2003 PLP 353 (YLR)

Aamer Raza A. Khan for Appellant Abdul Hafeez Pirzada and Hassan Aurang Zeb for Respondents. The respondents filed a petition under section 20 of Arbitration Act, 1940. Alongwith said petition an application under section 41 of the Arbitration Act read with paras. 3 and 4 of the Second Schedule to the said Act read with Order 39, Rules 1 and 2, sections 94 and 151 of the Civil Procedure Code was filed. It appears that in the first instance the learned trial Court took up the said application. Learned trial Court heard the learned counsel for the respondents (petitioner before it) and after noting contentions arrived at some conclusion and allowed the application under section 41 of the Arbitration Act read with said other provisions noted above and issued restraint order. Thereafter abruptly it was noted that dispute or difference is duly, covered by Arbitration Clause 24 of the Contract Agreement and directed the appellant to submit the Original Contract Agreement. This was done vide order, dated 15‑3‑1997.

2. F. A. O. No. 27 of 1997 has been filed by the appellant against the said order praying that the same be set aside on the grounds stated both against the acceptance of application under section 20 and the restraining order in respect of said bank guarantee.

3. Mr. Abdul Hafeez Pirzada, learned counsel for the respondents has raised the following objections to the maintainability of the appeal: (i) Appeal against that part of order whereby the learned trial Court has directed the appellant to file the agreement is competent but under section. 39(1) of Arbitration Act, 1940 read with rule 2(i)(a) of Chapter III, Part A of High Court Rules and Orders, Volume‑V this appeal will have to be heard by a Division Bench of this Court. (ii) The appeal against the part of order issuing restraint order qua the bank guarantee is not competent at all, as section 39 of Arbitration Act, 1940 lays down in clear terms that an appeal shall lie against the orders mentioned therein, and none other.

4. Mr. Aamer Raza A. Khan, Advocate also refers to section 39 of the Arbitration Act, 1940 to urge that impugned order inasmuch as it directs filing of Arbitration Agreement is appealable. However, according to the learned counsel this would be appealable as an order and not as decree because only provision where a decd can be or has to be passed is section 17 of the said Act and appeal is separately provided against the said decree in terms of the said section

17. As regards second objection of Mr. Abdul Hafeez Pirzada, Advocate, Mr. Aamer Raza A. Khan, Advocate, refers to section 41 of the said Act to state that powers in terms of the said section stand conferred on a Court while hearing the original proceedings or appeal and ancillary to the exercise of powers by the Court with regard to the said proceedings. According to the learned counsel appeal being competent against the main order in the original proceedings, the said interlocutory order would also become questionable in this appeal.

5. At this stage Mr. Hassan Aurang Zeb, Advocate, rejoins with a well prepared brief on the said question. He cites the cases of Municipal Corporation of Greater Bombay v. Patel Engineering Company Ltd. (AIR 1994 Bom. 80), The State of Himachal Pradesh and another v. Messrs H.S. Sobti & Co. (AIR 1973 Himachal Pradesh 1, Puppalla Ramula v. Nagidi Appalaswami and others (1957 Andhra Pradesh 11, Jute Corporation of India Ltd. v. Messrs Konark Jute Ltd. and others (AIR 1986 Orissa 238), Messrs Sharma Ice Factory v. Messrs Jewel Ice Factory and others (AIR 1975 Jammu and Kashmir 25), Smt. Krishnawati Devi and another v. Lala Harjas Mal Misra and others (AIR 1974 Allahabad 209), Messrs Banwari Lal Radhey Mohan, Delhi v. The Punjab State Coop. Supply and Marketing Federation Ltd. (AIR 1983 Delhi 402), Union of India and others v. Messrs N.K. Pvt. Ltd. and another (AIR 1972 Delhi 202, Muhammad Esoof v. V.R. Subratnanyam and another (AIR 1957 Mysore 78), Messrs Payar and Powar and others v. C.B.C.I. Society (AIR 1983 Karnataka 77), Union of India v. Manipur Builders Association (AIR 1977 Gauhati 5) (unreported judgment dated 3‑3‑1999 passed in C.R. 374/97), The Union of India v. The Mohindara Supply Co. (AIR 1962 SC 256), Balde Pentaiah v. Balaganti Mallaiah (AIR 1968 Andhra Pradesh 228 and NLR 1980 AC

542. Now I must say that the said judgments cited by Mr. Hassan Aurangzeb do go to support the objections raised by his Peer. Upon plain reading of section 39 of Arbitration Act, 1940, the appeal against order, made appealable does lie in the present case in this Court and is to be heard by a Division Bench; that an appeal against restraint order of the nature passed by the learned trial Court does not lie at all.

6. However, I may note here that in all these cases it so happened that learned trial Court or learned Judge hearing original proceedings had only decided the matter of interim relief in terms of section 41 and it was in the said context that appeals were filed before and heard and were consequently held to be incompetent and in all cases barring one were converted into a revision. In the present case the learned trial Court started with application under section 41 and somewhere on his way to decide the said matter abruptly came to hold that the dispute is covered by arbitration clause and arbitration agreement be tiled, thus changing entire texture of the said order. The end result of the said exercise undertaken by the learned trial Court is that we are faced with an order whereby appellant has been directed to file arbitration agreement and at the same time an order in terms of section 41 of Arbitration Act, 1940 has been passed.

7. Upon reading of section 39 and of course the judgments cited by Mr. Hassan Aurangzeb, Advocate, it is evident that appeal from the orders listed in section 39 are to be heard by a Court which is authorised by law to hear appeal from original decree of the Court passing the order. Now in case original decree is passed by the learned Civil Judge 1st Class and amount exceeds the pecuniary jurisdiction of the learned District Judge, the appeal comes before this Court and is heard by a Bench comprising more than one Judges. Thus I am in complete agreement with the learned counsel for the respondent that this appeal is to be heard by a Division Bench of this Court, of course this refers to the appeal inasmuch as it deals with the matter of direction to the appellant to tile arbitration agreement in Court.

8. Now this leaves the matter of appeal pertaining to the said order passed in terms of section 41 of the Arbitration Act, 1940. I do agree with the ratio of the said judgments cited by the learned counsel that notwithstanding the reference to Order 39 and other provisions of C.P.C., fact remains that the learned trial Judge was empowered to pass the order as prayed for by the respondents under section 41 read with said Second Schedule of the Arbitration Act, 1940 and it will be deemed that the order has been passed under said section

41. Now it is true that it may not be possible to treat one part of this appeal as regular appeal in terms of section 39 of Arbitration Act, 1940 and other part under section 41 of the said Act to be revision, that will not be possible. However, at the same time the provisions of section 115, C.P.C. have been left wholly, intact under subsection (2) of the said section

39. In my humble opinion this Court would not require an application to take cognizance of the matter under section 115, C.P.C. I do find that the said order purported to have been passed by the learned trial Court under section 41, Arbitration Act, 1940, is prima facie violative of the judgment of the Hon'ble Supreme Court in the case of Haral Textiles Ltd. v. Banque Indosuez Belgium S.A. and others (1999 SCMR 591) as also the one referred to in the impugned order itself i.e. Messrs National Construction Ltd. v. Aiwan‑e‑Iqbal Authority (PLD 1994 SC 311). The office to draw up proceedings under section 115, C.P.C. accordingly.

9. These and connected matter now be relisted before Division Bench dealing with all matters on 26‑11‑2002. M.B.A./O‑7/L Order accordingly.