1984 PLP 546 (CLC)

S. 23-Civil Procedure Code (V of 1908), O. WIT, r. 1-Arbitra tion-Reference-As soon as reference in a pending suit made to arbitration trial Court, held, becomes functus officio and cannot deal with such matter in suit except as provided under Arbitration Act, 1940-Court while retaining power to deal with such -a matter as permitted by Act cannot make any order or adjudication touching merits of subject-matter of suit.

S. 41(a) & 23(2)-Civil Procedure Code (V of 1908)-Provision of Civil Procedure Code, held, cannot be resorted to by Court when reference has already been made. -- S. 23(2) & Schedule Second-Civil Procedure Code (V of 1908), O. XLIII, r. I (r)-Reference to arbitration-Court in spite of refer ence to arbitration, held, retains certain powers and such powers include powers to pass orders of interim nature for custody, issue an injunction for preserving and protecting property of subject-matter and appointment of receiver etc. as indicated in Second Schedule to Arbitration Act, 1940-Court, held further, cannot pass any order with reference to subject-matter of dispute but can make order of interim nature-Court assumes jurisdiction when arbitration is superseded or award is filed. Budh Sen and others v, Nanak Chand and another A I R 1932 Oudh 151 ref. -- Ss. 21, 23 & 41 (b) read with Schedule Second-Civil Procedure Code (V of 1908), O. XXXIX, .rr. 1 & 2-Civil Court, held, has no power to issue interim injunction under O. XXXIX, rr. I & 2, C. P. C. after reference of dispute made to arbitration -Interim and interlocutory orders in respect of subject-matter of temporary nature can be passed by Court under S. 41 (b) of Arbitration Act, 1940-No order, held further, can be passes) re garding subject-matter of suit which touches proceedings of arbitration or has any relation to pith of case pending arbitration. (Injunction). Shah Vaktavarmal Seshmull v. Shah Nainmull Umaji & Co. A I R 1962 Mad. 436 and Chetasing Bagasing v. Gulibai and others A I R 1925 Sind 102 ref. -- S. 41 (b)-Civil Procedure Code (V of 1908) Ss. 104 & 151 read with O. XLIII, r. 1 and O. XXXIX, r. 1-Appeal-Trial Court issuing temporary injunction in exercise of jurisdiction vested in it under S. 41 (b) of Arbitration Act, 1940 and not under O. XXXIX, r. 1 or S. 151, C. P. C.-Appeal, held, would not be competent under S. 104 read with O. XLIII, r: 1, C. P. C. but provisions of Arbitration Act, 1940 would apply to appeals where order is made under any of provision of that Act. -- Ss. 39 & 41 (b) - Civil Procedure Code (V of 1908), O. XXXIX and S. 1 15-Appeal-Extent of right to appeal given to parties Appeals, held, lie against orders specified in S. 39 of Act and not against any other order or all orders-Order of temporary in junction passed by Court under S. 41(b), Arbitration Act, 1940 not of nature as specified in S. 39 of Arbitration Act-Appeal not competent-Propriety or legality of order, held further, can be examined under S. 115, C. P. C. Messrs M. A. Aziz & Sons v. Lt.-Col. f. Daud Khan and others P L D 1968 Lah. 847 rel. JUDGMENT This appeal arises out of an order made by the Senior Civil Judge Quetta, on 20th October, 1982 whereby he has restrained the appellant from raising construction over a plot of land situated at the extension of Lytton Road Quetta. The facts of the case are that the respondents had filed a suit for partition of ancestral property against the present appellant, During the pendency of the suit of parties entered into an agreement of refer the dispute to Arbitration. The arbitration proceedings are pending and so far reference has not been superseded. The respon dents had made an application for issue of temporary injunction under Order XXXIX, rules 1 and 2 read with section 151, C.P.C. It was stated in the application that the appellant had been in possession of the plot bering Khasra No. 1761/516 on which he had started raising construction. This plot is shown as estate of the deceased Arbab Muhammad Umar to which succession is claimed by the plaintiff/respondents. The trial Court issued a temporary injunction in the exercise of powers vested in it under section 41, clause (b) of the Arbitration Act. 2. The contention of the counsel of the appellant is that the Court becomes functus officio after reference of the dispute to arbitration, while on the other hand contention of the counsel of the respondent was that the appeal itself is not competent. Before considering the arguments of the counsel of the appellant it would be proper to consider the com petency of the appeal. To find out as to whether the appeal is competent it will be necessary to ascertain the jurisdiction of the trial Court. 3. The counsel of the appellant has filed this appeal under section 104 read with Order XLIII, rule 1, C.P.C. The trial Court has exercised its jurisdiction under section 41 of the Arbitration Act and not under order XXXIX, rule 1, C.P.C. If an injunction is issued by, a civil Court under Order XXXIX, rule 1, C.P.C. an appeal would be competent under section 104, C.P.C. read with Order LXIII, rule 1, C.P.C. As soon as reference is made to Arbitrators in a pending suit the trial Court becomes functus officio and cannot deal with such matter in the suit except as provided under the Arbitration Act. Section 23 (2) reads " 23(2) Where a matter is referred to arbitration, the Court shall not save in the manner and to the extent provided in this Act, deal with such matter in the suit." The jurisdiction of the Court is taken away to deal such matters in suit meaning thereby that the Court cannot make any order or adjudica tion touching the merits of the subject-matter of the suit. This provision of law has two aspects. One is that the Court retains the power to deal with such matter as permitted by the Act and the second aspect is that while dealing with such matter it cannot make any order which can directly or indirectly is related to the adjudication of any aspect of the suit or merits of the case. The Act provides procedure and powers of the Court with reference to Arbitration proceedings in section 41 which is reproduced below 41. Procedure and powers of Court.-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 res pect of any of the matters set out an the Second Schedule as it has for the purpose of, and in relation to, any proceedings before the Court Provided that nothing in clause (b) shall be taken to prejudice any power which may be vested in an arbitrator or umpire for making orders with respect to any of such matters." It will be seen that by section 41 (a), provisions of the Code of Civil Procedure are made applicable to all proceedings before the Court and to all appeals under the Act. Clause (a) of section 41 of the Act deals with proceedings before the Court while clause (b) deals with powers of the Court in relation to arbitration proceedings. Clause (a) deals with the applicablity of the Civil Procedure Code before reference or after filing of the award and is in relation to proceedings pending before the Court. It will mean proceedings are pending before the Court before reference is made and after the award is filed by the arbitrators. It will have no application to proceedings where reference has already been made, it, therefore, follows that provisions of the Code of Civil Procedure can not be resorted to by the Court when reference has already been made. Section 23(2) and section 41 of the Act are to be read together and there will not be any difficulty in finding the true import of section 41 (a) of the Act. The Court in which the suit was pending and who has referred the disputed to arbitration can act only under the provision of the Act according to section 23(2) and pass those orders which are permitted by the Act. 1. The preservation, interim custody or sale of any goods which are the subject-matter of the reference. (2) Securing the amount in difference in the reference. (3) The detention, preservation or inspection of any property or thing which is the subject of the reference or as to which any question may arise therein and authorising for any of the afore said purposes any person to enter upon or into any land or building to the possession of any party to the reference, or authorising any samples to be taken; or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence. (4) Interim injunction or the appointment of a receiver. (5) The appointment of a guardian for a minor or person of unsound mind for the purposes of arbitration proceedings." The counsel of the appellant relied upon the case of Budh. Sen and others v. Nanak Chand and another (A I R 1932 Oudh 151) where it was held "Once the case has been referred by the parties to arbitration, it is removed from the jurisdiction of the Court except where Schedule 2, C.P.C. brings that jurisdiction again into force : 33 All. 743, Rel. op." There is no dispute with this proposition. Moreover, this case deals with the law of arbitration before coming into force of the Act of 1940. As far as trial of the case is concerned the jurisdiction of the Court is taken away once reference is made. Court assumes jurisdiction when the Arbitration is superseded, or the award is filed. This jurisdiction relates p to the subject-matter of the suit or the reference as the case may be. In suitable cases it is the duty of the Court to pass order of interim nature for the custody, preservation or protection of the property of subject matter of the reference. The words "subject-matter of the reference" used in paragraph (t) of Schedule II of the Act are indicative of the stage when such powers could be exercised. The term "subject-matter of reference" should mean in the context, the stage when reference to arbitration has already been made and before the award is filed. As long as reference is not made clause (a) of section 41 applies and after reference is made Court can exercise powers under section 41 (b) of the Act. If a situa tion arises before reference to warrant action of interim nature Court can exercise those powers under the Code of Civil Procedure. The words "subject-matter of reference" would not have been there if it was intend ed that these powers were to be exercised before reference. The use of these words in clause (b) means that reference has already been made and person has been made to secure that property involved is not disposed of, alienated or damaged during arbitration proceedings. According to section 41 (a) of the Act, Code of Civil Procedure, 1908 applies to all pro ceedings before the Court and to all appeals under this Act. It' the Courts could exercise powers under Order XXXIX, C.P.C. then clause (b) of section 41 would be redundant. Clause (a) applies to cases where re ference has not been made while clause (b) covers the cases in relation to arbitration proceedings including orders in respect of and in relation to the custody or preservation of the property and to orders of interim nature as detailed in Schedule Second of the Act. A civil Court has no powers to issue interim injunction under Order XXXIX, rules 1 and 2 C.P.C. after reference of the dispute to Arbitration has been made, under section 21 of the Act. But it has ample powers to make interim or inter locutory orders in respect of the subject-matter of temporary nature under section 41(b) of the Act. It cannot pass any order regarding the subject matter of the suit which touches the proceedings of arbitration or has any relation to the pith of the case pending arbitration: Similar question had arisen in the case of Sha Vaktavarmal Seshmull v. Shah Nainmull Umaji & Co. (A I R 1962 Med. 436) The view taken was that : "The second Schedule, which is incorporated into the provisions of clause (b) of section 41 contains five items. This is purely to pre vent a party to the arbitration proceedings secreting the properties pending arbitration proceedings and defeat any award that may be passed therein." The counsel of the respondent referred to the case of Chetasing Bagasing v. Gulibai and others (A I R 1925 Sind 102) where it was held : "The Court is competent to appoint a Receiver in the interval or been the submission of an award and the final acceptance rejection of it and also where an arbitrator is proceeding with a reference." Considering all the aspects of the case and the law cited I have n doubt in my mind that the Court can exercise a jurisdiction in respect of the subject-matter of reference to the extent provided in the Act and pas involved. interim orders to preserve or to protect the property. 5. After ariving at the conclusion that the Court has not acted under Order XXXIX rule 1, C.P.C. or section 151, C.P.C. and has exercised a jurisdiction vested in it under section 41 (b) of the Arbitration Act it is abundantly clear that the appeal would not be competent under section 104 read with Order LXIII, rule 1 C.P.C. Provisions of the Arbitration Act would apply to appeals where order is made under any of the prov isions of the Act. Section 39 of the Act is reproduced below.: (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." This will show the extent of right of appeal given to the parties. The' appeals lie against the orders specified herein and not against any other order or all orders. Since the order is not of the nature as is specified in under section 39 of the Act the appeal is not competent. Same view was taken in case of Messrs M.A. Aziz & Sons v. Lt.-Col. M. Daud Khan an others (P L D 1968 Lah. 847). The property or legality of the order can however be examin ed under section 115, C.P.C. 6. The respondents have filed a suit for partition and they claim their share in the property left by Arbab Muhammad Umar including the plot on which the appellant is raising the construction. The appellant is raising construction on the undivided property left by Arbab Muhammad Umar, in which the plaintiff-respondents have claimed a share. During the course of arguments the counsel of the appellant urged that the appel lant bad acquired title by adverse possession but this case was not put up in the written statement or in the reply to the notice given telegraphi cally. The copy of the replies given by the appellant have been placed on record by the respondent's counsel in which the appellant has denied the claim of the respondents on the basis of Riwaj. The respondents had put up a prima facie case which requires adjudication. Construction of shops on the joint property is likely to prejudice the respondents and create complications and possibly confuse the issues and give rise to further litigation. If the shops are not transferred by way of lease by the appellant the object of completing the construction would be defeated and construction would be purposeless. The counsel of the appellant contended that in case the portion of the plot on which shops are being constructed falls to the lot of the respondents, the appellant would not claim any compensation in that behalf but there is no answer as to why the construction should be raised at all. Even what the counsel says be true yet he has not given any cogent reason or necessity of raising the construction. There is no answer to the question as to why he is raising the construction at all. He urged that shops which are leased to tenants can be vacated by process of law. If he is allowed to do what he is doing there will be another chain of litigation. He has not been able to give any plausible explanation of his conduct in creating all this confusion by raising construction on a disputed portion of plot. The balance of con venience lies in favour of the respondents and the unnecessary complica tion and future legal proceedings can be avoided if no construction is raised. The Senior Civil Judge has rightly exercised the discretion in favour of the respondents and I do not find any reason to interfere. The appeal is, therefore, dismissed. M. Z. M. Appeal dismissed.