Madras High Court
Anilkumar vs Sudarsanam on 19 April, 2013
Author: Vinod K.Sharma
Bench: Vinod K.Sharma
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 19/04/2013 CORAM THE HON'BLE MR.JUSTICE VINOD K.SHARMA OA.26 of 2013 SBQ STEELS LTD VS GOYAL MG GASES PVT LTD FOR PETITIONER : ANILKUMAR FOR RESPONDENT : SUDARSANAM ORDER:
O.A.No.26 of 2013 VINOD K. SHARMA,J., This application under Order XIV Rule 8 of O.S.Rules r/w Section 9 (ii) (d) of Arbitration and Conciliation Act, 1996, has been filed by M/s.SBQ Steels Limited, seeking interim injunction, restraining the respondents their men, servants, agents, person or persons acting through or under them or for and on their behalf from in any manner whatsoever removing any of the material, machineries or causing any damage to the property of the applicant lying in the leased premises described in the schedule hereunder.
2. The affidavit filed in support of prayer is that the applicant had established a Steel Plant in Andhra Pradesh on capital cost of Rs.1255 Crores. The registered office of the applicant is at Chennai. The respondent had approached the applicant and expressed that they have requisite expertise in production and supply of Oxygen and Nitrogen gases and liquid argon, which are required for the Steel Melt Shop of the applicant. Based on the representations, assurances, guarantees and warranties made by the respondent, that the applicant entered into a contract dated 07.08.2008 at the registered office of the applicant at Chennai, which was subsequently amended by agreement dated 05.03.2010, entered into at Chennai.
3. For the reason best known to the applicant, they have not placed on record copy of the contract dated 07.08.2008 or agreement dated 05.03.2010, which was said to have been entered at Chennai.
4. It is submitted, that the contract was styled as Build, Own and Operate basis, wherein the respondent was to incur the entire cost for the project of setting up the gas plant. The respondent was to set up an Air Separation Unit to produce and supply Oxygen and Nitrogen gases and liquid argon, required by the applicant, whereas applicant under the contract was to provide to the respondent various other facilities like land, water, electricity etc., for the above project.
5. The applicant entered into a Land Lease Agreement dated 16.12.2008, leasing out land measuring 6400 sq.ft., situated at Ankalapataru Village, Chillakuru Mandal, Gudur, Andhra Pradesh within the premises of the Steel Plant of applicant. The lease was registered before the Sub-Registrar, Gudur.
6. It is submitted, that the payment of lease money was to be paid at Chennai. The lease money payable was fixed at Rs.10,000/- (Rupees Ten Thousand) per annum and the lease was for a period of 19 years with provision for renewal for another 5 years on extension of the contract dated 07.08.2008.
7. According to the lease deed, the respondent was not to use the lease land for any other purpose, nor it could assign, transfer, mortgage, sub-let or part with possession without prior written consent.
8. The lease agreement also had arbitration clause, which reads as under:
"8. Any dispute or difference whatsoever arising between the parties and/or relating to the construction, interpretation, application, meaning, scope, operation or effect of the Contract to the breach thereof, then the parties shall endeavour to resolve such dispute or difference in good faith in the first instance within thirty (30) days of notice of such dispute or difference. If the dispute or difference is not resolved by mutual discussion, either party may, upon giving notice to the other, refer the dispute or difference for arbitration by a sole arbitrator, if the parties agree upon the same, failing which the dispute or difference shall be referred to three arbitrators, each party to appoint one arbitrator and the two appointed arbitrators shall appoint the third arbitrator who shall act as presiding arbitrator. The language of the arbitration proceeding shall be English. Venue of Arbitration shall be Delhi. The Arbitration shall be governed by Indian Arbitration and Conciliation Act, 1996 or any amendments or modifications thereto."
9. It is pleaded, that though contract dated 07.08.2008 styled as a Build, Own and Operate basis,where the respondent was to incur the entire cost of the project, but the respondent violated the terms of the contract and under the guise of civil work, the applicant was made to take up number of civil works and the respondent also delayed commissioning of ASU, causing huge loss to the applicant. Even after commissioning of the ASU, the quality and pressure of the gas was poor and not to the agreed specifications laid down in the contract. The applicant, on account of force majeure conditions, was forced to shut down the Steel Melt Shop from 11.08.2011.
10. It is pleaded case of the applicant, that there arose serious disputes between the applicant and the respondent on a number of issues relating to the contract dated 07.08.2008 and to resolve those disputes, the applicant invoked arbitration under the contract dated 07.08.2008.
11. The respondent filed an application under Section 9 of the Arbitration and Conciliation Act, 1996, before the Hon'ble High Court of Delhi on 07.03.2012, seeking various reliefs under the contract dated 07.08.2012, wherein interim order was passed on 26.03.2012, and the application is still pending.
12. The applicant filed O.A.No.432 of 2012 in this Court on 14.05.2012 with regard to the Contract dated 07.08.2008. The application was dismissed by this Court on the ground, that the application moved by the respondent under Section 9 was earlier in time. However, liberty was given to the applicant to approach this Court after decision of Delhi High Court, but on the line of jurisdiction.
13. It is admitted, that Arbitral Tribunal was constituted and pleadings are complete. It was during the pending of the Arbitration proceedings, that the respondent terminated the Contract dated 07.08.2008 vide its letter dated 14.09.2012. This fact has been brought on record of Arbitral Tribunal.
14. It is submitted, that the Land Lease Agreement was entered into in pursuance to the contract dated 07.08.2008, as the land was leased out with an object to set up and operate the ASU and for no other purpose. Therefore, by terminating the contract, the respondent has defeated the very object for which lease agreement was entered into. Therefore, in view of termination of the Contract, the applicant was left with no other option, but to terminate the Land Lease Agreement dated 16.12.2008, and the decision of terminating the lease was intimated to the respondent on 16.12.2008.
15. It is further submitted, that inspite of termination of the lease on 14.09.2012 itself, the respondent clandestinely and surreptitiously transferred Rs.10,000/- (Rupees Ten Thousand only) by NEFT wife transfer to the account of applicant at Chennai on 20.11.2012. This amount was returned to the respondent.
16. It is the case of applicant, that though the underlying contract stood terminated, the respondent with fraudulent intention to retain possession of the leased area, filed application under Section 17 dated 24.10.2012 before the Arbitral Tribunal for taking out inventory of the assets and machinery in the leased premises and note down the condition and physical features. The applicant gave no objection, but on 11.12.2012, the respondent sought further time from the Arbitral Tribunal, to file additional affidavit for pleading subsequent events.
17. It is also submitted, that this conduct of the respondent shows, that the respondent wants to keep possession of leased premises, therefore, were trying to delay appointment of Commissioner, because it was during the pendency of interlocutory application, the respondent terminated the agreement.
18. The applicant has preferred this application seeking for appointment of Commissioner to prepare inventory of the machineries and assets lying within the leased premises of the applicant and note down the condition, physical feature, as the respondent is not running the gas plant and the some of the employees are visiting the applicant. The said plant is situated within the factory premises, which does not have a separate ingress and egress and the machineries are lying unattended or uncared.
19. It is not understood as to how this application is maintainable in this Court, as admittedly, application under Section 17 on the same cause of action is pending before the Arbitral Tribunal.
20. It is also pleaded case of the applicant, that this application is filed under Section 9 on the plea, that if injunction sought by application is not granted, the applicant will be put to untold loss and hardship, which cannot be undone at a later point of time.
21. That the application has prima facie case and balance of convenience is in favour of the applicant and it would cause irreparable loss and hardship in case injunction is not granted.
22. In para-12, it is stated, that this application has been made for appointment of Commissioner to prepare inventory of machineries and assets lying at the leased premises of the applicant.
23. Whereas prayer in the Judge's summon is to grant injunction, restraining the respondents their men or anybody drawing rights through them from removing any material, machineries or causing any damage to the property of the applicant lying in the leased premises.
24. Whereas at the time of argument, the contention of the learned counsel for the applicant, was, that the respondent should remove the plant and machineries from the leased premises.
25. The counter has been filed, wherein preliminary objection is raised, that this Court has no jurisdiction to entertain and try this application, specially when on earlier occasion O.A.432 of 2012, this Court passed the following order:
"17. For the reasons stated above, this Court comes to the conclusion that the present original application filed by the applicant under Section 9 of the Arbitration and Conciliation Act, 1996 cannot be maintained in view of the fact that similar petition O.M.P.No.236 of 2012 filed earlier on the file of the Delhi High Court by the first respondent herein is pending.
Section 42 of the Arbitration and Conciliation Act, 1996 provides a bar for entertaining such an application by any other court. Hence the present original application is liable to be dismissed holding that it is not maintainable.
Accordingly, the present original application is dismissed as not maintainable. However, it is further observed that, in case the petition filed before the Delhi High Court is dismissed at a later point of time on the ground of want of jurisdiction, then this order shall not be an impediment for the applicant to file a fresh petition. There shall be no order as to cost."
26. It is also submitted, that the parties by agreement decided to give exclusive jurisdiction to the Hon'ble Delhi High Court, wherein the application filed under Section 9 is pending, whereas this application has been filed, restraining the respondent from in any manner removing any material, machineries or causing any damage to the property of the applicant lying in the leased premises described in the schedule, but in the schedule, the applicant has only mentioned about the leased property, without giving any inventory of material or machineries, qua which injunction is sought.
27. It is also the submission of learned counsel for the respondent, that plant and machinery or material lying in the leased premises is the property of the respondent, therefore, the applicant cannot seek injunction, restraining the respondent from dealing with their own property.
28. In the agreement entered into between the parties, it is clearly stated, that the production facility, like Air Separation Unit (ASU) and the ancillary equipment is the property of respondent, and it is within their right to remove it within 12 months after the expiry of the contract period at the discretion of the respondent.
29. It is submitted, that as per Article 16 (iv) of the Contract, even upon termination of contract, the respondent has unbridles right to deal with the Gases and the production facility in any manner whatsoever.
30. It is further submitted, that the applicant has not come to Court with clean hand, as he has not disclosed actual terms of the contract dated 07.08.2008, therefore, the applicant deserves to be non suited on this ground alone.
31. It is pleaded case of the respondent, that termination of the lease deed is irrelevant, as in the event of termination of lease deed, the applicant would be entitled to the possession of the leased land, therefore, this Court will not have any jurisdiction to deal with this matter, as the immovable property admittedly is situated in the State of Andhra Pradesh.
32. On merit, it is denied, that negotiation has held at Chennai. The stand of the respondent is that negotiation between the parties took place at New Delhi.
33. It is also the case of respondent, that the contract dated 07.08.2008 was entered into between the parties in pursuance to the negotiation by parties at New Delhi and the contract was also signed at New Delhi. That the lease deed was entered into between the parties, but the lease deed was to survive independently of the contract.
34. It is also the stand of respondent, that lease was for the period of 19 years with no clause for terminating it. That the respondent is the absolute owner of ASU, which entitles the respondent to access, utilize, manage, control, administer and safeguard the ASU facility.
35. It is submitted, that the contract between the parties was followed by two agreements, which were executed at New Delhi, i.e. A Tripartite Agreement and an Escrow Agreement between the parties and Punjab National Bank. Under the said agreements, the applicant was directly liable to the term loan irrespective of the continuance of the contractual relationship between the parties.
36. As a matter of fact, in the counter, basic stand taken is that this Court has no jurisdiction to entertain and try present application.
37. That the applicant has no right over ASU, which belongs to the respondent and the applicant, therefore, has no prima facie case to seek injunction.
38. Learned counsel for the applicant vehemently contended, that the lease agreement dated 16.12.2008 was entered into between the parties and the lease money payable thereunder was to be paid at Chennai. Therefore, this Court has jurisdiction to entertain and try this application.
39. It was also contended, that the applicant is entitled to injunction prayed for, as the reading of lease deed would show, that this was entered into in pursuance to the contract dated 07.08.2008. Once the said contract stood terminated by the respondent, the respondent did not have any right under the lease agreement, which also stood terminated.
40. It was further contended, by the learned counsel for the applicant, that pendency of arbitration proceedings before the Hon'ble Delhi High Court has no relevance, as the lease deed was independent contract, under which the applicant has the intention to invoke arbitration clause, to protect its interest in the leased property.
41. However, in the affidavit filed, applicant has neither pleaded the dispute, which is required to be determined by the learned Arbitrator, nor has pleaded its intention to commence arbitration proceedings.
42. Rather the prayer cannot be said to be bonafide, as under the terms of lease deed, the plant, equipment and machineries belong to the respondent and the applicant has rented out the leased land. The only right with the applicant, if any, is to get back possession of the leased property, if so permissible in law. This Court does not have jurisdiction to deal with the claim, because immovable property is admittedly situated in the State of Andhra Pradesh and not within the jurisdiction of this Court. Furthermore, as per the agreement entered into between the parties, the parties had agreed, that the dispute, if any under the agreement would be subject to the Hon'ble Delhi High Court.
43. The question, that the Hon'ble Delhi High Court has jurisdiction or not will depend upon the fact, that whether any cause of action had accrued in Delhi High Court, but this Court certainly will not have jurisdiction to entertain and try the dispute, qua immovable property, which is not situated within the jurisdiction of this Court.
44. Learned counsel for the applicant vehemently contended, that when a part of cause of action arises within the jurisdiction of this Court, then for moving the application under Section 9 of the Arbitration and Conciliation Act, leave under Clause 12 of Letters Patent is not required in view of the law laid down by the Hon'ble Division Bench of this Court in M/s.Dynasty Developers Pvt. Ltd., vs. Jumbo World Holdings Ltd and others, AIR 2008 Madras 110, laying down as under:
19. We have given our anxious thought to the submissions made at the Bar and the decisions cited before us. We are unable to agree with the view taken by the learned Judge that in order to maintain an application under the Act, it is a precondition that the leave under Clause 12 of the Letters Patent should have been obtained. Learned Judge has followed the Division Bench judgment of the Calcutta High Court in AIR 1984 Calcutta 24 and the judgment of Rebello, J. in (2002) 2 Bom. CR 88. The attention of the learned Judge was not drawn to the later decision of the Calcutta High Court in AIR 1986 Calcutta 338. Moreover, the learned Judge was much concerned and swayed by the words 'if the same had been the subject matter of the suit' appearing in Section 2(i)(e) of the Act. According to the learned Judge the leave would be necessary in case this Court has jurisdiction over the part of the cause of action only and as no suit could be filed without leave, no application under the Act under the similar circumstances could be entertained without leave under Clause 12 of the Letters Patent. The analogy of 'suit' given in Section 2(i)(e) of the Act only gives us guideline to find out the right court. The word 'suit' acts as an indicator and points out which court will be competent court to entertain the application under the Act. Section 2(i)(e) does not treat an 'application' under the Act as a 'suit' and the application under the Act remains an application. As a matter of fact, if a civil suit is filed covering the subject matter of an arbitration agreement, the Act makes it obligatory for the Court to refer the parties to arbitration in terms of the arbitration agreement. Therefore, it cannot be contended that the Act intended that an application under the Act and the civil suit should be treated on the same footing. It has been consistently held that the applications under the Arbitration Act cannot be equated with civil suit. (See Bhagwat Singh v. State of Rajasthan , Usmanali Khan v. Sagarmal, Firm Ashok Traders v. Gurumukh Das Saluja. The procedure for obtaining leave is applicable only to a suit and not to an application under the Arbitration Act. In our opinion, if a part of the cause action has arisen within the jurisdiction of this Court, the application under the Arbitration Act can be instituted in this Court and in that event leave under Clause 12 of the Letters Patent is not necessary."
45. This judgment is not even remotely applicable to the facts of the present case. This Court, while deciding the case, was not dealing with the question as to whether when the parties by agreement give exclusive jurisdiction to a particular Court, then violation agreement can application be maintained in this Court? Furthermore this Court is also to see whether any prima facie case is made out to maintain this application under Section 9 of the Arbitration and Conciliation Act, as it is well settled law, that by a clever drafting, the party cannot give jurisdiction to the Court, which otherwise does not have jurisdiction to entertain and try.
46. Learned counsel for the applicant thereafter placed reliance on the judgment of the Hon'ble High Court Bombay in Konkola Copper Mines (PLC) vs. Stewarts and Lloyds of India Limited, Arbitration Petition No.160 of 2013, decided on 19.03.2013, wherein it was held as under:
"16. The learned counsel for the respondent then placed reliance upon the judgment of this Court in the case of Raman Lamba vs. D.M.Harish, AIR 1991 Bombay 311, judgment of Madras High Court in the case of Sabson (India) Pvt. Ltd. vs. Neyveli Lignite Corporation Ltd. And Ors. AIR 1992 MADRAS 282, judgment of Delhi High Court in the case of Inox Air Products Ltd. Vs. Rathi Ispat Ltd. 2006(4) Arb.L.R.40 (Delhi) and particularly paragraphs 25, 26, 30 and 31 of the said judgment which read thus;
"25. Faced with this situation, counsel for the plaintiff sought to urge that the venue of the arbitration proceedings referred to in the arbitration agreement was at New Delhi, and hence this Court has jurisdiction to treat the suit as a petition under Section 9 of the Arbitration & Conciliation Act, 1996. Counsel for the defendant, on the contrary, seeks to urge that the situs of arbitration is wholly irrelevant for the purpose of deciding whether the jurisdiction to entertain even a petition under Section 9 of the Act vests in this Court. The place of arbitration, he urges, will not confer jurisdiction as would be clear from a reading of Section 2(1)(e) of the Act.
26. Reliance was placed, in the above context, by counsel for the defendant on several judgments of this Court. Thus, the question as to whether situs of arbitration confers jurisdiction on the court was considered by a learned Single Judge of this Court in Sushil Ansal v. State. In the said case, the contract was entered into at Lucknow in respect of the works executed at Kanpur and disputes arose which were referred to decision by a sole arbitrator, who made his award. The petition was filed in this Court under Section 14 & 17 of the Arbitration Act, for filing of the award and making the same as rule of the court, claiming that this Court had jurisdiction on the ground that the arbitrator was appointed at Delhi and that he had made the award at Delhi. This Court after examining the provisions of Sections 41, 31 & 2(c) of the Arbitration Act, 1940, held:
Thus one has to ascertain what are the questions forming the subject matter of the reference to arbitration which resulted in the award. Suppose those question arise in a suit then find out which would be the competent Court to decide such suit. The Court competent to decide such questions in the suit would be the Court having jurisdiction to decide the present petition under the Arbitration Act for making the award a rule of the Court.
The Court held further that:
The matters, as alleged by the petitioner, relating to appointment of arbitrator at New Delhi, making of award by him at New Delhi and the Union of India having its headquarters at New Delhi are not the questions forming the subject matter of reference and Therefore do not confer jurisdiction upon this Court.
30. In Ge Countrywide Consumer Financial Services Ltd. v. Mr.Surjit Singh Bhatia, the same learned Single Judge of this Court (Hon'ble Mr.Justice Badar Durrez Ahmed) reiterated that this Court would have no territorial jurisdiction nor could territorial jurisdiction be conferred upon it merely because of the agreed venue of the arbitration and that it was vital to consider the competency of the court for deciding the subject matter of the dispute had a suit been filed instead of invocation of arbitration clause.
31. Having regard to the above settled position of law, I have no hesitation in holding that notwithstanding the fact that there is an arbitration agreement, providing for the conduct of arbitration proceedings in Delhi, this Court has no jurisdiction to entertain a petition under Section 9 of the Arbitration & Conciliation Act, 1996 or for that matter any other petition under the said Act, in view of the fact that this Court lacks inherent jurisdiction to decide the subject matter of the dispute."
17. The learned counsel submits that the original venue of arbitration agreed upon between the parties was New Delhi which place only has to be considered as place of venue. Merely because at the commencement of arbitration proceedings, for sake of convenience of both the parties, if the venue was shifted to other place, that would not be construed as place of arbitration for the purpose of deciding jurisdiction. It is submitted that if for the sake of convenience geographical location was changed to Mumbai, it would not change the situs of arbitration which would remain to be either Jambia or New Delhi."
47. Learned counsel for the applicant contended, that place of arbitration will not confer the jurisdiction in view of Section 2(i)(e) of the Act, therefore, objection by respondent, that this Court has no jurisdiction cannot be sustained.
48. This contention again is misconceived. The applicant is seeking enforcement of ownership right qua the lease property, which is not situated within the jurisdiction of this Court, therefore, the Court under Section 2 (i)(e) will be the Court having jurisdiction to deal with the question arising qua the leased property.
49. The applicant cannot seek prayer to injunct the respondent from dealing with their own property, i.e. Plant, machinery and other equipment mounted on the leased property without claiming possession of the property in dispute.
50. At the sake of repetition, it may be recorded, that the applicant has not even shown its intention to start arbitration proceedings, nor was able to disclose the dispute.
51. Learned counsel for the applicant also placed reliance on the judgment of the Hon'ble Delhi High Court in the case of Apparel Export Promotion Council vs. Shri Prabhati Patni, Proprietor Comfort Furnishers and another, I.A.No.4652 of 2001 and OMP No.34 of 2000, decided on 01.12.2005, wherein the Hon'ble Delhi High Court was pleased to lay down as under:
"20. Although the decisions in Sushil Ansal (supra) and Gulati Construction (supra) were under the Arbitration Act, 1940, the position would not be different under the Arbitration and Conciliation Act, 1996 because the definition of 'court' in Section 2(e) of the new Act is not materially different Page 2414 from the definition given in Section 2(c) of the old Act. Here too, 'court' would mean that the court having 'jurisdiction to decide the questions forming subject matter of the arbitration if the same had been the subject matter of a suit.' Reading this definition of 'court' in Section 2(e) of the 1996 Act into Section 34 thereof would obviously mean that expression 'recourse to a court against an arbitral award' appearing in the said Section 34 would have reference to a court having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit. Therefore, to determine the jurisdiction of a court for the purposes of Section 34, one has to look at the subject matter of the arbitration and not at the situs of arbitration because that is wholly irrelevant. The situs of arbitration or the fact that the award was made at a particular place, would not be relevant for conferring jurisdiction. It is only the subject matter of the arbitration construed in a manner as if the arbitration proceeding was a suit that would be determinative of a court having jurisdiction to entertain and hear a petition under Section 34 of the Arbitration and Conciliation Act, 1996. Mr Rawal had relied upon a decision of a Division Bench of this court in the case of Prahalad Rai Dalmia v. Union of India: and in particular on the following observations made therein in para 7 which read as under:-
"7. ... The arbitrator held his sittings at Bombay. He made his award there. So no part of the cause of action arose at Delhi. Only on the ground that the Union of India carries on business at Delhi, Dalmia brought the present suit in Delhi. We are in respectful agreement with the view taken in Bakhtawar Singh's case and hold, in agreement with the learned single judge, that Delhi courts have no jurisdiction to try the suit.
In this case, it is clear that no part of cause of action had arisen in Delhi and the suit had been filed in Delhi merely on the ground that the Union of India carries on business at Delhi. This is not the situation which arises in the present case and a mere passing reference that the arbitrator was holding sittings in Bombay and made the award there and, therefore, no cause of action arose in Delhi, cannot be interpreted in a manner to indicate that the situs of arbitral proceedings would by itself confer jurisdiction. That is not the purport of the said decision in Prahalad Rai Dalmia (supra) and it was certainly not discussed therein. The decision in the case of Food Corporation of India (supra) is also of no help to the petitioner which also holds that under Section 2(c) of the Arbitration Act, 1940, 'court' means a civil court having jurisdiction to decide the questions forming the subject matter of reference if the same had been the subject matter of a suit. Therefore, the contention of Mr Rawal that the situs of arbitration and the fact that the award was made in Delhi would confer jurisdiction on this court to entertain this petition under Section 34 of the said Act is not tenable."
52. This judgment again is of no help to the applicant, as it is not disputed, that in the present case, the immovable property, qua which the dispute is raised is situated in the State of Andhra Pradesh, and any dispute with regard to immovable property can be instituted in the Court within whose jurisdiction the property is situate.
53. Reliance was also placed on the judgment of the Hon'ble Delhi High Court in the case of GE Countrywide Consumer Financial Services Limited vs. Surjit Singh Bhatia and Jaspal Kaur, Arb.P.No.193 of 2006, decided on 23.03.2006, wherein it was held as under:
"6. The question as to whether situs of arbitration confers jurisdiction on the court was considered by a learned Single Judge of this Court on the case of Sushil Ansal v. Union of India AIR 1980 Delhi 43. In Sushil Ansal it was clearly held that the situs of arbitration did not confer jurisdiction in the courts and that while considering the question of territorial jurisdiction, it is vital to consider the competency of the court for deciding the subject-matter of the dispute had a suit been filed instead of invocation of arbitration. In Sushil Ansal the court, after examining the provisions of Sections 41, 31 and 2(c) of the Arbitration Act, 1940 held that:
Thus one has to ascertain what are the questions forming the subject-matter of the reference to arbitration which resulted in the award. Suppose those questions arise in a suit then find out which would be the competent court to decide such suit. The court competent to decide such questions in the suit would be the court having jurisdiction to decide the present petition under the Arbitration Act for making the award a rule of the court.
This decision makes it clear that one has to first ascertain at the subject-matter which is sought to be referred to arbitration. Then, taking that subject-matter, it has to be presumed that there is no arbitration clause. And, upon such presumption, it is then to be seen as to where a suit could be filed with regard to the subject-matter. If the suit could be filed at a place where the parties had agreed to hold the arbitration proceedings then, obviously, the courts at such place would have jurisdiction. But, if the suit cannot be filed at a place where the parties had agreed to hold the arbitration proceedings then the courts at such a place would not have jurisdiction. If this was not the case, then any application under the Act would be maintainable at a place where the parties had agreed to hold the arbitration proceedings, even though no part of the cause of action arose at that place.
7. The decision in the case of Sushil Ansal was followed by another learned Single Judge (Justice B.N. Kirpal as he then was) of this Court in the case of Gulati Construction Company, Jhansi v. Betwa River Board and Anr. AIR 1984 Delhi 299, wherein he observed as under:
... Merely because the arbitrator chooses to hold the proceedings in a place, where admittedly no suit could be instituted, and chooses to make and publish an award at that place it would not give the courts of that place territorial jurisdiction to decide the matters arising under the Arbitration Act.
I also had occasion to deal with a similar contention raised in the case of Apparel Export Promotion Council v. Prabhati Patni, Proprietor Comfort Furnishers and Anr. In Apparel Export Promotion Council one of the contentions raised by the parties was that the appropriate court would be the court within whose territorial limits, the arbitration proceedings were conducted and the award was made. Repelling these arguments and following the earlier decisions in the cases of Sushil Ansal and Gulati Construction Company it was concluded in Apparel Export Promotion Council as under (para 20 of Arb. LR):
Although the decisions in Sushil Ansal, AIR 1980 Delhi 43 and Gulati Construction, , were under the Arbitration Act, 1940, the position would not be different under the Arbitration and Conciliation Act, 1996 because the definition of "court" in Section 2(1)(e) of the new Act is not materially different from the definition given in Section 2(c) of the old Act. Here too, "court" would mean that the court having "jurisdiction to decide the questions forming subject-matter of the arbitration if the same had been the subject-matter of a suit". Reading this definition of "court" in Section 2(1)(e) of the 1996 Act into Section 34 thereof would obviously mean that expression "recourse to a court against an arbitral award" appearing in the said Section 34 would have reference to a court having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit. Therefore, to determine the jurisdiction of a court for the purposes of Section 34, one has to look at the subject-matter of the arbitration and not at the situs of arbitration because that is wholly irrelevant. The situs of arbitration or the fact that the award was made at a particular place, would not be relevant for conferring jurisdiction. It is only the subject-matter of the arbitration construed in a manner as if the arbitration proceeding was a suit that would be determinative of a court having jurisdiction to entertain and hear a petition under Section 34 of the Arbitration and Conciliation Act, 1996."
54. This judgment again cannot advance the case of applicant and to file case against immovable property in the Court, having no jurisdiction. This Court, for want of jurisdiction, cannot grant injunction with regard to the property outside jurisdiction of this Court.
55. Learned counsel for the respondent on the other hand placed reliance on the judgment of this Court in G.G.Photo Limited vs. Aftab Pictures P.Ltd., 2006 (3) CTC 554, laying down as under:
"7. On a perusal of the affidavit and the documents filed along with this O.A., I find that the film assignment agreement for the assignment of the film 'Chand Sa Roshan Chehra' was executed in Mumbai on 19.2.2005 between the applicant and the 1st respondent. The financial arrangement of Rs.75 lakhs was also made by the applicant by way of cheque drawn on I.O.B., Isckon Branch, Juhu, Mumbai-400 049. The applicant company and the 1st respondent company are situated in Mumbai. So is the case of the 2nd respondent. The subject-matter of the dispute also, namely, the copyrights of the Hindi film has to be produced in Mumbai. In such circumstance, I do not find any cause of action or part of the cause of action arises within the jurisdiction of this Court.
8. Clause 12 of the financial agreement dated 19.2.2005 deals with reference of any dispute to arbitration and the venue of arbitration is in Mumbai. Further, as per Section 2(1)(e) of the Act 26 of 1996, Court having jurisdiction is the Court having jurisdiction to determine the question forming the subject matter of the arbitration if the same had been the subject-matter of a suit. The jurisdiction of the Court is made dependent solely on the subject-matter of the dispute. In this case, the subject-matter of the dispute has arisen in Mumabi. Hence, I am of the opinion that this O.A. filed under Section 9 of the Act before this Court cannot be maintained for want of jurisdiction. When the provisions of the Act is very clear in regard to jurisdiction, any application filed under Section 9 of the Act is to be decided only with reference to those provisions of the Act and not with reference to the provisions of the other Act like Copyright Act as contended by the learned counsel for the applicant. Even otherwise, the relief sought for cannot be granted for the simple reason that the finance agreement dated 19.2.2005 entered into between the applicant and the first respondent is for the production of Hindi film "Chand Sa Roshan Chehra". But the prohibitory order has been sought for to prohibit the respondents from releasing the print of the Hindi Cinematograph film "Sun Zarra", for which there is no agreement between the applicant and the 1st respondent. If the prayer is granted, not only this Court would go outside the subject-matter of the agreement entered into between third parties in suit who are not before this Court."
56. Reliance was also placed on the judgment of this Court in the case of Kirloskar Construction and Engineer Ltd., vs. Fast Track Associates, 2009 (5) CTC 97, wherein it was held as under:
"Held: It is true that the applicant has got its branch at Haryana, Panipet. In the circumstances, it is clear that the place of arbitration has been agreed by the parties to be at Chennai. However, the question to be decided in this case is, whether this Court has jurisdiction to entertain the application under section 9 of the Arbitration and Conciliation Act,1996 (in short, "the Act"). It is one thing to say that the parties have decided to have arbitration at Chennai, but that itself cannot confer jurisdiction on this Court under section 9 of the Act, unless the dispute involved in the contract which is the subject matter of arbitration can be decided by way of a suit within the jurisdiction of this Court in the absence of arbitration clause. It is, in this regard, relevant to refer to the definition of 'Court' under section 2(1)(e) of the Act, which reads as follows:
"2. Definitions:-
(1) (a) to (d) xxxx
(e) "Court" means 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."
A reading of the said definition makes it clear that the "Court" includes High Court having ordinary original civil jurisdiction, but the said Court must have the jurisdiction to decide the questions under the arbitration agreement if the same is made as a subject matter of the suit in the absence of such arbitration clause. Section 8 of the Act which empowers the judicial authority to refer the parties to arbitration for resolution of dispute, in case the agreement contains a clause for arbitration, reads as follows:
" 8. Power to refer parties to arbitration where there is an arbitration agreement.-
(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.
(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.
(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made."
By construing the said provisions, it is clear that even if an arbitration award is made, the Court in which such an award can be challenged under section 34 of the Act will be the competent Court having jurisdiction where the question under the arbitration agreement can be decided.
Again, an application under section 9 of the Act by way of interim measure can be filed before that Court which is having jurisdiction to decide the subject matter involved in the arbitration agreement, in a suit in the absence of arbitration clause. It is also relevant to note that while sections 9 and 34 use the term, 'Court', section 8 refers to the words, 'judicial authority'. That was also the view of the Hon'ble Supreme Court in P.Anand Gajapathi Raju vs. P.V.G.Raju (AIR 2000 SC 1886), wherein it was held that the Court to which a party shall have recourse to challenge the award would be the court within the meaning of section 2(e) of the Act. In the present case, even if the arbitration award is made in Chennai as per the agreement between the parties, inasmuch as the subject matter of arbitration agreement relating to laying of road in Haryana and Uttar Pradesh, such arbitration award can be challenged only in the courts at Haryana and Uttar Pradesh, where the subject matter of arbitration agreement would have been otherwise decided by a competent civil Court in the absence of arbitration clause. A reference to the Work Order shows that the contract on behalf of the applicant has been signed by its official at Panipet where the respondent has also signed and therefore, it cannot be presumed that the contract has been entered at Chennai.
It is not in dispute that the work carried on under the Work Order was not done within the jurisdiction of this Court, nor the respondent is residing or carrying on its business within the jurisdiction of this Court so as to confer the status of 'Court' on this Court for the purpose of Arbitration and Conciliation Act, 1996. In such circumstances, simply because the parties have agreed to have arbitration at Chennai, which is only for the purpose of completing the arbitration proceedings after dispute has arisen, it does not mean that this Court will have jurisdiction for entertaining the application under section 9 of the Arbitration and Conciliation Act,1996.
On the factual matrix of the case, it is clear that in the absence of arbitration clause in the Work Order, the applicant could file suit only in the place of the respondent or in the place where cause of action has arisen that is, either in Panipet, Haryana or in Uttar Pradesh. When such is the touchstone for a decision about the court of jurisdiction under the Arbitration and Conciliation Act, there is no difficulty to conclude that on the facts of the present case, this Court cannot be termed as a court to entertain the application under section 9 of the Act. Even though the applicability of the Code of Civil Procedure during the arbitration proceedings has been consciously taken away by the law makers when compared to Arbitration Act, 1940, where there was a specific provision for application of Civil Procedure Code in arbitration proceedings and in the present Act, the same has been dispensed with the same is left to be decided by consent of parties before the Arbitrator as seen under sections 23 and 24 of the Arbitration and Conciliation Act, 1996."
57. On consideration, I find that this application is totally misconceived and is not maintainable. In view of the settled law, this Court does not have jurisdiction to entertain and try this application, not because sites of arbitration proceedings are at Delhi High Court, but for the reason, that the lease deed in dispute is of immovable property, which is situated outside the jurisdiction of this Court.
58. The mere fact that the application is not seeking possession cannot be the ground to give jurisdiction to this Court to entertain and try this application, as this Court can act as Principal Court with regard to the property situated within its territorial jurisdiction and not with regard to the properties, which are not within the jurisdiction of Madras High Court.
59. The applicant also has not made out any prima facie case, as admittedly, the equipment and the plant and machineries over the leased property are under the ownership of respondent, qua which the applicant cannot seek any injunction. The applicant has only right as lessor of immovable property, and that right cannot be agitated in competent Court.
60. This application is not also maintainable, as the prerequisite for invoking the jurisdiction under Section 9, that there should be intention to invoke arbitration agreement and get the dispute settled by arbitration, is not pleaded, as the applicant has not even stated in the affidavit, that it has any intention to initiate arbitration proceedings. The pleadings also show, that the dispute with regard to equipment is already pending before the Arbitral Tribunal at Delhi High Court. This application therefore can be safely said to be nothing but misuse of the process of Court.
VINOD K. SHARMA,J., ar
61. Consequently, this application is ordered to be dismissed with costs, which are assessed at Rs.25,000/- (Rupees Twenty Five Thousand only).
19.04.2013 Index: Yes Internet: Yes ar Pre-Delivery Order in
O.A.No.26 of 2013