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2008 DIGILAW 820 (DEL)

East West Rescue Pvt. Ltd. v. Narender Singh

2008-08-27

HIMA KOHLI

body2008
JUDGMENT Hima Kohli, J. 1. The present petition is filed by the petitioner under Section 9 of the Arbitration and Conciliation Act, 1996 (in short the Act) praying inter alia for appointing the respondent No. 1 as the guardian ad-litem for minor respondents No. 2 & 3 in the arbitral proceedings, pending before the learned Arbitrator, Justice R.L. Khurana (Retd.). Before dealing with the submissions of the respective parties, it would be appropriate to advert to the relevant facts of the present case. .2. It is the case of the petitioner that it renders medical services in various parts of India and abroad. It has its registered office at Delhi, carries on its business at Delhi and makes all appointments of its medical and non-medical staff at Delhi. The terms and conditions of service governing the medical and non-medical staff are enclosed with the petition. Clauses 5 and 6 of the service conditions which are relevant for the purposes of the present petition are reproduced as under: 5. In case of any dispute of any kind arising between the Employer and Employee out of and in relation to the employment and Service Contract, the same shall be referred to sole arbitrator appointed by Medical Director of East West Rescue (Pvt) Ltd. whose decision shall be final and binding on the parties. The arbitration proceedings shall be held at Delhi and would be governed as per laws relating to arbitration applicable at relevant time. If for any reason, the person so appointed as arbitrator is not able to continue or act any further at any stage of the case or is not available for any reasons, then in that case again at all points of times Medical Director East West Rescue (Pvt) Ltd. shall appoint a new arbitrator in the matter. In any case, no person other than appointed by the Medical Director as mentioned shall act as an arbitrator. The decision of the Arbitrator so appointed shall be final and binding on both parties. 6. Courts at Delhi only shall have the jurisdiction for adjudication of all disputes between the employer and the employees. 3. One Dr. Narender Singh was engaged as a Medical Officer by the petitioner. The last place of posting of Dr. Narender Singh was at Himachal Pradesh. During the course of his service with the petitioner, certain disputes arose between them. 4. Dr. 3. One Dr. Narender Singh was engaged as a Medical Officer by the petitioner. The last place of posting of Dr. Narender Singh was at Himachal Pradesh. During the course of his service with the petitioner, certain disputes arose between them. 4. Dr. S.S. Pasrich was appointed as the Sole Arbitrator by the petitioner to enter upon reference and adjudicate the disputes between the parties. However, Dr. Narender Singh challenged the said appointment by instituting a suit for permanent injunction at Kinnaur (HP). After service was effected, the petitioner filed an application under Section 8 of the Act, stating inter alia that the suit ought not to be proceeded with further, as an Arbitration Clause governs the parties and an Arbitrator has already been appointed by the petitioner. The aforesaid application filed by the petitioner was dismissed by the learned Sub-Judge, Kinnaur (HP) vide order dated 30.6.2003. Aggrieved by the aforesaid order dated 30.6.2003, the petitioner filed a Civil Revision Petition before the High Court of Himachal Pradesh at Shimla. The aforesaid revision petition was disposed of vide order dated 03.12.2004. As per the aforesaid order, it was recorded that the counsel for the petitioner herein was willing to terminate the appointment of the Arbitrator appointed by it earlier and willing to appoint Justice R.L. Khurana (Retd.) as the Sole Arbitrator to adjudicate upon the entire gamut of disputes between the parties. Counsel for Dr.Narender Singh, gave her `no objection to the aforesaid suggestion and agreed to, subject her client to the jurisdiction of the Sole Arbitrator. It was also stated on behalf of Dr.Narender Singh that he shall have no objection to withdrawal of the suit filed by him before the learned senior sub-Judge, out of which the revision petition had arisen. Based upon the aforesaid agreement between the parties, the revision petition was disposed of while setting aside the order dated 30.6.2003, passed in the civil suit and dismissing the said suit as having been withdrawn. 5. Thereafter, both the parties approached the Sole Arbitrator, Justice R.L. Khurana (Retd.) for the purpose of adjudicating the claims raised by the petitioner against Dr.Narender Singh. .6. During the pendency of the arbitral proceedings, Dr. Narender Singh expired on 18.1.2008. At the relevant time, he was under cross-examination by the petitioner. Immediately thereafter, the petitioner filed an application for bringing on record the legal heirs of late Dr. .6. During the pendency of the arbitral proceedings, Dr. Narender Singh expired on 18.1.2008. At the relevant time, he was under cross-examination by the petitioner. Immediately thereafter, the petitioner filed an application for bringing on record the legal heirs of late Dr. Narender Singh, who have been arrayed in the present petition as respondents No. 1 to 3. Vide order dated 30.7.2008 passed by the learned Sole Arbitrator, copy of which has been handed over by the counsel for the petitioner, it was recorded that the arguments on the application filed by the petitioner under Section 40 read with Order 22 Rule 4, CPC were heard. Objections were raised on behalf of the respondents to the said application to the effect that the legal heirs of Dr.Narender Singh could not be brought on record, as notice to show cause was issued only to the wife of the deceased i.e. respondent No. 1 and not to the remaining legal heirs, and that as the minor legal heirs were not served with any notice, they could not be brought on the record. Submissions made by the counsel for the petitioner were recorded by the learned Arbitrator to the effect that the petitioner had preferred the present petition for appointment of a guardian ad-litem for the minor legal heirs of the deceased respondent and once orders are passed on the said petition, notices may be issued to the minor legal heirs through their natural guardian. After taking note of the submissions of both the parties, the learned Sole Arbitrator observed that in the absence of a guardian, no notice can be sent to the minor legal heirs. However, in view of the pendency of the present petition, the proceedings were adjourned sine die to await its outcome. 7. Notice was issued on the present petition on 24.3.2008, and appearance was entered on behalf of the respondents on 29.4.2008. The counsel for the respondents opposes the present petition on two grounds. The first ground taken on behalf of the respondents is that the minor legal heirs of the deceased Dr.Narender Singh were not arrayed as parties/respondents in the proceedings before the Sole Arbitrator and, therefore, the question of appointment of a guardian ad-litem did not arise. The counsel for the respondents opposes the present petition on two grounds. The first ground taken on behalf of the respondents is that the minor legal heirs of the deceased Dr.Narender Singh were not arrayed as parties/respondents in the proceedings before the Sole Arbitrator and, therefore, the question of appointment of a guardian ad-litem did not arise. In this regard, counsel for the respondents refers to the provisions of Order 32 Rule 3(1), CPC to state that a minor has to be a defendant in the first instance for the Court to appoint a proper person to be the guardian for the suit proceedings. It is, therefore, contended that the present petition is pre-mature and liable to be dismissed. 8. The second plea raised on behalf of the respondents is that this Court does not have the territorial jurisdiction to try and entertain the present petition as the cause of action has arisen in Himachal Pradesh. It is submitted that in view of the provisions of Section 42 of the Act, Shimla alone has the jurisdiction to entertain any subsequent application and that the parties should be relegated to the High Court of Himachal Pradesh at Shimla. 9. Counsel for the petitioner disputes the above position and states that the provisions of Order 32 Rule 3(1), CPC cannot be strictly enforced in arbitration proceedings as CPC does not have strict application in such proceedings. He further submits that the petitioner was compelled to file the present petition, in view of the stand taken by the respondent before the Sole Arbitrator as recorded in the order dated 30.7.2008. He further submits that as against the plea taken on behalf of the respondents before this Court that a guardian ad-litem cannot be appointed till the party is impleaded in the proceedings, the respondents took a stand before the learned Arbitrator that all the legal heirs were to be issued notice in the application filed under Section 40 read with Order 22 Rule 4 CPC and notice to respondent No. 1 alone, as the widow of the deceased was not sufficient. .10. Counsel for the petitioner further submits that the issue of jurisdiction has already been considered and decided by the Sole Arbitrator vide order dated 01.4.2006, wherein issues No. 1, 2 and 4 which related to the jurisdiction of the Arbitrator have been decided against the respondent. .10. Counsel for the petitioner further submits that the issue of jurisdiction has already been considered and decided by the Sole Arbitrator vide order dated 01.4.2006, wherein issues No. 1, 2 and 4 which related to the jurisdiction of the Arbitrator have been decided against the respondent. He states that in another dispute pending between the petitioner and a member of its staff, which culminated in an award, the same was assailed by the concerned employee, Dr. B. Dam by filing a petition under Section 34 of the Act in the High Court of Himachal Pradesh at Shimla. In the said petition, an objection was raised by the petitioner (respondent therein) as to the lack of territorial jurisdiction of the said Court to adjudicate the matter under consideration. Vide judgement dated 16.6.2008, the High Court of Himachal Pradesh upheld the aforesaid objection and held that the head office of the petitioner was at Delhi, the service conditions were regulated from Delhi, all salary etc. was paid to Dr.Dam at Delhi, thus, the High Court at Delhi had the jurisdiction to try and entertain the matter. The Court while directing that the petition be returned, made an observation that though a part of the cause of action had arisen within the territorial jurisdiction of the High Court of Himachal Pradesh at Shimla, in view of the Clause 6 of the Service Condition that their disputes were to be resolved at Delhi, the petition preferred by the petitioner was returned to be filed before the court having competent jurisdiction. 11. Counsel for the petitioner relies on the judgment in the case of P. Anand Gajapathi Raju and Ors. v. P.V.G. Raju and Ors. 4 (2000) SLT 123 to state that the Court to which party shall have recourse is the "Court" as defined under Section 2(1)(e) of the Act not the "Court" to which an application under Section 8 is made. In support of his submission that the relevant time to determine the existence of jurisdiction is when the matter is heard, he relies on the judgment of the Supreme Court in the cases of Jindal Vijaynagar Steel v. Jindal Parxain Oxygen Co. Ltd. (2006) 11 SCC 521 . In support of his submission that the relevant time to determine the existence of jurisdiction is when the matter is heard, he relies on the judgment of the Supreme Court in the cases of Jindal Vijaynagar Steel v. Jindal Parxain Oxygen Co. Ltd. (2006) 11 SCC 521 . He also relies in the case of Rodemadan India Ltd. v. International Trade Expo Centre Ltd. AIR 2006 SC 3456 to state that the bar of jurisdiction under Section 42 of the Act is only intended to apply to a "court" as defined under Section 2(1)(e) of the Act. 12. I have heard the counsels for the parties and have carefully perused the case law relied upon. .13. Before passing any order on the merits of the petition, this Court has to first deal with the second objection taken by the respondent regarding the lack of territorial jurisdiction of this Court. It is settled law that mere filing of an application under Section 8 of the Act before a particular judicial authority, does not decide the forum of the Court as defined under Section 2(1)(e) of the Act. In this regard, perusal of the provisions of Sections 8 and 42 of the Act are necessary. While Section 8 refers to an application before a "judicial authority", Section 42 refers to an application made in a "Court". Hence, filing of an application by the petitioner under Section 8 of the Act before the Civil Judge at district Kinnaur (H.P.) does not mean that the Courts at Himachal Pradesh are automatically vested with the jurisdiction to try and entertain any application under Part-I of the Act. In this regard, reliance is rightly placed by the counsel for the petitioner on the judgement of the Supreme Court in the case of P. Anand Gajapathi Raju (supra) wherein it was observed as below: .8...The language of Section 8 is preemptory. It is, therefore, obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement. Nothing remains to be decided in the original action or the appeal arising therefrom. There is no question of stay of the proceedings till the arbitration proceedings conclude and the Award becomes final in terms of the provisions of the new Act. All the rights, obligations and remedies of the parties would now be governed by the new Act including the right to challenge the Award. There is no question of stay of the proceedings till the arbitration proceedings conclude and the Award becomes final in terms of the provisions of the new Act. All the rights, obligations and remedies of the parties would now be governed by the new Act including the right to challenge the Award. The Court to which the party shall have recourse to challenge the Award would be the Court as defined in Clause (e) of Section 2 of the new Act and not the Court to which an application under Section 8 of the new Act is made. Any application before a Court under Section 8 merely brings to the Courts notice that the subject matter of the action before it is the subject of an arbitration agreement. This would not be such an application as contemplated under Section 42 of the Act as the Court trying the action may or may not have had jurisdiction to try the suit to start with or be competent Court within the meaning of Section 2(e) of the new Act. 14. In the present case, there is no dispute to the fact that Clause 5 of the Service Rules which contains the Arbitration Clause, stipulates that the arbitration proceedings shall be held at Delhi. Furthermore, Clause 6 mandates that "the courts at Delhi" only shall have the jurisdiction for adjudication of all the disputes between the employer and the employees. In the case of Jindal Steel (supra), while comparing the definition of "court" under the provisions of Section 2(c) of the Old Act of 1940 and the provisions of Section 2(1)(e) of the New Act, the Supreme Court observed that the definition is pari materia except that under the 1996 Act, the definition restricts the Subordinate Courts competent to hear such matters to the principal civil court and expressly includes the High Courts in exercise of their original civil jurisdiction. The Supreme Court went on to observe that on a fair reading of the definition of "court" under Section 2(1)(e) of 1996 Act, it is evident that an arbitration petition can be filed before the Principal Civil Court of original jurisdiction in the District or a High Court in exercise of its Original Civil Jurisdiction, having jurisdiction to decide the questions forming subject-matter of the arbitration, if the same had been the subject matter of a suit. In the present case, Delhi High Court exercises Original Civil Jurisdiction and is therefore a "court" within the meaning of Section 2(1)(e) of the Act. 15. In the same case, while referring to the decision of the Bombay High Court, in the case of Fazal Hussain Haiderbhoy Buxamusa and Ors. v. Yusuf Ally Adamji and Ors. AIR 1955 Bom 55 the Supreme Court took note of para 2 of the said judgement, which is reproduced herein below: Even if the Court had jurisdiction to entertain the suit as filed, if by reason of subsequent events the Court has lost jurisdiction to entertain or try the suit, the Court will not be justified in dealing with the suit with reference to circumstances as they existed at the date of the institution of the suit, but must proceed to decide the dispute on the footing that if the suit had been filed at the later date, the Court would have been incompetent to grant the reliefs in respect of the properties and of the persons who are not within the limits of the jurisdiction of the Court. Normally, a Court must have regard to circumstances existing as at the date when the issue of jurisdiction is tried and must decide it in the light of circumstances existing as at that date. 16. In the present case, it cannot be denied that though part of the cause of action had arisen in Himachal Pradesh as Dr.Narender Singh was residing and working for gain in the said State when he tendered his resignation, but part of the cause of action has also arisen in Delhi as the office of the petitioner is in Delhi and the petitioner employed the respondent at Delhi. 17. This takes us to the clinching factor, which is the jurisdiction clause contained in Clause 6 of the Service Conditions where the word "only" has been used, while conferring jurisdiction on the courts at Delhi. 17. This takes us to the clinching factor, which is the jurisdiction clause contained in Clause 6 of the Service Conditions where the word "only" has been used, while conferring jurisdiction on the courts at Delhi. The aspect of conferring exclusive jurisdiction on a Court was considered in the case of S.K. Contractor and Engineers v. Hindustan Petroleum Corporation Limited reported at 2008 ALR 263 (Delhi), wherein after taking note of the decision of the Supreme Court in the case of A.B.C. Laminart Pvt. Ltd and Anr v. A.P. Agencies reported at [1989] 2 SCR 1 a it was observed as below: Para 5 This takes me to the discussion of the jurisdiction clause contained in Clause 14.10 of the contact between the parties. As noted in A.B.C. Laminart (supra) as well as in the other two decisions cited by the learned Counsel for the parties, there can be a clause whereby jurisdiction is restricted to any one or more of the Courts which otherwise have jurisdiction in the matter. It is well settled that parties by agreement cannot confer jurisdiction on a court which otherwise does not have jurisdiction with regard to the subject matter. In the present case, there is no dispute that the courts at Mumbai do have jurisdiction with regard to the subject matter inasmuch as a substantial part of the cause of action had arisen at Mumbai. It is also clear that Clause 14.10 would be a clause whereby jurisdiction of courts other than the courts at Mumbai has been ousted. This is amply demonstrated by the use of the word "exclusive". In ABC Laminart Pvt. Ltd (supra), it has been observed: ...As regards construction of the ouster clause when words like `alone, `only, `exclusive and the like have been used there may be no difficulty. This clearly shows that the intention of the parties was to exclude jurisdiction of other courts and restrict the same to the Courts situated at Mumbai. The said Clause 14.10, therefore, clearly restricted the jurisdiction to the courts at Mumbai. However, this was by agreement between the parties. 18. Even in the present case, the word "only" used in Clause 6 of the Service Rules, as a suffix to the words "courts in Delhi", amply demonstrates the intention of the parties to vest exclusive jurisdiction in the courts at Delhi, while ousting the jurisdiction of other Courts. However, this was by agreement between the parties. 18. Even in the present case, the word "only" used in Clause 6 of the Service Rules, as a suffix to the words "courts in Delhi", amply demonstrates the intention of the parties to vest exclusive jurisdiction in the courts at Delhi, while ousting the jurisdiction of other Courts. Hence, regardless of the fact that part of the cause of action had accrued in Himachal Pradesh, the exclusive jurisdiction having been vested in the Courts in Delhi to adjudicate the disputes between the parties, it has to be held that this Court has the jurisdiction to entertain the present petition. 19. Insofar as the contention of the counsel for the respondents that filing of the application by the petitioner under Section 8 of the Act before the Sub-Judge, District Kinnaur and appointment of an Arbitrator in the revision proceedings filed by the petitioner before the High Court of the Himachal Pradesh at Shimla are relevant factors to be taken into consideration while deciding the issue of territorial jurisdiction of this Court, the judgment of the Supreme Court in the case of Rodemadan India Limited (supra) is relevant, wherein the Supreme Court has clearly held that the recourse taken by the parties to Section 9 of the Act to obtain interim relief, does not mean that the same is a "court as contemplated under Section 2(1)(e) of the Act and the bar of Section 42 of the Act does not come into play in such a case. 20. In view of the aforesaid observations and particularly, in view of the fact that the respondent during his lifetime agreed to the proposal of the petitioner as made before the High Court of Himachal Pradesh at Shimla for referring the disputes between the parties to the Sole Arbitrator, Justice R.L. Khurana (Retd) and thereafter, parties have been appearing before the Sole Arbitrator, it cannot be held that merely because the petitioner invoked the provisions of Section 8 of the Act for seeking directions from the Civil Court at Kinnaur to refer the disputes between the parties to arbitration, the courts at Delhi are divested of their jurisdiction to try and entertain the present petition. In the light of the aforesaid discussions, it is held that this Court is vested with the territorial jurisdiction to try and entertain the present petition. 21. In the light of the aforesaid discussions, it is held that this Court is vested with the territorial jurisdiction to try and entertain the present petition. 21. Coming to the merits of the case, the stand taken on behalf of the respondents that the present petition is not maintainable without the respondents No. 2 and 3 (minors) first coming on record as respondents in the pending arbitration proceedings, is hyper-technical. At the end of the day, the purpose of filing an application before the Sole Arbitrator for bringing on record the legal heirs of late Dr. Narender Singh and the object of filing the present petition for appointing a guardian ad-litem for the minor respondents No. 2 and 3 is to ensure that the legal heirs are brought on the record and at the same time, the interests of the minor legal heirs are secured by ensuring that they are represented in the pending proceedings by a next friend/ guardian whose interests are not adverse to theirs. Taking into consideration the views expressed by the Sole Arbitrator in his order dated 30.7.2008, it is all the more incumbent that this Court irons out the aforesaid technical objection/ hitch by disposing of the present petition for appointment of respondent No. 1 as the guardian ad-litem of respondents No. 2 and 3, being their mother and natural guardian, so that the arbitral proceedings are not stalled any further and the minors are issued a notice in the pending application preferred by the petitioner before the Sole Arbitrator under Section 40 read with Order 22 Rule 4, CPC. 22. Ideally, since the Arbitral Tribunal is not bound by the Code of Civil Procedure, as provided for under Section 19 of the Act, the procedural formality of bringing on record the legal heirs of late Dr.Narender Singh, while simultaneously considering the application of the petitioner for appointment of a guardian ad-litem of the minor legal heirs could have perhaps been taken up together. However, considering the fact that the petitioner has preferred an application under Section 40 of the Act read with Order 22 Rule 4 CPC before the Sole Arbitrator, while approaching this Court by way of the present petition for appointment of respondent No. 1 as a guardian ad-litem for the minor legal heirs i.e. respondents No. 2 and 3, the issue can be easily resolved by allowing the present petition while leaving the Sole Arbitrator to deal with the pending application preferred by the petitioner in this regard. 23. It is held that respondent No. 1 being the mother and natural guardian of the minor respondents No. 2 & 3, she does not have an interest adverse to that of the minors. Hence, the prayer made by the petitioner for appointment of the respondent No. 1 as a guardian ad-litem of the minor respondents No. 2 & 3, for the purposes of defending them in the arbitral proceedings is allowed, while leaving the parties to approach the Arbitral Tribunal for disposal of the pending application filed under Section 40 read with Order 22 Rule 4, C.P.C. 24. The petition is disposed of.