Andhra HC (Pre-Telangana)
Nila Construction Company vs Sanghi Industries Ltd., Cement ... on 21 October, 2005
Equivalent citations: 2006(1)ALD486, 2005(6)ALT806, 2006(2)ARBLR490(AP)
Author: Elipe Dharma Rao
Bench: Elipe Dharma Rao
ORDER Elipe Dharma Rao, J.
1. Aggrieved of the order dated 21-1-2004 in registering the O.P.No. 26 of 2004 by the learned District Judge, Ranga Reddy, at L.B. Nagar, filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for brevity the Act), praying to set aside the Arbitration Award dated 5-8-2002, the respondent in the Award, viz., M/s. Neela Constructions Company, Gujarat State, preferred this Civil Revision Petition.
2. Few facts that are necessary for the disposal of this revision are that the petitioner herein submitted its tenders for the civil works of Clinkerisation Plant Building and Fuel Plant of grinding unit, which was accepted by the respondent and an agreement was entered into on 1-6-1995. As per the terms, the petitioner was required to complete the structure pertaining to Clinkerisation plant within 12 months and three months grace period was also granted and to conclude the grinding plants with nine months. The respondent herein filed the O.P. averring that the petitioner herein could not complete the work within the stipulated time, as a result of which the respondent herein sustained loss and damages. The petitioner herein has invoked arbitration clause and filed claim statement claiming an amount of Rs. 4,99,99,870/- and for interest. The Arbitral Tribunal passed an award dated 5-8-2002 holding that the respondent is liable to pay a sum of Rs. 83,10,822/- and also awarded interest at 15% p.a. on Rs. 53,94,327/- from the date of the award till payment. The counter claim preferred by the respondent herein was rejected.
3. Aggrieved of the said award, the respondent herein filed the above O.P., seeking to set aside the award. It is submitted that though the award was passed on 5-8-2002 it was served on 7-8-2002 and the O.P. filed against the said award was returned several times by the office of the District Judge, Ranga Reddy, with several objections and after complying the same, it was ultimately registered as O.P. No. 26 of 2004 on 21-1-2004. Aggrieved of the said registration of the O.P., the present revision petition is filed, inter alia contending that in terms of the contract, the jurisdiction for all the proceedings in arbitration is agreed as at Hyderabad and hence, no other Court has jurisdiction to entertain of OP. and therefore, exclusion of jurisdiction, is not permissible. It is further contended that when the award was passed on 5-8-2002, the O.P. filed under Section 34 of the Act is beyond the limitation period. It is further contended that the plea that the award was received only on 7-8-2002 is not substantiated and is deliberately made to bring the same within the period of limitation, at any rate, after amendment to the Code of Civil of Procedure, delay in representation cannot be condoned beyond thirty days.
4. The counter filed by the respondent herein pleads that there is no specific order to be impugned in this revision. It is averred that the plea of jurisdiction and limitation being mixed questions of law and fact, cannot be decided except by leading evidence. It is further submitted that the petitioner herein filed E.P. for execution of the award before the City Civil Court, Hyderabad in February, 2004 and got it transferred to Civil Judge (S.D.), Bhuj, Gujarat State, having the knowledge of filing O.P. by the respondent herein, and warrant of attachment was issued, under the guise of which the petitioner threatened to attach the control room unless cheques are issued for payment of entire money. On contest by the respondent herein on merits and on complaint to the local police, the cheques were ordered to be returned, which were however not returned by the petitioner and facing an application before the Bhuj Court for wilful violation of orders of the Court. It is further contended that the O.P. filed is well within time, as delay in resubmission on several occasions was condoned under Section 148 and 149 of the Code and ultimately the O.P. was rightly registered on 21-1-2004, in accordance with law. It is further submitted that since the office of the respondent is situated at Sanghi Nagar, Ranga Reddy District, the District Court at Ranga Reddy has jurisdiction and, therefore, sought for dismissal of the Revision Petition.
5. The issue involved in this revision petition is simple. It is the contention of the learned Counsel for the petitioner that O.P. No. 26 of 2004 is not maintainable on the file of the Principal District Judge, Rangareddy, in view of the stand taken by the respondent herein before the High Court of Gujarat in Arbitration Petition No. 76 of 1998, in an application filed to refer the matter under Section 11 of the Arbitration Act to the Arbitrator, wherein it was contended that it has been agreed by the parties under the Special and Modified Terms and Conditions, that the proceedings under the Arbitration Acts shall be instituted only in the Courts at Hyderabad. In resorting to raise such an objection before High Court of Gujarath, the respondent has taken aid of Arbitration Clause i.e. Special and Modified terms and conditions dated 17-5-1995, in the contract, which reads:
"...Subject to clause relating to Arbitration in the General Conditions of contract, all disputes arising out of or in any way connected with this agreement, shall be deemed to have arisen in Hyderabad and only the Courts of Hyderabad shall have the jurisdiction to determine the same.
6. Since Clause 66 of the conditions of the contract also relates to jurisdiction, it is apt to reproduce the same, which reads:
"...Notwithstanding any other Court or Courts, having jurisdiction to decide the questions(s), forming the subject matter of the reference if the same had been the subject matter of suit, any and all actions and proceedings arising out or relative to the contract (including any arbitration in terms thereof) shall be only in the Court of competent jurisdiction in this behalf as mentioned in Appendix to Tender and only the said Courts (s) shall have jurisdiction to entertain and try any such action(s) and/or proceedings to the exclusion of all other Courts...."
Accepting the above contention/objection, the learned Chief Justice of Gujarat High Court by order dated 23-6-2000 passed the following order:
"...On the question of my jurisdiction for making reference, I have heard learned Counsel appearing for the applicant and he is unable to dispute the fact that under the agreement, the parties have agreed for the arbitration forum or the Courts only at Hyderabad.
Under the aforesaid circumstances, the learned Counsel for the applicant is allowed to withdraw this application with permission, to present the same in the High Court of Andhra Pradesh at Hyderabad...."
7. Accordingly, the petition was withdrawn and approached this Court by filing Arbitration Application No. 42 of 2000 and the Hon'ble Chief Justice of A.P. High Court, Hyderabad, by order dated 20-1-2001, appointed Hon'ble Mr. Justice K. Jayachandra Reddy, Retired Judge of the Supreme Court, as an Arbitrator, after hearing both the parties.
8. It is further contended that when the award is not passed in accordance with law, the petitioner is entitled to assail the correctness of the award, under Section 34 of the Act.
9. On the other hand, the learned Counsel for the respondent herein contends that having regard to the convenience of both the parties, when Hyderabad is chosen as place of arbitration and the registered office of the respondent (sic. petitioner) is situated at Gujarat and when there is no cause of action arose within the jurisdiction of Hyderabad and part of. the cause of action arose in Rangareddy District, therefore, the respondent is perfectly justified in approaching the Principal District Judge, Rangareddy, in terms of Section 2(e) of the Act, taking the aid of the grounds enumerated under Section 34 of the Act to set aside the award dated 5-8-2002. It is further contended that when the petitioner has received the summons in the above O.P., it ought to have appeared before the Principal District Judge, Rangareddy and should have raised all such contentions and objections, that are available to it, by filing counter instead of invoking the supervisory jurisdiction of this Court under Article 227 of the Constitution of India.
10. Concisely, this is the major issue that, this Court, is called upon to decide. For a better and proper appreciation of the Us, it is apposite to have a glance at See 2(e) of the Act which defines Court as:
".. .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 Courts, or any Court of Small Causes...."
11. In support of the contention, learned Counsel for the petitioner (sic. respondent) has placed reliance on a decision of the Apex Court in A. Venkatasubbaiah Naidu v. Chellappan and Ors., which deals with regard to the maintainability of the Revision under Article 227 of the Constitution of India. The facts there are that the subject matter of the litigation was a property bearing Door No. 177 to 182 on the Big Street at Triplicana in Madras, of which the plaintiff claimed to be a lessee under one S. Alagu, arrayed as 6th defendant in the suit, and on that strength he claimed to be in possession of the property and alleged that the defendants 1 to 5 had been threatening him of dispossession. The plaintiff along with the suit for permanent injunction moved an application under Order 39 Rule 1 and 2 of the Code of Civil Procedure, which was accordingly ordered restraining the respondents 1 to 5 therein. Thereafter, the first respondent on behalf of himself and respondents 2 to 5 filed a revision petition invoking Article 227 of the Constitution before the High Court of Madras alleging that they purchased the property from the owners thereof as per different sale documents executed on 15-3-1996 and they were in possession and enjoyment of the property. A learned Single Judge of the Madras High Court has disposed of the revision observing that the trial Court ought not to have granted an order of injunction at the first stage itself which could operate beyond thirty days as the Court had then no occasion to know of what the affected party has to say about it and, therefore, set aside the order. On appeal to the Apex Court, in such context of the matter, the Apex Court held as under:
"...Now what remains is the question whether the High Court should have entertained the petition under Article 227 of the Constitution when the party had two other alternative remedies. Though no hurdle can be put against the exercise of the constitutional powers of the High Court it is a well recognized principle which gained judicial recognition that the High Court should direct the party to avail himself of such remedies one or the other before he resorts to a constitutional remedy. Learned single judge need not have entertained the revision petition at all and the party affected by the interim ex-parte order should have been directed to resort to one of the other remedies. Be that as it may, now it is idle to embark on that aspect as the High Court had chosen to entertain the revision petition.
In the light of the direction issued by the High Court that the trial Court should pass final orders on the interlocutory application filed by the plaintiff on merits and in accordance with law, we may further add that till such orders are passed by the trial Court, status quo as it prevailed immediately preceding the institution of the suit would be maintained by the parties...."
The Apex Court further considered as to what would happen if a Court which passed the order granting interim exparte injunction did not record reasons thereof or did not require the applicant to perform the duties enumerated in Clauses (a) and (b) of Rule 3 of Order 39 and ultimately held that a disobedient beneficiary of an Order cannot be heard to complain against any disobedience alleged against another party. Having regard to the effect of non-compliance of Rule 3 of Order 39 and also having regard to the alternative remedy and availability of statutory remedy for getting it quashed, the Apex Court held as stated supra, but did not find fault with the party in approaching the High Court under Article 227. Therefore, the contention of the learned Counsel for the respondent that the petitioner ought not to have approached this Court under Article 227 of the Constitution and should have approached the Principal Dist. Judge, Rangareddy and raised all such contentions and objections, as are available to him in law, cannot be sustained.
12. I shall not dwell upon the contention of the learned Counsel for the respondent that the parties cannot, by agreement, confer jurisdiction on any Court not possessed by it under Section 20 of the Code and the decision of the Apex Court in Hakam Singh v. Gammon (India) Ltd., relied on by him.
13. As stated earlier, the petitioner and the respondent, under the Special and Modified Terms and Conditions of the agreement, and having regard to the convenience to both of them, have incorporated a clause that all the disputes arising out of or in any way concerned with the agreement, shall be deemed to have been arisen in Hyderabad and only the Courts at Hyderabad shall have the jurisdiction to determine the same.
14. It need not be emphasized that the Code of Civil Procedure in its entirety applies to proceedings under the Arbitration Act. The jurisdiction of the Courts under the Arbitration Act to entertain a proceeding for filing an award is accordingly governed by the provisions of the Code of Civil Procedure. In Hakam Singh's case (2 supra), by Clause 13 of the agreement it was expressly stipulated between the parties that the contract shall be deemed to have been entered into by the parties concerned in the City of Bombay. In any event the respondents have their principal office in Bombay and they were liable in respect of a cause of action arising under the terms of the tender to be sued in the Courts at Bombay. It is not open to the parties by agreement to confer by their agreement jurisdiction on a Court which it does not possess under the Code. But where two Courts or more have under the Code of Civil Procedure jurisdiction to try a suit or proceeding an agreement between the parties that the dispute between them shall be tried in one of such Courts is not contrary to public policy. Such an agreement does not contravene Section 28 of the Contract Act. Therefore, it is the contention of the learned Counsel for the respondent that when a part of cause of action has arisen at Rangareddy, there is nothing wrong in the respondent approaching Principal Dist. Judge, Rangareddy. This contention of the learned Counsel for the respondent cannot be countenanced in view of the stand taken before the Hon'ble Chief Justice of Gujarat High Court taking the aid of arbitral clause in the agreement and also Clause 66, under which jurisdiction is conferred on the Courts at Hyderabad alone. In view of the same, the petitioner cannot now turn round and say that any such clause in the agreement, jurisdiction cannot be conferred on the Court, which it does not possess. I am fortified in this view by ajudgment of the Apex Court in ABC Laminart Pvt. Ltd. and Anr. v. A.P. Agencies, Salem, wherein it is held that when parties transacted on the basis of a clause in the agreement, the clause must be deemed to have formed part of the agreement and the parties would be bound by it and the validity of the clause depends on the validity of the agreement. Therefore, the respondent herein is bound by the principle of estoppel by conduct. The question of conferring jurisdiction on more than one Court under the Code of Civil Procedure to try a suit or proceeding, does not arise, in view of Section 2(e) of the Arbitration Act, 1996, inasmuch as it is only Principal Civil Court of Original Jurisdiction in a district. The incorporation of jurisdiction clause in the general conditions of agreement, does not mean, conferring of jurisdiction on any Court, which it does not possess. Same is the principle laid down by a Division Bench of this Court in Bank of India CBD Belapur Branch, Navi Mumbai v. U.A.N. Raju and Anr., (D.B.) wherein this Court held that neither consent nor waiver can cure the defect of inherent lack of jurisdiction and consent of parties cannot operate to confer jurisdiction on a Court which has no competence to try it. For these reasons, the ratio laid down in the above decisions cannot be made applicable to the facts and circumstance of the case on hand. Therefore, the contention of the learned Counsel for the petitioner that the Principal Dist. Court, Rangareddy, is not having jurisdiction and the O.P. has to be filed before the Chief Judge, City Civil Court, Hyderabad, deserves merit.
15. Repelling the contention of the learned Counsel for the respondent, raised basing on Venkatasubbaiah Naidu's case (1 supra), that when there is alternative remedy available to the petitioner by approaching the learned Dist. Judge, Rangareddy, and raise all the objections and contentions that are available to it under law, the learned Counsel for the petitioner submitted that consequent to Amendment to Section 115 of the Code (Act 46 of 1999), the curtailment of revisional jurisdiction of this Court is not taken away and could not have been taken away and relied on a decision of the Apex Court in Surya Dev Rai v. Ham Chander Rai and Ors., . In this decision, the Apex Court dwelling upon Section 115 of the Code of Civil Procedure, as amended by Act 46 of 1999, which came into effect from 1-7-2002 and Articles 226 and 227 of the Constitution of India, has categorically held that Certiorari jurisdiction though available is not to be exercised as a matter of course and the High Court would be justified in refusing the writ of certiorari if no failure of justice has been occasioned. In exercising the certiorari jurisdiction the procedure ordinarily followed by the High Court is to command the inferior Court or Tribunal to certify its record or proceedings to the High Court for its inspection so as to enable the High Court to determine whether on the face of the record the inferior Court has committed any of the preceding (sic.) errors occasioning failure of justice.
16. In para 34 of its judgment, while dealing with the supervisory power of this Court, the Apex Court held:
"...We are of the opinion that the curtailment of revisional jurisdiction of the High Court does not take away-and could not have taken away-the constitutional jurisdiction of the High Court to issue a writ of certiorari to a civil Court nor the power of superintendence conferred on the High Court under Article 227 of the Constitution is taken away or whittled down. The power exists, untrammelled by the amendment in Section 115 of the CPC, and is available to be exercised subject to rules of self discipline and practice which are well settled...."
17. Therefore, applying the principle laid down by the Apex Court in the above decision and having regard to the fact that the respondent has once submitted to the jurisdiction of Courts at Hyderabad, before the Hon'ble Chief Justice of Gujarat High Court, in Arbitration Application No. 76 of 1998 is now estopped by conduct, to contend that since part of cause of action has arisen at Rangareddy, O.P. No. 26 of 2004 is maintainable before the Principal Dist. Judge, Rangareddy, more particularly in view of the fact that it had participated in the arbitral proceeding and an award dated 5-8-2002 came to be passed. Therefore, in exercise of the superintending power vested in this Court under Article 227 of the Constitution, this Court is perfectly justified in rectifying the errors committed by the inferior Court, which may occasion in failure of justice. For these reasons, I have no hesitation in holding that the contention of the learned Counsel for the petitioner is well merited and O.P. No. 26 of 2004 Principal District Judge, Rangareddy does not get jurisdiction to entertain the same. Consequently, the learned Principal District Judge, Rangareddy is directed to return the O.P. to the respondent for presentation before proper Court.
18. Insofar as the contention of the learned Counsel for the petitioner that the O.P. is barred by limitation is concerned, it is a mixed question of law and fact and cannot be adjudicated in this revision, without there being comprehensive evidence. Therefore, the petitioner is at liberty to agitate this aspect before the civil Court of original jurisdiction.
19. For these reasons, the Civil Revisior Petition is allowed. No order as to costs.