Union of India vs Mohindra Supply Company

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 112 of 1958

Decision Date: 05/09/1961

Coram: J.C. Shah, K.N. Wanchoo, K.C. Das Gupta, Raghubar Dayal

In this matter, the Supreme Court of India rendered its judgment on the fifth day of September, 1961, with a bench consisting of J C Shah, K N Wanchoo, K C Das Gupta and Raghubar Dayal. The petitioner was the Union of India and the respondent was Mohindra Supply Company. The dispute arose out of a contract for the supply of fuel, which the parties referred to arbitration. The arbitrators issued an award requiring the petitioner to pay a specified sum to the respondent, and the award was filed in the court of a Subordinate Judge. The petitioner applied to the Subordinate Judge for setting aside that award, but the judge rejected the application. Consequently, the petitioner appealed to the High Court under section 39(1) of the Indian Arbitration Act, 1940. A single judge of the High Court allowed the appeal and consequently set aside the arbitral award. The respondent then filed a Letters Patent appeal against the single judge’s decision. That appeal was entertained, the single judge’s judgment was set aside, and the order of the Subordinate Judge was restored.

The petitioner argued that the Letters Patent appeal was incompetent because section 39(2) of the Arbitration Act barred a second appeal from an order rendered in an appeal under section 39(1). The Court held that an appeal against the appellate order of the single judge is indeed barred by section 39(2). It explained that the expression “second appeal” in section 39(2) refers to a further appeal from an order passed in an appeal under section 39(1), and it does not refer to an appeal made under section 100 of the Civil Procedure Code. Moreover, “second appeal” includes an appeal under the Letters Patent. The Court observed that the Letters Patent of the Lahore High Court, which governed the present appeal, could be amended or altered by legislative enactments, and that by inserting clause (2) of section 39, the legislature deliberately prohibited a Letters Patent appeal against an order passed under section 39(1). The provisions of section 39 therefore apply both to appeals to superior courts and to intra‑court appeals. The Court cited earlier authorities, including Madhavdas v Fithaldas, I L R (1952) Bom 570, Radha Krishna Murthy v Ethirajulu, I L R (1945) Mad 564, Hanuman Chamber of Commerce Ltd v Jassa Ram Nand, A I R (1948) Lah 64, Banwari Lal Ram Dev v The Board of Trustees Hindu College, I L R (1948) E P 159 498, and Mulchand Kewal Chand Daga v Kishan Das Grihdardas (1961) 74 L W 408, which were approved or disapproved as indicated. In conclusion, the Court affirmed that section 39(2) removed the right of a Letters Patent appeal against an order passed under section 39(1).

The Court observed that statutory words must be interpreted without any bias toward the legal position that existed before the Arbitration Act of 1940 was enacted. In construing a statute that incorporates existing law, it is impermissible to begin with the presumption that the legislature intended no alteration of the pre‑existing rule. In support of this principle, the Court applied the precedent set in Narendra Nath Sircar v. Kamlabasini Dasi, L.R. (1896) 23 I.A. 18. The Court noted that under the Code of Civil Procedure of 1882 the High Courts were divided on whether a Letters Patent appeal could lie from an appellate order made by a single judge in arbitration matters. The later Code of 1908, by virtue of sections 4 and 104(1), expressly preserved the right of appeal under any other law that might then be applicable. When the Arbitration Act of 1940 came into force, it withdrew all arbitration‑related provisions from the Code and introduced a comprehensive scheme within the Act itself. Although under the 1908 Code an appeal from an order of a single judge exercising appellate jurisdiction could be taken under the Letters Patent, that right existed because section 4 of the Code deliberately reserved the power to entertain appeals under a special law. The Court pointed out that the Arbitration Act of 1940 contains no provision analogous to section 4 of the 1908 Code, and it provides no mechanism to retain the High Court’s jurisdiction by virtue of the Letters Patent. Consequently, the Letters Patent must be read in accordance with the provisions of section 39 of the Arbitration Act. The Court also referred to Hurrish Chunder Chowdry v. Kali Sundari Debia, (1882) L.R. 10 I.A. 4. The judgment proceeded to the civil appellate jurisdiction concerning Civil Appeal No. 112 of 1958, which arose from the judgment and decree dated 25 May 1954 of the Punjab High Court in L.P.A. No. 82 of 1948. Counsel for the appellant were Naunit Lal and T. M. Sen, while counsel for the respondent were S. T. Desai, Chatter Behari and A. G. Ratnaparkhi. Delivered on 5 September 1961 by Shah, J., the case involved a dispute under a contract for the supply of solidified fuel between Messrs. Mohindra Supply Company (the respondents) and the Governor‑General of India in Council, which was referred to arbitration by two arbitrators. On 19 March 1946 the arbitrators issued an award directing the Governor‑General to pay the respondents Rs. 47,250 with interest at three per cent from 17 July 1944 until payment. The award was filed in the court of the Subordinate Judge, First Class, Delhi. The Governor‑General sought a decree setting aside the award on certain grounds, which are not material to the present appeal. The Subordinate Judge rejected that application and refused to set aside the award. The Governor‑General then appealed the refusal to the Lahore High Court; after the creation of the Dominions of India and Pakistan, the appeal was transferred to the Circuit Bench of the East Punjab High Court at Delhi, where it was heard by Falshaw, J.

The judge who heard the earlier appeal set aside the order of the Subordinate Judge, holding that the dispute could not lawfully be referred to arbitration under the contract that gave rise to the controversy, and that view alone was sufficient to render the arbitral award invalid. In response to that decision, an appeal was lodged under clause ten of the Letters Patent of the High Court of Lahore; by virtue of the High Court (Punjab) Order of 1947, that provision was made applicable to the East Punjab High Court. Before the Appellate Bench of that court, the Governor‑General advanced the argument that the appeal filed under the Letters Patent was barred by section thirty‑nine, sub‑section two, of the Indian Arbitration Act. Consequently, the question of whether the appeal was maintainable was referred to a Full Bench of the High Court for determination. The Full Bench held that an appeal from the judgment of a Single Judge exercising appellate jurisdiction did indeed fall within clause ten of the Letters Patent, and that this right existed notwithstanding the prohibition contained in section thirty‑nine, sub‑section two, of the Arbitration Act. After the Full Bench rendered its opinion, a Division Bench examined the merits of the appeal and ultimately set aside the order originally made by Justice Falshaw. The Union of India consequently filed an appeal against the decision of the High Court. In the present appeal, the Court confines its consideration solely to the question of whether the appeal made under element ten of the Letters Patent of the High Court against Justice Falshaw’s order was maintainable. Since the enactment of the Indian Arbitration Act of 1940, all arbitration proceedings have been governed by the provisions of that Act. The Act functions as a consolidating and amending statute; it repealed the Arbitration Act of 1899, Schedule 2 of the Code of Civil Procedure, and also clauses (a) to (f) of section 104(1) of the Code of Civil Procedure, which previously provided for appeals from orders in arbitration matters. The Act established a comprehensive machinery for all contractual arbitrations, and its provisions, subject to certain exceptions, also apply to every arbitration conducted under any other enactment then in force, treating such arbitration as if it were based on an arbitration agreement and treating the other enactment itself as if it were an arbitration agreement, except to the extent that the Arbitration Act is inconsistent with that other enactment or with any rules made thereunder. Section thirty‑nine of the Act, which deals with appeals, provides that an appeal shall lie only from the orders listed in sub‑section (1) and from no others, to the court authorized by law to hear appeals from original decrees of the court that passed the order. The orders specified are: (i) an order superseding an arbitration; (ii) an order on an award stated in the form of a special decree; (iii) an order modifying or correcting an award; (iv) an order filing or refusing to file an arbitration agreement; (v) an order staying or refusing to stay legal proceedings where an arbitration agreement exists; and (vi) an order setting aside or refusing to set aside an award, subject to the condition that the provisions of this section do not apply to any order passed by a Small Causes Court. Sub‑section (2) further states that no second appeal shall lie from an order passed in appeal under sub‑section (1), but nothing in this provision shall affect or remove any right to appeal to the Supreme Court.

The provision states that “this section shall affect or take away any right to appeal to the Supreme Court.” The two sub‑sections of section 39 clearly belong to a single legislative scheme. Under sub‑section (1) the right of appeal is granted only against the categories of orders that are expressly listed and against no other orders. Moreover, sub‑section (1) provides that once an order has been affirmed on appeal, no further appeal, except an appeal to this Court, shall be permitted. A question arose as to whether the prohibition contained in sub‑section (2) applies to an appeal made under the Letters Patent. The High Courts of India have expressed differing views on this issue. The Bombay High Court, in Madhavdas v. Vithaldas¹, held that when a single judge of the High Court decides an appeal under section 39(1) of the Arbitration Act, there is no additional right of appeal under the Letters Patent. The Madras High Court expressed the same opinion in Radha Krishna Murthy v. Ethirajulu². By contrast, the Delhi High Court in Hanuman Chamber of Commerce Ltd. v. Jassa Ram Hira Nand³ and the Punjab and Haryana High Court in Banwari Lal Ram Dev v. The Board of Trustees, Hindu College⁴ held that an appeal under the Letters Patent against an order that arose from an appeal under section 39(1) is not barred by section 39(2). The Lahore and the East Punjab High Courts, however, treated the appeals barred by sub‑section (2) as “second appeals,” that is, appeals under section 100 of the Code of Civil Procedure as well as intra‑court appeals such as those made under the Letters Patent from a single judge to a bench of the same court. The Madras High Court, in a more recent decision, Mulchand Kewal Chand Daga v. Kissan Das Gridhardass¹, overruled its earlier stance in Radha Krishna Murthy’s case and concluded that section 39 deals only with appeals from orders of a court to a superior court and not with intra‑court appeals. Consequently, section 39(2) does not prevent an appeal under the Letters Patent against an order made by a single judge exercising appellate jurisdiction in an arbitration matter. Section 39(2) expressly bars a second appeal from an order decided under section 39(1) except an appeal to this Court. The language of sub‑section (2) makes it clear that the term “second appeal” does not refer to an appeal under section 100 of the Code of Civil Procedure. While sub‑section (2) creates an exception in favour of an appeal to this Court, such an appeal is not classified as a “second appeal.” If the legislature had intended to prohibit appeals under section 100, it would not have been necessary to include a specific provision preserving appeals to this Court. Finally, an appeal under section 39(1) is available against an order that supersedes an award, modifies an award, or corrects an award.

The Court noted that orders concerning the filing or refusal to file an arbitration agreement, the staying or refusal to stay legal proceedings where an arbitration agreement exists, the setting aside or refusal to set aside an award, or an award framed as a special case, are not decrees within the meaning of the Code of Civil Procedure and they do not possess the effect of decrees under the Arbitration Act. Section 100 of the Code of Civil Procedure deals with appeals from appellate decrees and not with appeals from appellate orders such as those mentioned above. Consequently, if Section 39(2) had been intended to prohibit appeals from appellate decrees, the provision would be redundant; the Court would not be justified in imputing to the legislature an intention to enact a sterile clause absent compelling context or circumstances. On this basis, the Court concluded that the expression “second appeal” used in Section 39(2) of the Arbitration Act signifies a further appeal from an order passed in an appeal under Section 39(1), and not an appeal made under Section 100 of the Civil Procedure Code. This interpretation was previously expressed by Savdekar, J., in Madhavdass v. Vithaldas (1) and by Rajamannar, C. J., in Mulchand Kewal Chand Daga v. Kissan Das Gridhardass (2), and the Court agreed that the adjective “second” imports the notion of a further, numerically second appeal. The next issue the Court turned to was whether the right to appeal under the Letters Patent is restricted by Section 39, subsections (1) and (2). Clause 10 of the Letters Patent of the High Court, insofar as it is material, provides that an appeal shall lie to the High Court from a judgment that is not a judgment passed in the exercise of appellate jurisdiction in respect of a decree or order made in the exercise of appellate jurisdiction by a Court subject to the superintendence of the High Court, and not being an order made in the exercise of revisional jurisdiction of one Judge of the High Court. By this clause, a right of appeal, except in the cases expressly specified, from a single Judge of the High Court to a Division Bench is expressly granted. However, the Letters Patent are declared by clause 37 to be subject to the legislative power of the Governor‑General in Council and also of the Governor‑in‑Council under I.L.R. [1952] Bom. 570 and the Government of India Act, 1915, and may be amended or altered in the exercise of legislative authority. Under Section 39(1), an appeal lies only from the orders enumerated in that subsection and from no others. The Legislature has plainly expressed that the right of appeal against orders passed under the Arbitration Act may be exercised only with respect to certain orders, and the right of appeal against other orders is expressly withdrawn. If the express provision of Section 39(1) restricts a right to appeal from a judgment that might otherwise be available under the Letters Patent, there is no basis for holding that subsection (2) does not impose a similar restriction on the appellate power conferred by the Letters Patent.

In this case, the Court observed that the provision contained in section 39(1) limited a right to appeal from a judgment that might otherwise have been available under the Letters Patent, and therefore the same limitation must logically apply to the power granted by clause two of the Letters Patent. Consequently, if for the reasons previously discussed the term “second appeal” were understood to include an appeal under the Letters Patent, it would be impossible to hold that, notwithstanding the explicit prohibition, an appeal under the Letters Patent from an order rendered in an appeal under subsection (1) could be entertained. The Punjab High Court, in Banwari Lal Ram Dev v. The Board of Trustees, Hindu College, and the Lahore High Court, in Hanuman Chamber of Commerce Ltd., Delhi v. Jassa Ram Hira Nand, had held that the appeals contemplated by section 39 were appeals to superior courts and not “intra‑court” appeals, and therefore they concluded that the right to appeal under the Letters Patent was not restricted by subsections (1) and (2). The Court noted, however, that a careful analysis of this argument produced startling consequences. If the appeal envisaged by section 39(1) were only an appeal to a superior court, then orders passed by a subordinate court whose decisions were ordinarily appealable to the same court would become non‑appealable under the Arbitration Act. For example, under the Bombay Civil Courts Act, certain decisions of Assistant Judges were made appealable to the District Courts; an Assistant Judge was itself a Judge of the District Court, and under that Act appeals against his orders and decrees in specified cases lay to the District Court. Accepting the proposition that an appeal under clause (1) of section 39 meant only an appeal to a superior court would consequently mean that an appeal from an order made by an Assistant Judge under section 39(1) would not lie at all. Similar provisions existed in the Civil Courts Acts of other States. The Court further explained that the qualifying wording “to the court authorised by law to hear appeals from original decrees of the Court passing the order” in section 39(1) did not import the idea that the appellate court must be distinct and separate from the court passing the order or decree. The legislature had not enacted such a requirement, and the context did not support that interpretation. The clause merely identified the forum of appeal. Thus, if from the decision of a court hearing a suit or proceeding an appeal lay to a Judge or a panel of Judges of the same court, then, by virtue of section 39(1), an appeal would lie from an order passed under the Arbitration Act, provided the order was appealable, to those Judge(s) of that court. The Court concluded that the argument suggesting that the right to file an appeal to the Supreme Court from orders in arbitration proceedings would be severely restricted lacked substance. If an order was passed in a proceeding

In this case the Court explained that where an order issued by the original side of a High Court is appealable under section 39 (1) of the Arbitration Act, the appeal must be taken to a Division Bench of the same High Court. From a judgment rendered by that Division Bench, a further appeal, by virtue of the express provision contained in subsection (2), may be made to the Supreme Court, subject only to the restrictions laid down in the relevant articles of the Constitution. The Court further held that if an order does not fall within the ambit of section 39 (1), no appeal will lie at all. The Court observed that against an order made in an arbitration proceeding, an appeal to the Supreme Court is a matter of right when the order has been passed by a Division Bench of a High Court and the conditions of Article 133 are satisfied; however, when the same matter is heard and decided by a Single Judge of the High Court, no such appeal to the Supreme Court is available.

The Court emphasized that the right of appeal is created by statute and that no litigant possesses an inherent right to appeal a court decision. It noted that the anomaly relied upon by the appellant arises in the context of second appeals and revision applications. When such proceedings are conducted and disposed of by Single Judges, there is no right of appeal to the Supreme Court, whereas appeals against decisions of Division Benches may be pursued. The Court also recorded that counsel argued that the interpretation of section 39 should not be isolated from the legislative history. In particular, reference was made to the legislative history and to the dictum of the Privy Council in Hurrish Chunder Chowdry v. Kali Sundari Debia (1), which has been universally followed when assessing the scope of the right of appeal under the Letters Patent. According to that view, the Court should not restrict a right of appeal that, until 1940, was exercisable by litigants against decisions of single Judges of High Courts in arbitration matters arising from appellate orders.

The Court further examined whether the right of appeal that had previously been available against decisions of single Judges in appeals from arbitration orders was intended to be removed by section 39 (2) of the Indian Arbitration Act. It stressed that the statute must be interpreted without any predisposition derived from the state of the law before the Arbitration Act was enacted. The Arbitration Act of 1940 was characterized as a consolidating and amending statute that functions as a code dealing with arbitration. In interpreting another statute, the Indian Succession Act, 1865, the Privy Council in Narendra Nath Sircar v. Kamlabasini Dasi (1) (1882) L.R. 10 I.A. 4, 17 held that a code must be construed according to the natural meaning of its language and not on the presumption that it was intended to leave existing law untouched. The Judicial Committee also endorsed Lord Herschell’s observations in Bank of England v. Vagliano Brothers (1), emphasizing that the proper first step is to examine the language of the statute and ascertain its natural meaning, independent of any prior legal position.

In interpreting a statute, the Court emphasized that the first step is to examine the language of the provision and determine its natural meaning without being influenced by the previous state of the law. The Court rejected the approach of first investigating how the law stood before the enactment, then assuming that the legislature intended to preserve the old law, and finally checking whether the words could be read to fit that assumption. The Court observed that if a statute designed to codify a particular branch of law were treated in that manner, its usefulness would be almost wholly destroyed and the purpose of the enactment would be frustrated. The purpose, according to the Court, is that for any point expressly covered by the code, the law must be ascertained by interpreting the language employed, rather than by searching through a multitude of earlier authorities and extracting the rule by meticulous analysis of prior decisions. Consequently, when a court interprets a statute it must not add words that are not present in the text, and it must not begin with the presumption that the statute was intended to leave the pre‑existing law unchanged. The Court cited authorities (1) (1896) L. R. 23, I. A. 18 and (2) [1891] A.C. 107, 144‑145 to support the principle that interpretation cannot rely on authority not found in the statute. The Court added that it would not dispose of the matter solely on these general principles. Even considering the legislative history in light of the Privy Council dictum in Hurrish Chunder’s case, the Court found no adequate justification for departing from the plain and apparent intention of the statute. The Court then turned to the specific provisions of the Code of Civil Procedure of 1877, which conferred a right of appeal on litigants only against orders specified in section 588 and no other orders. Sections s and t addressed the right to appeal against an order under section 514 that superseded an arbitration and against an order under section 518 that modified an award, respectively, and the last paragraph of the code declared that orders made on appeal under the section were final. Section 589, paragraph 2, provided that when an appeal from any order was permitted by the chapter, the appeal lay to the court that would entertain an appeal from the decree in the suit to which the order related. Section 591 stated that, except as provided in the chapter, no appeal lay from an order passed by any court exercising original or appellate jurisdiction. The Code of 1877 was later replaced by the Code of 1882, but the provisions relating to appeals from orders were re‑enacted in identical terms. The Court noted that before the decision in Hurrish Chunder’s case,…

The Court observed that both the Bombay and the Madras High Courts had previously held that, under clause 15 of the Letters Patent of the High Courts of Bombay, Madras and Calcutta, an appeal from an order made by a single judge of a High Court was permissible only if section 588 of the Code of Civil Procedure applied, and no other basis for appeal existed. In the case of Sonba v. Ahmed bha Habibha (1), a Full Bench of the Bombay High Court, while interpreting the Letters Patent together with the provisions of section 363 of the Civil Procedure Code, affirmed that an appeal to the High Court from an interlocutory order issued by one judge could be entertained solely in those situations where the Code of Civil Procedure and its amending statutes expressly allowed an appeal. The Madras High Court expressed an identical view in Achaya v. Ratrandu (2). However, the Privy Council in Hurrish Chunder Chowdry v. Kali Sundari Debia (3) adopted a contrary position. In that case, a Kassiswari had executed a will that divided a taluk equally between her daughter Chundermoni and her daughter‑in‑law Kali Sundari. After the Kassiswari’s death, the two devisees sued Hurrish Chunder for a decree of possession of the taluk. The Subordinate Judge granted the decree, and the decree was later affirmed by the Privy Council in an appeal filed by the daughters of Chundermoni; the order of the Queen‑in‑Council was then sent to the Calcutta High Court for execution. Subsequently, Chundermoni’s share in the taluk was bought by Hurrish Chunder. Kali Sundari then approached the original jurisdiction of the Calcutta High Court to obtain execution of the Queen‑in‑Council order. Pontifex, J. refused to execute the order on the ground that it could not be executed by only one of the two original plaintiffs. An appeal against Pontifex’s order was filed under clause 15 of the Letters Patent. A Full Bench of the High Court, sitting unanimously, held that the “discretion” exercised by Pontifex, J. was erroneous; nevertheless, Justice Garth, C. J., opined that Pontifex’s order was merely ministerial, that he lacked jurisdiction to pass it, and therefore the appeal was incompetent. Justices White and Romeshchunder Mitter, JJ., disagreed, stating that the order amounted to a “judgment” and was therefore appealable under clause 15 of the Letters Patent. The defendant, Hurrish Chunder, subsequently appealed the High Court’s order to the Judicial Committee of the Privy Council, which adopted the majority view of the High Court. In rejecting Justice Garth’s argument, the Committee noted that Pontifex, J. had not been shown to have usurped jurisdiction, and even if he had, that would constitute a valid ground for appeal. The Committee further observed that when a High Court judge makes an order under a mistaken view of his jurisdiction, the High Court possesses the authority to entertain an appeal to correct the miscarriage of justice. Finally, the Committee remarked that section 588 of Act X of 1877, which limits certain appeals, did not apply to a case where the appeal was from one judge to the full Court.

In its reasoning the Committee held that even if a High Court judge acted beyond the jurisdiction that law assigned to him, such excess could still constitute a proper ground for an appeal. Moreover, the Committee stated that when a judge of the High Court issues an order based on a mistaken understanding of the limits of his own authority, the High Court itself possesses the power to entertain an appeal in order to correct that miscarriage of justice. The Committee further observed that s. 588 of Act X of 1877, which restricts certain appeals, did not apply to a situation where an appeal was made from a single judge of the Court to the full Court. This pronouncement in the Hurrish Chunder Chowdry case created a serious conflict of opinion among the Indian High Courts. The High Courts of Calcutta, Bombay and Madras, following the Privy Council’s dictum, held that an order that was not appealable under s. 588 of the Civil Procedure Code could nevertheless be appealed if it amounted to a “judgment” within the meaning of clause 15 of the Letters Patent of the respective High Court, as reflected in cases such as Chappan v. Moidin Kutti, Chabhapathi Chetti v. Narayanaswami Chetti, Toolsee Money Dassee v. Sudevi Dassee and Secretary of State v. Jehangir. By contrast, the Allahabad High Court in Banno Bibi v. Mehdi Husain expressed the opposite view, and Sir John Edge, Chief Justice, observed that if an order was not appealable under s. 588 and s. 591 of the Code of Civil Procedure, it could not be appealed under the Letters Patent of the High Court. That view was affirmed by a Full Bench in Muhammad Naim‑Ul‑Lah Khan v. Ihsan‑Ul‑Lah Khan. In response to this divergence, the legislature intervened by amending the Code of 1908. Section 4, by its first sub‑section, provided that in the absence of a specific contrary provision, nothing in the Code would be deemed to limit or affect any special or local law then in force, nor any special jurisdiction or power conferred, or any special form of procedure prescribed by any other law. Section 104(1) then declared that an appeal shall lie from the orders listed therein and, unless expressly provided otherwise in the Code or any other law, no appeal shall lie from any other orders. The legislature also expressly stated that no appeal shall lie from any order passed in appeal under this section. Section 105 was drafted substantially in the same terms as s. 591 of the earlier Code. The purpose of sub‑section (1) of s. 104 was clearly to preserve the right of appeal conferred by any other law then in force.

In this case the Court observed that the legislation expressly preserved any special jurisdiction or power that existed under another law that was in force at the time. This preservation was emphasised by section 4 of the Code, which states that in the absence of a specific provision to the contrary, nothing in the Code is intended to limit or affect any special jurisdiction or power conferred by or under any other law then in force. Accordingly, the Court held that the right to appeal against judgments – that is, orders that did not amount to decrees – under the Letters Patent was not displaced by section 104(1) of the Code of Civil Procedure, 1908. The Court referred to the authority (1) I.L.R. (1892) 14 All. 226.

Under the amended Code, the prevailing view has consistently been that interlocutory judgments – decisions that do not constitute decrees but that determine a party’s right or liability and therefore affect the merits of the dispute – issued by a single Judge of a Chartered High Court are appealable under the Letters Patent. The Court cited several decisions to illustrate this position, namely Ruldu Singh v. Sanwal Singh (1), Paramasivan v. Ramasami (2), Vaman Ravji Kulkarni v. Nagesh Vishnu Joshi’s (3) and Ram Sarup v. Kaniz Ummebani (4).

The Court explained that before the year 1940 the law governing contractual arbitration, except to the extent covered by the Arbitration Act of 1899, was contained in the Code of Civil Procedure. Under that regime, certain orders made by courts during arbitration proceedings were appealable under section 588 of the Code of 1877 and under section 104 of the Code of 1908. In 1910 the legislature enacted Act X of 1940, which repealed schedule 2 and section 104(1) clauses (a) to (f) of the Code of Civil Procedure, 1908, and also repealed the Arbitration Act of 1899. Section 39 of the 1940 Act provided that a right of appeal in arbitration matters was conferred on litigants only from specified orders and from no others, and that the right to appeal from appellate orders was expressly taken away by sub‑section 2. The preservation clause that had been present in section 104 of the Code was incorporated into section 39 of the 1940 Act.

The Court noted that the wording of section 39 was absolute and allowed no exceptions. It further observed that, under the Code of 1908, an appeal could be taken under the Letters Patent from an order issued by a single Judge of a Chartered High Court in arbitration proceedings even when that order was made in the exercise of appellate jurisdiction, because the power of the Court to hear appeals under a special law then in operation was expressly preserved. The Court cited authorities (1) (1922) 3 Lah. 188, (2) I.L.R. (1933) 56 Mad. 915, (3) I.L.R. (1940) Bom. 426 and (4) I.L.R. (1937) All. 386 to support this reasoning.

Finally, the Court pointed out that the Arbitration Act contains no provision comparable to section 4 of the Code of Civil Procedure that preserves powers reserved to courts under special statutes. Moreover, the expression “authorised by law to hear appeals from original decrees of the Court” found in section 39(1) of the Arbitration Act does not, by implication, reserve any additional jurisdiction for the Letters Patent.

The court explained that the authority granted by the Letters Patent to hear an appeal against an order issued in arbitration proceedings had to be interpreted in light of sections 39(1) and 39(2) of the Arbitration Act. Consequently, whenever the Letters Patent dealt with appeals arising from arbitration orders, those provisions were required to be read subject to the limitations imposed by the two sub‑sections of section 39.

Under the Code of 1908, the right to appeal under the Letters Patent had been preserved both by section 4 and by the clause contained in section 104(1). However, the Arbitration Act of 1940 removed that preservation. The court noted that the 1940 Act expressly stated that the jurisdiction of the court under any other law that was then in force was not saved. As a result, the right of appeal could be exercised against arbitration orders only under section 39, and no appeal—except an appeal to the Supreme Court—could lie from an appellate order issued in those proceedings.

The court rejected the argument advanced by counsel for the respondents that the reservation clause in section 104 of the Code of 1908 was “superfluous” or that its omission from section 39(1) of the Arbitration Act made no material difference. The court observed that the clause had been enacted to resolve the unsettled state of the law and the divergent opinions expressed by the Allahabad High Court on one side and the Calcutta, Bombay and Madras High Courts on the other regarding the true effect of section 588 of the Code of Civil Procedure on the powers conferred by the Letters Patent. The legislature, being aware of this disagreement before the enactment of the Code of 1908 and noting the unanimity of opinion that followed the amendment, chose to omit the reservation clause from the arbitration legislation. The court concluded that this omission was intentional and intended to restrict the right of appeal to the strict limits defined by section 39, thereby removing the right that had been conferred by other statutes.

The court further held that the Arbitration Act, being a consolidating and amending statute and essentially a code relating to arbitration, must be interpreted without assuming that the legislature intended to leave the pre‑existing law on appeals unchanged. The language of the statute was plain and explicit, and it had to be given its full effect and interpreted in its ordinary meaning, free from assumptions based on the previous state of the law. In the court’s view, the legislature deliberately departed from the law that prevailed before the enactment of Act X of 1940 by codifying the law on appeals in section 39. Accordingly, the appeal was to be allowed.

The court ordered that no costs be awarded in this court. It set aside the order of the Division Bench of the High Court and restored the order passed by the learned single judge. The court added that, based on its view regarding the competency of

The Court observed that the petition presented before it was filed as an appeal invoking clause ten of the Letters Patent. It further recorded that, on the occasion of hearing, the Court had not taken any oral submissions from counsel regarding the substantive merits of the appeal, nor had any argument on the issues been advanced before it. Despite the absence of such oral advocacy, the Court examined the materials placed before it and considered the procedural posture of the case. After this consideration, the Court decided that the conditions for allowing the appeal were satisfied. Consequently, the Court entered an order whereby the appeal was allowed, thereby granting the relief sought by the appellant under the authority of clause ten of the Letters Patent.