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Madhya Pradesh High Court · body

2016 DIGILAW 1032 (MP)

Shivhare Road Lines, Gwalior v. Engineers India Ltd. , New Delhi

2016-11-11

ROHIT ARYA

body2016
ORDER : Rohit Arya, J. 1. This review petition seeking review of the order dated 9-12-2015 passed in AC No. 8/2015 has been filed. 2. This Court on an objection being raised by the respondents in the context of clause 24.4 of the agreement had dismissed the application filed under section 11(6) of the Arbitration and Reconciliation Act, 1996 (For short, 'the Act of 1996) filed at Gwalior Bench with liberty to the applicant to take recourse to law before the appropriate forum at the place mutually agreed by the parties under clause 24.4 of the agreement. 3. In the review petition, learned counsel for the petitioner has raised a legal question in the context of the aforesaid clause 24.4 related to sustainability of such a clause in the agreement in the backdrop of the fact that Ahmedabad, State of Gujarat is not one of the places to have jurisdiction in relation to the contract at issue inasmuch as neither of the parties reside at Ahmedabad nor agreement is entered at Ahmedabad and further the work has also not been executed at Ahmedabad. Therefore, in the light of law laid down by the Hon'ble Supreme Court in the case of A.B.C. Laminart (P) Ltd. v. A.P. Agencies, (1989) 2 SCC 163 and in the case of Interglobe Aviation Limited v. N. Satchindanand, (2011) 7 SCC 463 , the Courts at Ahemdabad shall have no jurisdiction for filing an application under section 11(6) of the Act of 1996. 4. Per contra, learned counsel for the respondents contends that clause 24.4 of the agreement cannot be read in isolation and the same is required to be read along with arbitration clause as contained under clause 24.9.1 of the agreement where under the parties have agreed to have Ahmedabad as neutral venue for arbitration. Therefore, a conjoint reading of the aforesaid two clauses suggest that the only Courts at Ahmedabad shall have jurisdiction for filing an application under section 11(6) of the Act of 1996 seeking appointment of arbitrator. Learned counsel placed reliance on the judgment of the Hon'ble Supreme Court in the case of Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 . 5. Heard learned counsel for the parties. 6. Learned counsel placed reliance on the judgment of the Hon'ble Supreme Court in the case of Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 . 5. Heard learned counsel for the parties. 6. For ready reference clauses 24.4 and 24.9.1 of the agreement are quoted below : "24.4 Law : The Contract shall be construed and governed by the Indian Law and shall be subject to the exclusive jurisdiction of the Courts at Ahmedabad, Gujarat." Clause 24.9.1: Parties undertake that all disputes and/or differences arising at any time between the parties as to the construction of this LOI/Work Order or Contract as to any matter or thing arising out of it or in any way connected therewith (referred to "dispute" hereafter) shall be resolved between the parties in good faith. If any dispute cannot be resolved between the parties within thirty (30) days or any agreed extension thereof, any Party may refer the dispute to an arbitrator by a notice invoking arbitration. Unless otherwise agreed in writing between the parties hereto, the arbitration proceedings shall be held at Ahmedabad, India and shall be conducted in accordance with Indian Arbitration and Conciliation Act, 1996 and any statutory modification or re-enactment thereof and rules thereunder excluding any laws, opinions, or regulations that would require application of the laws of any other jurisdiction." 7. Admittedly, no cause of action has arisen at Ahmedabad. Parties have entered into agreement through correspondence while petitioner was stationed at Gwalior and the respondents at New Delhi. The contract work place is in the State of Andhra Pradesh. Therefore, in the light of the judgment of Hon'ble Supreme Court in the case of A.B.C. Laminart (P) Ltd. (supra) and in particular paragraphs 16 and 21 which are quoted 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. 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 is total ouster of jurisdiction. 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 is 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........ 21. From the foregoing decisions it can be reasonably deduced that where such an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other Courts. When the clause is clear, unambiguous and specific accepted notions of contract would bind the parties and unless the absence of ad idem can be shown, the other Courts should avoid exercising jurisdiction, As regards construction of the ouster clause when words like 'alone', 'only, 'exclusive' and the like have been used there may be no difficulty. Even without such words in appropriate cases the maxim 'expressio unius est exclusio alterius' - expression of one is the exclusion of another may be applied. What is an appropriate case shall depend on the facts of the case, in such a case mention of one thing may imply exclusion of another. When certain jurisdiction is specified in a contract an intention to exclude all others from its operation may in such cases be inferred. It has therefore to be properly construed." As well as decision in the case of Interglobe Aviation Limited (supra), only such Courts where the cause of action has arisen shall have jurisdiction and parties may agree to one of such Courts to oust the jurisdiction of either Court. However, at a place where no cause of action has arisen at all cannot be conferred jurisdiction by mutual agreement to the exclusion of the Courts, otherwise having jurisdiction. However, at a place where no cause of action has arisen at all cannot be conferred jurisdiction by mutual agreement to the exclusion of the Courts, otherwise having jurisdiction. Therefore, Ahmedabad cannot be a place of jurisdiction, much-less, exclusive jurisdiction for arbitral proceedings to the exclusion of places like, Gwalior, New Delhi and Andhra Pradesh whereat cause of action arises to file application under section 11(6) of the Act of 1996. 8. The contention raised by the learned counsel for the respondents that the parties have mutually agreed for neutral place, Ahmedabad State of Gujarat for jurisdiction of the arbitration under clause 24.4 of the agreement, therefore, the jurisdiction of the Courts at Ahmedabad cannot be faulted with, in the opinion of this Court, runs counter to the basic principle of law in the context of determination of the jurisdiction of the Courts based on the theory of cause of action as propounded by the Hon'ble Supreme Court in catena of decisions and in the case of Hakam Singh v. M/s Gammon (India) Ltd., AIR 1971 SC 740 in the context of section 41 of the Arbitration Act, 1940 as well as the aforesaid cited decisions (supra) under the Act of 1996. Even otherwise, the choice of place of arbitration as provided under section 20 of the Act of 1996 is left to the parties after parties have submitted to the jurisdiction of arbitration to adjudicate the dispute. However, such decision of the arbitrator will not partake the character of adjudication of a dispute arising out of the agreement, so as to clothe it the character of an award (Relied on Sanshin Chemicals Industry v. Orientals Carbons and Chemicals, AIR 2001 SC 1219 ). 9. Besides, Chapter II deals with Arbitration Agreement (sections 7 arbitration agreement, 8 power to refer parties to arbitration where there is an arbitration agreement and 9 interim measures, etc., by Court) and Chapter III deals with Composition of Arbitration Tribunal (sections 10 to 15). 10. Chapter IV deals with Jurisdiction of Arbitral Tribunals, Chapter V deals with Conduct of Arbitral Proceedings and Chapter VI deals with Making of Arbitral Award and Termination of Proceedings and Chapter VII deals with Recourse against Arbitral Award. 11. As such, broadly speaking the provisions related to pre-arbitral proceedings are provided under Chapters II and III and post arbitration proceedings are provided under Chapter V, onwards. 11. As such, broadly speaking the provisions related to pre-arbitral proceedings are provided under Chapters II and III and post arbitration proceedings are provided under Chapter V, onwards. The proceedings under section 8(1) of the Act of 1996 are at the stage when the Court has to ascertain whether there is a valid agreement and disputes sought to be referred to falls within the scope of agreement, i.e., arbitrability of the dispute. At this stage, it is the Courts situated at a place having jurisdiction in law as crystallised by the Hon'ble Supreme Court in the case of A.B.C. Laminart (P) Ltd. (supra) to try the action shall have jurisdiction to determine the jurisdictional questions. In sequence thereof, application under section 11 of the Act of 1996 may be filed in such Courts having jurisdiction for appointment of arbitrator. It is only after the arbitration tribunal is constituted, the place of arbitration proceedings is to be determined under section 20 (Chapter V) of the Act of 1996. Therefore, the place of arbitration as agreed to between the parties under clause 24.9.1 of the agreement has no bearing on the question of territorial jurisdiction of the Court competent to entertain and decide the application under section 11(6) of the Act of 1996 and test laid down by the Hon'ble Supreme Court in the case of A.B.C. Laminart (P) Ltd. (supra) shall determine the same. 12. Consequently, in the opinion of this Court, as no cause of action arises at Ahmedabad, the Courts at Ahmedabad shall have no jurisdiction to decide the application under section 11(6) of the Act of 1996. The judgment of the Hon'ble Supreme Court in the case of Bharat Aluminium Company (supra) is distinguishable on facts and is of no assistance to the respondents as the controversy involved in that case related to the jurisdiction of the Court to examine the validity of an award passed by the arbitrator at the choice place of arbitrator. 13. Consequently, review petition is allowed. Order passed on 9-12-2015 in AC No. 8/2015 is recalled. AC No. 8/2015 is restored to its original and list the same b re the appropriate Bench.