Research › Search › Judgment

Allahabad High Court · body

2014 DIGILAW 3373 (ALL)

BANARAS AUTO TRADERS v. RELIANCE WEB STORES LTD.

2014-11-12

SUNEET KUMAR

body2014
JUDGMENT Hon’ble Suneet Kumar, J.—Heard Sri Udai Chandani, learned counsel for the applicant and Sri Siddharth Singh, learned counsel appearing for the opposite parties. 2. The application has been filed under Section 11(5) of the Arbitration and Conciliation Act. 1996 for settlement of dispute as per the arbitration clause contained in Section 16 of the Franchise Agreement dated 8.10.2004. The application is being opposed by the opposite parties that in view of Section 16 of the agreement the Courts of Mumbai will have exclusive jurisdiction in respect of this agreement, thus, this Court shall have no jurisdiction to entertain the application. 3. Learned counsel for the applicant submits that he has already filed Arbitration Case No. 50 of 2007, (M/s Banaras Auto Traders and others v. M/s Reliance Web Stores Ltd. and others) before the Court of District Judge, Varanasi for injunction to restrain the opposite parties from terminating the Franchise Agreement dated 8.10.2004 further restraining the opposite parties from interfering in the functioning the petitioner as Franchise under the said agreement. The opposite parties have appeared in the arbitration case before the District Judge, Varanasi and raised objection regarding jurisdiction of the Court as the parties had agreed that the Courts of Mumbai shall have exclusive jurisdiction in the matter. Learned counsel for the parties submit that the arbitration case is still pending before the Varanasi Court. 4. The submission of learned counsel for the applicant is that Section 42 of the Act inter alia provides that when an application has been made in the Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the subsequent proceedings shall be made in that Court and in no other Court. 5. In support of his submission, the learned counsel for the applicant has placed reliance upon : Adhunik Steels Ltd. v. Orrisa Manganese and Minerals (P) Ltd., (2007) 7 SCC 125 , Jindal Vijaynagar Steel v. Jindal Praxair Oxygen Co. Ltd., (2006) 11 SCC 521 , Pandey & Co. Builders (P) Ltd. v. State of Bihar and another, (2007) 1 SCC 467 , Datar Switchgears Ltd. v. Tara Finance Ltd. and another, (2000) 8 SCC 151 , Bharat Sanchar Nigam Ltd. and another v. Dhanurdhar Champatiray, (2010) 1 SCC 673 . 6. Ltd., (2006) 11 SCC 521 , Pandey & Co. Builders (P) Ltd. v. State of Bihar and another, (2007) 1 SCC 467 , Datar Switchgears Ltd. v. Tara Finance Ltd. and another, (2000) 8 SCC 151 , Bharat Sanchar Nigam Ltd. and another v. Dhanurdhar Champatiray, (2010) 1 SCC 673 . 6. In rebuttal, learned counsel for the opposite parties would submit that this Court will not have jurisdiction, as no property is involved, further, the contract itself provides that the Courts at Mumbai shall have jurisdiction, which is permissible as per Section 20 of the Act. Learned counsel for the opposite parties, in support of his submission has placed reliance upon Balaji Coke Industries Pvt. Ltd. v. Ms. Maa Bhagwati Coke Guj Pvt. Ltd., 2009 (9) SCC 403 and order passed in Arbitration and Conciliation Application No. 20 of 2008 (M/s Ujhani Fuel Point and others v. M.S. Reliance Industries Limited) and NKC Projects Pvt. Ltd. and another v. Utility Energytech & Engineering Pvt. Ltd. and another, 2009 (4) ALJ 18 (DB). 7. Rival submissions fall for consideration. The “Court” is defined under Section 2(e), means principal Civil Court of original jurisdiction in the District, and includes the High Court in exercise of its ordinary civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration, if the same had been the subject-matter of the suit. Section 19 of the contract reads as follows : Section 19: Dispute Resolution and Jurisdiction “If any dispute arises in respect of this Agreement, the parties shall endeavor to settle the dispute by direct negotiations in good faith. If such negotiations do not settle the dispute, the parties agree to submit the matter to settlement proceedings under the rules of the Arbitration and Conciliation Act, 1996, (the ‘Act’) as applicable for the time being in force. The place of the Arbitration will be Mumbai and the language of the proceedings will be English. The arbitral award shall be in writing and shall be final and binding on the parties. The place of the Arbitration will be Mumbai and the language of the proceedings will be English. The arbitral award shall be in writing and shall be final and binding on the parties. Judgement upon the award may be entered in any Court having jurisdiction thereof; provided, however, that this clause shall not be construed to limit Reliance from brining any action in any Court of competent jurisdiction for injunctive or other provisional relief as Reliance deems to be necessary or appropriate to protect its System, Proprietary Rights, trade marks, trade names, service marks, logotypes, insignia, trade dress and designs, or to enjoin or restrain Franchisee from otherwise causing immediate and irreparable harm to Reliance. Subject to the above, the Courts of Mumbai shall have exclusive jurisdiction in respect of this Agreement.” It is evident from the arbitration clause that the Courts of Mumbai have exclusive jurisdiction. Mere filing of an application under Section 9 of the Act before the Court at Varanasi would not confer jurisdiction upon this Court to entertain the application under Section 11(5) for appointment of an Arbitrator. 8. The Supreme Court in Jindal Vijaynagar Steel (JSW Steel Ltd) v. Jindal Praxair Oxygen Co. Ltd., (2006) 11 SCC 521 , held that once the parties have chosen a particular place to be the place for arbitration and proceedings connected thereto for resolve of dispute, the said place alone shall have jurisdiction. 9. The Supreme Court in the case of Balaji Coke Industry Pvt. Ltd. v. Ms Maa Bhagwati Coke Guj Pvt. Ltd., 2009 (9) SCC 403 , where Clause 14 of the agreement, which was a High Seas Sale Agreement, provided that the sale contract would be subject to Kolkata jurisdiction. The venue of the arbitration was also agreed to be Kolkata, West Bengal. After discussing several earlier judgments on the issue, the Apex Court held that the parties had knowingly and voluntarily agreed for Kolkata jurisdiction and even if the Courts in Gujarat also had jurisdiction, the agreement to have the disputes decided in Kolkata by an Arbitrator was valid and the respondent-Company had wrongly chosen to file an application under Section 9 of the Act before a Court in Gujrat and the same was in violation of the agreement. The Apex Court relied upon an earlier judgement in the case of A.B.C. Laminart (P) Ltd. v. A.P. Agencies, 1989 (2) SCC 173, to approve a legal proposition that 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 could not be said that the parties had by their contract ousted the jurisdiction of the Court. To similar effect is a judgment of this Court rendered by a Division Bench in the case of NKC Projects Pvt. Ltd. and another v. Utility Energytech & Engineers Pvt. Ltd. and another, 2009(3) ADJ 400 (DB). 10. A perusal of the demand made by the notice dated 20.6.2007 send by applicants to the defendants is a useful material for coming to the conclusion that the dispute, as per the demand of the applicants, relate to damages and claims and not to immovable property. In such a situation, under law, the suit could have been filed at Mumbai where the defendants resides, or where some cause of action arose, i.e. in the State of Uttar Pradesh. Hence, the relevant clause in the agreement conferring jurisdiction in the matter solely upon the Courts at Mumbai cannot be said to be illegal in view of the Supreme Court judgments noticed herein above. 11. In view of the aforesaid discussions, it is held that this application under Section 11 of the Act has been wrongly filed before this Court at Allahabad. The proper Court for filing such application would be at Mumbai. In that view of the matter, this application is dismissed, but with liberty to the applicants that they may prefer similar application before the competent Court at Mumbai. ——————