Allahabad High Court
Sudhanshu Misra vs Fiitjee Ltd. Thru Chairman Shri D.K. ... on 27 July, 2017
Author: Suneet Kumar
Bench: Suneet Kumar
HIGH COURT OF JUDICATURE AT ALLAHABAD A.F.R. Court No. - 30 Case :- ARBITRATION AND CONCILI. APPL.U/S11(4) No. - 10 of 2014 Applicant :- Sudhanshu Misra Opposite Party :- Fiitjee Ltd. Thru Chairman Shri D.K. Goel And Another Counsel for Applicant :- Pavan Kumar,Anupam Kumar Counsel for Opposite Party :- Nipun Singh Hon'ble Suneet Kumar,J.
The instant application has been filed under Section 11(4)/(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator in terms of Clause 36(a) of the Agreement.
The applicant was appointed Assistant Professor (Maths) in the centre run and managed by the opposite party FIITJEE LTD. Upon successfully completing probation and after undertaking training applicant joined on an annual salary as provided under the rules.
The Service Rules of the Employees of FIITJEE Ltd. contains the terms and conditions of appointment. The opposite party declined salary hike vide email communication dated 18 June 2013, consequently, applicant demanded that the matter be referred to an arbitrator in terms of clause 36(a) of the Rules. 36(a) provides that "All disputes and differences of any nature with regard to the FIITJEE service manual and the interpretation and adjudication of clauses and claims respectively shall be referred to the Sole Arbitrator appointed by the Company i.e. FIITJEE Ltd.............The venue of the arbitration shall be Delhi/New Delhi only.
Clause 36(b) reads: Subject to 36(a) hereinabove, the exclusive jurisdiction in the matter shall vest in Delhi/New Delhi Courts.
The opposite party filed counter affidavit, inter alia, raising objection to the maintainability of the application under Section 11 of the Arbitration and Conciliation Act, 1996, before this Court. It is contended that the Courts of Delhi alone will have jurisdiction. It is further stated that the applicant was appointed a faculty member by the opposite party at their Corporate House at New Delhi. Contract of service was concluded and signed between the parties in New Delhi. It is not being disputed that pursuant to the contract, the applicant was placed at their centre at Kanpur Nagar in the State of Uttar Pradesh from where the dispute between the parties has arisen.
The question for determination, in the facts of the present case is, as to whether, this Court would have territorial jurisdiction to entertain the application under Section 11 of the Act in view of the exclusion clause contained in paragraph 36(a) and 36(b) of the service contract.
Section 11(12)(b) of the Act provides that where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an arbitration other than the international commercial 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 Section 2(1)(e) is situate, and where the High Court itself is the court referred to in clause (e) of sub- section (1) of Section 2, to the Chief Justice of that High Court. Clause (e) of sub-section (1) of Section 2 defines ''Court' which means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary 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.
When it comes to the question of territorial jurisdiction relating to the application under Section 11, besides the above legislative provisions, Section 20 of the Code of Civil Procedure is relevant. Section 20 of the Code states that subject to the limitations provided in Sections 15 to 19, every suit shall be instituted in a Court within the local limits of whose jurisdiction, (a) the defendant, or each of the defendants where there are more than one, at the time of commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or (b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or (c) the cause of action, wholly or in part arises.
The explanation appended to Section 20 clarifies 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.
In the instant case, the applicant does not dispute that the Court at Delhi and at Uttar Pradesh would have jurisdiction as part of cause of action has arisen within the territorial jurisdiction of both the Courts. The question is, whether parties by virtue of clause 36(a) & 36(b) of the agreement have agreed to exclude the jurisdiction of the courts at Uttar Pradesh or in other words, whether in view of clause 36(a) & 36(b) of the agreement, the jurisdiction of the Chief Justice of the High Court at Uttar Pradesh has been excluded.
For the answer to the above question, the effect of the jurisdiction clause in the agreement which provides that the venue of the arbitration shall be Delhi/New Delhi only, further, the exclusive jurisdiction in the matter shall vest in Delhi/New Delhi Courts has to be seen. The intention of the parties by having clause 36(a) & 36(b) in the agreement is clear and unambiguous that the courts at New Delhi shall have jurisdiction. The parties have impliedly excluded the jurisdiction of other courts.
Supreme Court in Swastik Gases Private Limited vs. Indian Oil Corporation Limited, (2013) 9 SCC 32, held that where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, then an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner.
The above view finds support from the decisions of the Supreme Court in Hakam Singh vs. Gammon (India) Ltd. (1971) 1 SCC 286; A.B.C. Laminart (P) Ltd. vs. A.P. Agencies, 1989 2 SCC 163; R.S.D.V. Finance Co. (P) Ltd. vs. Shree Vallabh Glass Works Ltd. 1993 2 SCC 130; Angile Insulations vs. Davy Ashmore India Ltd. 1995 4 SCC 153; Shriram City Union Finance Corporation Ltd. vs. Rama Mishra 2002 9 SCC 613; Hanil Era Textiles Ltd. vs. Puromatic Filters (P) Ltd 2004 4 SCC 671; and Balaji Coke Industry (P) Ltd. vs. Maa Bhagwati Coke Gujarat (P) Ltd. 2009 9 SCC 403.
In Balaji Coke (supra), the agreement, inter alia, provided " the place of arbitration shall be Kolkata". The Supreme Court held that the parties had knowingly and voluntarily agreed that the agreement would be subject to Kolkata jurisdiction and even if the Courts in Gujarat also had jurisdiction to entertain any action arisen out of the agreement, it has to be held that the agreement to have the dispute decided in Kolkata by an arbitrator in Kolkata.
The three Judge Bench in Swastik Gases (supra) upon revisiting the decisions rendered earlier by the Supreme Court, in para 55 observed as follows:
It will be seen from the above decisions that except in A.B.C. Laminart where this Court declined to exclude the jurisdiction of the Courts in Salem, in all other similar cases an inference was - drawn (explicitly or implicitly) that the parties intended the implementation of the exclusion clause as it reads notwithstanding the absence of the words "only", "alone" or "exclusively" and the like. The reason for this is quite obvious. The parties would not have included the ouster clause in their agreement were it not to carry any meaning at all. The very fact that the ouster clause is included in the agreement between the parties conveys their clear intention to exclude the jurisdiction of Courts other than those mentioned in the concerned clause. Conversely, if the parties had intended that all Courts where the cause of action or a part thereof had arisen would continue to have jurisdiction over the dispute, the exclusion clause would not have found a place in the agreement between the parties.
In Inter Globe Aviation Ltd. vs. N. Satchidanand 2011 7 SCC 463, the Court placing reliance on the principle laid down in A.B.C. Laminart (supra), held that any clause which ousts the jurisdiction of all courts having jurisdiction and conferring jurisdiction on a court not otherwise having jurisdiction would be invalid. The Court observed:
"It is now well settled that the parties cannot by agreement confer jurisdiction on a court which does not have jurisdiction; and that only where two or more courts have the jurisdiction to try a suit or proceeding, an agreement that the disputes shall be tried in one of such courts is not contrary to public policy. The ouster of jurisdiction of some courts is permissible so long as the court on which exclusive jurisdiction is conferred, had jurisdiction. If the clause had been made to apply only where a part of cause of action accrued in Delhi, it would have been valid. But as the clause provides that irrespective of the place of cause of action, only courts at Delhi would have jurisdiction, the said clause is invalid in law, having regard to the principle laid down in A.B.C. Laminart (supra). The fact that in this case, the place of embarkation happened to be Delhi, would not validate a clause, which is invalid."
The Court finally concluded that in the jurisdiction clause of an agreement the absence of the words like "alone", "only", "exclusive" or "exclusive jurisdiction" is neither decisive nor does it make any material difference in deciding the jurisdiction of the Court. The very existence of a jurisdiction clause in an agreement makes the intention of the parties to an agreement quite clear and it is not advisable to read such a clause in the agreement like a statute. In the present case, only the Courts in Delhi had jurisdiction to entertain the disputes between the parties.
In the circumstances, I am of the considered opinion that this Court lacks territorial jurisdiction in view of the ouster clause conferring jurisdiction upon the Courts in Delhi.
The petition is, accordingly, dismissed with liberty to the applicant to approach the Court having jurisdiction.
Order Date :- 27.7.2017 S.Prakash