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1997 DIGILAW 261 (ORI)

BRANCH MANAGER, ORIENTAL INSURANCE CO. LTD. v. JAI BHAWANI PVT. LTD.

1997-09-19

PRADIPTA RAY

body1997
JUDGMENT : Pradipta Ray, J. - Opposite party M/s. Jaya Bhawani Pvt. Ltd. has a Rice Mill at Bolangir. Opposite party entered into an Insurance contract with Bolangir Branch office of M/s. Oriental Insurance Company. The policy of Insurance was issued by Bhawanipatna Branch Office as the prescribed policy forms were not available at Bolangir. Contract of insurance contained an arbitration clause (Clause 13). There was a fire in the said rice mill at Bolangir causing damages. Opposite party lodged a claim for compensation before Bolangir Branch office of Insurance Company. Entire claim of opposite party was not accepted by Insurance Company. Compensation paid by the Insurance Company did not satisfy the opposite party. Arbitration clause was invoked and both the Insurance Company and the opposite party nominated their respective arbitrator for determination of the dispute. The Arbitrator appointed by the Insurance Company was a Chartered Accountant of Bhubaneswar while the Arbitrator appointed by the opp. party was an Advocate practising at Cuttack. In the claim statement filed by the opp. party - Branch Manager, Bhawanipatna Branch of the Insurance Company and the Regional Manager of Insurance Company having its office at Bhubaneswar were impleaded as respondents. 2. The Arbitrators conducted arbitration proceeding at Bhubaneswar and passed their Award. As some controversy arose regarding fees payable to the Arbitrators the present petitioners filed an application before the Civil Judge (Senior Division), Bhubaneswar on January 5, 1996 u/s 38 of the Arbitration Act (hereinafter referred to as the "Act") for determination of the amount payable to the Arbitrators and for directing the Arbitrators to file the Award in Court. Said application was registered as Misc. Case No. 10/96. On February 9, 1996 the Arbitrators filed their Award in the Court of the Civil Judge (Senior Division), Bolangir for making it a rule of the Court and it was registered as Title Suit No. 18/96. On April, 16, 1996 the present petitioners filed an application in the Court at Bolangir contending that as Misc. Case No. 10/96 was earlier filed before the Civil Judge, Senior Division, Bhubaneswar, Bolangir Court has no jurisdiction to entertain any proceeding relating to the said arbitration in view of Section 31(4) of the Act. By order No. 11 dated June 27, 1996 Civil Judge (Sr. Case No. 10/96 was earlier filed before the Civil Judge, Senior Division, Bhubaneswar, Bolangir Court has no jurisdiction to entertain any proceeding relating to the said arbitration in view of Section 31(4) of the Act. By order No. 11 dated June 27, 1996 Civil Judge (Sr. Divn.), Bolangir rejected said objection relating to his jurisdiction and decided to proceed with the proceeding for making the Award as a rule of the Court. Present petitioners have filed this Revision against the aforesaid order dt. June 27, 1996. 3. Mr. G.P. Dutta, learned Advocate for the petitioners has strenuously urged that entertainment of the Award by the Court at. Bolangir is barred by Section 31(4) of the Act inasmuch as before filing of the Award an application u/s 38 of the Act was filed before the Court at Bhubaneswar, which is also competent to entertain the petitioners' application u/s 38 of the Act. Mr. E.H. Mohanty, learned Advocate appearing for the opp. party contended that in the facts and circumstances of the case Court at Bhubaneswar cannot be said to be a "competent Court" to entertain petitioners' application u/s 38 of the Act and accordingly Section 31(4) of the Act is not attracted. 4. Question which arises for determination in the present revision is whether the Court at Bhubaneswar can be called a "competent Court" to entertain an application arising out of or regarding the conduct of the arbitration proceeding between the parties. 5. u/s 31, Sub-section (1) of the Act an Award may be filed in any Court having jurisdiction in the matter of which the reference relates. Sub-section (2) provides that all questions regarding the validity, effect or existence of an award of an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the Award under the agreement has been, or may be, filed and by no other Court. Sub-section (3) similarly lays down that all applications regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings shall be made to the Court where the Award has been, or may be, filed and to no other Court. Thus combined effect of said sub-sections of Section 31 is that the "Court competent" within the meaning of Sub-section (4) of Section 31 is the Court having jurisdiction in the matter to which the reference relates. 6. Thus combined effect of said sub-sections of Section 31 is that the "Court competent" within the meaning of Sub-section (4) of Section 31 is the Court having jurisdiction in the matter to which the reference relates. 6. In the present case, reference relates to the dispute over the opp. party's claim for compensation for the damages caused to the insured rice mill by fire. The insurance agreement giving rise to the claim and containing arbitration clause was entered into at and issued by Bhawanipatna Branch of the Insurance Company. The insured mill is situated and the place of contract is at Bolangir, fire took place and damage was suffered at Bolangir Claim was lodged with Bolangir Branch office. There is no doubt or dispute that Bolangir Court is definitely "Competent Court" under Sub-section (1) of Section 31 of the Act and Award can be filed in that Court, but it is to be examined whether Bhubaneswar Court is a "Competent Court" or not. 7. Mr. Dutta, learned Advocate has submitted that a "Competent Court" within the meaning of Section 31(1) of the Act is "any Court in which a suit in respect of the claim can be filed". According to him, competence of the Court will have to be determined with reference to the provisions of Section 20 of the CPC and a suit can be filed in a Court within whose jurisdiction cause of action wholly or in part arises or any of the defendants actually and voluntarily resides or carries on business or personally works for gain. Referring to the facts of the present case Mr. Dutta has urged that part of clause of action has arisen within the jurisdiction of Bhubaneswar Court as the Insurance Company's Arbitrator was nominated by petitioner No. 2 at Bhubaneswar and the claim being more than Rs. 40,000/-is entertainable only by the Regional Office at Bhubaneswar. In support of his submission that Bhubaneswar Court is also a "Competent Court" Mr. Dutta has pointed out that the Regional Manager of the Insurance Company who has been impleaded as a party to the claim petition before the Arbitrators resides and carries on business within the jurisdiction of Bhubaneswar Court. 8. The meaning of "cause of action" has been explained by the Supreme Court in several decisions. In State of Rajasthan and Others Vs. 8. The meaning of "cause of action" has been explained by the Supreme Court in several decisions. In State of Rajasthan and Others Vs. Swaika Properties and Another, it has been observed that it (cause of action) is a bundle of facts which taken with law applicable to them gives the plaintiff a right to relief against the defendant. The said view has been re-affirmed in Oil and Natural Gas Commission Vs. Utpal Kumar Basu and Others. It is now settled that only such facts as are required to be proved to get the relief claimed, form part of the cause of action and not any and every fact having some relation to or connection with the subject-matter of the claim. It has also been held by the Supreme. Court in the above decision that mere fact of issuance of letter/notice from a place or receipt of such letter/notice at some place is not necessarily a fact within the bundle of facts constituting a cause of action. Appointment of arbitrator has nothing to do with the main relief, i.e. compensation for damages stated to have been suffered by the insured rice mill in the fire. 9. It is also settled that in determining territorial jurisdiction only the facts pleaded by a plaintiff or a claimant in his plaint or claim petition are to be taken into account. Supreme Court on Oil and Natural Gas Commission's case (supra) has reiterated the principle laid down in Chand Kour v. Partab Singh (15 Indian Appeal 156) that : ".......................the cause of action has no relation whatever to the defence which may be set up by the defendant, nor does it depend upon the character of the relief prayed for by the plaintiff. It refers entirely to the ground set forth in the plaint as the cause of action, or, in other words, to the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour." 10. In the present case for the purpose of obtaining relief the opp. party is required to prove (i) existence of a contract of insurance covering the subject-matter and the particular risk, (ii) extent of damage suffered by the insured rice mill due to fire, and (iii) compliance with essential safeguards and requirements, if any, under the terms of the contract of insurance. party is required to prove (i) existence of a contract of insurance covering the subject-matter and the particular risk, (ii) extent of damage suffered by the insured rice mill due to fire, and (iii) compliance with essential safeguards and requirements, if any, under the terms of the contract of insurance. In the present case incident of fire is admitted inasmuch as Insurance Company already granted compensation which according to the opp. party is insufficient. Undisputedly the contract of insurance was entered into outside the insured property is located and the incident giving rise to the claim occurred outside the jurisdiction of Bhubaneswar Court. Appointment of Arbitrator by the regional office at Bhubaneswar, residence of the Arbitrator or place of sitting of the. Arbitrator do not constitute any part of the cause of action necessitating invocation of the arbitration clause to determine dispute regarding quantum of compensation. I am unable to accept Mr. Dutta's contention that a part of cause of action arose within the jurisdiction of Bhubaneswar Court. 11. Residential test as contemplated in Clauses (a) and (b) of Section 20 of the CPC is also of no help to the petitioners. The petitioners have been impleaded in the claim petition not in their personal capacity but as representative of the Insurance Company. The claim is against the Insurance Company and not against any particular officer or individual. Accordingly, Explanation to Section 20, C.P.C. is attracted and the Insurance Company having a subordinate office at Bolangir where cause of action arose, location of principal office or regional office at any other place is wholly immaterial and irrelevant. Thus, even if residential test is applied, Bhubaneswar Court did/does not have territorial jurisdiction to entertain the main claim involved in the arbitration proceeding and the award could not have been filed before the Court at Bhubaneswar. 12. Mr. Dutta referred to a number of decisions which are not applicable to a fact situation like the present one. In Food Corporation of India and Another Vs. Great Eastern Shipping Co. Ltd., contract was signed at Bombay and it was held that Bombay High Court had jurisdiction. In Raman Lamba and others Vs. D.M. Harish and others, Delhi High Court was found to have jurisdiction because the business was carried on and most of the partners were residing at Delhi. In Ramkripal Sharma Vs. Great Eastern Shipping Co. Ltd., contract was signed at Bombay and it was held that Bombay High Court had jurisdiction. In Raman Lamba and others Vs. D.M. Harish and others, Delhi High Court was found to have jurisdiction because the business was carried on and most of the partners were residing at Delhi. In Ramkripal Sharma Vs. Union of India (UOI) and Another, business was being carried on at Calcutta, goods were supplied from Calcutta, goods supplied were inspected at Calcutta and accordingly it was held that Calcutta High Court had the jurisdiction. Full Bench of Delhi High Court in Ram Rattan Bhartia Vs. Food Corporation of India and Others, opined that residential test as laid down in Section 20 of the C.P.C. is also applicable to determine the jurisdiction of the Court to deal with matters arising out of the Arbitration Act. As already pointed out, in the present case application of residential test as contemplated by Section 20 of the C.P.C. 13. Bhubaneswar Court was thus not a "Competent Court" where the petitioners could file their application and the restrictions imposed u/s 31(4) of the Act does not operate against filing and entertaining of the Arbitration Award in the Court at Bolangir. 14. In view of clear language of Section 31 of the Act, convenience of parties is wholly immaterial in absence of any agreement to that effect. Still, even if convenience of the parties is considered, there cannot be any doubt that it will be convenient for both parties if follow-up steps arising out of Arbitration Award are taken in the Court at Bolangir. 15. For the foregoing reasons, I do not find any merit in this application and the revision is accordingly dismissed. No order as to costs. The petitioners, however, will be at liberty to withdraw their application from Bhubaneswar Court and to file it, if necessary, in the Court at Bolangir. The Court below will proceed to dispose of the main case expeditiously preferably within a period of four months from the date of communication of this order. Final Result : Dismissed