BABY PAUL Vs. HINDUSTAN PAPER CORPORATION LTD
LAWS(KER)-1978-3-19
HIGH COURT OF KERALA
Decided on March 28,1978

BABY PAUL Appellant
VERSUS
HINDUSTAN PAPER CORPORATION LTD. Respondents

JUDGEMENT

- (1.) ALLEGING that without terminating the contract, and after the work has progressed to a substantial extent, the respondents entrusted the balance work to 'some other agency' (not specified) and that agency started work, the petitioner moved the lower Court for interim injunction restraining the respondents, from altering, modifying or tampering with or destroying the work he has already done by themselves (the respondents) or through other agencies, till the Arbitrator inspects and measures the same. The contract mentioned above is a works-contract for construction of a road and the culverts thereon, and contains an arbitration clause, but admittedly no dispute has been referred for arbitration, though according to the petitioner disputes have arisen between the parties -- this is denied by the respondents. The petitioner invoked section 41 (b) of the Arbitration Act, 1940 and the provisions in Clauses 1, 3 and 4 in the Second Schedule to that Act. The lower Court said that no arbitration proceedings are pending and therefore Section 41 is not of any avail to the petitioner. According to the learned counsel for the petitioner before the reference of the dispute or disputes, as the case may be, for arbitration, and even before any dispute arises Section 41 (b) can be invoked by a party to an arbitration-agreement. Whether this submission is right, is the question to be decided in this case.
(2.) SECTION 41 (b) confers on the Court the same power of making orders in respect of the matters mentioned in the Second Schedule to the Act as it has for the purpose of and in relation to any proceedings before the Court, for the purpose of and in relation to arbitration proceedings, but, as per the previse thereto, without prejudice to any power vested in an arbitrator or umpire for making orders with respect to any of such matters. Whatever he the construction to be placed on the words 'for the purpose of, and in relation to, arbitration proceedings' in Section 41 (b), whether, under that provision the court is, as contended on behalf of the petitioner, in view of the words therein, 'for the purpose of arbitration proceedings', competent to pass any order even prior to the commencement of the reference, that is to say, before the parties refer their disputes for arbitration to the arbitrator, or not, (it is also contended that 'arbitration proceedings' commence from the time of the 'arbitration agreement' and this I will examine hereinafter in due course) Clauses 1 and 3 in the Second Schedule limit the power of the Court to make orders only as regards 'goods which are the subject-matter of the reference' (clause) and 'property or thing which is the subject-matter of the reference or as to which any question may arise 'therein' i. e. in the reference (Clause 3) and Clause 2 : only as regards 'the amount in difference in the reference; which a priori means that the orders contemplated by Section 41 (b) read with Clauses 1 to 3 in the second Schedule can be made only when there has been a reference of the dispute or disputes, as the case may be, for arbitration. Clause 4 in the Second schedule read with Section 41 (b) confers on the Court the same power of making orders of 'interim injunction or appointment of receiver' as it has for the purpose of and in relation to any proceeding before it. In relation to a proceeding before it, the Court derives its power of issuing interim injunction and appointing a receiver from the provisions contained In Section 94 (c) and (d) of the Civil P. C. , 1908 and the said powers are to be exercised in accordance with Rules 1 to 5 in Order 39 and Rules 1 to 5 in Order 40 of that code. Section 94 of the Code enables the Court to make interlocutory orders some of which are specified and enumerated in Clauses (a) and (d) as is clear from the residuary clause, Clause (e) which says that the Court may 'make such other interlocutory orders as may appear to the Court to be just and convenient. ' An interlocutory order is an order made during the course of a main proceeding as incidental and ancillary to the object of the principal proceeding. The principal proceeding so far as Section 41 (b) is concerned is an arbitration proceeding the object of which is an award by the arbitrator. Obviously, therefore, the Court's power of making orders in respect of matters set out in items 1 to 4 of the Second Schedule to the Arbitration Act, 1940 is only to make interlocutory orders in interlocutory proceedings during the course of arbitration proceedings pending determination of the rights of the parties thereto finally by an award passed by the arbitrator, and the Court is not competent to pass any order in respect of those matters anticipating a reference. The above discussion is sufficient to hold that the lower Court is right in rejecting the petitioner's motion for injunction invoking Section 41 (b) of the act and Clauses 1, 3 and 4 in the Second Schedule thereto. I have for that purpose assumed without deciding that the words 'for the purpose of arbitration proceedings' in Section 41 (b) may indicate that the parties to an arbitration agreement can t approach the Court before a reference, holding that the limitation on its power, namely, that the Court can pass such orders as are contemplated by Clauses 1 to 4 only after the reference of the dispute for arbitration, arises by reason of the very nature of the matters set out in these clauses. In deference to the arguments advanced by both sides, and for the sake of completeness, it is necessary also to advert to the same with reference to the one remaining clause, Clause 5, in the Second Schedule,
(3.) SECTION 41 (b) read with Clause 5 invests the Court with the same power as it has in the matter of appointment of guardian for a minor or person of unsound mind for the purpose of and in relation to, any proceeding before it, 'for the purposes of arbitration proceedings' as well. The Court's power to appoint a guardian to defend a suit during its pendency which continues until the same has been finally disposed of and complete satisfaction or discharge has been obtained, is to be found in Rules 3 and 15 in Order 32 of the Civil P. C. , 1908. The former Rule makes it the duty of the Court to appoint a proper person 'to be guardian for the suit' for a minor and the latter, makes Rule 3 applicable to a defendant who is of unsound mind. This is an inherent power of the Court founded on the principle that it is the duty of the Crown as Parens patriae to protect the interest of minors and persons of unsound mind and is to be exercised wherever necessary. However, this power arises only on the institution of a suit. On that analogy Section 41 (b) may not empower the Court to appoint a guardian to one of the parties to an arbitration agreement till there is a reference. But it may be that it is necessary to appoint a guardian even prior to actual submission or reference as for instance where "the parties have not named the arbitrator in the arbitration agreement wherefore it is necessary to nominate one before the actual reference and this cannot be done because one of parties at the relevant time is not of sound mind, or, he is dead, and his legal representative by or against whom the arbitration agreement is under section 6 (1) of the Act enforceable is a minor. In view of the provision 'for the purposes of arbitration proceedings' in Section 41 (b) and in Clause 5 in the second Schedule, the Court may, perhaps, be competent to appoint a guardian to a party to the arbitration agreement even prior to the actual reference, but since that question does not arise in this case, it is not necessary to finally decide the same herein.;


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