Delhi High Court
Apparel Export Promotion Council vs Shri Prabhati Patni, Proprietor ... on 1 December, 2005
Equivalent citations: 2005(3)ARBLR518(DELHI), 125(2005)DLT511
Author: Badar Durrez Ahmed
Bench: Badar Durrez Ahmed
JUDGMENT Badar Durrez Ahmed, J.
Page 2405
1. The question that arises for consideration is whether this court has jurisdiction to entertain the OMP No. 34/2000 filed by the petitioner praying for the rejection of the award dated 31.10.1999 made by the respondent No. 2.
2. The facts leading to the filing of the petition (OMP No. 34/2000) are as follows. The petitioner and the respondent No. 1 entered into an agreement on 01.07.1992. In terms of clause 4.9 of the conditions of contract governing the said agreement, disputes between the parties were to be settled by reference to arbitration. Clause 4.9, so much as is relevant, is reporduced hereinbelow:-
"4.9 Arbitration.
4.9.1 Settlement of Disputes.
In case any dispute or difference shall arises between the parties either upon any question relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned or these conditions, or otherwise concerning the work, or the execution, or failure to execute the same, whether arising during the progress of the work, or after the completion or abandonment thereof, or as to the breach of this contract, then either party shall forthwith dispute or difference shall be referred to Director General of the Council who will be the sole Arbitrator, and Council whose decision thereon shall be final, conclusive, binding on all the Parties.
The Contractor shall not stop work on account of reference of any dispute with Arbitrator and shall complete the work as per the time Schedule of the agreement."
Page 2406
3. Since disputes had arisen between the parties, the arbitration clause was invoked and the designated Arbitrator (i.e., The Director General of the petitioner) was requested to enter upon the reference. The respondent No. 1 preferred a claim before the said arbitrator (respondent No. 2) and the petitioner filed its counter-claim. Thereafter, the arbitration proceedings continued and culminated into making of the award dated 31.10.1999 by the respondent No. 2. It is noteworthy that the entire arbitration proceedings were conducted at Delhi and the award itself was made at Delhi. By the impugned award, the arbitrator (respondent No. 2) rejected the claims of the respondent No. 1 as well as the counter-claim of the petitioner. Since both the adversaries, namely, the petitioner and the respondent No. 1 were unhappy with the impugned award, both have filed objections Under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the said Act') for setting aside the said award. However, while the respondent No. 1 filed the objections against the said award before the District Court at Jaipur (Rajasthan) being Arbitration Case No. 102/2000), the petitioner has filed the present petition (OMP No. 34/2000) in this court on 31.01.2000. In the proceedings before the District Court at Jaipur, the petitioner is said to have appeared and filed its reply. However, the District Court at Jaipur, on being informed about the pendency of the present petition, has, by an order dated 17.03.2001, stayed further proceedings before it. In the present petition, this court had by an order dated 09.02.2000 directed issuance of notice to the respondents. After several attempts, the respondent No. 1 was ultimately served. At the first instance, the present application being IA No. 4652/2001 was moved by the respondent No. 1 Under Section 4, 2(b), 2(e), 2(h), 7, 34, 35 and 42 of the said Act read with Order 7 Rules 10 and 11 and Section 151 of the Code of Civil Procedure, 1908 (hereinafter referred to as the 'CPC') praying for dismissal / rejection of OMP No. 34/2000 filed by the petitioner on the ground that it was not maintainable for want of jurisdiction. Thereafter pleadings were completed in the application and it is this application which has come up for disposal today. If the application is to succeed, then the petition (OMP No. 34/2000) would have to be dismissed on the ground of lack of territorial jurisdiction. On the other hand if the application fails, then the petition would have to be considered on merits.
4. Mr Shyam Moorjhani, the counsel appearing for the applicant, respondent No. 1, drew my attention to clause 7 of the 'FORM OF ARTICLES OF AGREEMENT' and clause 4.8.3 of the 'CONDITIONS OF CONTRACT' governing the agreement dated 01.07.1992 entered into between the petitioner and the respondent No. 1. The said clause 7 and clause 4.8.3 read as under:-
"7. All disputes arising out of or in any way connected with the agreement shall be deemed to have arisen in Jaipur and only the Courts in Jaipur shall have jurisdiction to determine the same."
"4.8.3 Jurisdiction The contract and its operation shall be governed by the laws of India for the time being in force, irrespective of the place of delivery of materials, the place of execution of work or place of payment. This contract be deemed to have been entered into at Jaipur."
Page 2407
5. It was contended by Mr Moorjhani that civil jurisdiction, by agreement between the parties, was reserved with the courts at Jaipur and, therefore, this court would have no jurisdiction to entertain the present petition. In support of his arguments, Mr Moorjhani relied upon several decisions:-
i) Virendra Saigal v. Sumatilal Jamnalal: ;
ii) Hakam Singh v. Gammon (India) Ltd: ;
iii) Sushil Ansal v. Union of India and Anr., AIR 1980 Delhi 43;
iv) Ganpatrai Agarwall v. The Fertiliser Corporation of India: ;
v) Aligarh Muslim University and Anr. v. Vinay Egineering Enerprises (P) Ltd. and Anr., .
6. On the other hand, Mr Kuljeet Rawal, appearing for the petitioner, submitted that this court would have jurisdiction to entertain the present petition inasmuch as the arbitrator, respondent No. 2, was stationed at Delhi. The arbitration proceedings were conducted throughout in Delhi and that the impugned award has also been made at Delhi. Therefore, clearly, this court would have jurisdiction to entertain the present petition under Section 34 of the said Act seeking rejection of the award. Mr Rawal placed reliance upon the following decisions:-
i) Sharma Enterprises v. C.M.C. Ltd: 2003 III AD (Delhi) 472;
ii) Sthapati Engineers and Builders v. Central Building Research Institute and Anr: ;
iii) A.B.C. Laminart Pvt. Ltd. and Anr v. A.P. Agencies, Salem: .
7. He further submitted that in view of the provisions of Section 42 of the said Act, since the petitioner had filed the present petition in this court, this court alone would have jurisdiction even with regard to the objections filed by the respondent No. 1 and that the respondent No. 1's objections at Jaipur cannot be proceeded with. He also contended that the place of arbitration would confer jurisdiction on the court and in support of this proposition, he placed reliance on the following decisions:-
i) Hindustan Steel Works Construction Ltd v. N.V. Chowdhury and Ors. : ;
ii) Prahlad Rai Dalmia v. Union of India: ;
iii) Food Corporation of India v. Evdomen Corporation: .
Page 2408
8. Mr Rawal alternatively submitted that since the respondent No. 1 had participated in the arbitration proceedings at Delhi, therefore, the respondent No. 1 had, by so participating, waived the ouster clause, namely, clause 7. It was further contended that the respondent No. 1 had appeared in the present proceedings and had taken time to file a reply and, therefore, in view of Section 4 of the said Act the right to object with regard to jurisdiction would be deemed to have been waived.
9. I shall now consider the effect of clause 7 of the 'FORM OF ARTICLES OF AGREEMENT' set out above. To recapitulate, clause 7 provides that all disputes arising out of or in any way connected with the agreement shall be deemed to have arisen at Jaipur and 'only' the courts at Jaipur shall have jurisdiction to determine the same. As indicated above, Mr Moorjhani had contended that by virtue of this clause, only the courts at Jaipur would have jurisdiction and all other courts, including this court have been excluded by agreement between the parties. Mr Rawal, however, had contended that such a clause would not operate to shut out or exclude jurisdiction of a court within whose territorial limits some part of the cause of action has arisen. The law on this aspect is quite well-settled. In Hakam Singh (supra) the Supreme Court observed as under:-
"It is not open to the parties by agreement to confer by their agreement jurisdiction on a Court which it does not possess under the Code. But where two courts or more have under the Code of Civil Procedure jurisdiction to try a suit or proceeding an agreement between the parties that the dispute between them shall be tried in one of such Courts is not contrary to public policy. Such an agreement does not contravene Section 28 of the Contract Act."
10. In the context of the facts of the present case, there is no dispute that the courts at Jaipur have jurisdiction. Therefore, the parties could by agreement restrict jurisdiction to the courts at Jaipur, excluding the jurisdiction of other courts which may also have had jurisdiction sans the agreement between the parties. If any further confirmation of this position in law is required, the same is provided by the decision of the Supreme Court in the case of A.B.C. Laminart Pvt Ltd.(supra), wherein the court observed, in para 18 of the said decision as under:-
"Thus it is now a settled principle that where there may be two or more competent Courts which can entertain a suit consequent upon a part of the cause of action having arisen therewithin, if the parties to the contract agreed to vest jurisdiction in one such Court to try the dispute which might arise as between themselves the agreement would be valid. If such a contract is clearly, unambiguous and explicit and not vague it is not hit by Sections 23 and 28 of the Contract Act. This cannot be understood as Page 2409 parties contracting against the Statute. Mercantile law and practice permit such agreements."
11. In this decision, the Supreme Court also indicated that (See: para 20) when the court has to decide the question of jurisdiction pursuant to an ouster clause, it is necessary to construe the ousting expression or clause properly. The Supreme Court in A.B.C. Laminart (supra), was considering the clause which reads as under:-
"Any dispute arising out of this sale shall be subject to Kaira jurisdiction"
While considering the validity and effect of the aforesaid clause, the Supreme Court observed that an agreement which purports to oust the jurisdiction of the court absolutely is contrary to public policy and hence void. Construing Section 28 of the Indian Contract Act, 1872, the court held that every agreement by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunal, or which limits the time within which he may thus enforce his rights, is void to that extent. However, this would be subject to exceptions, namely, (1) a contract to refer to arbitration and to abide by its award, (2) as a matter of commercial law and practice to submit disputes on or in respect of the contract to agreed proper jurisdiction and not other jurisdictions though proper. The meaning, therefore, is clear that while a contract to oust absolutely the jurisdiction of the court would be unlawful and void being against the public policy, restricting jurisdiction in one of the many courts which would otherwise have jurisdiction would not be opposed to public policy.
12. After considering the entire case law on the subject including the earlier decision in the case of Hakam Singh (supra), the court in A.B.C. Laminart Pvt. Ltd. (supra), came to the conclusion that:-
"... where such an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other courts. When the clause is clear, unambiguous and specific accepted notions of contract would bind the parties and unless the absence of ad idem can be shown, the other courts should avoid exercising jurisdiction. As regards construction of the ouster clause when words like 'alone', 'only', 'exclusive' and the like have been used there may be no difficulty. Even without such words in appropriate cases the maxim 'expressio unius est exclusio alterius' 'expression of one is the exclusion of another' may be applied. What is an appropriate case shall depend on the facts of the case. In such a case mention of one thing may imply exclusion of another. When certain jurisdiction is specified in a contract an intention to exclude all others from its operation may in such cases be inferred. It has therefore to be properly construed."
Page 2410
13. Applying the aforesaid principles in A.B.C. Laminart (supra), the Supreme Court construed the clause under consideration in the following words:-
"Thus Kaira court would even otherwise have had jurisdiction. The bobbins of metallic yarn were delivered at the address of the respondent at Salem which, therefore, would provide the connecting factor for court at Salem to have jurisdiction. If out of the two jurisdictions one was excluded by clause 11 it would not absolutely oust the jurisdiction of the court and, therefore, would not be void against public policy and would not violate Sections 23 and 28 of the Contract Act. The question then is whether it can be construed to have excluded the jurisdiction of the court at Salem. In the clause 'any dispute arising out of this sale shall be subject to Kaira jurisdiction' ex facie we do not find exclusionary words like 'exclusive', 'alone', 'only' and the like. Can the maxim 'expressio unius est exclusio alterius' be applied under the facts and circumstances of the case ? The order of confirmation is of no assistance. The other general terms and conditions are also not indicative of exclusion of other jurisdictions. Under the facts and circumstances of the case we hold that while connecting factor with Kaira jurisdiction was ensured by fixing the situs of the contract within Kaira, other jurisdictions having connecting factors were not clearly, unambiguously and explicitly excluded. That being the position it could not be said that the jurisdiction of the court at Salem which court otherwise had jurisdiction under law though connecting factor of delivery of goods thereat was expressly excluded."
However, in the facts of the present case, I find that exclusion of courts other than the courts at Jaipur is specific inasmuch as the said clause 7 specifically provides that "only the courts at Jaipur shall have jurisdiction to determine the same".
14. A similar view was also taken by a Division Bench of this court in the case of A.K. Surekha and Ors. v. The Pradeshiya Investment Corporation of U.P. Ltd: . In that case, the clause under consideration was as under:-
"57. Jurisdiction for litigation The borrower and PICUP agree that for all purposes of litigation relating to this agreement the jurisdiction shall be of Lucknow courts only."
The Division Bench noted the contention of the parties with regard to jurisdiction and after considering several decisions of the Supreme Court and of other High Courts, concluded in the following words:-
"28. We have examined the relevant clause of the agreement and decided cases of various courts on question of territorial jurisdiction. If the principles which have been crystallised by the various courts are made applicable to the facts of this case, the conclusion would be irresistible that this Court has no territorial jurisdiction to entertain this petition Page 2411 because in the instant case the Respondent had entered into an agreement with the company of the Petitioner at Lucknow and in the loan agreement, it was clearly stated that for the purposes of litigation relating to this agreement the territorial jurisdiction shall be of Lucknow courts alone."
15. I also had an occasion to consider a similar clause in Mr. Mahesh Chand Gupta v. Assistant Collector, Sadar Bazar, Delhi and Anr: . The clause under consideration in Mahesh Chand Gupta (supra) was as under:-
"17. Jurisdiction: All suits, claims and other legal proceedings whatsoever arising out of this agreement shall be instituted in a court or courts of competent jurisdiction at Lucknow only."
In the said decision, after, inter alia, considering the decisions in the case of A.K. Surekha (supra), A.B.C. Laminart (supra), Hakam Singh (supra) and other decisions, I held that it is only the courts at Lucknow which would have had jurisdiction in that case.
16. Upon consideration of all the aforesaid decisions, the position becomes clear that where two or more competent courts have jurisdiction to entertain a matter, if the parties by contract agree to fix jurisdiction in only one of them, then such a contract or agreement would have to be held to be valid. The consequences thereof would be that the court on which the jurisdiction was conferred by agreement would be the only court entitled to exercise such jurisdiction. It is, in fact, not so much a question of conferment of jurisdiction but one of election or exclusion of jurisdiction. Where two or more courts have jurisdiction because part of cause of action may have arisen therewithin, parties may contract to exclude jurisdiction and elect to restrict it to one or more of the courts. In the present discussion, I have proceeded on the assumption that this court also has jurisdiction, although it is the contention of Mr Moorjhani that no part of cause of action arose within the territorial jurisdiction of this court. Be that as it may, assuming that this court otherwise has jurisdiction, in view of the said clause 7, such jurisdiction has been excluded by agreement between the parties and only the courts at Jaipur would have jurisdiction in the matter.
17. I now come to the second argument of Mr Rawal that this being a petition under the Arbitration and Conciliation Act, 1996, the appropriate court having jurisdiction would be the court within whose territorial limits the arbitration proceedings were conducted and the award was made. It is Mr Rawal's case that since the proceedings were conducted in Delhi and that the impugned Page 2412 award was made in Delhi, this court would clearly have jurisdiction to entertain the present petition. In view of the discussions above, it becomes clear that even if this court had jurisdiction, assuming for the moment that conduct of the arbitration proceedings and making of the award confers jurisdiction, the same is expressly excluded in view of the ouster clause (clause 7 referred to above). So, this argument of Mr Rawal is of no consequence.
18. Anyway, since it has been argued that the situs of arbitration proceedings confers jurisdiction on the court, I proceed to deal with this proposition. Mr Rawal had relied upon the decision in Sharma Enterprises (supra) and Sthapati Engineers and Builders v. Central Building Research Institute and Anr. : 1997 DLT 232 in support of this proposition. In Sharma Enterprises (supra), the agreement had been executed at Secunderabad but the application for appointment of arbitrator had been filed in Delhi. A learned Single Judge of this court (J.D. Kapoor, J) held that despite the fact that the agreement had been executed at Secunderabad, this court had jurisdiction primarily because-
a) the corporate office of the petitioner therein was at Delhi;
b) some of the payments were also made in Delhi and;
c) the disputes were to be referred to arbitration to be conducted by the Project Engineer at Delhi.
Mr Rawal particularly relied upon the last of the aforesaid three reasons indicated in the said decision to establish that Delhi had jurisdiction. However, I do not see how this decision [Sharma Enterprises (supra)] would be of any help to Mr Rawal. It is clear from a reading of the said decision that part of the cause of action arose in Delhi and more importantly, there was no ouster clause as in the present case. In any event, the said decision does not say that merely and only because the disputes were to be settled by arbitration to be conducted by the Project Engineer at Delhi, the courts at Delhi would have jurisdiction. The decision in the case of Sthapati Engineers and Builders (supra), would also not be of any help to Mr Rawal. In that case, a learned Single Judge of this court (Dr M.K. Sharma, J) held that the Delhi High Court had jurisdiction because the respondent therein (Central Building Research Institute) was a Unit of the Council of Scientific and Industrial Research which is a society having its registered office in Delhi. It is in view of the fact that the respondent was held to be carrying on its business activities in Delhi that this court held that this court would have jurisdiction to try and decide the petition. In passing, the learned Judge had also observed that the arbitrator had also filed the award in this court and, accordingly, there could be no objection to this court trying and deciding as to whether the award passed by the arbitrator could be made a rule of the court or not. The facts of the present case are entirely different to those obtaining in Sthapati Engineers and Builders (supra). In the latter case, the respondent was carrying on activities in Delhi and, Page 2413 therefore, this court naturally had jurisdiction. What is more important is that in Sthapati Engineers and Builders (supra), there was no ouster clause excluding the jurisdiction of the courts at Delhi. Therefore, this decision [Sthapati Engineers and Builders (supra)] is also of no help to the petitioner.
19. On the other hand, the decision of the learned Single Judge of this court in the case of Sushil Ansal (supra) clearly shows that the situs of arbitration does not confer jurisdiction in the courts. While considering the question of territorial jurisdiction, it is vital to consider the competency of the court for deciding the subject matter of the dispute had a suit been filed instead of invocation of arbitration. In Sushil Ansal (supra), the contract was entered into at Lucknow in respect of the works executed at Kanpur and disputes arose which were referred to decision by a sole arbitrator who made his award. A petition was filed under Section 14 and 17 of the Arbitration Act, 1940 for filing of the award and making the same a rule of the court. That petition was filed in this court claiming that this court had jurisdiction on the ground that the arbitrator was appointed in Delhi and that he had made the award at Delhi. This court held, after examining the provisions of Section 41, 31 and 2(c) of the Arbitration Act, 1940 that:-
"Thus one has to ascertain what are the questions forming the subject matter of the reference to arbitration which resulted in the award. Suppose those questions arise in a suit then find out which would be the competent court to decide such suit. The court competent to decide such questions in the suit would be the court having jurisdiction to decide the present petition under the Arbitration Act for making the award a rule of the Court.
The court held further that:-
"The matters, as alleged by the petitioner, relating to appointment of arbitrator at New Delhi, making of award by him at New Delhi and the Union of India having its headquarters at New Delhi are not the questions forming the subject matter of reference and therefore do not confer jurisdiction upon this court."
This decision was followed by another decision of a learned Single Judge (B.N. Kirpal, J, as he then was) in the case of Gulati Construction Company, Jhansi v. Betwa River Board and Anr. : , wherein it was observed as under:-
"...Merely because the arbitrator chooses to hold the proceedings in a place, where admittedly no suit could be instituted, and chooses to make and publish an award at that place it would not give the Courts of that place territorial jurisdiction to decide the matters arising under the Arbitration Act.
20. Although the decisions in Sushil Ansal (supra) and Gulati Construction (supra) were under the Arbitration Act, 1940, the position would not be different under the Arbitration and Conciliation Act, 1996 because the definition of 'court' in Section 2(e) of the new Act is not materially different Page 2414 from the definition given in Section 2(c) of the old Act. Here too, 'court' would mean that the court having 'jurisdiction to decide the questions forming subject matter of the arbitration if the same had been the subject matter of a suit.' Reading this definition of 'court' in Section 2(e) of the 1996 Act into Section 34 thereof would obviously mean that expression 'recourse to a court against an arbitral award' appearing in the said Section 34 would have reference to a court having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit. Therefore, to determine the jurisdiction of a court for the purposes of Section 34, one has to look at the subject matter of the arbitration and not at the situs of arbitration because that is wholly irrelevant. The situs of arbitration or the fact that the award was made at a particular place, would not be relevant for conferring jurisdiction. It is only the subject matter of the arbitration construed in a manner as if the arbitration proceeding was a suit that would be determinative of a court having jurisdiction to entertain and hear a petition under Section 34 of the Arbitration and Conciliation Act, 1996. Mr Rawal had relied upon a decision of a Division Bench of this court in the case of Prahalad Rai Dalmia v. Union of India: and in particular on the following observations made therein in para 7 which read as under:-
"7. ... The arbitrator held his sittings at Bombay. He made his award there. So no part of the cause of action arose at Delhi. Only on the ground that the Union of India carries on business at Delhi, Dalmia brought the present suit in Delhi. We are in respectful agreement with the view taken in Bakhtawar Singh's case and hold, in agreement with the learned single judge, that Delhi courts have no jurisdiction to try the suit.
In this case, it is clear that no part of cause of action had arisen in Delhi and the suit had been filed in Delhi merely on the ground that the Union of India carries on business at Delhi. This is not the situation which arises in the present case and a mere passing reference that the arbitrator was holding sittings in Bombay and made the award there and, therefore, no cause of action arose in Delhi, cannot be interpreted in a manner to indicate that the situs of arbitral proceedings would by itself confer jurisdiction. That is not the purport of the said decision in Prahalad Rai Dalmia (supra) and it was certainly not discussed therein. The decision in the case of Food Corporation of India (supra) is also of no help to the petitioner which also holds that under Section 2(c) of the Arbitration Act, 1940, 'court' means a civil court having jurisdiction to decide the questions forming the subject matter of reference if the same had been the subject matter of a suit. Therefore, the contention of Mr Rawal that the situs of arbitration and the fact that the award was made in Delhi would confer jurisdiction on this court to entertain this petition under Section 34 of the said Act is not tenable.
Page 2415
21. I now come to the argument advanced by Mr Rawal based upon a reading of Section 42 of the Arbitration and Conciliation Act, 1996. To appreciate what has been submitted by him, it would be relevant to examine the provisions of Section 42 which reads as under:-
"42. Jurisdiction.-"Notwithstanding anything contained elsewhere in this Act 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."
A reading of Section 42 makes it clear that it is a non-obstante provision and that it indicates that if any application is submitted under Part I (which includes an application under Section 34) in a court, then that court alone would have jurisdiction over the arbitral proceedings and all subsequent applications arising out of the arbitral agreement and the arbitral proceedings shall be made in that court and in no other court. Mr Rawal has construed this provision to mean that since the petitioner had filed his objections under Section 34 first in this court and the respondent had thereafter filed its objections in the court at Jaipur, this court and this court alone would have jurisdiction and the court at Jaipur, notwithstanding anything contained elsewhere or in any other law for the time being in force, would not have jurisdiction. I am unable to agree with this submission of Mr Rawal. The primary reason being that Section 42 also uses the word 'court' which has to be construed in terms of the definition in Section 2(e). This court (i.e., Delhi High Court), clearly, is not the 'court', in the facts of the present case, which is referred to in Section 2(e) of the said Act. Therefore, the mere filing of the petition under Section 34 in this court would not clothe this court with jurisdiction in respect of the disputes between the parties for all times to come. Mere filing of the objections under Section 34 in a wrong court would not clothe that court with jurisdiction. This court does not otherwise have jurisdiction as indicated above and, therefore, the mere fact that the petition under Section 34 has been filed here would not confer jurisdiction on this court.
22. A similar issue arose in Virender Saigal v. Sumatilal Jamnalal: (V 57 C 3). In that case, a learned Single Judge (S.N. Andley, J) considered the provisions of Section 2(c) and 31(4) of the Arbitration Act, 1940. I have already indicated that the provisions of Section 2(c) of the 1940 Act and that of Section 2(e) of the 1996 Act, for the purpose of this case, are not materially different. Section 31(4) of the 1940 Act needs some explanation. It reads as under:-
"Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference any application under this Act has been made in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and Page 2416 all subsequent applications arising out of that reference and the arbitration proceedings shall be made in that Court and in no other Court."
A mere reading of the said provision would indicate its similarity with Section 42 of the 1996 Act. In respect of Section 31(4) of the 1940 Act, this court in Virender Saigal (supra), held that the mere filing of an application in any court irrespective of whether such court had jurisdiction in the matter or not would not fix that court permanently as the court in which all subsequent applications are to be filed. The only difference that I note which could be material when comparing the provisions of Section 31(4) of the 1940 Act and the Section 42 of the 1996 Act are the absence of the words 'competent to entertain it' in Section 42 of the 1996 Act. In my opinion, this would not make any difference inasmuch as the word 'court' itself has been given a specific meaning in terms of Section 2(e) of the 1996 Act and I have already held that this court would not, in the context of the factual matrix of the present case, qualify to be such a court as defined under Section 2(e) of the 1996 Act. Therefore, the mere fact that the filing of Section 34 application by the petitioner in this court was prior in time to the filing of the Section 34 application by the respondent in the court at Jaipur, would not confer jurisdiction on this court because the reference to 'court' in Section 42 has to be read in the light of the definition given in Section 2(e) of the 1996 Act.
In Hindustan Steel Works Construction (supra), the issue was whether the provisions of Section 31(4) of the Arbitration Act, 1940 or clause of the Letters Patent of the Calcutta High Court would prevail. It was held that the former would prevail. While considering the provisions of Section 31(4) of the Arbitration Act, 1940, the single Judge of the Calcutta High Court was of the view that the expression 'no other court' appearing therein clearly contemplated a situation where two or more courts have jurisdiction in respect of an application and when the application is made in one of such courts first in order of time, then that court will be fixed with the exclusive jurisdiction and all other courts which otherwise are entitled to entertain the application, will be divested of their jurisdiction in the matter.
From this, it becomes clear that for invoking the provisions of Section 31(4) which is in pari materia to the provisions of Section 42 of the new Act, the court in which the application is first instituted must be a court having jurisdiction in the matter. Therefore, this decision also does not help the petitioner. In fact, it supports the contention of the respondent and the view taken by me.
23. Lastly, I shall deal with the alternative arguments of Mr Rawal. It was contended that because the respondent No. 1 had participated in the arbitration proceedings at Delhi, the respondent No. 1 had thereby waived the ouster clause. Since the situs of the arbitration proceedings is irrelevant insofar as the question of territorial jurisdiction is concerned, participation in arbitration proceedings held at Delhi would not confer jurisdiction on the courts at Delhi. So, the question of waiver which entails an intentional or Page 2417 voluntary relinquishment of a known right 'does not arise. To be sane, the participation in the arbitration proceedings at Delhi did not, in law or fact, mean that the respondent No. 1 had given up, abandoned or relinquished the right to have all issues adjudicated exclusively by the courts at Jaipur. That right remained unaffected. Therefore, this plea advanced by Mr Rawal cannot be accepted. It was also urged taking recourse to Section 4 of the said Act, that the right to object to the territorial jurisdiction of this court was also lost inasmuch as the respondent No. 1 had appeared in the present proceedings and had taken time to file a reply. This submission is also without any basis. Firstly, Section 4 of the said Act does not apply to the present situation. A plain reading of the provision would disclose that it has reference to a situation prior to the making of an award. This is clear from the expression 'and yet proceeds with arbitration without stating his objection'. In the present case, the arbitral proceeding has terminated as the award has been made (See: section 32 of the said Act). The waiver that is imputed is post the arbitral proceedings and in such a situation the deeming provision of section 4 is clearly inapplicable. Secondly, in any event, there is no factual basis for imputing waiver. After notice was served upon the Respondent No. 1, as stated above, at the first instance, the present application (IA No. 4652/2001) was filed by the respondent No. 1 praying for dismissal of the petition (OMP NO. 34/2000) on the ground of lack of territorial jurisdiction. Therefore, even the alternative arguments of Mr Rawal fail.
24. In view of the foregoing discussion, this application (IA No. 4652/2001) is allowed. The petition (OMP 34/2000) is dismissed on the ground of lack of territorial jurisdiction. No order as to costs.