1920 JTR(SC) 7
1920 AIR(PC) 86 ; 1919 47 LawReportsInd.App. 124 ; 1920 12 LW 15 ; 1920 24 CWN 721 ; 1920 47 ILR(Cal) 918 ; 1920 MWN 407
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
VISCOUNT CAVE, LORD MOULTON, SIR JOHN EDGE, AND MR. AMEER ALI.
RAMCHAND MANJIMAL (A FIRM) - Appellant
Versus
GOVERDHANDAS VISHINDAS RATANCHAND (A FIRM) - Respondents
On Appeal From The Judicial Commissioner of Sind.
Decided On : Feb. 17. 1920.
An order is "final" for the purpose of appeal only if it finally disposes of the rights of the parties. An order refusing a stay of proceedings to refer a matter to arbitration is not a final order as it leaves the rights to be determined by the court.
Act
Referred
:CIVIL PROCEDURE CODE
: S.109(a)
(A) Code of Civil Procedure, 1908 - Sections 109(a), 109(c) and 110 - Indian Arbitration Act, 1889 - Section 19 - Definition of "final order" - An order is final if it finally disposes of the rights of the parties - An order refusing a stay of proceedings for arbitration does not finally dispose of those rights, but leaves them to be determined by the courts in the ordinary way.
(B) Appeal - Competence - Where an order is not a "final order" within the meaning of the procedural code, no right of appeal exists unless the appellate court specifically certifies that the case is a fit one for appeal.
Facts of the case:
Suits were filed for the recovery of damages for failure to deliver cotton under contracts of sale. The contracts contained arbitration clauses. The defendants applied for a stay of proceedings to refer the disputes to arbitration. The first court granted the stay, but the appellate court reversed this decision and refused the stay. The appellate court certified the order as a "final order" and certified that the subject-matter exceeded the statutory monetary threshold to allow an appeal to the higher court.
Findings of Court:
The court found that the orders refusing the stay of proceedings were not final orders because they did not finally dispose of the rights of the parties.
Issues: Whether an order refusing a stay of proceedings under the arbitration act constitutes a "final order" for the purposes of appeal under the Code of Civil Procedure.
Ratio Decidendi: An order is considered final only if it finally disposes of the rights of the parties. A refusal to stay proceedings in favor of arbitration does not determine the substantive rights of the parties; rather, it determines that such rights shall be adjudicated by the court in the ordinary course of litigation.
Result: Appeals dismissed with costs.
(B) Appeal - Competence - Where an order is not a "final order" within the meaning of the procedural code, no right of appeal exists unless the appellate court specifically certifies that the case is a fit one for appeal.
Facts of the case:
Suits were filed for the recovery of damages for failure to deliver cotton under contracts of sale. The contracts contained arbitration clauses. The defendants applied for a stay of proceedings to refer the disputes to arbitration. The first court granted the stay, but the appellate court reversed this decision and refused the stay. The appellate court certified the order as a "final order" and certified that the subject-matter exceeded the statutory monetary threshold to allow an appeal to the higher court.
Findings of Court:
The court found that the orders refusing the stay of proceedings were not final orders because they did not finally dispose of the rights of the parties.
Issues: Whether an order refusing a stay of proceedings under the arbitration act constitutes a "final order" for the purposes of appeal under the Code of Civil Procedure.
Ratio Decidendi: An order is considered final only if it finally disposes of the rights of the parties. A refusal to stay proceedings in favor of arbitration does not determine the substantive rights of the parties; rather, it determines that such rights shall be adjudicated by the court in the ordinary course of litigation.
Result: Appeals dismissed with costs.
Finality - Used to establish the test of whether a decision finally disposed of the litigation to determine if an order is a 'final order'.
Finality - Used to refine the test for a 'final order' by focusing on the effect of the order as made.
Finality - Cited to support the conclusion that an order is final only if it finally disposes of the rights of the parties.
Solicitors for appellants :Wontner & Sons. Solicitors for respondents: T. L. Wilson & Co.
Judgement
Consolidated appeals from a judgment and six orders of the Court of the Judicial Commissioner of Sind (April 16, 1918) reversing six orders of the Additional Judicial Commissioner.
In each of the consolidated appeals the respondent firm had brought a suit against the appellant firm to recover damages for a failure to deliver cotton under a contract of sale and purchase. The contracts were made on the printed form of the Karachi Indian Merchants’ Association and contained a clause referring any dispute arising out of the contract to the arbitration of two members of the above-named Association under the Indian Arbitration Act, 1889, it being provided that if the arbitrators should
Law. Rep. 47 Ind. App. 124 ( 1919- 1920) Ramchand Manjimal V. Goverdhandas Vishindas Ratanchand
disagree the dispute should be referred to an umpire nominated by them, and if they failed to agree on an umpire one should be nominated by the managing committee of the Association.
Upon application by the appellants the Additional Judicial Commissioner stayed the suits under s. 19 of the Indian Arbitration Act.
The Court of the Judicial Commissioner, in its appellate jurisdiction, reversed the order. The learned Commissioners were of opinion upon the evidence that it was practically certain that an umpire would have to be appointed by the managing committee, and that he would be a person interested in awarding that to be a market rate which was not a market rate at all. They accordingly thought that the Court should exercise its discretion under s. 19 by refusing to stay the action.
The present appellants petitioned the appellate Court under Order xlv., rr. 2 & 3, and ss. 109, 110 of the Code of Civil Procedure for leave to appeal, and for a certificate that the subject-matter exceeded Rs. 10,000 in amount, or for a certificate that the case was otherwise a fit one for appeal to His Majesty in Council.
The appellate Court was of opinion that the order made by it was a " final order " within s. 109 (a) of the Code since it went to the root of the suit, namely the jurisdiction of the Court to entertain it. The Court certified that " the case as regards amount fulfils the requirements of s. 110 of the Code of Civil Procedure inasmuch as the subject-matter in dispute is over Rs. 10,000, and the order does not affirm the decision of the lower Court."
The appeal was thereupon entered and came on for hearing.
1920. Feb. 17. Sir John Simon K.C. and E. B. Raikes for the respondents. There is a preliminary objection to the hearing of the appeal. The order refusing a stay was not a " final order " within s. 109
(a) of the Code of Civil Procedure. There was consequently no right of appeal unless the appellate Court under s. 109 (c) specially certified that the case was a fit one for appeal. The Court was prayed so to certify but did not do so. The test adopted by the Court of Appeal in Salaman v. Warner ([ 1891] 1 Q. B. 734.) in deciding whether an order was a final order" for the purposes of the English rule, Order lviii., rr. 2, 3, was whether the decision, whichever way it had been given, finally disposed of the litigation. That test was varied in the later decision, Bozson v. Altrincham Urban Council ([ 1903] 1 K.
B. 547.), by making the question depend upon the effect of the order as made. But whichever test is adopted the order appealed from was not a " final order." The present consolidated appeal is therefore incompetent and should be dismissed.
Upjohn K.C. and Kenworthy Brown for the appellants. The preliminary objection is not open to the respondents, because there was no appeal from the order of the appellate Court under Order xlv. granting leave to appeal. If, however, the point is open, the order was a " final order " since it finally decided that a substantial term of the contract was not to be enforced. In any case the appeals should not be dismissed but remitted in order that the appellate Court may be asked to certify under s. 109 (c). The case is one in which the Board should grant special leave to appeal. The appellate Court had no jurisdiction to interfere with the lower Courts exercise of its discretion under s. 19 of the Indian Arbitration Act.
Sir John Simon K.C. in reply. It is in accordance with the practice of the Board for a respondent to dispute the competence of an appeal without having appealed from the order giving leave. Further there was no order to appeal from, but merely a certificate as to the amount in dispute. The present objection was stated in the respondents case upon the appeal as the first reason
Law. Rep. 47 Ind. App. 124 ( 1919- 1920) Ramchand Manjimal V. Goverdhandas Vishindas Ratanchand 24
why the appeals should be dismissed.
The judgment of their Lordships was delivered by
VISCOUNT CAVE. These are suits for alleged breaches of certain contracts for the sale of cotton. Each contract contained an arbitration clause, and the defendants in each suit applied under s. 19 of the Indian Arbitration Act of 1899 for a stay of proceedings with a view to the issues being referred to arbitration under the clause. The first Court granted a stay, but on appeal the Court of the Judicial Commissioner of Sind reversed the orders and refused a stay of proceedings. Applications were made to the Appellate Court for certificates under s. 109 (a), or in the alternative under s. 109 (c) of the Civil Procedure Code, 1908, with a view to an appeal to this Board. The learned judges of the Judicial Commissioners Court took the view that the orders refusing a stay were final orders and, accordingly, refused a certificate under s. 109 (c) but granted a certificate under s. 110 to the effect that the value of the matter in dispute exceeded Rs. 10,000. Thereupon the appeals were brought to His Majesty in Council, and the objection is raised that the orders refusing a stay were in fact not final, and, accordingly, that the appeals do not lie.
Their Lordships have considered the matter, and are of opinion that the preliminary objection succeeds. The question as to what is a final order was considered by the Court of Appeal in the cases of Salaman v. Warner ([ 1891] 1 Q. B. 734.), Bozson v. Altrincham Urban District Council ([ 1903] 1 K. B. 547.) and Isaacs v. Salbstein . ([ 1916 2 K. B. 139.) The effect of those and other judgments is that an order is final if it finally disposes of the rights of the parties. The orders now under appeal do not finally dispose of those rights, but leave them to be determined by the Courts in the ordinary way.
In their Lordships view the orders were not final, and accordingly the appeals cannot proceed, and their Lordships will therefore humbly advise His Majesty that they should be dismissed with costs.
Two of the appeals have already been withdrawn, as regards certain of the parties, and therefore the order will not apply to those.