Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL  NO.  4998  of 2007

SHIN-ETSU CHEMICAL CO.LTD. .......   Appellant

Vs.

VINDHYA TELELINKS LTD. & ORS. ....... Respondents

J U D G M E N T

R.V. Raveendran J.,

These  appeals  by  special  leave  are  filed  against  the  order  dated

30.11.2006  passed  by  the  IV  Additional  District  Judge,  Rewa,  Madhya

Pradesh,  aggrieved  by  the  remand,  while  allowing  in  part  Civil  Appeal

Nos.24 and 25 of 2006 filed by the appellant, with a direction to reconsider

the applications of  the appellant  under Section 45 of the Arbitration and

Conciliation Act, 1996 (‘Act’ for short)  in terms of the Judgment of this

Court in Shin-Etsu Chemical Co.Ltd. v. Aksh Optifibre Ltd. & Anr. 2005(7)

SCC 234.

2. Vindhya Telelinks Ltd. and Optic Fibre Goa Ltd. - respondents 1 & 2

in  the  first  of  the  two  appeals  filed  Civil  Suit  Nos.  31-A  of  2002

(renumbered as Civil Suit No.38A of 2004) on the file of the Civil Judge,

Class-I, Rewa, Madhya Pradesh for a declaration that the Long Term Sale

and Purchase Agreement entered between appellants and them, was null and

void  and  for  a  permanent  injunction  restraining  the  appellant  (first

defendant in the suit) from relying upon/invoking/giving effect to any term

of the said agreement. Similarly, Birla Ericsson Optical Ltd. and Optic Fibre

Goa Ltd – respondents 1 & 2 in the second of these appeals, filed Civil Suit

No.30A of 2002 (renumbered as Civil  Suit  No.39A of 2004)  in the said

court for similar reliefs.  

3. On entering appearance, the appellant filed applications under order 7

Rule 11 of Code of Civil Procedure read with Sections 5 and 8 of the Act

seeking dismissal  of the  suits  and a direction for  referring  the parties  to

arbitration  (in  terms  of  the  arbitration  agreement  contained  in  the  Long

Term Sale & Purchase Agreements dated 23rd and 24th January, 2001). The

said  applications  were  dismissed  by  the  trial  court  on  14.07.2003.   The

revision  petitions  filed  by the  appellants  were  dismissed  by the  Madhya

Pradesh High Court on 26.08.2003.  On further appeals, this court in Civil

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Appeal         Nos.6210-6211 of 2004, by order dated 7.12.2005, set aside the

orders of the trial court and High Court and remanded the matters to the trial

court  to  decide  the  matters  afresh  treating  the  applications  filed  by  the

appellant herein (under Order 7 Rule 11 CPC read with sections 5 and 8 of

the Act) as applications under Section 45 of the Act and dispose them in

terms of the decision in Aksh Optifibre Ltd.(supra).   In pursuance of it, the

trial court considered the applications filed by the appellant as applications

under Section 45 of the Act and passed a common order dated 31.3.2006

thereon,  holding  that  the  arbitration  clause  on  the  basis  of  which  the

appellant had filed an application under Section 45 of the Act was prima

facie inoperative and in such a situation, the parties cannot be referred to

arbitration and the matter should be proceeded with and decided on merits

by the court.

4. The  said  order  of  the  trial  court  was  challenged  by  the  appellant

before the IV Additional District Judge, Rewa who by the impugned orders

dated 30.11.2006 allowed the appeals, set aside the order of the trial court,

and remitted the matters to the trial court with a direction to consider the

applications of the appellant under section 45 of the Act, in accordance with

the procedure and principles laid down in Para 111 of the decision in  Aksh

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Optifibre Ltd. (supra). The said orders of the Additional District Judge are

challenged  in  these  appeals  by  special  leave  under  Article  136  of  the

Constitution of India. The appellant contends that as neither the trial court

nor the appellate court recorded a finding that the arbitration agreement was

null,  void,  inoperative or incapable of being performed,     the appellate

court  ought  to  have  merely  allowed  the  appeals,  and  ought  not  to  have

remanded the matters to the trial court for fresh consideration.   

5. The respondents raised a preliminary objection that these appeals are

not  maintainable  and if  the appellant  was aggrieved by the orders of the

learned  District  Judge  in  the  appeals,  the  appropriate  remedy  was  to

challenge the same before the High Court. On the other hand, the appellant

contended that these appeals are maintainable and at all events as leave has

been granted  and these  appeals  are  pending  for  two years,  the appellant

should not be relegated to the High Court to pursue an alternative remedy,

however efficacious it may be.  On the contention urged, these appeals give

rise to the following two questions:  

(i) Whether  the  appellants  can  directly  approach  this  Court  under Article 136 of the Constitution, against the orders of the District Court, without approaching the High Court?  

(ii) Even if the answer to the first question is in the negative, whether leave having been granted by this Court, these appeals should be considered and decided on merits?  

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Re : Question (i) :

6. Section 45 deals with power of judicial authority to refer the parties

to  arbitration.  It  provides  that  the  judicial  authority,  when  seized  of  an

action (in a matter in respect of which the parties have made an agreement

referred to in section 44 of the Act) shall, at the request of one of the parties

refer the parties to arbitration, unless it finds that the said agreement is null

and void, inoperative or incapable of being performed. Section 50 provides

for appeals and it is extracted below :  

“50. Appealable orders : 1) An appeal shall lie from the order refusing to--

(a) refer the parties to arbitration under section 45; (b) enforce a foreign award under section 48,

to the Court authorized by law to hear appeals from such order.

(2) No second appeal shall  lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.”

Sections 45 and 50 in Part II of the Act relating to ‘Enforcement of certain

foreign  awards’,  correspond  to  Sections  8  and  37  of  Part-I  of  the  Act.

Sub-section (1) of Section 50 provides for an appeal from an order refusing

to refer the parties to arbitration under Section 45, to the Court authorized

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by law to hear appeal by such order.  Therefore, the appellant challenged the

orders  of  the Civil  Judge (Class  I),  Rewa,  before  the  Additional  District

Judge, Rewa, which is said to be the court authorised to hear appeals from

the orders of the Civil Judge (Class I). Sub-section (2) of Section 50 bars

second appeals. It provides that no appeal shall lie from an order passed in

appeal  under Section 50.   It  however clarifies that  nothing in Section 50

shall affect or take away any right to appeal to the Supreme Court.  

7. Relying upon the exception contained in sub-section (2) of Section

50, the appellant contended that even though an appeal may not lie from the

order  in  the  appeal,  the  right  of  appeal  to  Supreme Court  having  been

specifically saved,  these  appeals  to  the  Supreme Court  are  maintainable.

The appellant  does not  dispute  that  the Act  does not  provide a ‘right  to

appeal’ to Supreme Court against an appellate order under Section 50(1)(a)

of the Act. The appellant would contend that as Article 136 contemplates

Supreme Court granting leave to appeal from any judgment, decree or order

and as sub-section (2) of Section 50 of the Act specifically saves the right to

appeal to Supreme Court, an appeal to Supreme Court  by obtaining leave

under article 136 should be held to be a remedy in regard to an appellant

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order under Section 50(1) of the Act, even if the court of appeal was a court

inferior to the High Court.

8. What is exempted from the bar against second appeals is ‘any right to

appeal to the Supreme Court’. Article 136 of the Constitution provides that

notwithstanding anything in Chapter IV of Part V of the Constitution, the

Supreme Court may in its discretion grant special leave to appeal from any

judgment, decree, determination, sentence or order in any cause or matter

passed or made by any court or tribunal in the territory of India. Article 136

does not confer a right to a party to appeal to the Supreme Court.  The said

article confers discretion upon the Supreme Court to grant leave to appeal in

suitable cases. The power vested in Supreme Court to grant leave, which is

to be used sparingly in appropriate cases, cannot be construed as vesting of

a  right  of  appeal  in  a  party  under  Article  136.  The  right  to  appeal  to

Supreme Court referred and excluded from the bar contained in section 50

(2) of the Act,  refers  to appeals  under Article 132 or 133(1) against  any

judgment,  decree,  or  final  order  of  the  High  Court,  if  the  High  Court

certified under Article 134-A that the case involves a substantial question of

law  as  to  interpretation  of  the  Constitution  or  that  the  case  involves  a

substantial question of law of general importance and that in the opinion of

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the High Court the said question needs to be decided by the Supreme Court.

The  words  “right  to  appeal”  refers  to  a  right  conferred  either  under  the

Constitution or under a statute to file an appeal to a higher court against the

judgment, decree or order of a lower court, without having to first obtain

any permission  or  leave.   In  the absence  of  a  constitutional  or  statutory

provision for an appeal as of right, the appellant cannot contend that it has a

‘right  to  appeal’  to  the  Supreme  Court.   An  appeal  by  special  leave  to

Supreme Court cannot therefore be considered as an appeal as of right or as

an appeal in pursuance of a right to appeal to the Supreme Court.    

9. Similar  questions  arose  before  this  Court  in  Nirma  Ltd.  v.  Lurgi

Lentjes  energietechnik  Gmbh  & Anr.-  2002(5)  SCC  520  and  ITI  Ltd.  v

Siemens Public Communications Network Ltd.  – 2002 (5) SCC 510 where

this  Court  considered whether   a  person aggrieved by an appellate  order

passed by a City Civil Court, under Section 37 of the Act, could challenge it

by filing a Special Leave Petition under Article 136. This court held that

such petitions were not maintainable in view of the efficacious alternative

remedy of revision to the High Court being available under Section 115 of

the  Code of  Civil  Procedure.  This  Court  followed  its  earlier  decision  in

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Shyam Sunder  Agarwal  & Co.  vs.  Union  of  India –  1996  (2)  SCC 132

wherein this Court observed :  

“In our view, a revisional application before the High Court against  an appellate order passed Under Section 39 of the Arbitration Act (1940) is maintainable. There is no express provision in the Arbitration Act putting an embargo against filing a revisional application against appellate order Under Section 39 of the Act. The Arbitration Act has put an embargo on filing any second appeal from appellate order Under Section 39 of the Act. The Arbitration Act is a special statute having limited application relating to matters governed by the said Act. Such special statute, therefore, must have  its  application  as  provided  for  in  the  said  statute.  The  revisional jurisdiction of the High Court under the Code or under any other statute therefore shall not stand superseded under the Arbitration Act if the Act does not contain any express bar against exercise of revisional power by the  High  Court  provided  exercise  of  such  revisional  power  does  not mitigate against giving effect to the Provisions of the Arbitration Act.”

10. We  may  also  usefully  refer  to  the  observations  of  this  Court  in

Punjab Agro Industries  Corporation  Ltd. v  Kewal  Singh Dhillon  -  2008

(11) SCALE 616 where an order was passed by the District  Judge under

section 11(6) of the Act (as designate of the Chief Justice) was sought to be

challenged before this court, by seeking special leave. This Court held :-

“This  Court  has repeatedly stressed that  Article 136 is  not  intended to permit direct access to this Court where other equally efficacious remedy is available and the question involved is not of any public importance; and that this  Court will  not ordinarily exercise its  jurisdiction under Article 136, unless the appellant has exhausted all other remedies open to him. Therefore, the contention that the order of the Civil Judge, Sr. Division rejecting a petition under section 11 of the Act could only be challenged, by recourse to Articlr136 is untenable. The decision in SBP did not affect the maintainability of the writ petition filed by appellant before the High Court.”  

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11. We  therefore  reiterate  that  though  the  existence  of  an  alternative

remedy by itself  will  not  take  away the  jurisdiction  of  this  Court  under

Article 136, this Court would not grant leave and entertain appeals against

orders/judgments/decrees of the district court or courts sub-ordinate thereto,

if remedy by way of appeal or revision to the High Court or other court or

forum is available.  

Re:  Question No. (ii)

12. It is now well settled that the discretionary power vested in this Court

under article 136 continues even after granting leave. Therefore, on hearing

an appeal by special leave, this Court may refuse to go into merits, or even

if  it  goes  into  merits,  merely  declare  the  law  and  refuse  to  interfere  if

interests of justice and/or facts of the case do not call for interference.  If

this  Court  finds  that  leave  ought  not  to  have  been  granted  and  that  no

prejudice will be caused, it may reject the appeal by special leave, reserving

liberty to  the appellant  to  pursue the alternative remedy before the  High

Court  or  other  appropriate forum. In extreme cases, this  Court  may even

revoke  the  leave  already  granted.   See  Taherakhatoon  v.  Salambin

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Mohammed - 1999 (2) SCC 635 and  Raghuath G. Panhle  . v.  Chaganlal

Sundarji & Co.  - 1999 (8) SCC 1.  

13. In this case the Special Leave Petition was filed on 11.12.2006 and

this Court on 4.1.2007 ordered issue notice and subsequently granted leave

on  22.10.2007.  We  are  conscious  of  the  fact  that  the  matter  has  been

pending  before  this  Court  for  more  than  two  years  and  relegation  to

alternative remedy will further delay the consideration of the issue. But it is

inevitable  in  the  circumstances.   Though,  Article  136  provides  that  this

Court  has  the   discretion  to  grant  leave  to  appeal  against  any  order

(judgment, or determination) in any cause by any court, this Court has been

consistently following  the  practice  of  not  entertaining  appeals directly

from  the  orders  of  district  courts  or  court  subordinate  thereto,  if  an

alternative remedy by way of appeal or revision was available before the

High  Court.  In  fact,  after  the  scope  of  revision  under  section  115  was

curtailed  by  Amendment  Act  46  of  1999  with  effect  from 1.7.2002,  the

availability  of  even  the  remedy by  invoking  the  supervisory  jurisdiction

under Art.  227 of the Constitution (as enunciated by this Court in  Surya

Dev Rai vs. Ram Chander Rai – 2003 (6) SCC 675), has been considered as

an  adequate  alternative  remedy,  for  the  purposes  of  Article  136.  If  an

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exception is to be made in this case on the ground that the leave has been

granted, there is a risk of its becoming an erroneous precedent. Further on

the examination of the facts we are of the considered view that the case does

not  involve any special and exceptional  circumstance that warrants direct

interference with an order of a district court bypassing the remedy available

before the High Court. Therefore the mere fact of leave having been granted

will not come in the way of the appellant being relegated to the available

alternative efficacious remedy.  

14. We therefore  dismiss  these  appeals  without  going  into  the  merits

reserving liberty to the appellants to pursue their remedy in accordance with

law before  the  High  Court.   It  is  needless  to  say  that  if  and  when  the

appellant  approaches  the  High  Court,  the  time  spent  in  prosecuting  the

special leave petitions and appeals before this Court, will stand excluded.

__________________J [R. V. Raveendran]

_________________J [Markandey Katju]

New Delhi; March 27, 2009.

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