Holding

The civil court at Mandsaur is competent to appoint a receiver of the disputed property until the question of the Delhi court's exclusive jurisdiction under s.31(4) is finally determined.

Summary

Pratap Singh and Preetam Singh, brothers in partnership, referred their business dispute to arbitration under the Arbitration Act, 1940. The arbitrator failed to render an award within four months and applied to the Subordinate Judge, Delhi, for an extension of time under s.28, which was granted despite an objection to the court's jurisdiction. While a revision of that order was pending before the Delhi High Court, Preetam Singh filed a suit in the Additional District Judge, Mandsaur, seeking account, dissolution, and the appointment of a receiver of the partnership property; Pratap Singh obtained a stay of the suit under s.34. The Mandsaur court nonetheless appointed a receiver, and the Madhya Pradesh High Court upheld the appointment, holding it maintainable despite the pending jurisdictional question. On appeal, the Supreme Court held that the civil court seised of the suit could grant interim relief, including appointing a receiver, until the exclusive jurisdiction of the Delhi court under s.31(4) is finally resolved. Consequently, the appeal was dismissed.

Issues considered

Whether the Additional District Judge, Mandsaur, has jurisdiction to appoint a receiver of property subject to an arbitration proceeding pending before a Subordinate Judge, Delhi, under s.31(4) of the Arbitration Act, 1940.

Legislation cited

Arbitration Act, 1940s. 28, s. 2(c), s. 31(4), s. 34

Subjects

arbitrationjurisdictionreceivercivil courtextension of timestay of suitsection 31(4)section 34partnership disputeinterim relief

Judgment

776
PRAJAP SINGH

v.
B PRBETAM S.INGH & ANR.
August 19, 1969

[J:C. SHAH, ACTING CJ., V. RAMASWAMI,
A.N. GROVER,JJ.}
c Arbitration Act, 1940-Stctlon 31(4)-Scopl of.

Tbe appellant and the respondent were carrying on three busineMes at
~-
three diffe.rent places-Piptiya in Madhya Prades~. Bombay 110d Nagpur. Certain
disputes relating to the partnertbip business were referred to an arbitrator.
Having not been able to complete ti;le reference within four months, the arbitrator
applied to the Subordinate Judge, Delhi for extension oftime. Overruling the
D objection as to his jurisdiction to e.ntertain the application the Subordinate Judge,
Delhi granted extension of time for making the award.

When the revision application against this order was pending before the
High Court of Delhi, the respondent filed a suit in the court ot the Additional
. District Judge in Madhya Pradesh for certain' reliefs. In the meantime the appel·
lant applied under s. 34 of the Arbitration Act for stay of the suit. The Addi-
I tional District Judge appointed a receiver of the properties. In appeal the Madhya
Pradesh High Court held that having regard to the proceedings pending in tl:ie
High Court at Delhi it was a case in which, without adjudicating upon the juris-
diction of the Subordinate Judge at Delhi, the. application for appointment of the .)
rreceiver was maintainable.
)

In appeal to this Court it was contended that it was open to a Court to
F appoint a receiver of any other property in dispute or in relation to any procee-
dings before the arbitrator and by coofirment of that power, the power of the
Civil Court in a suit t~ appoint a receiver·was excluded and, therefore, the only
Court competent to entertain an application for. appointment of a receiver was
the Subordinate Judge at Delhi and not the court of Additional District Judge in
Madhya Pradesh.
G _ -nismissing the appeal,

HELD : Normally for the, grant of interim relief in respect of the
subject-matter of the dispute before an arbitrator the parties would have to resort _
to that court to which tho application for extension of time to make the award
H was made. But as the jurisdiction of the Court of the Subordinate Judge, Delhi
to entertain tbe applicati.o n for exteQ$ion of time w~ in d_ispute the Civil Court
PRATA.P\SINGH v. PREBTAM SINGH {J.C. Shah, Ag. C.J.) 777

which is seised of the suit was entitled to make appropriate orders for preserving
the property which is the subject-matter of the-suit. [780 C-D] ·

Therefo're, the Civil Court in Madhya Pradesh was competent to appoint
a receiver of the· property unfil the question about tbe jurisdiction of the Delhi
Court under s. 31 (4) of the Arbitration Act to entertain appli!:;aiions arising out
of the order of reference was finally determined. After the High Court of Delhi B
determined tbat question, tbe receiver appointed, in order to comply with the
requirements of the statute, may be made subject to the jurisdiction of the Delhi
Court if it be held that the Delhi Court had jurisdiction to entertain the appli·
cation. [780· B)

CIVIL APPELLATE JuRISDICTION : Civil AppeaL1 No. 2321 of -. C
1968.

Appeal by Special Leave from the Judgment and Order dared
the 1st November, 1968 of the-.Madhya Pradesh High Court,· Indore·
Bench in Civil Miscellaneous Appeal No. 111 of 1967. . D

C.K. Daphtary and B. Dutra for the Appellant.

P.C. Khanna for Respondent No. 1.
I
The Judgment of the Court was delivered by

J.C. SHAH, AG. C.J: Pratap Singh, Preetam Singh and Diwan
Singh are three brothers. Pratap Singh and Preetam Singh. carried
on business in partnership, at three places-{ I)· Pipliya in Madhya
Pradesh, in the·name of the Jaora Slate Pencil Works; {2) Bombay, F
in the name of Partap Bro!hers; and (3) Nagpur, in the name of
Nice Tiles and Marble, Nagpur: By an agreement dated Decem-
ber 18, \965 disputes between Pratap Singh and Preetam Singh
relating to the partnership business were referred to the arbitration
of their brother Diwan Singh. The arbitrator enter~d upon the
reference, but be was unable to complete the reference within four G
months .. Diwan Singh, l!pplied to the Court of the Subordinate
Judge, Delhi,- under s. 28 of the Arbitration Act for extension of time.
Preetam Singh objected to the jurisdiction of the Subordinate Judge
at Delhi to entertain the application. The Subordinate Judge _
overruled the objection and granted extension of time for making H
the award. A revision application,. preferred against the order is
pending before the High Court of Delhi.
....... .~·~

SUPREMB COURT REPORTS
778

A · Jn the nieanwbile.Preetam Singh filed an action in the Co~rt of
the Additional District Judge, Mandsaur against Pratap Singh and
Pritipal Singh (brother-in-law of Preetam Singh) for a decree for
rendition of account of the dealing ·in respect of the J aora Slate
Pencil-Works and for appointment of a receiver. By amendment of
. the plaint a claim for d_issolution of partnership was also made.
B Pratap Singh applied under s. 34 of the Arbitration Act 1940 for
stay of the suit, and the' applicati<•n was granted. But the Addi-
tional District Judge clirected th.at a receiver be appointed of the
properties of the Jaora Slate Pencil Works at Pipliya.· Against that
order an appeal was carried to 'the High Court of t\fadhya Pradesh.
The High Court was of the view that a case was made out for the
c appointment of the receiver. The Court further held that having
regard to the proceedings pending in the High Court at Delhi it was
a case in. which without adjudicating upon the jurisdiction of the
Subordinate Judge at Delhi, the application for appointment of the ·
receiver was maintainable. Against that order, with special leave,
0 . this appeal baa been preferred.
'
The only question argued in this appeal is about the jurisdic-
tion of the Additional District Judge, Mandsaur to entertain the suit
and to appoint a receiver. The relevant statutory provisions may
in the first be noticed.
E . I

Dy cl. 3 or Sch. 1 of the Arbitration Act the arbitrator is
required to make an award within four months after entering on the
reference, Section 28 of the Act provides that the Court may, if it
thinks fit, whether the time for making the award has expired or not
and whether the award bas bee~ made or not, enlarge from time to
F time the time for making the award, and the ellpression "Court" is
defined in s, 2 (c) as meaning "a Civil Court having jurisdiction to

. .
decide the questions forming the subj~:ct-mattt:r of the reference if .i
'
the aame bad been the subject-matter of a suit, but • •
.....
G
Section 31 of the Act pruvides.
(I)) ...

(2)
1-1
· (3) All application~ regarding the conduct of arbitratiod
proceedipgs or otherwise ·arising out of such pro·
ceedings shall be mad'e ·to the Court where the award
has been, or may be,.filed, and to no other Court• .

.(4) Notwithstanding anything contained elsewhere i.n this
. Act or in any other law for the time being in force,
where in any reference any 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 arbitrati~n pro-
.: .· ·'
ceedings shall be made in. that Court and no other·
Court...
c
.,
. Section 34 o.r the Act provides for stay of a suit. In so · far as
it is material it enacts.

_"Where any party to an arbitration agreement
'D
commences any legal proceedings agai~st any· other
I
·· party to· the agreement '
.
.. :. . in respect - of
any matter agreed to be referred, any party to such legal
proceeditigs may, at any time before . filing a ~tten
statemenfor taking any o!her steps in the proCeedings, ' 'E
apply to the judicial aut6orjty befote which the pro·
.. , ' ceedings'are pending to stay the proceedings; and if
satisfied that there is no suffieient reason ·why the ·
· ' mt!ter should not be· referred in accordance with the
armtration agreement and that the application was, at
-' - J the time when the proceedings were' .comrrienced, ·and
. ·. still remai'ds ready'and willing to do all things necessaey .
to the proper conduct' of the arbitration such a1,1tborhy
. '
· o~: may make an order staying the proceedings."

A~ application for stay of the suit . ~nding ~tore Ute Addit,9nal
Dlstrict Judge, Mandsaut was made by Pratap Singh and it was
.lranted. But thereby the juri~diction: pf the ~o.urt' to pass appro·
'pria~e ~rd~rs for protecting the subject m~,tt~r of the suit was not
excluded. An applic~tion for appointment of a :receiver cou_l~ •.be
granted notwithstanding the order: o~ stay of suit under s. 34 of the
H
Arbitration Act. But it was urged that it is open to the Court as
d~fined in s. 2 (c) under s. 41 read with the Schedule to ·the

......
stJPR£MB cotJRt itEi>oilts (19s21 3 s.t!.i.

A Arbitration Act. to appoint a receiver of any other property in
dispute or in relation, to any proceedings before the arbitrator, and
-.... by conferment of that power, the power of the Civil Court in a suit
to appoint a receiver is excluded. On that premise it was urged that
the only Court competent to entertain an application for appoint-
<
ment of a receiver was the Subordinate Judge's Court at Delhi and
u· not the Court of the Additional District Judge, Mandsaur. It is true
that an application for extension of time to make the award was
made to the Cour~ of the Subordinate Judge, Delhi and · normally
the parties would have to resort to that Court for interim relief in
respect of the subject-matter of the dispute before the arbitrator.
.. c But so long as . the jurisdiction of the Court of the Subordinate
.
I
[ Judge, Delhi to entertain the application for eitension of time was
in dispute the Civil Court which is seized of the suit was entitled to
make _appropriate orders for preserving the property which is the
subject-matter of the suit.

I· D We are therefore of the view that the Civil Court at Mandsaur
was competent to appoint a receiver of the property until the
question about the jurisdiction of the Delhi Court under s. 31 (4) to
entertain applications arising out of the order of reference is finally
determined. After the High Court of Delhi determines that ques-
tion, the receiver appointed, in order to comply with the require-
E
ments of the statute, may be made subject to the jurisdiction of the
Delhi Court, if it be held that Delhi Court had . jurisdiction to
entertain the application.

F It was urged that the suit filed at Mandsaur only relates to the
assets, of the partnership at Pipliya within the State of Madhya
\.
Pradesh and does not relate to the proper~ies at Bombay and Nagpur
and t~at by the expe.dient of obtaining an order for appointment of
a recetver Preetam Smgb has managed to remain in possession of the
properties at Do~ bay and Nagpur to the exclusion of Pratap Singh.
G We cannot at this stage, de~~~e. wbether the suit in so far tt:i it relates
to the ~sset~ of the partn~~s.~ip at Pipliya alone is maintainable.
The arburatJO.n proc~edings .undoubtedly relate to all the assets of
the Partnershtp and tf Preetam Singh as contend.. d b p
h • d· • • -. Y ratap IDg ,
s· .h
as rrmatne tn possessaon of the properties of the partnersbi at
H Dombay.and Nagpur to tho exclusion of Pratap Singh and it is p·ust
and equttable to have a receiver appointed h' . J
· • IS reO\edy IS to COnl"
. /
PitdAP !IN(nt •.. Pki!ilTAM stN6H (J.C. s~J,. Ag. C.i.) 7ai
mence appropriate proceedingdor that purpose and to apply to a
competent court to appoint a receiver of the properties.

.The appeal fails and is dismissed. There will be no order as
to costs.

• B
- P.B.R. Appealtdismis_sed.

)