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whether the proceedings under section 14(2) of the Act could have been initiated only in the Delhi High Court and not before the Sub-court, Gaya, having regard to section 31(4) of the Act.

                                                                              Reportable 

                     IN THE SUPREME COURT OF INDIA

                       CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.6316 OF 2011

                     [Arising out of SLP [C] No.15165/2008]

M/s. Milkfood Pvt. Ltd.                                              ... Appellant

Vs.

M/s. GMC Ice Cream (P) Ltd.                                          ... Respondent

                                   J U D G M E N T

R.V. RAVEENDRAN,J.

       Leave granted. 

2.     Under   an   agreement   dated   7.4.1992,   respondent   agreed   to 

manufacture   and   pack   appellant's   product   (ice   cream)   as   per   the 

specifications   and   standards   of   the   appellant.   Clause   20   of   the   said 

agreement provided for settlement of disputes by arbitration. The said clause 

provided   that   the   venue   of   arbitration   should   be   Delhi   and   contract   was 

subject to Delhi jurisdiction.

                                                       2

3.      Respondent   filed   a   suit   (T.S.No.40/1995)   in   the   court   of   learned 

Munsif,   Gaya   (Bihar)   for   an   injunction   to   restrain   the   appellant   from 

interfering with the manufacture and supply of ice cream by the respondent. 

On   being   served   with   the   notice   of   the   said   suit,   the   appellant   filed   an 

application   under section  34  of  Arbitration   Act, 1940  (`Act'  for  short)  for 

stay of proceedings in the suit on the ground that the contract between the 

parties provided for arbitration. The learned Munsif by order dated 3.8.1995 

allowed the appellant's application under section 34 of the Act and stayed 

further proceedings in the suit. 

4.      The respondent filed a revision under section 115 of the Code of Civil 

Procedure (`Code' for short) before the Patna High Court against the order 

dated 3.8.1995. The High Court disposed of the said revision petition by the 

following order dated 6.5.1997 :

        "Before this court parties have agreed that the dispute between them may 

        be referred, as per the agreement to Arbitrators chosen by the parties. The 

        plaintiff   has   chosen   Shri   Uday   Sinha   a   retired   judge   of   this   court   and 

        Senior Advocate of the Supreme Court, while the defendants have chosen 

        Shri Hari Lal Agrawal, Senior Advocate of the Supreme Court, a former 

        judge of this court and Chief Justice of Orissa High Court as Arbitrators. 

        The dispute between the parties is referred to arbitrator.

        I   hope   that   the   learned   Arbitrators   will   dispose   of   the   arbitration 

        proceedings within three months of the entering the reference.

        Let   a   copy   of   this   order   be   sent   to   both   Shri   Hari   Lal   Agarwal   at   his 

        address Nageshwar Colony, Boring Road, Patna-1 and Shri Uday Sinha at 

        his Patna address 308 Patliputra Colony, Patna.

                                                   3

       Parties are directed to appear before the Arbitrators within a month from 

       today.

       Let   all   necessary   documents   be   filed   before   the   Arbitrators   within   four 

       weeks thereafter. 

       This application is disposed of."

It may be mentioned that long before the disposal of the revision petition, by 

notice dated 14.9.1995 the appellant had appointed its arbitrator and called 

upon the respondent to concur in that appointment or alternatively nominate 

its   arbitrator.   When   respondent   also   appointed   its   arbitrator,   the   two 

arbitrators appointed an umpire. The arbitral tribunal made an award dated 

17.8.2004 in favour of the respondent.

5.     The respondent filed a suit under section 14 (2) of the Act in the court 

of Sub-Judge, Gaya on 28.8.2004 praying that the award be made a rule of 

the   court.   The   appellant   entered   appearance   on   28.10.2004   and   made   an 

application under Order 7 Rule 10 of the Code read with section 31(4) of the 

Act contending that only the Delhi High Court had jurisdiction to entertain 

the application and Gaya court did not have jurisdiction.

6.     The   appellant   also   challenged   the   award   by   filing   a   petition   under 

sections 30 and 33 of the Act before Delhi High Court on 16.10.2004. On 

25.10.2005 the appellant's petition under sections 30 and 33 of the Act was 

                                               4

disposed of by Delhi High Court on the ground that the award had been filed 

before   the   learned   Sub-Judge,   Gaya,   prior   to   filing   of   the   petition   by   the 

appellant   under   sections   30   &   33   of   the   Act   and   since   the   matter   was 

pending in the Gaya court and the appellant had challenged the jurisdiction 

of that court, the Gaya court would decide whether it had jurisdiction; and if 

it came to the conclusion that it had no jurisdiction, that court could forward 

the   record   to   Delhi   High   Court,   in   which   event   the   appellant   could   seek 

revival of the petition under sections 30 and 33 of the Act.

7.      The Sub-Court Gaya heard and dismissed the application filed by the 

appellant   (for   return   of   the   plaint   to   the   respondent)   by   order   dated 

23.3.2006   holding   that   it   had   jurisdiction   to   entertain   and   decide   the 

application under section 14(2) of the Act. The said order was challenged by 

the   appellant   by   filing   a   revision   petition   before   the   Patna   High   Court.   A 

learned single Judge of the Patna High Court dismissed the revision petition, 

by the impugned order dated 25.5.2008. He noted that the parties had earlier 

consented   before   the   Patna   High   Court   for   referring   the   disputes   to 

arbitration and that Patna High Court had recorded the said agreement and 

referred the disputes to arbitration by order dated 6.5.1997. He held that the 

said order dated 6.5.1997 should be considered to be an order under section 

8 of the Act; and if so, the order dated 6.5.1997 would be the order in the 

                                                     5

first application under the Act in the reference; and as Patna High Court did 

not   have   original   jurisdiction,   the   Sub-Judge,   Gaya   which   was   the 

corresponding   civil   court   having   original   jurisdiction   would   have 

jurisdiction   to   entertain   the   application   under   section   14(2)   of   the   Act, 

having regard to section 31(4) of the Act. The said order is challenged in this 

appeal by special leave.

8.     On   the   contentions   urged,   the   only   question   that   arises   for 

consideration   is   whether   the   proceedings   under   section   14(2)   of   the   Act 

could have been initiated only in the Delhi High Court and not before the 

Sub-court, Gaya, having regard to section 31(4) of the Act.

9.     Section 31 of the Act deals with jurisdiction and the same is extracted 

below :

       "31. Jurisdiction.--(1) 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. 

                (2) 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. 

            (3) All applications regarding the conduct of arbitration proceedings or 

       otherwise   arising   out   of   such   proceedings   shall   be   made   to   the   Court 

       where the award has been, or may be, filed, and to no other Court. 

            (4) Notwithstanding anything contained elsewhere in this Act or in any  

       other   law   for   the   time   being   in   force,   where   in   any   reference   any  

                                                   6

       application   under   this   Act   has   been   made   in   a   Court   competent   to  

       entertain it, that Court alone shall have jurisdiction over the arbitration  

       proceedings-,   and   all   subsequent   applications   arising,   out   of   that  

       reference,   and   the   arbitration   proceedings   shall   be   made   in   that   Court  

       and in no other Court."

                                                                      (emphasis supplied)

Sub-section (4) of section 31 provides where any application under the Act, 

in any reference,  had been made  in a court competent  to entertain  it, then 

notwithstanding anything contained in the Act (or in any other law for the 

time   being   in   force),   that   court   alone   shall   have   jurisdiction   over   the 

arbitration   proceedings   and   all   subsequent   applications   arising   out   of   that 

reference and therefore all arbitration proceedings shall be made in that court 

alone and not in any other court. Sub-section (4) of section 31 of the old Act 

corresponds to section 42 of the new Act.

10.    As   the   court   where   the   first   application   was   made   is   the   court 

competent   to   entertain   all   subsequent   applications   under   the   Act,   it   is 

necessary   to   decide   where   the   first   application   in   the   reference   was   made 

under the Act. In chronological order, the four applications in the reckoning 

for being considered as the first application in the reference under the Act, in 

a competent court are :

                                               7

    (i)      The   application   dated   19.6.1995   filed   by   the   appellant   under 

             section 34 of the Act, in the court of Munsif, Gaya (resulting in the 

             order dated 3.8.1995).

    (ii)     The   revision   petition   dated   2.7.1996   filed   by   the   respondent 

             against the order dated 3.8.1995, under section 115 of the Code, in 

             the Patna High Court (resulting in the order dated 6.5.1997).

    (iii)    The application made in April 1998 by the appellant under Section 

             33 of the Act, in the Delhi High Court (resulting in the order dated 

             13.10.1998).

    (iv)     The   application   dated   16.8.2000  by   the  respondent   under   section 

             27 of Arbitration & Conciliation Act, 1996 in the Delhi High Court 

             (resulting in the order dated 1.10.2000).

The  appellant  contends  that the first  application  in the reference  was filed 

under   the   Act   in   Delhi   High   Court   in   April,   1998   and   therefore   all 

subsequent proceedings including the application under section 14(2) should 

be filed in Delhi High Court. The respondent contends that the application 

made either in the Gaya Court on 19.6.1995 or in the Patna High Court on 

2.7.1996 should be considered to be the first application in the reference in a 

competent   court;   and   as   that   Patna   High   Court   did   not   have   original   civil 

jurisdiction, the corresponding civil court namely the Sub-Judge, Gaya was 

                                               8

the court where all applications, including an application under section 14(2) 

of the Act should be filed.

11.     In  Kumbha   Mawji   vs.   Union   of   India  -   1953   SCR   878,   this   Court 

explained that the words `in any reference' would mean `in the matter of a 

reference to arbitration'. In Union of India vs. Surjeet Singh Atwal - 1969 (2) 

SCC 211, this Court held that an application under section 34 of the Act is 

not   to   be   considered   as   an   application   under   the   Act   in   a   reference. 

Therefore, the application under section 34 of the Act filed by the appellant 

on 19.6.1995 cannot be considered to be the first application to a court in the 

reference to arbitration.   Let us next examine whether  the first application 

under  the  Act  in the  reference  was first  made   to the  Patna High  Court. A 

Revision   Petition   (C.R.No.1020/1996)   was   filed   in   the   Patna   High   Court 

under section 115 of the Code, aggrieved by the order dated 3.8.1995 passed 

in   an   original   suit   filed   by   the   respondent.   The   order   dated   3.8.1995   was 

made   allowing   an   application   filed   by   respondent   for   stay   of   proceedings 

under section 34 of the Act. Therefore, the order dated 6.4.1997 appointing 

the arbitrators was made by Patna High Court, not in an application under 

the Act, but in a revision petition under section 115 of the Code. Further the 

said   revision   did   not   arise   out   of   arbitration   proceedings,   but   against   the 

rejection   of   an   application   under   section   34   of   the   Act   to   stay   the 

                                                9

proceedings   in   a   civil   suit.   If   the   proceedings   in   which   the   order   dated 

6.5.1997 was made by the Patna High Court did not relate to an application 

under the Act in a reference, nor is it a revision arising from an application 

under   the   Act   in   a   reference,   it   is   not   possible   to   hold   that   the   first 

application   under   the   Act   in   a   reference   was   made   before   the   Patna   High 

Court. 

12.     At this juncture, it is necessary to notice the argument put forth by the 

respondent. The respondent contends that even though the revision petition 

did   not   arise   from   an   application   under   the   Act,   the   order   dated   6.5.1997 

made  therein by the Patna High Court, recorded the consent of the parties 

that   the   disputes   may   be   referred   to   arbitrators   chosen   by   the   parties, 

recorded   the   names   of   the   arbitrators   appointed   by   them,   and   referred   the 

disputes  between   the  parties  to  arbitration.  According  to  the  respondent,  a 

court   can   appoint   an   arbitrator   either   under   section   20   or   section   8   of  the 

Act; as there was no application for filing the agreement under section 20 of 

the Act, the order dated 6.5.1997 should be deemed to have been made in an 

application   under   section   8   of   the   Act   to   the   High   Court.   The   respondent 

therefore   contends   that   the   Patna   High   Court   should   be   treated   as   a   court 

where first application under the Act was filed and therefore all subsequent 

applications   should   be   filed   in   that   court.   There   is   no   merit   in   this 

                                                  10

contention.   Section   8   relates   to   the   power   of   civil   court   to   appoint   an 

Arbitrator or umpire. With reference to the facts of this case the power under 

section   8   of   the   Act   can   be   exercised   only   if   the   following   conditions 

mentioned in the section are fulfilled : (i) the parties did not concur in the 

appointments of arbitrators, when differences arose; (ii) one of the parties to 

the   arbitration   agreement   served   on   the     other   party   a   written   notice 

nominating   its   arbitrator   and   calling   upon   the   other   party   to   make   its 

nomination;  (iii) the other party did not appoint its arbitrator within 15 clear 

days after the service of such notice; and (iv) an application was made by the 

party who gave the notice under section 8 of the Act for appointment of the 

arbitrator.   The   order   dated   6.5.1997   of   the   Patna   High   Court   cannot   be 

considered   to   be   an   order   under   section   8   of   the   Act,   as   neither   an 

application   was   filed   under   section   8   of   the   Act   nor   the   conditions   for 

making an application under section 8 of the Act existed in this case.

13.     As   noticed   above   the   said   order   was   made   in   a   revision   petition 

against   the   grant   of   an   application   under   section   34   in   a   suit   filed   by   the 

respondent.  All that  the  High Court did was to record  the submission  that 

both   parties   had   appointed   their   respective   arbitrators   and   therefore   the 

disputes stood referred to them. Such an order recording the nomination of 

arbitrators by consent and referring the disputes to arbitration, can be made 

                                                11

in   any   suit   or   other   proceedings,   even   if   they   do   not   arise   under   the 

arbitration agreement or under the Act. If for example a civil suit is filed by 

a party against the other and there is no arbitration agreement between them, 

but   during   the   course   of   the   said   suit   both   parties   agree   that   the   matter 

should   be   referred   to   a   named   arbitrator   for   arbitration   and   the   court 

accordingly   refers   it   to   arbitration,   is   not   an   appointment   of   an   arbitrator 

under section 8 of the Act, but a consent order referring the disputes to the 

arbitrators already appointed by the parties. Therefore we can not accept the 

contention that the order dated 6.5.1997 of the Patna High Court should be 

treated as an order in a proceeding under section 8 of the Act. If the order 

dated   6.5.1997   is   not   an   order   made   in   an   application   under   the   Act   in   a 

reference, it follows that the question of making all subsequent applications 

arising out of the reference under the Act, to that court does not arise. 

14.     In this case the appellant filed an application (OMP No.94/1998)   in 

the Delhi High Court under section 33 of the Act in April 1998 praying for a 

clarification   as   to   whether   the   arbitration   proceedings   between   the   parties 

would   be   governed   by   the   provisions   of   Arbitration   Act,   1940   or   by   the 

provisions   of   Arbitration   and   Conciliation   Act,   1996.   Thereafter   the 

respondent   made   an   application   (OMP   No.217/2000)   to   Delhi   High   Court 

for summoning and examining one O.P.Singh as a witness in respect of the 

                                            12

pending arbitration, to produce certain documents. Therefore the application 

(OMP No.94/1998) made by the appellant under section 33 of the Act will 

have to be treated as the first application under the Act in the reference. If 

that is so all subsequent applications will have to be made in the High Court 

of Delhi.

15.    Learned counsel for respondent submitted that the application filed by 

it   in   OMP   No.217/2000   for   issue   of   summons   to   a   witness   to   produce 

documents, cannot be treated as an application under the Act as it was filed 

under section 27 of the Arbitration and Conciliation Act, 1996 and not under 

the   provisions   of   section   43   of   Arbitration   Act,   1940.   OMP   No.217/2000 

was made for issue of processes for appearance of witness and production of 

documents, in a pending arbitration proceedings. When the application was 

filed in the year 2000, there was some confusion as to whether the new Act 

applied or the old Act applied. In fact that question was pending before the 

Delhi High Court in OMP NO.94/1998 filed by the appellant. That issue was 

decided   by   Delhi   High   Court   on   13.10.1998   holding   that   the   matter   was 

governed   by   1996   Act,   but   that   order   was   reversed   by   the   order   dated 

5.4.2004 of this court in  Milkfood Ltd. Vs. GMC Ice Cream (P) Ltd. [2004 

(7)   SCC   288]   holding   that   the   old   Act   applied   with   the   following 

observations : "For the reasons aforementioned, we are of the view that in 

                                               13

this case, the 1940 Act shall apply and not the 1996 Act. .... The award shall 

be filed in the court having jurisdiction whereafter the parties may proceed 

in terms of the old Act." Therefore OMP No.217/2000 could be deemed to 

have   been   made   under   section   43   of   the   Act.   At   all   events   as   OMP 

No.94/1998   has   to   be   treated   as   the   first   application   under   the   Act,   Delhi 

High   Court   alone   will   have   jurisdiction   to   entertain   any   subsequent 

applications and therefore the court at Gaya will not have jurisdiction.  It is 

also relevant to note that the Arbitration clause provides  that the venue of 

arbitration shall be Delhi and Delhi courts will have jurisdiction. 

16.     In   view   of   the   above   we   allow   this   appeal,   set   aside   the   impugned 

order of the Patna High Court as also the order of Sub-Court, Gaya and hold 

that all applications should be filed in Delhi High Court.                 

17.     The respondent shall therefore obtain return of the application under 

section 14(2) of the Act from the Gaya court and file it before Delhi High 

Court within two months from today. If it is so filed, Delhi High Court shall 

entertain the same and dispose it of in accordance with law. We may note 

that when the matter had come up before this court in the first round, in the 

order dated 5.4.2004, this court had expressed the hope that the award will 

                                     14

be made and all legal proceedings should come to an end within four months 

from the date of communication of that order. More than seven years have 

elapsed thereafter and the proceedings have not ended. We therefore request 

the High Court to dispose of the matter expeditiously.

                                             .................................J.

                                             (R V Raveendran)

New Delhi;                                   ...................................J.

August   4, 2011.                            (A K Patnaik)

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