Case Note & Summary
The appeals before the Supreme Court arose from arbitration proceedings under the Defence of India Act, 1939. The Central Government, in exercise of powers under Rule 75(A) of the Defence of India Rules, requisitioned certain premises belonging to Hanskumar Kishanchand on February 19, 1941. Since the parties could not agree on compensation, the matter was referred to Mr. Jafry, Additional District Judge, Khandwa, as arbitrator under Section 19(1)(b) of the Act. On March 31, 1943, the arbitrator made an award fixing annual rent for occupation of the premises at Rs.13,000. Dissatisfied, both the property owner and the Government appealed to the Nagpur High Court under Section 19(1)(f) of the Act. A Division Bench of the High Court, consisting of Grille C.J. and Padhye J., by judgment dated December 31, 1947, enhanced the annual rent by Rs.3,250 and also awarded additional compensation for dislocation of a high school run on the property. Both parties then applied for leave to appeal to the Federal Court under Sections 109 and 110 of the Code of Civil Procedure, 1908, and on August 25, 1949, the High Court granted certificates. The appeals came before the Supreme Court as Civil Appeals Nos. 224 and 225 of 1954. At the hearing, the learned Solicitor-General raised a preliminary objection on behalf of the Union of India that the High Court's decision in the appeal under Section 19(1)(f) was an award and not a judgment, decree or order within the meaning of Sections 109 and 110 CPC, and therefore no appeal lay. He contended that the reference and appeal were all arbitration proceedings, and the appellate decision by the High Court was really an award. The appellant's counsel argued that while proceedings under Section 19(1)(b) were arbitration, once an appeal came to the High Court under Section 19(1)(f), it became a civil proceeding in the ordinary jurisdiction, and the decision was appealable under Sections 109 and 110 CPC. He also relied on Clause 29 of the Letters Patent as an independent basis for appeal. The Supreme Court examined the provisions of the Defence of India Act and the general principles governing arbitration. It noted that an arbitration agreement withdraws the dispute from ordinary courts and entrusts it to a private tribunal; the resulting decision is an award, and the court's role in passing a decree in terms of the award is merely to give it enforceability. There is a sharp distinction between a court's decision on merits in a cause and a court giving effect to an award; the former is a judgment, decree or order appealable under general law, while the latter is an adjudication of a private tribunal with court sanction and is final within the terms of reference. The Court held that this position is the same for statutory arbitrations, as Section 46 of the Arbitration Act, 1940 treats statutory arbitrations as if pursuant to an arbitration agreement. It further held that when a court is appointed as arbitrator under a statute, it acts as persona designata and not as a civil court, and its decision is an award, not open to appeal except as provided by the statute. The Court also affirmed that an appeal is a continuation of the original proceeding; therefore, what was an arbitration at inception retains that character even on appeal. The Court relied on decisions including Kollegal Silk Filatures Ltd. v. Province of Madras, Rangoon Botatung Company v. Collector of Rangoon, and Secretary of State for India v. Hindustan Co-operative Insurance Society Ltd., among others. It concluded that the Nagpur High Court's decision under Section 19(1)(f) was an award, not a judgment, decree or order, and therefore could not be appealed under Sections 109 and 110 CPC or Clause 29 of the Letters Patent. Consequently, both appeals were dismissed as incompetent.
Headnote
A) Arbitration - Statutory Arbitration - Nature of Proceedings - Defence of India Act, 1939, Section 19(1)(b), Section 19(1)(f); Code of Civil Procedure, 1908, Section 109, Section 110 - The dispute concerned compensation for requisitioned property referred to an arbitrator under Section 19(1)(b) and an appeal to the High Court under Section 19(1)(f); the entire proceeding remained an arbitration in character, and the High Court's appellate decision was an award, not a judgment, decree or order, hence not appealable under Sections 109 and 110 CPC (Paras not mentioned). B) Arbitration - Court Acting as Arbitrator - Persona Designata - Defence of India Act, 1939, Section 19(1)(b); Arbitration Act, 1940, Section 46 - A court appointed as arbitrator under a statute acts as persona designata and not as a civil court; its decision is an award and not open to appeal under ordinary law; the same principle applies to statutory arbitrations as to consensual arbitrations (Paras not mentioned). C) Appeals - Continuation of Original Proceedings - Appeal from Arbitrator's Award - Defence of India Act, 1939, Section 19(1)(f); Code of Civil Procedure, 1908, Section 109, Section 110 - An appeal is a continuation of the original proceeding; since the original proceeding was an arbitration, the appellate proceeding before the High Court retained that character, and the appellate decision was an award, not a judgment, decree or order (Paras not mentioned). D) Civil Procedure - Maintainability of Appeal to Supreme Court - Judgment, Decree or Order - Code of Civil Procedure, 1908, Section 109, Section 110; Letters Patent (Nagpur High Court), Clause 29 - The expression "judgment, decree or order" in Sections 109 and 110 CPC does not include an award made by a court functioning as arbitrator under a statute; Clause 29 of the Letters Patent also did not confer a right of appeal from such award; the certificate granted by the High Court was inoperative (Paras not mentioned). E) Arbitration - Distinction Between Decision on Merits and Filing of Award - Arbitration Act, 1940, Section 17, Section 46 - There is a sharp distinction between a court pronouncing a decision on merits in a cause and a court giving effect to an award; the former is appealable under general law, while the latter is an adjudication of a private tribunal with court sanction and final within terms of reference (Paras not mentioned).
Issue of Consideration
Whether the decision of a High Court in an appeal under Section 19(1)(f) of the Defence of India Act, 1939, from an arbitrator's award is a judgment, decree or order within the meaning of Sections 109 and 110 of the Code of Civil Procedure, 1908, and whether an appeal lies to the Supreme Court from such decision.
Final Decision
The preliminary objection was upheld. Both appeals were dismissed as incompetent. The decision of the High Court in appeal under Section 19(1)(f) of the Defence of India Act, 1939 is an award, not a judgment, decree or order, hence not appealable under Sections 109 and 110 of the Code of Civil Procedure, 1908. The High Court functioned as persona designata or arbitrator, and the award could not be challenged except as provided under the statute.
Law Points
- Legal points not extracted
- An arbitration proceeding under a statute is not an ordinary civil proceeding
- an appeal is a continuation of the original arbitration proceeding
- a court acting as arbitrator under a statute functions as persona designata and its decision is an award
- an award is not a judgment decree or order appealable under Sections 109 and 110 of the Code of Civil Procedure
- 1908
- statutory arbitration awards are final subject only to remedies provided in the statute
