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2010 DIGILAW 373 (CAL)

Srachi Developers Pvt. Ltd. v. Bidyutlata Mohapatra

2010-04-08

SANJIB BANERJEE

body2010
JUDGMENT: 1. GA No.2570 of 2008 has been filed by the respondents to AP No. 376 of 2007, AP No.376 of 2007, a petition under section 9 of the Arbitration and Conciliation Act, 1996, was disposed of on January 8, 2008 without any effective order. The present application for recalling such order has been necessitated since there is an issue between the parties as to whether this Court would have any jurisdiction to entertain any petition arising out of the agreement dated November 1, 2004. 2. THE agreement is in the nature of a deed of partnership whereby the respondents' contribution was a plot of land in Bhubaneswar and the petitioner herein was to be the financing partner to develop the land. It is the admitted position that proceedings under section 11 of the 1996 Act have been instituted by the respondents before the Orissa High Court at Cuttack. The petitioner herein has instituted a subsequent petition under section 11 of the 1996 Act, being AP No. 229 of 2008. AP No. 229 of 2008 has to be dismissed in view of the earlier petition under section 11 carried by the respondents to the Orissa High Court. This is in view of sections 11(11) and 11(12)(b) of the 1996 Act. 3. THOUGH the order dated January 8, 2008 would not otherwise affect the respondents, but the fact that a previous petition in respect of the same reference or the same arbitration agreement has been entertained in this Court would imply that all subsequent petitions relating to the reference or the same arbitration agreement have per force to be brought here. It is for such purpose that the respondents seek recalling of the order dated January 8, 2008 passed in AP No. 376 of 2007. 4. IN the vacating application two grounds have been urged. The first ground is that the agreement or the deed of partnership of November 1, 2004 contains a forum selection clause. The second ground is that notwithstanding the forum selection clause, no part of the petitioner's alleged cause of action has or could have arisen within the jurisdiction of this Court. IN the vacating application two grounds have been urged. The first ground is that the agreement or the deed of partnership of November 1, 2004 contains a forum selection clause. The second ground is that notwithstanding the forum selection clause, no part of the petitioner's alleged cause of action has or could have arisen within the jurisdiction of this Court. It is of some significance that the respondents have admitted the receipt of the cause papers relating to AP No. 376 of 2007 but the excuse proffered it: that in Orissa papers are served through Court process and not by litigants themselves or Advocates and the respondents were under an impression that a more formal service through Court would be effected and did not pay any credence to the notice issued on behalf of the petitioner. At paragraph 6 of the vacating application it has been averred that no part of the petitioner's alleged cause of action - not even any fraction thereof-has arisen within jurisdiction. Against this, the petitioner shows the averments made in the petition relating to AP No.376 of 2007. The petitioner also seeks to demonstrate that a part of the performance under the deed of partnership of November 1, 2004 was in Calcutta and within jurisdiction. The petitioner refers to Clause 3.2 of the deed which provides for a principal office to be opened at Rudrapur in Bhubaneswar and other offices to be opened at such other places as may be agreed upon between the parties. The petitioner says that one of the offices of the firm has been set up at Todi Mansion in Lalbazar within jurisdiction and as such it cannot be said that the agreement or the transactions there under had no nexus with this Court. 5. AS to whether a part of the cause of action arose within, jurisdiction or not has to be assessed on the basis of affidavit evidence. There are statements made on behalf of the petitioner to one effect and the averments at paragraph 6 of the vacating application would imply that the petitioner's contentions on such ground have been denied and the respondents have asserted that no part of the cause of action has arisen within jurisdiction. There are statements made on behalf of the petitioner to one effect and the averments at paragraph 6 of the vacating application would imply that the petitioner's contentions on such ground have been denied and the respondents have asserted that no part of the cause of action has arisen within jurisdiction. If such a question were raised in course of interlocutory proceedings in a suit, there would be an easy way out for the interlocutory Judge in that the statements contained in the plaint have to be accepted as true and correct and the question is left to be decided at the time of trial. Such luxury is not available to the arbitration Court taking up a matter under section 9 of the 1996 Act since the statement of claim is filed not before the Court but before the arbitrator in the reference. Further, since a petition under section 9 of the 1996 Act can also be made and even disposed of at the pre-reference stage, the arbitration Court may not even have the benefit of perusing the statement of claim but has to, in a sense, guess the likely issues that could arise in the reference. That does not imply that the question of jurisdiction has to be tried on evidence in each case when there is an assertion by a petitioner and a denial thereof by the respondent. 6. IN any event, an issue as to territorial jurisdiction does not hit at the root of the Court's authority to receive a petition; in the sense that it is not an issue of inherent lack of jurisdiction. If every issue as to territorial jurisdiction in a petition under section 9 of the Arbitration and Conciliation Act, 1996 were to be tried on evidence, there would be little time left to do anything else. Every recalcitrant respondent would raise the issue of jurisdiction and would require the Court to adjudicate upon the same before making any substantive order on the merits of the matter. The assessment by the arbitration Court has to be made on a meaningful consideration and upon considering the balance of convenience of the parties. Every recalcitrant respondent would raise the issue of jurisdiction and would require the Court to adjudicate upon the same before making any substantive order on the merits of the matter. The assessment by the arbitration Court has to be made on a meaningful consideration and upon considering the balance of convenience of the parties. There does not appear to be any overwhelming case of inconvenience made out in the vacating application for the issue of jurisdiction to be answered in favour of the respondents and the leave initially granted under Clause 12 of the Letters Patent when receiving AP No.376 of 2007 to be revoked. As to the forum selection clause, the same provides as follows : "5. Jurisdiction.- All matters arising in connection with the Agreement shall be settled by the Courts within the jurisdiction of the Bhubaneswar High Court of Orissa." To start with there is no High Court in this country by the name of Bhubaneswar High Court. Even if one were to ignore such minor matter and consider the clause to imply the Orissa High Court at Cuttack it would still not be a forum selection clause conferring exclusivity on any specific Court as is ordinarily required for a forum selection clause to be effective. The Orissa High Court has no original jurisdiction and as such the forum selection clause could not have provided that only the Orissa High Court would have exclusive authority to entertain petitions arising out of the agreement. Further, the clause does not contain the words of exclusivity that have to be incorporated in a clause to make it an effective forum selection clause. If the clause implies that the agreed Court would be a Court over which the Orissa High Court exercises Superintendence under Article 227 of the Constitution of India, it would rob the Clause of any sense of exclusivity that is essential for a forum selection clause to possess. After all, the Orissa High Court exercises superintendence under Article 227 of the Constitution over all subordinate Courts from the eastern-most and northern-most of its districts to the western-most and southern-most of them. 7. IN such circumstances, the vacating application being GA No.2570 of 2008 is dismissed. There will be no order as to costs. 8. After all, the Orissa High Court exercises superintendence under Article 227 of the Constitution over all subordinate Courts from the eastern-most and northern-most of its districts to the western-most and southern-most of them. 7. IN such circumstances, the vacating application being GA No.2570 of 2008 is dismissed. There will be no order as to costs. 8. AP No.228 of 2008 is a subsequent petition under section 9 of the 1996 Act in which an interim order dated May 6, 2008 is subsisting. AP No. 228 of 2008 is disposed of by confirming the interim order. It is made clear that the parties may seek further interim orders or a variation of the subsisting interim order in the reference. There will be no order as to costs. This order will not preclude the parties from otherwise resolving the disputes by negotiation.