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2017 (12) TMI 780

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..... 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. - Civil Appeal No. 1093 of 2006 - - - Dated:- 14-12-2017 - Mr. Dipak Misra CJI, Mr. A.K. Sikri, Mr. A.M. Khanwilkar, Dr. D.Y. Chandrachud, Mr. Ashok Bhushan JUDGMENT Dipak Misra, CJI A two-Judge Bench while hearing the present appeal found that there is difference of opinion in relation to the entertainability of an application by this Court for ma .....

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..... April 10, 1996 in the court of Sub-Judge, Saraikella, Jharkhand is also referred for adjudication to Hon ble Mr. Justice S.B. Sinha, retired Judge of this Court. (iii) The terms and conditions shall be settled by the learned Arbitrator in consultation with the parties. (iv) The parties shall appear before the learned Arbitrator on February 5, 2013. We request the learned Arbitrator to conclude the aforesaid arbitration proceedings expeditiously and further observe that the award shall be filed before this Court. [Underlining is ours] 4. After reproducing settlement, the Court recorded thus:- We record and accept the statement of the learned senior counsel for the parties that learned Arbitrator may be requested to decide the claim on merits. We observe accordingly. 5. Learned arbitrator concluded the arbitration proceedings and passed the award on 16.10.2015 and filed the same before this Court. The appellants challenged the said award by filing its objections before the Civil Court. Per contra, the respondent filed an affidavit dated 16.06.2016 requesting this Court to pronounce the judgment in terms of the award. 6. It was contended before the two-Judge B .....

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..... r has been placed before us. 9. We have heard Mr. Ajit Kumar Sinha, learned senior counsel appearing for the appellants and Mr. K.V. Viswanathan, learned senior counsel for the respondent. 10. It is submitted by Mr. Sinha, learned senior counsel appearing for the appellant-State, that the view expressed in Guru Nanak Foundation (supra) does not state the law correctly and it will be inappropriate to annul the right of appeal of the appellants solely on the ground that this Court, on the consent of the parties, had accepted that the award shall be filed before this Court and, therefore, this Court alone has the jurisdiction to decide the objections for making the award Rule of the Court. According to Mr. Sinha, the definition of the Court under Section 2(c) of the Act has to be appropriately appreciated and on proper construction of the meaning of the word Court , it cannot be said to include the Supreme Court. It is additionally propounded by Mr. Sinha that under the scheme of the Act, the appellants are entitled under law to file the objections before the Sub-Judge whose order is assailable in an appeal before the High Court under Section 39 of the Act, and, if this Cou .....

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..... Skelton (supra) and Guru Nanak Foundation (supra). According to him, the submission advanced on behalf of the appellants that they would lose the right of appeal has been squarely rejected in Guru Nanak Foundation (supra) and there is no necessity to dislodge the said principle. 12. Drawing our attention to Section 31(4) of the Act, Mr. Viswanathan would contend that the said provision is intended to deal only with those situations where even after compliance with the first three sub-sections of Section 31, there may be two or more courts wherein proceedings under those sub-sections may be taken. But it has no application in those cases where a superior/higher court has retained control and passed a direction to file the award in that court. The concept of choice as enjoined in Section 31(4) has to be understood as courts of equal status. Learned senior counsel would further submit that the control of superior courts has to be given primacy. To sustain the said proposition, he has placed reliance upon Kumbha Mawji v. Dominion of India (Now the Union of India) 1953 SCR 878 : AIR 1953 SC 313 . He has laid stress that once the superior court retains control which .....

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..... . Even in the absence of an express qualification to that effect such a qualification is always implied. 14. In the case of Saith and Skelton (supra), the Court was dealing with Section 2(c) and Section 14(2) of the Act and in that context, the three-Judge Bench, keeping in view the language employed in the beginning of Section 2, opined:- 18. Therefore the expression Court will have to be understood as defined in Section 2(c) of the Act, only if there is nothing repugnant in the subject or context. It is in that light that the expression Court occurring in Section 14(2) of the Act will have to be understood and interpreted. ... 15. In the aforesaid case, the Court had appointed the arbitrator on the consent of the parties and had directed him to make his award . That apart, no further direction was given in the said case. The arbitrator after passing the award had filed the same before this Court and in that context, the Court held:- 18. Surely the law contemplates further steps to be taken after the Award has been made, and quite naturally the forum for taking the further action is only this Court. There was also direction to the effect that the pa .....

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..... r arbitrator and the evidence led before him were to be ignored. That led the first respondent therein to move an application before this Court seeking the relief that the learned arbitrator should commence the arbitration proceedings from the stage where it was left by the previous arbitrator. After hearing both the parties, the Court directed thus:- CMP No. 1088 of 1977: We have heard counsel on both sides. It is absolutely plain that the new arbitrator in tune with the spirit of the Order passed by this Court should proceed with speed to conclude the arbitration proceedings. In the earlier directions by this Court it had been stated that the proceedings should commence within 15 days and that the arbitrator shall try to dispose of the same as expeditiously as possible . We direct the arbitrator, bearing in mind the concurrence of the counsel on both sides, that he shall conclude the proceedings within four months from today. A grievance is made that the arbitrator is calling for fresh pleadings which may perhaps be otiose since pleadings have already been filed by both sides before the earlier arbitrator Mr Nanda. If any supplementary statement is to be filed it is certa .....

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..... 1. Section 14, sub-section (2) provides for filing of the Award in the court and in view of the definition of the expression court the arbitrator will have to file the Award in that court which would have jurisdiction to entertain the suit forming the subject-matter of reference. 21. As the discussion in the judgment would show, the Court observed that there was some controversy between the High Courts whether the expression Court would comprehend appellate court in which the award can be filed but it was finally resolved in the decision in CT. A. CT. Nachiappa Chettiar (supra) which held that the expressions suit and Court in Section 21 of the Act would also comprehend proceedings in appeal and appellate court respectively because the expression Court in Section 21 includes the appellate court proceedings which are generally recognized as continuation of the suit, and the word suit would include such appellate proceedings. 22. After so stating, Guru Nanak Foundation (supra) proceeded to advert to Section 31(4) of the Act and, in that context, held that the non-obstante clause excludes anything anywhere contained in the whole Act or in any other law f .....

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..... rt as defined in Section 2(c) needs to be adhered to unless there is anything repugnant in the subject or context in which it is used. It is further opined that on a pure grammatical construction as well as a harmonious and overall view of the various provisions contained in the Act, it is quite clear that ordinarily the Court will have jurisdiction to deal with the questions arising under the Act, except the one in Chapter IV in which the suit with regard to the dispute involved in the arbitration would be required to be filed under the provisions of the Code of Civil Procedure. Elucidating further, the two-Judge Bench ruled that when an application is made in any reference to a court competent to entertain it, that court will have jurisdiction over the arbitration proceeding and all subsequent applications arising out of the reference and the arbitration proceedings shall be made to that court alone and in no other court. Analysing the facts, the learned Judges expressed that this Court had complete control over the proceedings before the arbitrator. In view of the fact that the reference was made by this Court and further directions were issued with regard to the manner and met .....

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..... of this contention reliance was placed on Kumbha Mawji case urging that the expression in any reference under Section 31(4) of the Act is comprehensive enough to cover application first made after the arbitration is completed and a final Award made and the sub-section is not confined to applications made during the pendency of the arbitration proceedings. Negativing this contention this Court held that accepting the wider meaning given to the phrase in any reference as implying in the course of a reference an application under Section 34 is not an application in a reference within the meaning of the phrase as elaborated in Kumbha Mawji case . The Court took notice of various sections under which an application can be made before a reference has been made. Therefore, the decision in Kumbha Mawji case would not mean that a proceeding earlier to the reference in a court would clothe that court with such jurisdiction as to render the provision contained in Section 31(4) otiose. The aforesaid analysis only shows that the two-Judge Bench expressed the opinion that the principles stated in Kumbha Mawji would not help in answering the contention canvassed on behalf of th .....

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..... n (4) of the Act is limited to applications under the Act during the pendency of the arbitration proceedings only. 27. So far as the first question is concerned, we need not dwell upon the same. What is important to note is how the Court dealt with the third question and for the said purpose, it is necessary to apprise ourselves about the facts involved in the said case. The respondent in the said case had filed an application under Section 14(2) of the Act before the Subordinate Court of Gauhati in Assam to the effect that the umpire be directed to file both the awards in the Court. A week after the respondent made the first application in the Gauhati Court, the solicitors for the appellant therein sent a letter to the Registrar of the High Court of Calcutta with the two awards and requested for issue of notices thereon. After some correspondence between the Deputy Registrar and solicitors, a direction was issued to serve the awards on the parties and fix a date for determination upon the said awards by the Commercial Judge of the Court. The three-Judge Bench took note of the fact that in respect of the same awards, proceedings were initiated purporting to be one under Sect .....

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..... eals with the ambit of the exercise of that jurisdiction, and declares it to be exclusive by saying that all questions regarding the validity, effect or existence of an award or arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the court in which the award under the agreement has been, or may be, filed and by no other court . Sub-section (3) is intended to provide that all applications regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings are to be made only in one court, and lays on the concerned party the obligation to do so. Then comes sub-section (4), the object of which apparently is to go further than sub-section (3), that is, not merely casting on the party concerned an obligation to file all applications in one court but vesting exclusive jurisdiction for such applications in the court in which the first application has been already made. 12. Thus it will be seen on a comprehensive view of Section 31 that while the first sub-section determines the jurisdiction of the court in which an award can be filed, sub-sections (2), (3) and (4) are intended to make that jurisdiction .....

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..... construction must be rejected. 30. Explicating further, the three-Judge Bench stated:- 14. As already stated, the entire basis of the limited construction is the meaning of the phrase in any reference used in sub-section (4) as meaning in the course of any reference . But such a connotation thereof is not in any ordinary sense compelling. The preposition in is used in various contexts and is capable of conveying various shades of meaning. In the Oxford English Dictionary one of the shades of meaning of this preposition is Expressing reference or relation to something; in reference or regard to; in the case of, in the matter, affair, or province of. Used especially with the sphere or department in relation or reference to which an attribute or quality is predicated. In the context of Section 31 sub-section (4), it is reasonable to think that the phrase in any reference means in the matter of a reference . The word reference having been defined in the Act as reference to arbitration , the phrase in a reference would mean in the matter of a reference to arbitration . The phrase in a reference is, therefore, comprehensive enough to cover also an appl .....

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..... an application to a judicial authority before whom a legal proceeding is pending for the stay of that proceeding. An application for stay of legal proceeding to a judicial authority before whom it is pending is an application under the Arbitration Act to a judicial authority competent to entertain it. But the judicial authority need not necessarily be a court competent under Section 2( c ) to decide the question forming the subject-matter of the reference. A party to an arbitration agreement may choose to file a suit in a court which has no jurisdiction to go into the matter at all and merely because the defendant in such a suit has to make an application to that Court under Section 34 of the Act for the stay of the suit it cannot be said that the Court which otherwise has no jurisdiction in the matter becomes a Court within the meaning of Section 2( c ) of the Act. The view that we have expressed is borne out by the decisions of the Calcutta High Court in Choteylal Shamlal v. Cooch Behar Oil Mills Ltd . ILR (1951)Cal 418 ; Brittannia Building Iron Co. Ltd. v. Gobinda Chandra Bhattacharya 64 CWN 325 and Basanti Cotton Mills Ltd. v. Dhingra Brothers AIR 1949 C .....

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..... , as noted above, the definition is exhaustive and recognizes only one of two possible courts that could be court for the purpose of Section 2(1)( e ). Secondly, under the 1940 Act, the expression civil court has been held to be wide enough to include an appellate court and, therefore would include the Supreme Court as was held in the two judgments aforementioned under the 1940 Act. Even though this proposition itself is open to doubt, as the Supreme Court exercising jurisdiction under Article 136 is not an ordinary appellate court, suffice it to say that even this reason does not obtain under the present definition, which speaks of either the Principal Civil Court or the High Court exercising original jurisdiction. Thirdly, if an application would have to be preferred to the Supreme Court directly, the appeal that is available so far as applications under Sections 9 and 34 are concerned, provided for under Section 37 of the Act, would not be available. Any further appeal to the Supreme Court under Article 136 would also not be available. The only other argument that could possibly be made is that all definition sections are subject to context to the contrary. The context .....

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..... s we agree with the principle stated therein and there is no reason to accept what has been stated in Burn Standard Co. Ltd. (supra). 34. In Nav Bharat Construction Company (supra), this Court had appointed a retired Judge of this Court as umpire and had also held that the reference was not a new one but a continuation of the earlier proceedings under the Act. Further, the Court directed the award to be filed in this Court. After the award was passed by the learned arbitrator, the State of Rajasthan filed an application for making the award Rule of the court and at the same time, the respondent filed petition under Sections 30 and 33 of the Act and interlocutory application was filed by the respondent challenging the jurisdiction of this Court to make the award absolute and also to consider the objection raised by the respondent against the award passed by the umpire in pursuance of the order passed by this Court. Repelling the stand of the respondent, the Court held:- 11. From the judgment of this Court dated 4-10-2005, it has been made clear by this Court in the operative part of the same, as noted hereinearlier, that the award that would be passed by the umpire mu .....

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..... the Act will have to be understood in the context in which it occurs. So understood, it follows that this Court is the Court under Section 14(2) where the arbitration Award could be validly filed. 38. In this backdrop, it is necessary to delve into what precisely has been stated in CT. A. CT. Nachiappa Chettiar (supra). The facts as narrated in the decision are that a partition suit was filed by the respondent therein. The question that emerged for consideration pertained to the validity of the award made by the arbitrators to whom the matters in dispute between the parties were referred pending the present litigation. The suit was fixed for hearing. An application was filed by the appellant therein under Order VIII Rule 9 of the Code of Civil Procedure for permission to file an additional written statement. The said application was dismissed by the trial Judge on the ground that it sought to raise a new and inconsistent plea. Against the said decision, appeals were filed before the High Court. The High Court ordered that there was no need to stay all proceedings before the Commissioner and that it would be enough if the passing of the final decree alone was stayed. After t .....

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..... award were valid and, accordingly, it directed that a decree should be passed in terms of the award. 39. This Court, in the course of analysis, considered the objection against the validity of the reference as that was seriously pressed before it. It took note of the submission that the reference and award were invalid because the trial court was not competent to make the order of reference under Section 21 of the Act. The Court referred to Section 21 and observed that two conditions must be satisfied before an application in writing for reference is made, namely, (i) all the interested parties to the suit must agree to obtain a reference, and (ii) the subject matter of the reference must be any matter in difference between the parties to the suit. The three-Judge Bench observed that the construction of the Section presents no difficulty but to analyse the implication of the two conditions and to seek to determine the denotation of the word Court difficulties arise. It posed the question, what does the word Court mean in relevant provision. According to the appellants therein, Court means court as defined by Section 2(c) of the Act. The argument on behalf of the appell .....

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..... ng about such a violent departure from the existing practice. If that had been the intention of the Legislature it would have made appropriate changes in the words used in Section 21. Therefore, the word court cannot be interpreted to mean only the trial court as contended by the appellants. Similarly, the word suit cannot be construed in the narrow sense of meaning only the suit and not an appeal. In our opinion, court in Section 21 includes the appellate court proceedings before which are generally recognised as continuation of the suit; and the word suit will include such appellate proceedings. We may add that whereas Section 41 of the Act is consistent with this view no other section militates against it. 41. Proceeding further, the three-Judge Bench expressed thus:- 37. In our opinion the scheme of the section does not permit the addition of any words qualifying the word judgment used in it. The expression at any time before the judgment is pronounced is only intended to show the limit of time beyond which no reference can be made, and that limit is reached when a final judgment is pronounced. The provision that any matter in difference between the pa .....

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..... y pending before two courts. Proceedings which would have to be taken between the parties in pursuance of, and consequent upon, the preliminary decree are pending before the trial court whereas matters in difference between the parties which are covered by the preliminary judgment and decree are pending before the appellate court. In that context, the Court held:- 39. In such a case it may perhaps be logically possible to take the view that the arbitration in respect of the disputes in relation to proceedings subsequent to the preliminary decree can be directed by the trial court, whereas arbitration in respect of all the matters concluded by the trial court s preliminary judgment which are pending before the appellate court can be made by the appellate court; but such a logical approach is not wholly consistent with Section 21; and rather than help to solve any difficulty it may in practice create unnecessary complications. In most cases matters in dispute before the trial court in final decree proceedings are so inextricably connected with the matters in dispute in appeal that effective arbitration can be ordered only by one reference and not by two. We are, therefore, i .....

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..... top at a particular level. To explicate, in a given case, the parties may agree for arbitration and the court may think it appropriate to send it for arbitration. But to expand the theory that the court had issued directions after the appointment of arbitrator and was in control of it and, therefore, the award can only be filed before the superior court for the purpose of making it a Rule of Court as has been held in Saith and Skelton does not flow from the correct understanding of the principle stated in CT. A. CT. Nachiappa Chettiar . 44. Guru Nanak Foundation (supra), as we have narrated earlier, refers to the definition of Court and analyses sub-section (2) of Section 14 and sub-section (4) of Section 31 and opines that sub-section (4) of Section 31 not only confers exclusive jurisdiction on the court to which an application is made in any reference but also simultaneously ousts the jurisdiction of any other court which may as well have jurisdiction in itself. To illustrate the point further, the Bench has stated:- 15. if an Award was required to be filed under Section 14(2) read with Section 31(1) in any particular court as being the court in which a suit .....

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..... of the Courts. Sub-section (1) stipulates that subject to the provisions of this Act, an award may be filed in any court having jurisdiction in the matter to which the reference relates. Sub-section (2) lays down that notwithstanding anything contained in any other law for the time being in force and save as otherwise provided in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the court in which the award under the agreement has been, or may be, filed, and by no other Court. Sub-section (4) which commences with a non-obstante clause, reads as follows:- (4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference any application under his Act has been made in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent application arising out of that reference and the arbitration proceeding shall be made in that court in no other Court. 48. The said provision, as noted earlier, has been in .....

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..... meaning of the word Court and assuming the premise that the Supreme Court can also become the court of first instance if it has retained control over the proceedings. On a perusal of the definition of the term Court in the dictionary clause and the meaning of the word Court as employed in Section 31(4) of the Act and appreciating the same in the context of the provisions and also taking note of the scheme of the Act, we find that the construction placed in Guru Nanak Foundation (supra) suffers from a fundamental fallacy. The language used in Section 31(4) of the Act commences with the non-obstante clause. The said part of the provision has to be understood in the textual context because primarily the provision is an enabling one and the real intendment that is conveyed through the vehicle of expressive language is that where any application has been made in a reference under the Act as regards the Court which has competence to entertain an application, that court alone shall have the jurisdiction over the arbitration proceedings. The purpose behind the said provision is to avoid conflict in the exercise of jurisdiction and to inject the intention of certainty of the juris .....

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..... d, in the said case, the three-Judge Bench opined that the award passed by the Tribunal can be scrutinized under Article 136 of the Constitution and the special leave to appeal would be maintainable. The purpose of referring to the aforesaid judgment in detail is to show that where the original jurisdiction has been conferred by the Constitution upon this Court and where it is barred. 51. In the aforesaid backdrop, the question that is required to be posed is whether this Court by using the expression keep controls over the arbitral proceeding can assume original jurisdiction. As indicated earlier, the Court has assumed the jurisdiction by interpreting the word Court as used in Section 31(4) of the Act. We have already held that interpretation is not in accord with the language used in the provision and the intention of the legislature. It is clear to us that the court competent to entertain the reference will have the jurisdiction to deal with the objections to the award or any post award proceeding. 52. Another significant issue that arises for consideration is whether the Court can, by assuming such original jurisdiction, deprive the party to prefer an appeal which is .....

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..... n away only by a subsequent enactment, if it so provides expressly or by necessary intendment and not otherwise. In this context, we have also been commended to the authority in A.R. Antulay (supra). In the said case referring to Prem Chand Garg and another v. The Excise Commissioner, U.P and others 1963 Supp. 1 SCR 885 : AIR 1963 SC 996 and relying on the same, Sabyasachi Mukharji, J. (as His Lordship then was) stated:- 50. The fact that the rule was discretionary did not alter the position. Though Article 142(1) empowers the Supreme Court to pass any order to do complete justice between the parties, the court cannot make an order inconsistent with the fundamental rights guaranteed by Part III of the Constitution. No question of inconsistency between Article 142(1) and Article 32 arose. Gajendragadkar, J., speaking for the majority of the judges of this Court said that Article 142(1) did not confer any power on this Court to contravene the provisions of Article 32 of the Constitution. Nor did Article 145 confer power upon this Court to make rules, empowering it to contravene the provisions of the fundamental right. At page 899 of the Reports, Gajendragadkar, J., .....

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..... n stated. Jurisdiction is the authority to hear and determine, and in order that it may exist the following are essential: (1) A court created by law, organized and sitting; (2) authority given to it by law to hear and determine causes of the kind in question; (3) power given to it by law to render a judgment such as it assumes to render; (4) authority over the parties to the case if the judgment is to bind them personally as a judgment in personam , which is acquired over the plaintiff by his appearance and submission of the matter to the court, and is acquired over the defendant by his voluntary appearance, or by service of process on him; (5) authority over the thing adjudicated upon its being located within the court s territory, and by actually seizing it if liable to be carried away; (6) authority to decide the question involved, which is acquired by the question being submitted to it by the parties for decision. 56. In Shiv Shakti Coop. Housing Society, Nagpur v. Swaraj Developers and others (2003) 6 SCC 659 , it has been expressed that the right of appeal is statutory and when conferred by a statute, it becomes a vested right. Jurisdiction vested in an appell .....

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..... dly applications in the matter of a reference and may fall within the purview of Section 31(4) of the Act even though these applications are made before any reference has taken place. The purpose of referring to the said authority is that the principle stated in Kumbha Mawji (supra) has been elaborated in Surjit Singh Atwal (supra). It is to be borne in mind that the Court that has jurisdiction to entertain the first application is determinative by the fact as to which Court has the jurisdiction and retains the jurisdiction. In this regard, an example may be cited. 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. 59. Thus analysed, we arrive at the irresistible conclusion .....

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