Research › Search › Judgment

Kerala High Court · body

2009 DIGILAW 856 (KER)

Muthoot Vehicle & Asset Finance Ltd. v. Gopalan Kuttappan

2009-09-10

K.M.JOSEPH, M.L.JOSEPH FRANCIS

body2009
Judgment :- M.L. Joseph Francis, J. The above appeals are filed by the petitioner, M/s. Muthoot Vehicle & Asset Finance Ltd. in O.P. (Arb) No.155 of 2009, 934 of 2009, 943 of 2009 and 940 of 2009 on the file of District Court, Ernakulam. Respondents in the above appeals are respondents in the respective Arb.O.Ps. 2. The common facts of the case are briefly as follows: The appellant is a public limited company having its registered office at Ernakulam. The company is mainly engaged in the business of providing loans on hypothecation and guarantee basis. The appellant provided loan facility for the purchase of vehicle to the first respondent in the above O.Ps. The second respondent in O.P. No. 940 of 2009 and second respondent in U.P. No. 943 of 2009 stood as guarantors to the first respondent in the above case. The agreement provides for arbitration in the event of dispute. As per the terms and conditions of agreement, respondents have to repay the loan with interest in monthly instalments. After the initial payment of few instalments, the respondents defaulted in making monthly instalments. In spite of repeated notices, the respondents did not repay the defaulted instalments. Therefore, the appellant initiated steps for arbitration. In the meanwhile, the appellant filed the above application under S.9 of the Arbitration and Conciliation Act for attachment of immovable property belonging to the respondents. That application under S.9 was declined by the court below holding that the court has no territorial jurisdiction as the property sought to be attached is situated in other Districts and all the petitions are ordered to be returned for presentation before the proper court under O.VII R. 10 of the Civil Procedure Code. Against that common order, the above arbitration appeals are filed. 3. We heard the learned counsel for the appellant and the learned counsel for the respondents. 4. The learned counsel for the appellant submitted that the agreement of loan in each case was executed at Ernakulam and as per the agreement, the venue of arbitration is at Ernakulam. Moreover, the loan was sanctioned at Ernakulam and the registered office of the appellant company is at Ernakulam, and hence, District Court, Ernakulam is having jurisdiction to entertain the arbitration O.Ps. Moreover, the loan was sanctioned at Ernakulam and the registered office of the appellant company is at Ernakulam, and hence, District Court, Ernakulam is having jurisdiction to entertain the arbitration O.Ps. Whereas the learned counsel for the respondents in Arbitration Appeal relied on the decision of the Apex Court reported in AIR 1971 SC 740 (Hakam Singh v. M/s. Gammon (India) Ltd.) argued that parties cannot by agreement confer jurisdiction on court not possessed by it under Civil Procedure Code. The learned counsel for the respondents submitted that the agreement in question was not executed at Ernakulam and therefore the District Court, Ernakulam, has no jurisdiction to entertain the petitions. In the same decision, it was further observed that the agreement that one of the courts having such jurisdiction alone, shall try the dispute is not contrary to public policy, and does not contravene S.28 of the Contract Act. The question whether the respondents executed the agreement in question at Ernakulam or not is a matter to be decided after taking evidence. The order under challenge shows that it was passed without giving notice to the respondents and therefore the respondents could not file any counter stating that the District Court Ernakulam has no jurisdiction to entertain the Arbitration O.Ps. 5. Cl.17(a) of the agreement provided for Arbitration in the event of dispute. As per Cl.17(h) of the agreement the venue of Arbitration shall be at Ernakulam. One of the reasons stated by the court below to hold that, that court had no territorial jurisdiction is that the respondents are residing outside the jurisdiction of that court. As per S.2(e) of the Arbitration and Conciliation Act, the principal Civil Court of original jurisdiction is vested with jurisdiction to decide the question forming the said matter of arbitration if the same had been the subject matter of the suit. 6. In the present case, it is a simple claim for money, which was advanced to the respondents. In other words, it would have been a simple suit for money if there was no Arbitration clause. As per S.20(c) of Civil Procedure Code, the suit can be instituted where the cause of action wholly or in part arises. The question regarding the cause of action can be decided only on the basis of the pleadings in the petition. In other words, it would have been a simple suit for money if there was no Arbitration clause. As per S.20(c) of Civil Procedure Code, the suit can be instituted where the cause of action wholly or in part arises. The question regarding the cause of action can be decided only on the basis of the pleadings in the petition. The learned counsel for the appellants submitted that the original transaction took place at Ernakulam, where the original loan amount was sanctioned by the head office at Ernakulam. It is submitted that the loan agreement was entered and signed by the parties at Ernakulam at their registered office. If that be so, part of the cause of action as understood by S.20(c) of C.P.C. has arisen within the jurisdiction of District Court, Ernakulam. 7. The learned counsel for the appellants submitted that as per the loan agreement, the venue of Arbitration proceedings shall be at Ernakulam and the office of the named Arbitrator is at Ernakulam. The learned counsel for the appellant invited our attention to the decision in Jindal Vijayanagar Steel (JSW Steel Ltd) v. Jinal Praxair Oxygen Co. Ltd. ((2006) 11 SCC 521), in which it was held "Appellant and respondent companies entering into an agreement in Karnataka for creation of an air separation plant for supply of gases to appellant - Plants of both companies located in Karnataka -Difference arising between companies in implementation of agreement -Respondent filing petition under S.9 in Bombay High Court - Parties themselves had chosen Bombay to be situs for invocation of arbitration clause, held at Bombay - Agreement under which dispute arose was approved, reviewed and discussed by Board of Directors of appellant in Bombay - At the time of filing of petition under S.9, appellant having its corporate office at Bombay from where it carrying on business - Appellant's entire senior management and Directors stationed at Bombay - Moreover, appellant shifting its registered office to Bombay during pendency of the said petition - In view of these facts, held, Bombay High Court had jurisdiction to entertain the petition filed by respondent." 8. In the present case, the venue of arbitration proceedings is fixed by the parties as Ernakulam, and the named sole Arbitrator's office is at Ernakulam and therefore we are of the view that the District Court, Ernakulam has jurisdiction to entertain the petitions under S.9 of the Arbitration and Conciliation Act, 1996. 9. Another reason for refusal to entertain the petition is that, since attachment of property beyond the jurisdiction is involved S.16(d) of C.P.C. is attracted. In the present cases, in the hypothecation agreement no security by way of immovable property had been subjected either by the principal debtor or the surety. Therefore, neither S.16 nor S.17 of C.P.C. is involved or attracted in this case. 10. The subject matter of the Arbitration is a claim for money which had nothing to do with the immovable property. In a suit for money, the plaintiff in order to secure the plaintiffs claim, is entitled to seek by way of interim relief attachment of property of the defendant or seek interim injunction against that property, even though, the suit is not one relating to the title, possession, enjoyment or any other incidents relating to the proprietary claim over the property. For obtaining an attachment before judgment based on money claim, it is not the legal requirement that the property sought to be attached is the subject matter of the suit claimed and no matter whether the property is within or beyond the jurisdiction of the court. Therefore, that finding of the District Court is untenable. 11. S.9(e) of the Arbitration and Conciliation Act empowers the court to pass such other interim measures of protection as may appear to the court, to be just and convenient. In view of that provision, we are of the view that the District Court can grant interim relief including attachment of immovable property. Since part of course of action arose within the jurisdiction of District Court, Ernakulam, we are of the view that the District Judge Ernakulam is not justified in finding that, that court has no jurisdiction to entertain the petitions. 12. Since part of course of action arose within the jurisdiction of District Court, Ernakulam, we are of the view that the District Judge Ernakulam is not justified in finding that, that court has no jurisdiction to entertain the petitions. 12. Accordingly, the above appeals are allowed and the order in Arb.O.P.s.155, 934, 943 and 240 of 2009 on the file of District Court, Ernakulam to return the petition under O.VII R.10 C.P.C. for presentation before proper court, is set aside and District Court, Ernakulam is directed to proceed with the Arb.O.P.s in accordance with the law. Parties are directed to appear before the District Court, Ernakularn on 28.10.2009. The parties are directed to suffer their respective costs in this appeal.