Sk. Yunus v. Eastern Coalfields Limited — 1996 DIGILAW 326 (CAL)

JUDGMENT The Court: This is an application under s. 20 of the Arbitration Act for filing of the agreement and for appointment of arbitrator in terms of the Arbitration Clause provided in the contract. 2. It is the contention of the petitioner that since the Eastern Coalfields Ltd. failed and/or neglected to make payment of the claim amount and the disputes between the parties and on the failure on the part of the concerned authority to nominate an arbitrator in terms of the Arbitration Clause, the petitioner has no other alternative but to make this application. The main defence of the respondent is that this Court has no jurisdiction to entertain and adjudicate upon the application under s. 20 of the Arbitration Act. 3. It has been alleged on behalf of the respondent that Tender for the said work was invited by the Office of Eastern Coalfields Ltd. at Saktoria and the work in question was carried out of Sanktoria area. It was further alleged that since the petitioner has been carrying on business outside the territorial jurisdiction of this Court, this Court has no territorial jurisdiction to entertain and try and determine the issues involved in the instant petition. 4. It has been contended on behalf of the petitioner that the affidavit-in-opposition of the respondent was affirmed by the Senior Law Officer and constituted attorney of the respondent having his office at 13, R.N. Mukherjee Road, Calcutta. It has accordingly been submitted that the records relating to the case are lying in the office of the Eastern Coalfields Ltd. at 13, R.N. Mukherjee Road, Calcutta within the jurisdiction of this Court and this Court has exclusive jurisdiction to entertain and decide the application. 5. It has been further submitted on behalf of the petitioner that admittedly the subject-matter of the said application being the contract awarded by the Eastern Coalfields Ltd. to the petitioner is a commercial contract and admittedly the Eastern Coalfields Ltd. is carrying on business and/or performing its commercial activities inter alia at 13, R.N. Mukherjee Road, Calcutta within the jurisdiction of this Court. This Court as such has jurisdiction to entertain and determine the said application under s. 20 of the Arbitration Act. 6. The learned Advocate for the petitioner has referred to s. 2(c) of the Arbitration Act, 1940. This Court as such has jurisdiction to entertain and determine the said application under s. 20 of the Arbitration Act. 6. The learned Advocate for the petitioner has referred to s. 2(c) of the Arbitration Act, 1940. He has further submitted that the Court as defined in s.2(c) of the Act means a Civil Court having jurisdiction to decide the question forming the subject-matter of the reference if the same had been the subject-matter of a suit. This Court certainly has jurisdiction to entertain a suit for the cause of action in the said application under s.20 of the Arbitration Act, had there not been a clause for arbitration in the agreement referred to in the application. He has further submitted that this Court as such is a Court under s. 2(c) of the said Act having jurisdiction to entertain and adjudicate the said application under s. 20 of the said Act. 7. The learned Advocate for the petitioner has relied upon the judgment of an unreported decision in Award No. 110 of 1994 passed by me on March, 28, 1996. He has also referred to the unreported judgment in Award Case No. 178 of 1993 passed by Altamas Kabir, J. 8. It has accordingly been submitted on behalf of the petitioner that the respondent has no valid defence to the said application under s. 20 of the Act and it will be therefore just and proper that an order be passed on the said application under s. 20 of the Act directing the respondent to file the Arbitration Agreement in the record of this Court as also for reference of the claim of the petitioner contained in the letter dated 24th September, 1993 forming Annexure 'D' to the said petition for adjudication in Arbitration Proceeding in terms of the Arbitration Agreement between the parties and for costs. 9. The learned Advocate for the respondent, on the other hand, has submitted that this Court has no jurisdiction to entertain the petition since the contract was neither made at Calcutta nor was it executable within the jurisdiction of this Court. He has further contended that invocation of arbitration agreement by letter of demand for arbitration issued by the petitioner, was received by the respondent at Burdwan. Moreover, the matter to which the agreement relates pertains to the work at Kunustoria area, Burdwan and the petitioner also carried on business at Burdwan. He has further contended that invocation of arbitration agreement by letter of demand for arbitration issued by the petitioner, was received by the respondent at Burdwan. Moreover, the matter to which the agreement relates pertains to the work at Kunustoria area, Burdwan and the petitioner also carried on business at Burdwan. So, no part of the cause of caution arose within the jurisdiction of this Court. 10. It has also been contended on behalf of the respondent that there is no scope for reference of any dispute to the arbitrator since the entire dues have been received by the petitioner and the petitioner has signed and accepted the measurement book of work without any objection. 11. It has also been submitted on behalf of the respondent that according to s. 2(c) of the said Act, Court means a Civil Court having jurisdiction to decide the question forming the subject-matter of reference if the same had been the subject-matter of a suit. Under s. 20 of the said Act one can apply to a Court having jurisdiction in the matter to which agreement relates and the agreement can be filed in such Court. Under s. 31 of the said Act, Court means court having jurisdiction in the matter to which the reference relates. The reference in respect of the dispute, which is arising in the instant case has nothing to do at this Court since none of the disputes have arisen or can be said to be forming subject-matter of a reference on the basis of which this Court can exercise jurisdiction. It has accordingly been submitted that a combined reading of the aforesaid sections unmistakably point out that only the Court having jurisdiction to decide the question forming subject-matter of reference to entertain the application in question and that such a Court alone would have jurisdiction to decide all questions regarding validity, affect or existence of an award of Arbitration Agreement between the parties or persons claiming under them having jurisdiction even the conduct of the arbitration proceedings. That being so, residence of defendant or the place where they carried on business or work for gain alone in total disregard of the question forming subject-matter of reference, would not give jurisdiction to the Court at those places for entertaining proceeding arising under the said Act. That being so, residence of defendant or the place where they carried on business or work for gain alone in total disregard of the question forming subject-matter of reference, would not give jurisdiction to the Court at those places for entertaining proceeding arising under the said Act. It is the contention of the respondent that in the instant cases stated earlier the contract was entered into and the entire work to which the alleged dispute pertains was performed at Burdwan. This Court, in the circumstances has no jurisdiction to entertain the present application on the basis of residence of the respondent when the contract was neither made at Calcutta nor was it executable within the jurisdiction of this Court. 12. Learned Advocate has further contended that in the instant case as appearing in the cause title of the petition the respondent having head office at Sanktoria is carrying on business outside the jurisdiction of this Court and whole of cause of action arose at Burdwan. So merely because respondent having an office at Calcutta does not confer any right to initiate proceeding within the jurisdiction of this Court, unless the petitioner shows that part of the cause of action arose within the jurisdiction of this Court and leave under cl. 12 of the Letters Patent was obtained by the Court in view of a decision of Division Bench of this Court. In support of his contention he has relied upon the judgment and decision in the case of Tobu Enterprise Pvt. Ltd. vs. Cameo Industries reported in AIR 1984 Cal 24 . He has further relied upon the judgment and decision in the case of Indian Oxygen Ltd. vs. National Oxygen Ltd. & Anr. reported in (1990) 1 CLT 275. Learned Advocate for the respondent has also strongly relied upon the judgment and decision in the case of Aligarh Muslim University & Anr. vs. Vinoy Engineering Enterprises (PJ Ltd. & Anr. reported in (1994) 4 SCC 710 , wherein it was held that in case where the contract in question was executed, and the construction work was to be carried out outside the jurisdiction of the High Court, no part of the cause of action arose within the territorial jurisdiction of the said High Court merely because respondent was a Calcutta based firm and therefore exercise of jurisdiction by it amounted to abuse of jurisdiction. Hence, the proceeding is unsustainable. Hence, the proceeding is unsustainable. 13. Learned Advocate for the respondent has also relied upon an unreported decision in the case of M/s. Western Industries Ltd. vs. Central Coal Fields Ltd. & Anr. wherein the application was dismissed by me on the ground of jurisdiction. He has also relied upon the judgment and decision in the case of Oil & Natural Gas Commission vs. Utpal Kr. Basu & Ors. reported in (1994) 1 SCC 711. He has accordingly submitted that this application is not sustainable and should be dismissed. 14. I have considered the respective submissions of the Learned Advocates for the parties and the decision cited from the bar. In the instant case subject-matter of the said application is the contract awarded by the Eastern Coalfields Ltd. to the petitioner. The said contract is a commercial contract and admittedly Eastern Coalfields Ltd. is carrying on business and/or performing its commercial activities inter alia at 13, RN. Mukherjee, Road, Calcutta within the jurisdiction of this Court. 'Court' has been defined under s. 2(c) of the Arbitration Act, 1940. In terms of the said s. 2(c) of the said Act Court means Civil Court having jurisdiction to decide the question forming the subject-matter of reference if the same had been the subject-matter of a suit. It appears that the entire subject-matter of a dispute has arisen outside the jurisdiction of this Court. The work in question was to be carried out at Sanktoria, District Burdwan, outside the jurisdiction of this Court. It does not appear from the petition that any correspondence appears to have been exchanged with the General Manager of the Eastern Coalfields Ltd. Kanustoria area, P.O. Topsia, Dist. Burdwan outside the jurisdiction of this Court. 15. In that view of the matter, can it be said that merely because the respondent, ECL has an office in Calcutta, this Court will have jurisdiction? In fact, it appears from the cause title that the petitioner is also carrying on business at Hizalgore, Dist. Burdwan, W.B. outside the aforesaid jurisdiction. Balance of convenience therefore dictates that the proceeding should have been instituted at the appropriate Court in the Dist. of Burdwan. 16. In fact, it appears from the cause title that the petitioner is also carrying on business at Hizalgore, Dist. Burdwan, W.B. outside the aforesaid jurisdiction. Balance of convenience therefore dictates that the proceeding should have been instituted at the appropriate Court in the Dist. of Burdwan. 16. In the unreported decision in the case of Western India Industries Ltd. vs. Central Coalfields Ltd., the similar question came up for consideration before me and it was held by me inter alia as follows ;- "It appears on perusal of Ss. 2(c) and 31 of the Arbitration Act that only the Court having jurisdiction to decide the question forming subject-matter of reference alone would have jurisdiction to decide on questions regarding validity, effect or existence of an award or arbitration between the parties to the agreement or persons claiming under them having jurisdiction over the conduct of the Arbitration proceedings. In view of the aforesaid only the residence of the defendant or the place where the defendant carries on business or work for gain alone would not give jurisdiction to the Court for entertaining proceedings if the question forming subject-matter of reference arises outside the jurisdiction of this Court." 17. It was also held in the said decision that the contract in question was executed outside the jurisdiction of this Court and all works were done under the contract outside the jurisdiction. There is no question of any breach taking place within the jurisdiction. The entire cause of action has arisen outside the jurisdiction of this Court. The question relating to reference arose outside the jurisdiction of this Court and merely because the defendant has local office. The same cannot confer jurisdiction to the Court to entertain the matter. The same principles also apply to the facts of the instant case. 18. I have also taken note of my earlier judgment in the case of Indian Oxygen Ltd. vs. National Oxygen Ltd. reported in 1990 (1) CLT 275 wherein it was held that "execution of agreement does not confer jurisdiction on the basis of the Arbitration Act since the execution of the agreement is not in dispute but the subject-matter of performance relates to dispute arising outside the jurisdiction. It cannot be said that this Court has jurisdiction to decide the questions forming the subject-matter of reference. It cannot be said that this Court has jurisdiction to decide the questions forming the subject-matter of reference. The subject-matter of reference refers to execution or performance of contract which took place outside the jurisdiction of this Court. There is an agreement that all disputes would be referred to the Tribunal of Arbitration of the Bengal Chamber of Commerce but it cannot confer jurisdiction on this score." 19. Judgment and decision in the case of Aligarh Muslim University and Anr. vs. Vinoy Engineering Enterprises (P) Ltd. & Anr. reported in 1994 (4) SCC 710 may be taken note of. In the aforesaid decision it was held that "in case where the Contract in question was executed, and the Construction Work was to be carried out outside the jurisdiction of this Court, no part of the cause of action arose within the territorial jurisdiction of the said Court merely because the respondent was a Calcutta based firm and therefore exercise of jurisdiction by it amounted to abuse of jurisdiction. Hence, the proceeding is unsustainable. The petitioner had deliberately moved to the Court ignoring the fact that no part of the cause of action had arisen within the jurisdiction of that Court. So heavy cost was awarded against the persons who initiated the proceedings." 20. Following decisions have been cited on behalf of the petitioner in support of his contentions that this Court has jurisdiction are set out :- (i) Judgment in Award Case No. 110 of 1994 passed by me on March 28, 1996. (ii) Judgment in Award Case No. 178 of 1993 passed by Altamas Kabir, J. 21. In both the aforesaid decisions it was held that the respondents, State is carrying on commercial activities and has its head-quarter in Calcutta within the jurisdiction of this Court, wherefrom the said commercial activities being carrying on. 22. In the instant case, Head-quarter of ECL is not in Calcutta but in the District of Burdwan. The plaintiff is also carrying on business in Burdwan in its aforesaid address. The entire subject-matter of the dispute arose within the jurisdiction of the District Court at Burdwan. There is no reason to hold that this Court has jurisdiction to entertain and try the proceeding and this Court cannot be the appropriate Court under s. 2(c) of the Arbitration Act. 23. The entire subject-matter of the dispute arose within the jurisdiction of the District Court at Burdwan. There is no reason to hold that this Court has jurisdiction to entertain and try the proceeding and this Court cannot be the appropriate Court under s. 2(c) of the Arbitration Act. 23. Considering the facts and circumstances of the case, in my view, this Court does not appear to have any jurisdiction to entertain the disputes and differences arising out of the reference. 24. Accordingly the application fails and is dismissed on the ground of jurisdiction alone. 25. It is made clear that I have not adjudicated on the merits of the disputes. 26. There will be no order as to costs. 27. The department concerned is directed to draw up the order expeditiously. 28. All parties concerned including the department are to act on a signed copy of the operative part of this judgment on the usual undertaking. Application dismissed.