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TMI Blog1944 (1) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... tain properties. The award was filed in the Subordinate Judge's Court of South Kanara and "though the respondent appeared by an advocate, he did not raise any contention and a decree was passed in terms of it on the 29th July, 1938". The respondent later on paid Rs. 10,000 on the 27th August, 1938. On the bank seeking to execute the decree, the respondent objected that a reference between companies and persons could only be made under the Indian Arbitration Act of 1899, that under that Act the District Court had exclusive jurisdiction to enforce the award and therefore the Subordinate Judge's Court had no jurisdiction either to pass a decree or to execute it. The point raised is precisely the same as that which was decided on the 15th September, 1943, by my learned brothers, Somayya and Happell, JJ., in the Karnataka Bank, Ltd., Mangalore v. Singarayya [1944] 14 Comp. Cas. 1 . Somayya, J., at the beginning of the judgment states the position thus, "The only question in this appeal is whether under the provisions of the Indian Companies Act, a company can refer any dispute between it and another person to arbitration only in accordance with the provisions of the Indian Arbitr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to refer all matters in dispute to arbitration. Jessel, M.R., in Ex parte Stephens [1876] L.R. 3 Ch. 639, at 660 , speaks of the. "well known rule that where there is a special affirmative power given which would not be required because there is a general power, it is always read to import the negative, and that nothing else can be done, so that the power to register a trade mark used before the passing of the Act clearly negatives the conclusion that a distinctive word can be used as a trade mark first used as after the passing of the Act. A well-known illustration of this rule may be derived from the Act which gave power to railway companies to borrow on mortgage or bond. It was said that, irrespective of that Act, any Corporation might borrow by common law either on mortgage or otherwise. The answer was, that there being a definite power given, you must import the negative so that the company could only borrow on mortgage or bond." No general rule can be laid down as to whether "may" is equivalent to "must". The position appears to be that whether "may" should be considered as "must" according to the special object of the statute and the circumstances. I consider that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the procedure of Sections 88 and 67 of the two Acts respectively should have been followed, when they operated respectively. Coming to Section 152 of the Indian Companies Act of 1913, I consider that its meaning is as follows : A company may legally refer matters to arbitration ; but if it does, there must be a written agreement (not under seal as was the old law) and the method of reference must be in accordance with the Indian Arbitration Act of 1899. In short, just as under Section 88 Companies are restricted to a certain method of making contracts, so under Section 162 are they restricted to a certain method of entering into arbitrations. The Court having jurisdiction under the Act of 1899 is the District Court. I respectfully agree with the reasoning of Mitter, J., in [1940] 1 Cal. 358 at p. 365 with regard to the effect of sub-section (3) of Section 152 of the Companies Act of 1913. "The words 'in pursuance of this Act' ( i.e., Companies Act) clearly qualify the phrase 'shall apply'. The meaning is that the provisions of the Indian Arbitration Act, 1899, except Section 2 thereof (which is to be treated as non-existent) shall apply to all arbitrations between companies a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore refer the following question : "Before the Indian Arbitration Act, 1940, came into force, did Section 152 of the Indian Companies Act, 1913, entitle a company to refer a dispute to arbitration at its option either under the Indian Arbitration Act, 1899, or under the Civil Procedure Code, (Section 89 and Second Schedule)." Kunhi Raman, J. I have had the advantage of perusing the order just pronounced by my learned brother and I wish to add only a few words. Jhirighat Native Tea Co., Ltd. v. Bopal Chandra Gupta [1940] 10 Comp. Cas. 56 , about the scope of Section 152 of the Indian Companies Act, 1913, seems to me, with respect, to be sounder than the view taken on the same point by the Lahore High Court in Sitaram Balmukund v. Punjab National Bank Ltd. [1936] 6 Comp. Cas. 337. Since the latter view has been followed by another Bench of this Court in the case reported in Karnataka Bank, Ltd., Mangalore v. Singarayya, [1944] 14 Comp. Cas. 1 it has become desirable to have the question decided by a Full Bench. The Indian Arbitration Act, 1940, has now repealed the earlier Act of 1899, which, however, was in force when the present case was decided by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w any of the courses contemplated by the Civil Procedure Code as it stood before 1940. Before its repeal sub section (1) of Section 89 of the Code made this provision of law "Save in so far as is otherwise provided by the Indian Arbitration Act, 1899, or by any other law for the time being in force, all references to arbitration whether by an order in a suit or otherwise, and all proceedings thereunder, shall be governed by the provisions contained in the second schedule." The second schedule provided for an order of reference to arbitration being made in a suit, for an order of reference being passed without any suit being filed and for the case where an arbitration had taken place without the intervention of a Court; In all these cases the Court could pronounce judgment according to the award and pass a decree. In the present case the Catholic Bank., Ltd., Mangalore, a company registered under the Indian Companies Act, entered into an agreement outside the Court for a reference to arbitration and obtained an award for payment of the sum of Rs. 63,500 with interest. Thereupon the Bank filed an application in the Court of the Subordinate Judge of South Kanara for the executi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit the suit could whether with leave or otherwise be instituted in a Presidency Town. The second clause of the section contained a proviso empowering the Provincial Government, by notification in the Official Gazette, to declare the Act applicable in any other local area as if it were a Presidency Town. No such notification was issued and therefore the Act so far as its own provisions were concerned only applied to Presidency Towns, but by reason of the insertion of the words "other than those restricting the application of the Act in respect of the subject matter of the arbitration" in sub-section (3) of Section 152 of the Companies Act its application, so far as companies were concerned, was made general. In holding that Section 182 was merely an enabling section the Lahore High Court laid stress on the word "may" and considered that if the procedure laid down in the section were applicable the words "in pursuance of this Act" occurring at the end of the subsection (3) would seem to be wholly redundant. The Court also attached importance to the fact that the Civil Procedure Code itself contained no indication that a company was to be excluded from the benefits of Schedule II. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the company acting under the authority of the company. The corresponding section to Section 152 of the present Act was Section 96, which said that a company might from time to time, by writing under its common seal agree to refer, and might refer, to arbitration any matter whatsoever in dispute between itself and any other company or person. The fact that under the Companies Act, 1882, a company could only refer a dispute to arbitration when it agreed to do so under seal appears to us to be a clear indication that the Legislature at an early stage contemplated companies and persons being placed on different footings. It follows that we share the opinion of the Calcutta High Court with regard to the effect of the words "in pursuance of this Act" in sub-section (3) of Section 152 of the Indian Companies Act, 1913, and that we can see nothing in the Civil Procedure Code which militates against, the acceptance of the section as a mandatory provision of law. On the contrary sub-section (1) of Section 89, Civil Procedure Code, supports the proposition. It makes the second schedule applicable to references to arbitration only "save in so far as is otherwise provided by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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