Calcutta High Court
Golden Edge Engineering Private ... vs Bharat Heavy Electricals Limited on 18 June, 2020
Equivalent citations: AIR 2020 CALCUTTA 217, AIRONLINE 2020 CAL 372
Author: Shivakant Prasad
Bench: Shivakant Prasad
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GA No. 822 of 2020
AP No. 191 of 2020
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
GOLDEN EDGE ENGINEERING PRIVATE LIMITED
Versus
BHARAT HEAVY ELECTRICALS LIMITED
Present :
The Hon'ble Justice Shivakant Prasad
For the Petitioner : Mr. Dhruba Ghosh, Sr. Adv.
Mr. Rohit Banerjee, Adv.
Ms. Sananda Ganguli, Adv.
Mr. Subhradip Roy, Adv.
For the Respondent : Mr. Rohit Das, Adv.
Heard On : 02.06.2020 Judgment On : 18.06.2020
This is to consider an application under section 9 of the Arbitration and Conciliation Act, 1996.
Petitioner's case in brief is that it is engaged in the business of election, testing and commissioning of boilers, ancillaries and associated mechanical practices as a contractor. The respondent is a government of India undertaking and is engaged in the business of engineering and manufacturing for generation of power through varied equipment and system. The respondent Tender being Tender No PSER:SCT:NKP-T1835:17 dated June 8, 2017, inter alia, for shifting The Generator Stators Inside Plant Premises, Handling At site, Storage Yard, Stores, Transportation to site, Erection, Testing, Commissioning and 2 Handling over of Steam Turbine, Turbo Generator, Condenser, Heat Exchanger, Pumps, BFP Drive Turbine etc. The petitioner was selected as the successful bidder and the project was awarded to him. The petitioner had to mobilize at site within 15 days from the date of clearance intimation from the construction manager BHEL/NTPC site. The entire work of their erection, testing, commissioning, PG test, handling over etc under the scope was to be completed within 20 months from the start of erection of the scope of work and other works to be completed within timeline slot provided under the agreement. The petitioner's contention is that petitioner faced many practical difficulties attributable to the acts and omissions of the respondents which delayed mobilization and commitment of the work and due to delay payments causing severe financial crisis to the petitioner and consequential delays.
The petitioner's specific case is that the respondent had not provided sufficient frontage for the execution of the work related to SCW piping and it delayed in payment of RA bills and these two issues were the main cause for the delay in the entire project. It is further contended that from March 25, 2020 nationwide lockdown was announced by the Government of India and had to be followed in a strict measure due to the spread of pandemic with Covid-
19. Due to a strict lockdown of transportation, accessibility to materials, availability of manpower and staff faced at site; all works at site had to be stopped which naturally caused delay in the project for reasons beyond the control of the petitioner.
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7. According to the petitioner, the respondent had assured that by deploying sufficient manpower it would be in a position to complete the project as per schedule without counting the time loss due to pandemic and lockdown. In reply on May 11, 2020 the petitioner assured that it is fully capable of completing the work provided fair and supportive environment is given at site. It is alleged that despite receiving the said reply on May 12, 2020, the respondent issued an email informing that the new tender for executing Balance Work Of Erection, Testing & Systems IN 3 x 660 MW NORTH KARANPURA PROJECT has been floated on May 9, 2020 for carrying out balance job against BHEL WO, vide ref. no. PSER: SCT:NKP-T1835:18: PKG-B (LP & FW PIPING): W0: 7140 dated 13.10.20 18 by which the petitioner came to know of the fact that the new tender has been floated by the respondent. It is submitted that there was no necessity and urgency for the respondent to publish the notice inviting the tender especially when the new tender proposes the completion of work within 24 months from the date of the start of work at site, as certified by BHEL Site Construction Manager. It is submitted that such action on the part of respondent has created apprehension in the mind of the petitioner.
Hence, the instant application whereunder the petitioner is seeking for an order of injunction restraining the respondent from withdrawing the work allotted to the petitioner and from issuing a new tender in respect of the same work at the risk and cost of the petitioner.
4Mr. Dhruba Ghosh Learned Sr. counsel for the petitioner submitted that the actions of the respondent are prima facie contrary to their own representations made in the letter dated 8.5.2020 which records inter alia that:
"... In the backdrop of the references indicated above you may note that despite repeated persuasion from BHEL, you have miserably failed in meeting contractual obligation,including completion of site execution work, pertaining to the enclosed work order. Details of deficiencies observed, corrective action solicited and permissible timelines taking into account of current Lockdown scenario due to outbreak of Covid 19 is tabulated as per annexure- 1. Matter may be treated with top most priority and augmentation of desired resources be immediately taken up in consultation with BHEL site on urgent basis to avoid further slippage in project execution & meet stipulated time lines as per Annexure -1. Further, if you fail to take the immediate measures within the said time line BHEL shall withdraw these areas from your contractual scope in line with contractual provisions at your ' risk& cost'..."
It is urged that the Work had been suspended since March 23 2020 on account of the Covid-19 Lockdown and was to re-commence after the lockdown was over. As such the respondent be estopped from taking coercive action by withdrawing any area of work or issuing a new tender before the timeline suggested in the said letter takes effect. Annexure I of the said letter contemplates the completion of the work in different stages (some within 15 days of the lifting of the lockdown, some within 6 months thereafter and some 8 months as reflected page 99 to 101of Annexure 1 of the said letter). Moreover, the said letter states that BHEL will finalize a post lockdown timeline within 15 days of the lifting of the lockdown and yet, the very next day BHEL issued a new tender for the balance work.
5Thus, it is submitted that such action is clearly arbitrary and the petitioner apprehends that this is nothing but a predetermined action on part of BHEL to terminate the petitioner's work without basis. Admittedly the Respondent had floated the said Tender being June 8, 2017 for carrying out various jobs at its North Karanpura Project, Jharkhand. The Petitioner had been selected as the successful bidder and the project was awarded to it which contained an arbitration clause.
It is alleged that the work started late and was delayed from time to time due to acts and omissions of the Respondent and that the Respondent had withheld payments and obstructed the workings of the Petitioner.
Petitioner further contended that issuance of a new tender is unjustified since even the original time stipulated under the tender given to the petitioner is not over and in any event the respondent had agreed to extend the time after the lifting of the lockdown, as per its own letter. Petitioner states that the Lockdown is not over totally and it would reasonably take some more time before the workers can get back to work post-lockdown period.
According to the respondent, due to the work under the Tender not being completed, the Respondent issued a new tender on May 9, 2020 for completion of remaining work at its North Karanpura Project. At the outset, the Respondent has raised preliminary objections with respect to the maintainability of the instant application and the lack of jurisdiction of this Hon'ble Court. The Respondent contended 6 that the concerned office of the Respondent is located in Salt Lake, North 24 Parganas, which is outside the Original Side Jurisdiction of this Honourable Court and hence this Court cannot entertain the instant application.
Mr. Rohit Das learned counsel for the respondent submitted that the petitioner has suppressed the true facts. The arbitration clause being clause 2.21.3 as contained in the said Tender dated June 8, 2017 clearly states that the seat of arbitration shall be Kolkata (the place from where the contract is issued). Furthermore, the exclusive jurisdiction clause being clause 2.2 contained in the aforesaid Tender states that:
" the contract shall be governed by the law for the time being in force in the Republic of India. Subject to clause 2.21.1 of this contract, the civil court having civil jurisdiction at Delhi for PSER, at Kolkata for PSER, at Nagpur for PSER and at Chennai for PS SR, in regard to all matters in respect of this contract."
It is further submitted that the respondent has its Power Sector Eastern Region office situated in DJ-9/1, Salt Lake City Kolkata 700091, North 24 Parganas which is predominantly mentioned at the foot of each page of the tender document. The Tender in question out of which the dispute has arisen has been issued from such office. Even considering that the said tender was an electronically floated tender issued from the Salt Lake address, in terms of section 13(3) of Information Technology Act, 2002, such tender would be deemed to be despatched at the place where the respondent has its place of business i.e. Salt Lake address and mere usage of the word "Kolkata" in the arbitration clause for the choice of "seat" and the forum 7 selection clause would not clothe this Hon'ble Court with jurisdiction. The respondent has relied upon the following judgments to fortify its arguments:-
(i) Indus Mobile Distribution Private Limited -vs- Datawind Innovations Private Limited & Anr - (2017) 7 SCC 678
(ii) BGS SJS Soma JV -vs- NHPC Ltd. - Civil Appeal No. 9308 of 2019 before the Hon'ble Supreme Court of India
(iii) Hindustan Construction Company Ltd. -vs- NHPC Ltd & Anr. -
Transfer Petition No. 3053 of 2019 before the Hon'ble Supreme Court of India Having respectfully considered the ratio of decision in the above cited decisions, I am of the view that the agreed seat of arbitration lies in that part of the metropolitan area of Kolkata which only lies within the district of North 24 Parganas and where the cause of action for the petitioner has arisen within that part of the metropolitan area of Kolkata only.
The Petitioner contended that the Respondent has its zonal office at Park Street but the Respondent vehemently denies the same and submited that the prayers in the instant application are barred by Specific Relief Act, 1963 as the application is premature and the Petitioner will suffer no prejudice if it improves the quality and pace of its work as per the timeline given by respondent, ergo, there is no overt act on the part of the respondent and no grounds have been made out for grant of reliefs as prayed for.
8Reliance has been placed by both the parties on the following paragraph of BGS SJS Soma JV -vs- NHPC Ltd. (supra) "61. 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." Per contra, Mr. Ghosh appearing for the Petitioner submits that the tender was firstly published on its website and thus there is no specific place of issuance. The tender also does not mention that it was issued form the Salt Lake Office, though the address of the Salt 9 Lake Office and the registered office in Delhi is given. The tender also does not mention that it was issued form the Salt Lake Office, though the address of the Salt Lake Office and the registered office in Delhi is given. Thus, the seat must be Kolkata and not what is written in the bracketed portion. Moreover, if what they say is held to be correct that it was issued in Salt Lake, then it cannot be said to have been issued in Kolkata. The seat is Kolkata irrespective of where it was issued. The ratio of these judgments point out that when seat of an arbitration has been agreed upon between the parties, an application can be made only before such Court which has jurisdiction over the seat of arbitration. Such proposition is no longer res integra. However, its application in the instant case shall be governed by the clause mentioning the seat of the arbitration i.e. "Kolkata (the place from where the contract is issued)".
The respondent argued that BHEL allegedly has no office at 57 A Park Street within jurisdiction of the High Court (though this is what is reflected in an internet search of BHEL's Offices). They argued that the contract was issued from their Salt Lake Office and as such the Commercial Court or the District Court at Barasaat and not the High Court is the relevant Court and they further contended that no part of the cause of action arose within the High Court jurisdiction. Respondent placed reliance on the following judgements: Hakam Sing vs Gammom ( India) Limited reported in AIR 1971 SC 740; A.B.C Laminart Private Limited &Orsvs A.P. Agencies Salem reported in AIR 1989 SC 1239 and Sunil Hitech Engineers vs Bharat Heavy Electrical 10 Limited (unreported) (A.P No. 966 of 2016, order dated February 21, 2017) wherein it has been held conclusively that unless a part of the cause of action arose within the jurisdiction of a court, the parties cannot confer jurisdiction upon it by stipulating it in a forum selection clause.
In Indus Mobile Distributions Pvt Ltd(supra), Hon'ble Supreme Court introduced the concept of 'seat' and held that the court in Mumbai had exclusive jurisdiction over a transaction that took place between Delhi and Kolkata, even though no part of the cause of action arose in Mumbai and simply because the parties had chosen Mumbai as their seat. (see paras 19-20 of the judgment).
In BGS SGS Soma JV- Vs- NHPC Limited the Hon'ble Supreme Court in its judgment dated December 10, 2019 (unreported)(Civil Appeal No. 9307 of 2019; Arising out of SLP(Civil) No. 25618 of 2019), the relied on the earlier decision in BALCO -Vs- Kaiser Aluminium Technical Services inc, (reported in (2012)9 SCC 552) and held that the court over the 'seat' will have exclusive jurisdiction. In a recent judgment delivered on March 4, 2020 by the Hon'ble Supreme Court in Hindustan Construction Company Ltd-Vs- NHPC Ltd & Anr, (unreported) (CIVIL APPEAL No. 1987/2020)(TRANSFER PETITION (C) NO. 3053 OF 2019) (Arising out of Special Leave Petition (C) No. 402/2020), the Hon'ble Supreme Court relied on BGS and stated in paragraphs 4 and 5 of the judgment as follows :-
".....4) This Court in Civil Appeal No. 9307 of 2019 entitled BGS SGSSoma JV vs. NHPC Ltd. delivered a judgment on 10.12.2019 i.e.after the impugned judgment was delivered, in 11 which reference was made to Section 42 of the Act and a finding recorded thus: "61. 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 .5) This was made in the backdrop of explaining para 96 of theBalco (supra), which judgment read as a whole declares that once the seat of arbitration is designated, such clause then becomes an exclusive jurisdiction clause as a result of which only the courts where the seat is located would then have jurisdiction to the exclusion of all other courts"
To appreciate the issue of jurisdiction, the Jurisdiction clause is set out herein:- Clause 2.2 "The contract shall be governed by the law for the time being in force in the Republic of India. Subject to Clause 2.21.1 or 2.21.2 of this Contract, 12 the Civil Court having Civil Jurisdiction at Delhi for PSER, at Kolkata for PSER, at Nagpur for PSWR and at Chennai for PSSR, in regard to all matters in respect of this contract".
However, with respect to Arbitration, the jurisdiction is covered by Clause 2.21.3 which states as under:-
"... The seat of arbitration shall be Kolkata (the place from where the contract is issued)."
I have checked the address of 57 Park Street Kolkata but no such address has been displayed in the internate as the office or business place of the respondent. The Petitioner stated such Park Street Address to be the zonal office of the Respondent in order to satisfy the requirement of Section 2 (1) (e) (i) of the said Act read with Section 20 of the Code of Civil Procedure, 1908 as falsely portrayed in paragraph 35 of the Petition so as to create the jurisdiction of this Hon'ble Court.
The scope and purport of the Section 2(1)(e)(i) of the said Act read with the Letters Patent for the High Court of Judicature at Fort William in Bengal, 1865 (hereinafter referred to as "Letters Patent" confers ordinary original civil jurisdiction to this Hon'ble Court for entertaining applications under Section 9 of the said Act only if:
a) The Seat of arbitration is within the ordinary original civil jurisdiction of the Hon'ble High Court at Calcutta in terms of the Letters Patent for the High Court of Judicature at Fort William in Bengal, 1865 with either (i) the Respondent resides/carries on business within the ordinary original civil jurisdiction; or (ii) the cause of action or a part thereof arising within the ordinary original civil jurisdiction of the Hon'ble High Court at Calcutta.
-or-
b) The Parties have exclusively chosen this Hon'ble Court as their court of exclusive jurisdiction with either (i) the Respondent resides/carries on business within the ordinary original civil 13 jurisdiction; or (ii) the cause of action or a part thereof arising within the ordinary original civil jurisdiction of the Hon'ble High Court at Calcutta. The aforesaid proposition finds recognition in Debdas Routh and Ors. -vs- Hinduja Leyland Finance Limited and Ors. - AIR 2018 Cal 322 - Paragraph 60 and 70-77 (A copy of the judgment is enclosed herewith).
Moreover, Section 2(e) of the Arbitration & Conciliation Act 1996 clearly states"[(e) "Court" means-- (i) in the case of an arbitration other than international commercial arbitration, 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;".
The respondent's next contended that no injunction can be granted in view of Section 41(ha) and Section 20A of Specific Relief Act. It has been argued that these provisions were introduced to prohibit injunction being granted in infrastructure contracts. On the contrary, it is submitted for the petitioner that factually the provisions of the Act of 1963 are applicable only if it is shown that there is delay or it would impede the contractual project. The facts of this case, however, clearly demonstrates that the balance work is to be completed in 24 months whereas the petitioner still has the original contract period subsisting till June 24, 2020 and has been give 8 months to complete the work. Thus, the respondent cannot take advantage of the section and contended that the project will be 14 delayed if unless the new tender is opened and processed. Time is clearly not of the essence of the contract.
It is submitted that the judgment BHEL - Vs- ACE (supra) referred to by the respondent is not applicable in the factual matrix of the instant case being distinguishable. Moreover this judgment dose not vacate the injunction granted by the subordinate court but simply directs the court to dispose the application for vacating the injunction expeditiously without going into the merits of the matter. In this connection the petitioner relies on the decision of the Supreme Court reported in Adhunik Steels Ltd-Vs- Orissa Manganese and Minerals (P) Ltd, reported in AIR 2007 SC 2563, where the contractor sought to terminate the sub-contractor alleging it was contrary to mining rules. Despite that Supreme Court passed injunction /upheld injunction, restraining contractor (OMM) from interfering with sub-contractor (Aadhunik) as it was not possible to assess compensation at that stage. Sub-contractor's argument was that issuance of new contract for same purpose was unjust and was upheld (para 21). Other issue was left open but (OMM) was restrained from entering into new contract (para 24).
I have gone through the judgment which is also not applicable int he present case as in the cited decision, new tender was offered on the selfsame term. In my view the petitioner's apprehension that the respondent is acting in a predetermined manner and has already decided to terminate the contract is wishful thinking of the petitioner, it is argued that the said Act, of 1963 no doubt envisages that an 15 employer can withdraw work from a contractor but it requires a 30 day notice (section 20 of the Specific relief Act, 1963). Section 20 of the said Act of 1963 has not been complied by the respondent, hence the act to invoke the 'risk and cost' clause is illegal and unless the injunction is granted the respondent will succeed in giving effect to the breach of the contract between the parties.
Admittedly, the respondent allowed the petitioner further time to complete the work after the lockdown period as per the timeline given to the petitioner. Though the lockdown period was not over but it cannot be said that there is still uncertainty as to the workmen. The practical reality is that site where the project has to be completed is in Jharkhand and worker never migrated from that State. So, the petitioner cannot take a defensive plea to delay the project work assigned to it as per the timeline and as per the schedule which has got to be completed.
It has to be borne in mind that the contract was delayed by the petitioner as it did not complete the work in terms of the time schedule given in the Tender as it was accepted by the petitioner when there was not no pandemic due to COVID-19. Therefore, petitioner is not entitled to resist the withdrawal of work when it has once again been given opportunity to conclude the work. It is no doubt true as to whether there is any delay at all or who is at fault or whether force measure circumstances existed are matters to be taken up in the arbitration proceedings if dispute is referred to by the petitioner but in 16 my view opportunity has already been given by respondent to the petitioner to execute the work.
In the second fold as made by respondent, it is submitted that the prayers made by the Petitioner in the present application are expressly barred by the Specific Relief Act, 1963 as the Tender relates to a part of the work for establishment of a 3 x 660 Mega Watt Powerplant in North Karanpura Project , Jharkhand. The aforesaid work thus relates to an "Infrastructure Project" in terms of Entry 2A to the Schedule of the Specific Relief Act, 1963 and Thus, prayers a), b), c) and d) of the Petitioner as stated in the application are expressly barred by law in terms of Section 41(ha) read with Section 20A of the Specific Relief Act, 1963 amended by the Specific Relief (Amendment) Act,2018 because if such prayers are granted, the direct effect would be to delay, impede and/or halt the progress of such critical public infrastructure project (a copy of the said Act as amended up to date is enclosed herewith). The said law in relation to Infrastructure Projects in the context of the self-same Respondent has been recognised by our Hon'ble High Court in the following case of Bharat Heavy Electricals Limited -vs- M/s Ace Engineering - Order dated September 26, 2019 passed in FMAT 908 of 2019.
It is submitted that there is no specific provision of the Tender/contract between the Petitioner and the Respondent or otherwise in law, prohibiting the Respondent from conducting a New Tender. In fact, the clear provision of the Tender/contract between the Petitioner and the Respondent allows the Respondent to award the 17 balance work to a third party at the risk and cost of the Petitioner, in the event of default or delay or non-performance and/or unsatisfactory performance on the part of the Petitioner. The Petitioner has been given a very fair opportunity by the Respondent to complete the balance work in a period of 18 months in terms of the notice dated May 18, 2020 by the Respondent. The question of any loss or injury whatsoever only arises only in the event the Petitioner fails to improve such performance and even assuming that the Petitioner's contract is terminated and the successful bidder in the New Tender gets awarded the balance work there is no irreparable injury or loss which cannot be compensated in monetary terms as the petitioner can always bring a claim against the Respondent in arbitral proceedings for the amount of quantifiable damages based on the monetary value of the scope of work taken away from it and awarded (if at all) under the New Tender.
So, the balance of convenience is entirely in favour of the Respondent as a Public Sector Undertaking engaged in power generation ought not to be prevented from engaging a new contractor if the existing contractor is unable to provide the requisite standard of work as the documents on record clearly show that ample opportunities have been provided and are being provided by the respondent to the petitioner to complete their outstanding work as per requisite standards but instead of utilising the same the petitioner intends to secure a monopoly and ensure the Respondent is stuck with the Petitioner in whatever performance and/or quality of work 18 they offer. It is stated and submitted that the entire project has been severely lagging behind the requisite standards and the Respondent's employer i.e. the National Thermal Power Corporation has been constantly reprimanding the Respondent because of the cascading effect the Petitioner's under performance has been having on the entire project. A lot of time will be wasted and the project will come to a standstill in the event the Respondent is unable to go ahead with the New Tender and have a candidate ready to replace the Petitioner in the event of the failure to complete the work as such new tender would have to be conducted post the Petitioners failure. Indus Mobile Distribution Private Limited -vs- Datawind Innovations Private Limited & Anr. - (2017) 7 SCC 678 makes out the case of the Respondent and not the Petitioner in Paragraph 19 as under:
"A conspectus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause.
On the facts of the present case, it is clear that the seat of arbitration is Mumbai and Clause 19 further makes it clear that jurisdiction exclusively vests in the Mumbai courts. Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to "seat" is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction - that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Section 16 to 21 of the CPC be attracted. In arbitration law however, as has been held above, the moment "seat" is determined, the fact that the seat is at Mumbai 19 would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties".
Hindustan Construction Company Ltd -vs- NHPC Ltd & Anr - Transfer Petition No. 3053 of 2019 before the Hon'ble Supreme Court of India also makes out the case of the Respondent and not the Petitioner as it follows the ratio of [BGS SJS Soma JV -vs- NHPC Ltd] and also in paragraph 5 and 6 states that:
5) This was made in the backdrop of explaining para 96 of the Balco ( supra), which judgment read as a whole declares that once the seat of arbitration is designated, such clause then becomes an exclusive jurisdiction clause as a result of which only the courts where the seat is located would then have jurisdiction to the exclusion of all other courts.6) Given the finding in this case that New Delhi was the chosen seat of the parties, even if an application was first made to the Faridabad Court, that application would be made to a court without jurisdiction. The seat of arbitration is designated, such clause then becomes anexclusive jurisdiction clause as a result of which only the courts where the seat is located would then have jurisdiction to the exclusion of allother courts"
I fully agree with the submission of learned counsel for the respondent that this Hon'ble Court does not have jurisdiction to entertain the application as the relief claimed is contrary to the provisions of Section 41(ha) of the Specific relief Act,1963 and further opine that the petitioner will suffer no prejudice if it comply with the timeline and on failure to execute the work, the respondent has a right to go ahead with the new tender for the petitioner has already delayed the work assigned to it under the said tender given to it on 31.8.2017 in pre pandemic era due to Covid-19.20
Having respectfully gone through the above cited decisions referred to by the respective parties and having marshaled out the fact of the parties, this Court is of the considered view that the seat of arbitration being at Kolkata cannot be read in isolation of the words contained in the brackets which have been purposively given to keep the seat within such place from where the tender has been issued. Contrary to the argument of the Petitioner, Section 13(3) of the Information Technology Act, 2002 cannot be ignored while determining the place where contract was issued, inasmuch as Salt Lake is considered as part of Kolkata in common parlance, it cannot be ignored that any seat of arbitration being Kolkata has to fall within the original side jurisdiction of this Court. The words contained in the bracket leaves no room to attract the jurisdiction of this Court on its Original Side and I am of the opinion that the petitioner would be left with a claim for equitable compensation as there would be no significant prejudice to the petitioner in the event of refusal to grant interim injunction at this stage.
In the context above, the case being GA No. 822 of 2020 and AP No. 191 of 2020 are disposed of.
Website copy of this Judgment, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(Shivakant Prasad, J.)