UNION OF INDIA versus SURJEET SINGH ATWAL

Citation: [1970] 1 S.C.R. 351 · Decided: 22-04-1969 · Supreme Court of India · Bench: S.M. SIKRI · Disposal: Appeal(s) allowed

Judgment (excerpt)

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UNION OF INDIA 
v. 
SURJEET SINGH ATWAL 
,4.pril 22, 1969 
[S. M. S!KllI, R. S. BACHAWAT AND V. RAMASWAMI, JJ.] 
Indian Arbitration Act o/ :1940, $. 31(4) 
11nd 34-Arbirration 
agreement entered at Delhi-Suit filed in Calcutta-Application in suit 
under s. 34-Whethei· an application wi~~in mea;iing of•· 31(4)-Ju~ 
diction of Dtlhi Court. 
· 
An aareement, containing a clause for settlement of the disputes by re-
ference to an Arbitrator at Calcutta was executed at Delhi between the 
appellant-Union of India, and the respondent for certain constructions at 
Da"'lbhumgarh. 
lll!'oring the arbitration clause, the respondent filed a suit ,,-
on the original 11de of the Calcutta High Court claiming certain amount 
under the agreement. 
The appellant filed an applic'ation under s. 34 of 
the Arbitration Act for the stay of the suit. The suit was stayed and the 
matter was referred to the Arbitrator in Calcutta before whom the appel-
lant made a- counter..claim. The respondent objected to the ente:rtairunent 
of the ccunter-claim. The stay granted by the Calcutta High Court was 
vacated. Pending the suit the appellant filed an application under s. 20 
of the Act before the 'Subordinate Judge, Delhi, for making the referenc" 
to the Arbitrator. The respondent opposed the application on the ground 
that the Subordinate Judge, Delhi had no jurisdiction to entertain the 
application and· that the appellant having filed an applicafon under s. 34 
df the Act in the Calcutta High Court, the subsequent application should 
be filed in the Calclltta High Court. 
The Subordinate Judge Delhi, re-
ferred the disputes to· the Arbitrator holding that the Delhi Court had 
jurisdiction as the contract was concluded and signed at Delhi. The res-
pondent filed an appeal to the Punjab High Court, which the High Court 
allowed holding that !lie Delhi Court had no jurisdiction to entertain the 
application. In appeal~ this Court, 
HELD : The Subordinate Judge, Delhi was right in holding that the 
application under s. 20 was maintainable , in his court and for mak.'ng a 
reference of the disputes to the arbitrator mentioned in the a&reement. 
Two conditions must be fulfilled in order to give a court exclusive 
jurisdiction under s. 31(4) of the Act. 
In the first place an application 
under the Arbitration Act must be 1,iade to the Court competent to enter-
tain it. and, in the second place, it must be made "in any reference". The 
application for stay of suit under s. 34 in tb,e present case was not an 
application in a reference within the wider meaning given to that. phrase 
by this Court in Kumhha Mawji's case. There are different sections in 
the Arbitration Act whereby an application is to be made even before any 
reference has been made. Section 8 for instance,· provides for an applica-
tion to invoke the power of the court, when the parties fail to concur in 
the appointment qf a.n arbitrator to whom the reference· can be made. So 
also s. 20 provides for '~n application to file the arbitration agreement in 
court so that an order <>f reference to an arbitrator can be made. These 
are Clearly applications anterioc ·to the reference but they lead to a refer-
ence. Such aPl'lications are undoubtedly applications "in the matter of a 
referenc~" and' may fall within the purview of s. 31 ( 4) of the A<t even 
though these applications are made before any reference has taken place. 
But an application under s. 34 is clearly not an application belonging t<> 
352 
SUPREME COURT REPORTS 
(1970] I SC.R 
the same category. It has nothing to do with any reference. 
It is only 
A 
intended to make an arbitration agreement effective and prevent a party 
from going to court contrary to his own agreement that the dispute is to 
bo adjudicated by a private tribunal. [355F-356C] 
Kumbha Mawji v. Union of India, [1953] S.C.R. 878, referred to. 
The other condition imposed by s. 31 ( 4) is that the 
application for 
stay must be made to a coun competent to entertain it. 
In s. 34 the ex-
pression "judicial authority" is used. The section provides for an applica-
tion to a Judicial authority before whom a legal proceeding is pending for 
the stay of that proceeding. 
An application for stay of legal proceedi!li 
lo 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 
s. 2

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