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2010 DIGILAW 240 (CAL)

Maniam Properties Pvt. Ltd. v. Bentel Associates Realty Design Consultants Pvt. Ltd.

2010-03-04

SANJIB BANERJEE

body2010
JUDGMENT 1. THE Judgment of the Court was as follows : THE petitioner seeks to invoke the arbitration agreement which reads as follows : "In the event of any dispute or difference arising at any time between the Parties hereto as to the construction, meaning or effect of this Agreement or any clause or thing contained herein or the rights, duties, liabilities and obligations of the Parties hereto, the same shall then be referred to and settled by three arbitrators, one to be appointed by each Party and the third to be appointed by the two arbitrators. The decision of the arbitrators shall be final and binding upon the Parties. The Arbitration shall be in accordance with the Arbitration and Conciliation Act, 1996. The venue of arbitration proceedings shall be Kolkata, India and the language of arbitration shall be English." 2. THE only ground urged by the respondent in opposing the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 is that the agreement contains a Forum selection clause that confers exclusive jurisdiction on Courts in Mumbai. The Forum selection clause is in the section Of the agreement that is entitled "ARBITRATION AND GOVERNING LAW." THE relevant clause provides as follows : "This Agreement will be governed by the laws of India and will be subject to jurisdiction of the Courts of Mumbai, India." The respondent says that it would be evident from the agreement that the parties carry on business at different places and it was agreed that the venue for the arbitration would be in Kolkata but only the Courts in Mumbai could be approached, if necessary. 3. THE petitioner says that the Forum selection clause is not exclusive in the sense that it does not use any word or phrase indicating exclusivity. The petitioner relies on a judgment reported at AIR 1989 SC 1239 (ABC Laminart (P) Ltd. v A.P. Agencies) and another reported at (2007)3 Cal LT 43 (Apeejay Oxford Bookstores. Pvt. Ltd. v Hotel Leela Venture Ltd.). 4. IN ABC Laminart, the Forum selection clause provided that any dispute arising out of the sale "shall be subject to Kaira jurisdiction." The Supreme Court found that such clause did not confer any exclusivity on the relevant Court in Kaira. Pvt. Ltd. v Hotel Leela Venture Ltd.). 4. IN ABC Laminart, the Forum selection clause provided that any dispute arising out of the sale "shall be subject to Kaira jurisdiction." The Supreme Court found that such clause did not confer any exclusivity on the relevant Court in Kaira. At paragraph 21 of the report it was held that words of exclusivity appearing in a Forum selection clause would aid in the assessment as to whether the jurisdiction was conferred by agreement on a particular Court and the jurisdiction of other Courts was ousted. It was also concluded that even without words of exclusivity, the maxim "expressio unius est exclusio afterius" may be applied to gauge the real intent of the parties. 5. IN the judgment of this Court next referred to by the petitioner, paragraph 34 is apposite. The Forum selection clause in that case did not contain any word of exclusivity and the relevant expression was, "....the jurisdiction of this agreement shall be at Bangalore." Upon appreciating the authorities on such aspect, the conclusion at paragraph 34 ran thus: "Even if Clause 26 in the present case is read as the respondent suggests, the expression "the jurisdiction of this agreement shall be at Bangalore" does not appear to confer any degree of exclusivity on the appropriate Court in Bangalore to receive an action relating to this agreement. The agreement has obviously been prepared by an expert; the language of the agreement, the other clauses found therein and the format obviously suggest that. There is no need to read it in a layman's language where the use of the word "jurisdiction" would suffice to indicate exclusivity. That the bookstore is in Bangalore and the parties wanted the reference to be conducted in Bangalore would not be enough to conclude that the parties had bargained that legal proceedings in respect of the reference could only be made to the appropriate Court in Bangalore." 6. THE respondent refers to a judgment reported at (2004)4 SCC 671 [Hanil Era Textiles Ltd. v Puromatic Filters (P) Ltd.]. THE respondent refers to a judgment reported at (2004)4 SCC 671 [Hanil Era Textiles Ltd. v Puromatic Filters (P) Ltd.]. 'The Forum selection clause in such case was as follows : "Any legal proceeding arising out of the order shall be subject to the jurisdiction of the Courts in Mumbai." The Supreme Court opined that merely the use of the word "any" (in the absence of the words "alone", "only" or "exclusively") in the clause did not confer exclusivity of jurisdiction. The test that the Court applied, at paragraph 9 of the report, was as to whether in the facts and circumstances of that case it could be inferred that the jurisdiction of all other Courts except the Courts in Mumbai had been excluded. Having set down the parameters for assessing the effect of the clause, the conclusion appears from the last two sentences of paragraph 9 of the report : "9.....Having regard to the fact that the order was placed by the defendant at Bombay, the said order was accepted by the Branch office of the plaintiff at Bombay, the advance payment was made by the defendant at Bombay, and as per the plaintiff's case the final payment was to be made at Bombay, there was a clear intention to confine the jurisdiction of the Courts in Bombay to the exclusion of all other Courts. The Court of Additional District Judge, Delhi had, therefore, no territorial jurisdiction to try the suit." 7. THE respondent contends that the relevant clause in such case did not contain the word "only" nor did it otherwise indicate any exclusivity, but was still found to be good enough for only Mumbai Courts to be entitled to receive any action in respect of the agreement. But the issue turned not on the clause so much as the Supreme Court holding that the Delhi Court lacked territorial jurisdiction to receive the suit. 8. FOR a Forum selection clause to be effective, it has to confer exclusive jurisdiction on an agreed Forum. The second condition is that the agreed Forum must otherwise have jurisdiction to receive the action. Apart from use of words of exclusivity like "only" or alone" or "exclusive" in Forum selection clauses, it may be coined otherwise to indicate an element of exclusivity. In Han/7 Era, the clause began with the word "any". The second condition is that the agreed Forum must otherwise have jurisdiction to receive the action. Apart from use of words of exclusivity like "only" or alone" or "exclusive" in Forum selection clauses, it may be coined otherwise to indicate an element of exclusivity. In Han/7 Era, the clause began with the word "any". But that was not the only factor that weighed with the Supreme Court since the ABC Laminart clause also contained the word "only". The clause was construed to have said that other Courts not specified therein could not receive any action arising out of the agreement in the context that the substantial part of the cause of action also arose in Bombay. There has to be both a positive and a negative mandate in a Forum selection clause for it to be enforced: the positive mandate should specify the Forum of choice; the negative mandate should, expressly or by necessary implication, preclude the parties from approaching any other Forum. 9. THE clause in the present agreement does not contain either the word "only" or the word "any" and, in fact, the relevant phrase is "will be subject to jurisdiction of the Courts of Mumbai, India." This clause does not convey the sense that the parties could not approach any other Court. There is no negative mandate that can be culled out from the clause. It is also the admitted position that a part of the cause of action can be said to have arisen in Calcutta. 10. SINCE the arbitration agreement is otherwise not questioned and the respondent says that a part of the cause of action, within the meaning of Section 2(1)(e) of the 1996 Act, may be said to have arisen within this State, it was open to the petitioner to approach the Chief Justice of this Court or his designate with a request under Section 11 of the 1996 Act. The Forum selection clause that the respondent relies on confers no element of exclusivity for the petitioner to be required to approach any agreed Forum or be precluded from approaching any other. A Forum selection clause contained in an agreement that also contains an arbitration clause cannot imply that a request under Section 11 of the 1996 Act has to be made to the agreed, exclusive Forum. A Forum selection clause contained in an agreement that also contains an arbitration clause cannot imply that a request under Section 11 of the 1996 Act has to be made to the agreed, exclusive Forum. A request under Section 11 of the 1996 Act has, per force, to be made to a Chief Justice or the person or institution designated by a Chief Justice. Section 42 of the 1996 Act may have no impact on the situs of a request under Section 11 of the Act if a part of the cause of action under an agreement containing an arbitration clause has arisen within the jurisdiction of two or more Courts, whether or not they are spread over a few States. The first application under Part I of the 1996 Act made to a Court which had the authority to receive it would govern all subsequent applications under Part I of the Act covering the same agreement or the reference under the arbitration clause contained therein. This would not impact a petition or request made under Section 11 of the 1996 Act. But if there is a valid forum selection clause contained in an agreement also containing an arbitration clause, the request under Section 11 of the 1996 Act would have to be made to the Chief Justice (or his designate) of the High Court exercising superintendence over the agreed, exclusive Forum; or, to the Chief Justice of the High Court if the High Court exercising original jurisdiction is the agreed, exclusive Forum. If it is not held so and if the situs of the cause of action or other factors that govern the place of suing under the Civil Procedure Code or the Letters Patent, as the case may be, are considered irrelevant, a party to a contract containing an arbitration agreement would be free to approach any of the several Chief Justices of High Courts in this country irrespective of whether a Court in such State had the jurisdiction to receive an application under Part I of the 1996 Act. That would lead to an absurdity and would also be in derogation of Clause (b) of sub-section (12) of Section 11 of the 1996 Act. 11. That would lead to an absurdity and would also be in derogation of Clause (b) of sub-section (12) of Section 11 of the 1996 Act. 11. A.P. No.330 of 2007 should be placed before the Hon'ble Designate of the Hon'ble the Chief Justice for constituting an Arbitral Tribunal to adjudicate upon the disputes between the parties covered by the arbitration agreement. 12. G.A. No. 3545 of 2007 is an application by the respondent for dismissal of the petition under Section 11 of the 1996 Act. In the light of the view taken above, G.A. No. 3545 of 2007 is dismissed. There will be no order as to costs in either case. Urgent certified photocopies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.