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(ii) The arbitration proceeding shall be initiated by a Party lending an arbitration demand to the other party. The demand shall be sent in accordance with Article 17.2 of this Agreement. The demand shall be sent to the Party at the address and to the individual specified in Article 17.2.

(iii) .

(iv)

(v)."

A meeting was held at Mumbai between the representatives of the parties on 04.10.2004. However, the respondent filed a petition under Section 9 of the Act in the Bombay High Court being Arbitration Petition No. 459 of 2004. The respondent, on 14.10.2004, issued notice of arbitration pursuant to Article 17.2 of the PSA. The notice of arbitration was issued by the respondent in Bellary, Karnataka and served upon the appellant in Bellary and Bangalore, Karnataka. The appellant wrote a letter pointing out that unilateral action threatened by the respondent was contrary to the letter and spirit of the PSA read with the Settlement Agreement, as the respondent was under the obligation to first meet the product requirements of the appellant. The appellant, in view of the urgent need to protect its interests, filed Arbitration Petition No. 9 of 2005 before the Principal District Judge, Bellary on 06.02.2005 seeking appropriate orders to restrain the respondent from breaching the PSA read with the Settlement Agreement. On 07.02.2005, an interim order was passed by the Principal District Judge, Bellary restraining the respondent from insisting upon an artificial ceiling of 40 TPD of LAR. The respondent filed an I.A. No.4 in the said arbitration petition under Section 151 of the CPC read with Section 42 of the Arbitration Act to dismiss the arbitration petition filed by the appellant at Bellary. On 05.03.2005, the Principal District Judge, Bellary dismissed I.A. No. 4 in arbitration petition and held that as the entire cause of action had arisen in Bellary, the Bellary Court had jurisdiction to decide the matter. An appeal was preferred by the respondent against the order passed by the Principal District Judge, High Court of Karnataka which allowed the appeal filed by the respondent and directed that the issue of jurisdiction would have to be decided by the Bombay High Court in respondent's Arbitration Petition No. 459 of 2004. By the impugned order dated 02.03.2006, the Bombay High Court held that it had the jurisdiction to entertain Arbitration Petition No. 459 of 2004. Hence the present appeal. The High Court, in para 16 of its order, has held as under:-

It is the contention of Mr. Nariman that the High Court has failed to notice and appreciate that the cause of action as set out hereunder arose in Bellary:

a) the disputes raised by both the parties emanate from the maintenance of product levels stored/supplied from the plants of both the parties, which are situated in Bellary, Karnataka;
b) at the relevant time, the registered office of the appellant was situated in Bellary, Karnataka;
c) the registered office of the respondent is situated in Bellary, Karnataka;
d) the action threatened by the respondent to limit the supply of Liquid Argon ("LAR") up to 40 Tonnes per day ("TPD") was proposed to be made in Bellary, Karnataka;
e) the consequences of such actions would also have an effect on the plant of the appellant and the ancillary units in the same situated in Bellary;
f) the entire chain of events leading to the unilateral threat issued by the respondent to restrict the supply of Liquid Argon occurred in Bellary.

The High Court also is not correct in holding that since during the pendency of the petition filed by the respondent before it, the Registered Office of the appellant had shifted to Mumbai, the appellant was carrying on business in Mumbai, and that this would vest jurisdiction in the Bombay High Court under Section 9 of the Act, in relation to disputes which had arisen prior to the shifting of the Registered Office. According to learned senior counsel, the subsequent events do not retrospectively confer jurisdiction upon Courts to entertain pending cases, where there was no jurisdiction to entertain them at inception and that the sole intention of the respondent in filing a petition under Section 9 of the Act before the Bombay High Court was to oust the jurisdiction of the competent Court under Section 2(1)(e) of the Act and that the High Court by claiming jurisdiction rendered the petition filed in the Bellary Court by the appellant nugatory and ineffective. Mr. Nariman also submitted that the test under Section 2(e) of the Act applies uniformly across India and that the principle in the explanation to Section 20 CPC should be applied to Clause 20 of the Bombay Letters Patent. Concluding his argument, Mr. Nariman submitted that the High Court in passing the impugned order has mis-interpreted the provisions of the Act and Clause 12 of the Letters Patent and the net effect of the impugned order is that it renders nugatory the competency of the Courts having jurisdiction where admittedly the entire cause of action has arisen. Further it affords jurisdiction to courts on the basis of an enactment, namely, the Letters Patent which would not apply since in arbitration matters, jurisdiction must be solely determined by Section 2(1)(e) of the Act.

CAUSE OF ACTION:

Mr. Nariman, learned senior counsel submitted that the Bombay High Court has correctly come to the conclusion that no cause of action in relation to the present dispute has arisen in Bombay and that this finding has been recorded at 3 separate places in the impugned judgment and has not been challenged by the respondent. It is submitted that the Registered Offices of both the appellant and the respondent were situated in Bellary District at all relevant times. Further, the plants of both the appellant and the respondent are situated in Bellary, the concerned products are supplied and payment in respect of them is made at Bellary, the alleged actions of the respondent took place at Bellary and the consequences allegedly emanating from these actions would be borne in Bellary. Finally, the correspondence in relation to the threatened action also took place at Bellary. Mr. Nariman further submitted that as per the decision of this Court in Patel Roadways Limited, under Section 20, the place of business of a Corporation, for the purposes of the institution of a suit against it, would be the place at which the cause of action arose, if a subordinate office of the Corporation was located at that place, or failing which, the place of the principal office of the Corporation. Therefore, he submitted that in the Patel Roadways judgment, it was held that the words 'place of business' used in Section 20(a) of the CPC would, in relation to a Corporation, refer exclusively to the place at which the cause of action arose, if a subordinate office of the Corporation was also situated there. In such circumstance, no suit can be initiated in the court with jurisdiction over the principal office of the corporation under Section 20(a). It is only in cases where there is no subordinate office at the place at which the cause of action arose, that a suit may be instituted under Section 20(a) in the court with jurisdiction over the principal office of the corporation. Conversely, no suit may be instituted under Section 20(a) in the court with jurisdiction over the subordinate office unless the cause of action has also arisen within the same jurisdiction.