision of the Letters


Patent   of  the  High   Court.  In  other   words   even   though   the   Arbitration   Act


does not envisage or permit an appeal from the order, the party aggrieved by


it can still have his way, by-passing the Act and taking recourse to another


jurisdiction.


                                               4




3.      Mr. C.A. Sundaram, senior advocate, however, who led the arguments


on behalf of the appellants, would like to frame the question differently. He


would ask whether there is any provision in the 1996 Act that can be said to


exclude   the   jurisdiction   of   the   High   Court   under   its   Letters   Patent   either


expressly or even impliedly. He would say that the jurisdiction of the High


Court under the Letters Patent is an independent jurisdiction and as long as


the order qualifies for an appeal under the Letters Patent an appeal from that


order would be, undoubtedly, maintainable before the High Court.


4.      A correct answer to both the questions would depend upon how the


1996  Act  is   to  be  viewed.  Do  the  provisions   of the   1996  Act  constitute  a


complete   code   for   matters   arising   out   of   an   arbitration   proceeding,   the


making of the award and the enforcement of the award? If the answer to the


question   is   in   the   affirmative   then,   obviously,   all   other   jurisdictions,


including   the   letters   patent   jurisdiction   of   the   High   Court   would   stand


excluded   but   in   case   the   answer   is   in   the   negative   then,   of   course,   the


contention of Mr. Sundaram must be accepted.


5.      The   batch   presently   before   the   Court   originally   consisted   of   nine


cases,   out   of   which   SLP   (C)   No.16908   of   2010   ended   in   compromise


between   the   parties.   Of   the   remaining   eight   cases,   SLP   (C)   No.13625   of


2010 and SLP (C) No.11945 of 2010 are unrelated and have been wrongly


                                              5




put   in   this   batch.   These   two   SLPs   are   filed   against   a   common   judgment


passed by a single judge of the Delhi High Court insofar as though allowing


the petitioners' application for enforcement of two foreign awards, the High


Court   declined   to   pass   any   order   for   payment   of   interest   on   the   awarded


amounts payable to the petitioners. These two cases are, therefore, directed


to be de-tagged  and listed separately.  This leaves behind six cases. At the


conclusion of hearing,  one of the cases, being SLP (C)  No.31067 of 2009


was directed, on the prayer made by the counsel for the petitioner, to be de-


linked from the batch and to be listed separately. It, however, appears that


the direction was wrongly obtained since that case and another case in the


batch, SLP (C) No.31068 of 2009 arise from a common order and SLP (C)


No.31067 of 2009 would also be fully governed by this judgment. Be that as


it may, the direction for de-linking is already made and, hence, that case will


be separately listed and dealt with in due course. Of the remaining five cases


four come from the Delhi High Court and one from the Calcutta High Court.


In   SLP   (C)   No.4648   of   2010   and   SLP   (C)   No.31068   of   2010,   the


applications   filed   by   the   respective   respondents   in   these   cases,   for


enforcement   of   the   foreign   award   in   their   favour   were   allowed   by   orders


passed by a single judge of the High Court. Against the orders of the single


judge, the petitioners in these SLPs filed appeals before the division bench


                                               6




of the High Court. All the appeals were taken together and dismissed by a


common   order   as   not  maintainable.   The   petitioners   have   come  before   this


Court against the order passed by the division bench only, on the question of


maintainability  of their appeals. Civil Appeal No.36 of 2010 coming from


the Calcutta High Court is opposite of the aforementioned two SLPs coming


from the Delhi High Court. In this case, against an order passed by a single


judge   of   the   High   Court,   by   which   he   granted   relief   for   enforcement   of   a


foreign award, an appeal was preferred before the division bench of the High


Court.   The   appeal   was  admitted   but   a   preliminary  objection   was  raised   in


regard   to   its   maintainability   in   view   of   section   50   of   the   1996   Act.   The


division   bench   by   order   dated   May   8,   2007   rejected   the   preliminary


objection holding that the appeal was maintainable.


6.      In SLP (C) Nos.22318-22321 of 2010 a single judge of the Delhi High


Court  dismissed the suit filed by the petitioner and allowed the application


filed   by   defendant   nos.3-5   referring   the   parties   to   arbitration   in   terms   of


section 45 of the 1996 Act. The petitioner's appeal before the division bench


was dismissed as not maintainable. The SLP (C) Nos. 22318-22321 of 2010


are filed under Article 136 of the Constitution challenging orders passed by


both the division bench and the single judge of the High Court.


                                                7




7.      The petitioner in SLP (C) Nos.13626-13629 of 2010 is the respondent


in SLP (C) No.13625 of 2010 and SLP (C) No.11945 of 2010 which have


been held to be unrelated to the batch. Against the order passed by a single


judge of the High Court for enforcement of two foreign awards against it,


the petitioner in SLP (C) Nos.13626-13629 of 2010, first preferred an appeal


before the division bench of the High Court, but the appeal was dismissed by


the   division   bench   as   not   maintainable.   The   present   SLPs   are   filed


challenging   both   the   orders   passed   by   the   single   judge   and   the   division


bench.


8.      At   the   outset   Mr.   C.A.   Sundaram,   submitted   that   the   proper   course


would be to refer the matter to a larger bench of three judges. He pointed out


that in Orma Impex Pvt. Ltd. v. Nissai ASB PTE Ltd., (1999) 2 SCC 541, the


same question was earlier referred to a bench of three judges of this Court.


The Court, however, did not have the occasion to decide the case because it


was   withdrawn   following   a   settlement   between   the   parties.   Mr.   Sundaram


submitted that though the case does not survive, the issue arising in it (which


is   the   same   as   in   this   batch   of   cases)   continues   to   be   alive   and   hence,


following  the  referral  in  Orma  Impex Pvt.   Ltd.  (which  was in  the form  of


`Record   of   Proceedings'   and   not   an   order   of   the   Court!),   all   these   cases


should be referred for hearing before a bench of three judges of this Court.


                                                 8




Mr. Dushyant Dave, learned senior advocate appearing for the respondents,


in   some   of   the   cases   in   the   batch,   strongly   opposed   Mr.   Sundaram's


submission and contended that there was no need to refer the cases to any


larger bench.


9.      In Orma Impex Pvt. Ltd., the Delhi High Court had taken the view that


against the order passed by a single judge of the High Court under section


45, refusing to refer parties to arbitration, no further appeal would lie under


section   50   of   the   1996   Act.   In   the   special   leave   petition   filed   against   the


order of the High Court, a bench of two judges of this Court observed that


the High Court had failed to notice section 10 of the Delhi High Court Act,


1996   and  clause   10  of  the   Letters   Patent   which  applies   to  the   Delhi  High


Court. It further observed that though the view taken by the High Court was


supported   by   a   two   judge   bench   decision   of   this   Court   in  State   of   West


Bengal v. M/s Gourangalal Chatterjee, (1993) 3 SCC 1,  which in turn had


relied upon an earlier decision of the Court in  Union of India  v.  Mohindra


Supply  Co.,   1962   (3)   SCR   497,   a   contra   view   was   taken   by   the   Court   in


Vinita M. Khanolkar  v.  Pragna M. Pai & Ors., (1998) 1 SCC 500. There,


thus,   appeared   a   conflict   of   decisions   on   the   question.   In   support   of   the


contra view, the division bench also referred to an earlier decision by a three


                                               9




judge   bench   of   this   Court   in  National   Sewing   Thread   Co.   Ltd.  v.  James


Chadwick and Bros. Ltd., AIR 1953 SC 357.


10.     Mr. Dave pointed out that neither the decision in Vinita M. Khanolkar


nor the decision in National Sewing Thread Co. Ltd. was rendered under the


provisions of the Arbitration Act; the former was in the context of section


6(3) of the Specific Relief Act, 1963 and the latter under the Trade Marks


Act,   1940.   He   further   submitted   that   after   the   decisions   in  Vinita   M.


Khanolkar and the referral of Orma Impex Pvt. Ltd., a three judge bench of


this Court in Union of India & Ors. v. Aradhana Trading Co., (2002) 4 SCC


447, had the occasion to consider the same question, as arising in this batch


of   cases,   though   not   under   the   1996   Act   but   under   the   provisions   of   the


Arbitration   Act,   1940   (hereinafter   "1940   Act").   In  Aradhana   Trading   Co.


the   Court   referred   to   both   the   decisions   in  Vinita   M.   Khanolkar  and   in


National Sewing Thread Co. Ltd.; the first it did not follow and the second it


distinguished as having been rendered on a different set of provisions. Mr.


Dave   submitted   that,   thus,   the   very   foundation   on   which   the   referral   of


Orma Impex Pvt. Ltd. was based, no longer held good.


11.     On hearing the two sides, we are of the view that in the afore-noted


facts and circumstances the referral of Orma Impex Pvt. Ltd. cannot be said


to constitute a binding precedent, especially as the case that was referred no


                                               10




longer survives. In any event we have heard the two sides at great length and


we see no good reason why this matter should be referred to a larger bench


and not decided by this Court. We, accordingly, proceed to do so.


12.     The question regarding the availability of an appeal under the relevant


clause of the Letters Patent has engaged the attention of this Court from time


to   time   under   different   circumstances   and   in   cases   arising   under   different


Acts. We take note of some of the cases here that were brought to our notice


by the two sides.


13.     In National Sewing Thread Co. Ltd., this Court held that the judgment


of a learned single judge of the Bombay High Court, on an appeal preferred


under section 76 of the Trade Marks Act was subject to appeal under clause


15 of the Letters Patent of that High Court. The Court noted the material part


of clause 15 of the Letters Patent of the High Court and section 76 (1) of the


Trade Marks Act and observed:


        "The   Trade   Marks   Act   does   not   provide   or   lay   down   any

        procedure for the future conduct or career of that appeal in the

        High Court, indeed S.77 of the Act provides that the High Court

        can   if   it   likes   make   rules   in   the   matter.  Obviously   after   the

        appeal had reached the High Court it has to be determined

        according   to   the   rules   of   practice   and   procedure   of   that

        Court and in accordance with the provisions of the charter

        under which that Court is constituted and which confers on

        it power in respect to the method and manner of exercising

        that jurisdiction. The rule is well settled that when a statute

        directs   that   an   appeal   shall   lie   to   a   Court   already


                                                            11




          established,   then   that   appeal   must   be   regulated   by   the

          practice and procedure of that Court."


                                                                                  (emphasis supplied)


14.       Taking   support   for   its   view   from   the   decisions   in   (i)  National


Telephone Co. Ltd.  v.  Postmaster-General, (1913) AC 546, (ii)  Adaikappa


Chettiar v. Chandresekhara Thevar, AIR 1948 PC 12 and (iii) Secy. of State


for India v. Chellikani Rama Rao, AIR 1916 PC 21, the decision in National


Sewing Thread Co. Ltd. further observed:


          "Section 76, Trade Marks Act confers a right of appeal to the

          High Court and says nothing more about it. That being so, the

          High  Court being  seized  as  much   of the  appellate   jurisdiction

          conferred by S.76 it has to exercise that jurisdiction in the same

          manner as it exercises its other appellate jurisdiction and when

          such   jurisdiction   is   exercised   by   a   single   Judge,   his   judgment

          becomes   subject   to   appeal   under   Cl.15   of   the   Letters   Patent

          there being nothing to the contrary in the Trade Marks Act."


15.       The Court held that there was nothing in the provisions of section 77


of   the   Trade   Marks   Act   that   would   debar   the   High   Court   from   hearing


appeals  under  section   76,  according  to  the   Rules  under  which   all  other


appeals   are   heard   or   from   framing   Rules   for   the   exercise   of   that


jurisdiction under section 108, Government of India Act, 1915, for hearing


those   appeals   by   single  judges   or  by  division   benches.   It  also   negated  the


submission   that   the   judgment   of   the   learned   single   judge   would   not   be


                                               12




subject to an appeal under clause 15 of the Letters Patent because it was not


delivered pursuant to section 108, Government of India Act.


16.     In Vinita M. Khanolkar, a bench of two judges of this Court held that


notwithstanding   the   bar   of   sub-section   (3),   an   order   passed   by   a   learned


single   judge   of  the   High  Court  under   section   6  of  the   Specific   Relief   Act


would nevertheless be subject to appeal under clause 15 of the Letters Patent


of the Bombay High Court. In Vinita M. Khanolkar, this Court put the power


of   the   High   Court   under   the   Letters   Patent   at   the   level   of   constitutional


power of the High Court and went on to observe as follows:


        "3. Now it is well settled that any statutory provision barring an

        appeal or revision cannot cut across the constitutional power of

        a   High   Court.   Even   the   power   flowing   from   the   paramount

        charter   under   which   the   High   Court   functions   would   not   get

        excluded   unless   the   statutory   enactment   concerned   expressly

        excludes appeals under letters patent. No such bar is discernible

        from   Section   6(3)   of   the   Act.   It   could   not   be   seriously

        contended by learned counsel for the respondents that if clause

        15   of   the   Letters   Patent   is   invoked   then   the   order   would   be

        appealable. Consequently, in our view, on the clear language of

        clause 15 of the Letters Patent which is applicable to Bombay

        High Court, the said appeal was maintainable as the order under

        appeal was passed by learned Single Judge of the High Court

        exercising original jurisdiction of the court. Only on that short

        ground the appeal is required to be allowed."


17.     As noted above, Vinita M. Khanolkar, was considered in a later three


judge bench decision in Aradhana Trading Co. One may not go so far as to


say that Aradhana Trading Co. disapproved Vinita M. Khanolkar wholly but


                                               13




it surely took the opposite view on the question in the context of section 39


of the Arbitration Act, 1940.


18.     In Sharda Devi v. State of Bihar, (2002) 3 SCC 705, a bench of three


judges of this Court examined the question whether a Letters Patent Appeal


is   maintainable   against   the   judgment   and   decree   of   a   single   judge   of   the


High   Court   passed   in   an   appeal   preferred   under   section   54   of   the   Land


Acquisition   Act,   1894.  A   bench   of  two  judges   before   which   the   case   was


earlier put up noticed a conflict of decision on the question. In  Baljit Singh


v.  State   of   Haryana,   bench   of   two   judges   of   the   Court   had   held   that   no


Letters Patent Appeal is maintainable against the judgment of a single judge


of  the   High  Court   on  an   appeal   under  section   54   of  the   Land   Acquisition


Act,   whereas   in  Basant   Kumar  v.  Union   of   India,   (1996)   11   SCC   542,   a


bench of three judges, without adverting to the decision in Baljit Singh, held


that   such   an   appeal   is   maintainable.   The   two   judge   bench,   accordingly,


referred the case for hearing before a bench of three judges. The three judge


bench affirmed the decision in  Basant Kumar. It noted that the decision in


Baljit Singh was based on concession made in light of an earlier decision of


this  Court  in  South Asia  Industries  (P) Ltd.  v.  S.B.   Sarup  Singh,  (1965) 2


SCR   756.   The   decision   in  South   Asia   Industries  was   in   a   case   under   the


Delhi Rent Control Act, 1958. In Sharda Devi, the Court pointed out that in


                                                  14




South   Asia   Industries,  the   Court   had   examined   sections   39   and   43   of   the


Delhi Rent Control Act and held that a combined reading of the two sections


showed that an order passed by the High Court in an appeal under section 39


was   to   be   final.   It   was   held   that   the   provision   of   finality   was   intended   to


exclude any further appeal. This decision was, thus, based on interpretation


of sections 39 and 43 of the Delhi Rent Control Act. Section 54 of the Land


Acquisition Act, has no similarity with sections 39 and 43 of the Delhi Rent


Control Act. Hence, the decision in  South Asia Industries  had no relevance


to decide the question whether a letters patent appeal is maintainable against


the   judgment   passed   by   a   single   judge   under   section   54   of   the   Land


Acquisition   Act.   In   regard   to   the   Letters   Patent   jurisdiction   of   the   High


Court,   this   Court   in  Sharda   Devi  made   the   following   observation   in


paragraph 9:


        "9.  A Letters Patent is the charter under which the High Court

        is   established.   The   powers   given   to   a   High   Court   under   the

        Letters  Patent  are  akin  to  the  constitutional  powers   of a  High

        Court. Thus when a Letters Patent grants to the High Court a

        power of appeal, against a judgment of a Single Judge, the right

        to   entertain   the   appeal   would   not   get   excluded  unless   the

        statutory   enactment   concerned   excludes   an   appeal   under

        the Letters Patent."


19.     Referring   to   section   54   of   the   Land   Acquisition   Act,   the   Court


concluded as follows:


                                               15




        "14.   ...  Section 26   of   the   said   Act   provides   that   every   award

        shall be a decree and the statement of grounds of every award

        shall be a judgment. By virtue of the Letters Patent "an appeal"

        against the judgment of a Single Judge of the High Court would

        lie  to a  Division  Bench.  Section 54  of  the  said  Act does  not

        exclude an appeal under the Letters Patent. The word "only"

        occurring   immediately   after   the   non   obstante   clause   in

        Section 54   refers   to   the   forum   of   appeal.   In   other   words,   it

        provides  that  the   appeal  will   be  to  the  High  Court  and  not  to

        any   other   court   e.g.   the   District   Court.   The   term   "an   appeal"

        does  not restrict  it to only one appeal  in the High Court. The

        term   "an   appeal"   would   take   within   its   sweep   even   a   letters

        patent appeal. The decision of the Division Bench rendered in a

        letters   patent   appeal   will   then   be   subject   to   appeal   to   the

        Supreme   Court.   Read   in   any   other   manner   there   would   be   a

        conflict   between   Section 54   and   the   provision   of   a   Letters

        Patent. It is settled law that if there is a conflict, attempt should

        be made to harmoniously construe the provisions."




20.     In Subal Paul v. Malina Paul & Anr., (2003) 10 SCC 361, a bench of


three   judges   of   this   Court   examined   the   question   whether   a   letters   patent


appeal would lie against the judgment of a single judge of a High Court on


an   appeal   filed   under   section   299   of   the   Indian   Succession   Act,   1925.


Arguing   against   the   maintainability   of   a   letters   patent   appeal   against   the


judgment   of   the   single   judge   it   was   contended   that   the   rejection   of   the


application for probate by the district judge did not give rise to any decree.


Hence, an appeal against such an order would be one under section 104 of


the Civil Procedure  Code and a further appeal would, therefore, be barred


under   sub-section   (2)   of   section   104.   This   Court   did   not   accept   the


                                                16




submission.   It   held   that   the   appeal   against   an   order   of   the   district   judge


would be under section 299 of the Indian Succession Act. Section 104 of the


Code simply recognizes appeals provided under special statutes; it does not


create  a  right of appeal as  such. Consequently,  it does  not bar any  further


appeal also. As regards the nature of an appeal under the Letters Patent, the


decision in Subal Paul in paragraphs 21 and 22, observed as follows:


        "21.  If   a   right   of   appeal   is   provided   for   under   the   Act,   the

        limitation   thereof   must   also   be   provided   therein.   A   right   of

        appeal   which   is   provided   under   the   Letters   Patent   cannot   be

        said   to   be   restricted.  Limitation   of   a   right   of   appeal,   in   the

        absence   of   any   provision   in   a   statute   cannot   be   readily

        inferred. It is now well-settled that the appellate jurisdiction

        of a superior court is not taken as excluded simply because

        the   subordinate   court   exercises   its   special   jurisdiction.  In

        G.P. Singh's Principles of Statutory Interpretation, it is stated:

                "The   appellate   and   revisional   jurisdiction   of   superior

                courts   is   not   taken   as   excluded   simply   because   the

                subordinate   court   exercises   a   special   jurisdiction.   The

                reason is that when a special Act on matters governed by

                that Act confers a jurisdiction to an established court, as

                distinguished   from   a  persona   designata,   without   any

                words   of   limitation,   then,   the   ordinary   incident   of

                procedure   of   that   court   including   any   general   right   of

                appeal or revision against its decision is attracted."

       

        22.  But   an   exception   to   the   aforementioned   rule   is   on

        matters where the special Act sets out a self-contained code,

        the   applicability   of   the   general   law   procedure   would   be

        impliedly   excluded.  [See  Upadhyaya   Hargovind   Devshanker

        v. Dhirendrasinh Virbhadrasinhji Solanki (1988) 2 SCC 1]"


                                                                  (emphasis supplied)


                                                17




21.     In   paragraph   32   of   the   judgment,   this   Court   further   observed   as


follows:


        "32. While determining the question as regards clause 15 of the

        Letters   Patent,   the   court   is   required   to   see   as   to   whether   the

        order   sought   to   be   appealed   against   is   a   judgment   within   the

        meaning thereof or not. Once it is held that irrespective of the

        nature   of   the   order,   meaning   thereby   whether   interlocutory   or

        final,   a   judgment   has   been   rendered,   clause   15   of   the   Letters

        Patent would be attracted."



22.     In P.S. Sathappan v. Andhra Bank Ltd. & Ors., (2004) 11 SCC 672, a


constitution bench of this Court once again extensively considered the nature


of the Letters Patent jurisdiction of the High Court, and the circumstances in


which it would be available and those under which it would be ousted. The


question   that   was   referred   to   the   Constitution   Bench   was:   what   would   be


"the   effect   of   the   provisions   of   section   104(2)   of   the   Code   of   Civil


Procedure, 1908 (hereinafter "CPC") vis-`-vis clause 15 of the Letters Patent


(of   the   Madras   High   Court)"?   An   application   for   setting   aside   the   court


auction-sale   was   dismissed   by   the   execution   court.   An   appeal   against   the


order   came   to   the   High   Court   and   it   was   dismissed   by   a   single   judge.


Against the order of the single judge, a letters patent appeal was filed. The


question of maintainability  of the appeal was examined by a full bench of


the High Court and the intra-court appeal to the division bench was held to


be not maintainable in view of the provisions of section 104(2) of CPC. A


                                               18




Constitution Bench of this Court, however, reversed the decision of the full


bench of the High Court and by a majority of 3:2 held that the letters patent


appeal was perfectly maintainable.


23.     P.S. Sathappan is actually an authority on the interplay of section 104


of   the   Code   of   Civil   Procedure   and   the   Letters   Patent   jurisdiction   of   the


High Court. The majority judgment went into the history of the matter and


pointed   out   that   under   the   Civil   Procedure   Codes   of  1877   and   1882   there


was a divergence of opinion among the different High Courts on the point


whether   the   finality   attached   to   orders   passed   under   section   588


(corresponding   to   section   104   of   the   present   Code)   precluded   any   further


appeals, including a letters patent appeal. The question, then, came up before


the Privy Council in the case of Hurrish Chunder Chowdry v. Kali Sundari


Debia,  ILR (1882) 9 Cal. 482 ( PC). But the decision of the Privy Council,


rather   than   settling   the   issue   gave   rise   to   further   conflicting   decisions   by


different   High   Courts   in   the   country.   The   Bombay,   Calcutta   and   Madras


High Courts held that section 588 did not take away the right of appeal given


under the Letters Patent. On the other hand, the Allahabad High Court took a


different view and held that a letters patent appeal was barred under section


588 of the Code. In view of this conflict of views, the legislature stepped in


and amended the law. It introduced section 4 and section 104 in the Code.


                                                 19




Having,   thus,   put   the   controversy   in   the   historical   perspective,   the   Court


referred   to   sections   4   and   104   of   the   Code   and   made   the   following


observation in paragraph 6 of the judgment:


        "To be immediately noted that now the legislature provides that

        the provision of this Code  will not affect or limit special law

        unless   specifically   excluded.   The   legislature   also

        simultaneously saves, in section 104(1), appeals under "any

        law for the time being in force". These would include letters

        patent appeals."

                                                                   (emphasis supplied )


24.     The above is really the kernel of the decision in  P.S. Sathappan  and


the rest of the judgment is only an elucidation of this point.


25.     In  P. S. Sathappan  the constitution  bench considered in some detail


the   1962   decision   by   a   bench   of   four   judges   of   the   Court   in  Mohindra


Supply   Co.  (supra)   in   which   the   legislative   history   of   section   104   of   the


Code was traced out in detail and it was shown that by virtue of the saving


clause   in  section   4   and  the   express  language   of  section   104  that   saved   an


appeal   as   provided   by   any   other   law   for   the   time   being   in   force,   a   letters


patent appeal was not hit by the bar of sub-section (2) of section 104 of the


Code.    [Mohindra Supply Co., however, was a case under section 39 of the


1940  Act,  which   did  not  contain   any   provision   similar   to  section  4  of  the


Code and hence, in that case the Court held that the finality attached by sub-


                                               20




section (2) to an order passed under sub-section (1) of section 39 barred any


further appeal, including a letters patent appeal.]


26.     In P.S. Sathappan, on a consideration of a number of earlier decisions,


the Constitution Bench concluded that till 1996, the unanimous view of all


courts was that section 104(1) CPC specifically saved letters patent appeals


and   the   bar   under   section   104(2)   did   not   apply   to   letters   patent   appeals.


Thereafter, there were two decisions in deviation from the accepted judicial


view, one by a bench of two judges of this Court in  Resham Singh Pyara


Singh v. Abdul Sattar, (1996) 1 SCC 49 and the other by a bench of three


judges   of   this   Court   in  New   Kenilworth   Hotel   (P)   Ltd.   v.   Orissa   State


Finance Corpn., (1997) 3 SCC 462.   P.S. Sathappan, overruled both these


decisions and declared that Resham Singh Pyara Singh and New Kenilworth


Hotel (P) Ltd. laid down wrong law. It further pointed out that even after the


aforementioned two decisions this Court had continued to hold that a Letters


Patent   Appeal   is   not   affected   by   the   bar   of   section   104(2)   CPC.   In   this


connection, it referred to Vinita M. Khanolkar (supra), under section 6 of the


Specific Relief Act, Chandra Kanta Sinha v. Oriental Insurance Co. Ltd. &


Ors.,    (2001)   6   SCC   158,   under   section   140   of   the   Motor   Vehicles   Act,


1988,  Sharda   Devi   (supra),   under  section   54   of  the  Land   Acquisition  Act


and  Subal   Paul   (supra),   under   section   299   of   the   Indian   Succession   Act,


                                                21




1925 and came to the conclusion that the consensus of judicial opinion has


been that section 104(1) CPC expressly saves the letters patent appeal and


the bar under section 104(2)  CPC does not apply to letters patent appeals. In


paragraph 22 of the judgment, the Court observed as follows:


        "22.... The view has been that a letters patent appeal cannot be

        ousted   by   implication   but   the   right   of   an   appeal   under   the

        Letters Patent can be taken away by an express provision in an

        appropriate legislation. The express provision need not refer to

        or   use   the   word   "letters   patent"   but   if   on   a   reading   of   the

        provision it is clear that all further appeals are barred then even

        a letters patent appeal would be barred."


27.     Further,  analysing  the two sub-sections of section 104(2) along with


section   4   CPC,   this   Court   in   paragraph   30   of   the   judgment   observed   as


follows:


        "30.... Section 104 must be read as a whole and harmoniously.

        If the intention was to exclude what is specifically saved in sub-

        section (1), then there had to be a specific exclusion. A general

        exclusion   of   this   nature   would   not   be   sufficient.   We   are   not

        saying that a general exclusion would never oust a letters patent

        appeal.   However,   when   section   104(1)   specifically   saves   a

        letters patent appeal then the only way such an appeal could be

        excluded is by express mention in section 104(2) that a letters

        patent appeal is also prohibited. . ...."


28.     Mr. Sundaram heavily relied upon this decision.


29.     The   decisions   noticed   so   far   lay   down   certain   broad   principles   that


may be stated as follows:


                                        22




1. Normally, once an appeal reaches the High Court it has to be


    determined according to the rules of practice and procedure


    of the High Court and in accordance with the provisions of


    the   charter   under   which   the   High   Court   is   constituted   and


    which   confers   on   it   power   in   respect   to   the   method   and


    manner of exercising that power.


2. When   a   statute   merely   directs   that   an   appeal   shall   lie   to   a


    court already established then that appeal must be regulated


    by the practice and procedure of that court.


3. The   High   Court   derives   its   intra-court   appeal   jurisdiction


    under the charter by which it was established and its powers


    under   the   Letters   Patent   were   recognized   and   saved   by


    section 108 of the Government of India Act, 1915, section


    223   of  the   Government  of  India   Act,   1935   and   finally,   by


    Article   225   of   the   Constitution   of   India.   The   High   Court,


    therefore, cannot be divested of its Letters Patent jurisdiction


    unless provided for expressly or by necessary intendment by


    some special statute.


4. If   the   pronouncement   of   the   single   judge   qualifies   as   a


    "judgment", in the  absence   of  any  bar  created  by  a  statute


                                           23




      either   expressly   or   by   necessary   implication,   it   would   be


      subject   to   appeal   under   the   relevant   clause   of   the   Letters


      Patent of the High Court.


5.    Since   section   104(1)   CPC   specifically   saves   the   letters


      patent   appeal   it   could   only   be   excluded   by   an   express


      mention   in   section   104(2).   In   the   absence   of   any   express


      mention   in   section   104(2),   the   maintainability   of   a   letters


      patent appeal is saved by virtue of section 104(1).


6. Limitation of a right of appeal in absence of any provision in


      a   statute   cannot   be   readily   inferred.   The   appellate


      jurisdiction of a superior court cannot be taken as excluded


      simply   because   a   subordinate   court   exercises   its   special


      jurisdiction.


7. The   exception   to   the   aforementioned   rule   is   where   the


      special Act sets out a self-contained code and in that event


      the   applicability   of   the   general   law   procedure   would   be


      impliedly excluded. The express provision need not refer to


      or   use   the   word   "letters   patent"   but   if   on   a   reading   of   the


      provision it is clear that all further appeals are barred  then


      even a letters patent appeal would be barred.


                                               24




30.     These   general   principles   are   culled   out   from   the   decisions   of   this


Court   rendered   under   section   104   of   the   CPC   and   various   other   Acts,   as


noted   above.   But   there   is   another   set   of   decisions   of   this   Court   on   the


question   under   consideration   rendered   in   the   context   of   section   39   of   the


1940 Act. Section 39 of the erstwhile Act contained the provision of appeal


and provided as follows:


        "39.   Appealable   orders.--(1)   An   appeal   shall   lie   from   the

        following orders passed under this Act (and from no others) to

        the   Court   authorised   by   law   to   hear   appeals   from   original

        decrees of the Court passing the order:


        An order -


                (i) superseding an arbitration;


                (ii) on an award stated in the form of a special case;


                (iii) modifying or correcting an award;


                (iv) filing or refusing to file an arbitration agreement;


                (v)   staying   or   refusing   to   stay   legal   proceedings   where

                there is an arbitration agreement;


                (vi) setting aside or refusing to set aside an award:


        PROVIDED   THAT   the   provisions   of   this   section   shall   not

        apply to any order passed by a Small Cause Court.


        (2) No second appeal shall lie from an order passed in appeal

        under this section, but nothing in this section shall affect or take

        away any right to appeal to the Supreme Court."


                                                25




[Insofar   as   relevant   for   the   present,   section   37   of   the   1996   Act,   is   very


similar to section 39 of the previous Act as quoted above.]


31.     In Mohindra Supply Co., a bench of four judges of this Court held that


a letters patent appeal against an order passed by a single judge of the High


Court on an appeal under section 39(1) of the 1940 Act was barred in terms


of sub-section   (2) of section   39. This  decision   is  based  on the  bar against


further appeals as contained in sub-section (2) of section 39 of the 1940 Act


and,   therefore,   it   may   not   have   a   direct   bearing   on   the   question   presently


under consideration.


32.     More   to   the   point   are   two   later   decisions.   In  M/s   Gourangalal


Chatterjee, a bench of two judges of this Court held that an order, against


which no appeal would lie under section 39(1) of the 1940 Act, could not be


taken in appeal before the division bench of the High Court under its Letters


Patent.   The   same   view   was   reaffirmed   by   a   bench   of   three   judges   of   this


Court in Aradhana Trading Co.


33.     In regard to these two decisions, Mr. Sundaram took the position that


both M/s Gourangalal Chatterjee and Aradhana Trading Co. were rendered


on section 39 of the 1940 Act, the equivalent of which is section 37 of the


1996   Act.   In   view   of   the   two   decisions,   he   conceded   that   in   the   event   an


order was not appealable under section 37(1) of the 1996 Act, it would not


                                              26




be   subject   to   appeal   under   the   Letters   Patent   of   the   High   Court.   He,


however, referred to section 50 of the 1996 Act, which is as follows:


        "50. Appealable orders.--(1) An appeal shall lie from the order

        refusing to--

                 (a) refer the parties to arbitration under section 45;

                 (b) enforce a foreign award under section 48,

        to the court authorised by law to hear appeals from such order.


        (2) No second appeal shall lie from an order passed in appeal

        under this section, but nothing in this section shall affect or take

        away any right to appeal to the Supreme Court."


34.     Mr.   Sundaram   submitted   that   section   50,   unlike   section   39   of   the


previous   Act   and   section   37   of   the   current   Act   does   not   have   the   words


"(and from no others)" and that, according to him, made all the difference.


He contended that the omission of the words in parenthesis was significant


and it clearly pointed out that unlike section 37, even though an order was


not   appealable   under   section   50,   it   would   be   subject   to   appeal   under   the


Letters Patent of the High Court. At any event the decisions rendered under


section 39 of the 1940 would have no application in a case relating to section


50 of the 1996 Act.


35.     Mr.   Dave,   in   reply   submitted   that   the   words   "(and   from   no   other)"


occurring in section 39 of the 1940 Act and section 37 of the 1996 Act were


actually   superfluous  and  seen,   thus,  there  would  be  no  material   difference


between the provisions  of section 39 of the 1940 Act or section  37 of the


                                            27




1996 Act and section 50 of the 1996 Act and all the decisions rendered on


section 39 of the 1940 Act will apply with full force to cases arising under


section 50 of the 1996 Act.


36.     The use of round brackets for putting words in parenthesis is not very


common   in   legislation   and   this   reminds   us   of   the   painful   lament   by


Meredith, J. of the Patna High Court, who in 1948 dealing with a case said


that "the 1940 Act contains examples of bad drafting which it would be hard


to beat".


37.       According   to   the   New   Oxford   Dictionary   of   English,   1998   edition,


brackets are used to enclose words or figures  so as to separate them from


the   context.   The   Oxford   Advanced   Learner's   Dictionary,   Seventh   edition


defines "bracket" to mean "either of a pair of marks, ( ) placed around extra


information in a piece of writing or part of a problem in mathematics".  The


New Oxford Dictionary of English, 1998 edition gives the meaning and use


of parenthesis as:


        "Parenthesis--noun   (pl.   parentheses)   a   word,   clause,   or

        sentence   inserted  as   an   explanation   or   afterthought   into   a

        passage   which   is   grammatically   complete   without   it,   in

        writing usually marked off  by brackets, dashes, or commas.


        - (usu. Parentheses) a pair of round brackets ( ) used to include

        such a word, clause, or sentence."

       


                                                 28




38.     The Oxford Advanced Learner's Dictionary, Seventh edition, defines


the meaning of parenthesis as:


        "a   word,   sentence,   etc.   that   is   added   to   a   speech   or   piece   of

        writing,   especially   in   order   to   give   extra   information.   In

        writing,   it   is   separated   from   rest   of   the   text   using   brackets,

        commas or DASHES."


39.     The   Complete   Plain   Words   by   Sir   Ernest   Gowers,   1986   revised


edition   by   Sidney   Greenbaum   and   Janet   Whitcut,   gives   the   purpose   of


parenthesis as follows:


        "Parenthesis


        The   purpose   of   a   parenthesis   is   ordinarily   to   insert   an

        illustration,   explanation,   definition,   or   additional   piece   of

        information  of  any  sort  into  a  sentence   that   is  logically   and

        grammatically   complete   without   it.   A   parenthesis   may   be

        marked   off   by   commas,   dashes   or   brackets.   The   degree   of

        interruption   of   the   main   sentence   may   vary   from   the   almost

        imperceptible   one   of   explanatory   words   in   apposition,   to   the

        violent one of a separate sentence complete in itself."


40.     The   Merriam   Webster   Online   Dictionary   defines   parenthesis   as


follows:


        "1  a  :  an amplifying or explanatory word, phrase, or sentence

        inserted   in   a   passage   from   which   it   is   usually   set   off   by

        punctuation b : a remark or passage that departs from the theme

        of a discourse : digression

       

        2: interlude, interval

       

        3:  one   or   both   of   the   curved   marks   (   )   used   in   writing   and

        printing   to   enclose   a   parenthetical   expression   or   to   group   a

        symbolic unit in a logical or mathematical expression"


                                                29





41.     The   Law   Lexicon,   The   Encyclopaedic   Law   Dictionary   by   P.


Ramanatha Aiyar, 2000 edition, defines parenthesis as under:


        "Parenthesis.   a   parenthesis   is   defined   to   be   an   explanatory   or

        qualifying   clause,   sentence,   or   paragraph,   inserted   in   another

        sentence,   or   in   course   of   a   longer   passage,   without   being

        grammatically connected with it. (Cent. Dist.)


        PARENTHESIS is used to limit, qualify or restrict the meaning

        of   the   sentence   with   which   it   is   connected,   and   it   may   be

        designated  by the use  of commas,  or by  a dash,  or by curved

        lines or brackets [53 Fed.81 (83); 3C, CA 440]."




42.     Having   regard   to   the   grammatical   use   of   brackets   or   parentheses,   if


the words, "(and from no others)" occurring in section 39 of the 1940 Act or


section 37 of the 1996 Act are viewed as `an explanation or afterthought' or


extra information separate from the main context, then, there may be some


substance   in   Mr.   Dave's   submission   that   the   words   in   parentheses   are


surplusage  and in essence the provisions of section  39 of the 1940 Act or


section   37   of   the   1996   Act   are   the   same   as   section   50   of   the   1996   Act.


Section 39 of the 1940 Act says no more and no less than what is stipulated


in section 50 of the 1996 Act.


43.     But there may be a different reason to contend that section 39 of the


1940   Act   or   its   equivalent   section   37   of   the   1996   Act   are   fundamentally


different from section 50 of the 1996 Act and hence, the decisions rendered


                                            30




under section 39 of the 1940 Act may not have any application to the facts


arising under section 50 of the 1996 Act.


44.     But for that we need to take a look at the basic scheme of the 1996


Act   and   its   relevant   provisions.   Before   the   coming   into   force   of   the


Arbitration   and   Conciliation   Act,   1996   with   effect   from   August   16,   1996,


the law relating to domestic arbitration was contained in the Arbitration Act,


1940, which in turn was brought in place of the Arbitration Act, 1899. Apart


from the Arbitration Act 1940, there were two other enactments of the same


genre. One called the Arbitration (Protocol and Convention) Act, 1937 (for


execution   of   the   Geneva   Convention   Awards)   and   the   other   called  the


Foreign Awards (Recognition and Enforcement) Act, 1961 (for enforcement


of the New York Convention awards).


45.     The   aforesaid   three   Acts   were   replaced   by   the   Arbitration   and


Conciliation Act, 1996, which is based on the  United Nations Commission


on International Trade Law (UNCITRAL) Model and is broadly compatible


with the "Rules of Arbitration of the International Chamber of Commerce".


The Arbitration and Conciliation Act, 1996 that has repealed the Arbitration


Act, 1940 and also the Acts of 1937 and 1961, consolidates and amends the


law   relating   to   domestic   arbitration,   international   commercial   arbitration,


enforcement   of   foreign   arbitral   awards   and   defines   the   law   relating   to


                                             31




conciliation   and   provides   for   matters   connected   therewith   and   incidental


thereto taking into account the UNCITRAL MODEL law and Rules.


46.     The   Statement   of   Objects   and   Reasons   of   the   Arbitration   and


Conciliation Act, 1996 reads as under:


        "Statement of Objects and Reasons


               The law of arbitration in India is at present substantially

        contained   in   three   enactments,   namely,   The   Arbitration   Act,

        1940, The Arbitration (Protocol and Convention) Act, 1937 and

        The Foreign Awards (Recognition and Enforcement) Act, 1961.

        It is widely felt that the 1940 Act, which contains the general

        law of arbitration, has become outdated. The Law Commission

        of India, several representative bodies of trade and industry and

        experts in the field of arbitration have proposed amendments to

        this   Act   to   make   it   more   responsive   to   contemporary

        requirements.   It   is   also   recognised   that   our   economic   reforms

        may   not   become   fully   effective   if   the   law   dealing   with

        settlement   of   both   domestic   and   international   commercial

        disputes   remains   out   of   tune   with   such   reforms.   Like

        arbitration,   conciliation   is   also   getting   increasing   worldwide

        recognition   as   an  instrument  for  settlement   of   disputes.   There

        is, however, no general law on the subject in India.


        2. The United Nations Commission on International Trade Law

        (UNCITRAL) adopted in 1985 the Model Law on International

        Commercial  Arbitration. The General Assembly of the United

        Nations   has   recommended   that   all   countries   give   due

        consideration to the said Model Law, in view of the desirability

        of uniformity of the law of arbitral procedures and the specific

        needs   of   international   commercial   arbitration   practice.   The

        UNCITRAL also adopted in 1980 a set of Conciliation Rules.

        The General Assembly of the United Nations has recommended

        the use of these Rules in cases where the disputes arise in the

        context   of   international   commercial   relations   and   the   parties

        seek   amicable   settlement   of   their   disputes   by   recourse   to

        conciliation.  An   important   feature   of   the   said   UNCITRAL


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Model   Law   and   Rules   is   that   they   have   harmonised

concepts   on   arbitration   and   conciliation   of   different   legal

systems of the world and thus contain provisions which are

designed for universal application.


3. Though the UNCITRAL Model Law and Rules are intended

to   deal   with   international   commercial   arbitration   and

conciliation,   they   could,   with   appropriate   modifications,   serve

as   a   model   for   legislation   on   domestic   arbitration   and

conciliation.   The   present   Bill   seeks   to   consolidate   and   amend

the   law   relating   to   domestic   arbitration,   international

commercial arbitration, enforcement of foreign arbitral awards

and   to   define   the   law   relating   to   conciliation,   taking   into

account the said UNCITRAL Model Law and Rules.


4. The main objectives of the Bill are as under:-

(i)      to  comprehensively cover  international and commercial

         arbitration   and   conciliation   as   also   domestic   arbitration

         and conciliation;

(ii)     to make provision for an arbitral procedure which is fair,

         efficient and capable of meeting the needs of the specific

         arbitration;

(iii)    to provide that the arbitral  tribunal gives reasons for its

         arbitral award;

(iv)     to   ensure   that   the   arbitral   tribunal   remains   within   the

         limits of its jurisdiction;

(v)      to   minimise   the   supervisory   role   of   courts   in   the

         arbitral process;

(vi)     to   permit   an   arbitral   tribunal   to   use   mediation,

         conciliation   or   other   procedures   during   the   arbitral

         proceedings to encourage settlement of disputes;

(vii)    to provide that every final arbitral award is enforced

         in the same manner as if it were a decree of the court;

(viii) to   provide   that   a   settlement   agreement   reached   by   the

         parties   as   a   result   of   conciliation   proceedings   will   have

         the same status and effect as an arbitral award on agreed

         terms   on   the   substance   of   the   dispute   rendered   by   an

         arbitral tribunal; and

(ix)     to   provide   that,   for   purposes   of   enforcement   of   foreign

         awards, every arbitral award made in a country to which


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                one   of   the   two   international   Conventions   relating   to

                foreign arbitral awards to which India is a party applies,

                will be treated as a foreign award.


        5. The Bill seeks to achieve the above objects."

                                                              (emphasis supplied)


47.     The   Preamble   of   the   Arbitration   and   Conciliation   Act,   1996   is   as


follows:


                                      "PREAMBLE


                WHEREAS   the   United   Nations   Commission   on

        International   Trade   Law   (UNCITRAL)   has   adopted   the

        UNCITRAL   Model   Law   on   International   Commercial

        Arbitration in 1985;

           

                AND   WHEREAS   the   General   Assembly   of   the   United

        Nations   has   recommended   that   all   countries   give   due

        consideration to the said Model Law, in view of the desirability

        of uniformity of the law of arbitral procedures and the specific

        needs of international commercial arbitration practice;

           

                AND   WHEREAS   the   UNCITRAL   has   adopted   the

        UNCITRAL Conciliation Rules in 1980;

           

                AND   WHEREAS   the   General   Assembly   of   the   United

        Nations   has   recommended   the   use   of   the   said   Rules   in   cases

        where   a   dispute   arises   in   the   context   of   international

        commercial   relations   and   the   parties   seek   an   amicable

        settlement of that dispute by recourse to conciliation;

           

                AND  WHEREAS  the said  Model Law  and Rules  make

        significant contribution to the establishment of a unified legal

        framework  for   the   fair   and   efficient   settlement   of   disputes

        arising in international commercial relations;

           


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                AND WHEREAS it is expedient to make law respecting

        arbitration   and   conciliation,   taking   into   account   the   aforesaid

        Model Law and Rules;"


48.     The   new   Act   is   a   loosely   integrated   version   of   the   Arbitration   Act,


1940, Arbitration (Protocol and Convention) Act, 1937 and Foreign Awards


(Recognition  and Enforcement) Act, 1961. It actually  consolidates  amends


and   puts   together   three   different   enactments.   But   having   regard   to   the


difference   in   the   object   and   purpose   and   the   nature   of   these   three


enactments,   the   provisions   relating   thereto   are   kept   separately.   A   mere


glance   at   the   1996   Act   is   sufficient   to   show   that   under   its   scheme   the


provisions   relating   to   the   three   enactments   are   kept   separately   from   each


other. The 1996 Act is divided into four parts and it has three schedules at its


end.   Part   I   has   ten   chapters   that   contain   provisions   governing   domestic


arbitration and international commercial arbitration. Part II has two chapters;


Chapter I contains provisions relating to the New York Convention Awards


and   Chapter   II   contains   provisions   relating   to   the   Geneva   Convention


Awards. Part III of the Act has provisions concerning conciliation. Part IV


has   the   supplementary   provisions   such   as   the   power   of   the   High   Court   to


make   rules   (section  82),  provision  for   removal of  difficulties   (section  83),


and the power to make rules (section 84). At the end there are two repeal and


saving sections. Section 85 repeals the three enactments referred to above,


                                               35




subject to the appropriate saving clause and section 86 repeals Ordinance 27


of 1996, the precursor of the Act, subject to the appropriate saving clause.


Of the three schedules, the first is related to Part II, Chapter I, i.e., the New


York Convention Awards and the second and the third to Chapter II, i.e., the


Geneva Convention Awards.


49.     There is a certain similarity between the provisions of Chapters I and


II of Part II but Part I of the Act is vastly different from Chapters I and II of


Part II of the Act. This is quite understandable too since Part II deals only


with   enforcement   of   foreign   awards   (Chapter   I,   of   New   York   Convention


Awards and Chapter II, of Geneva Convention Awards) while Part I of the


Act deals with the whole gamut of law concerning domestic arbitration and


international   commercial   arbitration.   It   has,   therefore,   a   very   different   and


much larger framework than the two chapters in Part II of the Act.


50.     Part   I   has   ten   chapters.   Chapter   I   begins   with   definition   clauses   in


section   2   that   defines,   amongst   other   terms   and   expressions,   "arbitration",


"arbitration agreement", "arbitral award", etc. Chapter I also contains some


"General Provisions" (sections 3-6). Chapter II contains provisions relating


to   "Arbitration   Agreement"   (sections   7-9).   Chapter   III   contains   provisions


relating to "Composition of Arbitral Tribunal" (sections 10-15). Chapter IV


deals with the "Jurisdiction of Arbitral Tribunals" (sections 16-17). Chapter


                                                 36




V   lays   down   provisions   concerning   "Conduct   of   Arbitral   Proceedings"


(sections   18-27).   Chapter   VI   deals   with   "Making   of   Arbitral   Award   and


Termination   of   Proceedings"   (sections   28-33).   Chapter   VII   has   only   one


section,   i.e.,   section   34   that   provides   "Recourse   against   Arbitral   Award".


Chapter   VIII   deals   with   "Finality   and   Enforcement   of   Arbitral   Awards"


(sections   35-36).   Chapter   IX   provides   for   "Appeals"   (section   37   which   is


akin to section 39 of the 1940 Act). Chapter X contains the "Miscellaneous"


provisions (sections 38-43).


51.     It is also evident that Part I and Part II of the Act are quite separate


and contain provisions that act independently in their respective fields. The


opening words of section 2, i.e. the definition clause in Part I, make it clear


that meanings assigned to the terms and expressions defined in that section


are for the purpose of that part alone. Section 4 which deals with waiver of


right to object is also specific to Part  I of the Act. Section  5 dealing with


extent of judicial intervention is also specific to Part I of the Act. Section 7


that defines "arbitration agreement" in considerable detail also confines the


meaning   of   the   term   to   Part   I   of   the   Act   alone.   Section   8   deals   with   the


power of a judicial authority to refer parties to arbitration where there is an


arbitration   agreement   and   this   provision   too   is   relatable   to   Part   I   alone


(corresponding provisions are independently made in sections 45 and 54 of


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Chapter I and II, respectively of Part II). The other provisions in Part I by


their very nature shall have no application insofar as the two chapters of Part


II are concerned.


52.     Once it is seen that Part I and Part II of the Act are quite different in


their object and purpose and the respective schemes, it naturally follows that


section   37   in   Part   I   (analogous   to   section   39   of   the   1940   Act)   is   not


comparable to section 50 in Part II of the Act. This is not because, as Mr.


Sundaram contends  section 37 has  the words in parentheses  "and from no


others" which are not to be found in section 50 of the Act. Section 37 and


section 50 are not comparable because they belong to two different statutory


schemes.   Section   37   containing   the   provision   of   appeal   is   part   of   a   much


larger framework that, as seen above, has provisions for the complete range


of   law   concerning   domestic   arbitration   and   international   commercial


arbitration. Section 50 on the other hand contains the provision of appeal in


a   much   limited   framework,   concerned   only   with   the   enforcement   of   New


York   Convention   awards.   In   one   sense,   the   two   sections,   though   each


containing the appellate provision belong to different statutes.


53.     Having   come   to   this   conclusion,   it   would   appear   that   the   decisions


rendered by the Court on the interplay between section 39 of the 1940 Act


and   the   Letters   Patent   jurisdiction   of   the   High   Court   shall   have   no


                                                  38




    application   for   deciding   the   question   in   hand.   But   that   would   be   only   a


    superficial view and the decisions rendered under section 39 of the 1940 Act


    may still give the answer to the question under consideration for a very basic


    and fundamental reason.


    54.      However, before going into that it will be useful to take another look


    at the provisions of Chapter I of Part II of the Act. We have so far seen the


    provisions of Chapter I of Part II of the Act in comparison with those of Part


    I of the 1996 Act. It would also be relevant to examine it in comparison with


    the   provisions   of   its   precursor,   the   Foreign   Awards,   Recognition   and


    Enforcement  Act, 1961 and to see how far the earlier Act is consolidated,


    amended and harmonised and designed for universal application.


    55.      The provisions of Chapter I of Part II of the 1996 Act along with the


    provisions of the Foreign Awards, Recognition and Enforcement Act, 1961,


    insofar as relevant for the present are placed below in a tabular form:





                                                                         PART II

                                                        ENFORCEMENT OF CERTAIN

      THE FOREIGN AWARDS                                       FOREIGN AWARDS

            (RECOGNITION AND

     ENFORCEMENT) ACT, 1961                                           CHAPTER I

                                                          NEW YORK CONVENTION

                                                                       AWARDS


2.   Definition.--In   this   Act,   unless   the  44.   Definition.--In   this   Chapter,   unless

context   otherwise   requires,   "foreign  the   context   otherwise   requires,   "foreign


                                                           39




award"   means   an   award   on   differences  award"   means   an   arbitral   award   on

between   persons   arising   out   of   legal  differences   between   persons   arising   out

relationships, whether contractual or not,  of                            legal         relationships,         whether

considered as commercial under the law  contractual   or   not,   considered   as

in   force   in   India,   made   on   or   after   the  commercial   under   the   law   in   force   in

11th day of October, 1960 -                                     India,   made   on   or   after   the   11th   day   of

     (a) in   pursuance   of   an   agreement   in  October, 1960 -

          writing   for   arbitration   to   which  

          the   Convention   set   forth   in   the                (a) in   pursuance   of   an   agreement   in

          Schedule applies, and                                           writing for arbitration to which the

     (b) in   one   of   such   territories   as   the                    Convention   set   forth   in   the   First

          Central                Government           being               Schedule applies, and

          satisfied                that         reciprocal         (b) in   one   of   such   territories   as   the

          provisions have been made, may,                                 Central            Government,            being

          by   notification   in   the   Official                         satisfied that reciprocal provisions

          Gazette,   declare   to   be   territories                      have   been   made   may,   by

          to   which   the   said   Convention                            notification in the Official Gazette,

          applies.                                                        declare   to   be   territories   to   which

                                                                          the said Convention applies.

3.   Stay   of   proceedings   in   respect   of  

matters   to   be   referred   to   arbitration.--

Notwithstanding   anything   contained   in

the   Arbitration   Act,   1940   (10   of   1940),

or in the Code of Civil Procedure, 1908

(5 of 1908), if any party to an agreement

to which Article II of the Convention set  45.   Power   of   judicial   authority   to   refer

forth   in   the   Schedule   applies,   or   any  parties to arbitration.--

person   claiming   through   or   under   him  Notwithstanding   anything   contained   in

commences any legal proceedings in any  Part I or in the Code of Civil Procedure,

court   against   any   other   party   to   the  1908   (5   of   1908),   a   judicial   authority,

agreement   or   any   person   claiming  when   seized   of   an   action   in   a   matter   in

through   or   under   him   in   respect   of   any  respect   of   which   the   parties   have   made

matter agreed to be referred to arbitration  an   agreement   referred   to   in   section   44,

in   such   agreement,   any   party   to   such  shall, at the request of one of the parties

legal proceedings may, at any time after  or any person claiming through or under

appearance   and   before   filing   a   written  him,   refer   the   parties   to   arbitration,

statement or taking any other step in the  unless it finds that the said agreement is

proceedings,   apply   to   the   court   to   stay  null and void, inoperative or incapable of

the   proceedings   and   the   court,   unless  bring performed.

satisfied   that   the   agreement   is   null   and


                                                  40




void,   inoperative   or   incapable   of   being  46.   When   foreign   award   binding.--Any

performed   or   that   there   is   not,   in   fact,  foreign   award   which   would   be

any   dispute   between   the   parties   with  enforceable   under   this   Chapter   shall   be

regard   to   the   matter   agreed   to   be  treated as binding for all purposes on the

referred, shall make an order staying the  persons   as   between   whom   it   was   made,

proceedings.                                        and may accordingly be relied on by any

                                                    of those  persons  by  way  of defence,  set

4.   Effect   of   foreign   awards.--(1)   A  off or otherwise in any legal proceedings

foreign   award   shall,   subject   to   the  in   India   and   any   references   in   this

provisions of this Act, be enforceable in  Chapter   to   enforcing   a   foreign   award

India   as   if   it   were   an   award   made   on   a  shall   be   construed   as   including

matter referred to arbitration in India.            references to relying on an award.

 (2) Any foreign award which would be  

enforceable   under   this   Act   shall   be  47.   Evidence.--(1)   The   party   applying

treated as binding for all purposes on the  for   the   enforcement   of   a   foreign   award

persons   as   between   whom  it   was  made,  shall,   at   the   time   of   the   application,

and may accordingly be relied on by any  produce before the court -

of those persons by way of defence, set  

off or otherwise in any legal proceedings                (a) the   original   award   or   a   copy

in India and any references in this Act to                   thereof,   duly   authenticated   in   the

enforcing   a   foreign   award   shall   be                 manner required by the law of the

construed   as   including   references   to                 country in which it was made;

relying on an award.                                     (b) the   original   agreement   for

                                                             arbitration or a duly certified copy

5. Filing of foreign award in court.--(1)                     thereof; and

Any person interested in a foreign award                 (c) such evidence as may be necessary

may   apply   to   any   court   having                      to prove that the award is a foreign

jurisdiction over the subject-matter of the                  award.

award that the award be filed in court.            

 (2) The  application  shall  be in writing              (2)   If   the   award   or   agreement   to   be

and shall be numbered and registered as  produced   under   sub-section   (1)   is   in   a

a   suit   between   the   applicant   as   plaintiff  foreign   language,   the   party   seeking   to

and the other parties as defendants.                enforce   the   award   shall   produce   a

 (3)   The   court   shall   direct   notice   to   be  translation   into   English   certified   as

given   to   the   parties   to   the   arbitration,  correct by a diplomatic or consular agent

other   than   the   applicant,   requiring   them  of   the   country   to   which   that   party

to   show   cause,   within   a   time   specified  belongs   or   certified   as   correct   in   such

why the award should not be filed.                  other   manner   as   may   be   sufficient

                                                    according to the law in force in India.

6.   Enforcement   of   foreign   award.--(1)         Explanation.--In this section and all


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Where   the   court   is   satisfied   that   the  the   following   sections   of   this   Chapter,

foreign   award   is   enforceable   under   this  "Court"   means   the   principal   Civil   Court

Act, the court shall order the award to be  of   original   jurisdiction   in   a   district,   and

filed   and   shall   proceed   to   pronounce  includes the High Court in exercise of its

judgment according to the award.                                         ordinary   original   civil   jurisdiction,

 (2) Upon the judgment so pronounced a  having   jurisdiction   over   the   subject-

decree  shall follow,  and no appeal shall  matter of the award if the same had been

lie from such  decree except in so far as  the subject-matter of a suit, but does not

the   decree   is   in   excess   of   or   not   in  include any civil court of a grade inferior

accordance with the award.                                               to   such   principal   Civil   Court,   or   any

                                                                         Court of Small Causes.

7. Conditions for enforcement of foreign  

awards.--  (1) A foreign award may  not  48.   Conditions   for   enforcement   of

be enforced under this Act-                                              foreign   awards.--(1)   Enforcement   of   a

   (a) if   the   party   against   whom   it   is  foreign   award   may   be   refused,   at   the

        sought   to   enforce   the   award  request   of   the   party   against   whom   it   is

        proves   to   the   court   dealing   with  invoked,   only   if   that   party   furnishes   to

        the case that-                                                   the court proof  that -

     (i)      the   parties   to   the   agreement  

              were under the law applicable                                 (a) the   parties   to   the   agreement

              to   them,   under   some                                         referred   to   in   section   44   were,

              incapacity,   or   the   said                                     under   the   law   applicable   to   them,

              agreement   is   not   valid   under                              under   some   incapacity   or   the   said

              the   law   to   which   the   parties                            agreement   is   not   valid   under   the

              have   subjected   it,   or   failing                             law   to   which   the   parties   have

              any indication  thereon,  under                                   subjected   it   or,   failing   any

              the law of the country where                                      indication   thereon,   under   the   law

              the award was made; or                                            of   the   country   where   the   award

     (ii)     the   party   was   not   given                                   was made; or

              proper           notice                 of         the        (b) the party against whom the award

              appointment   of   the   arbitrator                               is   invoked   was   not   given   proper

              or         of         the              arbitration                notice   of   the   appointment   of   the

              proceedings or was otherwise                                      arbitrator   or   of   the   arbitral

              unable to present his case; or                                    proceedings   or   was   otherwise

     (iii)    the   award   deals   with                                        unable to present his case; or

              questions   not   referred   or                               (c) the   award   deals   with   a   difference

              contains decisions on matters                                     not contemplated by or not falling

              beyond   the   scope   of   the                                   within the terms of the submission

              agreement:   Provided   that   if                                 to   arbitration,   or   it   contains

              the   decisions   on   matters                                    decisions   on   matters   beyond   the


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             submitted   to   arbitration   can                                scope   of   the   submission   to

             be   separated   from   those   not                               arbitration:

             submitted,   that   part   of   the                                      Provided   that,   if   the   decisions

             award           which                     contains                on   matter   submitted   to   arbitration

             decisions                 on              matters                 can be separated from those not so

             submitted   to   arbitration   may                                submitted,   that   part   of   the   award

             be enforced; or                                                   which   contains   decisions   on

     (iv)    the   composition   of   the                                      matters   submitted   to   arbitration

             arbitral   authority   or   the                                   may be enforced; or

             arbitral   procedure   was   not   in                         (d) the   composition   of   the   arbitral

             accordance                 with                  the              authority   or   the   arbitral   procedure

             agreement   of   the   parties   or                               was   not   in   accordance   with   the

             failing   such   agreement,   was                                 agreement of the parties, or, failing

             not   in   accordance   with   the                                such   agreement,   was   not   in

             law of the country where the                                      accordance   with   the   law   of   the

             arbitration took place; or                                        country where the arbitration took

     (v)     the award has not yet become                                      place; or

             binding   on   the   parties   or   has                       (e) the   award   has   not   yet   become

             been   set   aside   or   suspended                               binding on the parties, or has been

             by   a   competent   authority   of                               set   aside   or   suspended   by   a

             the   country   in   which,   or                                  competent authority of the country

             under   the   law   of   which,   that                            in   which,   or   under   the   law   of

             award was made; or                                                which, that award was made.

                                                                     

   (b) if  the court   dealing with  the case      (2)   Enforcement   of   an   arbitral   award

       is satisfied that-                                             may   also   be   refused   if   the   Court   finds

     (i)     the   subject-matter   of   the  that -

             difference   is   not   capable   of                          (a) the          subject-matter         of         the

             settlement   by   arbitration                                     difference   is   not   capable   of

             under the law of India; or                                        settlement by arbitration under the

     (ii)    the enforcement of the award                                      law of India; or

             will   be   contrary   to   public                            (b) the   enforcement   of   the   award

             policy.                                                           would   be   contrary   to   the   public

                                                                               policy of India.

 (2) If the court before which a foreign  

award   is   sought   to   be   relied   upon   is             Explanation.--Without prejudice to

satisfied   that   an   application   for   the  the   generality   of   clause   (b)   of   this

setting aside or suspension of the award  section,   it   is   hereby   declared,   for   the

has been made  to a competent authority  avoidance of any doubt, that an award is

referred to in sub-clause (v) of clause (a)  in conflict with the public policy of India


                                                  43




of   sub-section   (1),   the   court   may,   if   it  if the making of the award was induced

deems   proper,   adjourn   the   decision   on  or affected by fraud or corruption.

the   enforcement   of   the   award   and   may  

also,   on   the   application   of   the   party    (3) If an application for the setting aside

claiming   enforcement   of   the   award,  or   suspension   of   the   award   has   been

order   the   other   party   to   furnish   suitable  made to a competent authority referred to

security.                                            in clause (e) of sub-section (1) the Court

                                                     may, if it considers it proper, adjourn the

8. Evidence.--(1) The party applying for  decision on the enforcement of the award

the enforcement of a foreign award shall,  and   may   also,   on   the   application   of   the

at the time of the application, produce-             party claiming enforcement of the award,

   (a) the   original   award   or   a   copy  order   the   other   party   to   give   suitable

        thereof,   duly   authenticated   in   the  security.

        manner required by the law of the  

        country in which it was made;                49.   Enforcement   of   foreign   awards.--

   (b) the   original   agreement   for  Where   the   Court   is   satisfied   that   the

        arbitration or a duly certified copy  foreign   award   is   enforceable   under   this

        thereof; and                                 Chapter, the award shall be deemed to be

   (c) such   evidence   as   may   be  a decree of that Court.

        necessary to prove that the award  

        is a foreign award.                          50.   Appealable   orders.--(1)   An   appeal

 (2) If the award or agreement requiring  shall lie from the order refusing to -

to   be   produced   under   sub-section   (1)   is  

in a foreign  language, the party  seeking                (a) refer the parties to arbitration under

to   enforce   the   award   shall   produce   a             section 45;

translation   into   English   certified   as             (b) enforce   a   foreign   award   under

correct by a diplomatic or consular agent                    section 48,

of   the   country   to   which   that   party    to   the   court   authorised   by   law   to   hear

belongs   or   certified   as   correct   in   such  appeals from such order.

other   manner   as   may   be   sufficient  

according to the law in force in India.                 (2) No second appeal shall lie from an

                                                     order passed in appeal under this section,

9. Saving.--Nothing in this Act shall-                but nothing in this section shall affect or

   (a) prejudice   any   rights   which   any  take   away   any   right   to   appeal   to   the

        person   would   have   had   of  Supreme Court.

        enforcing in India of any award or  

        of availing himself in India of any  51.   Saving.--Nothing   in   this   Chapter

        award   if   this   Act   had   not   been  shall   prejudice   any   rights   which   any

        passed; or                                   person   would   have   had   of   enforcing   in

   (b) apply   to   any   award   made   on   an  India of any award or of availing himself


                                                  44




        arbitration   agreement   governed  in India of any award if this Chapter had

        by the law of India.                           not been enacted.


10.   Repeal.--The   Arbitration   (Protocol  52. Chapter II not to apply.--Chapter II

and Convention) Act, 1937 (6 of 1937),  of this Part shall not apply in relation to

shall   cease   to   have   effect   in   relation   to  foreign awards to which this Chapter

foreign awards to which this Act applies.              applies.


11.   Rule   making   power   of   the   High

Court.--The High Court may make rules

consistent with this Act as to-

   (a) the   filing   of   foreign   awards   and

        all         proceedings         consequent

        thereon or incidental thereto;

   (b) the   evidence   which   must   be

        furnished   by   a   party   seeking   to

        enforce a foreign award under this

        Act; and

   (c) generally, all proceedings in court

        under this Act.





    56.        A comparison of the two sets of provisions would show that section


    44,   the   definition   clause   in   the   1996   Act   is   a   verbatim   reproduction   of


    section 2 of the previous Act (but for the words "chapter" in place of "Act",


    "first   schedule"   in   place   of   "schedule"   and   the   addition   of   the   word


    "arbitral" before the word "award" in section 44). Section 45 corresponds to


    section   3   of   the   previous   Act.   Section   46   is   a   verbatim   reproduction   of


    section   4(2)   except   for   the   substitution   of   the   word   "chapter"   for   "Act".


    Section 47 is almost a reproduction of section 8 except for the addition of


    the words "before the court" "in sub-section (1)" and an explanation as to


                                                 45




what is meant by "court" in that section. Section 48 corresponds to section 7;


section 49 to section 6(1) and section 50 to section 6(2). Apart from the fact


that   the   provisions   are   arranged   in   a   far   more   orderly   manner,   it   is   to   be


noticed that the provisions of the 1996 Act are clearly aimed at facilitating


and   expediting   the   enforcement   of   the   New   York   Convention   Awards.


Section 3 of the 1961 Act dealing with a stay of proceedings in respect of


matters to be referred to arbitration was confined in its application to "legal


proceedings in any court" and the court had a wider discretion not to stay the


proceedings   before   it.   The   corresponding   provision   in   section   45   of   the


present   Act   has   a   wider   application   and   it   covers   an   action   before   any


judicial   authority.   Further,   under   section   45   the   judicial   authority   has   a


narrower discretion to refuse to refer the parties to arbitration. Under section


4(1) of the 1961 Act, a foreign award for its enforcement was first deemed to


be an award made on a matter referred to arbitration in India. Section 46 of


the present Act dispenses with the provision of sub-section (1) of section 4


and resultantly a foreign award is enforceable in its own right. Section 47 is


almost   a   reproduction   of   section   8   except   for   the   addition   of   the   words


"before the court" in sub-section (1) and an explanation as to what is meant


by "court" at the end of the section. Section 49 corresponds to section 6(1)


and section 50 to section 6(2). It is however, a comparison of section 6 of the


                                                46




1961 Act with section 49 of the present Act that would be of interest to us


and that provides a direct answer to the question under consideration. As the


comparison of the two sections is of some importance, the two sections are


once again reproduced here:


        The Foreign Awards (Recognition and Enforcement) Act, 1961


         "6.   Enforcement   of   foreign   award.--(1)   Where   the   court   is

         satisfied   that   the   foreign   award   is   enforceable   under   this   Act,

         the court shall order the award to be filed and shall proceed to

         pronounce judgment according to the award.

           (2) Upon the judgment so pronounced a decree shall follow,

         and no appeal shall lie from such decree except in so far as the

         decree is in excess of or not in accordance with the award."


                      The Arbitration and Conciliation Act, 1996


         "49.   Enforcement   of   foreign   awards.--Where   the   Court   is

         satisfied   that   the   foreign   award   is   enforceable   under   this

         Chapter,   the   award   shall   be   deemed   to   be   a   decree   of   that

         Court."




57.      Under section 6 of the 1961 Act, the Court on being satisfied that the


foreign award was enforceable under the Act, would first order the award to


be   filed   and   then  proceed   to   pronounce   judgment   according   to   the


award. The judgment would lead to a decree against which no appeal would


lie  except   insofar   as   the   decree   was   in   excess   of   or   not   in   accordance


with the award.


                                                47




58.     Section 49 of the present Act makes a radical change in that where the


court is satisfied that the foreign award is enforceable, the award itself would


be deemed to be a decree of the Court. It, thus, not only omits the procedural


formality for the court to pronounce judgment and a decree to follow on that


basis  but also completely removes the possibility of the decree being in


excess of, or not in accordance with the award. Thus, even the limited


basis on which an appeal would lie under sub-section (2) of section 6 of


the   1961   Act,   is  taken   away.   There   is,   thus,   no   scope   left   for   an   appeal


against an order of the court for the enforcement of a foreign award. It is for


this reason that section 50(1)(b) provides for an appeal only against an order


refusing to enforce a foreign award under section 48.


59.     There can be no doubt that under section 6, except on the very limited


ground,   no   appeal   including   a   Letters   Patent   Appeal   was   maintainable


against the judgment and decree passed by the Court under section 6(1). It


would   be   futile,   therefore,   to   contend   that   though   the   present   Act   even


removes the limited basis on which the appeal was earlier maintainable, yet


a Letters  Patent  Appeal  would lie  notwithstanding  the limitations  imposed


by section 50 of the Act. The scheme of sections 49 and 50 of the 1996 Act


is devised specially to exclude even the limited ground on which an appeal


was earlier provided for under section 6 of the 1961 Act. The exclusion of


                                                48




appeal   by   section   50  is,   thus,   to   be  understood   in  light   of  the  amendment


introduced in the previous law by section 49 of the Act.


60.       There is another way to look at the matter. It will be illuminating to


see   how   the   courts   viewed   the   Arbitration   Act,   1940   shortly   after   it   was


enacted and even while the previous law, the Arbitration Act, 1899 coupled


with   the   Schedule   2   of  the   Code   of   Civil   Procedure   was   still   fresh   in   the


courts' mind. In Gauri Singh v. Ramlochan Singh, AIR (35) 1948 Patna 430,


the plaintiff had filed a suit for an order for filing an arbitration award and


preparing a decree of the court on that basis. The award was in writing and it


was   also   registered   on   the   admission   of   the   arbitrators   but   the   award   was


made not on the basis of any arbitration agreement in writing but on an oral


reference. Before the division bench of the Patna High Court, the question


arose   regarding   the   maintainability   of   the   suit.   Agarwala,   C.J.   in   a   brief


order held that Chapter II of the Act would only apply when the agreement


was in writing. In other words, the existence of an "arbitration agreement"


i.e. an agreement in writing, was the foundation of the court's jurisdiction to


direct the arbitrators, under section 14(2), to cause the award to be filed in


court. But Meredith, J. examined the matter in greater detail. He considered


the question, whether the Act of 1940 was exhaustive or whether it related


only to awards following arbitration agreements within the meaning of the


                                                 49




Act.   The   case   of   the   plaintiff   was   that   there   was   an   oral   reference   to


arbitration. Such an oral reference was perfectly valid and so was the award


upon it. But it did not come within the scope of the Act. The award could,


therefore, be enforced by an ordinary suit under the Code of Civil Procedure.


Rejecting   the   submission,   in   paragraphs   20,   21   and   22   of   the   judgment,


Meredith, J. observed as follows:


        "20.   .....   It   may   be   regarded   as   settled   that,   so   far   as   Sch.2,

        Civil P.C., and the Arbitration Act of 1899 were concerned, an

        award based upon an oral submission or reference to arbitration

        was   not   touched,   but   was   perfectly   legal   and   valid,   and   the

        award   could   be   enforced   by   suit,   though   not   by   the   special

        procedure   under   the   provisions   of   the   Civil   P.C.,   or   the   1899

        Act.   That   Act   was   regarded   as   not   exhaustive   even   in   the

        limited areas where it was applicable.  .....


        21.   This   view   was   also   taken   by   the   Madras   High   Court   in

        Ponnamma v. Marappudi Kotamma [19 A.I.R. 1932 Mad. 745],

        and   also   in   our   own   High   Court   in  Ramautar   Sah  v.  Langat

        Singh, A.I.R. 1931 Pat. 92. The view there taken was that there

        is   nothing   in   law   which   requires   a   submission   of   the   dispute

        between   the   parties   to   arbitration   to   be   in   writing.   A   parole

        submission is a legal submission to arbitration.


        22.   Has   the   position   been   altered   by   the   Act   of   1940?   In   my

        opinion  it  has.  The  Act  of 1899  was  described  as  "An  Act to

        amend  the   law  relating   to   arbitration",   but  the   Act  of  1940   is

        headed as "An Act to consolidate and amend the law relating to

        arbitration", and the preamble says "whereas it is expedient to

        consolidate and amend the law relating to arbitration in British

        India".   It   is   an   Act   to   consolidate   the   arbitration   law.   This

        suggests that it is intended to be comprehensive and exhaustive.

        ......"


                                                  50




61.     Making   reference   to   sections   47,   26   and   30   of   the   1940   Act,   in


paragraph 26 of the judgment, His Lordship concluded as follows:


        "26.   I   think   I   am   justified   in   holding,   in   view   of   these

        provisions,   that   the   Act   was   intended   to   be   exhaustive   of   the

        law and procedure relating to arbitration. I cannot imagine that

        the words "arbitrations" and "awards" could have been used in

        such specific provisions without more, specially having regard

        to the definition of award, if it was intended to leave it open to

        the   parties   to   an   award   based   upon   an   oral   submission   to

        proceed to enforce it or set it aside by proceedings by way of

        suit altogether outside the Act. Let us take it then that the Act

        intended that there should be no such proceedings."


62.     In paragraph 33, he further said:


        "If  then, as I have held, the Act  is intended to be exhaustive,

        and   contains   no   provisions   for   the   enforcement   of   an   award

        based upon an oral submission, the only possible conclusion is

        that the Legislature intended that such an award should not be

        enforceable at all, and that no such suit should lie."


63.     In  Belli   Gowder  v.  Joghi   Gowder,   AIR   (38)   1951   Madras   683,


Viswanatha Sastri, J. took the same view on a case very similar in facts to


the   case   in   the   Patna   decision.   In   paragraph   2   of   the   judgment,   Sastri,   J.


observed as follows:


        "2. The first point argued by the applt's learned advocate is that

        the   suit   is   one   to   enforce   an   award   given   on   oral   reference   or

        submission to arbitration and is not maintainable by reason of the

        provisions of the Arbitration Act, 1940. It is common ground that

        there   was   no   written   submission   to   the   panchayatdars.   Prior   to

        the enactment of the Arbitration Act of 1940 it had been held by

        this and other H. Cts that there was nothing in the Arbitration Act

        of   1899   or   in   Sec.   89   and   schedule   2   of   the   C.   P.   C.   of   1908

        rendering   an   oral   agreement   to   refer   to   arbitration   invalid.   A


                                              51




        parole submission was held to be a legal submission to arbitration

        and  an   award  passed  on  an  oral   reference  was  held  to  be  valid

        and   enforceable   by   a   suit   though   not   by   the   special   procedure

        prescribed by Sch 2, C. P. C. or the Arbitration Act of 1899....

        .... The question whether it was intended merely to make awards

        on   oral   submissions   unenforceable   under   the   procedure   of   the

        Arbitration   Act   or   to   make   them   invalid   and   unenforceable

        altogether, would depend to a large extent on whether the Act is

        exhaustive of the law of arbitration. I am inclined to think that it

        is. I therefore hold that an award passed on oral submission can

        neither be filed and made a rule of Ct under the Act, nor enforced

        apart   from   the   Act.   The   same   opinion   has   been   expressed   in

        'Gauri Singh v. Ramlochan Singh', AIR (35) 1948 Pat 430: (29

        PLT 105)."




64.     In  Narbadabai and Ors.  v.  Natverlal Chunilal Bhalakia & Anr., AIR


1953 Bombay 386, a division bench of the Bombay High Court went a step


further and held that an arbitration award could only be enforced in terms of


section 17 of the Arbitration Act and a suit filed for enforcement of an award


was not maintainable. Chagla, C.J. speaking for the court, in paragraph 5 of


the judgment, held and observed as follows:


        "5.  Whatever the law on the subject may have been prior to the

        Indian Arbitration Act 10 of 1940, it is clear that when this Act

        was   passed,   it   provided   a   self-contained   law   with   regard   to

        arbitration. The Act was both a consolidating and amending law.

        The   main   object   of   the   Act   was   to   expedite   and   simplify

        arbitration proceedings and to obtain finality; and in our opinion

        when we look at the various provisions of the Arbitration Act, it

        is clear that no suit can be maintained to enforce an award made

        by arbitrators and an award can be enforced only by the manner

        and according to the procedure laid down in the Arbitration Act

        itself.   Section   14   deals   with   signing   and   filing   of   the   award.

        Section 15 deals with the power of the Court to modify the award


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        in   cases   set   out   in   that   section   and   Section   16   deals   with   the

        power of the Court to remit the award. Then we come to S.17 and

        that provides that

                "Where the Court sees no cause to remit the award or any

                of the matters referred to arbitration for reconsideration or

                to   set   aside   the   award   the   Court   shall,   after   the   time   for

                making an application to set aside the award has expired,

                or   such   application   having   been   made,   after   refusing   it,

                proceed   to   pronounce   judgment   according   to   the   award,

                and   upon   the   judgment   so   pronounced   a   decree   shall

                follow, and no appeal shall lie from such decree except on

                the   ground   that   it   is   in   excess   of,   or   not   otherwise   in

                accordance with the award."


        Therefore, Section 17 lays down the procedure by which a decree

        can   be   obtained   on   an   award.   The   Act   gives   the   right   to   the

        parties  to challenge  the award by applying for setting  aside the

        award after the award is filed under Section 14, but if that right is

        not availed of or if the application is dismissed and the Court has

        not   remitted   the   award,   then   the   Court   has   to   pronounce

        judgment   according   to   the   award,   and   upon   the   judgment   so

        pronounced a decree has to follow. Mr. Desai does not dispute, as

        indeed   he   cannot,   that   when   the   award   was   published   by   the

        arbitrators,   he   could   have   followed   the   procedure   laid   down   in

        the   Arbitration   Act   and   could  have   applied   for   judgment  under

        Section   17.   But   Mr.   Desai   contends   that   Section   17   does   not

        preclude   a   party   from   filing   a   suit   to   enforce   the   award.   Mr.

        Desai   says   that   Section   17   gives   a   party   a  summary   remedy   to

        obtain judgment upon the award but that summary remedy does

        not bar a suit. ..."


65.     He, then, considered sections 31 and 32 of the Act and came to hold


as follows:


        "6....   Mr.   Desai   is   undoubtedly   right   that   before   the   Act   of

        1940 the view was taken that an award did not lose its efficacy

        merely because it was not filed and no action was taken on it by

        proceedings   under   the   arbitration   law.   But   the   question   is

        whether   that   view   is   possible   after   the   Arbitration   Act   came


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        into   force   and   the   Legislature   enacted   S.32.   Therefore,   with

        respect,   we   agree   with   the   view   taken   by   the   Madras   High

        Court   in   -'Moolchand   v.   Rashid   Jamshed   Sons   &   Co.',   [('46)

        AIR   1946   Mad.   346]   and   the   view   taken   by   the   Patna   High

        Court   in--   'Ramchander   Singh   v.   Munshi   Mian   [('42)   AIR

        1942 Bom 101]., & the view taken by the Punjab High Court in

        - 'Radha Kishen v. Ganga Ram [('51) AIR 1951 Punj 121].

       

        7. The result, therefore, is that the plaintiff cannot maintain this

        action to enforce the award.   ..... Therefore, if we are right in

        the view we take as to the interpretation of Section 32, then it is

        clear that Shah J. with respect, had no jurisdiction to try a suit

        which in substance and in effect was a suit to enforce an award.

        The result, therefore, is that the suit must fail on the preliminary

        ground  that  the  suit  is   not  maintainable,   the  suit  being  one   to

        enforce   an   award   duly   given   by   arbitrators   appointed   by   the

        parties and also because the award deals with the very disputes

        which are the subject-matter of the suit. ...."




66.     In  S.N.   Srikantia   &   Co.  v.  Union   of   India   and   Anr.,   AIR   1967


Bombay 347, the question that arose for consideration was whether a court


has the power to grant interest on the principal sum adjudged by an award


from the date of the award till payment. The plaintiff in the case claimed that


the court should award interest in the principal sum adjudged by the award at


a   certain   rate   from   the   date   of   the   award   till   the   date   of   the   decree,   and


further interest on the said principal sum at another rate from the date of the


decree till payment. The plaintiff's claim was resisted on the plea that under


section   29   of   the   1940   Act,   interest   on   the   principal   sum   adjudged   by   an


award could not be granted from the date of the award till the passing of the


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decree. It was contended on behalf of the plaintiff that section 29 was merely


an   enabling   provision   but   that   cannot   stand   in   the   way   of   the   court   in


awarding  interest for the prior period, namely, from the date of the award


onwards till the passing of the decree. Tulzapurkar, J., (as his Lordship then


was)   referred   to   the   earlier   decisions   of   the   Bombay   High   Court   in


Narbadabai  and relying  upon the  decisions  of Patna  High Court  in  Gauri


Singh and Madras High Court in Belli Gowder held an observed as follows:


        "I   may   mention   that   a   contention   was   raised   in   that   case   that

        though Section 17 of the Act laid down the procedure by which

        a   decree   could   be   obtained   on   an   award   that   Section   gave   a

        summary remedy to a party to an award for a judgment upon an

        award,   but   that   such   summary   remedy   did   not   bar   a   suit   to

        enforce an award. This contention was negatived by this Court

        and it was held that for enforcing an award the procedure laid

        down in the Act itself could alone be availed of by a party to

        the   award.   It   is   no   doubt   true   that   Section   32   of  the   Act   was

        referred   to,   which   expressly   barred   suits   "for   a   decision   upon

        the   existence,   effect   or   validity   of   an   award"   and   it   was   held

        that the expression "effect of the award" was wide enough, to

        cover a suit to enforce an award. At the same time this Court

        did take the view that since the Act was a self-contained Code

        with regard to arbitration  and was exhaustive, an award could

        be enforced only by the manner and according to the procedure

        laid down in section 17 of the Act. In my view, these decisions

        and particularly, the decisions of the Patna High Court and the

        Madras High Court clearly indicate the corollary which follows

        upon   an   Act   being   regarded   as   exhaustive   viz..   that   it   carries

        with it a negative import that only such acts as are mentioned in

        the   Act   are   permissible   to   be   done   and   acts   or   things   not

        mentioned therein are not permissible to be done. In my view,

        Section 29 of the Act also is exhaustive of the whole law upon

        the   subject   of   "interest   on   awards"   and   since   the   said   section

        enables   the   court   to   award   interest   on   the   principal   sum


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        adjudged by an award from the date of the decree onwards, it

        must   be   held   that   it   carries   with   it   the   negative   import   that   it

        shall   not   be   permissible   to   the   Court   to   award   interest   on   the

        principal sum adjudged by an award for any period prior to the

        date of the passing of the decree."




67.     We have so far seen the decisions of the High Courts holding that a


suit for enforcement of an arbitration award made on an oral reference was


not maintainable, an arbitral award could only be enforced in terms section


17 of the Arbitration Act and a suit for the enforcement of an arbitral award


was   not   maintainable,   and   third,   that   no   interest   could   be   awarded   on   the


amount  adjudged   in   the   award  beyond   the  provisions   of  section   29   of  the


Arbitration Act.


68.     We now come back to the decision of this Court in Mohindra Supply


Co.  in   which   the   issue   was   about   the   maintainability   of   an   appeal,


particularly, a letters patent appeal. It is seen above that, in Mohindra Supply


Co.  the court held that a letters patent appeal was not maintainable in view


of section (2) of section 39 of the 1940 Act. To that extent, the decision may


not   have   any   bearing   on   the   present   controversy.   But,   in   that   decision


observations of great significance were made in regard to the nature of the


1940 Act. It was observed (SCR page 500):


          "The   proceedings   relating   to   arbitration   are,   since   the

        enactment of the Indian Arbitration Act X of 1940, governed by

        the   provisions   of   that   Act.   The   Act   is   a   consolidating   and


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        amending   statute.   It   repealed   the   Arbitration   Act   of   1899,

        Schedule 2 of the Code of Civil Procedure and also cls. (a) to

        (f) of s. 104(1) of the Code of Civil Procedure which provided

        for appeals from orders in arbitration proceedings. The Act set

        up machinery for all contractual arbitrations and its provisions,

        subject   to   certain   exceptions,   apply   also   to   every   arbitration

        under any other enactment for the time being in force, as if the

        arbitration were pursuant to an arbitration agreement and as if

        that, other enactment were an arbitration agreement, except in

        so   far   as   the   Arbitration   Act   is   inconsistent   with   that   other

        enactment or with any rules made thereunder. .... ..."


69.     It was further observed and held (SCR page 506):


        "But it was urged that the interpretation  of s.39 should not be

        divorced from the setting of legislative history, and if regard be

        had   to   the   legislative   history   and   the   dictum   of   the   Privy

        Council   in  Hurrish   Chunder   Chowdry  v.  Kali   Sundari   Debia

        [(1882) L.R.10 I.A. 4, 17] which has been universally followed,

        in considering the extent of the right of appeal under the Letters

        Patent, the Court would not be justified in restricting the right

        of   appeal   which   was   exercisable   till   1940   by   litigants   against

        decisions of single Judges of High Courts in arbitration matters

        from   orders   passed   in   appeals.   In   considering   the   argument

        whether   the   right   of   appeal   which   was   previously   exercisable

        by   litigants   against   decisions   of   single   Judges   of   the   High

        Courts in appeals from orders passed in arbitration proceedings

        was   intended   to   be   taken   away   by   s. 39(2) of   the   Indian

        Arbitration Act, the Court must proceed to interpret the words

        of the statute without any predisposition towards the state of the

        law   before   the   Arbitration   Act   was  enacted.  The   Arbitration

        Act of 1940 is a consolidating and amending statute and is

        for all purposes a code relating to arbitration....."


70.     And (SCR pages 512-513):


        "Prior to 1940 the law relating to contractual arbitration (except

        in  so  far  as  it was dealt  with by  the Arbitration  Act  of  1899)

        was contained in the Code of Civil Procedure and certain orders

        passed by courts in the course of arbitration proceedings were


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made appealable under the Code of 1877 by s. 588 and in the

Code of 1908 by s.104. In 1940, the legislature enacted Act X

of 1940, repealing schedule 2 and s. 104(1) clauses (a) to (f) of

the   Code   of   Civil   Procedure   1908   and   the   Arbitration   Act   of

1899. By s. 39 of the Act, a right of appeal was conferred upon

litigants in arbitration proceedings only from certain orders and

from   no   others   and   the   right   to   file   appeals   from   appellate

orders was expressly  taken away  by sub-s.2  and the clause  in

s.104 of   the   Code   of   1908   which   preserved   the   special

jurisdiction under any other law was incorporated in s. 39. The

section   was   enacted   in   a   form   which   was   absolute   and   not

subject to any exceptions. It is true that under the Code of 1908,

an appeal did lie under the Letters Patent from an order passed

by   a   single   Judge   of   a   Chartered   High   Court   in   arbitration

proceedings   even   if   the   order   was   passed   in   exercise   of

appellate jurisdiction, but that was so, because, the power of the

Court to hear appeals under a special law for the time being in

operation was expressly preserved."


"There is in the Arbitration Act no provision similar to s. 4 of

the Code of Civil Procedure  which preserves  powers reserved

to   courts   under   special   statutes.   There   is   also   nothing   in   the

expression   "authorised   by   law   to   hear   appeals   from   original

decrees   of   the   Court"   contained   in   s. 39(1) of   the   Arbitration

Act   which   by   implication   reserves   the   jurisdiction   under   the

Letters Patent to entertain an appeal against the order passed in

arbitration   proceedings.   Therefore,   in   so   far   as   Letters   Patent

deal   with   appeals   against   orders   passed   in   arbitration

proceedings,   they   must   be   read   subject   to   the   provisions   of

s. 39(1) and (2) of the Arbitration Act."


"Under the Code of 1908, the right to appeal under the Letters

Patent   was   saved   both   by   s. 4 and   the   clause   contained   in

s. 104(1), but by the Arbitration Act of 1940, the jurisdiction of

the Court under any other law for the time being in force is not

saved;   the   right   of   appeal   can   therefore   be   exercised   against

orders   in   arbitration   proceedings   only   under   s. 39,   and   no

appeal   (except   an   appeal   to   this   Court)   will   lie   from   an

appellate order."


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71.     Mohindra   Supply   Co.  was   last   referred   in   a   constitution   bench


decision of this Court in P.S. Sathappan, and the way the constitution bench


understood   and   interpreted  Mohindra   Supply   Co.  would   be   clear   from   the


following paragraph 10 of the judgment:


        "10.....The   provisions   in   the   Letters   Patent   providing   for

        appeal, in so far as they related to orders passed in Arbitration

        proceedings,   were   held   to   be   subject   to   the   provisions   of

        Section 39(1) and (2) of the Arbitration Act,  as the same  is a

        self-contained code relating to arbitration."


72.     It is, thus, to be seen that Arbitration Act 1940, from its inception and


right through 2004 (in P.S. Sathappan) was held to be a self-contained code.


Now,   if   Arbitration   Act,   1940   was   held   to   be   a   self-contained   code,   on


matters pertaining to arbitration the Arbitration and Conciliation Act, 1996,


which   consolidates,   amends   and   designs   the   law   relating   to   arbitration   to


bring it, as much as possible, in harmony with the UNCITRAL Model must


be held only to be more so. Once it is held that the Arbitration Act is a self-


contained   code   and   exhaustive,   then   it   must   also   be   held,   using   the   lucid


expression of Tulzapurkar, J., that it carries with it "a negative import that


only such acts as are mentioned in the Act are permissible to be done and


acts or things not mentioned therein are not permissible to be done". In other


words, a Letters Patent Appeal would be excluded by application of one of


the   general   principles   that   where   the   special   Act   sets   out   a   self-contained


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code   the   applicability   of   the   general   law   procedure   would   be   impliedly


excluded.


73.     We, thus, arrive at the conclusion regarding the exclusion of a letters


patent   appeal   in   two   different   ways;   one,   so   to   say,   on   a   micro   basis   by


examining the scheme devised by sections 49 and 50 of the 1996 Act and the


radical  change that it brings about in the earlier  provision of appeal under


section   6   of   the   1961   Act   and   the   other   on   a   macro   basis   by   taking   into


account   the   nature   and   character   of   the   1996   Act   as   a   self-contained   and


exhaustive code in itself.


74.     In light of the discussions made above, it must be held that no letters


patent appeal will lie against an order which is not appealable under section


50 of the Arbitration and Conciliation Act, 1996.


75.     In the result, Civil Appeal No.36 of 2010 is allowed and the division


bench   order   dated   May   8,   2007,   holding   that   the   letters   patent   appeal   is


maintainable, is set aside. Appeals arising from SLP (C) No.31068 of 2009


and SLP (C) No.4648 of 2010 are dismissed.


76.     SLP (C) Nos.13626-13629 of 2010 and SLP (C) Nos.22318-22321 of


2010   are   dismissed   insofar   as   they   seek   to   challenge   the   orders   of   the


division bench holding that the letters patent appeals were not maintainable.


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These  two  SLPs  may now  be  listed   only  in regard  to  the challenge  to  the


orders passed by the single judge.


77.     There will be no order as to costs.







                                                                ........................

                                                                            ......J.

                                                       (AFTAB ALAM)





                                                                ........................

                                                                            ......J.

                                                       (R.M. LODHA)

New Delhi;

July 8, 2011.