Bombay High Court
M/S Repute Constructions Pvt. Ltd., New ... vs Oriental Manufactures, Oriental ... on 21 July, 2022
Author: Manish Pitale
Bench: Manish Pitale
2-MCA1350.18.odt
1/10
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
MISC. CIVIL APPLN. (ARBN) NO. 1350 OF 2018
M/s. Repute Construction Pvt. Ltd.
-Vs.-
Oriental Manufactures, Division of Oriental
Enterprises Pvt. Ltd. & anr.
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Office notes, Office Memoranda of
Coram, appearances, Court's orders Court's or Judge's Orders.
or directions and Registrar's orders.
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Ms Sejal Lakhani, counsel for the applicant.
Ms S.P.Dhotre, counsel for the respondents.
CORAM : MANISH PITALE, J.
DATE : 21.07.2022 By this application filed under section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act of 1996"), the applicant has approached this Court seeking appointment of sole arbitrator for resolving the disputes with the respondents.
2. The respondent Nos.1 and 2 have been engaged by the Steel Authority of India Limited for carrying out certain works at Chandrapur, which includes design, supply, construction and other such works for a reinforced cement concrete overhead water tank and other allied works and utilities. The respondents engaged the applicant as a sub-contractor for execution of the works. The work order was issued at Chandrapur. Annexure-II to the work order consisting of the special terms and conditions incorporated an arbitration clause.
KHUNTE 2-MCA1350.18.odt 2/10 As disputes arose between the parties, the applicant sought to invoke arbitration clause for resolution of the disputes and when the respondents were allegedly not coming forward to resolve the disputes, the applicant was constrained to move the present application before this Court.
3. Upon notice being issued, the respondents raised a preliminary objection regarding jurisdiction of this Court to entertain such an application under section 11 of the Act of 1996, in view of the specific stipulation in the arbitration clause. It was contended that in terms of the special stipulation, only the Court at Kolkata would have jurisdiction and if at all such application for appointment of sole arbitrator was to be moved, it ought to be moved before the Competent Court at Kolkata and not before this Court.
4. This Court heard the learned counsel for the rival parties on the preliminary issue, before entering into the question as to whether a sole arbitrator could be appointed in terms of the prayer made in the present application.
5. Ms Sejal Lakhani, learned counsel appearing for the applicant, submitted that there was no substance in the preliminary objection for the reason that the arbitration clause read with various judgments of the Hon'ble Supreme Court would indicate that merely because there is a stipulation regarding Kolkata having jurisdiction, would not oust the jurisdiction of this KHUNTE 2-MCA1350.18.odt 3/10 Court, particularly because the work order was issued at Chandrapur and the work was actually being executed at Chandrapur, which is admittedly within the jurisdiction of this Court. Reliance was placed on a judgment of the Hon'ble Supreme Court in the case of BGS SGS Soma JV v. NHPC Limited, reported in (2020) 4 SCC 234, Enercon (India) Limited and others v. Enercon GMBH and another, reported in (2014) 5 SCC 1 and Mankastu Impex (P) Ltd. v. Airvisual Ltd., reported in (2020) 5 SCC 399.
6. On the other hand, Ms S. Dhotre, learned counsel appearing for the respondents relied upon judgment of the Hon'ble Supreme Court in the case of Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd., reported in (2013) 9 SCC 32, to contend that in almost similar circumstances, the Supreme Court held that only the Court specified in the arbitration clause would have jurisdiction, notwithstanding the fact that the other Courts may concurrently have jurisdiction. Reliance was also placed on the judgment of the Hon'ble Supreme Court in the case of Brahmani River Pellets Ltd. v. Kamachi Industries Limited, reported in AIR 2019 (SC) 3658 to support the said contention. It was specifically submitted that the preliminary objection be upheld and the application be dismissed.
7. In order to appreciate the contentions raised on behalf of the rival parties, it would be appropriate to reproduce the arbitration clause in the present case.
KHUNTE 2-MCA1350.18.odt 4/10 "10. In the event of any Dispute arising in connection with this Work/Contract/W.O., the matter will be settled by Arbitration. It will be a single Arbitrator, as nominated with mutual consent and will be in the jurisdiction of Kolkata."
8. A bare perusal of the arbitration clause would show that there is indeed a stipulation that in case disputes arise, which necessitates arbitration proceeding, such proceeding will be before a sole arbitrator nominated with mutual consent and will be in the jurisdiction of Kolkata.
9. It has been strenuously submitted on behalf of the applicant that since the work order was issued at Chandrapur and the works were actually being carried out at Chandarpur, which is within the jurisdiction of this Court, notwithstanding the stipulation in the above quoted clause, this Court would also have jurisdiction and therefore, applying section 42 of the Act of 1996, in such a situation, the Court where an application under the said Act is first moved would have jurisdiction. On this basis, it is contended that this Court certainly has jurisdiction and the applicant having moved this Court, there ought not to be any impediment in entertaining the present application.
10. This Court has perused the law laid down by the Hon'ble Supreme Court in the case of Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. (supra). In the said case, in a similar situation, the Supreme Court found that part of the cause of action did arise at Kolkata while the application under section 11 of the Act of 1996 was KHUNTE 2-MCA1350.18.odt 5/10 moved by one of the parties before the Rajasthan High Court.
11. The Supreme Court observed that although the Rajasthan High Court may also have jurisdiction, considering the peculiar stipulation in the arbitration clause, the parties having chosen the Courts at Kolkata to have jurisdiction, an application under section 11 of the Act of 1996, could be entertained only at Kolkata. The relevant portion of the said judgment in the case of Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. (supra) reads as follows.
"31.In the instant case, the appellant does not dispute that part of cause of action has arisen in Kolkata. What appellant says is that part of cause of action has also arisen in Jaipur and, therefore, the Chief Justice of the Rajasthan High Court or the designate Judge has jurisdiction to consider the application made by the appellant for the appointment of an arbitrator under Section
11. Having regard to Section 11(12)(b) and Section 2(e) of the 1996 Act read with Section 20(c) of the Code, there remains no doubt that the Chief Justice or the designate Judge of the Rajasthan High Court has jurisdiction in the matter. The question is, whether parties by virtue of clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur or, in other words, whether in view of Clause 18 of the agreement, the jurisdiction of the Chief Justice of the Rajasthan High Court has been excluded?
32. For answer to the above question, we have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst providing for jurisdiction clause in the agreement the words like "alone", "only", "exclusive" or "exclusive jurisdiction" have not been used but this, in our view, is not decisive and does not make any material difference. The intention of the parties- by having Clause 18 in the agreement-is clear and unambiguous that the courts at Kolkata shall have jurisdiction which means that the courts at Kolkata alone shall have jurisdiction. It is so because for construction of jurisdiction clause, like clause 18 in the agreement, the KHUNTE 2-MCA1350.18.odt 6/10 maxim expressio unius est exclusio alterius comes into play as there is nothing to indicate to the contrary. This legal maxim means that expression of one is the exclusion of another. By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts. Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner."
12. Similarly, in the case of Brahmani River Pellets Ltd. v. Kamachi Industries Limited (supra) the Hon'ble Supreme Court after referring to the aforesaid judgment in the case of Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. (supra) held as follows.
"16. Where the contract specifies the jurisdiction of the court at a particular place, only such court will have the jurisdiction to deal with the matter and parties intended to exclude all other courts. In the present case, the parties have agreed that the "venue" of arbitration shall be at Bhubaneswar. Considering the agreement of the parties having Bhubaneswar as the venue of arbitration, the intention of the parties is to exclude all other courts. As held in Swastik, non-use of words like "exclusive jurisdiction", "only", "exclusive", "alone" is not decisive and does not make any material difference.
17. When the parties have agreed to have the "venue" of arbitration at Bhubaneswar, the Madras High Court erred in assuming the jurisdiction under Section 11(6) of the Act. Since only Orissa High Court will have the jurisdiction to entertain the petition filed under Section 11(6) of the Act, the impugned order is liable to be set aside."
13. This Court needs to consider the judgment on which reliance is placed on behalf of the applicant. In the case of BGS SGS Soma JV v. NHPC Ltd. (supra), the Supreme Court, amongst other issues, was considering a question of seat of arbitration as opposed to venue and KHUNTE 2-MCA1350.18.odt 7/10 in that context referred to section 42 of the Act of 1996. In the process, the Supreme Court referred to judgments of certain High Courts, including judgment of Delhi High Court in the case of Antrix Corpn. Ltd. v. Devas Multimedia Pvt. Ltd., reported in 2018 SCC OnLine Del 9338. Certain paragraphs of the said judgment were quoted in paragraph 56 by the Supreme Court. The Delhi High Court referred to the aforesaid judgment of the Supreme Court in the case of Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. (supra) and commented upon the manner in which section 42 of the Act of 1996, could be interpreted to hold as to how a situation concerning jurisdiction of a particular Court could be handled. The learned counsel for the applicant sought to rely upon certain observations made in the aforesaid judgment in the case of Antrix Corpn. Ltd. v. Devas Multimedia Pvt. Ltd. (supra) by the Delhi High Court, quoted in paragraph 56 of the judgment of the Supreme Court in the case of BGS SGS Soma JV v. NHPC Ltd. (supra), but paragraphs 57 to 59 of the said judgment clearly show that the Supreme Court did not agree with the view of the Delhi High Court in this context.
14. In fact, it was specifically held in paragraph 59 that the judgment in Antrix Corpn. Ltd. v. Devas Multimedia Pvt. Ltd. (supra) of the Delhi High Court was incorrect and that the view did not commend to the Supreme Court. Paragraph 59 of the judgment in the case of BGS SGS Soma JV v. NHPC Ltd. (supra) reads as follows.
KHUNTE 2-MCA1350.18.odt 8/10 "59. Equally incorrect is the finding in Antrix Corporation Ltd. (supra) that Section 42 of the Arbitration Act, 1996 would be rendered ineffective and useless. Section 42 is meant to avoid conflicts in jurisdiction of courts by placing the supervisory jurisdiction over all arbitral proceedings in connection with the arbitration in one court exclusively. This is why the section begins with a non obstante clause, and then goes on to state "...where with respect to an arbitration agreement any application under this Part has been made in a court..." It is obvious that the application made under this part to a court must be a court which has jurisdiction to decide such application. The subsequent holdings of this court, that where a seat is designated in an agreement, the courts of the seat alone have jurisdiction, would require that all applications under Part I be made only in the court where the seat is located, and that court alone then has jurisdiction over the arbitral proceedings and all subsequent applications arising out of the arbitral agreement. So read, Section 42 is not rendered ineffective or useless. Also, where it is found on the facts of a particular case that either no "seat" is designated by agreement, or the so-called "seat" is only a convenient "venue", then there may be several courts where a part of the cause of action arises that may have jurisdiction. Again, an application under Section 9 of the Arbitration Act, 1996 may be preferred before a court in which part of the cause of action arises in a case where parties have not agreed on the "seat" of arbitration, and before such "seat" may have been determined, on the facts of a particular case, by the Arbitral Tribunal under Section 20(2) of the Arbitration Act, 1996. In both these situations, the earliest application having been made to a Court in which a part of the cause of action arises would then be the exclusive court under Section 42, which would have control over the arbitral proceedings. For all these reasons, the law stated by the Bombay and Delhi High Courts in this regard is incorrect and is overruled."
15. Insofar as the judgment of the Supreme Court in the case of Enercon (India) Ltd. v. Enercon GMBH (supra) is concerned, the learned counsel placed reliance on specific paragraph thereof to highlight that in such cases the Court ought to adopt a pragmatic and common sense approach instead of a pedantic and technical approach and also that the arbitration KHUNTE 2-MCA1350.18.odt 9/10 proceeding ought to take place at a geographically convenient place, which does not entail unnecessary economic and financial hardship to either party. The judgment in the case of Mankastu Impex (P) Ltd. v. Airvisual Ltd. (supra) considers the question of seat of arbitration and venue of arbitration and in that context certain observation has been made with regard to the place where the arbitration may be undertaken in terms of the agreement.
16. This Court is of the opinion that the observations made by the Supreme Court in the cases of Enercon (India) Ltd. V. Enercong GMBH and Mankastu Impex (P) Ltd. v. Airvisual Ltd. (supra) cannot be of much assistance to the applicant, firstly because the said judgments did not deal with such a specific arbitration clause and the said judgments were more concerned with the question as to what could be said to be a seat of arbitration as opposed to a venue of arbitration. It is in that context, the Supreme Court has recommended adopting a pragmatic and common sense approach. The judgments of the Hon'ble Supreme Court in the cases of Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. and Brahmani River Pellets Ltd. v. Kamachi Industries Limited (supra) read with BGS SGS Soma JV v. NHPC Ltd. (supra) clearly indicate that when the arbitration clause itself carries a stipulation of the nature as found in the present case, the application for appointment of an arbitrator can be entertained only by the Courts pertaining to the jurisdiction indicated in the arbitration KHUNTE 2-MCA1350.18.odt 10/10 clause. Section 42 of the Act of 1996 has to be read and interpreted in such a manner that it furthers the intention of the parties as manifested in the arbitration clause.
17. In view of the above, this Court is of the opinion that the preliminary objection regarding jurisdiction raised on behalf of the respondents deserves to be upheld. Accordingly, it is held that this Court does not have jurisdiction to entertain the present application. Accordingly, it is dismissed. No order as to costs.
18. Nonetheless, the applicant would be at liberty to move such an application before the Competent Court of jurisdiction, which obviously will be decided in accordance with law.
JUDGE Signed By:GHANSHYAM S KHUNTE Signing Date:26.07.2022 10:36 KHUNTE