Jharkhand High Court
Pratap Electrical And Co. vs Asea Brawn Boveri Ltd. (Abb) on 9 February, 2005
Equivalent citations: AIR2005JHAR95, 2005(2)BLJR943, [2005(2)JCR127(JHR)], AIR 2005 JHARKHAND 95, 2005 AIR - JHAR. H. C. R. 1027, 2005 (2) BLJR 943, (2005) 2 JCR 127 (JHA), 2006 (4) ARBI LR 426, 2005 BLJR 2 943, (2006) 4 ARBILR 426, (2005) 4 CIVLJ 434
Author: M.Y. Eqbal
Bench: M.Y. Eqbal
JUDGMENT M.Y. Eqbal, J.
1. In the instant application under Section 11(6) of the Arbitration and Conciliation Act, the petitioner has prayed for appointment of a co-arbitrator for entering into the reference and adjudication of dispute and differences.
2. Petitioner was awarded some work order videf work No. 281 dated 13.6.1996 and 280 dated 6.12.1997 by the respondent for execution of certain work for modernization of SAIL/Bokaro Steel Plant at Bokaro, Jharkhand.
3. Petitioner's case is that after completing the work successfully bills were submitted but the respondent made part payment to the petitioner. The total amount of bill to the work executed is Rs. 9,46,555.93/-. Petitioner has sent several letters to the respondent but none of the letters have been responded. Petitioner, therefore, invoked arbitration clause and referred the matter to arbitration in terms of Clause 26 of the agreement appointing Sri S.P. Tiwary, Arbitrator on behalf of the petitioner vide letter dated 8.11.2002. Petitioner said to have again served a letter dated 15.2.2003 for appointment of an arbitrator but could not get any response. Hence, this petition.
4. In the counter-affidavit filed by the respondent, it is stated that the instant application for appointment of an arbitrator is not maintainable. Besides controverting the facts made in the petition, it is stated that Clause 28 of the general condition of contract provides that the sub-contract dated 13.6.1996 entered into by and between the petitioner and the respondent shall be deemed to have been entered in the city of Bangalore and, therefore, Bangalore Court has only jurisdiction to adjudicate the dispute and this Court has no jurisdiction to entertain the petition under Section 11(6) of the Act.
5. Mr. Rajiv Ranjan, learned counsel appearing for the petitioner submitted that the agreement between the parties was entered into at Bokaro and as per clause 26 of the agreement only this Court has jurisdiction to entertain the petition. Learned counsel referred Section 42 of the said Act, and submitted that the petition filed in this Court is maintainable. Learned counsel relied upon a decision of the Supreme Court in the case of Hakam Singh v. Gammon (India) Ltd., AIR 1971 SC 740.
6. Mr. Indrajit Sinha, learned counsel appearing on behalf of the respondent, on the other hand, submitted that although the contract was signed at Ranchi but the respondent resides in Bangalore and, therefore, only that Court has jurisdiction to entertain the petition. Learned counsel submitted that there is a specific stipulation in the agreement that it shall be deemed to have been executed at Bangalore and, therefore, only the High Court which falls within the jurisdiction of Bangalore shall have the jurisdiction. Learned counsel relied upon the decision of the Supreme Court in the case of A.B.C. Laminart Pvt. Ltd and Anr. v. A.P. Agencies, Salem AIR 1989 SC 1239, in the case of State of Orissa and Ors. v. Gokulananda Jena, 2003 (3) JCR 191 (SC) : (2003) 6 SCC 465, in the case of Firm Ashok Traders and Anr. v. Gurumukh Das Saluja and Ors., (2004) 3 SCC 155 arid in the case of Sharda Construction v. The State of Jharkhand and Ors., 2005 (1) JLJR 162 : 2004 (4) JCR 786 (Jhr).
7. Before adverting the rival contention of the learned counsel appearing for the parties, I would like to refer clause 26 of the agreement which reads as under :
"26.0 ARBITRATION It at any time any question, dispute or difference whatever shall arises between the Company and the Sub-Contractor upon, or in relation to or in connection with the sub-contract which cannot be amicably settled, either party may give to other notice in writing of the existence of such question, dispute or difference, and the same shall be referred to the adjudication of two arbitrators, one to be nominated by the Company and the other to be nominated by the Sub-Contractor, or in the case of the said arbitrators not agreeing then to the adjudication of an umpire to be appointed by the arbitrators in writing before proceeding with the reference and the award of the arbitrators, or in the event of their not agreeing of the umpire appointed by them shall be final and binding on the parties and the provision of the Indian Arbitration Act, 1940 and of the rules thereunder and any statutory modification thereof shall be deemed to apply to and be incorporated in the contract.
Work under the contract shall be continued by the Sub-Contractor during the arbitration proceedings unless otherwise directed in writing by the Company or unless the matter is such that the work cannot, possibly be continued until the decision of the arbitrators or of the umpire, as the case may be, is obtained."
8. It is also useful to refer Clause 28 of the agreement which reads as under :
"28.0 JURISDICTION This sub-contract shall be deemed to have been entered in the city of Bangalore and the Court of law in Bangalore alone shall have jurisdiction to adjudicate thereon."
9. In A.B.C. Laminart Pvt. Ltd and Anr. v. A.P. Agencies, Salem, AIR 1989 SC 1239, the fact of the case was that the parties entered into an agreement for supply of rubbish of metallic yarn. Clause 11 of the agreement provided that any dispute arising out of this sale shall be subject to Kaira jurisdiction. Disputes having arisen out of the contract, the respondents filed a suit against the appellants in the Court of Salem for the recovery of balance amount. The appellants took a defence as preliminary objection that Salem Court had no jurisdiction to entertain the suit. As the parties, by express contract, had agreed to confer exclusive jurisdiction in regard to all disputes arising out of the contract on the Civil Court at Kaira, in the light of the aforesaid facts, their Lordships held, "Where there may be two or more competent Courts which can entertain a suit, consequent upon a part of cause of action having arisen together with, 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."
10. In Hakam Singh v. Gammon India Limited, (Supra), the fact was that the parties by agreement agreed that in the event of dispute arising out of the contract, the same shall be referred to arbitration under the Arbitration Act, 1940. It was further agreed that the contract shall be deemed to have been entered into by the parties concerned in the city of Bombay and the Court of law in the city of Bombay alone shall have jurisdiction to adjudicate their own dispute arose between the parties and one of the parties submitted a petition to the Court of Subordinate Judge, Varanasi for an order under Section 20 of the Arbitration Act, 1940. On those facts, their Lordships of the Supreme Court, considering Section 41 of the Arbitration Act, 1940, held as under :
"The Code of Civil Procedure in its entirety applies to proceedings under the Arbitration Act. The jurisdiction of the Courts under the Arbitration Act, to entertain a proceeding for filing an award is accordingly governed by the provisions of the Code of Civil Procedure. By Clause 13 of the agreement it was expressly stipulated between the parties that the contract shall be deemed to have been entered into by the parties concerned in the City of Bombay. In any event the respondents have their principal office in Bombay and they were liable in respect of a cause of action arising under the terms of the tender to be sued in the Courts at Bombay. 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."
11. In the case of State of Orissa and Ors. v. Gokulananda Jena, reported in 2003 (3) JCR 191 (SC) : (2003) 6 SCC 465, the appellant by a writ petition filed under Article 226 of the Constitution, challenged the order of the Designated Judge based on the following facts :
(i) Since the contract between the parties was executed before the Act came into force, hence, the Act, does not apply.
(ii) Dispute is a state one having arisen nearly 20 years ago.
(iii) Clause 23 of the agreement contemplates the adjudication of a dispute by a company arbitrator.
(iv) No person other than an arbitrator nominated in clause 23 of the agreement has any jurisdiction to entertain the disputes.
Relying on the Konkan Rly. Case, (2002) 2 SCC 388 the High Court came to the conclusion that a writ petition under Article 226 of the Constitution was not maintainable against an order of Designated Judge under Section 11(6) of the Act. The Supreme Court holding that writ petition under Article 226 is maintainable further observed :
"8. However, we must notice that in view of Section 16, read with Sections 12 and 13 of the Act, as interpreted by the Constitution Bench of this Court in Konkan Rly. almost all disputes which could be presently contemplated can be raised and agitated before the arbitrator appointed by the Designated Judge under Section 11(6) of the Act. From the perusal of the said provisions of the Act, it is clear that there is hardly any area of dispute which cannot be decided by the arbitrator appointed by the Designated Judge. If that be so, since an alternative efficacious remedy is available before the arbitrator, a writ Court normally would not entertain a challenge to an order of the Designated Judge made under Section 11(6) of the Act, which includes considering the question of jurisdiction of the arbitrator himself. Therefore, in our view even though a writ petition under Article 226 of the Constitution is available to an aggrieved parry, ground available for challenge in such a petition is limited because of the alternative remedy available under the Act, itself."
12. In the case of Sharda Construction v. The State pf Jharkhand and Ors., reported in 2004 (4) JCR 786 (Jhr) : 2005 (1) JLJR 162, a Bench of this Court while considering the question with regard to the jurisdiction of the arbitrator held as under :
"14. From bare perusal of the aforesaid provision, it is manifest that the legislature has specifically conferred power on the arbitrator himself to decide the issue of his jurisdiction or the existence of arbitration agreement. Consequently, the jurisdiction of the Chief Justice under Section 11(6) of the Act, being merely administrative and not adjudicatory, the Chief Justice or his nominee cannot usurp the said jurisdiction or authority. It is well settled that when the Act specifically confers power on a specific authority to decide an issue, it implies that only such authority has the necessary power and all other authorities are excluded from exercising that power by necessary implication.
19. In the light of the law laid down by the Supreme Court, in my considered opinion, learned Chief Justice has erred in law in adjudicating upon the question of existence and validity of the Arbitration Agreement contained in the contract. As noticed above prima facie there is an arbitration clause contained in the contract entered into between the parties. The stand of the petitioner is that neither the notification deleting the arbitration clause was communicated by the respondents nor the petitioners were aware about the deletion of arbitration clause by Gazette Notification. On the other hand, the stand of the respondents is that clause 23 of the Contract which is the arbitration clause stood deleted by Gazette notification in the year 1992 but because of inadvertence such clause was not struck out from the contract. In my opinion, all these questions relate to existence and validity of Arbitration agreement is to be adjudicated upon only by Arbitral Tribunal. It is beyond the power of the learned Chief Justice to have gone into these questions and adjudicate upon the issue of existence and validity of the Arbitration Clause."
Their Lordships further observed :
"20. Admittedly, Clause 23 which is the arbitration clause exists in the contract entered into between the parties. The said contract is not a statutory contract which was signed by both the parties. Whether the arbitration clause in the said contract which has no statutory force, can be said to have been ' deleted merely because of some executive order issued by the Government by a notification, is also an issue to be considered while deciding the existence and validity of the arbitration agreement contained in the said contract. In my considered opinion, therefore, the finding of the learned Chief Justice on this issue is wholly without jurisdiction."
13. Coming back to the instant case, admittedly the parties entered into a contract at Bokaro and the work under the contract was executed at Bokaro. All the bills relating to work were submitted at Bokaro and all correspondences were made by the petitioner with the Area Incharge of the respondent at Bokaro. Admittedly, therefore, the Court within which jurisdiction Bokaro city situate shall have the jurisdiction. The question, therefore, that falls for consideration is whether the ouster clause contained in the agreement will oust the jurisdiction of the Court conferred by the Arbitration and Conciliation Act, 1996.
14. Section 42 of the Act of 1996 defines the jurisdiction for applications under the Act. Section 42 reads as under :
Jurisdiction.--Notwithstanding anything contained elsewhere in this Part 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.
15. From bare reading of the aforesaid provision, it is manifest that the non-obstante clause contained in the said provision makes it clear notwithstanding ouster of jurisdiction clause in the agreement, application under the new Act, shall be filed in a Court having jurisdiction. The non-obstante clause excludes anything anywhere contained in the whole Act, or in any other law for the time being in force, if it is contrary to or in consistent with substantive provisions contained in the section.
16. At this stage, I would like to refer Section 2(3) of the Act which defines :
S.2(1)(e).--"Court" 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 reference 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.
17. A conjoint reading of the definition of Court as given in Section 2(e) and Section 42 of the Act, leaves no mind of doubt that only one Court, namely, the Civil Court of original jurisdiction or the High Court in exercise of its ordinary original jurisdiction shall have the jurisdiction to entertain application in respect of disputes and differences forming subject matter of the arbitration.
18. As noticed above, the agreement between the parties was executed at Bokaro and all work in execution of the contract was done at Bokaro which falls within the jurisdiction of this Court. In my considered opinion, therefore, the deeming clause contained in the agreement ousting the jurisdiction of this Court and conferring the jurisdiction to the Court at Bangalore cannot override the provision of Section 42 of the Act of 1996. I, therefore, hold that application filed by the petitioner under Section 11(6) is maintainable.
19. Admittedly, dispute arose between the parties and the petitioner complied the requirements of Section 11 of the Act, before approaching this Court. It is, therefore, a fit case for appointment of sole arbitrator for entering into the reference. Hence, as agreed between the parties, Shri K.N. Prasad, Sr. Advocate of this Court is appointed as sole arbitrator. He is directed to enter into reference and give his award within a period of four months from the date of entering into reference.
With the aforesaid observations and directions, this application is allowed.