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2013 DIGILAW 146 (GAU)

Rakesh Sirohia v. Hanuman Tea Company Ltd.

2013-03-05

B.D.AGARWAL

body2013
JUDGMENT B.D. Agarwal, J. 1. This appeal under Section 37(1)(a) of the Arbitration and Conciliation Act, 1996 (hereinafter, referred to as 'the Arbitration Act', in short), read with Order 43 Rule 1(a) of the Code of Civil Procedure, 1908, (briefly, 'CPC') is directed against the Order dated 19.06.2012, passed by the learned District Judge, Sonitpur, Tezpur, in Misc. (Arbitration) Case No. 26 of 2012. By this impugned order, the learned District has declined to grant interim protection for the suit property under Section 9 of the Arbitration Act. Hence, this appeal is at the instance of the petitioner. Heard Sri S. Kejriwal, learned counsel for the petitioner as well as Sri P. Sundi, learned counsel for the respondent/defendant in the Court of the learned District Judge. Also gone through the impugned order and other documents annexed with the memo of appeal. No counter has been filed by the respondent. 2. The gist of the case is that the petitioner has purchased a tea garden, namely. Sonajuli Tea Estate, owned by the respondent Company. The terms and conditions of the sale and purchase of the tea garden have been set-out in the Agreement dated 13th of October 2009. Pursuant to the agreement, the petitioner has already made part payment of the total consideration and has also made substantial investment in the development and upgradation of the Tea Estate. Since the respondent had outstanding dues to the Bank of Baroda, one of the conditions to purchase the tea garden was that the respondent Company shall enter into "one time settlement" with the Bank and thereafter, the final sale deed shall be executed. According to the petitioner, the respondent failed to perform their obligations giving rise to filing of an application under Section 9 of the Arbitration Act. 3. Initially, both the parties were directed by the learned District Judge to maintain status quo of the property vide order dated 23.2.2012. However, this interim order has been vacated through the impugned order dated 19.6.2012. 4. The prayer for interim protection has been basically rejected on the ground that the Court of District Judge at Sonitpur, Tezpur in Assam has no jurisdiction to pass any order under Section 9 of the Arbitration Act in view of Clause 8.3 of the agreement. However, this interim order has been vacated through the impugned order dated 19.6.2012. 4. The prayer for interim protection has been basically rejected on the ground that the Court of District Judge at Sonitpur, Tezpur in Assam has no jurisdiction to pass any order under Section 9 of the Arbitration Act in view of Clause 8.3 of the agreement. At this stage, it is necessary to mention here that the suit property, i.e., Sonajuli Tea Estate is situated in the district of Sonitpur in Assam. At the same time, the registered office of the Company of the respondent is situated at Kolkata and the agreement was also executed at Kolkata. However, the application for interim protection was filed in the Court of learned District Judge, Sonitpur, Tezpur, Assam, basically on the ground that the dispute is related to a tea estate, which is an immovable property, and since the tea garden is situated in Assam only a principal civil court having original jurisdiction in the district where the immovable property is situated has its jurisdiction to pass an order for interim protection under Section 9 of the Arbitration Act. 5. For ready reference Clause 8.3 is reproduced below:- 8.3. Courts at Kolkata alone shall have exclusive jurisdiction to the exclusion to all other Courts in all matters arising out of or relating to this agreement. 6. Sri Kejriwal, learned counsel for the petitioner submitted that since Sonajuli Tea Estate is situated in the district of Sonitpur, Assam, only a Civil Court in Assam will have territorial jurisdiction over a dispute as provided under Section 16 CPC. According to the learned counsel, since the principal civil court at Kolkata cannot entertain any application under Section 9 of the Arbitration Act or resolve the dispute of immovable property situated in Assam Clause 8.3 of the agreement is against the public policy and it cannot be invoked for determining the jurisdiction of a court. 7. The learned counsel for the petitioner further argued that had it been a case of jurisdiction of two different courts over the disputed property the matter could have been agitated before a competent Court at Kolkata. However, since it is a case of jurisdiction of only one court Clause 8.3 of the agreement is to be declared as against public policy and cannot be acted upon. However, since it is a case of jurisdiction of only one court Clause 8.3 of the agreement is to be declared as against public policy and cannot be acted upon. In support of his submissions, the learned counsel for the petitioner cited the judgments of the Hon'ble Supreme Court rendered in the cases of- (1) Hakam Singh Vs. M/s. Gammon (India) Ltd. (1971) 1 SCC 286 , (2) Bhatia International Vs. Bulk Trading SA (2002) 4 SCC 105 ; (3) Harshad Chiman Lal Modi Vs. DLF Universal Ltd. (2005) 7 SCC 791 . 8. Per contra, Sri Sundi, learned counsel for the respondent submitted that the dispute is not the property of tea garden but the dispute is related to alleged non-performance of the terms and conditions of the agreement and, as such, Section 16 CPC will not be applicable. The learned counsel also contended that by virtue of an agreement the parties can oust the jurisdiction of a particular Court and can vest the jurisdiction upon another particular Court, as in the instant case. According to the learned counsel, since the agreement was executed at Kolkata the jurisdiction of a competent Court at Kolkata was vested with the power to resolve any dispute arising out of the agreement and, as such, the learned District Judge, Sonitpur, has rightly declined to entertain the application. 9. In support of his submissions, the learned counsel for the respondent cited the judgment of the Apex Court rendered in the case of ABC Laminart Pvt. Ltd. Vs. AP Agencies, Salem (1989) 2 SCC 163 . The aforesaid authority relied upon by the respondent is totally based on a different footing. In the said case, the suit was filed for realizing certain amount of money and is not a case of passing any interim order to protect an immovable property. The observations made by Their Lordships in Para 16 of the judgment, which was made the basis for argument by the learned counsel for the respondent, are reproduced below: 16. So long as the parties to a contract do not oust the jurisdiction of all the courts which would otherwise have jurisdiction to decide the cause of action under the law it cannot be said that the parties have by their contract ousted the jurisdiction of the court. So long as the parties to a contract do not oust the jurisdiction of all the courts which would otherwise have jurisdiction to decide the cause of action under the law it cannot be said that the parties have by their contract ousted the jurisdiction of the court. If under the law several courts would have jurisdiction and the parties have agreed to submit to one of these jurisdictions and not to other or others of them it cannot be said that there total ouster of jurisdiction. In other words, where the parties to a contract agreed to submit the disputes arising from it to a particular jurisdiction which would otherwise also be a proper jurisdiction under the law their agreement to the extent they agreed not to submit to other jurisdictions cannot be said to be void as against public policy. If on the other hand the jurisdiction they agreed to submit to would not otherwise be proper jurisdiction to decide disputes arising out of the contract it must be declared void being against public policy. Would this be the position in the instant case? 9.1 In my considered opinion, the aforesaid observations of the Apex Court neither support the theory of ousting of the jurisdiction of a particular court where the immovable property is situated nor it is a decision under Section 16 CPC. 10. The submission of the learned counsel for the respondent that the dispute is regarding breach of the terms of the agreement and is not related to a dispute of immovable property is totally misplaced. In my considered opinion, the property of tea estate cannot be separated from the agreement and vice-versa. In other words, an agreement cannot exist without any property and in the present case the property is out and out an immovable property. In Para-41 of the application under Section 9, the petitioner has elaborated the disputes and differences arising in respect of Sonajuli Tea Estate. 11. On the other hand, the authorities cited on behalf of the petitioner are exactly on the point. In the case of Hakam Singh (supra), there was a stipulation in the contract agreement that notwithstanding the place of work only a competent court at Bombay shall have jurisdiction to adjudicate the disputes arising out of the contract. 11. On the other hand, the authorities cited on behalf of the petitioner are exactly on the point. In the case of Hakam Singh (supra), there was a stipulation in the contract agreement that notwithstanding the place of work only a competent court at Bombay shall have jurisdiction to adjudicate the disputes arising out of the contract. In this cited authority the arbitration application was filed at Varanasi, where the work was executed and where the cause of action had arisen. The jurisdiction of Varanasi Court was challenged in the High Court and the High Court held that in view of vesting of jurisdiction in a Court at Bombay in preference to jurisdiction to Varanasi Court an application under the Arbitration Act could not have been entertained by the Court at Varanasi. The view taken by the High Court was upheld by the Hon'ble Supreme Court. From this decision, it appears that if two or more Courts have jurisdiction of a particular dispute the parties can contract out the jurisdiction of a particular court and vest the jurisdiction upon a particular court. However, in the case before me, no Court at Kolkata can entertain any application either under Arbitration law or under Specific Performance Act to resolve the dispute relating to immovable property. 11.1. In the case of Bhatia International (supra), the parties had agreed to refer the disputes for arbitration as per the rules of International Chamber of Commerce and the arbitration proceeding was to be held in Paris, France. However, the respondent had filed an application under Section 9 of the Arbitration Act at Indore in India. Hence, the issue of jurisdiction of a Court in India was raised. In this case, the Hon'ble Supreme Court has held that the agreement did not oust the jurisdiction of India and, as such, a competent Court in India had the jurisdiction to entertain an application under Section 9 of the Arbitration Act. Their Lordships further observed that the definition of a 'court' under Section 21(3) does not provide that the courts in India will not have jurisdiction if an international commercial arbitration takes place outside India. Hence, the ouster clause of jurisdiction cannot be implied. 11.2. Similarly, in the case of Harshad C.L. Modi (supra), the contract agreement was executed at Delhi for sale of an immovable property situated at Gurgaon in the State of Haryana. Hence, the ouster clause of jurisdiction cannot be implied. 11.2. Similarly, in the case of Harshad C.L. Modi (supra), the contract agreement was executed at Delhi for sale of an immovable property situated at Gurgaon in the State of Haryana. The suit was filed at Delhi since a clause in the agreement stipulated that only Delhi High Court or court subordinate to it alone shall have jurisdiction in all matters arising out of the contract. However, the High Court held that the court at Delhi had no jurisdiction and the Clause in the agreement vesting the jurisdiction upon a Court in Delhi was against public policy. This view was affirmed by the Hon'ble Supreme Court. The case before me is similar in nature. 12. Under Section 28 of the Indian Contract Act, 1872, every agreement, whereby, a party is restricted absolutely from enforcing its rights under or in respect of any contract by way of a legal proceeding in the ordinary court is void to that extent. In the instant case, though the petitioner had legal right to enforce the agreement for purchasing a tea estate in an appropriate Court at Sonitpur, Assam, he was restrained from doing so by way of incorporating Clause 8.3 in the agreement. In this way, Clause 8.3 of the agreement is also violative of Section 28 of the Contract Act being against public policy. 13. For the foregoing reasons, the impugned order is hereby set aside. I hold that the Court of District Judge, Sonitpur, Tezpur, Assam alone will have jurisdiction to resolve the dispute. Since there is a provision for referring disputes to arbitrators the district court at Sonitpur, definitely has the jurisdiction to pass appropriate order under Section 9 of the Arbitration Act, if the facts and circumstances so warrant. With the aforesaid observations, the appeal stands allowed. Appeal allowed