Karnataka High Court
Hatti Gold Mines Company Limited vs Khaleel Ahmed Dakhani on 29 July, 1999
Equivalent citations: ILR1999KAR4525, 2000(5)KARLJ557
Author: B.N. Mallikarjuna
Bench: B.N. Mallikarjuna
ORDER B.N. Mallikarjuna, J.
1. This revision under Section 115 of the CPC by the judgment-debtor in Exc. P. 50 of 1999 on the file of the Principal District and Sessions Judge, Raichur is directed against the order dated 24-5-1999. Subsequently, by way of amendment petitioner has also sought for quashing the order dated 21-6-1999 on I.A. I an application under Order 21, Rule 58 of the CPC. Respondent is the decree-holder.
2. Briefly stated the facts are:
Decree-holder is a contractor and resident of Shorapur in the District of Gulbarga. Judgment-debtor is a company incorporated under the provisions of the Companies Act, 1956 having its principal office at Bangalore and the mining activities at a place called Hatti in Lingsugur Taluk, Raichur District. Company having decided to go in for a High School building for the convenience of the children of its employees, called for tenders and the tender offered by the decree-holder was accepted and the construction work was entrusted to him subject to certain terms and conditions contained in the agreement dated 9-3-1995. Accordingly, decree-holder started work and in the middle certain disputes arose and therefore there was correspondence between the parties. Ultimately, it would appear that on 24-7-1996 company terminated the contract. Judgment-debtor therefore approached the Hon'ble Chief Justice of Karnataka under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') in C.M.P. 7 of 1996 and sought for appointment of an Arbitrator in accordance with Clause 35 in the agreement. This application was allowed on 11-11-1997 and on Sri H.S. Bhat, Chief Engineer (retired), residing at Bangalore was appointed as an Arbitrator with a direction to the arbitrator to submit his award within a period of 4 months. Subsequently, decree-holder appeared before the arbitrator on 14-9-1997 and the judgment-debtor on 9-10-1997 and after hearing the parties arbitrator made the award dated 28-8-1998. It would appear that certain claims of the decree-holder were allowed and other claims were disallowed.
3. Aggrieved by the said award, judgment-debtor filed an application before the Principal City Civil Judge, Bangalore under Section 34 of the Act in Ar. Case 39 of 1998. Decree-holder appeared in Court and resisted the petition. It may also be noted here that decree-holder had entered caveat and therefore copy of the application under Section 34 was served on him and he resisted the application and that matter is pending enquiry. In the meantime, decree-holder approached the District Court at Raichur by filing Exc. P. 50 of 1999, this application was filed on 16-4-1999 and on 17-4-1999 Court ordered attachment of moveables. However, decree-holder does not appear to have paid the process and therefore on 24-5-1999 Court ordered for re-issuance of attachment warrant. Thereafter, judgment-debtor made an application I.A. I requesting the Court to raise the attachment order. The Court by impugned order rejected the application I.A. I and therefore certain moveables viz., motor vehicles and an excavator in all six items were attached on 24-6-1999 and they are now kept in the custody of the Civil Judge (Junior Division) and Judicial Magistrate First Class, Lingsugur. It is these two orders that are under challenge in this revision.
4. Sri Dayanand S. Naik, learned Counsel for the revision petitioner-judgment-debtor argued that the Court has committed a serious irregularity in ordering attachment when an application under Section 34 of the Act, 1996 was pending consideration. His arguments are three-fold. First, he contended that in view of Sections 34 and 36 of the Arbitration Act, 1996 award was not enforceable either on 17-4-1999 or on 24-5-1999. Secondly, the Court at Raichur had no jurisdiction in view of the agreement between the parties and in view of Section 20 of the CPC. Thirdly, he contended that in view of the pendency of the application under Section 34, decree-holder should have moved any subsequent application in the matter only in the Principal City Civil Court, Bangalore.
5. Per contra, Sri Veeresh B. Patil, learned Counsel for the respondent-decree-holder vehemently argued that jurisdictional Court is the District Court at Raichur and the Court at Bangalore had no jurisdiction to entertain the application. The application having been filed in a Court which had no jurisdiction to entertain, said application was not a proper application in the eye of law and therefore decree-holder was free to execute the award. The order impugned does not suffer either from illegality or irregularity and as such not amenable to revision under Section 115 of the CPC.
6. Learned District Judge, Raichur, after hearing both the parties and considering the relevant papers holds that the City Civil Court, Bangalore had no jurisdiction to entertain the application under Section 34 of the Arbitration Act, 1996 and the Court which had the jurisdiction in the matter is only the Court at Raichur. Further, he holds that the Principal City Civil Judge, Bangalore was not competent to entertain the application to set aside the award and as such the application filed by decree-holder for enforcing the award was well within law and therefore there was no ground whatsoever to raise the order of attachment.
7. It is undisputed that there was an agreement between the parties providing for arbitration in the event of a dispute, decree-holder approached the Hon'ble Chief Justice for appointment of an arbitrator, an arbitrator was appointed and the said arbitrator after holding proceedings made the award on 20-8-1998. Section 34 of the Act provides for an application by either of the parties to the agreement for setting aside the award and that application is required to be filed within three months in the Court having jurisdiction. Further, it provides for condoning the delay for sufficient cause to be shown provided the delay is only 30 days and not thereafter. A perusal of Section 36 of the Act makes it clear that an award becomes enforceable if there was no application under Section 34 within the prescribed time or if such application having been made has been refused. If such an application is not there under Section 34 or if an application has been refused, award becomes enforceable in the same manner as if it were a decree of the Court in accordance with the provision of the CPC.
8. In the instant case, it is undisputed that a clause in the agreement viz., Clause 35 stipulates that in the event of dispute between the parties, Court at Bangalore alone will have the jurisdiction. Suffice it to say that by consent of the parties, jurisdiction cannot be conferred on a particular Court. Sections 16, 17, 18 and 19 of the CPC speak about the place of suing. Section 20 of the CPC provides for institution of suit within the jurisdiction of the Court where the defendant resides or cause of action raises. Explanation to Section 20 stipulates that a corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place. The Apex Court, interpreting the scope and purport of Section 20 of the CPC, more importantly referring to the word 'or' occurring in that explanation has said in M/s. Patel Roadways Limited, Bombay v M/s. Prasad Trading Company', that the Court which has jurisdiction to entertain the suit/matter is the one in whose jurisdiction the company carries on the work and the company has its subsidiary office and not in the Court within whose jurisdiction the principal office of the company is situated. Undisputably, in this case, company has its branch office at Hatti and the work was carried out at Hatti, principal office is at Bangalore. In view of the decision in M/s. Patel Roadways Limited, supra, the earlier decisions of the Apex Court in Hakam Singh v M/s. Gammon (India) Limited and Globe Transport Corporation v Triveni Engineering Works and Another, are not of any assistance to the revision petitioner (judgment-debtor).
9. Learned Counsel for judgment-debtor relied on two other decisions of the Apex Court viz., Aligarh Muslim University and Another v Vinay Engineering Enterprises (Private) Limited and Another and Oil and Natural Gas Commission v Utpal Kumar Basu and Others , in support of his contention that an application under Section 34 of the Act (which is in the nature of a suit) could have been filed either in the Courts within whose jurisdiction the company carries on business or according to the terms of agreement or within whose jurisdiction the principal office is situated, viz., either at Bangalore or at Raichur. In Aligarh Muslim University's case, supra, apart from the agreement between the parties, the work was carried out at Aligarh, therefore the Apex Court declared that the Jurisdiction Court was the Court at Aligarh. In the second case, the Court said that the Calcutta High Court had no jurisdiction in the matter and therefore it could not have entertained the writ petition. The Apex Court has no doubt commented in strong words condemning entertaining petitions and making orders in matters where the Court has no jurisdiction at all. But in this case and more importantly in view of the decision in Patel Roadways case, supra, it would be difficult to say that the District Court at Raichur had no jurisdiction in the matter. But the question for consideration would be whether in the given facts and circumstances of this case, learned District Judge, Raichur could have made the orders impugned, more particularly when it was brought to his notice the pendency of the matter in the City Civil Court at Bangalore.
10. Section 34 of the Act provides for filing an application in the Court for setting aside the award. It does not say what the Court is. Section 37(1)(b) of the Act provides for an appeal against an order setting aside or refusing to set aside an arbitral award under Section 34 to the Court authorised by law to hear appeals from original decree of the Court passing the order. Section 2(e) of the Act defines what the 'Court' is. Arbitration Act, 1940 was repealed by Act 1996. In the earlier Act, expression 'Court' was defined in Section 2(c) of the said Act. The definitions read as under:
Act 1996 Act 1940 "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 suck Principal Civil Court, or any Court of Small Causes;"
"2(c): "Court"
means the Civil Court having jurisdiction to decide the questions forming the subject-matter of the Court reference if the same had been the subject-matter of a suit, but does not, except for the purpose of arbitration proceedings under Section 21 include a Small Causes Court;"
A careful reading of Sections 34 and 2(c) of the Act, 1996 makes it clear that an application under Section 34 has to be filed in the Principal Court of original jurisdiction in a district and does not include any Civil Court of a Grade inferior to such Principal Civil Court or any Court of Small Causes. Interpreting Section 2(c) of the Act, 1940 and Sections 11 and 14 of the Act, Supreme Court in M/s. Guru Nanak Foundation v M/s. Rattan Singh and Sons, observed that in the absence of an arbitration agreement if a dispute was required to be resolved by initiating proceedings in a Civil Court that Court which will have jurisdiction to entertain the suit alone would have jurisdiction to entertain the award and the arbitration in view of Section 14(2) would have to file the award in that Court. Karnataka Civil Courts Act defines the jurisdiction of the Civil Courts in the State. Section 14 of the Karnataka Civil Courts Act defines the jurisdiction of District Courts, Section 16 jurisdiction of Civil Judge and Section 17 jurisdiction of Munsiff. Sections 14, 16 and 17 read thus:
"Section 14: Jurisdiction of District Courts.--(1) The District Court shall be deemed to be the Principal Civil Court of original jurisdiction within the local limits of its jurisdiction.
(2) Subject to the provisions of the Code of Civil Procedure, 1908 (Central Act 5 of 1908), the jurisdiction of a District Court shall extend to all original suits and proceedings of a Civil nature.
Section 16: Jurisdiction of Civil Judge.--The jurisdiction of the Court of a Civil Judge shall extend to all original suits and proceedings of a Civil nature.
Section 17: Jurisdiction of Munsiff.--The jurisdiction of a Munsiff's Court shall extend to all original suits and proceedings of a Civil nature, not otherwise excluded from the Munsiffs jurisdiction, of which the amount or value of the subject-matter does not exceed (fifty thousand rupees)".
Section 15 of the CPC contemplates that every suit shall be instituted in the Court of the lowest grade competent to try it. A reading of sub-section (2) of Section 14 of Karnataka Civil Courts Act, 1964 and Sections 15 and 16 of the CPC make it clear that though the District Court is deemed to be the Principal Court of original jurisdiction of original suits and proceedings of a civil nature, suits exceeding the value of Rs. 50,000/- has to be filed only in the Court of Civil Judge (Senior Division) and not in the District Court. The amount awarded in the instant case is Rs. 8,64,530/- together with interest at 18% from 24-7-1996 till the date of repayment. When we consider the value keeping in mind the observations of the Apex Court in M/s. Guru Nanak Foundation's case, supra and the relevant provisions, it would for a moment strike that the suit should be filed in the Court of Civil Judge (Senior Division) and not in the District Court, but there is some difficulty in the matter, in view of the change in the definition of expression 'Court' in Section 2(c) and 2(e) of the Acts. The change we notice in Section 2(c) and 2(e) is while earlier only the Small Causes Court was excluded, now by Section 2(e) all other Civil Courts of a grade inferior to such Principal Civil Court are also excluded. It would therefore appear that whatever the amount awarded, an application for setting aside the award and all other applications subsequent to that application will have to be filed in the Principal Civil Court of original jurisdiction. In this case, it is undisputed that the mining activities of the company are at Hatti, a village in the Taluk of Lingsugur in the District of Raichur. Therefore, whatever the terms in the agreement may be or wherever the principal office of the company might be situated, all matters relating to the dispute must necessarily be filed in the Principal Court of original jurisdiction within whose territorial jurisdiction the activities of the company are carried out. Learned District Judge, while considering Section 14 of the Civil Courts Act has neither considered sub-section (2) of Section 14 nor Sections 15 and 16 of the Civil Courts Act and Section 15 of the CPC. Whatever, that may be, a close reading of those sections perhaps makes it difficult to say that the District Court at Raichur had no jurisdiction to entertain the matter. But the question that would arise in this case is as to whether in the given circumstances of the case, District Court at Raichur could have entertained the application for execution and ordered for attachment of moveables.
11. It is undisputed that an application under Section 34 of the Act was pending enquiry in the Court of Principal Civil Judge, Bangalore. In fact, Clause 35 of the Agreement dated 9-3-1995 provided for making this application before the Court at Bangalore. May be, perhaps in view of this clause in the agreement, decree-holder also had entered caveat under Section 148A of the CPC in the Court at Bangalore. Matter is pending adjudication. It is no doubt true that an application for interim order is made in the said proceedings and no order has been so far made on that application. Merely, because there was no order on that application, whether the Court at Raichur could have entertained the application for enforcing the award and order attachment of moveables is a point for consideration. Application under Section 34, in the circumstances, might have been filed in the Court at Bangalore either inadvertently or by mistake. It may also be noted that the defendant resisted the petition contending inter alia that the Court at Bangalore has no jurisdiction to entertain the application under Section 34 of the Act. Suppose, the Court at Bangalore after hearing concludes that it had no jurisdiction, can it dismiss the application for want of jurisdiction, is a point for consideration. It is fairly conceded by both the learned Advocates that all applications under the Arbitration Act have to be treated as original suits. When that is the case, suppose the Court which had no jurisdiction to entertain, receives the application and allows it to lie over for some time, cannot dismiss the application even if it were to hold later that it had no jurisdiction, in view of Order 7, Rule 10 of the CPC. The view expressed by many High Courts in the country is also to the effect that in such a situation a suit cannot be dismissed but it has to be returned for presentation to the proper Court. In this context, we may refer to the decision in Gulab and Others v Jaggan Ram Singh and Others. Considering the scope of Section 9 and Order 7, Rule 10 of the CPC, observation made by the Court reads as under:
"2. The other question related to the rights of the parties over the Pokhri under the provisions of U.P. Zamindari Abolition and Land Reforms Act. However, as the finding of the Courts below was that the Civil Court had no jurisdiction to decide the case, they should not have dismissed it. The suit should have been returned for presentation to proper Court".
Considering a similar situation, Apex Court in R.S.D.V. Finance Company Private Limited v Shree Vallabh Glass Works Limited, holds:
"7. .. .. .. .. ..
The Division Bench was totally wrong in passing an order of dismissal of suit itself when it had arrived to the conclusion that the Bombay High Court had no jurisdiction to try the suit. The only course to be adopted in such circumstances was to return the plaint for presentation to the proper Court and not to dismiss the suit".
In the instant case also admittedly the application is pending and a question relating to jurisdiction of that Court to entertain the application under Section 34 is required to be considered by the Court. Even assuming that the Court comes to the conclusion that it had no jurisdiction, it cannot dismiss the application except to return for presentation before proper Court. In the circumstances, it is rather difficult to say that the application under Section 34 for setting aside the decree had been finally concluded and the award in question had become enforceable. Learned District Judge, Raichur, not considering this aspect of the matter holds that City Civil Court at Bangalore was not competent and had no jurisdiction and as such application pending enquiry is no application in the eye of law. This is clearly an erroneous observation in the given circumstances of the present case. Learned District Judge was not right in ordering attachment of moveables despite the objections by the judgment-debtor notwithstanding the fact that the Court at Bangalore had no jurisdiction to decide the application under Section 34 of the Act. It is therefore clear that even the procedure adopted by the learned District Judge is not proper and regular and therefore the orders impugned are not sustainable in law.
12. In the result and for the reasons hereinabove stated, this revision in allowed. Both orders dated 24-5-1999 and 21-6-1999 are hereby set aside. Consequently, attachment of moveables are raised. The attached properties shall be returned to the person from whose custody they were seized and attached.