Kumbha Mawji vs Union Of India

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 16 April, 1953

Coram: Mehr Chand Mahajan, Vivian Bose, Jagannadha Das

In the matter styled Kumbha Mawji versus Union of India, reported on 16 April 1953, the Supreme Court of India delivered a judgment authored by Justice Jagannadha Das, with the bench consisting of Justices Mehr Chand Mahajan and Vivian Bose. The factual background began on 28 January 1948 when the appellant, Kumbha Mawji, entered into a contract with the respondent, the Dominion of India as it then existed, to manufacture and supply stone boulders and ballast to the Bengal Assam Railway. The supply was to be taken from the Chutiapara quarry, an undertaking to be performed in Assam although the agreement itself was executed at Calcutta. The contract contained a dispute-resolution clause stipulating that any differences between the parties should first be referred to arbitration by two arbitrators, one appointed by each side. If the two arbitrators could not reach a consensus, the clause required the appointment of an umpire, to be selected jointly by the arbitrators, whose decision would be final.

Subsequent to the agreement, disagreements did arise and the parties accordingly referred the dispute to two arbitrators. The arbitrators were unable to agree, and thus the matter progressed to the umpire, identified as Mr P C Chowdhury. Around 20 July 1949 the umpire issued two separate awards, both favoring the appellant. The first award directed the respondent to pay the sum of Rs 3,67,000 to the appellant not later than 19 August 1949, and to pay interest at the rate of six per cent per annum on any amount remaining unpaid after that date. The second award ordered the respondent to pay an additional sum of Rs 83,000 under the same terms. It was reported that the umpire delivered original copies of each award to the respective parties.

On 10 August 1949 the respondent filed an application under section 14, sub-section (2) of the Indian Arbitration Act, 1940, before the Subordinate Judge of Gauhati, Assam. The application sought a direction that the umpire, Mr Chowdhury, should file both awards in the court so that the respondent would have an opportunity to raise objections to them. In response to the application the court issued a notice to the umpire, requiring the filing of the awards before 24 August 1949.

Complying with the notice, the umpire sent a letter dated 18 August 1949 to the Subordinate Judge along with copies of the two awards. In the letter he wrote: “Dear Sir, with reference to your notice in money suit No 63 of 1949 requiring me to submit the awards made by me in the above-mentioned dispute on 20 July 1949, I beg to submit that the two awards were made and signed by me in the presence of the parties and handed over to me on 20 July 1949. As directed by you I am sending herewith copies of the same signed by me. On the back of each of these copies occurs the receipt of the parties to the awards.” The umpire therefore transmitted certified copies of the awards, each bearing the parties’ acknowledgments of receipt.

Having received the umpire’s letter and the copies of the awards, the Subordinate Judge issued an order on 24 August 1949. The order, whose exact wording follows in the record, concerned the filing of the awards and the procedural steps to be taken thereafter.

On the basis of the umpire’s report, which indicated that copies of the award had been forwarded and that the originals had been delivered to the parties, the Subordinate Judge recorded a notice directing the applicant to file his copy on 3 September 1949. Accordingly, on 3 September 1949 the respondent submitted the awards that had been handed to it by the umpire, and the Subordinate Judge’s court in Gauhati proceeded to issue further notices and to entertain objections. A week after the respondent’s first application in the Gauhati court, on 17 August 1949, the appellant’s counsel wrote to the Registrar of the High Court, Original Side, enclosing two original awards dated 20 July 1949 for the sums of Rs 3,67,000 and Rs 83,000, each signed by Umpire P. C. Chaudhury, and requested that the office file the awards and issue notices promptly. After an exchange of correspondence in which the Deputy Registrar asked for additional documents, the Deputy Registrar notified the counsel on 29 August 1949 that the awards had been filed and instructed the counsel to obtain from the court a statutory notice fixing a date for judgment on the awards by the Commercial Judge. Notices were then issued to both parties stating that the umpire’s award had been filed on 29 August 1949 and that the Commercial Court would pronounce judgment on the award on 7 November 1949. The notice was served on the respondent on 2 September 1949, thereby initiating proceedings that were claimed to be under section 14(2) of the Indian Arbitration Act in both the Subordinate Judge’s court in Gauhati, Assam, and on the Original Side of the Calcutta High Court.

The appellant, in response to the Gauhati court’s notice dated 3 September 1949, appeared before that court on 28 October 1949 and obtained a series of adjournments that continued until 10 December 1949. On that date the Gauhati court declined any further adjournment and fixed 20 January 1950 for an ex parte hearing. Meanwhile, after receiving the notice issued by the Calcutta High Court, the respondent filed an affidavit on 24 November 1949, dated 15 November 1949, setting out objections to the jurisdiction of the Calcutta Court and to the validity of the awards. On the same day, a counter-affidavit dated 19 November 1949 was filed on behalf of the appellant. These affidavits were placed before the Commercial Judge of the Calcutta High Court on 16 December 1949, who overruled the respondent’s objections and passed judgment on the two awards. The respondent subsequently appealed to the Division Bench, which reversed the single judge’s decision, holding that no proper application under section 14(2) of the Indian Arbitration Act had been made before the Calcutta High Court and consequently that the court lacked jurisdiction to entertain the matter.

The Court noted that the respondent had filed objections to the jurisdiction of the Calcutta High Court and to the validity of the two arbitration awards. On the same day, the appellant filed a counter-affidavit dated 19 November 1949. Both affidavits were placed before the Commercial Judge of the Calcutta High Court on 16 December 1949. The learned Judge dismissed the respondent’s objections and rendered judgment in favour of the awards. The respondent then appealed to the Division Bench, which set aside the single Judge’s decree. The Division Bench held that no proper application under section 14(2) of the Indian Arbitration Act had been made before the Calcutta High Court; consequently the Court lacked jurisdiction to entertain the matter. Prior to the single Judge’s hearing, the principal objection raised in paragraph 14 of the respondent’s affidavit of 15 November 1949 was that the application under section 14(2) of the Act had been filed “as aforesaid” with the Gauhati Court before the award was submitted in Calcutta, and therefore only the Gauhati Court possessed jurisdiction. The Court explained that, under section 31(1) of the Arbitration Act, an award may be filed in any court that has jurisdiction over the subject matter of the reference. The reference originated from a contract concluded in Calcutta but to be performed in Assam, giving both the Gauhati Court and the Calcutta High Court jurisdiction over the dispute. The respondent’s contention, however, relied on section 31(4) of the Act and the fact that an application under section 14(2) for the umpire to file the award had been made to the Gauhati Court on 10 August. The respondent argued that this earlier application seized the matter for the Gauhati Court, thereby barring any later application under section 14 to another competent court. This issue formed the crux of the respondent’s arguments before the single Judge. The learned Judge, however, interpreted section 31(4) as applying only to applications made while an arbitration reference was pending, not to applications submitted after an award had been made. He further held that the exclusive jurisdiction for filing an award depended on the court in which the award was actually first filed under section 14(2), rather than on the court where the application to file the award was originally presented. In applying this view to the facts, the Judge concluded that the award should be treated as having been filed in the Calcutta Court, thereby granting it exclusive jurisdiction under section 31(3) and allowing the judgment on the award to stand.

The lower court concluded that the award had to be considered as having been filed first in the Calcutta court rather than in the Gauhati court. Accordingly, it held that, in view of section 31(3), the Calcutta High Court possessed exclusive jurisdiction over the matter. The court then proceeded to give judgment on the award because the respondent had not raised any objection within the prescribed time. On appeal, the appellate judges expressed that it was unnecessary for them to resolve the case on either of the grounds previously examined by the single judge. They observed that, on the facts, there was no proper filing of the award in the Calcutta court under section 14(2) because the awards that were alleged to have been duly filed had, in reality, not been filed by the umpire, nor had it been shown that they were filed with his authority. On this sole ground, they set aside the decision of the single judge and vacated the judgment that had been handed down in favour of the appellant on the basis of the two awards. Consequently, both appeals were brought before this Court. The case presented three questions for adjudication: first, whether the appellant possessed the umpire’s authority to file the awards on his own behalf in accordance with section 14(2) of the Arbitration Act; second, whether, pursuant to sub-section (3) of section 31 of the Act, the awards could be said to have been filed earlier in the Calcutta High Court than in the Gauhati court; and third, whether the scope of section 31, sub-section (4) is confined solely to applications made under the Act during the pendency of the arbitration proceedings.

Regarding the first question, section 14, sub-section (2) provides that “the arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the court and upon payment of the fees and charges due in respect of the arbitration and award and of the costs and charges of filing the award, cause the award or a signed copy of it, together with any depositions or documents which may have been taken and proved before them, to be filed in court, and the court shall thereupon give notice to the parties of the filing of the award.” The provision clearly implies that when a party actually files the award or a signed copy in court, that party must have the umpire’s authority to do so. This assumption formed the basis of the High Court’s analysis, and no party contested before this Court that a filing made by a party without the umpire’s authority could satisfy the requirement of the section. The High Court judges opined that the evidence did not establish that the appellant had been empowered by the umpire to file the original awards in court on his behalf.

The Court observed that the evidence did not establish that the umpire had empowered the appellant to file the original awards in court on the umpire’s behalf. The appellant argued that paragraph 7 of an affidavit dated 19 November 1949, filed on his behalf in the High Court on 24 November 1949, stated that “On or about the 21st July 1949, the said Umpire made over the said original award to this deponent for filing.” The appellant contended that this clause amounted to a declaration of the required authority from the umpire and highlighted that the respondent had made no reply affidavit to contradict the assertion. On the basis of that claim, the appellant maintained that the filing of the award was therefore valid. The learned Judges, however, reached the opposite conclusion by relying on two factual observations. First, the umpire’s letter to the Gauhati Court dated 18 August 1949, sent in compliance with a notice from that Court, merely recorded that the umpire had handed the awards over to both parties and did not state that he had authorised either party to file the awards in court on his behalf. Second, the Judges expressed the view that, as a matter of ordinary common-sense, the umpire could not be understood to have authorised both parties to file the awards in his name. The Court was inclined to accept that reasoning. When the originals are said to have been handed to both parties, it cannot be presumed that the simple act of handing them over automatically confers the umpire’s authority to file them in court. Such authority must be specifically alleged and proved. In the present case, the affidavit relied upon by counsel for the appellant only asserted that the umpire handed the original awards to the appellant for filing, but it did not allege that the hand-over was intended to confer the umpire’s authority to file the awards on his behalf. Moreover, the umpire may not have been aware that the awards were to be filed in court only by him or by someone expressly authorised by him. Counsel for the appellant further argued that the question of whether the umpire had authorised the appellant to file the award had not been raised as an objection before the learned single Judge of the High Court, and that such an objection should not be taken up for the first time on appeal. It is indeed correct that neither the respondent’s affidavit nor the judgment of the learned single Judge contains any indication that this issue was raised in the lower court. The appellate Judges themselves acknowledged this point toward the concluding portion of their judgment.

The Court reproduced the judgment of the lower tribunal, stating that the point on which the appeal succeeded had not been argued before that court. Nevertheless, the Court observed that the issue constituted a point of law and that the respondent had raised no objection to the appellant raising that point. No suggestion was made before the Court that the lower judgment’s statement was in any way erroneous or misleading. Counsel for the appellant contended that, had the appellate judges chosen to decide the case solely on this issue, they should have summoned the umpire to confirm the appellant’s authority. He further urged that the appellant should now be permitted to produce an affidavit supporting the claimed authority. The Court, however, found that reopening the matter at this late stage was neither necessary nor desirable for the parties. Beyond the mere lack of proof of authority, the Court emphasized that the appellant was required to expressly allege, pursuant to sub-section (2) of section 4, that he possessed the umpire’s requisite authority. The Court observed that such an allegation was absent not only in the affidavit dated 19th November 1949 but also in the letter accompanying the filing on 17th August 1949. The filing letter, submitted by the appellant’s solicitors, merely stated that the two original awards signed by the umpire were enclosed for filing and requested prompt issuance of notices. There was no expression in that letter indicating that the awards were being filed under the umpire’s authority. Accordingly, the Court concluded that the appellant’s solicitors had not complied with the requirements of section 14, sub-section (2) of the Act, which demands filing by the umpire himself.

The Court turned to the second issue, namely whether, under the terms of section 31, sub-section (3), the awards should be treated as filed earlier in the Calcutta court or in the Gauhati court. The learned Commercial Judge had held that the filing in the Calcutta court was the earlier one among the two. For purposes of considering that question, the Court assumed that the filing was made under the umpire’s authority. The Court noted that accepting the assumption of umpire authority allowed it to focus solely on the chronological order of the two filings. Under that premise, the filing that occurred in the Calcutta court preceded the filing that took place in the Gauhati court. Consequently, the Court was prepared to treat the Calcutta filing as the operative date for the purposes of section 31, sub-section (3). The Court’s analysis therefore rested on the factual finding that the awards had been lodged in Calcutta before any filing was effected in Gauhati. Thus, if the filing in Calcutta is accepted as the earlier one, any rights or obligations arising under the awards would be traced to that earlier filing date. The Court therefore indicated that the issue of the proper court of earlier filing would be resolved in favour of the Calcutta jurisdiction.

The learned Judge concluded that the awards were filed in the Gauhati court on 3 September 1949 because, following the Subordinate Judge’s order of 24 August 1949, the respondent had lodged the original awards with the court on that date. In reaching this conclusion, the Judge disregarded the fact that on 18 August 1949 the umpire, responding to a prior notice, had forwarded signed copies of the awards to the court and that those copies were already in the court’s possession on or before 24 August 1949. This act satisfied the requirement of section 14, sub-section (2), which merely obliges the umpire, on the court’s direction, to cause the original award or a copy thereof to be filed. The Judge further expressed uncertainty as to whether the copies sent to the Subordinate Judge were signed, and he failed to note that the umpire’s letter dated 18 August 1949 expressly stated, “As directed by you I am sending herewith copies of the same (awards) signed by me.” Moreover, the Judge was inclined to regard the mere forwarding of the awards as insufficient for filing, overlooking that section 14, sub-section (2) does not require the umpire’s physical filing; it is enough that the umpire causes the awards to be filed, and transmission by post in compliance with the notice fulfills that “causing.” Consequently, the Court determined that the proper filing date in the Gauhati court was 24 August 1949. Regarding the Calcutta court, although the appellant’s solicitors placed the awards there on 17 August 1949, the Registrar’s notice dated 30 August 1949 treated the awards as filed only on 29 August 1949. Paragraphs 8 and 9 of the respondent’s affidavit filed in the Calcutta court on 24 November 1949 categorically asserted that the awards were filed by the umpire on 24 August 1949 in the Gauhati court and on 29 August 1949 in the Calcutta High Court; these statements were not contested by the appellant in its counter-affidavit filed the same day. From these facts, the Court concluded that, for the purposes of section 31(3), the earlier filing occurred in the Gauhati court, contrary to the single Judge’s erroneous factual impression that it had occurred in the Calcutta court.

The Court observed that no argument had been presented before it suggesting that, for legal purposes, the filing of the awards in the Calcutta High Court should be dated to the 10th of August 1949—the day when the solicitors sent a letter to the Registrar enclosing the awards—rather than to the 29th of August 1949, which was the date recorded in the notice issued by the Registrar. The Court explained that this issue appeared to have been raised in the judgment of the Division Bench of the Calcutta High Court, but that, in the material before the Court, the contrary assumption had been adopted. Consequently, the Court was of the view that, even if the authority of the umpire to permit the appellant to file the award on his behalf were taken as a given, the earlier filing must be regarded as having occurred in the Gauhati Court. On that basis, the Court was inclined to hold that only the Gauhati Court possessed jurisdiction under section 31(3) of the Arbitration Act. The Court then turned to the third question that remained for determination, namely whether sub-section (4) of section 31 of the Indian Arbitration Act of 1940 applies solely where the first application under the Act was made while a reference to arbitration was still pending, or whether it also applies in a situation such as the present case where the first application is filed after the arbitration has been completed and an award has been made. The Court noted that the learned judges hearing the appeal had not addressed this point. However, the trial judge had examined the issue and concluded that the provision concerned only applications made during the pendency of a reference to arbitration. According to that judge, “in order to attract sub-section (4) an application must have been made during the pendency of the reference, and if such an application had been made, all other applications arising out of that reference—whether made in the reference or not—must be made in that court.” The Court observed that the trial judge appeared to have interpreted the phrase “in a reference” in section 31(4) as meaning “in the course of a reference.” The appellant’s counsel similarly contended that this interpretation required closer scrutiny. The Court then set out the relevant provision, stating that section 31 provides: “(1) Subject to the provisions of this Act, an award may be filed in any Court having jurisdiction in the matter to which the reference relates. (2) Notwithstanding anything contained in any other law for the time being in force and save as otherwise provided in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been, or may be, filed, and by no other Court. (3) All applications regarding the conduct of arbitration 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.” The Court proceeded to analyse these subsections in order to determine the appropriate jurisdictional rule applicable to the present dispute.

The judgment explained that, according to section 31 of the Indian Arbitration Act of 1940, any application that concerns the conduct of arbitration proceedings or that arises in any other way from those proceedings must be presented to the court in which the award has already been filed or in which it may be filed, and no other court may entertain such an application. The provision identified as sub-section (4) further stated that, irrespective of any other provision of the Act or any other law then in force, if an application under the Act is made in a court that is competent to hear it, that particular court alone will acquire jurisdiction over the entire arbitration process. Consequently, every subsequent application that arises out of that reference and from the arbitration proceedings must be filed in the same court and cannot be filed elsewhere. The analysis then turned to the purpose of each sub-section of section 31. Sub-section (1) deals with the question of where a completed award should be filed, thereby fixing the appropriate local jurisdiction for that purpose. Sub-section (2) expands the scope of that jurisdiction by declaring it exclusive, using the language that all questions relating to the validity, effect or existence of an award or an arbitration agreement, as well as claims by persons standing in the shoes of the parties, shall be decided by the court which has already received, or may receive, the award and by no other court. Sub-section (3) is intended to ensure that every application concerning the conduct of the arbitration or any other matter arising out of those proceedings is to be made in only one court, imposing on the concerned party a duty to file all such applications in that single forum. Sub-section (4), however, goes a step further than sub-section (3). While sub-section (3) merely obliges a party to lubricate the filing of all applications in a single court, sub-section (4) actually invests that court with exclusive jurisdiction over those applications once the first application concerning the matter has been filed there. When the court examined the entire section 31, it observed that the first sub-section designates the forum in which an award may be filed, whereas sub-sections (2), (3) and (4) each operate to give effect to that jurisdictional determination in three distinct manners. First, sub-section (2) confers upon a single court the authority to resolve all questions concerning the validity, effect or existence of an award or of an arbitration agreement. Second, sub-section (3) imposes upon the parties an obligation to present any application relating to the conduct of the arbitration or any other matter arising out of it before that one court. Third, sub-section (4) grants exclusive jurisdiction to the court where the initial application relating to the dispute is filed, thereby preventing any other court from entertaining later applications. The court therefore concluded that the context of sub-section (4) indicates that its reach is not limited merely to applications made while the arbitration is still pending. The purpose of assigning exclusive and effective jurisdiction to a single court, and the combined operation of the three provisions, is to avoid conflicts, duplications and a scramble for jurisdiction. This need for a uniform forum is equally essential whether the question arises during the pendency of the arbitration, after the arbitration has concluded, or even before the arbitration is started.

In this case, the Court observed that there is no logical basis for assuming that the Legislature intended to limit the operation of subsection 4 of section 31 solely to applications filed while an arbitration was still pending, even if the expression “in any reference” were interpreted to mean “in the course of a reference.” The Court noted that the Arbitration Act categorises arbitrations into three distinct groups: the first group consists of arbitrations that proceed without any court intervention and are governed by sections 3 to 19 of Chapter II; the second group involves arbitrations where a court intervenes but no regular suit is pending, and these are dealt with in section 20 of Chapter III; the third group comprises arbitrations that arise within ordinary suits and are covered by sections 21 to 25 of Chapter IV. For the latter two groups, the Act provides the relevant jurisdictional rules within the very provisions that create those categories, namely section 20, subsection (1), and section 21. The Court further explained that subsection (1) of section 31 appears to address only the first class of arbitrations, and consequently it might be suggested that subsections (2), (3) and (4) were meant to apply exclusively to that first class. However, the Court observed that no party relied on such a restricted view before it, and that, given the wide language employed in subsections (2) and (3), it has been assumed that those provisions extend to all three classes of arbitration at every stage of the process. If subsections (2) and (3) are to be understood in that expansive manner, the Court asked whether there is any compelling reason to construe subsection (4) in a narrowly limited fashion. According to the appellant’s interpretation, subsection (4) would not only exclude applications filed after a final award has been rendered, but would also preclude applications made before the arbitration actually commences, such as applications for filing an agreement of reference or for seeking a preliminary direction. The Court reminded that section 31 belongs to the group of sections labelled “General,” which, by operation of section 26, are applicable to every arbitration irrespective of its category. Consequently, unless the wording of subsection (4) is so forcefully exclusive that it unquestionably restricts its scope to applications made only during the pendency of an arbitration, the Court held that a limited construction must be rejected. The Court explained that the entire basis for the limited construction rests on reading the phrase “in any reference” to mean “in the course of any reference.” Yet the Court found that such an interpretation is not compelling, because the preposition “in” can convey a variety of meanings. Citing the Oxford English Dictionary, the Court noted that one of the dictionary’s definitions of “in” is “expressing reference or relation to something; in reference or regard to; in the matter, affair, or province of.” In the specific context of subsection (4) of section 31, the Court considered it reasonable to interpret the phrase “in any reference” as meaning “in the matter of a reference.” Since the Act defines “reference” as a “reference to arbitration,” the expression therefore means “in the matter of a reference to arbitration.” The Court concluded that this phrasing is sufficiently broad to encompass applications made after the arbitration has concluded and a final award has been issued, and that this broader construction represents the correct interpretation of subsection (4) within the overall scheme of the Arbitration Act.

The Court held that the expression “in any reference” should be understood to mean “in the matter of a reference”. Since the Act defines “reference” as a “reference to arbitration”, the phrase “in a reference” therefore signifies “in the matter of a reference to arbitration”. The Court observed that this wording is sufficiently wide to also encompass an application that is filed after the arbitration has concluded and a final award has been issued, and the Court considered this to be the proper construction of the provision in the context of the case. Consequently, the Court was of the opinion that section 31(4) confers exclusive jurisdiction on the court where an application for the filing of an award under section 14 of the Act is first made. It was undisputed that the Union of India, as the respondent, had filed its application before the Gauhati Court on 10 August 1949, whereas the earliest filing by the appellant before the Calcutta Court occurred on 17 August 1949. Having examined these facts together with the Court’s interpretation of section 31(4), the Court concluded that only the Gauhati Court possessed jurisdiction over the present dispute and that the Calcutta High Court did not. Accordingly, the Court ordered that both appeals be dismissed with costs, and recorded that the appeals were dismissed. The agent appearing for the appellant was identified as Sukumar Ghose, and the agent representing the respondent was identified as G. H. Rajadhyaksha.