Calcutta High Court
Tapas Kumar Bhunia vs Jagadish Patra on 26 September, 2018
Author: Sanjib Banerjee
Bench: Sanjib Banerjee, Abhijit Gangopadhyay
OD-4
GA No.2252 of 2018
APO No.217 of 2018
in
AP No.379 of 2018
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
ORIGINAL SIDE
TAPAS KUMAR BHUNIA
Versus
JAGADISH PATRA
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE
And
The Hon'ble JUSTICE ABHIJIT GANGOPADHYAY
Date : September 26, 2018.
Appearance:
Mr. Tapas Dutta, Adv.
...Appellant
Mr. Indranil Nandi, Adv.
Mr. Manoranjan Maiti, Adv.
...Respondent
The Court : The facts are not much in dispute. An agreement was entered into between the parties in 2012 that provided for some money being invested in a partnership business and the partnership business being conducted in a particular manner. The agreement contained an arbitration clause, without indicating the procedure for the appointment of an arbitrator. 2 The agreement did not provide for any seat for the arbitral reference nor did the agreement contain any forum selection clause.
Upon disputes and differences arising between the parties, the appellant herein sought an arbitral reference and, upon the parties failing to agree on the composition of the arbitral tribunal in the absence of any procedure being specified in the arbitration agreement, a request was carried to this High Court under Section 11 of the Arbitration and Conciliation Act, 1996. Such request was disposed of by an order dated August 26, 2016 appointing an arbitrator. The arbitrator has rendered his award on March 8, 2018. The appellant herein challenged such part of the award that went against the appellant by way of a petition under Section 34 of the said Act in this Court. The appellant's petition challenging the award, or a part thereof, was filed on June 6, 2018. However, prior thereto, on May 2, 2018, the respondent herein applied under Section 34 of the Act before the District Judge, Purba Medinipur at Tamluk for setting aside the arbitral award.
The preliminary question that arose before the arbitration Court here was whether the appellant's petition for challenging a part of the award could have been received in this Court. By the judgment and order impugned dated July 18, 2018, the petition under Section 34 of the said Act was rejected on the ground that this Court did not have the jurisdiction to entertain the same. The reasons indicated in the judgment impugned are, inter alia, that an earlier petition under Part-I of the said Act was carried to a competent Court in Purba Medinipur, that an execution application of the appellant herein was rejected by 3 a coordinate Bench on the ground of lack of territorial jurisdiction and that that the dictum in a Supreme Court judgment reported at (2017)7 SCC 678 (Indus Mobile Distribution Private Limited vs. Datawind Innovations Private Limited) was not applicable since the Indus Mobile matter dealt with a situation where there was a clause governing the seat of the arbitral reference and, in the present case, there was no choice of such seat indicated in the matrix contract or in the arbitration clause contained therein.
The appellant refers to the amendment of 2015 to the Act of 1996 and submits that in the change in the nomenclature from the "Chief Justice or any person or institution designated by him" to the "High Court" and "Supreme Court" and "person or institution designated by such Court", the law has been completely altered and, at any rate, a High Court exercising original jurisdiction has to receive all subsequent petitions and applications pertaining to the arbitration agreement in the event such High Court has passed a previous order under Section 11 of the Act.
In support of such contention, a Division Bench judgment of this Court rendered on January 21, 2011 in APOT No.371 of 2010 (Steel (Singapore) Trading Private Limited vs. Bhushan Power & Steel Limited) has been placed.
The facts as noticed in Steel (Singapore) Trading referred to the appointment of the arbitrator being made by the Delhi High Court and the arbitrator making an award on January 19, 2010. Upon the award being received, execution proceedings were launched by the appellant and an interim order was passed in such proceedings by the Delhi High Court on April 30, 2010. 4 The respondent before the Division Bench challenged the award before this Court. The date of the filing of the petition is not evident from the judgment. A Single Bench of this Court rejected the objection as to the maintainability of the petition in this Court. In such context, the Division Bench expressed the opinion that an order passed under Section 11(6) by a High Court appointing an arbitrator would debar any other Court other than that High Court to entertain any further applications pertaining to the arbitration agreement under Part-I of the Act of 1996. The reason indicated in the relevant order is that since the view taken by the Constitution Bench in SBP & Co. (AIR 2006 SC 450) was that the power exercised under Section 11 of the Act was judicial in nature, the order passed under Section 11 of the Act "was passed by a 'Court' as defined under Section 2(1)(e) of the said Act. Accordingly, for the purpose of the provisions of Section 42 of the said Act, in our opinion, it would create a bar on the jurisdiction of this Court to entertain the present application under Section 34."
The above view in Steel (Singapore) Trading is clearly per incuriam, inter alia, in the Division Bench not noticing the entirety of Section 11 of the Act and such view is contrary to several Supreme Court judgments including the one reported at (2006) 11 SCC 651 (Rodemandan India Limited v. International Trade Expo Centre Limited). Though the matter before the Supreme Court pertained to an international arbitration, paragraph 25 to the report is relevant since it was held that Section 42 of the 1996 Act would not be applicable to a matter under Section 11 of the Act since there was no court involved under Section 11 of the Act and it was only a Chief Justice or his designate who had the authority to 5 receive a request thereunder. The legal position remains unaltered despite the words "Chief Justice" being replaced by the words "High Court" or "Supreme Court" in Section 11 of the Act as amended in 2015. Paragraph 25 of the report in Rodemandan is set out:
" 25. Finally, it is contended that as recourse had been taken by the petitioner under Section 9 of the Act to obtain interim relief by moving the Delhi High Court by their original petition OMP No. 98 of 2005 dated 24-3-2005, by reason of Section 42 of the Act that Court alone could have jurisdiction upon the arbitral tribunal. In my view, this contention has no merit as I have held earlier, neither the Chief Justice or his designate under Section 11 (6) is a "court" as contemplated under the Act. Section 2(1)(e) of the Act defines the expression "court". The bar of jurisdiction under Section 42 is only intended to apply to a "court" as defined in Section 2 (1)(e). The objection, therefore, has no merit and is rejected."
Indeed, the judgement in Steel (Singapore) Trading and another Division Bench judgment that was referred to therein were extensively dealt with in a Single Bench judgment reported at AIR 2011 Cal 158 (Texmaco Limited v. Tirupati Builders Private Limited). The attention of the parties to the present proceedings was drawn to such judgement in course of the hearing of this matter on a previous occasion, but the appellant has not dealt with such judgment.
The judgement in Steel (Singapore) Trading is also contrary to the Supreme Court judgment cited by the appellant herein and reported at (2007) 1 SCC 467 (Pandey & Co. Builders (P) Limited v. State of Bihar). Paragraph 17 of the report is apposite in the present context:
6
"17. It is not disputed before us that the Patna High Court does not exercise any original civil jurisdiction. The definition of "court" as noticed hereinbefore means the Principal Civil Court of original jurisdiction in a district and includes the High Court which exercises the original civil jurisdiction. If a High Court does not exercise the original civil jurisdiction, it would not be a "court" within the meaning of the said provision..."
The appellant also refers to a judgment reported at (2016) 2 SCC 75 (Bridgestone India Private Limited vs. Inderpal Singh) for the proposition that if the law previously declared by the Supreme Court is altered by the Parliament, the previous dictum of the Supreme Court would not be binding. The proposition is too elementary to deserve any discussion and is utterly inapposite in the present context.
Section 2(1)(e) of the 1996 Act as it now stands after the 2015 amendment defines Court in the context of domestic arbitration as follows:
"2. Definition-(1) In this Part unless the context otherwise requires, - ...
(e) "Court" means -
(i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;
..."
7Thus, the definition requires the application of the Civil Procedure Code to ascertain the principal Court where such Code is applicable or to the Letters Patent of a High Court if the principal Court is a High Court. In either case, if the subject-matter of the arbitral reference is an immovable property, in terms of the provisions of Sections 16 to 20 of the Code and the similar provisions contained in Clause 12 of the Letters Patent as applicable in this Court, the appropriate Court within the meaning of Section 2(1)(e)(i) of the Act would be the Court within whose jurisdiction the immovable property is wholly or in part situate. In every other case, the situs of the Court for the purpose of Section 2(1)(e)(i) of the Act would be the principal Civil Court, including a High Court if it exercises original jurisdiction, within whose jurisdiction the respondent or any of the respondents voluntarily resides or works for gain or carries on business at the time of the institution of the petition; or, with or without the leave of the Court, as the case may be, if the cause of action, wholly or in part, arises.
This rule as to the Court which is authorised to receive a civil suit under the Code, or under the Letters Patent in the applicable High Courts, is not altered in any manner or form by the definition in Section 2(1)(e)(i) of the Act and such definition only points to such principal Court which would, if there was no arbitration agreement, be competent to receive a suit in respect of the subject- matter of the arbitration.
8
Whether prior to or after the amendment of 2015, neither Section 2(1)(e) of the Act nor Section 11 thereof has made any special provision for a High Court where the Chief Justice or his designate or (after the amendment) such Court has passed an order under Section 11 of the Act, for the situs of all future petitions and applications under Part-I of the Act pertaining to the arbitration agreement to only be carried to such High Court. In other words, just like Section 8 of the Act of 1996 cannot be governed by Section 42 of such Act, Section 11 thereof can also not be governed by Section 42. As to the jurisdiction of the High Court receiving a request under Section 11 of the Act, there is an in-built provision in Section 11(12) of the Act. Clause (b) of such provision is relevant for the present purpose.
"(b) where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in any other arbitration, the reference to "the Supreme Court or, as the case may be, the High Court" in those sub-sections shall be construed as a reference to the "High Court"
within whose local limits the principal Civil Court referred to in clause (e) of sub-section (1) of section 2 is situate, and where the High Court itself is the Court referred to in that clause, to that High Court."
Sub-section (11) of Section 11 of the Act further emphasises the point. It is possible, just as in the case of any suit, that several Courts may have the jurisdiction to entertain the same but the plaintiff chooses to carry the plaint to one of them. Section 11(11) notices that it is possible, in such a scenario, for several High Courts to be approached for a request to constitute an arbitral 9 tribunal. It is in such context that Section 11(11) has been introduced to indicate that the High Court that is approached first would have the authority to pass an appropriate order in such regard; but such provision is also qualified by Section 11(12) in the later sub-section indicating which High Courts would have the authority to receive a request under Section 11 of the Act.
It is not possible to approach a High Court with a request under Section 11 of the Act if the Court within the definition of Section 2(1)(e)(i) of the Act is not a Court which is subordinate to that High Court or such Court is not that High Court itself in exercise of its original jurisdiction.
Since Section 2(1)(e)(i) does not make any distinction between a principal civil Court of a district or a High Court exercising original jurisdiction, there is no impact on the situs of further petitions pertaining to an arbitration agreement if the first of them is a request carried to a particular High Court under Section 11 of the Act. The matter may be seen from another perspective. It is inconceivable that when a request is taken to the High Court of a State where such High Court does not exercise original jurisdiction, that by virtue of Section 42 of the Act, future petitions and applications pertaining to the arbitration agreement have per force to be carried to such High Court.
It is equally possible that a petition under Section 11 of the Act is not the first petition pertaining to the relevant arbitration agreement. There may have been a previous petition under Section 9 of the Act already filed before a district Judge. In such event, Section 42 of the Act will have no manner of operation on 10 the situs of a subsequent request under Section 11 of the Act since such request has to be carried to High Court and not to a district Court.
On such score, the judgment and order impugned does not call for any interference. The judgment has also appropriately dealt with the dictum in Indus Mobile and found it to be inapplicable, inter alia, since no seat for the arbitral reference was agreed to between the parties in the present case. As to the impact of the order on the execution proceedings, the issue is left open since such aspect is covered in another appeal that is proposed to be dealt with immediately hereafter.
Accordingly, APO No. 217 of 2018 and GA No. 2252 of 2018 are dismissed with costs assessed at 50 GM.
Urgent certified website copies of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(SANJIB BANERJEE, J.) (ABHIJIT GANGOPADHYAY, J.) sg/bp.