Rajasthan High Court - Jaipur
Kamal Kumari vs M/S Magma Fincorp Ltd on 17 May, 2012
Author: Prem Shanker Asopa
Bench: Prem Shanker Asopa
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH JAIPUR ORDER S.B.CIVIL ARBITRATION APPLICATION NO.22/2012 Kamal Kumari Versus M/s.Magma Fincorp Ltd. (earlier named as Magma Shrachi Finance Ltd.) DATE OF ORDER --- MAY 17,2012 PRESENT HONBLE MR.JUSTICE PREM SHANKER ASOPA Dr.P.C.Jain, for the Applicant None present for the Non-applicant BY THE COURT
(1) Before the case was taken up for hearing, counsel for the Applicant has filed a photo stat copy of the arbitration application which was filed in September, 2011 before the Calcutta High Court. The same is taken on record.
(2) Heard learned counsel for the Applicant.
(3) This is an arbitration application u/s 11 of the Arbitration and Conciliation Act, 1996 (in short `the Act of 1996') filed on 26.3.2012, arising out of the lease agreement dated 17.3.2008 containing arbitration clause for appointment of the Arbitrator.
(4) Briefly stated, the facts of the case are that by an agreement dated 17.3.2008 (Anx.1), the Applicant along with other co-owners let out one premises at 2nd floor of A 9, A 10, Janta Store, Bapu Nagar, Jaipur for a term of three years from 1st March, 2008 to 28th February, 2011 with option of renewal to the Non-applicant (earlier named as M/s.Magma Shrachi Finance Ltd.). The said agreement was executed on a stamp of Rs.100/- which was purchased by the Non-applicant on 17.3.2008 at Jaipur and then the same was got typed and signed by the authorised signatory of the Non-applicant along with its seal as also by the four co-owners of the demised premises at Jaipur. Initially, the aforesaid premises were let out for a period of three years for consideration of Rs.54,000/- per month as also maintenance charges of Rs.5,000/- per month. However, the amount of monthly rent was to be enhanced at the rate of 5% per year. As per the terms of the agreement, the Non-applicant intimated vide its letter dated 30.11.2010 (Anx.2) to exercise its right of renewal of the term of tenancy of the demised premises for a further period of three years with effect from 1st February, 2011 to 31st January, 2014 with 5% yearly enhancement of rent. This option of the Non-applicant was accepted on behalf of the Applicant and other co-owners by signing and returning copy of the said letter in token of their acceptance. It was clearly written in the said letter that rest all the clauses except those stated in the first para of the said letter about continuance of period of tenancy from 1.2.2011 to 31.1.2014 and 5% yearly enhancement of rent other clauses of agreement dated 17.3.2008 including the arbitration clause shall remain unchanged.
(5) In the arbitration application, it is further stated that the Non-applicant vide its letter dated 11.5.2011 terminated the tenancy of the demised premises w.e.f. 15.8.2011 and subsequently, vide letter dated 22.7.2011 further claimed termination of tenancy w.e.f. 15.8.2011. It is then stated in the application that the alleged notices were never served upon any of the co-owners. Thus, the dispute between the Applicant and other co-owners and the Non-applicant about the demised premises has arisen between the parties with regard to the termination of the tenancy, damages etc. (6) On 28.7.2011 (Anx.3), in reply to the termination notice regarding the tenanted premises, the Applicant has refuted the right of termination of the tenancy as it had already been renewed up to 31.1.2014 and further stated that as per the back dated notices disputes have arisen between your company and my client above named, hence as per clause 17 of the agreement we nominate Justice I.S.Israni (Retd.) to arbitrate in the matter with the further mention that if you do not agree to the aforesaid name then you may move an application to Hon'ble High Court of Rajasthan, Jaipur within 30 days to appoint any other person to arbitrate in the matter otherwise the matter would be referred to him.
(7) It is also pertinent to mention here that the Non-applicant filed an application u/s 9 of the Act of 1996 before the City Civil Court No.10 at Calcutta and thereafter, another application before the High Court of Calcutta u/s 11 of the Act of 1996 in the month of September, 2011. The said application u/s 9 of the Act of 1996 was withdrawn on filing the transfer application by the Applicant before the Supreme Court. However, the application filed before the Calcutta High Court u/s 11 of the Act of 1996 with regard to the dispute arising out of the same agreement is presently pending before the Calcutta High Court.
(8) Despite service, no one appears for the Non-applicant.
(9) Counsel for the Applicant submits that as per SBP & Co. V. Patel Engineering Ltd. and another (2005) 8 SCC 618), Para 39 and 47(iv), the Constitution Bench identified and segregated the preliminary issues that may arise for consideration in an application u/s 11 of the Act of 1996 which have been further categorized in three categories in Para 22 of National Insurance Co. Ltd. V. Boghara Polyfab Pvt. Ltd. (2009) 1 SCC 267) out of which First Category in para 22.1 is whether party making the application has approached the appropriate High Court. Counsel further submits that the said Category 22.1 will have to be decided by the Chief Justice / his designate as per Sec. 11(12)(b) of the Act of 1996 where the arbitration application has been filed. Counsel then submits that in the present case, immovable property is situated at Janta Store, Bapu Nagar, Jaipur; the Rs.100/- stamp for lease agreement had been purchased at Jaipur by the Non-applicant which was written and signed at Jaipur and the rent was also payable at Jaipur. Further, as per Sec. 2(e) of the Act of 1996, which has been mis-printed as Sec.2(c) in the arbitration clause of the agreement, the principal city civil court of original jurisdiction, having jurisdiction to decide the question forming the subject matter of arbitration, is situated at Jaipur Metropolitan which is within the local limit of this Court, therefore, as per Sec. 11(12)(b), the Chief Justice / his designate will have to decide the said issue of jurisdiction as referred in Para 22.1.(a) of National Insurance Co. (supra). The same is the position in the arbitration agreement dated 17.3.2008 with the further mention of the fact that the venue of arbitration shall be at Jaipur.
(10) On Sec.11(11) of the Act of 1996, submission of Dr.P.C.Jain is that as per the said Section, where more than one request has been made under sub section (4) or sub section (5) or sub section (6) to the Chief Justices of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made under the relevant sub section shall alone be competent to decide on the request but it will not debar this Court from deciding the preliminary issue of jurisdiction of this Court in this application u/s 11 of the Act of 1996 which has also been raised by them before the Calcutta High Court as a preliminary objection to the arbitration application filed by the Non-applicant. On the said issue, Dr.P.C.Jain, placed reliance on paras 4 and 30 of Balaji Coke Industry Pvt.Ltd. V. Maa Bhagwati Coke Gujarat Pvt Ltd. (2009) 9 SCC 403). His further submission is that after recording the finding on the preliminary issue of jurisdiction, this case may be consigned to record till the decision of the Calcutta High Court on the arbitration application which was filed earlier in point of time.
(11) Before proceeding further, it would be relevant to reproduce arbitration clause 21 in the agreement dated 17.3.2008, Sec. 2(e), Sec. 11(11), 11(12)(b) of the Act of 1996, relevant para 22 of National Insurance Co. (supra) and Paras 1, 4,11,30 and 32 of Balaji Coke Industry Pvt. Ltd. (supra). The same are as under:
Arbitration Clause 21 in the agreement dated 17.3.2008
21. That any dispute arising out of and / or concerning these presents including the interpretation thereof shall be referred to an Arbitral Tribunal comprising of a sole Arbitrator to be appointed by the Court within the meaning of section 2(c) of the Arbitration and Conciliation Act, 1996. The provisions of Arbitration and Conciliation Act, 1996 or any other enactment for the time being in force shall apply. The venue of arbitration shall be at Jaipur and the reference shall be governed by the provision of the above Act.
(emphasis supplied by me) Sec.2(e), Sec. 11(11) and 11(12)(b) of the Act of 1996 Sec.2(e) 2(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;
(emphasis supplied by me) Sec.11(11)
11.Appointment of arbitrators (11) Where more than one request has been made under sub-section (4) or sub section (5) or sub-section (6) to the Chief Justices of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request.
(emphasis supplied by me) Sec.11(12)(b)
(b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to Chief Justice in those sub-sections shall be construed as a reference to the Chief Justice of the High Court within whose local limits the principal civil court referred to in clause (e) of sub-section (1) of section 2 is situated and, where the High Court itself is the court referred to in that clause, to the Chief Justice of that High Court.
(emphasis supplied by me) Para 22 of National Insurance Co.Ltd.
22.Where the intervention of the court is sought for appointment of an Arbitral Tribunal under Section 11, the duty of the Chief Justice or his designate is defined in SBP & Co. This Court identified and segregated the preliminary issues that may arise for consideration in an application under Section 11 of the Act into three categories, that is (i) issues which the Chief Justice or his designate is bound to decide; (ii) issues which he can also decide, that is, issues which he may chose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide.
(emphasis supplied by me) 22.1 The issues (first category) which the Chief Justice / his designate will have to decide are :
(a) Whether the party making the application has approached the appropriate High Court;
(emphasis supplied by me)
(b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement.
22.2 The issues (second category) which the Chief Justice / his designate may choose to decide (or leave them to the decision of the Arbitral Tribunal) are:
(a) Whether the claim is a dead (long barred) claim or a live claim.
(b) Whether the parties have concluded the contract / transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection.
22.3 The issues (third category) which the Chief Justice / his designate should leave exclusively to the Arbitral Tribunal are:
(i)Whether a claim made falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration).
(ii)Merits or any claim involved in the arbitration.
Paras 1, 4, 11,30 and 32 of Balaji Coke Industry Pvt. Ltd.
1. This transfer petition under Article 139-A(2) of the Constitution of India read with the relevant provisions of the Supreme Court Rules and Section 25 of the Code of Civil procedure has been filed by Balaji Coke Industries (P) Ltd. for transfer of Arbitration Application No.1 of 2008, titled Maa Bhagwati Coke (Guj) (P) Ltd. V. Balaji Coke Industry (P) Ltd. pending in the Court of the Principal Senior Civil Judge at Bhavnagar (Gujarat) to the Calcutta High Court.
4. Clause 11 of the aforesaid agreement contains an arbitration clause which reads as under:
In case of any dispute or difference arising between the parties hereto or any claim or thing herein contained or the construction thereof or as to any matter in any way connected with or arising out of these presents or the operation thereof or the rights, duties or liabilities of either party thereof, then and in every such case the matter, differences or disputes shall be referred to an arbitrator in Kolkata, West Bengal, India in accordance with and subject to the provisions of the Arbitration and Conciliation Act, 1996, or any other enactment or statutory modifications thereof for the time being in force. The place of arbitration shall be Kolkata. (emphasis supplied)
11. According to the petitioner, it was surprised to receive summons issued by the Principal Senior Civil Judge, Bhavnagar (Gujarat) to appear before the said court on 17.1.2009, in Arbitration Application No.1 of 2008 purported to have been filed by the respondent Company under Section 9 of the Arbitration and Conciliation At, 1996, praying for an injunction to restrain the petitioner, his servants and agents from disposing, selling, diverting or alienating the material in question or any part thereof and for the issuance of a direction to the petitioner to issue delivery ordes for 6793 MT of coking coal in favour of the respondent.
30. In the instant case, the parties had knowingly and voluntarily agreed that the contract arising out of the high seas sale agreement would be subject to Kolkata jurisdiction and even if the courts in Gujarat also had the jurisdiction to entertain any action arising out of the agreement, it has to be held that the agreement to have the disputes decided in Kolkata by an Arbitrator in Kolkata, West Bengal, was valid and the respondent Company had wrongly chosen to file its application under Section 9 of the Arbitration and Conciliation Act before the Bhavnagar Court (Gujarat) in violation of such agreement. The decisions of this Court in A.B.C.Laminart (P) Ltd. as also Hakam Singh are very clear on the point."
(emphasis supplied by me)
32. We, accordingly, do so and direct that Arbitration Application No.1 of 2008 titled Maa Bhagwati Coke (Guj) (P) Ltd. V. Balaji Coke Industry (P) Ltd. pending in the Court of the Principal Civil Judge (Senior Division), Bhavnagar (Gujarat), be transferred to the Calcutta High Court. There will, however, be no order as to costs. (emphasis supplied by me) (12) I have gone through the contents of the arbitration application and further carefully considered the aforesaid provisions of law along with the judgment cited by the counsel for the Applicant.
(13) On consideration of the Constitution Bench judgment in SBP & Co. V. Patel Engineering Ltd. and another (supra), as discussed in the case of National Insurance Co.Ltd. (supra), wherein the preliminary issues identified and segregated in SBP & Co. V. Patel Engineering Ltd. and another, while considering application u/s 11 of the Act of 1996, have been categorised in three Categories and the issue whether the party making the application has approached the appropriate High Court is Category No.22.1(a) and whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement is Category No.22.1(b), are bound to be decided by the Chief Justice / his designate. In this particular case, two arbitration applications arising out of the same agreement dated 17.3.2008 are pending before two different High Courts. The arbitration application filed at an earlier point of time, by the Non-applicant is pending before the Calcutta High Court whereas the present arbitration application filed by the Applicant, which is later in point of time, is pending before this Court, therefore, for deciding as to which High Court is competent to decide the arbitration application, including the territorial jurisdiction, sub-section (11) of Sec. 11 of the Act of 1996 assumes importance, which was not considered in both the aforesaid judgments.
(14) The case of Balaji Coke Industry Pvt.Ltd. (supra) was a decision on the transfer petition filed under Article 139-A(2) of the Constitution of India read with the relevant provisions of the Supreme Court Rules and Section 25 of the Code of Civil procedure filed by Balaji Coke Industries Pvt. Ltd. for transfer of Arbitration Application No.1 of 2008, under Section 9 of the Act of 1996, titled Maa Bhagwati Coke (Guj) (P) Ltd. V. Balaji Coke Industry (P) Ltd. pending in the Court of the Principal Senior Civil Judge at Bhavnagar (Gujarat) to the Calcutta High Court. In the said judgment, the jurisdiction for filing of an application u/s 9 of the Act of 1996 was under challenge and the Court while considering the arbitration clause read with Sec. 17,20 and 25 CPC, came to the conclusion that the application has been filed in wrong court, therefore, the said application was transferred to the right court. The arbitration clause 21 of the Agreement dated 17.3.2008 is relevant along with the other aforesaid relevant issues, as submitted by Dr.P.C.Jain, counsel for the Applicant, for deciding the territorial jurisdiction to entertain an application u/s 11 of the Act of 1996. I am of the prima facie view that this Court has territorial jurisdiction to entertain this arbitration application but in the present case, two arbitration applications are pending simultaneously, therefore, before proceeding further on the issue of jurisdiction, I have to consider sub-section (11) of Sec. 11 of the Act of 1996 as to which High Court is competent to decide on the request, which could not have been under consideration in Balaji Coke Industry Pvt. Ltd. (supra) which was a case of filing of an application u/s 9 of the Act of 1996, by one party only, before the wrong Court.
(15) On further consideration of the aforesaid three judgments of the Supreme Court, I find that neither the Constitution Bench in SBP & Co. nor National Insurance Co. nor in Balaji Coke, the Supreme Court considered Sec.11(11) where two applications filed before different High Courts or their designate at different point of time for appointment of the Arbitrator are pending at the same time, then which High Court is competent to decide on the request.
(16) In this particular case, request was first made before the Calcutta High Court by the Non-applicant in the month of September, 2011 for appointment of the Arbitrator for deciding the disputes arising out of the agreement dated 17.3.2008 whereas the Applicant has made similar request on 26.3.2012 before this Court subsequently, for appointment of the Arbitrator in respect of the lease agreement dated 17.3.2008, after service of the notice of the Calcutta High Court. The request for appointment of the Arbitrator has been first made before the Chief Justice / his designate of the Calcutta High Court and then subsequently to the Chief Justice / his designate of this Court, arising out of the same arbitration agreement dated 17.3.2008, therefore, Chief Justice / his designate of the Calcutta High Court, shall alone be competent to decide on the request under sub-section (11) of Sec. 11 of the Act of 1996 which will also include the decision on the territorial jurisdiction of the appropriate High Court.
(17) Accordingly, I refrain from recording my finding on the issue of territorial jurisdiction and this Arbitration application is consigned to record. However,after the decision of the arbitration application by the Calcutta High Court, the parties will be at liberty to move an application for listing of the present arbitration application.
(Prem Shanker Asopa) J.
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