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2011 DIGILAW 41 (KER)

M. K. A. Agencies v. ACTIA India Pvt. Ltd.

2011-01-11

K.SURENDRA MOHAN, R.BASANT

body2011
Judgment :- Basant, J. Does not an application filed under Section 9 of the Arbitration and Conciliation Act, 1996 (‘the Act’ hereafter) after the commencement of the Arbitral Proceedings attract the bar under Section 42 of the Act? ii) Are the words “in respect to an arbitration agreement” employed by the legislature in Section 42 sufficient to exclude the application of Section 43 of the Act to such applications filed after the commencement of arbitral proceedings? These questions arise for consideration in this appeal. 2. This appeal is directed against an order passed by the District Court, Ernakulam directing return of proceedings initiated under Section 34 of the Act. 3. There is no dispute on fundamental facts. That there is an arbitration agreement between the parties is admitted. Invoking the provisions in the arbitration agreement, arbitral proceedings had commenced. That is also not disputed. That during the pendency of the arbitral proceedings, an application was filed by the respondent under Section 9 of the Act before the Delhi High Court is not disputed. That award was passed in the arbitral proceedings on 04.03.2009 is accepted. That the petition under Section 9 of the Act was disposed of by the Delhi High Court after 04.03.09 is conceded. That the petition under Section 34 of the Act was filed by the appellant before the District Court, Ernakulam, on 30.03.2009 is also not disputed. It will be crucial mention that the fact that the court at Delhi and the court at Ernakulam are both courts having jurisdiction within the meaning of Section 2(e) of the Act is also not disputed. 4. In the application filed by the appellant under Section 34 of the Act before the District Court, the respondent entered appearance and raised an objection that the District Court, Ernakulam, though it answers the definition of “court” under Section 2(e) of the Act, cannot have jurisdiction to entertain the petition under Section 34 of the Act in view of the clear bar under Section 42 of the Act. 5. The court below considered the objection. The court, upholding the objection, held that proceedings having already been initiated before the court at Delhi, the subsequent proceedings must also be initiated before that court and not before the District Court at Ernakulam. The appellant claims to be aggrieved by the impugned order. We entertained reservations on the need for admission of the appeal. The court, upholding the objection, held that proceedings having already been initiated before the court at Delhi, the subsequent proceedings must also be initiated before that court and not before the District Court at Ernakulam. The appellant claims to be aggrieved by the impugned order. We entertained reservations on the need for admission of the appeal. The learned counsel was requested to advance detailed arguments. A caveat had been lodged by the respondent and the respondent is represented by a counsel before us. We have heard the learned counsel for the appellant. The learned counsel for the respondent also, though the matter has not formally been admitted, has been heard by the court on the sustainability of the appeal. 6. The important question that arises for consideration is whether the District Court, Ernakulam, though it satisfactorily answers the definition of ‘Court’ in Section 2(e) of the Act, has jurisdiction to entertain the petition under Section 34 of the Act in the light of the admitted fact that an earlier application under Section 9 was entertained validly and orders passed earlier by the Delhi High Court. 7. The learned counsel for the appellant first of all contends that no written statement has been filed before the District Court, Ernakulam and in these circumstances, the court below erred in considering the objections without insisting on the filing of a written statement. The crucial facts, having a bearing on the question, are all admitted. We are not, in these circumstances, persuaded to take the view that not filing the written statement must be held to be crucial or vital in the circumstance of the case. That objection is found to be unsustainable. 8. The next contention urged, though without conviction, is that the Delhi High Court is not a court under Section 2(e) of the Act. In the course of arguments, it is accepted that the Delhi High Court entertains civil jurisdiction and is the principal civil court of original jurisdiction so far as Delhi is concerned. The definition of the court in Section 2(e) of the Act makes it very clear that where the High Court is the civil court of original jurisdiction in a district that court will be court for the purpose of Section 2(e) of the Act. The definition of the court in Section 2(e) of the Act makes it very clear that where the High Court is the civil court of original jurisdiction in a district that court will be court for the purpose of Section 2(e) of the Act. We extract Section 2(e) of the Act below: “Section 2(e): “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.” (emphasis supplied) 9. There can, in these circumstances, be no merit in the contention that the Delhi High Court is not a court answering the definition in Section 2(e) of the Act. It will not be inapposite in this context to mention that an appealable order under Section 9 was passed by the Delhi High Court with the appellant on the party array and the appellant has not chosen to challenge the order. 10. Lastly and most importantly the contention is raised that Section 42 can have no application in the fact scenario available in the case. 11. We extract Section 42 of the Act below: “42. Jurisdiction:- Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court. (emphasis supplied) 12. The language of Section 42 of the Act is clear and simple. The purpose of the stipulation also appears to us to be clear and evidence. Where plurality of courts have jurisdiction to deal with the matter and one court has already dealt with the matter in any dimension earlier, it is for such court, which has already dealt with the matter and no other court, to later entertain any subsequent applications in respect of the same matter. 13. Where plurality of courts have jurisdiction to deal with the matter and one court has already dealt with the matter in any dimension earlier, it is for such court, which has already dealt with the matter and no other court, to later entertain any subsequent applications in respect of the same matter. 13. The learned counsel for the appellant lays emphasis on the use of the words “with respect to an arbitration agreement” in Section 42 and contends that the bar of jurisdiction under Section 42 of the Act can apply only when application is filed under Part I with respect to an arbitration agreement. To put it in a nut shell the argument of the counsel is that in this case application under Section 9 of the Act has been filed admittedly after commencement of the arbitral proceedings. It cannot hence be said that the application is with respect to an arbitration agreement. It was with respect to the arbitral proceedings which had already commenced. The counsel hence contends that Section 42 can have no application. 14. We are afraid, this argument cannot be accepted. The application under Section 9 as also application under Section 34, are both applications under Part I of the Act. So far as an application under Section 9 is concerned, such an application can be filed prior to the arbitral proceedings, during the arbitral proceedings or after the culmination of the arbitral proceedings. All the three must necessarily relate to the arbitration agreement. An application during the arbitral proceedings or after the completion of the arbitral proceedings could be described with reference to the arbitral proceedings. But, when arbitral proceedings is only anticipated and has not actually commenced, reference to the proceedings can be only by reference to the arbitral agreement. Such reference to the arbitral agreement would cover all the 3 cases – of proceedings prior to formal initiation of the arbitral proceedings, after the initiation of arbitral proceedings and after culmination of the arbitral proceedings. In these circumstances, the attempt to make much out of the use of the expression “with respect to an arbitration agreement,” cannot obviously succeed. Such reference to the arbitral agreement would cover all the 3 cases – of proceedings prior to formal initiation of the arbitral proceedings, after the initiation of arbitral proceedings and after culmination of the arbitral proceedings. In these circumstances, the attempt to make much out of the use of the expression “with respect to an arbitration agreement,” cannot obviously succeed. The legislature was conscious that by using the expression “with respect to arbitration agreement”, at the three instances of a petition filed under the part prior to the commencement of the arbitral proceedings, after the commencement of the arbitral proceedings and after the culmination of the arbitral proceedings, can all be taken within its sweep. That precisely is the reason why the expression “with respect to the arbitration agreement” is made use of. 15. The language of Section 42 of the Act is clear and simple. Whether an application under Part I is already filed (and that includes an application under Section 9), all subsequent applications must be before that court. We may hasten to observe that such first application filed must be filed validly and legally. If such prior application is filed before a court which has no jurisdiction, the bar of Section 42 cannot obviously be applied. The expression an application under this part “has been made in a court” must certainly be read in the circumstances “as validly made in court”. We need not go into that question in detail in this case as we have no dispute that the Delhi High Court is not a court answering the definition of court under Section 2(e) of the Act or that the application under Section 9 was not validly made before that Court. There is no contention even that the application under Section 9 lacked bona fides. 16. The legislative purpose underlying Section 42 of the Act appears to be two fold. The yearning to avoid conflicting decisions appears to be primary. Parallelly, and equally important, it appears to us, is the convenience of the parties. Having already been obliged to contest the proceedings at one venue, they should not be obliged to run to another venue to continue the contest in respect of the same subject matter. The yearning to avoid conflicting decisions appears to be primary. Parallelly, and equally important, it appears to us, is the convenience of the parties. Having already been obliged to contest the proceedings at one venue, they should not be obliged to run to another venue to continue the contest in respect of the same subject matter. This legislative purpose also cannot persuade us to distinguish between a pre arbitral proceedings application under Section 9 and a post arbitral proceedings application under Section 9, in the interpretation of Section 42. It must further be seen that Section 42 later refers to all subsequent applications “arising out of that agreement and the arbitral proceedings”. There can hence be no semblance of doubt on this aspect. 17. We are, in these circumstances, of the opinion that the court below was absolutely justified in taking the view that in the light of Section 42 of the Act and in the light of the admitted filing and disposal of the earlier application under Section 9 before the Delhi High Court, the District Court, Ernakulam did not have jurisdiction to entertain the petition under Section 34 filed by the appellant. The challenge fails. 18. Finally the learned counsel for the appellant submits that the appellant may be given time to present the returned petition before the Delhi High Court. The appellant shall, of course, have reasonable time from this date to present the application under Section 34 of the before the Delhi High Court. Taking all the relevant circumstances into account, we reckon and stipulate 30 days as reasonable time to re-present the petition before the Delhi High Court. 19. In these circumstances, we dismiss this Writ Petition in limine with the above observations.