Calcutta High Court
Macrotech India And Ors. vs Uma Roy on 29 November, 2002
Equivalent citations: 2003(3)ARBLR52(CAL)
JUDGMENT P.K. Samanta, J.
1. In this revisional application the plaintiff/ petitioners have raised a short but important question as to whether an application under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter called as the said Act) filed initially before the District Judge could be transferred by him to a Court of Additional District Judge for its disposal.
2. The facts giving rise to this civil revisional application are that the plaintiff-petitioners and the defendant-opposite party constituted a partnership firm registered under the Partnership Act. The said partnership agreement contained an arbitration clause as under :
"Any dispute or difference arising between the partners whether during or after the determination of the partnership in relation to any matter whatsoever touching the partnership affairs shall be referred to arbitration in accordance with the subject to the provisions of the Indian Arbitration Act, 1940 or any statutory notification thereof for the time being in force."
3. It has been alleged by the plaintiff-petitioners that the defendant-opposite party by a letter dated 10th May, 2002 expressed her intention to retire permanently from the partnership in terms of the said partnership agreement but by her letter dated 22nd May, 2002 she by making a false statement challenged the running of the firm by the petitioners on various grounds. Further by writing false letter to the Bank where the main account of the firm is maintained, she managed the Bank to refuse to honour some cheques issued by the firm. Such action by her caused stop supply of goods to the firm preventing execution of its business commitments. Upon such allegations the plaintiff-petitioners made an application under Section 9 of the Arbitration Act before the Court of District Judge at Alipore on the plea that the disputes between the parties are liable to be settled in accordance with the arbitration agreement and as such they are prepared to nominate and appoint an Arbitrator in accordance with law. The said application was registered as Title Suit No. 92 of 2002 in Court of District Judge, South 24-Parganas at Alipore. The petitioner also made an application for an order of temporary injunction restraining the defendant-opposite party from making any communication in any manner concerning the partnership firm and from obstructing the honouring of cheques issued by the firm, from claiming to be a partner, from disclosing her as such partner before any authority rill disposal of the suit. The learned District Judge refused to pass any ad interim order of injunction as above ex parte. It appeared that the defendant-opposite party also filed a counter case which was registered as Title Suit No. 96 of 2002 before the self-same Court of District Judge at Alipore. In the said proceeding the defendant-opposite party also filed an application inter alia for an order of temporary injunction restraining the plaintiff-petitioners from carrying on with the business under the name and style of the partnership firm and from interfering with the defendant's carrying on with the said business, from operating the Bank accounts, from dealing with the customers of the firm and also from entering into the Office and factories of the firm during the pendency of the arbitral proceeding or till the disposal of the suit. The learned District Judge posted both the above applications for hearing without making any ad interim order ex parte. In these state of things the defendant-opposite party made an application for analogous trial of both the proceedings. The learned District Judge then by an impugned order transferred both the proceedings to the Court of 5th Additional District Judge, South 24-Parganas at Alipore for disposal along with the above applications for temporary injunction as also the petition for analogous trial of the same.
4. In these contexts the plaintiff-petitioners challenged the action of the District Judge upon contention that in view of Section 2(e) and Section 42 of the Arbitration and Conciliation Act, 1996 the Court of the District Judge at Alipore alone is required to exercise jurisdiction over such applications and no other Court shall have the jurisdiction over such proceedings arising out of the applications filed by the parties before the Court of District Judge at Alipore.
5. Section 2(c) of the said Act provides as under :
"(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 docs not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes."
6. The fact remains that both the parties have approached the Court of District Judge with their respective applications. Section 42 of the said Act reads as under :
"(42) Jurisdiction--Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court."
7. Accordingly, it was contended on behalf of the petitioners that the applications were being made in the Court of District Judge by both the parties 'that Court alone' rule will be applicable for the purpose of disposal of matters in connection therewith and there is no scope for transfer of those applications as well as the proceedings that were initiated by the Court of District Judge to any other Court even if it is not a Civil Court of a grade inferior to the Court of District Judge. In support of such contention reference was made to a decision of a learned single of this Court reported in Hukum Raj Sajjan Raj Kumbal v. E'I Dorado Guarantee Limited., 2002(1) CHN 438=2002(2) Arb. LR 119 (Cal.).
8. I do not see much force in such contention. Because upon careful reading of Section 2(e) of the said Act it appears that it does not confer jurisdiction to entertain any application under Part I of the said Act upon the Court of a District Judge exclusively in a District. The definition as given provides that such an application can be made to a principal Civil Court in a District which exercises its original jurisdiction in a District and also has the jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit but shall in no case be a Civil Court of a grade inferior to such principal Civil Court. Therefore, by necessary implications the definition is also an inclusive definition and a Civil Court not of a grade inferior to the principal Civil Court of original jurisdiction in a District having jurisdiction to decide the question forming the subject-matter of arbitration shall also have the jurisdiction to decide an application under Section 9 of the said Act. In such context it becomes necessary to decide as to whether an application under Section 9 of the said Act filed before the Court of District Judge shall have to be disposed of by the District Judge himself or not.
9. Upon plain reading of Section 42 of the said Act it appears that "that Court alone" rule will predominantly be applicable for the purpose of exercising jurisdiction over the arbitral proceeding if there be any and all subsequent applications that may arise out of that agreement, pending such arbitral proceeding. In other words if an arbitral proceeding takes place at the instance of a Court then such arbitral proceeding and all applications that may be made by the parties pending such arbitral proceeding should remain under jurisdiction of that Court alone for effective and speedy resolution of the dispute. This part of the section accordingly gives an impression that where a Court substantially exercises its jurisdiction on the substance of the application made under Part I of the said Act and consequent to such exercise an arbitral proceeding has taken place then that Court alone shall exercise jurisdiction over such arbitral proceeding and the purported steps to be taken by the parties to the arbitration agreement pending such arbitral proceedings. It does not strictly stipulate that by filing of an application before the principal Civil Court of original jurisdiction in a District a party to an agreement will be entitled to compel that principal Civil Court to exercise it's jurisdiction even before an arbitral proceeding has ensued. If such an interpretation is given then the last part of the Section 2(e) of the said Act would be redundant. Therefore the sine qua non for exercise of jurisdiction by that Court alone is not the making of an application by a party to the dispute before the principal Civil Court of original jurisdiction but a substantial exercise of jurisdiction by such principal Civil Court upon receipt of an application under Part I of the said Act, by directing an arbitral proceeding for resolution of the dispute. Mere entertainment of an application under Section 9 of the said Act and refusal to pass an ad-interim order upon such an application by a Court do not necessarily imply that an arbitral proceeding for resolution of the disputes between the parties will necessarily follow. The decision of a learned Single Judge of this Court in the case of Hukum Raj Sajjan Raj Kumbat (supra), is distinguishable in the facts of this case, In that case an application under Section 9 of the said Act was filed before this Court. This Court by applying its mind to such petition for an ad interim order made an order by appointing a Receiver to take possession of the respondent's membership card of stock exchange for Mumbai and National Stock Exchange and the documents and statements in relation thereto. The respondent contested the said interim order on the question of territorial jurisdiction. It was contended that the appropriate Court for adjudication of any dispute by way of arbitration would be the Court at Mumbai. In such context the learned Judge overruling the said objection held that the Court which has been approached first will be the Court in all matters connected with arbitral proceedings and award. Such decision was rendered in view of Section 2(c) of the said Act as the jurisdiction has been made to depend solely on the subject-matter of the dispute and as the subject-matter of the dispute in that case was the transactions between the parties relating to sales and purchases of shares.
10. On the contrary decision of the Supreme Court as reported in ITI Ltd. v. Siemens Public Communications Network Ltd., is very much relevant for the present purpose. The Supreme Court while dealing with a question as to whether a revision-petition Under Section 115 of the Civil Procedure Code lies to the High Court as against an order made by a Civil Court in an appeal preferred under Section 37 of the Arbitration and Conciliation Act, 1996 it was held by the Supreme Court that when a Special Act on matters governed by that Act confers a jurisdiction on an established Court as distinguished from a persona designata without any words of limitation, then the ordinary incident of procedure of that Court including right of appeal or revision against its decision is attracted. In view of the aforesaid decision of the Supreme Court an interpretation of Section 42 of the said Act giving rise to a situation where the Court of District Judge alone will be required to exercise every jurisdiction once an application is made before it, will make that Court somewhat like persona designata who will not have the power to follow the ordinary incident of procedure for transfer of a proceeding before a Court of similar grade for the purpose of disposal even in exercise of power under Sub-section (2) of Section 8 read with Section 9 of Bengal, Agra, Asam Civil Courts Act. The decisions of the Supreme Court reported in P. Anand Gajapathi Raju and Ors. v. P.V.G. Raju (Dead) Ors., and Konkan Railway Corporation Ltd. and Anr. v. Rani Construction Pvt. Ltd., as referred to on behalf of petitioners-plaintiffs are not relevant for the present purpose. In the case of P. Anand Gajapathi Raju & Ors. (supra), it was held that in a pending appeal if the parties agree to the arbitration of the disputes between them it is obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement. In deciding so it was further held by the Supreme Court that the party shall have recourse to challenge the award before the Court as defined in Clause (e) of Section 2 of the New Act and not to the Court which referred the parties to arbitration in applying the principles under Section 8 of the said Act at the stage of appeal. The decision in the case of Konkan Railway Corporation Ltd. & Anr. (supra), is entirely on a different matter. It is a decision on a question under Section 11 of the said Act wherein it has been held that the order of the Chief Justice or his designate tinder Section 11 by nominating an Arbitrator is not an adjudicatory order and the Chief Justice or his designate is not a Tribunal.
11. In the facts and circumstances of this case both the parties approached the Court of District Judge with their respective applications made under Part I of the said Act. Before any reference was made for arbitration of the disputes between the parties both the parties applied for an ad-interim order as prayed for in their respective applications before the Court of District Judge. The learned Court did not enter into the merits of the applications for reference of the disputes between the parties for arbitral settlement nor any reference was made for arbitration. The learned Court being not satisfied with the prima facie case of the respective parties refused to pass ad-interim order on the applications made under Section 9 of the said Act. Such applications were transferred for effective and speedy disposal of the same by a Civil Court not of a grade inferior to the Court where such applications were filed. Therefore, in the instant case the learned Court of District Judge made the said order before any arbitral proceeding has taken place and furthermore before exercising its jurisdiction substantially on the petitions filed by the respective parties by directing an arbitration of the disputes. At this stage it cannot be said that the Court of District Judge is the only Court for exercising jurisdiction for all purposes as the applications were filed before him. In all such considerations, and in view of the discussions as above I do not find any jurisdictional error committed by the learned Court of District Judge in making the impugned order.
12. This revisional application is accordingly dismissed.
13. If urgent xerox certified copy of this order, is applied for by the respective parties, be supplied to the parties as expeditiously as possible.