WONDERGENIE TRADE LINKS PVT. LTD. v. SATYAM TOWERS PVT. LTD.
2012-09-11
M.M.DAS
body2012
DigiLaw.ai
JUDGMENT : M.M. Das, J. - In this appeal under section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act'), the appellant has called in question the order dated 27.03.2010 passed by the learned District Judge, Cuttack on an application filed by the appellant under section 9 of the Act registered as ARBP No.36 of 2010. By the said order, the learned District Judge finding that he has no jurisdiction to pass any order on the said application and coming to the conclusion that the application cannot be entertained by him, rejected the same. 2. The sole question to be decided in this appeal is as to whether the learned District Judge was correct in holding that the application under section 9 of the Act filed by the appellant cannot be entertained by him due to lack of jurisdiction. For deciding the above question the facts involved in the case are required to be referred to in jist, which are as follows. 3. The appellant, which is a Company registered under the Companies Act, 1956 owns and runs a Chrome Ore Beneficiation Plant over Plot Nos.257 and 258 at Sukutijhar Ramchandrapur in the District of Jajpur. The respondent no.1, which is also a Company registered under the Companies Act having its head office at Kolkata being interested agreed to invest and work together for carrying out the expansion/up-gradation of the plant and jointly run the business on the terms and conditions agreed upon between the parties for which an agreement was entered into on 12.06.2008. The respondent no.4 was appointed as the lawful attorney on behalf of the appellant - Company to operate and conduct the maintenance of the plant by virtue of a general power of attorney dated 13.06.2008. On 19.03.2009, the appellant and the respondent no.1 entered into a fresh agreement titled as "Joint Venture Agreement" cancelling their previous agreement dated 12.06.2008. By the said Joint Venture Agreement, it was agreed to between both the parties that the respondent no.1 would procure raw materials in its name and at its cost and supply the same to the appellant for processing. However, the ownership of the raw material as well as the finished goods and any type of trailing would remain with the respondent no.1.
However, the ownership of the raw material as well as the finished goods and any type of trailing would remain with the respondent no.1. As per the terms of the agreement, the appellant was required to pay all rates, taxes, rent and all other charges in respect of the premises, plant and any additional plant or machinery to be erected or added. It was agreed that the respondent no.1 would bear the entire production expenses and will be reimbursed by the appellant on actual basis whereas the appellant will have the duty to carry out any renovation and repairs with respect to the plant to keep the same in good operational condition. It was also agreed in the said agreement that the plant and the machinery would run under the supervision and direction of the respondent no.1. Both the parties to the said agreement agreed to appoint the respondent no.4 as Management and respondent no.3 as Consultant to look after the day to day running of the plant efficiently and to its full capacity. It was further agreed that an irrevocable power of attorney would be executed in favour of respondent no.2 - Mr. Shankar Prasad Das by the appellant as a security for the purpose of the agreement. There were other stipulations made in the said agreement with regard to running of the said plant. As per one of the terms of the said agreement dated 19.03.2009, one consultancy agreement was entered into between the appellant and the respondent no.1 with M/s. Sparsa Consultant and Exports represented by its Director Mr. Rudra Prasad Das respondent no.3. Another agreement was entered into on 19.03.2009 named as Management Agreement between the appellant and the respondent no.1 with Mr. Rajeev Mohanty, respondent no. 4 to manage the day to day work of the plant. 4. It is alleged by the appellant that the respondents failed to abide by the terms of various agreements entered into between each of them with the appellant and deliberately delayed the production of the plant resulting into huge financial loss to the appellant and further also failed to achieve and maintain the targeted production of 2500 M.T. within six months.
It is alleged by the appellant that the respondents failed to abide by the terms of various agreements entered into between each of them with the appellant and deliberately delayed the production of the plant resulting into huge financial loss to the appellant and further also failed to achieve and maintain the targeted production of 2500 M.T. within six months. The appellant alleges various derelictions by the respondent no.1 in adhering to the terms of the contract, inter alia, stating that the appellant as per the Joint Venture Agreement went on performing the duties cast upon it under the said agreement. Several request letters are alleged to have been sent to the respondent no.1 by the appellant to perform the duties cast upon them in the said agreement and the appellant made all attempts to amicably settle the dispute. However, attempts having failed, it is asserted by the appellant that the dispute arose in connection with various clauses of the arbitral agreement entered into between the parties, which is required to be referred to an Arbitrator as per the provisions of the Act. The appellant further asserts that the cause of action for filing the petition under section 9 having arisen within the jurisdiction of the learned District Judge, Cuttack, it preferred the application under section 9 of the Act for interim orders pending arbitration, such as, for appointment of a receiver till adjudication of the dispute between the parties. The said application having been rejected, as already stated, the appellant has approached this Court in the present appeal. 5. To decide the present lis, it is necessary to quote the Arbitration Clause in the Joint Venture Agreement, i.e., Clause Nos.24 and 25, which are as follows:- "24. All, if any, disputes between the parties under this agreement or concerning this agreement shall be referred to arbitration and two arbitrators one to be appointed by each of the parties. The arbitrators shall appoint an umpire before starting of the Arbitration. 25. The Courts at Kolkata only shall have jurisdiction in respect of the said agreement." It is an admitted fact that the Joint Venture Agreement was entered into between the parties at Kolkata. The consultancy agreement was also entered into on the same date in between the parties at Kolkata. 6.
25. The Courts at Kolkata only shall have jurisdiction in respect of the said agreement." It is an admitted fact that the Joint Venture Agreement was entered into between the parties at Kolkata. The consultancy agreement was also entered into on the same date in between the parties at Kolkata. 6. The learned District Judge taking the above fact into consideration in the impugned order came to the conclusion that he lacks jurisdiction to entertain the petition under section 9 of the Act as it is a settled position of law that the parties cannot confer jurisdiction on the court by agreement. He placed reliance on the decision in the case of M/s. Patel Roadways Ltd., Bombay v. M/s. Prasad Trading Company, AIR 1992 SC 1514 and Hakam Singh v. Gamon (India) Ltd., AIR 1971 SC 740 in support of his contention. 7. Mr. B.M. Pattnaik, learned senior counsel appearing for the appellant submitted that as it is well settled in law that the plant and machinery being embedded to the earth or permanently fashioned, the same falls within the definition of immovable property as set out in section 3 (26) of the General Clauses Act, 1897 read with section 3 (c) of the Transfer of Properties Act, 1882 and as the plant which is situated within the jurisdiction of the learned District Judge, Cuttack, he had jurisdiction to entertain the application under section 9 of the Act as per section 20 C.P.C. 8. On the contrary, Mr. S.P. Mishra, learned senior counsel appearing for the respondents contended that in the facts of the present case and in view of the language used in the agreement that the courts at Kolkata only will have jurisdiction to entertain a dispute arising between the parties, the learned District Judge, Cuttack is correct in holding that it lacks jurisdiction to entertain the application. 9.
9. Section 16 C.P.C. provides as follows:- "Suits to be instituted where subject-matter situate.-Subject to the pecuniary or other limitations prescribed by any law, suits,- (a) for the recovery of immovable property with or without rent or profits, (b) for the partition of immovable property, (c) for foreclosure, sale or redemption in the case of a mortgage of or charge upon immovable property; (d) for the determination of any other right to or interest in immovable property; (e) for compensation for wrong to immovable property; (f) for the recovery of immovable property actually under distraint or attachment; shall be instituted in the Court within the local limits of whose jurisdiction the property is situate:- Provided that a suit to obtain relief respecting, or compensation for wrong to, immovable property held by or on behalf of the defendant may, where the relief sought can be entirely obtained through his personal obedience, be instituted either in the Court within the local limits of whose jurisdiction the property is situate, or in the Court within the local limits of whose jurisdiction the defendant actually and voluntarily resides, or carries on business or personally works for gain. Explanation - In this section "property" means property situate in (India)". 10. Section 20 C.P.C. provides thus:- "Other suits to be instituted where defendants reside or cause of action arises.- Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction- (a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or (b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or (c) the cause of action, wholly or in part, arises. Explanation - A corporation shall be deemed to carry on business at its sole or principal office in (India) or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place".
Explanation - A corporation shall be deemed to carry on business at its sole or principal office in (India) or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place". 11. Under similar facts, this Court had the occasion to deal with the question of jurisdiction in the case of Vidhi Minerals & Allied Pvt. Ltd., represented through its Director v. Paradip Port Trust, represented through its Chairman, Paradip and another, in ARBA No.10 of 2010 disposed of by judgment dated 27.07.2010. This Court analyzing various case laws and relying upon the decision in the case of New Moga Transport Company v. United India Insurance Co. Ltd. And others, AIR 2004 SC 2154 as well as the decision in the case of A.B.C. Laminart Pvt. Ltd. and another v. A.P. Agencies, AIR 1989 SC 1239 did not interfere with the orders of the learned District Judge refusing to exercise jurisdiction under section 9 of the Act on the ground of lack of jurisdiction. 12. To reiterate, it is seen that the Supreme Court in the case of New Moga Transport Company (supra), in paragraphs - 14 and 19 thereof held as follows:- "14. By a long series of decisions it has been held that where two Courts or more have under the CPC jurisdiction to try a suit or proceeding an agreement between the parties that the dispute between them shall be tried in any one of such Courts is not contrary to public policy and in no way contravenes Section 28 of the Indian Contract Act, 1872. Therefore, if on the facts of a given case more than one Court has jurisdiction, parties by their consent may limit the jurisdiction to one of the two Courts. But by an agreement parties cannot confer jurisdiction to a Court which otherwise does not have jurisdiction to deal with a matter....... " "19. The intention of the parties can be culled out from use of the expressions "only", "alone", "exclusive" and the like with reference to a particular Court. But the intention to exclude a Court's jurisdiction should be reflected in clear, unambiguous, explicit and specific terms. In such case only the accepted notions of contract would bind the parties.
" "19. The intention of the parties can be culled out from use of the expressions "only", "alone", "exclusive" and the like with reference to a particular Court. But the intention to exclude a Court's jurisdiction should be reflected in clear, unambiguous, explicit and specific terms. In such case only the accepted notions of contract would bind the parties. The first appellate Courts was justified in holding that it is only the Court at Udaipur which had jurisdiction to try the suit. The High Court did not keep the relevant aspects in view while reversing the judgment of the trial court. Accordingly, we set aside the judgment of the High Court and restore that of the first appellate court. The Court at Barnala shall return the plaint to the plaintiff No.1 (respondent no.1) with appropriate endorsement under its seal which shall present it within a period of four weeks from the date of such endorsement of return before the proper Court at Udaipur. If it is so done, the question of limitation shall not be raised and the suit shall be decided on its own merits in accordance with law. The appeal is allowed. No costs." In the case of ABC Laminart Private Ltd. and another (supra), it was laid down by the Supreme Court that if the clause in the agreement is clear and unambiguous, it would bind the parties and unless the absence of ad idem can be shown, the other courts should avoid exercising jurisdiction. With regard to construction of the ouster clause, the Supreme Court held that when words like 'alone', 'only', 'exclusive' and the like have been used, there may be no difficulty but even without such words in appropriate cases, the maxim 'expressio unius est exclusio alterius' may be applied and what is an appropriate case shall depend on the facts of the case. It was, therefore, held by the Supreme Court that it is well settled that where there are two or more competent courts, which can entertain a suit consequent upon a part of the cause of action having been arisen therein, if the parties to the contract exclude the jurisdiction of any of such court retaining the jurisdiction of only one of such courts to try the dispute, such agreement is valid and binding. 13. In the instant case admittedly the respondent no.1 has its head office at Kolkata.
13. In the instant case admittedly the respondent no.1 has its head office at Kolkata. The agreement was entered into at Kolkata. But the plant is situated within the jurisdiction of the learned District Judge, Cuttack. Hence, the cause of action, according to this Court, for filing the application under section 9 of the Act arose both before the court at Cuttack as well as Kolkata. 14. Applying the ratio of the above decisions, it is, therefore, clear that the parties having agreed to exclude the jurisdiction of the court at Cuttack, the learned District Judge was correct in holding that it lacks jurisdiction to entertain the application under section 9 of the Act filed by the appellant. Section 16 C.P.C., in the circumstances, shall have no application to the facts of the case, even if, it is held that the plant in question, is an immovable property, as the application under section 9 is not a suit filed for the purposes mentioned in section 16 C.P.C. 15. In view of the above analysis, this Court finds no error to have been committed by the learned District Judge in the impugned order so as to be interfered with in this appeal. The appeal being devoid of merit stands dismissed, but in the circumstances without cost.