Nortan Intee Rubbers (P) Ltd. v. Neyveli Lignite Corporation
2012-03-30
M.Y.EQBAL
body2012
DigiLaw.ai
Judgment :- 1. The Petitioner has moved the present Revision Petition with a prayer to set aside the order dated 23.08.2011 made in Memo in Arbitration O.P.No.87 of 2010 on the file of the Principal District Judge, Cuddalore, whereby the learned Principal District Judge dismissed the Memo filed by the Petitioner herein holding that there is neither any bar nor any prohibition in respect of territorial jurisdiction for the District Court at Cuddalore to proceed with the pending Arbitration Original Petition. 2. The short facts, which are relevant and necessary for the disposal of this Revision Petition is quoted herein below: It is stated that the 1st Respondent – Neyveli Lignite Corporation, which is a Public Sector Undertaking, floated a ‘limited tender’ for the procurement of different sizes of Butyle Tubes during the year 1998. The Petitioner-Company, which is engaged in the business of production and supply of components involved in the manufacture of type tubes, was the successful bidder for two contracts. Accordingly, two purchase orders containing agreed terms and conditions of the contract were issued to the Petitioner-Company. The first Purchase Order was dated 21.09.1998, and it was for the supply of 1600 Nos. of 9.00 x 20 butyle tubes. The total value was for Rs.7.60 lakhs. The delivery schedule was for “bulk supply” to be effected on or before 31.10.1998. The second Purchase Order was dated 29.09.1998 and it was for the supply of 290 Nos. of 6.00 x 16 butyle tubes for a total value of Rs.43,500/-. The price agreed is firm till the entire supply is effected. As far as the second Purchase Order is concerned the Petitioner had effected the supplies within time. However, regarding the first Purchase Order dated 21.09.1998 the Petitioner failed to effect supply in time and sought for time and upward revision in the price, for which the 1st Respondent herein did not agree, but in turn the 1st Respondent by its letter dated 20.10.1998 impressed upon the Petitioner-Company about the urgent need of the materials and required it to complete the supplies within the stipulated time. There was no response from the Petitioner-Company.
There was no response from the Petitioner-Company. Hence, by another communication dated 10.12.1998 the 1st Respondent intimated the Petitioner-Company to complete the supplies on or before 24.12.1998 and it was also made clear in that letter that failure to supply the materials in time would result in cancellation of the first Purchase Order at the risk and cost of the Petitioner-Company. Even thereafter, the Petitioner-Company did not take any steps to supply the materials. In view of the urgency, the 1st Purchase Order was cancelled and the materials were procured through other agencies invoking the risk purchase clause. An extra expenditure of Rs.1,83,989.60 was incurred by the 1st Respondent on account of this. A demand to remit the extra expenditure was also made to the Petitioner-Company, but it remained silent. Thereafter, by communication dated 02.11.1999 the Petitioner-Company was informed that an amount of Rs.43,500/- payable under the 2nd purchase order to it, has been set off, as against the amount of Rs.1,83,989.60 due to the 1st respondent, and the Petitioner-Company was required to remit the balance amount of Rs.1,40,489.60 immediately. The Petitioner-Company did not oppose or object to the setting off of the sum of Rs.43,500/-, nor did it remit the balance amount of Rs.1,40,489/-. It did not initiate any legal action for the recovery of the said amount of Rs.43,500/-. While being so, suddenly in the year 2009 i.e., after the lapse of nearly 10 years the Petitioner-Company filed a Claim Petition before the 2nd Respondent – Council under the provisions of Micro, Small and Medium Enterprises Development Act, 2006 (in short MSMED Act) claiming the said amount of Rs.43,500/-with interest. The 2nd Respondent – Council allowed the Claim Petition, as prayed for, by its Award dated 08.03.2010. Being aggrieved by the said Award the 1st respondent filed an Arbitration Original Petition being O.P.No.87 of 2010 before the District Court at Cuddalore. In that original Petition, the Petitioner-Company has raised a preliminary issue regarding the territorial jurisdiction of the District Court at Cuddalore to entertain the Original Petition. According to the Petitioner-Company, since, the impugned Award dated 08.03.2010 was passed by the 2nd Respondent-Council at Chennai the Original Petition challenging the said Award should be moved before the Courts at Chennai and not at Cuddalore.
According to the Petitioner-Company, since, the impugned Award dated 08.03.2010 was passed by the 2nd Respondent-Council at Chennai the Original Petition challenging the said Award should be moved before the Courts at Chennai and not at Cuddalore. But, the Principal District Judge, Cuddalore in his impugned Order dated 23.08.2011 held that since for the district of Cuddalore the MSE Facilitation Council shall be situate at Chennai and therefore, the provisions in the MSMED Act, 2006 does not curb the jurisdiction of the Principal District Court at Cuddalore. Aggrieved by the said order, the Petitioner-Company has moved the present Revision Petition. 1. 3. Mr. G.S. Rajasekaran, Party in Person, mainly contended that the First Respondent had participated in the proceedings before the Facilitation Council at Chennai. Therefore, any resultant order will have to be challenged before the appropriate Court at Chennai. According to him, the jurisdiction under Article 226 of the Constitution could have been invoked where the right of parties, although governed by contract, was intervened by the MSMED Act, 2006, and compulsory arbitration took place at Chennai instead of Cuddalore. It was submitted that the non-obstante clause contained in Section 24 of the MSMED Act, 2006 provides overriding effect notwithstanding anything inconsistent therewith and any other law for the time being in force. He also submitted that the jurisdiction of the Council in a State is where the supplier is located and the Appeal from the Council will lie before appropriate judicial Courts where the Arbitral proceedings had taken place. 4. I do not find any force in the submission of the Petitioner-party in person. Indisputably, the first respondent is a Public Sector Undertaking carrying on its activities in Cuddalore District. Pursuant to the limited tender issued by the First Respondent from its office at Cuddalore, the Petitioner, being the successful tenderer for the contract, was issued purchase orders on the agreed terms and conditions. As against the first Purchase Order, the supply was effected, but subsequent to the issuance of the second Purchase Order, dispute arose because of the non-supply of materials by the petitioner. Although the entire cause of action arose within the jurisdiction of Cuddalore, but because of the provisions contained in the MSMED Act, the arbitration took place at Chennai and the award was passed.
Although the entire cause of action arose within the jurisdiction of Cuddalore, but because of the provisions contained in the MSMED Act, the arbitration took place at Chennai and the award was passed. The First Respondent, being aggrieved by the said award, filed a Petition under Section 34 of the Arbitration and Conciliation Act before the District Court at Cuddalore for setting aside the award. The only question, therefore, that needs to be considered is as to whether the Court at Cuddalore had the jurisdiction to entertain the Petition, which has been seriously objected to by the Petitioner. 5. Section 2(1)(e) of the Arbitration and Conciliation Act, 1996 defines the term ‘Court’, which reads as under: “‘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 a Suit, but does not include any Civil Court of a grade inferior to such Principal Civil Court, or any Court of Small Causes.” 6. From the aforementioned definition, it is clear that it is only the Court at Cuddalore which has territorial jurisdiction to entertain the aforesaid Petition. It is well settled that territorial jurisdiction of the Court shall be where the contract was entered into and the same was executed. Irrespective of the place where the arbitration was concluded and the award was passed, the Court having territorial jurisdiction shall be the competent Court. Besides the above, an award can be filed only in that Court in which the Suit would lie with regard to the subject matter of reference. Hence, filing of award or challenging the award under Section 34 of the Arbitration and Conciliation Act shall be only in a Court having territorial jurisdiction. In my view, therefore, the learned District Judge has rightly held that merely because the arbitration took place at Chennai, the Courts at Chennai shall not have jurisdiction to entertain the Petition for setting aside the award. The relevant portion of the order passed by the District Judge is quoted herein below: “The Civil Courts having ordinary Original Civil jurisdiction over Neyveli shall alone have exclusive jurisdiction in regard to all questions or dispute arising under the contract with the purchase of whatever nature including the Arbitration proceedings, if any.
The relevant portion of the order passed by the District Judge is quoted herein below: “The Civil Courts having ordinary Original Civil jurisdiction over Neyveli shall alone have exclusive jurisdiction in regard to all questions or dispute arising under the contract with the purchase of whatever nature including the Arbitration proceedings, if any. Based on this provision, it was stated in unequivocal terms that the Principal District Court at Cuddalore shall alone have the jurisdiction to try the arbitration matters. If perused with a deep insight into the provisions of the Micro Small and Medium Enterprises Development (MSMED) Act, 2006 and upon G.O. Ms. No.63, Small Industries Department, dated 8.12.2006, it is found that the table appended in the said Act is the jurisdiction and powers related to the MSE Facilitation Councils and the various divisions mentioned in the table indicates the formation and jurisdiction of the MSE Facilitation Councils. As such, for the District of Cuddalore, the MSE Facilitation Council shall be situate at Chennai. Therefore, the provision in the MSMED Act, 2006 does not curb the jurisdiction of the Principal District Court at Cuddalore. Therefore, taking into consideration of the above materials, this Court comes to the conclusion that there is neither any bar nor any prohibition for this Court to proceed with the O.P. on the plea of territorial jurisdiction and hence, it is ordered that the proceedings may continue as usual.” 7. Taking into consideration the entire facts, I do not find any error in the impugned order passed by the District Judge, Cuddalore and there is no merit in the Civil Revision Petition, which is accordingly dismissed. However, there shall be no order as to costs.