2017 (12) TMI 780 - SC - Indian Laws

Whether this Court can entertain an application for making the award as Rule of the Court, even if it retains seisin over arbitral proceedings? - whether this Court by using the expression keep controls over the arbitral proceeding can assume original jurisdiction? Held that - the superior court is not expected in law to assume jurisdiction on the foundation that it is a higher court and further opining that all contentions are open. The legislature, in its wisdom, has provided an appeal under Section 39 of the Act. Solely because a superior court appoints the arbitrator or issues directions or has retained some control over the arbitrator by requiring him to file the award in this Court, it cannot be regarded as a court of first instance as that would go contrary to the definition of the term court as used in the dictionary clause as well as in Section 31(4). Simply put, the principle is not acceptable because this Court cannot curtail the right of a litigant to prefer an appeal by stating that the doors are open to this Court and to consider it as if it is an original court. Original jurisdiction in this Court has to be vested in law. Unless it is so vested and the Court assumes, the court really scuttles the forum that has been provided by the legislature to a litigant. When arbitrator is not appointed under the Act and the matter is challenged before the High Court or, for that matter, the Supreme Court and, eventually, an arbitrator is appointed and some directions are issued, it will be inappropriate and inapposite to say that the superior court has the jurisdiction to deal with the objections filed under Sections 30 and 33 of the Act. The jurisdiction of a Court conferred under a statute cannot be allowed to shift or become flexible because of a superior court s interference in the matter in a different manner. Appeal disposed off.

Issues Involved:
1. Entertainability of an application by the Supreme Court for making an arbitral award a Rule of the Court.
2. Jurisdiction of the Supreme Court over arbitral proceedings and subsequent applications.
3. Right to appeal under the Arbitration Act, 1940.
4. Interpretation of the term "Court" under Section 2(c) of the Arbitration Act, 1940.
5. Application of Section 31(4) of the Arbitration Act, 1940.
6. Control retained by the Supreme Court over arbitral proceedings.

Issue-wise Detailed Analysis:

1. Entertainability of an application by the Supreme Court for making an arbitral award a Rule of the Court:
The Supreme Court was asked to decide whether it could entertain an application for making an arbitral award a Rule of the Court when it retains seisin over the arbitral proceedings. The Court examined previous decisions and concluded that the Supreme Court cannot assume original jurisdiction to make an award a Rule of the Court solely because it retained control over the arbitration proceedings.

2. Jurisdiction of the Supreme Court over arbitral proceedings and subsequent applications:
The Court analyzed whether it had jurisdiction to entertain objections to the arbitral award. It referred to previous cases, including *Saith and Skelton* and *Guru Nanak Foundation*, which suggested that the Supreme Court retained jurisdiction if it had control over the proceedings. However, the Court clarified that the competent court to entertain the reference will have jurisdiction over the objections and post-award proceedings, not the Supreme Court.

3. Right to appeal under the Arbitration Act, 1940:
The Court emphasized that the right to appeal is a valuable statutory right that should not be deprived unless there are cogent reasons. It referred to *Bharat Coking Coal Limited* and *Garikapati Veeraya*, which established that the right of appeal is a vested right and can only be taken away by subsequent enactment. The Court concluded that assuming original jurisdiction by the Supreme Court would curtail the statutory right of appeal provided under Section 39 of the Arbitration Act, 1940.

4. Interpretation of the term "Court" under Section 2(c) of the Arbitration Act, 1940:
The Court examined the definition of "Court" under Section 2(c) of the Act, which refers to a civil court having jurisdiction to decide the subject matter of the reference if it were the subject matter of a suit. The Court found that the interpretation in *Guru Nanak Foundation* and *Saith and Skelton* was incorrect in assuming that the Supreme Court could be the original court for filing the award.

5. Application of Section 31(4) of the Arbitration Act, 1940:
Section 31(4) of the Act confers exclusive jurisdiction on the court where the first application in a reference is made. The Court referred to *Kumbha Mawji* and *Surjeet Singh Atwal*, which interpreted this provision to mean that the court where the first application is made retains jurisdiction over all subsequent applications. The Court concluded that the Supreme Court cannot assume jurisdiction under Section 31(4) based on control over the proceedings.

6. Control retained by the Supreme Court over arbitral proceedings:
The Court analyzed the concept of control retained by the Supreme Court over arbitral proceedings. It referred to cases where the Supreme Court had issued directions to the arbitrator and retained control. However, the Court concluded that such control does not confer original jurisdiction on the Supreme Court to entertain objections to the award or make it a Rule of the Court.

Conclusion:
The Supreme Court overruled the decisions in *Saith and Skelton* and *Guru Nanak Foundation*, stating that they did not lay down the correct position of law. The Court held that the competent court to entertain the reference will have jurisdiction over the objections and post-award proceedings, not the Supreme Court. The appeal was disposed of, and the parties were granted liberty to file their respective objections before the Civil Court within thirty days.

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