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2016 DIGILAW 416 (HP)

Sanjay Aggarwal v. BLCCO Lawrie Limited

2016-04-05

SANJAY KAROL

body2016
JUDGMENT : Sanjay Karol, J. Petitioner Sanjay Aggarwal filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) against BLCCO Lawrie Limited and H.P. State Electricity Board Limited, with the following prayer :- “It is, therefore, prayed that the application may be allowed and the respondent No.2 may be restrained from releasing any amount in favour of respondent No.1 for the Award Annexure A-1 and further to attach the amount to the tune of Rs. 22,26,621/- pending to be disbursed to respondent No.1 in the first running bill submitted by respondent No.1 to respondent No.2” 2. It is not in dispute that for commissioning of work of respondent No.2, respondent No.1 allotted certain works to be executed by the petitioner. This was in terms of work order dated 20.07.2013. Allegedly, petitioner completed certain works and despite bills being raised, no payment was released. According to the applicant, bills amounting to Rs.17,79,101/- are pending with respondent No.1. 3. On 01.12.2014, this Court passed an interim order directing respondent No.2 not to release any amount pursuant to bill dated 11.09.2013 (Annexure A-2) in favour of respondent No.1. 4. Upon receipt of the notice, respondent No.2 filed the instant application (being OMP No. 205 of 2015), invoking Order 7 Rule 10 read with Section 151 of the Code of Civil Procedure, with the following prayer:- “It is, therefore, respectfully prayed that this application may kindly be allowed and the petition filed by the Non-Applicant/Petitioner may kindly be held not maintainable before this Hon'ble Court and the same may kindly be dismissed and returned to the Non-Applicant/Petitioner for presentation/filing in the Court as per stipulations in the Contract entered into between the parties.” 5. It is contended that in term of Clause 34 of the Notice Inviting Tenders (NIT) parties have chosen to confer jurisdiction solely and exclusively upon the Courts of South 24 Pargana, Alipore, Kolkata. 6. At the threshold, it is clarified that application is not to be rejected solely on the ground that the applicant has referred to incorrect/wrong provisions of law. If this Court does not have jurisdiction or if the parties have otherwise conferred jurisdiction, in accordance with law, upon a particular Court, this Court would not refrain from passing any order, merely on account of such defect. If this Court does not have jurisdiction or if the parties have otherwise conferred jurisdiction, in accordance with law, upon a particular Court, this Court would not refrain from passing any order, merely on account of such defect. The Court is obliged to examine the matter and decide the lis, in accordance with law. Jurisdictional issue can be considered and decided even suo motu. Hence such issue needs to be examined. 7. Part-1 of the Code of Civil Procedure (CPC) deals with the jurisdiction of Courts. Unless expressly or impliedly barred, all Courts have jurisdiction to try all suits of civil nature. 8. An application under Section 9 of the Act is to be filed before a “Court”, which under Section 2 (e) of the Act, has been defined to mean 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 the arbitration, if the same had been 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. 9. Chapter-II of the Act does not provide for territorial limits of the Court, where such applications are to be filed. Only limitation prescribed is in Section 42 (Chapter-X) of the Act. The jurisdictional issue of the respective Courts is referred to therein, which is not relevant for adjudication of the controversy in issue. However, it be only observed that with respect to the arbitration agreement, an application is to be made under Part-I before a Court, and only that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of the agreement and the arbitral proceedings are to be made only in that Court and no other Court. 10. The question which arises for consideration is as to before which Court, an application under Section 9 of the Act would lie. To answer the same, one has to again look into the provisions of Part-I of CPC. 10. The question which arises for consideration is as to before which Court, an application under Section 9 of the Act would lie. To answer the same, one has to again look into the provisions of Part-I of CPC. Section 15 prescribes that civil suit has to be instituted in the Court of the lowest grade, competent to try the same; Sections 17/18 deal with the cases pertaining to immovable properties; and Section 19 deals with the places where suits for actionable claims of moveable property are to be filed. Rest all other cases are to be dealt with, in accordance with the provisions of Section 20, which reads as under :- “20. 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. 11. Significantly objection with regard to the jurisdiction is required to be taken at the first instance and at the earliest possible opportunity, as is so provided in Section 21. Sections 24 and 25 deal with transfer of suits by various Statutory/Constitutional Authorities. From the bare reading of Section 20, it is apparent that the suit has to be instituted in a Court within the local limits of the jurisdiction where the defendant resides/carries on business or the cause of action, wholly or in part, arises. 12. Sections 24 and 25 deal with transfer of suits by various Statutory/Constitutional Authorities. From the bare reading of Section 20, it is apparent that the suit has to be instituted in a Court within the local limits of the jurisdiction where the defendant resides/carries on business or the cause of action, wholly or in part, arises. 12. The apex Court in A.B.C. Laminart Pvt. Ltd. Versus A.P. Agencies, Salem, (1989) 2 SCC 163 , has observed 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 cannot be said that the parties have by their contract ousted the jurisdiction of the Court. If under the law, several courts have jurisdiction and the parties agree to submit to one of these jurisdictions and not to other or others, it cannot be said that there is total ouster of jurisdiction. In other words, where the parties to a contract agree 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 agree not to submit to other jurisdictions cannot be said to be void as against public policy. If on the other hand the jurisdiction they agree 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. The apex Court further held that :- “20. When the court has to decide the question of jurisdiction pursuant to an ouster clause it is necessary to construe the ousting expression or clause property. Often the stipulation is that the contract shall be deemed to have been made as a particular place. This would provide the connecting factor for jurisdiction to the courts of that place in the matter of any dispute on or arising out of that contract. It would not, however, ipso facto take away jurisdiction of other courts. Often the stipulation is that the contract shall be deemed to have been made as a particular place. This would provide the connecting factor for jurisdiction to the courts of that place in the matter of any dispute on or arising out of that contract. It would not, however, ipso facto take away jurisdiction of other courts. Thus, in Salem Chemical Industries v. Bird & Co., AIR 1975 Guj 72, where the terms and conditions attached to the quotation contained an arbitration clause provided that : “any order placed against this quotation shall be deemed to be a contract made in Calcutta and any dispute arising therefrom shall be settled by an arbitrator to be jointly appointed by us”, it was held that it merely fixed the situs of the contract at Calcutta and it did not mean to confer an exclusive jurisdiction on the court at Calcutta, and when a part of the cause of action had arisen at Salem, the court there had also jurisdiction to entertain the suit under Section 20 (c) of the Code of Civil Procedure.” 13. Also, the apex Court in Swastik Gases Private Limited Versus Indian Oil Corporation Limited, (2013) 9 SCC 32 , has held that:- “… … … 29. When it comes to the question of territorial jurisdiction relating to the application under Section 11, besides the above legislative provisions, Section 20 of the Code is relevant. Section 20 of the Code states that subject to the limitations provided in Sections 15 to 19, 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 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. … … … 32. … … … 32. For answer to the above question, we have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst providing for jurisdiction clause in the agreement the words like “alone”, “only”, “exclusive” or “exclusive jurisdiction” have not been used but this, in our view, is not decisive and does not make any material difference. The intention of the parties—by having Clause 18 in the agreement—is clear and unambiguous that the courts at Kolkata shall have jurisdiction which means that the courts at Kolkata alone shall have jurisdiction. It is so because for construction of jurisdiction clause, like Clause 18 in the agreement, the maxim expression unius est exclusio alterius comes into play as there is nothing to indicate to the contrary. This legal maxim means that expression of one is the exclusion of another. By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts. Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner. … … … 37. In my opinion, the very existence of the exclusion of jurisdiction clause in the agreement would be rendered meaningless were it not given its natural and plain meaning. The use of words like “only”, “exclusively”, “alone” and so on are not necessary to convey the intention of the parties in an exclusion of jurisdiction clause of an agreement. Therefore, I agree with the conclusion that jurisdiction in the subject-matter of the proceedings vested, by agreement, only in the courts in Kolkata.” 14. In B.E. Simoese Von Starburg Niedenthal and another Versus Chhattisgarh Investment Limited, (2015) 12 SCC 225 , the apex Court had the occasion to deal with a case where parties had confined the jurisdiction to the Courts at Goa. In B.E. Simoese Von Starburg Niedenthal and another Versus Chhattisgarh Investment Limited, (2015) 12 SCC 225 , the apex Court had the occasion to deal with a case where parties had confined the jurisdiction to the Courts at Goa. Under identical circumstances, where an application under Section 9 of the Act was filed before the District Judge, Raipur, which Court otherwise also had jurisdiction to try the same, the Court held that competent Court of jurisdiction to try the lis was only Goa and not Raipur. 15. Now applying the aforesaid principles to the instant case, it is seen that Annexure A-1 was issued in favour of the applicant having its place of business in the State of Himachal Pradesh. But it was issued from Kolkata. Notice Inviting Tender was also issued in Kolkata, where the registered office of respondent No.1-Company is situate. However, as per Annexure A-1, parties had confined the jurisdiction with the Court at Kolkata. Also all disputes were to be referred to a nominated person. For ready reference, Clauses-31 and 32 of the agreement are reproduced as under:- “… … … 31. ARBITRATION: Any dispute of any nature whatsoever or regarding any right, liability, act or account of any of the parties hereto arising out of or in relation to this contract /order shall be referred to the sole Arbitration of the Managing Director of Biecco Lawrie Limited, Kolkata. The award of Arbitrator so appointed shall be final and conclusive and binding on all parties to this agreement/standard terms and conditions relating to this order, subject to provisions of the Arbitration and conciliation act, 1996 or statutory modification of the enactment thereof. 32. JURISDICTION OF CONTRACT: The Contract /Purchase order shall be governed by the laws of India in force for the time being. The courts of South 24 Parganas, Alipore, Kolkata only shall have exclusive jurisdiction to deal with any dispute arising out of this contract.” 16. From the communications inter se the petitioner and respondent No.1, it is evident that cause of action also arose in Kolkata. Parties exchanged several communications through E-mails and postal communications were sent and received at their respective offices situate in the State of Himachal Pradesh and Kolkata. Applicant had responded to the Notice Inviting Tender by submitting his quotation at Kolkata, which is evident from letters (Pages 78-79). 17. Parties exchanged several communications through E-mails and postal communications were sent and received at their respective offices situate in the State of Himachal Pradesh and Kolkata. Applicant had responded to the Notice Inviting Tender by submitting his quotation at Kolkata, which is evident from letters (Pages 78-79). 17. Submissions made on behalf of the petitioner, that no cause of action arose in Kolkata, is factually incorrect. Conveniently he wants the Court to forget his following averments made in the petition:- “The applicant thereafter called to Kolkata office by respondent No.1 to sort out the issue and he was assured that the payment will soon be released in favour of the applicant with respect to the first bill as has been raised by him. He was asked to continue with the work and since it is a government undertaking the work and the clearance was required at various levels was the only reason as to why necessary documentation etc. was taking such long. Since the applicant had no reasons to disbelieve assurances of the respondent No.1 officials and especially when such assurances were being extended by the top management of respondent No.1, the applicant believing the same to be true came back to Nahan and continued the work at the project site.” (Emphasis supplied) 18. Petitioner himself had visited Kolkata, where assurances were meted out by senior level officers of respondent No.1 in their office at Kolkata. 19. Hence, it is held that the parties being governed by agreement containing the Arbitration Clause and restricting jurisdiction to the Courts of South 24 Pargana, Alipore, Kolkata, present application not being maintainable before this Court, is directed to be returned to the applicant for presentation before the Court having competent jurisdiction. 20. Registrar General of this Court is directed to retain a photocopy of the application for its record and do the needful. Interim order dated 01.12.2014 stands vacated.