Pratap Singh Vs. Preetam Singh & ANR
[1969] INSC 190 (19 August 1969)
19/08/1969
ACT:
Arbitration Act, 1940-Section 31(4)-Scope of.
HEADNOTE:
The appellant and the respondent were
carrying on three businesses at three different places-Pipliya in Madhya
Pradesh, Bombay and Nagpur. Certain disputes relating to the partnership
business were referred to an arbitrator. Having not been able to complete the
reference within four months, the arbitrator applied to the Subordinate Judge,
Delhi for extension of time. Overruling the objection as to his jurisdiction to
entertain the application the Subordinate Judge, Delhi granted extension of
time for making the award.
When the revision application against this
order was pending before the High Court of Delhi, the respondent filed a suit
in the court of the Additional District Judge in Madhya Pradesh for certain
reliefs. In the meantime the appellant applied under s. 34 of the Arbitration
Act for stay of the suit. The Additional District Judge appointed a receiver of
the properties. In appeal the Madhya Pradesh High Court held that having regard
to the proceedings pending in the High Court at Delhi it was a case in which,
without adjudicating upon the jurisdiction of the Subordinate Judge at Delhi,
the application for appointment of the receiver was maintainable.
In appeal to this Court it was contended that
it was open to a Court to appoint a receiver of any other property in dispute
or in relation to any proceedings before the arbitrator and by conferment of
that power, the power of the Civil Court in a suit to appoint a receiver was
excluded and, therefore, the only Court competent to entertain an application
for appointment of a receiver was the Subordinate Judge at Delhi and not the
court of Additional District Judge in Madhya Pradesh.
Dismissing the appeal,
HELD: Normally for the grant of interim
relief in respect of the subject-matter of the dispute before an arbitrator the
parties would have to resort to that court to which the application for
extension of time to make the award was made. But as the jurisdiction of the
Court of the Subordinate Judge, Delhi to entertain the application for
extension of time was in dispute the Civil Court 777 which is seised of the
suit was entitled to make appropriate orders for preserving the property which
is the subject- matter of the suit. [780 C-D] Therefore, the Civil Court in
Madhya Pradesh was competent to appoint a receiver of the property until the
question about the jurisdiction of the Delhi Court under s. 31 (4) of the
Arbitration Act to entertain applications arising out of the order of reference
was finally determined. After the High Court of Delhi determined that question,
the receiver appointed, in order to comply with the requirements of the
statute, may be made subject to the jurisdiction of the Delhi Court if it be
held that the Delhi Court had jurisdiction to entertain the application. [780
E]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 2321 of 1968.
Appeal by Special Leave from the Judgment and
Order dated the 1st November, 1968 of the Madhya Pradesh High Court, Indore
Bench in Civil Miscellaneous Appeal No. 111 of 1967.
C.K. Daphtary and B. Dutta for the Appellant.
P.C. Khanna for Respondent No. 1.
The Judgment of the Court was delivered by
J.C. SHAH, AG. C.J. Pratap Singh, Preetam Singh and Diwan Singh are three
brothers. Pratap Singh and Preetam Singh carried on business in partnership, at
three places- (1) Pipliya in Madhya Pradesh, in the name of the Jaora Slate
Pencil Works; (2) Bombay, in the name of Partap Brothers; and (3) Nagpur, in
the name of Nice Tiles and Marble, Nagpur. By an agreement dated December 18,
1965 disputes between Pratap Singh and Preetam Singh relating to the
partnership business were referred to the arbitration of their brother Diwan
Singh. The arbitrator entered upon the reference, but he was unable to complete
the reference within four months. Diwan Singh applied to the Court of the
Subordinate Judge, Delhi, under s. 28 of the Arbitration Act for extension of
time. Preetam Singh objected to the jurisdiction of the Subordinate Judge at
Delhi to entertain the application. The Subordinate Judge overruled the
objection and granted extension of time for making the award. A revision
application preferred against the order is pending before the High Court of
Delhi.
778 In the meanwhile Preetam Singh filed an
action in the Court of the Additional District Judge, Mandsaur against Pratap
Singh and Pritipal Singh (brother-in-law of Preetam Singh) for a decree for
rendition of account of the dealing in respect of the Jaora Slate Pencil Works
and for appointment of a receiver. By amendment of the plaint a claim for
dissolution of partnership was also made. Pratap Singh applied under s. 34 of
the Arbitration Act 1940 for stay of the suit, and the application was granted.
But the Additional District Judge directed that a receiver be appointed of the
properties of the Jaora Slate Pencil Works at Pipliya. Against that order an
appeal was carried to the High Court of Madhya Pradesh. The High Court was of
the view that a case was made out for the appointment of the receiver. The
Court further held that having regard to the proceedings pending in the High
Court at Delhi it was a case in which without adjudicating upon the
jurisdiction of the Subordinate Judge at Delhi, the application for appointment
of the receiver was maintainable. Against that order, with special leave, this
appeal has been preferred.
The only question argued in this appeal is
about the jurisdiction of the Additional District Judge, Mandsaur to entertain
the suit and to appoint a receiver. The relevant statutory provisions may in
the first be noticed.
By cl. 3 of Sch. 1 of the Arbitration Act the
arbitrator is required to make an award within four months after entering on
the reference. Section 28 of the Act provides that the Court may, if it thinks
fit, whether the time for making the award has expired or not and whether the
award has been made or not, enlarge from time to time the time for making the
award, and the expression "Court" is defined in s. 2 (c) as meaning
"a Civil Court having jurisdiction to decide the questions forming the
subject- matter of the reference if the same had been the subject- matter of a
suit, but * * * * * Section 31 of the Act provides.
(1) ... ... ...
(2) .... ... ...
(3) All applications regarding the conduct of
arbitration 779 proceedings or otherwise arising out of such proceedings shall
be made to the Court where the award has been, or may be, filed, and to no
other Court.
(4) Notwithstanding anything contained
elsewhere in this Act or in any other law for the time being in force, where in
any reference any application under this Act has been made in a Court competent
to entertain it, that Court alone shall have jurisdiction over the arbitration
proceedings and all subsequent applications arising out of that reference and
the arbitration proceedings shall be made in that Court and no other
Court." Section 34 of the Act provides for stay of a suit. In so far as it
is material it enacts.
"Where any party to an arbitration
agreement ...
... commences any legal proceedings against
any other party to the agreement ... ... in respect of any matter agreed to be
referred, any party to such legal proceedings may, at any time before filing a
written statement or taking any other steps in the proceedings, apply to the
judicial authority before which the proceedings are pending to stay the
proceedings; and if satisfied that there is no sufficient reason why the matter
should not be referred in accordance with the arbitration agreement and that
the application was, at the time when the proceedings were commenced, and still
remains ready and willing to do all things necessary to the proper conduct of
the arbitration such authority may make an order staying the proceedings."
An application for stay of the suit pending before the Additional District
Judge, Mandsaur was made by Pratap Singh and it was granted. But thereby the
jurisdiction of the Court to pass appropriate orders for protecting the subject
matter of the suit was not excluded. An application for appointment of a
receiver could be granted notwithstanding the order of stay of suit under s. 34
of the Arbitration Act. But it was urged that it is open to the Court as
defined in s. 2 (c) under s. 41 read with the Schedule to the 780 Arbitration
Act to appoint a receiver of any other property in dispute or in relation to
any proceedings before the arbitrator, and by conferment of that power, the
power of the Civil Court in a suit to appoint a receiver is excluded.
On that premise it was urged that the only
Court competent to entertain an application for appointment of a receiver was
the Subordinate Judge's Court at Delhi and not the Court of the Additional
District Judge, Mandsaur. It is true that an application for extension of time
to make the award was made to the Court of the Subordinate Judge, Delhi and
normally the parties would have to resort to that Court for interim relief in
respect of the subject-matter of the dispute before the arbitrator. But so long
as the jurisdiction of the Court of the Subordinate Judge, Delhi to entertain
the application for extension of time was in dispute the Civil Court which is
seized of the suit was entitled to make appropriate orders for preserving the
property which is the subject-matter of the suit.
We are therefore of the view that the Civil
Court at Mandsaur was competent to appoint a receiver of the property until the
question about the jurisdiction of the Delhi Court under s. 31 (4) to entertain
applications arising out of the order of reference is finally determined. After
the High Court of Delhi determines that question, receiver appointed, in order
to comply with the requirements of the statute, may be made subject to the
jurisdiction of the Delhi Court, if it be held that Delhi Court had
jurisdiction to entertain the application.
It was urged that the suit filed at Mandsaur
only relates to the assets, of the partnership at Pipliya within the State of
Madhya Pradesh and does not relate to the properties at Bombay and Nagpur and
that by the expedient of obtaining an order for appointment of a receiver
Preetam Singh has managed to remain in possession of the properties at Bombay
and Nagpur to the exclusion of Pratap Singh. We cannot at this stage, decide
whether the suit in so far as it relates to the assets of the partnership at
Pipliya alone is maintainable. The arbitration proceedings undoubtedly relate
to all the assets of the Partnership and if Preetam Singh, as contended by
Pratap Singh, has remained in possession of the properties of the partnership
at Bombay and Nagpur to the exclusion of Pratap Singh and it is just and
equitable to have a receiver appointed, his remedy is to commence appropriate
proceedings for that purpose and to apply to a competent court to appoint a
receiver of the properties.
The appeal fails and is dismissed. There will
be no order as to costs.
P.B.R. Appeal dismissed.
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