M/S. Surajmull Nagarmull Vs. State of
West Bengal  INSC 148 (17 April 1962)
17/04/1962 SHAH, J.C.
CITATION: 1963 AIR 393 1963 SCR (2) 163
Arbitration--Arbitrator appointed under the
Defence of India Act, if a court--Right to appeal against the award, if and
when, exercisable--Defence of India Act, 1939 (35 of 1939), ss. 19(1), 19
(1)(f) and (g), 19(3)(c)--Defence of India Rules, 1939, rr. 75A , 19, second
The appellants were tenants of three
warehouses and vacant land, which were used for storage of jute belonging to
the appellants. By an order issued under r. 75A of Rules framed under the
Defence of India Act, 1939, the warehouses were requisitioned by the
Government. An arbitrator was appointed under s. 19(1) (b) of the Defence of
India Act to fix the amount of compensation payable to the owner. The claim of
the appellants to compensation for Ion of earning, and for ,loss of
business" was rejected by the arbitrator.
An appeal filed by the appellants against the
arbitrator was dismissed by the High Court at Calcutta, as not maintainable.
Held, that the arbitrator appointed under s.
19 of the Defence of India Act is not a court, nor is a tribunal subject to the
appellate jurisdiction of the High Court. By the Act a right to appeal against
the award of the arbitrator is 164 conferred, but the exercise of that right is
restricted in the manner prescribed by the rules framed under the Act. By the
second proviso to r. 19 an appeal does not lie against an award of the
arbitrator where the amount of compensation awarded does not exceed Rs. 5000 An
award dismissing the claim in its entirety is one in which the amount awarded
does not exceed Rs. 5000/-and therefore an appeal lay to the High Court.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 403 of 1959.
Appeal by special leave from the judgment and
order dated June 27, 1955, of the Calcutta High Court in Appeal from Original
Decree No. 28 1948.
A. V. Viswanatha Sastri and B. P. Maheshwari,
for the appellant.
B. Sen, P. K. Chatterjee and P. K. Bose, for
1962. April 17. The Judgment of the Court was
delivered by SHAH, J.-Messrs. Surajmull Nagarmull-who will hereinafter be
referred to as the appellants were tenants of three warehouses and vacant land
appurtenant there-to popularly known as the Shamnagar Jute Godown--belonging to
Sri Hanuman Seva Trust. The warehouses were used for storage of jute belonging
to the appellants. By an order dated August 17, 1943 and issued under Rule 75A
of the Defence of India Rules, 1939, the warehouses were requisitioned and
possession thereof was taken on September 21, 1943. As the amount of
compensation payable to the owner of the warehouses could not be fixed by
agreement an Arbitrator was appointed under s. 19(1)(b) of the Defence of India
Act, 1939. Before the Arbitrator, Sri Hanuman Seva Trust claimed compensation
as owners of the warehouses. The appellant claimed compensation for loss of
earnings, ",'damage to business" and cost 165 of removal of 18,000
maunds of jute and some iron implements, which the appellants claimed had to be
removed in consequence of the order of requisition. The appellants estimated
the compensation at Rs. one lakh. The Arbitrator by his order dated December
13, 1947 observed that the appellants had failed to prove any actual loss of
business in consequence of the requisition, and rejected the claim of the
Against the order passed by the Arbitrator an
appeal was preferred to the High Court of Judicature at Calcutta. The
appellants valued the claim at Rs. 1,50,000/-. At the hearing of the appeal,
the State of West Bengal contended that the appeal was not maintainable in view
of the provisions of s. 19(1)(f) and (g) and s. 19(3)(c) of the Defence of India
Act and the 2nd proviso to r. 19 framed under the Defence of India Act. The
High Court upheld the contention raised by the State of West Bengal and
dismissed the appeal. With special leave the appellants have appealed to this
Under cl. (1) of s. 19 of the Defence of
India Act, 35 of 1939, it is provided, in so far as it is material :
"Where under section 19A or by or under
any rule made under this Act any action is taken of the nature described in
sub-section (2) of section 299. of the Government of India Act, 1935, there,
shall be paid compensation, the amount of which shall be determined in the
manner and in accordance with the principles hereinafter set out, that is to
say :- x x x x (f) An appeal shall lie to the High Court against an award of the
Arbitrator except in cases where the amount thereof does not exceed an amount
prescribed in this 166 behalf by rule made by the Central Government.
(g) Save as provided in this section and in
any rules made there under, nothing in any law for the time being in force
shall apply to arbitrations under this section." Sub-section (3), in so
far as it is material, provides :- "(3) In particular and without any
prejudice to the generality of foregoing power, such rules may prescribe :- x x
x (c) the maximum amount of an award against which no appeal shall lie."
By notification dated March 22, 1945, Rules were framed under s. 19 relating to
arbitration for settlement of compensation.
Rule 19 of the Rules provided :
" 19. Any appeal against the award of
the Arbitrator shall be presented within six weeks from the date of receipt by
the Collector the party by whom the appeal is preferred of the copy of the
award sent under Rule 17 :
Provided further that no appeal shall lie
against an award made under these Rules where the amount of compensation
awarded does not exceed Rs. 5,000 in lump or Rs 250 per mensem." The
Arbitrator appointed under A. 19 of the Defence of India Act is not a court or
a tribunal subject to the Appellate jurisdiction of the High Court. By the
Defence of the India Act a right to appeal against the award of the Arbitrator
is conferred, but that right is restricted in the manner prescribed 167 the
rules. It is provided by the second proviso to Rule 19 that an appeal shall not
lie against an award where the amount of compensation does not exceed Rs.
The claim of the appellant was rejected by
the Arbitrator and they were- not awarded any compensation. Mr. Vishwanatha
Sastri appearing on behalf of the appellants, contends that by el. (f) .of...
s. 19 (1) the Legislature provided a right of appeal against all awards and has
imposed a restriction only in those cases were some amount is awarded but the
amount so awarded is less then Rs.
5,000/-. Counsel submits that the restriction
limiting the right of appeal must be strictly construed. He says that where for
any reason no compensation at all is awarded the bar contained in el. (f) of s.
19(1) and the second proviso to Rule 19 would not apply. In our judgment, there
is no force in that contention. An appeal is a creature of statute. The
Arbitrator not being a court subordinate to the High Court, an appeal would lie
only if it is expressly so provided. The Legislature has provided that where
the amount of compensation awarded does not exceed Rs. 5,000/- no appeal shall
lie against the award. The rule does not contemplate that the bar to the
maintainability of the appeal will be effective only if some amount is awarded
but the compensation go awarded is less than Rs. 5,000/-. If the Arbitrator rejects
the claim and refuses to award anything the case would, in our judgment, fall
within the 2nd proviso to Rule 19 as being one where the amount of compensation
awarded does not exceed Rs. 5,000/-.
The 2nd proviso to Rule 19 enacts a rule of
which a parallel is difficult to find. The right to appeal does not depend upon
the claim made by the claimant either before the acquiring authority or the
Arbitrator or before the High Court : it depends solely upon the amount of
compensation awarded 168 by the Arbitrator. But, however, unusual the rule may,
appear to be, it would not open to the Court to extend the right to appeal and
to enable a claimant whose claim has been rejected completely to appeal to the
High Court. The right to appeal is exercisable only if the amount awarded
exceeds Re., 5,000/.
In that view of the case, the High Court was
right in not entertaining the appeal. The appeal fails and is dismissed.