Andhra HC (Pre-Telangana)
E.S.M. Dass, Secunderabad vs Alfa Laval India Limited, Pune on 23 March, 2001
Equivalent citations: 2001(3)ALD410, 2001(3)ALT344
ORDER
1. This arbitration application is filed under Section 11 of the Arbitration and Conciliation Act, (for short "the New Act") read with Para 2 of the Scheme for Appointment of Arbitrators framed by the Chief Justice under sub-section (10) of Section 11 of the Arbitration and Conciliation Ordinance, 1996 (hereinafter referred to as "the Scheme") seeking appointment of an independent Arbitrator for adjudicating the disputes that arose between the parties in connection with the termination of the services of the applicant under Clause 7 of the Contract of Service entered into between him and the respondent-Company on31-l-1995.
2. The facts leading to filing of this application, in brief, are: The applicant was appointed in the Managerial Cadre of the respondent-Company on 7-11-1979 at their Pune Branch. On 16-7-1990 he was posted as Branch Manager at the Bhopal Branch. On 31-1-1995 he was promoted to the Senior Managerial Cadre in the respondent-Company and on the very same day i.e., on 31-1-1995, a service contract was executed by and between the parties. Clause 7 thereof provides for settlement of all disputes between the parties by arbitration, which reads thus:
"7. In case any dispute or difference shall arise between the parties hereto with respect to their respective rights or liabilities or otherwise under this agreement or as to whether the same has been determined, the same shall be referred to arbitration in accordance with the provisions of the Indian Arbitration Act, 1940 or any law relating to arbitration for the time being in force in India, The venue for such arbitration proceedings shall be at Pune. The parties to this agreement respectively undertake to abide by and perform the award that may be made in such arbitration."
On 14-3-1997 the applicant was transferred to Hyderabad Branch. While he was working at Hyderabad he went on leave on medical grounds from 24-5-1999. After returning from medical leave, the applicant appears to have written a letter on 9-10-1999 to the Management of the respondent-Company stating that certain confidential information was being leaked out by some persons in the Company to rival Companies resulting in losses to the respondent-Company. On the very same day he addressed another letter, wherein he stated, inter alia, that in the demoralised situation that was prevailing he was unable to lead the sales/service team, therefore, he was taking leave on medical grounds. Then the respondent-Company terminated his services by an order dated 20-10-1999. On 30-10-1999 the applicant got issued a Lawyer's notice disputing the validity of the termination order and requesting withdrawal of the same, failing which he would be constrained to take appropriate legal action making the respondent-Company liable for the costs.
3. The respondent-Company got issued a reply notice through their Lawyers, on 22-11-1999 justifying the termination order. The applicant then got issued another notice through his advocate on 29-11-1999 calling upon the respondent-Company either to reinstate him into service within seven days from the date of receipt of the said notice or pay a sum of Rs. 62,72,076/- as compensation. It appears that the said notice, which was sent by Registered Post, Acknowledgment Due, was returned by the Postal Authorities with an endorsement "not claimed". However, on 1-12-1999 the respondent-Company addressed a letter to the applicant enclosing a cheque for Rs.49,702/- towards settlement of the applicants claim in respect of medical bills, LTA, proportionate tour claims and conveyance expenses etc. The applicant, without accepting the said payment, got issued a notice, on 10-12-1999, through his Lawyer invoking the arbitration clause and nominating Sri J.P. Roy and Sri Anupam Das as the arbitrators on his side and calling upon the respondent-Company to appoint arbitrators on their side to settle the dispute. On 17-12-1999 the applicant got issued another legal notice appointing Sri Anupam Das as the arbitrator. The respondent then got issued a reply notice on 19-12-1999 refusing to refer the dispute to arbitration. The applicant then filed the present application.
4. The respondent-Company filed a counter-affidavit raising mainly the following three objections:
(1) The service contract dated 31-1-1995 was entered into at Pune, the applicants earliest appointment order with the Company on 7-11-1979 was issued and accepted at Pune, and the parties have specifically agreed that the venue of the arbitration proceedings, if otherwise maintainable, shall be at Pune, and, therefore, the present application could not have been filed before the Chief Justice of the Andhra Pradesh High Court as the Andhra Pradesh High Court has no territorial jurisdiction;
(2) The applicant has deliberately made a claim for fanciful amount of Rs.62,72,076/- solely with a view to bring the dispute within the pecuniary jurisdiction of the Judge of the High Court, who has been designated by the Chief Justice of the Andhra Pradesh High Court under the Scheme; and (3) The services of the applicant were determined in terms of service contract dated 31-1-1995 and, therefore, there is no arbitrable dispute to be referred to arbitration.
5. Counsel for the respondent, Sri Ram Kumar, reiterated the aforesaid three objections during his oral arguments.
6. Counsel for the applicant, Sri B. Nalini Kumar, on the other hand, submits that the applicant was last working at Hyderabad Branch under the respondent at the time of his alleged wrongful termination, hence, part of cause of action has arisen within the territorial jurisdiction of the Andhra Pradesh High Court. He further submits that the arbitration clause in the agreement only mentions about the venue of arbitration and that does not confer exclusive jurisdiction on the Courts at Pune and, therefore, the applicant can maintain the present application under Section 11 of the New Act. He also submits that whether the termination of the applicant's services is valid or not is an arbitrable dispute and, therefore, it has to be referred to arbitration.
7. I do not find any merit in the first objection. It may be that the service contract was signed at Pune, but that by itself cannot confer exclusive jurisdiction on the Courts at Pune. Admittedly, the applicant, at the time when his services were terminated by the respondent, was working at Hyderabad. Thus, a part of the cause of action arose at Hyderabad and, therefore, the Courts at Hyderabad will also have jurisdiction in view of the clear provision of law contained in Section 20(c) of the Code of Civil Procedure.
8. It is no doubt true that when more than one Court has jurisdiction to entertain any particular suit; it is open to parties to choose one such Court and confer jurisdiction on that Court to the exclusion of the other Courts, but such exclusion agreement must be clear, unambiguous and explicit. See the decisions of the Supreme Court in ABC Laminart Private Limited v. A.P. Agencies, and Angile Insulations v. Davy Ashmore India Limited, . There is no such agreement in the present case. What all the parties have agreed, as is evident from the arbitration clause, extracted hereinabove, is that "venue for such arbitration proceedings shall be at Pune". Such an agreement is permissible under Section 20 of the New Act. But, the same cannot, by any stretch of imagination, be construed as an agreement conferring exclusive jurisdiction on the Courts at Pune. Further more, place of arbitration will not confer jurisdiction on the Chief Justice of a particular High Court, for making appointment of an Arbitrator under Section 11 of the New Act. It is the location of a Principal civil Court of original jurisdiction, which can entertain a suit regarding the subject-matter of the dispute, that will confer such jurisdiction. This would be clear from a combined reading of subsection 12(b) of Section 11 and Section 2(e) of the New Act, which are reproduced hereunder :
"Section 11 (12)(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 situate and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that High Court.
Section 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".
9. As already noted, the Court of the Chief Judge, City Civil Court, Hyderabad, is the Principal civil Court, which could have entertained a suit by the applicant regarding the subject matter of the dispute. That Court is within the local limits of the High Court of Andhra Pradesh. Therefore, the Chief Justice of the Andhra Pradesh High Court or his designate under the Scheme has jurisdiction to entertain the present application. The application is, therefore, maintainable.
10. I do not find any merit in the second objection. In my considered view, whether a claim was bloated up or not for the purpose of bringing it within the jurisdiction of the High Court Judge designated by the Chief Justice, can never be an issue for decision in this application. It is for the applicant to value his claim, either rightly or wrongly. Furthermore, in this case, I find that the applicant, at the earliest point of time, i.e., much before he invoked the arbitration clause, valued his claim at Rs.62,72,076/- in his letter dated 29-11-1999. That being so, the contention that the applicant has bloated up the claim for the purpose of filing this application before the Judge of the Andhra Pradesh High Court, designated by the Chief Justice, cannot be accepted.
11. I find no merit either in the third objection. A plain reading of the arbitration clause indicates, prima facie, that it comprehends the dispute regarding the validity of termination order. Be that as it may, that question can only be decided by the arbitrator in view of the three Judge Bench decision of the Supreme Court in Konkan Railway Corporation Limited v. Mehul Construction Company, 2000 (5) Supreme 657.
12. For all the aforementioned reasons, I have no hesitation to overrule the objections raised by the respondent.
13. Since the Arbitration Clause does not mention about the number of Arbitrators, the Arbitral Tribunal has to be constituted by appointing an independent and impartial person as sole Arbitrator.
14. Having regard to the fact that the agreement does not prescribe any qualifications for the arbitrator and the dispute between the parties is not of technical nature, I deem it appropriate to appoint a retired Judge of High Court of Andhra Pradesh as a sole Arbitrator.
15. Accordingly, Ms. Justice S. V. Maruthi, a retired Judge of A.P. High Court, it appointed as the sole Arbitrator to decide the dispute that arose between the parties in connection with the termination of the services of the applicant by the respondent, including the question of arbitrability of the dispute. The Arbitrator is at liberty to fix her own fee. The applicant is, however, directed to deposit, initially, an amount of Rs.25,000/- (Rupees twenty five thousand only) with the Arbitrator as an advance towards her fee.
16. The application is accordingly allowed. No costs.