Societe De Traction Et D'Electricite Societe Anonyme v. Kamani Engineering Company Ltd.

Shah J.

(3) The provisions of the Arbitration Act, 1940 (X of 1940), shall apply to all arbitrations in pursuance of this Act to which a company is a party."

The High Court held that an Indian Company could, because of s. 389 refer an existing or future dispute between itself and any other company or person to arbitration only in accordance with the Arbitration Act, 1940 and not otherwise ; that any arbitration agreement which obliged the Company to submit itself to arbitration according to a scheme of arbitration different from the Arbitration Act, 1940 would not be binding upon the Indian Company, and therefore the Court had no power to enforce com- · pliance with an invalid covenant, and to stay the suit instituted by an Indian company in breach thereof. In recording that conclusion the High Court was guided by its earlier judgment in Societe Italians per Lavori Marittimi v. Hind Constructions Ltd. ('), that it was not permissible to a Company incorporated under the Indian Companies Act to refer disputes to arbitration otherwise than in accord-ance with the Arbitration Act.

In support of the appeal Mr. Setalvad con-tended that s. 389 is an enabling provision and does not compel an Indian Company to agree to refer differences to arbitration only in accordance with the provisions of the Indian Arbitration Act, 1940 i.e. if the Company desires to refer a dispute to arbitra-tion under the Arbitration Act, 1940, it may do so, but the power to submit to arbitration beini an (I) Appeal No. 63 of 195a decided on September 22, 1960, (Unreported,) incident of the power to enter into contracts for the 1963 purpose of carrying on its business, is unrestricted, Sotiete De Traction and that sub-s. (3) of s. 389 applies not to consensual et D' E/1 :t•idt1 arbitrations but only to statutory arbitrations in pur-S«it11 AnonJml v. 8uance of the Companies Act, e.g. arbitrations under K01"ani Engin11ring s. 494 (3) (b) of the companies Act 1956. C•mpany Ltd. Shah J. It cannot be disputed that the use of the expres-sion 'may' is not decisive. Having regard to the context, the expression 'may' used in a statute has varying significance. In some contexts it is purely permissive, in others, it may confer a power and make it obligatory upon the person invested with the power to exercise it as laid down.

A company under the Indian Companies Act is entitled to enter into contracts for all such purposes as are by its constitution within its competence. It is invested with a legal personality, and a commercial company may subject to restrictions specifically imposed upon it by its memorandum or Articles, always enter into contracts for the purpose of its business subject in the matter of form to s. 46 of the Companies Act. An arbitration agreement being a contract to submit present or future differences between the parties not to the ordinary courts but before a tribunal chosen by the parties, if the company has the power to enter into a contract, that power would include power to submit a dispute to arbitration out of court. By s. 28 of the Indian Contract Act agreements in restraint of legal proceedings are declared void, subject however to the rule that a contract by which two or more persons agree that any dispute which has arisen or which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, is not illegal. Section 389 of the Companies Act, 195fi, therefore, doc> r ct confer any new right upon Companies to agree to refer disputes which have arisen or which may arise to arbitration : the

section recognises the rights of a company to &citte D1 Traction refer present disputes to arbitration, and seeks to et· D' Elei:rricit1 regulate the right by placing a restriction upon the &cit1t Ano1i,Y'11t exercise of that right. It is pertinent to remember

v • Kamani Engineering that the Arbitration Act, 1940 is in form a code

C.mpany Ltd. relating to the law of arbitration and applies to all

S"4h J. arbitrations: it applies to all arbitrations to which

persons natural and legal are parties. The power of the Company to enter into an arbitration agreement is therefore not conferred for the first time by the Companies Act; it is merely regulated by s. 389 of the Companies Act. In other words, a company within the meaning of the Indian Companies Act, 1956 has the power to refer present or future disputes to arbitration, but such reference has because of the statutory ·provision to be in accordance with the Arbitration Act, 1940. Sub·section (3) of s. 389 makes the provisions of the Arbitration Act, applicable to all arbitrations to which a company is a party, provided they are in · pursuance of the Companies Act. There is no warrant for holding that sub·s. (3) is independent of suh-s. (1). Sub-section (1) affirms the power of a company to refer differences between it and another company or person, and also regulates it. Sub-section (3) makes the provisions of the Arbitration Act applicable to all arbitrations to which a company is a party : it is not restricted to mere statutory arbitrations to which a ·company is obliged to submit by virtue of the provisions of the Companies Act. To invest sub·s. (3) with a restricted meaning, is to make it redundant. The only provision of the Companies Act which compels a company to go to arbitration in respect of a dispute is s. 494 (3) (b). By that clause a member of a transferor company in voluntary liquidation expressing dissent against an arrangement relating to the acceptance of shares, policies or other interest or participation in profits· in the transferee company in consideration of the business of the former may require the liquidator to purchase his interest at a price to be determined 1969 by agreement or by arbitration in the manner Saciet1 De TraetUm provided bys. 494, and sub-s. (6) expressly makes 1t D 1 Electrieit1 the provisions of the Arbitration Act applicable to So<it11 Anrmym1 v. such arbitration. It may be observed that the words Kamani Engineerinz "other than those restricting the application of that Company Ltd. Act" in sub-s. (6) have no meaning. They have ~hah· J, been merely copied from s. 208C of the Companies Act of 1913, in which they survived by some inadvertance, even after the repeal of the Arbitration Act of 1899. Our attention has not been invited to any other provisions under the Indian Companies Act under which compulsory arbitration has to be undertaken between a company and another company or person and in regard to which no provision relating to the applicability of the Arbitration Act has expressly bren made. The provisions relating to arbitration in the earlier Companies Act also confirm that view. A retrospect of legislation relating to arbitration in the context of the law relating to Companies would serve also in clearing the ground in appreciating the reasons which led to conflicting decision~ in the High Courts.

It may not be necessary to enter upon a detailed review of the Regulations and Acts in force prior to the year 1882. It may be sufficient to observe that in the Presidency towns of Calcutta, Madras and Bombay there were diverse Regulations in operation which provided for machinery for amicable settlement of disputes of civil nature by arbitration. For the first time by Act 8 of 1859 in the Code of Civil Procedure a provision was made for reference of disputes to arbitration by parties to the suit applying to the Court in which the suit was pending in which the matter was referred to arbitration. Then came the Indian Contract Act 9 of 1872, which recognized the validity of contracts requiring parties to submit their disputes either present or future to arbitration. In 1822 the Indian

128 SUPREM:E COURT REPORTS [1964] VOL.

- 1969 Companies Act 6 of 1882 was enacted which by

ss. 96 to 123 made provisions for arbitration out of Soci1te o• D1 Troction Court, of disputes in which companies were concer-et Ettct•ieite Soei1{e •• .dflOnyme ned. A company could refer by writing under its "Kamani Enginte,ing common seal any matter whatsoever in dispute

Company Ltd between itself and any other company or person, and

Shah J. the procedure prescribed in those sections applied.

This group of sections dealt exhaustively with arbitrations out of court to which a company was a party. Beside enacting the procedure for arbitra-tion it provided that the award of the arbitrator was not liable to be set aside on any ground of irregu-larity or informality. -On the application of any party interested the arbitration agreement could be filed in the High Court having jurisdiction, and an order of reference could be made thereon. Imme-diately in the wake of the Companies Act, 1882 the Code of Civil Procedure (Act 14 of 1882) was enacted which provided by Ch. XXXVII the general law relating to arbitration. Sections !506 to 522 dealt with arbitration in a pending suit. If all the parties to a suit desired that any matter in difference bet-ween them in the suit be referred to arbitration, they could, at any time before judgment was pronounced, applv to the Court for an order of reference. By s. 523 provision was made enabling the parties to an arbitration agreement to file it in Court and the Court if satisfied as to the existence of the arbitration agreement could make a reference to the arbitrator appointed bv the parties or nominated by the Court and the provisions relating to arbitration in the earlier sections in so far as they related to or were consis-tent with the agreement applied. Section 525 enabled any person interested in the award made in a matter referred to arbitration without the inter-vention of a Court of Justice to file the same iii Court and if no ground for setting aside the award ,_ was made out, the Court could otder that the same be filed. Chapter XXXVII therefore dealt with arbi-tration generally-arbitration in pending proceedings, arbitrations pursuant. to orders passed by the /9f! Court referring a dispute on an agreement filed in So1<it11 Dt TY•clia11 Court, and filing of awards made by arbitrators 1t D' Electrirhi appointed by valid agreements out of Court. The $~ciet1 . Ano11Jm1 v. combined· effect of the Indian Companies Act ss. 96 K.m.ni.Eui!f1er£111 to 123 and the Code of Civil Procedure ss. 506 Cornµ,ny. Ljd. to 526 was that where a Company was a party to S4.Ji J. an arbitration out of Court, the arbitration procee-dings had to take place in accordance with the Companies Act and could be enforced in the manner provided thereunder. Filing of an arbitration agree-ment in Court for reference was also governed by the Companies Act, but arbitration in a pending suit to which a Company was a party was governed by the Code of Civil Procedure.

In 1899 the Indian Legislature enacted the Indian Arbitration Act, 9 of 1899. That Act had a limited operation. By s. 2 it was provided that it shall apply only in cases where if the subject-matter submitted to arbitration were the subject of a suit, the suit could, whether with leave or other-wise, be instituted in a Presidency-town. By the proviso it was open to the Local Government, to declare the Act ·applicable in other local area as if it were a Presidency-town. By s. 3 proviso (2) it was provided that nothing in the Act shall affect the provisions of the Indian Companies Act, 1882 rela-ting to arbitration. The provisions of the Indian Companies Act, 1882 contained in ss. 96 to 123 !ii therefore continued to remain in operation and to

apply to companies notwithstanding the enactment of the Indian Arbitration Act, 1899. The Civil Procedure Code of 1882 was repealed by Act 5 of 1908 and the provisions relating to arbitration subs-tantially on the same pattern as in the Code of 1882 were incorporated in a separate schedule in the new Code. Clauses 1 to 16 dealt with references to arbi-tration of the differences between the parties to a __ suit if they applied in writing in that behalf.

Clauses 17 to l 9 dealt with orders of references on Soei1r1 01 Tr11ction agreements to refer disputes to arbitration,. and 11 1· ·Eledrfrite clauses 20 and 21 dealt with the tiling and enforce-Socittf -A1r1111yme ment of awards. Section 89 specially enacted

•• wa~ Kaani Erigin.111;,rg, in thr. Code which provided by the tirst sub-section:

~.1 Lti.

Shh J. · "(l) Save in so far as is otherwise provided by the Indian Arbitration Act, 1899, or by any other law for the time being in force, all refe-rences to arbitration whether by an order .in a suit or otherwi>e, and all proceedings there-under, shall be governed by the provisions contained in the Second Schedule."

The effect of s. 89 was to make the Second Schedule applicable to all arbitrations other than those gover-ned by the Indian Arbitration Act, 1899 or any other law for the time being in force. Therefore since the enactment of the Code of Civil Procedure, 1908 all arbitr.ttions out of Court where a company was a party had to be conducted in the manner provided by the Companies Act, 1882 but arbitra-tions during the pend ency of a suit or refereuces to arbitrations by filing an arbitration agreement could be made under the appropriate clauses of the Code of Civil was Procedure. The Indian Companies Act, 1882 repealed by the Companies Act 7 of 1913 .. By s. 290 of that Act read with Schedule IV the Indian Companies Act of lil82 and the second pro-viso to s. 3 of the Indian Arbitration Act, 1899 were repealed. The Indian Companies Act, 1913 incor-porated a new section 152 which by the first clause authorised a company by written agreement to refer to arbitration, in accordance with the Indian Arbi-tration Act, 1899, an existing or future difference hetween itself and any other company or person, and by the third sub-section enacted that the provisious of the Indian Arbitration Act, 189l!, other than those restricting the application of the Act in respect of the subject-matter of the arbitration, shall apply to all !Lrbitrations between companies and persons in pur-suance of the Companies Act. The arbitrations to J96!J which a company was a party had therefore to take \oci1U De 1 ra ·tinll place irrespective of the restrictions contained in et D' E/er:t1 it:iu s. 2 of the Arbitration Act, 1899, according to the Socittt An1nym~ v.. ' provisions of the Arbitration Act, 1899. Section 214 £ amani EntinurU.,t of the Companies Act, 1913 (which was later renum-C1m/Jo•y L1i bered s. 208 C by Act XXII of 1936) provided for >"4h J. compulsory arbitration for purchasing the interest of a member of a Company in voluntary liquidation when the business of the company was agreed to be transferred to another company in the course of liqui-dation and the liquidator and the member could not agree as to the price payable in respect thereof.

By cl. (6) of that section it was expressly provided that the provisions of the Arbitration Act, 1899, other than those restricting the application of that Act in respect of the subject-matter of the arbitration, shall apply to all arbitrations in pursuance of s. 214.

The Government of India was a party to the Protocol on Arbitration Clauses and the Convention on the Execution of Foreign Arbitral Awards. To enforce the terms of the Protocol, the Indian Legisla-ture enacted the Arbitration (Protocol and Conven-tion) Act, 6 of 1937 for enforcement of foreign awards on differences relating to matters considered as commercial under the law in force in British India in pursuance of an arbitration agreement to which the Protocol set forth in the First Schedule applied, between persons who were subject to the jurisdiction of the powers notified by the Governor-General in that behalf as parties to the Convention. By s. 3 of that Act it was provided that :

"Notwithstanding anything contained in the Indian Arbitration Act, 1899, or in th~ Code of Civil Procedure, 1908, if any party to a submission made in p1irsuance of an agreement to which the Protocol set forth in the First Schedule as modifiFd by the re1ervation subject to which it was signed by India applies, or any 1963 person claiming through or under him, commen: ces any legal proceedings in any Court against Soii4t1 D1 Trution any other party to the submission or any person 1t D' · Elldtieitl So&UU AllM{)'me claiming through or under him in respect of

v. any matter agreed to be referred, any party to K ..; Enzinming

c~u•. such legal proceedings may, at any time after

SWJ. appearance and before filing a written state-ment or taking any other steps in the proceed-ings, apply to the Court to stay the proceedings; and the Court, unless satisfied that the agree-ment of arbitration has become inoperative or cannot proceed, or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings."

By this enactmeut an obligation in the conditions set out in s. 3 was imposed upon the Court, unless it was satisfied that the agreement of arbitration had become inoperative or could not proceed, to direct that the suit filed in any Court in India against any other party to the submission shall be stayed. This provision applied to all arbitration agreements whether a company was or was not a party thereto. This Act was followed by the Arbitration Act, X of 1940. The Act was enacted in the form of a complete code on the law of arbitration in India. All consensual arbitrations were governed by the ..,_ Arbitration Act and by .. s. 46 the provisions of the Act, except sub-s (1) of s. 6 and ss. 7, 12, 36 and 37 were made applicable to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agree-ment, and as if that other enactment were an arbitra-tion agreement, except in so far as the Act was ncon-sistent with that other enactment or with any rules made thereunder. Bys. 4.7 it was provided that : "Subject to the provisions of section 46, and save in so far as is otherwise provided by any ''-·

law for the time being in force, the provisions of this Act shall apply to all arbitrations and Soci1t1 1)1 Tra,iw. to all proceedings thereunder. u · D' Eltdritdb Soci1u A._ Y, Provided that an arbitration award other- !Lamani Enptwint wise obtained may with the consent of all C11111p.ny Lii. parties interested be taken mto consideration Sha /, as a compromise or adjustment of a suit by any Court before which the suit is pending."

By s. 49 read with the Fourth Schedule the figure "1899" ins. 152(1) & (3) in the Companies Act, 1913 was substituted by the figure "11J40"' and the words in sub-s. (:3) "other than those restricting the applica-tion of the Act in respect of the subject-matter of the arbitration" were deleted. So also s. 89 of the Code of Civil Procedure was deleted. The effect of this amendment was to make the Arbitration Act applica-ble to all arbitrations in pursuance of the Companies Act, 1913 in which a company was a party. No amendment, however, was made in the Arbitration (Protocol and Convention) Act, 6 of 1937 and none such was necessary. By virtue of the saving clause ins. 47 the provisions of the Arbitration (Protocol aud Convention) Act, 1937 continued to operate.

The Indian Companies Act, 7 ofl913 was repealed by the Companies Act I of 1 !l5fi and s. 389 took the place of s. l 52 of the former Act with a sli~ht modification. Under the Arbitration Act, 1899 read with the Companies Act, 1913.

the power of a company to refer differences to arbitration fell to be determined in certain cases which arose, before the High Courts of Lahore, Calcutta and Madras. In Sita Ram Balm11kand v.

The Pitnjab National Bank Ltd. Ambala City{'), there was a private arbitration in a dispute between the Punjab National Bank Ltd. and a debtor of the Bank and the arbitrator made his award in favour r of the Bank. This award was filed in the Court

(1) (1936) I. L. !\, 17 Lah. 712 f· ll 1969 of tlie Senior Subordinate Judge, Ambala under 3•citle D1 Tr•ction Sch. I of the Code of Civil Procedure, 1908 et D' Electricit1 and a decree was obtained in accordance with the Societe An""'in! •• provisions of that Schedule. Execution was then Kvn,•11i Entint1ri111 taken out and property of the debtor was attached.

C1mpanv Ltd. The debtor contended that the award and the decree

Shah J. by the Court were invalid, because arbitration to

which a company was a party had, in view of the provisions of s. 152 of the Indian Companies Act, to take place in accordance with the provisions of the Arbitration Act, 1899 and the award could only be filed in the Court of the District Judge and not in the Court of the Senior Subordinate Judge and therefore the proceedings in execution "were ultra vires"·. The High Court held that s. 15:l of the Indian Companies Act,. 1913, enacted an enabling provision and did not make it obligatory upon the parties one of which was a company, to go to arbi-trat.on in accordance with the requirements of the Indian Arbitration Act, 1899. The provisions of s. 152 in the view of the Court being permissive, the Company could apply to have an award filed in Court under paragraph 21 (1) of Sch. II to the Code of Civil Procedure and the decree passed by the Senipr Subordinate Judge was not a nullity as contended by the debtor. Bhide, J, who delivered the judgment of the Court observed that the general policy of the Legislature as disclosed by s. l 52 of the Indian Companies Act, 1913, was not to make compliance in arbitration proceedings with the provisions of the Indian Arbitration Act, 1899, obligatory outside the Presidency-towns and that s. 152 being an enabling provision it merely confer-red power on companies to refer disputes to arbitra-tion under the Indian Arbitration Act, 1899, by an agreement in writing when that course was preferred. This view was not accepted by the Calcutta High Court in Jhirighat Native Tea Company Ltd. v. Bipul Chandra Gupta (1). In that case the juris-diction of the. Distri.ct Court to entertain a petition \I/ I,!... R. (1910) I Cal, s~s.

under paragraph-20 of Sch. II of the Code of Civil 1963 Procedure for an order filing an award made out of ·rr •. CtuU. court where one of the parties to the dispute was a 'ocittt D1 et D' Eltclt.icft1 company registered under the Indian Companies }ociete · A110R;m1 Act, 1913, was challenged. It was held by the r V1· ·- . am•ni E,,ji}.i#fl.i'lt High Court of Calcutta that by virtue of the provi-c.,,.p..rf.ti. sions of s. l52 sub-ss. (1) and (3) of the Indian S~J. Companies Act, l!Jl3, all arbitrations between com-panies and persons had to take place in accordance with the provisions of ss. 3 to 22 of the Indian Arbitration Act, 1899, and for that purpose, s. 2 of the Indian Arbitration Act restricting its local application was to be treated as non-existent.

The Court also opined that in view of s. 89 of the Code of Civil Procedure, 1908, the Second Schedule to the Code had no application to arbitration bet- ~·1een a company · and a person or to arbitrations under s. 208C of the Companies Act, 1913. lt was observed that the words "in pur5uance of this Act"

(i. e. the Companies Act) qualified the phrase "shall apply'' and therefore the meaning of s. 152 was that the provisions of the Indian Arbitration Act, 1899, except s. 2 thereof shall . apply to all arbitrations between companies and persons by the force and effect of the Companies Act itself.

In East Bengal Bank Ltd. v. Jogesh Chandra Banerji (1), Mittar J. modified the second proposi-tion which was somewhat broadly stated. He held that even where one party or both the parties to a suit ~re companies registrred under 'he Indian Compa-nies Act, arbitration proceedings pendentee lite bet-ween them are governed by the second schedule to the Code of Civil Procedure, 1908, and not the provi-sions ofs. 152 of the Companies Act, 1913. It was pointed out that the Indian Arbitration Act, 1899, only applied to arbitration by agreement without intervention of the Court and the Act had no appli-cation to arbitration relating to the subject-matter of a pen<ling suit by the force and effect of s. l52

1963 of the Indian Companies Act. The view expressed Sec_it.1.1 1)1 Tracl,ion in Jhirigha~ Native Tea Company's Case (1), was e_t''!Y · !11,~1~icit1 approved by the Madras High Court in The Catho· S:.~cit!i •• 'Atisnytnt lie Bank Ltd. Al.angalore v. F. P. 8 . .Albuquerque (') . ··~nr E,,p,ri1"t.rin1 In that case the Court held that after the enactment ~~LI/: of the Indian Companies Act, 1913 and before the

Skah 'J. Indian Arbitration Act, 1940, came into force, a

company could submit differences to arbitration only under the provisions of the Indian Arbitration Act, 1899, and consequently Companies were (for the purpose of arbitration out of court) not governed by Sch. II of the Code of Civil Procedure. All these cases arose under the Indian Arbitration Act, 1899 read with the Indian Companies Act, 1913, and the question mooted was whether the Subordinate Judge, who was approached on the assumption that Sch. II of the Code of Civil Procedure applied, was competent to pass a decree on an award made out of court, or to entertain a petition for filing such an award.

In 1960 the Bombay High Court had occasion to consider the effect of s. 152 of the Indian Compa-nies Act 7 of 1913, in its relation to the Arbitration Act of 1940. The Court in that case after refer-ring to the Lahore, the Calcutta and the Madras decisions observed in Societe Italians per Lavori Marittimi v. Hind Constructions Ltd. ('),decided by Mudholkar acting C. J. and S. M. Shah, J, after referring to the marginal note of s. 152 :

"Undoubtedly a corporation has powers which are incidental to the performance of the objects for which that corporation was established. It can, therefore, be said and properly be said that a power to carry on bminess implies also an incidental power to refer a dispute arising fro111l that business to arbitration. It was, therefore, not at all necessary to make specific provisions in the Indian Companies Act of llJ I.L.R. (19~0) I Cal. 358. (2) I.L.R (i944) Mad. !15 F ll \I) Appeal No, 61of195g d~id~ 011 8ep~bor i2, 19'0,

the kind which we find in section 152 of the 1963 Act of 1913 for enabling a corporation to Soci1t1 D1 Traction enter into an agreement for arbitration. The et D' Elect1icit1 fact that the legislature has enacted this Societ1 •• A.111.myme provision would show that the legislature by Kamani Engirieerinz enacting it had no object in view other than Company Lti. to limit the eicercise of that power." Shah J. The Court therefore held that an arbitration agree· ment whereby an Indian Company had agreed to refer future dispute under a collaboration agree· meat with an Italian Corporation, was unenforceable by virtue of s. 152 of the Indian Companies Act, and the suit filed by the fodian company for a declara-tion that the "dredging agreement" had been validly terminated, and for damages for breach of contract, and accounts of profits and losses could not be orde-red to be stayed either under s. 3-! of Arbitration Act or s. 3 of the Arbitration (Protocol and Con-vention) Act, 1937, or under s. 151 of the Code of Civil Procedure.

On a review of the statutory provisions and the authorities we are of the view that s. 152 of the Indian Companies Act, 1913, and s. 389 of the Indian Companies Act, I of 1956, were intended to provide that all arbitrations to which a company is a party shall be conducted in accordance with the provisions of the Indian Arbitration Act, X of 1940.

For reasons which we have already stated s. 389 ( 1) of the Companies Act, 1956, regulated the power of Indian Companies to agree to submit differences to arbitration and by sub-s. (3) the provisions of the Arbitration Act, 1940, applied to all arbitrations to which an Indian Company was a party.

That however is not decisive of the question which falls to be determined before us. Section 4 7 of the Arbitration Act, 1940, is as much a part of the Indian Arbitration Act as any other provision

1963 and that section makes the provisions of the Societe re Traction Arbitration Act applicable to all arbitrations and to et D' E/e;tricite all proceedings thereunder but subject to the Societe Ananyme provisions of s. 46 and save in so far as is otherwise

v.

Kamani Engineering provided by any law .for the time being inf orce.

Compan,y Ltd. We are not concerned in the present case with a

Shah J, statutory arbitration. But by the use of the words

"save in so far as is otherwise provided by any law for the time being in force", the Legislature has clearly made the provisions of the Arbitration (Protocol and Convention) Act, 1937, applicable to consensual arbitrations under the Arbitration Act of J 940 when the conditions prescribed for the application of that Act are attracted, even· if the scheme of arbitration recognised thereby is inconsis-tent with ss. 3 to 38 of the Arbitration Act, 1940. The Arbitration (Protocol and Convention) Act 6 of 1937 was enacted for giving effect to the protocol on arbitration clauses set forth in the First Schedule and of the conventions on the execution of foreign arbitral awards set forth in the Second Schedule and for enabling the conventions to become operative in India. It is not disputed that the proposed arbitration between Traction and Kamani under the Rules of the International Chamber of Commerce is governed by the Protocol on Arbitration Clauses agreed to at Geneva on September 24; 1923, and the Protocol in the First Schedule applies. The Arbitration (!'rotocol and Convention) Act 6 of 1937, being a law otherwise providing for arbitration the provisions thereof would by virtue of s. 47 be applicable to arbitrations under s. 389 of the Indian Companies Act, 1956. if the conditions regarding their appli-cability are fulfilled. That Act applies to arbitrations whether parties to the submission are individuals or companies. By virtue of s. 389 sub,ss. (1) and (3) of the Indian Companies Act I of l 95n, (before that section was repealed in 1960) an Indian Company may agree to refer differences between itself and any other company or person by written agreement in accordance with the Arbitration Act, 1940 and the provisions of the Arbitration \ociet1 D1 Tr,zctiori Act, 1940 apply to all Arbitrations in pursuance rt D' El1ctricite of the Companies Act to which a company Saciete Anonyme v. is a party. Arbitration according to the provisions amani Engi'leerini: of the Arbitration (Protocol and Convention) Act Compa111 Ltd 6 of 1937 being recognised by the Arbitration Act Shah J. an agreement to refer disputes in accordance with the rules of the International Chamber of Commerce is not inconsistt"nt with s. 389 of the Comp:mies Act, 1956. In Societe Italians per Lavori Jlfarittimi's case (1), the attention of the Court was, it appears, not invited to the provisions of s. 47 of the Arbi-tration Act, J 940, in its relation to the Arbitration (Protocol and Convention) Act 6 of 1937 and the Court refused to stay the action commenced in contravention of the arbitration agreement on the footing that an arbitration agreement which contemplated reference otherwise than in the manner provided by the Arbitration Act, 1940, ss. 1 to 38 I was inffective not being permissible under the

provisions of s. 152 of the Companies Act 1913 and "therefore impossible and completely prohibited."

This view in our judgment, cannot be sustained.

In the present case, Kantawala, J. and the High Court proceeded upon the view (as they were bound to do) that the decision in Societe ltaUnn per Lavori Marittimi's case (1) was sufficient to justify the con-tention of Kamani that the suit could not be stayed, the arbitration agreement being inffective and invalid. For reasons already set out by us, that assumption cannot be supported Whether having reg<trd to the terms of s. B of the Arbitration (Protocol and Convention) Act 6 of 1937 stay mav a be granted of the suit commenced by Kamani is question on which no decision has been recorded by the Trial .Judge nor by the High Court, and we will not be justified in thi, appeal in entering upon questions of fact for the first time without having the

(I) Appeal Jllo, 63 of 1959 decided on Septembor 22, 196Q,

1963 benefit of the view of the High Court on those Sociltt de Traciion questions ..

et D' El1ctricit1 So~iett •• Anonyme The appeal will therefore be allowed, and tne Kamani Engineering proceeding remanded to the Court of First Instance Company 1 Jd. to be heard and disposed of according to Jaw. Costs

Sh•h J, in this Court and before the Di vision Bench of the High Court will abide the result of the proceedin~ taken pursuant to this order in the Trial Court.

Appeal allowed. Gase remanded.

1963 THE CENTRAL BANK OF INDIA LTD.

April 19 v.

P. S. RAJAGOPALAN ETC.

(P. B. GAJENDRAGADKAR, K. N. WANCHOO,

K. C. DAS GUPTA, J. C. SHAH and

N. RAJAGOPALA AYYANGARjj.)

Industrial Disputes-Application claiming •pecial allo-wance for operating the adding machine-Power of Labo1tr Court -Limitation-l'lastry Award-Industrial Dispute• Act, 1947 ( 14 of 1947), s. 33C(2).

Applications were made by four respondents under s.33C(2) of the Industrial Disputes Act, I !H7, contending that be-sides attending to their routine duty as clerks, they had been ope-rating the adding machine provided for use in the clearing depart· ment of the appellant Bank during-the period mentioned in the. list annexed to the petitions and hence each of them was enti-tled to the payment of Rs. IO/· pm, as special allowan.ce for operating the adding machine as provided for in para 164(b)(l) of the Sastry Award. The appellant Bank raised certain objections but these Were rejected by the Labour Court which held that the respondents were entitled to the amounts claimed ....