{"id":83487,"date":"1965-03-12T00:00:00","date_gmt":"1965-03-11T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-calcutta-tramways-co-ltd-vs-the-corporation-of-calcutta-on-12-march-1965"},"modified":"2016-11-11T04:47:16","modified_gmt":"2016-11-10T23:17:16","slug":"the-calcutta-tramways-co-ltd-vs-the-corporation-of-calcutta-on-12-march-1965","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-calcutta-tramways-co-ltd-vs-the-corporation-of-calcutta-on-12-march-1965","title":{"rendered":"The Calcutta Tramways Co. Ltd vs The Corporation Of Calcutta on 12 March, 1965"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">The Calcutta Tramways Co. Ltd vs The Corporation Of Calcutta on 12 March, 1965<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1965 AIR 1728, \t\t  1965 SCR  (3) 354<\/div>\n<div class=\"doc_author\">Author: K Subbarao<\/div>\n<div class=\"doc_bench\">Bench: Subbarao, K.<\/div>\n<pre>           PETITIONER:\nTHE CALCUTTA TRAMWAYS CO. LTD.\n\n\tVs.\n\nRESPONDENT:\nTHE CORPORATION OF CALCUTTA\n\nDATE OF JUDGMENT:\n12\/03\/1965\n\nBENCH:\nSUBBARAO, K.\nBENCH:\nSUBBARAO, K.\nSHAH, J.C.\nBACHAWAT, R.S.\n\nCITATION:\n 1965 AIR 1728\t\t  1965 SCR  (3) 354\n\n\nACT:\n    Calcutta  Tramways\tAct  (W.B.  Act\t 25  of\t 1951),\t  s.\n5--Agreements with Arbitration clause--Whether saved.\n\n\n\nHEADNOTE:\n    By\tthe  enactment of Calcutta Tramways Act,  1951,\t the\nGovernment   of\t  West\tBengal\twas  substituted   for\t the\nCorporation  of Calcutta (Respondent) in various  agreements\nentered\t into  between the predecessors-in-interest  of\t the\nappellant   and\t  the  predecessors-in-interest\t    of\t the\nrespondent,  subject to a reservation that any\tsum  payable\nunder  the agreements shall be payable by the  appellant  to\nthe respondent. All the agreements contained an\t arbitration\nclause\twhich  provided for refering  any  disputes  arising\nunder  the  agreements\tto  arbitration\t in  the  prescribed\nmanner.\t Disputes arose as regard the track rent payable  by\nthe appellant to the respondent and the dispute was referred\nto   arbitration  in  accordance  with\tthe  terms  of\t the\narbitration  clause. The appellant nominated its  arbitrator\nwithout prejudice to its rights, and filed an application in\nthe  High  Court,  for the  determination  of  the  question\nwhether there was a valid arbitration agreement between\t the\nappellant and respondent. The High Court held that there was\nan agreement. In appeal by special leave:\n    HELD:  Both\t the  right  to\t the  sums  payable  to\t the\nrespondent and the procedure of arbitration were saved under\nthe Act.\n    The\t proviso to s. 5 of the Act, in terms as well as  by\nnecessary implication brings the subject-matter of the\tsums\npayable under the agreements both under the substantive\t and\nprocedural  aspects within the scope of the  exception.\t The\nsubstantive right to the payment of rent and the  procedural\none  to\t have any dispute arising in respect of\t that  right\nreferred  to  arbitration  embodied in\tthe  agreements\t are\ninterconnected\tand  are  not  severable.  To  preserve\t the\nsubstantive  right and to withhold the procedural  right  to\nenforce it is to save the right and deny the remedy. [357 C-\nD, F-G]\n\n\n\nJUDGMENT:\n<\/pre>\n<p>CIVIL APPELLATE JURISDICTION: Civil Appeal No. 245 of 1964.<br \/>\n    Appeal  by\tspecial leave from the\tjudgment  and  order<br \/>\ndated February 13, 1963, of the Calcutta High Court in Award<br \/>\nCase No. 8 of 1963.\n<\/p>\n<p>A.V. Viswanatha Sastri and D.N. Gupta, for the appellant.<br \/>\nS.T. Desai and P.K. Mukherjee, for the respondent.<br \/>\nThe Judgment of the Court was delivered by<br \/>\n    Subba  Rao,\t J.  On\t or  about  October  2,\t 1879,\t the<br \/>\nCorporation  of\t the  town of  Calcutta\t incorporated  under<br \/>\nBengal\tAct IV of 1876 entered into an agreement in  writing<br \/>\nwith Dillwyn Parrish, Alfresh Parrish and Robinson  Souttar,<br \/>\nhereinafter called the grantees<br \/>\n<span class=\"hidden_text\">  355<\/span><br \/>\nwhereunder the Corporation granted to the said grantees\t the<br \/>\nright  to  construct, maintain and use certain\ttramways  in<br \/>\nCalcutta on payment of certain rents as provided in the said<br \/>\nagreement..  The agreement contained an\t arbitration  clause<br \/>\nwhich provided for referring any disputes arising under\t the<br \/>\nsaid  agreement\t to  arbitration in  the  manner  prescribed<br \/>\nthereunder.  The said agreement further provided in  cl.  28<br \/>\nthat  the  words &#8220;the said Corporation&#8221;\t would\tinclude\t the<br \/>\nCorporation  and its successors. Different  agreements\twere<br \/>\nentered\t into between the successors of the  Corporation  of<br \/>\nCalcutta  and  the grantees from time to  time,\t namely,  on<br \/>\nNovember  22, 1879, September 2, 1893 and December 9,  1899,<br \/>\nand  were  confirmed  by  appropriate  Acts.  In  all  these<br \/>\nagreements the appellant&#8217;s predecessor-in-interest agreed to<br \/>\npay  the rents to the respondent&#8217;s  predecessors-in-interest<br \/>\nin respect of the tramways constructed, maintained and\tused<br \/>\nby  them. All the said agreements contained  an\t arbitration<br \/>\nclause similar to that contained in the first agreement. The<br \/>\nCorporation  of\t Calcutta  is  now  the\t successor  of\t the<br \/>\nproperties  of\tthe  Corporation of  the  town\tof  Calcutta<br \/>\nconstituted  under  the\t Bengal\t Act  IV  of  1876.  It\t was<br \/>\nconstituted  by Bengal Act II of 1888. The appellant,  i.e.,<br \/>\nthe  Calcutta  Tramways Co. Ltd., is the  successor  or\t the<br \/>\nassignee of the said grantees. On August 30, 1951, the State<br \/>\nof West Bengal entered into an agreement with the  appellant<br \/>\nwhereby the Government agreed to purchase the undertaking of<br \/>\nthe  appellant as provided in the said agreement.  The\tsaid<br \/>\nagreement  was\tsubject\t to  an\t Act  being  passed  by\t the<br \/>\nappropriate  Legislature ratifying the agreement and  giving<br \/>\neffect to it. The Calcutta Tramways Act, 1951 (W.B. Act\t XXV<br \/>\nof  1951) was passed and it came into effect on October\t 18,<br \/>\n1951.  Under  that  Act the Government of  West\t Bengal\t was<br \/>\npractically  substituted  for the  Corporation\tof  Calcutta<br \/>\nunder  the various agreements subject to a reservation\tthat<br \/>\nany sums payable under the said agreements shall be  payable<br \/>\nby  the\t appellant to the Corporation..\t Disputes  arose  as<br \/>\nregards\t the  track  rent payable by the  appellant  to\t the<br \/>\nCorporation  and the dispute was referred to arbitration  in<br \/>\naccordance with the terms of the arbitration clause.  Though<br \/>\nthe   parties\tappointed  arbitrators\tin  terms   of\t the<br \/>\narbitration   clause  of  the  agreements,   the   appellant<br \/>\nnominated its arbitrator without prejudice to its rights and<br \/>\nfiled  on  January 7, 1963, an application in  the  Original<br \/>\nSide  of  the  Calcutta\t High Court,  inter  alia,  for\t the<br \/>\ndetermination  of  the question whether there  was  a  valid<br \/>\narbitration   agreement\t between  the  appellant   and\t the<br \/>\nrespondent and for other incidental reliefs. The application<br \/>\nwas  heared  by\t A.N. Ray, J. who held\tthat  there  was  an<br \/>\nagreement between the appellant and the respondent and\tthat<br \/>\nthe  appellant\twas  a\tparty  to  the\tarbitration  clauses<br \/>\ncontained  in the relevant agreements, that  the  respondent<br \/>\ncould  make a reference to arbitration in terms of the\tsaid<br \/>\nagreements  and\t that the reference to the  arbitrators\t was<br \/>\nvalid, legal and effective. The appellant, by special leave,<br \/>\nhas  filed the present appeal against the said order of\t the<br \/>\nHigh Court.\n<\/p>\n<p>L\/B(N)3SCI&#8211;10<br \/>\n<span class=\"hidden_text\">356<\/span><br \/>\n    Mr.\t A.V.  Viswanatha Shastri, learned counsel  for\t the<br \/>\nappellant, contended that all the rights of the\t Corporation<br \/>\nof  Calcutta under the various agreements stood\t transferred<br \/>\nunder  the Tramways Act, 1951, and vested in the  Government<br \/>\nof West Bengal except only in regard to the sums payable  to<br \/>\nthe  Corporation and that, therefore, the Corporation  could<br \/>\nnot  rely on the arbitration clauses of the  agreements\t and<br \/>\nrefer the disputes arising in respect of the sums payable in<br \/>\nterms of the said agreements to arbitration.<br \/>\n    The\t point raised is in a small compass and\t turns\tupon<br \/>\nthe relevant provisions of the West Bengal Act XXV of  1951,<br \/>\nhereinafter  called  the Act. Under the\t Act  the  agreement<br \/>\nentered\t into  on August 30, 1951, between the\tGovernor  of<br \/>\nWest  Bengal on the one part and the Calcutta  Tramways\t Co.<br \/>\nLtd.  on the other part was confirmed. Section 3 of the\t Act<br \/>\nsays,  &#8220;The transfer agreement is hereby confirmed and\tmade<br \/>\nbinding\t on the parties thereto and the\t several  provisions<br \/>\nthereof shall have effect as if the same had been enacted in<br \/>\nthis  Act.&#8221; &#8220;Section 4 enacts that notwithstanding  anything<br \/>\nto the contrary in any other law, all the powers and  duties<br \/>\nof  the\t Corporation of Calcutta. the Commissioners  of\t the<br \/>\nHowrah Municipality, the Commissioners of the South Suburban<br \/>\nMunicipality and the Commissioners for the New Howrah Bridge<br \/>\nwith respect to the construction, maintenance, use,  leasing<br \/>\nof or otherwise dealing with tramways are transferred to and<br \/>\nvested\tin the Government&#8221;. Section 5, which is the  crucial<br \/>\nsection, reads:\n<\/p>\n<blockquote><p>\t      (1) The several agreements particulars whereof<br \/>\n\t      are set out in the Second Schedule to this Act<br \/>\n\t      &#8216;shall  have effect as if the Government\twere<br \/>\n\t      parties  thereto\tin lieu\t of  the  respective<br \/>\n\t      bodies and persons set out in column 2 of\t the<br \/>\n\t      said  Schedule and any reference in  any\tsuch<br \/>\n\t      agreement\t to  any of such bodies\t or  persons<br \/>\n\t      shall unless the subject-matter or the context<br \/>\n\t      otherwise requires be deemed to be a reference<br \/>\n\t      to the Government:\n<\/p><\/blockquote>\n<blockquote><p>\t      Provided that any sums payable under any\tsuch<br \/>\n\t      agreement\t to  any of such bodies\t or  persons<br \/>\n\t      shall  continue to be payable as if  this\t Act<br \/>\n\t      had not been passed.\n<\/p><\/blockquote>\n<p>The  Second  Schedule contains a list of the titles  of\t the<br \/>\nvarious\t agreements mentioned by us earlier. Under s.  5  of<br \/>\nthe  Act the Government is statutorily substituted  for\t the<br \/>\nrespondent  or its predecessors-in-interest in\tthe  various<br \/>\nagreements stated supra. The fiction is a well defined\tone.<br \/>\nThe   Government   replaces   the   Corporation\t  and\t its<br \/>\npredecessors-in-interest as a party to the agreements unless<br \/>\nthe  subject-matter  or the context otherwise requires.\t The<br \/>\nnatural presumption is that but for the proviso the enacting<br \/>\npart  of the section would have included the  subject-matter<br \/>\nof  the\t proviso also. The proviso to s. 5  saves  from\t the<br \/>\noperation of the substantive section the sums payable  under<br \/>\nany such agreements to any such bodies mentioned therein: it<br \/>\nexcludes the operation of the<br \/>\n<span class=\"hidden_text\">\t\t\t    357<\/span><br \/>\nfiction in respect of such sums payable.  In respect of\t the<br \/>\nsaid sums payable the agreements entered into with the\tsaid<br \/>\nbodies will remain intact as if the Act had not been passed;<br \/>\nthat is to say, the respondent would still continue to be  a<br \/>\nparty  to  the said agreements for the\tsaid  purpose.\t The<br \/>\nrelevant  agreements provided for the recovery of the  rents<br \/>\nand  also for the procedure for the recovery of the sums  so<br \/>\npayable\t in  accordance with the terms\tof  the\t arbitration<br \/>\nclauses of the agreements.  Had not the Act been passed\t and<br \/>\nhad the Government not been substituted in the place of\t the<br \/>\nCorporation, it cannot be denied that the Corporation, if  a<br \/>\ndispute arose in regard to the rent, could have referred the<br \/>\ndispute\t to  arbitration.   The\t substantive  right  to\t the<br \/>\npayment\t of rent and the procedural one to have any  dispute<br \/>\narising\t in  respect of that right referred  to\t arbitration<br \/>\nembodied  in the agreements are interconnected and  are\t not<br \/>\nseverable.   To\t preserve  the\tsubstantive  right  and\t  to<br \/>\nwithhold  the procedural right to enforce it is to save\t the<br \/>\nright  and to deny the remedy.\tTo accept the contention  of<br \/>\nthe  appellant\tis to make out a new agreement\tbetween\t the<br \/>\nparties\t in respect of the sums payable.  The acceptance  of<br \/>\nthis  suggestion  compels  the Corporation to  give  up\t its<br \/>\nagreed remedy.\tThe alternative suggestion, namely, that  in<br \/>\nrespect\t of  the  amounts payable  to  the  Corporation\t the<br \/>\narbitration  clauses of the agreements could be enforced  by<br \/>\nthe   Government   against  the\t appellant   introduces\t  an<br \/>\nincongruity.   While  the  dispute  would  be  between\t the<br \/>\nappellant  and\tthe Corporation, the  arbitration  would  be<br \/>\nbetween the appellant and a third party.  The argument\tthat<br \/>\nthe  Government\t would\tbe  acting  as\ta  trustee  of\t the<br \/>\nCorporation   in  respect  of  the  sums  payable   to\t the<br \/>\nCorporation is not supported by any of the provisions of the<br \/>\nAct.  A fair construction of the proviso to s. 5 of the\t Act<br \/>\nremoves all the anomalies.  Further, in the substantive part<br \/>\nof  s.\t5  of the Act the fiction takes\t effect\t unless\t the<br \/>\nsubject-matter\tor  the\t context  otherwise  requires.\t The<br \/>\nproviso in terms as well as by necessary implication  brings<br \/>\nthe subject-matter of the sums payable under the  agreements<br \/>\nboth under the substantive and procedural aspects within the<br \/>\nscope of the said exception.  The fiction in s. 5 of the Act<br \/>\nshall  yield. to that extent, to the terms of the  contract.<br \/>\nOn  such  a  construction  we hold,  as\t we  have  indicated<br \/>\nearlier,  that both the right to the said sums\tpayable\t and<br \/>\nthe procedure of arbitration are saved thereunder.<br \/>\nIn the result, we agree with the view expressed by the\tHigh<br \/>\nCourt and dismiss the appeal with costs.\n<\/p>\n<p>Appeal dismissed.\n<\/p>\n<p><span class=\"hidden_text\">358<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India The Calcutta Tramways Co. Ltd vs The Corporation Of Calcutta on 12 March, 1965 Equivalent citations: 1965 AIR 1728, 1965 SCR (3) 354 Author: K Subbarao Bench: Subbarao, K. PETITIONER: THE CALCUTTA TRAMWAYS CO. LTD. Vs. RESPONDENT: THE CORPORATION OF CALCUTTA DATE OF JUDGMENT: 12\/03\/1965 BENCH: SUBBARAO, K. BENCH: SUBBARAO, K. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-83487","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Calcutta Tramways Co. 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