Calcutta High Court (Appellete Side)
Heiza Boilers (I) Pvt. Ltd. & Anr vs Union Of India on 20 July, 2009
Author: Jayanta Kumar Biswas
Bench: Jayanta Kumar Biswas
In The High Court at Calcutta
Constitutional Writ Jurisdiction
Appellate Side
Present :
The Hon'ble Mr Justice Jayanta Kumar Biswas
W.P.No.7030 (W) of 2007
Heiza Boilers (I) Pvt. Ltd. & Anr.
v.
Union of India, Ministry of Commerce & Industry, New Delhi & Ors.
Ms Shanta Ramchand and Mr Farhan Ghaffar, advocates, for the petitioners. Mr
Manoj Roy and Mr Ranjan Roy, advocates, for the first respondent. Mr Anil
Kumar Gupta, advocate, for the second - fourth respondents.
Heard on: July 16, 2009.
Judgment on : July 16 & 20, 2009.
The Court:- The petitioners in this writ petition dated April 9, 2007 are seeking a mandamus quashing the arbitral proceedings pending before the arbitral tribunal appointed by the Director General of Supplies & Disposals, Government of India, Directorate General of Supplies & Disposals (Litigation Branch), New Delhi, by a letter dated September 22, 2006, Annexure P9 at p.63, and the letter itself.
The Director of Supplies & Disposals, Mumbai floated a tender inviting quotation for supply, installation and commissioning of two Boilers Steam Vertical Oil Fired. By a letter dated January 17, 1991, Annexure P3 at p.31, his office informed Heiza that its quotation dated July 10, 1989 read with its letter dated January 16, 1991 was accepted. Then the parties entered into an agreement that contained an ouster clause reading: "The courts of the place from where the acceptance of tender has been issued shall alone have jurisdiction to decide any dispute arising out of or in respect of the contract."; and an arbitration clause providing: "In the event of any question, dispute or difference arising under these conditions or any special conditions of contract, or in connection with this contract (except as to any matters the decision of which is specifically provided for by these or the special conditions) the same shall be referred to the sole arbitration of an officer in the Ministry of Law, appointed to be the arbitrator by the Director General of Supplies & Disposals.", and "In the event of the Arbitrator dying, neglecting or refusing to act or resigning or being unable to act for any reason, or his award being set aside by the court for any reason, shall be lawful for the Director General of Supplies & Disposals to appoint arbitrator in place of the outgoing arbitrator in the manner aforesaid."
Disputes and differences arose between the parties, and they were referred to arbitration by the Director General of Supplies & Disposals who appointed successive arbitrators including one Dr Gita Rawat, Additional Legal Adviser to the Government of India in the Ministry of Law, who was appointed by a letter dated December 8, 2003. Noticing that all notices of the proceedings, pending from February 2, 1999, sent to Heiza at 28 Burdwan Road, Alipore, Kolkata - 700027 had been returned unserved by the post office with the remark "LEFT", and that, in spite of orders, the Union of India failed to take necessary step for substituted service, the arbitrator terminated the proceedings by an order dated February 4, 2004, Annexure P8 at p.61, saying: - "In view of the observations made above, I have no option but to pass order U/s.32 of the Arbitration and Conciliation Act, 1996 for the termination of the proceedings in this case as due to the non-availability of the correct address and non-cooperation of the claimant, the continuation of the proceedings of the case is not possible."
Thereafter by the letter dated September 22, 2006 the Director General of Supplies & Disposals appointed one Suresh Chandra, Additional Govt. Counsel to the Ministry of Law & Justice, New Delhi as the sole arbitrator. It was mentioned in the letter that since the previous arbitrator terminated the arbitral proceedings on February 4, 2004 under s.32 of the Arbitration and Conciliation Act, 1996, her mandate stood terminated under s.32(3). A copy of the letter dated September 22, 2006 was sent to Heiza at 28, Burdwan Road, Alipore, Kolkata-700027. In the arbitral proceedings the arbitrator made an order dated December 20, 2006, Annexure P10 at p.64, fixing hearing for January 17, 2007. With a letter dated January 6, 2007, Annexure P11 at p.65, the Director of Supplies & Disposals, Mumbai forwarded a copy of the order of the arbitrator dated December 20, 2006 to Heiza at Budge Tank Road, Chandan Nagar, 24 Pgs.(s), Kolkata.
By a letter, Annexure P12 at p.66, marked "Without Prejudice", Heiza, while questioning the validity of the reference, asked the arbitrator to supply it copy of the records. It sent an identical letter dated January 15, 2007, Annexure P13 at p.67, to the Director of Supplies & Disposals. The arbitrator made an order dated January 17, 2007, Annexure P14 at p.68, adjourning the hearing until April 16, 2007 so that Heiza, seeking time, might get a fair opportunity of hearing. By a letter dated February 26, 2007, Annexure P15 at p.69, the Director of Supplies & Disposals communicated the order of the arbitrator dated January 17, 2007 to Heiza that sent a legal notice dated March 20, 2007, Annexure P 16 at p.70, questioning the validity of the arbitral proceedings. In a reply letter dated March 30, 2007, Annexure P17 at p.73, the Director of Supplies & Disposals said that Heiza would get full opportunity to raise all objections before the arbitrator. Feeling aggrieved, Heiza and one of its directors took out this writ petition.
The respondents in the writ petition are: 1."Union of India, Ministry of Commerce and Industry, New Delhi, Secretary represented by Senior Central Government Advocate Ministry of Law and Justice having office at 11, Strand Road, Calcutta - 700001"; 2."The Director of Supplies and Disposals, having office at Jeevan Tara Building, 5, Sansad Marg, New Delhi - 110001";
3."Assistant Director of Supplies for D.S. & G.D. having office at New G.G.O. Building, 5th/6th floor, S.W. Wing, New Marine Line, Mumbai - 400020"; and
4."Shri Suresh Chandra Additional Government Counsel Advisor/Justice and sole Arbitrator having office at Jeevan Tara Building, Room No.4, 1st floor, 5, Sansad Marg, New Delhi - 110001". It has been stated that while the second, third and fourth respondents have their respective offices outside the territories in relation to which this court exercises jurisdiction under art.226, the first respondent has its office within such territories.
In para.25 of the writ petition the petitioners have stated as follows:
"25.The part of the cause of action has arisen at Calcutta inasmuch as letter dated 22.09.2006 making appointment of arbitrator is received at Calcutta and letter dated 30.03.2007 to continue with the arbitration proceedings and diverse correspondence has been received at Calcutta. The purported Acceptance Tender dated 01.02.1991 was received at Calcutta as it appears claim statement. The part of cause of action arose at Delhi as the respondent No.2 by letter dated 30.03.2007 has threatened to continue with the arbitration proceeding and part of cause of action arose at Mumbai as diverse correspondence has been exchanged by the Mumbai office of the respondents."
By an order dated April 16, 2007 the writ petition was entertained and an interim order in terms of prayer (i) was made. Prayer (i) is: "(i) An order of injunction be made restraining the respondents from holding any arbitration meeting on 16.04.2004 and/or any subsequent date, until disposal of the instant application.". At the time of hearing on April 16, 2007 none appeared for the respondents. By an order dated June 6, 2007 directions were given for filing opposition by the respondents. On June 6, 2007 also none appeared for the respondents. Counsel for the second-fourth respondents appeared on September 22, 2007 when he prayed for extension of time to file opposition. The interim order expired on December 18, 2007. The petitioners applied for a fresh interim order, and by an order dated February 28, 2008 a fresh interim order in terms of prayer (i) was made. It was ordered that the interim order would remain in force until further order. The interim order is still in force. The second-fourth respondents, instead of filing opposition, filed CAN No.2739 of 2008 for vacation of the interim order. By an order dated December 19, 2008 the application was treated as opposition and time to file reply by the petitioners was extended. Reply has been filed, and the writ petition has come up for final hearing.
Counsel for the second-fourth respondents has raised the question of territorial jurisdiction of this court to entertain the writ petition. Relying on Oil & Natural Gas Commission v. Utpal Kumar Basu & Ors., (1994) 4 SCC 711, he has contended that since all the respondents have their respective offices outside the territorial limits of this court and no part of the cause of action arose within the territories in relation to which this court exercises jurisdiction under art.226, this court has no jurisdiction to entertain the writ petition. Counsel for the first respondent has said that in view of the provisions of s.16 of the Arbitration and Conciliation Act, 1996 validity of the reference should not be examined by the writ court.
Relying on a portion of a passage on p.211 of Sarkar's the Code of Civil Procedure, (2006 Ed.) and the decisions in Tara Chand Boid v. Shikam Chand Bhora, AIR 1995 Ori 199; Kusum Ingots & Alloys Ltd. v. Union of India & Anr., (2004) 6 SCC 254; Om Prakash Srivastava v. Union of India & Anr., (2006) 6 SCC 207; and Ashok Kumar Saboo (HUF) & Anr. v. Hindusthan Paper Corporation Ltd. & Ors., 2007 (3) CHN 533, counsel for the petitioners has argued that since today there is no existence of the contract, the ouster clause incorporated therein, that is otherwise also totally irrelevant for determining the territorial jurisdiction of the writ court, is of no consequence; and that, since the letters of the Director General of Supplies & Disposals dated September 22, 2006 appointing the arbitrator and of the Director of Supplies & Disposals dated March 30, 2007 threatening to pursue the arbitral proceedings were served on Heiza at its Kolkata office, a part of the cause of action arose within the territories in relation to which this court exercises jurisdiction under art.226. I have drawn her attention to State of Rajasthan & Ors. v. Swaika Properties & Anr., AIR 1985 SC 1289.
In State of Rajasthan & Ors. v. Swaika Properties & Anr., AIR 1985 SC 1289, it was held (para.8) that the mere service of a notice at Swaika's registered office in Kolkata did not give rise to a part of the cause of action within the territorial limits of this court empowering it to entertain the writ petition. The general rule applying which the decision was given is (para.8): the mere service of a notice at the registered office of a firm or company does not give rise to a part of the cause of action at such place, unless the service of the notice is an integral part of the cause of action; and the answer to the question whether the service of the notice is an integral part of the cause of action within the meaning of art.226(2) must depend upon the nature of the impugned order or action giving rise to the cause of action, and the test to ascertain this is whether for questioning the order or action it is necessary to plead the service of the notice in the writ petition.
In Oil & Natural Gas Commission v. Utpal Kumar Basu & Ors., (1994) 4 SCC 711, ONGC, through its consultants, issued an advertisement dated June 27, 1991 inviting tenders, and NICCO, filing the writ petition in this court, stated that it read the advertisement in Kolkata, submitted bid from its Kolkata office, by letters demanded justice from Kolkata, and received a fax message dated January 15, 1993 in Kolkata. Final decision was taken by the steering committee in New Delhi on January 27, 1993 and the contract was given to one CIMMCO. NICCO, contending that a part of the cause of action arose in Kolkata, sought orders restraining ONGC from awarding the contract to any other party and cancelling the contract, if awarded. It was held (para.8) that none of the above-noted facts was an integral part of the cause of action.
In Kusum Ingots & Alloys Ltd. v. Union of India & Anr., (2004) 6 SCC 254, it was held (para.10) that in view of the expressions used in art.226(2), even if a small fraction of the cause of action arises within the territorial limits of a high court, then such high court will have jurisdiction over the matter, and (para.18) that facts which have nothing to do with the prayer made in the writ petition cannot be said to give rise to a cause of action sufficient to confer jurisdiction on the court.
In Om Prakash Srivastava v. Union of India & Anr., 2006(6) SCC 207, while ascertaining (paras.9-17) the meaning of the expression "cause of action"
their Lordships reiterated (para.13) that the expression "cause of action" denotes the whole bundle of the material and essential facts without the proof of which the plaintiff must fail in his suit, and held (para.18) that when the question of jurisdiction arises, the correct way to deal with a writ petition is to say whether the cause of action or a part thereof arose within the territorial limits of the high court, and not to decline to exercise jurisdiction saying that it may have jurisdiction, but another high court can deal with the matter more effectively.
The principles are these. Facts which have no bearing on the lis or the dispute involved in the case do not give rise to a cause of action so as to confer territorial jurisdiction on a court. What is to be seen is whether a particular fact is of substance and can be said to be material, integral or essential part of the lis between the parties. If it is, it forms a part of the cause of action. If it is not, it does not form a part of the cause of action. In determining the question the substance of the matter, and not the form thereof, is to be considered. The answer to the question whether the service of a notice is an integral part of the cause of action within the meaning of art.226(2) must depend upon the nature of the impugned order or action giving rise to the cause of action, and the test to ascertain this is whether for questioning the order or action it is necessary to plead the fact of service of the notice in the writ petition and prove it. Only those facts without the proof of which the action must fail are material and essential facts in the bundle of facts constituting the cause of action. Hence a fact without the proof of which a writ petition will not fail is not an integral part of the cause of action, and, accordingly, it cannot be said that a part of the cause of action has arisen at the place where the event concerning the fact has happened.
Here the question is whether the service of a copy of the letter of the Director General of Supplies & Disposals dated September 22, 2006 appointing the arbitrator, and the letters of the Director of Supplies & Disposals including the one dated March 30, 2007 saying that Heiza would get full opportunity to raise all objections before the arbitrator, on Heiza in Kolkata gave rise to any part of the cause of action. The controversies involved in the writ petition are whether the Director General of Supplies & Disposals possessed the power to appoint the arbitrator after the arbitrator appointed by him previously by his letter dated December 8, 2003 had terminated the arbitral proceedings by her order dated February 4, 2004, made under s.32 of the Arbitration and Conciliation Act, 1996; and whether the arbitrator appointed by the letter dated September 22, 2006 acquired any jurisdiction to proceed with the arbitral proceedings.
Since the question of very jurisdiction of this court to entertain the writ petition has been raised, I do not think it is necessary for me to express any opinion on the merits of the controversies involved in the writ petition. In my opinion, appropriate opinions on them are to be expressed only if it is found that this court has jurisdiction to entertain this writ petition, and then it is held that even in the face of the provisions of s.16 of the Arbitration and Conciliation Act, 1996 the merits of the controversies can be examined, and the questions arising therefrom can be answered by the writ court. At present I am required only to answer the question of jurisdiction.
There is no dispute that the letters dated September 22, 2006, January 6, 2007, February 26, 2007 and March 30, 2007 were received by Heiza in Kolkata. Hence if it is held that the fact of their service or receipt is a material, integral or essential part of the cause of action, then it can be said that a part of the cause of action arose within the territorial limits of this court, and in that case this court will have jurisdiction to entertain this writ petition.
The decision to appoint the arbitrator was taken by the Director General of Supplies & Disposals in New Delhi. The arbitrator made the orders dated December 20, 2006 and January 17, 2007 in Mumbai where the arbitral proceedings are pending decision. I am unable to see how for an order quashing the decision to appoint the arbitrator, the orders of the arbitrator and the arbitral proceedings, it is necessary for the petitioners to plead in the writ petition and prove the fact of the service or receipt of the letters dated September 22, 2006, January 6, 2007, February 26, 2007 and March 30, 2007. The causes of action arose when the Director General of Supplies & Disposals appointed the arbitrator in New Delhi, and when the arbitrator made the orders dated December 20, 2006 and January 17, 2007 in the arbitral proceedings pending decision in Mumbai.
The service and receipt of the letters gave the petitioners only a right to action on the already accrued causes of action, and they enabled them to meet the plea of laches or limitation, if raised by the respondents. There is no reason to say that the fact of service or receipt of any of the letters is a material, integral or essential part of the controversies between the parties. The fact of service or receipt of the letters has absolutely no bearing on any lis involved in the case. For an order, if otherwise available from the writ court, quashing the letter of the Director General of Supplies & Disposals dated September 22, 2006 and the arbitral proceedings pending before the arbitrator appointed thereby, it is not necessary for the petitioners to plead in the writ petition the fact of service or receipt of the letters and the orders in question, and prove it. I am, therefore, unable to accept the contention that since the petitioners received the letters in Kolkata, a part of the cause of action arose within the territories in relation to which this court exercises jurisdiction under art.226 of the Constitution of India.
There is no merit in the case of the petitioners that the letter concerning acceptance of Heiza's tender was received by Heiza in Kolkata. As will appear from the letter dated January 17, 1991, Heiza's offer was accepted by the Director of Supplies & Disposals in Mumbai. The arguments concerning the ouster clause incorporated in the contract concerned and the decisions in Tara Chand Boid v. Shikam Chand Bhora, AIR 1995 Ori 199, and Ashok Kumar Saboo (HUF) & Anr. v. Hindusthan Paper Corporation Ltd. & Ors., 2007 (3) CHN 533 relied on by counsel for the petitioners are totally irrelevant to the question under examination. The facts of this case resemble the ones in Aligarh Muslim University & Anr. v. Vinay Engineering Enterprises (P) Ltd. & Anr., (1994) 4 SCC
710. The first respondent's whereabouts, evident from the cause title, reveals the petitioners' stunning ingenuity. There is no reason to say that the first respondent took any action or decision, or that it has a Kolkata office at the address given in the cause title. In my opinion, this court has no territorial jurisdiction to entertain this writ petition.
For these reasons, the writ petition is dismissed. There shall be no order for costs.
Counsel for the petitioners prays for stay of operation of my judgment. I am unable to see what is to be stayed. I have dismissed the writ petition. I have not given any direction to any of the parties to the case. Hence there is nothing to stay. What counsel seeks is an interim order from me. In my opinion, after dismissing the writ petition for lack of jurisdiction, I should not make an interim order restraining the respondents from pursuing the pending arbitral proceedings.
Urgent certified xerox of this order, if applied for, shall be supplied to the parties within three days from the date of receipt of the file by the section concerned.
(Jayanta Kumar Biswas, J.)