M/S. Jethanand And Sons vs The State Of Uttar Pradesh

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

Court: Supreme Court of India

Case Number: Civil Appeals Nos. 421 to 423 of 1957

Decision Date: 6 February 1961

Coram: J.C. Shah, J.L. Kapur

In this matter, the Supreme Court of India considered the appeals filed by M/s Jethanand and Sons against the State of Uttar Pradesh. The judgment was rendered on 6 February 1961 by a bench comprising Justice J.C. Shah and Justice J.L. Kapur. The case was cited as 1961 AIR 794 and also reported in the Supreme Court Reports at 1961 SCR (3) 754. The citation record also listed several subsequent references, including R 1963 SC1484, R 1967 SC1344, D 1967 SC1440, D 1968 SC733, and R 1971 SC2319. The principal issues involved whether the order of the Allahabad High Court, which remanded the case for further determination and granted a certificate of fitness under Article 133(1)(c) of the Constitution of India, qualified as a “final order” for the purposes of a appeal to this Court, and whether the High Court possessed the power under Section 109 of the Code of Civil Procedure, 1908 (V of 1908) to entertain such an appeal. The petitioners contended that the High Court’s remand order should be treated as a final decision because it effectively determined the parties’ rights, while the respondents argued that the order merely directed further proceedings and therefore did not meet the constitutional definition of a final judgment, decree, or order. Counsel for the appellant and counsel for the respondent presented their arguments before the Court.

The Court observed that the High Court’s order did not resolve any substantive question concerning the rights of the parties; it merely sent the matter back to the trial court for a fresh determination after framing issues and allowing evidence. Accordingly, the Court held that such a remand order could not be classified as a judgment, decree, or final order within the meaning of Article 133 of the Constitution. The Court explained that a final order must amount to a conclusive decision on the rights in dispute in the civil proceeding. Since Section 109 of the Code of Civil Procedure expressly limited appeals to judgments, decrees, and final orders, and the High Court’s order fell outside that category, no appeal lay under that provision to this Court. The Court also referred to the earlier decision in V. M. Abdul Rahman and Others v. V. D. K. Cassim and Sons and Another (1933) L.R. 60 I.A. 76, emphasizing that the High Court’s order did not raise a question of great public or private importance, nor did it involve the interpretation of Paragraph 3 of the First Schedule of the Indian Arbitration Act, which remained for trial before the Civil Judge. Consequently, the Court concluded that the certificate of fitness for appeal could not be granted under Article 133, and it set aside the High Court’s remand order and the certificate of fitness.

The parties identified as the appellants, M/s Jethanand & Sons, had obtained a certificate of fitness to appeal under Article 133(1)(c) of the Constitution from the High Court of Judicature at Allahabad. These appellants had entered into three distinct contracts with the Government of the United Provinces, which is presently known as the State of Uttar Pradesh. The contracts were executed on 20 March 1947, 27 May 1947 and 28 June 1947 respectively, and each concerned the supply of stone ballast at Shankar Garh in the District of Allahabad. All three agreements were drafted on identical terms and each incorporated the same arbitration clause, which provided that any dispute arising out of the contract—whether during its continuance or after its rescission, or concerning the construction, meaning, tender, specifications, conditions, any part thereof, or any matter incident thereto for which no express provision had previously been made—should be referred to the Superintending Engineer of the circle concerned, whose decision was to be final, binding and conclusive upon the parties.

Pursuant to the performance obligations in the contracts, the appellants supplied the required stone ballast. Subsequently, invoking clause 16 of the agreements, the Executive Engineer of the Provincial Division referred several disputes that the State of Uttar Pradesh claimed arose out of the performance of the contracts to the arbitration of the Superintending Engineer of the circle concerned. The Superintending Engineer issued notices requiring the appellants to appear before him at the times specified therein. By a letter dated 31 May 1951, the appellants declined to submit to the jurisdiction of the Superintending Engineer and warned that any determination made by him ex parte would not be binding upon them.

On 7 February 1953, the Superintending Engineer rendered and published three awards addressing the disputes that had arisen under each of the three contracts, and he filed these awards in the court of the Civil Judge at Lucknow. The appellants moved to have the awards set aside on the ground that the contracts had been fully performed and therefore no dispute could arise thereafter, and that the State of Uttar Pradesh lacked authority to refer such alleged disputes to arbitration. They further contended that the awards were legally invalid because, under the arbitration agreements, no action had been taken in accordance with section 20 of the Arbitration Act.

The Civil Judge at Lucknow held that the disputes between the parties had been properly referred to the Superintending Engineer by the State of Uttar Pradesh and that the awards had been validly made. Dissatisfied with that decision, the appellants filed three separate appeals before the High Court of Judicature at Allahabad. The High Court set aside the orders of the Civil Judge and remanded the matters to the Trial Judge, directing that the Trial Judge allow the appellants, and, if necessary, also allow the respondent, to amend their pleadings, frame all issues arising out of the pleadings, and provide the parties an opportunity to present such evidence as they deemed appropriate for resolution of the case.

The High Court directed that the parties be allowed to amend their pleadings, that all issues arising from those pleadings be framed, and that each party be given an opportunity to adduce any evidence it considered necessary, with the case to be decided on the basis of that evidence. The High Court observed that the appellants had not been properly served with notice of the filing of the arbitration awards and that the appellants were “seriously handicapped in their reply by the course which had been adopted both by the court and the arbitrator in the conduct of the proceedings in court.” On the basis of the applications filed by the appellants, the High Court granted leave to appeal to this Court under Article 133(1)(c) of the Constitution, certifying that the matters were fit for a Supreme Court appeal. The respondent’s counsel argued that the High Court lacked competence to issue such a certificate under Article 133(1)(c). The High Court had, however, held that its order was made in the exercise of its inherent power to dispense such orders when required for the ends of justice or to prevent abuse of process. Article 133 provides that an appeal to this Court may be taken from any judgment, decree, or original order in a civil proceeding of a High Court if the High Court certifies that (a) …, (b) …, or (c) “the case is a fit one for appeal to the Supreme Court.” In the present view, the order remanding the cases under section 151 of the Civil Procedure Code does not constitute a judgment, decree, or final order within the meaning of Article 133. By that order the High Court did not determine any question concerning the parties’ rights; it merely sent the matters back for a fresh trial because it found that the petitions seeking to set aside the awards had not been properly tried. An order that merely remands a case for retrial does not satisfy the definition of a final order under Article 133(1)(c). A final order is one that represents a conclusive decision on the rights of the parties in the dispute. If, after the order, the civil proceeding must still be conducted and the parties’ rights remain to be determined, the order is not final within the meaning of Article 133. The High Court seemed to assume that a certificate of fitness for appeal could be issued under section 109(1)(c) of the Code of Civil Procedure even where the order was not final, relying on the Judicial Committee of the Privy Council decision in V. M. Abdul Rahman v. D. K. Cassim & Sons. However, section 109 of the Code is now expressly made subject to Chapter IV, Part V of the Constitution, and Article 133(1)(c) in that chapter authorises the grant of a certificate by the High Court only when the order is a final one.

The Court observed that the requirement for a certificate of fitness to appeal under Article 133 (1)(c) is that the order must be a final order. The inconsistency that had previously existed between section 109 of the Code of Civil Procedure and Article 133 of the Constitution was removed by the enactment of the Code of Civil Procedure (Amendment) Act 66 of 1955. Nevertheless, even before that amendment, because section 109(1)(c) was expressly made subject to the Constitution, an appeal to this Court could lie only against judgments, decrees and final orders. The Court further noted that the orders issued by the High Court did not raise any question of great public or private importance. The High Court, after examining the applications and setting aside the awards filed by the appellants, held that those applications had not been properly tried and therefore ordered that the matters should be remanded to the court of first instance for a trial de novo. In that direction the High Court granted leave to the parties to amend their pleadings and directed the Civil Judge to frame “all the issues that arise and allow the parties an opportunity of adducing such evidence as they desired.” This direction amounted to an order for a trial de novo on fresh pleadings and on all issues that may arise on the pleadings (1)(1933) L.R. 60 I.A. 76. Consequently, any decision rendered by the High Court in the course of that order would not be binding in the subsequent trial de novo, and the cases would have to be tried afresh by the Civil Judge. The High Court also expressed the view that the interpretation of paragraph 3 of the first schedule of the Indian Arbitration Act raised a substantial question of law. However, by its own direction, that question was left open to be tried before the Civil Judge. The Court could not appreciate how an observation on a question that was directed to be retried could still be regarded as raising a question of law of great public or private importance sufficient to justify the grant of a certificate under Article 133 (1)(c) of the Constitution. Accordingly, the Court vacated the certificate that had been granted by the High Court and dismissed the appeals, ordering the payment of costs and a single hearing fee, and thereby dismissed the appeals.