1980 PLP 346 (CLC)

This is an application under clause 4 of the Second Schedule read with section 41 of the Arbitration Act, 1940 and Order XXXIX, rules 1and 2, C. P. C. praying for injunction restraining the respondent their employees" representatives, agents from acting in derogation of the agree ment dated 26th June,r1976 between the parties and from recalling and encashing the Bank Guarantees Nos. 221/76 dated 8-7-1976 225/76 dated 20-10-1076 and 35/77 dated 29-4-1977/13th September, 1977 for a total amount of Rs. 20,34,496.00. The application arises under the following circumstances as stated in the affidavit filed in support of the application. The respondent entered into a contract for erection, fixing and maintaining of 25 million gallon per day water filtration (treatment) plant including civil engineering works at Pipri and a Reservoir of 6 million gallon capacity. Certain disputes having arisen, the applicants by their letter dated 16th September', 1979 (Annexure 'B' to the application) required the Superin tending Engineer of the respondents to refer the dispute in accordance with the provisions of clause 10 of the agreement to one of the four persons named therein as sole arbitrator within 15 days. The letter dated 16th September, 1979 was sent by registered post on 18th September, 1979 under postal receipt No. 268 produced by the applicants in Court before me. However, before tote time mentioned in the letter for appointment of arbitrator could expire the applicants on 2-10-1979 presented this application for injunction of which I ordered notice. Today I have heard Mr. Habibur Rehman learned counsel for the applicants and Mr. Sabir Hussain Qazalbash Advocate for the respondents. A preliminary point has been raised as to the maintainability of this application. According to Mr. Qazalbash no arbitration proceedings have commenced or are pending and therefore the provisions of section 41 of the Arbitration Act, 1940 are not attracted and the appli cation is not maintainable. In reply it is submitted by Mr. Habibur Rahman that arbitration proceedings commenced as soon as notice dated 16th September, 1979 was served on the respondents for appointment of a sole arbitrator, Mr. Habibur Rehman relies on the provisions of section 37 of the Arbitration Act, 1940. In order to appreciate the respective contentions: of the learned counsel it would be convenient if the relevant provisions of sections 37 and 41 of the Arbitration Act, 1940 are considered in detail. These are as follows :

"37.-(1) All the provisions of the Limitation Act, 1908, shall apply to arbitrations as they apply to proceedings in Court. (2) . ..................................................................................... (3) For the purposes of this section and of the Limitation Act, 1908, an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other parties thereto a notice requiring the appointment of an arbitrator, or where the arbitration agreement provides that the reference shall be to a person named or designated in the agreement, requiring that the difference be submitted to the person so named or designated. (4) ..................................................................................... (5) Whether the Court orders that an award be set aside or orders, after the commencement of an arbitration, that the arbitration agreement shall cease to have effect with respect to the difference referred, the period between the commence ment of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1908 for the commencement of the pro ceedings (including arbitration) with respect to the difference referred."

41. Subject to the provisions of this Act and of rules made thereunder :

(a) The provisions of the Code of Civil Procedure, 1908, shall apply to all proceedings before the Court, and to all appeals under this Act, and (b) the Court shall have, for the purpose of, and in relation to, arbitration proceedings the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of, and in relation to, any proceed ings before the Court; Provided that nothing in clause (8) shall be taken to prejudice any power which may be vested in an arbitrator' or umpire for making order with respect to any of such matters." Clause (4) of the Second Schedule gives powers to the Court to issue interim injunction to appoint receiver. It will therefore, be seen from the provisions of section 41 of the Arbitration Act, 1940 that the Court has power for the purposes of or in relation to, arbitration proceeding inter alia to issue injunction. But this can be done only for the purpose of, and, in relation to arbitration proceeding. The word 'proceeding' ha not been defined in Arbitration Act. However, the ordinary dictionary meaning of the word 'proceeding' as given in the Oxford English Dic tionary, Volume VIII at page 1407 are :-- (1) The action of going onward, advance, onward movement or course. (2) The carrying on of an action or series of actions ; action, course of action, conduct, behaviour (b) A particular action or course of action ; a piece of conduct of behaviour ; a transaction ; Most usually in pl : Doings, actions, transactions. (3) Spec. The instituting or carrying on of action at law ; a legs action or process, any act done by authority of a Court of a law ; any step taken in a cause by either party. (4) The action of going on with something already begun, Conti nuance of action ; advance, progress, advancement." According to the above meanings of the word 'proceedings', there cannot be any proceedings without there being an arbitrator or Court or authority being in existence to decide the claim or dispute, and proceed ings can be said to have commenced only when some action is taken before an arbitrator or Court or authority for example filing a statement of claim or dispute before an arbitrator or a plaint before a Court. In the instance case no arbitrator has yet been appointed and no reference has been made and therefore, it cannot be said that arbitration proceed ings have commenced. Even if the respondents fail to appoint an arbitrator within the time mentioned in the notice served on them the appli cant's remedy may be to file an application under section 8 or 20 of the Arbitration Act for appointment of an arbitrator or filing the arbitration agreement in Court and referring the dispute in accordance therewith. However, Mr. Habibur Rahman relied on section 37 of the Arbitration Act wherein it is provided that an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other parties thereto a notice requiring .the appointment of an arbitrator, or where the arbitration agreement provides that the reference shall be to a person named or designated in the agreement requiring that the reference be submitted to the person so named or designated. How ever, the submission overlooks the controlling words of this subsection i. e. `for the purpose of this section and the Limitation Act." Therefore: it is only for the purposes of section 37 which are mentioned in subsections (2), (4) and (5) thereof and the Limitation' Act that the arbitration proceedings are deemed to have commenced from the date of service of notice. Here I may refer to Ranjit Chandra Mitter v. Union of India (A I R 1963 Cal. 594). In this case the contractor served a notice upon the Government ,through the Development Commissioner to submit the dispute to an arbitrator as per arbitration clause within 4 days or else a suit for damages liquidated at a specific sum mentioned there in would be filed. Copy of the notice was sent to the Secretary, Ministry of Commerce and Industry as well. The contractor then filed an application under section 41 of Arbitration Act for interim relief by way of injunction restraining the Government from accepting any fresh tender and seeking a reference to arbitration of the dispute between him and the Government in specific performance of the arbitration clause. On the question of propriety of the applica tion and reliefs sought, inter alia, it was held that since no arbitration proceedings were pending the interlocutory application for interim injunction under section 41 would not lie. In support of his contention however, Mr. Habibur Rehman relied on Muhanunad Akbor v. Province of Punjab (P L D 1974 Lah. 231) wherein the question for con sideration which came up before the Court was whether a civil Court can under clause (b) of section 41 issue a temporary injunction when no proceedings were pending before it and the reference to arbitration was also without the intervention of the Court. Answering ' that question it ryas observed :- . "A reading of this section indicates that whereas clause (a) specifies the procedure which a Court actin under the Act may follow clause (b) speaks of the powers o the Court with respect to arbitration proceedings. There are no words in Clause (b) or in the entire section which may be taken as limiting the expression `arbitration proceedings' occurring in clause (b) to such proceedings to have been intimated through the intervention of a Court. The words `the same power' as occurring in clause (b), when read in conjunction with the words `as it has' male it abundantly clear that clause (b) has reference to proceedings other than those which may be pending before a Court. Otherwise clause (b) will be entirely redundant as clause (o) .has already provided for the pro cedure which a Court is to follow while exercising its function under the Act. In the presence of clause (o) it is entirely unnecessary to confer some specific powers on a Court under clause (b), for these are already available to it under clause (a) ." However, in this case, as would appear from the facts of the case, a sole arbitrator was already appointed and had already entered upon the reference while in the instant case the arbitrator has not yet been appointed. Mr. Habibur Rehman also referred to S. Y. Seshmull v. S. N. Umojid Co. (A I R 1962 Mad. 436) wherein a contention was raised that the provisions of sec tion 41 would only apply if proceedings are pending in Court itself and not when what is pending was merely arbitration proceedings. The question when arbitration proceedings are deemed to commence was not under consideration in that case. This case is also distinguishable. Moreover in this case also the arbitrator was already appointed. Mr. Habibur Rehman also referred to Daulat Ran Phoolchand v. Shri Ram and others (A I R 1964 Madb. Pro. 219). In this case it was held that the power of the Court in the Second Schedule of the Arbitration Act could be exercised even in a case where the reference to arbitration has been made without the intervention of the Court and no proceedings are pending in connec tion therewith in any Court. However, in this case also before coming to Court parties had already appointed arbitrator for partition of the joint family property which was in dispute. Therefore, the proceedings were already pending before the arbitrator. Mr. Habibur Rahman relied also on unreported decision of this Court in J. M. 59/75 wherein my learned brother Fakhruddin G. Ebrahim, J. had issued a temporary injunction but in this case also the question raised before me was pot at all raised or considered. Since I have come to the conclusion that this application is not maintainable, it is not necessary to consider the application on merits. I, therefore, dismiss it leaving the parties to bear their own costs. M. A. K Application dismissed.