P.A. AHAMMED IBRAHIM versus THE FOOD CORPORATION OF INDIA

Citation: [1999] SUPP. 1 S.C.R. 498 · Decided: 17-08-1999 · Supreme Court of India · Bench: D.P. WADHWA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
P.A. AHAMMED IBRAHIM 
v. 
THE FOOD CORPORATION OF INDIA 
AUGUST 17, 1999 
B 
[D.P. WADHWA AND M.B. SHAH, JJ.] 
Arbitration Act, I 940-Section 20-Appointment of arbitrator by 
court-Scope and jurisdiction of-Appellant entered into an agreement with 
respondent having an arbitration clause-Held, sub-sections (2) and(/) of 
C Section 20 mandate the court to pass an order either referring .the matter to 
arbitration or to reject the same and there was no jurisdiction to pass a 
decree in favour of the applicants-Thus application under Section 20 is not 
a suit-Before applying provisions of Order VI Rule I 7, there must be 
institution of the suit-Any application filed under provisions of different 
D statutes cannot be treated as a suit unless otherwise provided in the said Act 
as otherwise it would cause serious prejudice to the other side-In such case 
court could not resort to inherent jurisdiction under Section I 5 I CPC as it 
would nullifY the procedure prescribed under the Act-Amendment of 
applications not filed under a pending suit-Inherent powers of the court-
When to be exercised-Civil Procedure Code 1908, Order VJ Rule 17, Section 
E 151 
Appellant entered into an agreement with the respondent to carry out 
the work of loading-unloading and transportation of foodgrains on their 
behalf from April 1973 to April 1975. Respondent had an option under the 
agreement to extend the contract by one year, and respondent informed the 
F appellant that it was not ready and willing to extend the period of con.tract 
beyond the original contract period. Agreement also had an arbitration 
clause. In April 1978, appellant filed a suit for recovery of certain sum from 
the respondent being money due on account of pending bills, security deposits 
etc. for the contract period. As against this, respondent filed petition under 
G Section 20 of the Arbitration Act in April 1978 for appointment of arbitrator 
to refer certain disputes. Respondent also filed an interim application under 
Section 34 of the Act for staying suit filed by the appellant against them. 
Trial Court dismissed the application filed by respondent on the ground that 
the same was not maintainable inasmuch as the application failed to disclose 
any dispute or difference between the parties which would come within the 
H 
498 
P.A. AHAMMED IBRAHIM v. F.C.I. 
499 
arbitration agreement. On appeal, a Division Bench of the High Court A 
dismissed it by holding that the trial court had rightly exercised its 
jurisdktion in declining to stay the suit under Section 34 of the Arbitration 
Ad 
. 
In March 1986, the respondent filed an application for amendment of 
the pending application under Section 20 of the Arbitration Act for converting B 
it as a suit for recovery of certain sum against appellant, which was dismissed 
by the trial court. Respondent filed a revision petition before the High Court 
which was allowed by resorting to its inherent jurisdiction under Section 
151 CPC. Hence this appeal. 
Allowing the appeal, the Court 
c 
HELD: Final order which is required to be passed in an application 
under Section 20 of the Arbitration Act is either to refer the matter to the 
arbitration or to reject the same and there is no question of passing any 
decree in favour of the applicant Section 20 nowhere provides that application D 
filed for referring the dispute to the arbitrator is to be treated as a plaint 
as contemplated under CPC. Hence, it cannot be considered to be a plaint. 
Before applying provisions of Order VI Rule 17, there must be institution 
of the suit. Any application filed under provisions of different statutes cannot 
be treated as a suit or a plaint unless otherwise provided in the said Act. In 
any case, the amendment would introduce a totally new cause of action and E 
change the nature of suit. It would introduc~ a totally different case which 
is inconsistent with the prayer made in the application for referring the 
dispute to the arbitrator. Primafacie, such amendment would cause serious 
prejudice to the contention of the appellant that the claim of the respondent 
to recover the alleged amount was barred by the period of limitation as it was F 
pointed out that cause of action for recovery of the said amount arose in the 
year 1975 and the amendment application was filed on 30.03.1986. In such 
cases, there is no question of invoking inherent jurisdiction of the court 
under Section 151 of the CPC as it would nullify the procedure 

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