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Jharkhand High Court · body

2010 DIGILAW 750 (JHR)

Jain Udyog Ltd. v. Mahindra & Mahindra Ltd.

2010-07-23

SUSHIL HARKAULI

body2010
Order I have heard both sides. Introduction: 2. This is an application under Section 11 (4) of the Arbitration & Conciliation Act, 1996 (hereinafter referred as the Act). It seeks appointment of an Arbitrator by the Chief Justice pursuant to Clause 36 of the "Dealer Agreement" dated 4th April, 2004 entered into between the parties hereto. A copy of the said Agreement has been filed by the applicant as Annexure-3. 3. There is no dispute that Clause 36 of the said Agreement is an arbitration Clause. 4. The objection by the respondent is to the territorial jurisdiction of this Court to entertain this application under Section 11. The objection is based upon Clause 37 of the same Dealer Agreement dated 4th April, 2004 which is being relied upon by the applicant also. 5. For ready reference the said Clause 37 is quoted below: "37. JURISDICTION This Agreement has been signed in Mumbai and any legal proceedings arising out of this Agreement or relating thereto or in any manner connected with the dealership granted under this Agreement, shall be instituted in Mumbai Courts only, to the exclusion of other Courts." (emphasis supplied) The Law: 6. Before dealing with the factual aspect of the matter, it would be desirable to spell out the law. 7. Sub-sections (4), (5), (6), (7), (8) and (10) of Section 11 of the Act use the word "Chief Justice". Clause (b) of subsection (12) of Section 11 elaborates the meaning of the word "Chief Justice" as used in sub-sections (4), (5), (6), (7), (8) and (10) of Section 11. 8. For ready reference, Clause (b) of sub-section (12) of Section 11 is quoted below: "Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to "Chief Justice" in those sub-sections shall be construed as a reference to the Chief Justice of the High Court within whose local limits the principal civil court referred to in clause (e) of sub-section (1) of Section 2 is situate and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that High Court." 9. Thus, Section 2(1)(e) of the Act becomes relevant and is quoted below for ready reference:- "Court" means the principal civil court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal civil Court, or any court of small causes." 10. From reading of these provisions, it would appear that the Chief Justice under sub-sections (4), (5), (6), (7), (8) and (10) of Section 11 of the Act would mean the Chief Justice of the High Court within the local limits of which that 'Civil Court' is situated, which Civil Court would have (in absence of the arbitration provision) the territorial jurisdiction to decide a suit involving the questions forming the subject-matter of the arbitration. 11. The territorial jurisdiction of civil courts is determined by Section 20 of the Code of Civil Procedure, 1908 which in substance provides that a suit can be instituted either where the defendant resides or where the cause of action has arisen. 12. Therefore, initially it will have to be examined, with reference to the facts of this case, where any part of the cause of action has arisen. The Facts of this case: 13. It has been contended on part of the applicant that the 'entire' cause of action has arisen within the territory of Jharkhand State. 14. This contention is misconceived. From Clause 37 of the Agreement quoted hereinabove, it is clear that the Agreement has been signed in Mumbai. The execution of the Agreement is an integral part of the cause of action for seeking the reliefs by way of arbitration because without such Agreement neither the disputes would not have arisen nor arbitration would be possible. 15. An argument has been advanced from the sides of the applicant that the Agreement was not signed in Mumbai. 16. This argument cannot be accepted because the statement that the Agreement has been signed in Mumbai forms part of that very Agreement upon which the applicant is relying for seeking arbitration. 17. Therefore, for the purposes of this case, this Court has to proceed on the assumption that the Agreement has been signed in Mumbai. 18. 16. This argument cannot be accepted because the statement that the Agreement has been signed in Mumbai forms part of that very Agreement upon which the applicant is relying for seeking arbitration. 17. Therefore, for the purposes of this case, this Court has to proceed on the assumption that the Agreement has been signed in Mumbai. 18. That being the situation, Mumbai Courts would also have territorial jurisdiction in the matter under Section 20 of the Code of Civil Procedure, 1908 on the ground that part of cause of action had arisen in Mumbai. 19. The respondent relies upon Clause 37 of the Agreement which has confined the jurisdiction to Mumbai Courts, to the exclusion of other Courts, in respect of any legal proceedings arising out of the said Agreement or relating to the said Agreement. 20. It is obvious from Section 28 of the Indian Contract Act, 1872 and it has also been held in (2009)9 SCC 403 (Balajee Coke Industry Private Limited vs. Maa Bhagwati Coke Gujarat Private Limited) that where two or more Courts have territorial jurisdiction in a case, it is open to the parties by Agreement to confine the jurisdiction to anyone or more of such Courts, and such Agreement would be valid in law. 21. Therefore, in the present case, because of Clause 37 of the Agreement the territorial jurisdiction has been validly confined to Mumbai Courts. 22. The applicant has argued that it is not open to the parties to confer jurisdiction, by an Agreement, upon a Court which does not otherwise have jurisdiction. 23. For this proposition, reliance has been placed by the applicant upon the decision of the Supreme Court reported in AIR 1992 S.C. 1514 (M/s Patel Roadways Ltd. vs. M/s Prasad Trading Company) and a decision of this Court reported in 2005(2) JLJR 189 (M/s Pratap Electrical & Co. vs. M/s Asea Brawn Boveri Ltd.). 24. There is no quarrel with the said proposition advanced by the applicant. But as found above in this case jurisdiction is not being conferred by the Agreement upon a Court which otherwise does not have jurisdiction. It has been found above that Mumbai Courts also have the jurisdiction under Section 20 of the Code of Civil Procedure. The Conclusion: 25. There is no quarrel with the said proposition advanced by the applicant. But as found above in this case jurisdiction is not being conferred by the Agreement upon a Court which otherwise does not have jurisdiction. It has been found above that Mumbai Courts also have the jurisdiction under Section 20 of the Code of Civil Procedure. The Conclusion: 25. In view what has been found above, it must be held that in this case the Civil Court at Mumbai alone would have jurisdiction to decide the questions forming the subject matter of arbitration, if those disputes had been subject-matter of a civil suit. 26. Therefore, the words "Chief Justice" as used in Section 11 (4) of the Act, for the purposes of this case would mean Chief Justice of the Bombay High Court only. 27. Accordingly, this application is not maintainable before this Court for want of territorial jurisdiction. Order: 28. In these circumstances, leaving it open to the applicant to apply before the Chief Justice of Bombay High Court, this application is dismissed.