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2019 DIGILAW 1596 (KAR)

Shubha Entrprises v. Gulf Petroleum Fzc, R/By Sr Manager Coal Logs And Operations

2019-07-05

P.G.M.PATIL

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JUDGMENT : P.G.M. Patil, J. This petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short the 'Act') for appointment of an Arbitrator. 2. The brief facts of the case are as follows: The petitioner is a trader, engaged in supply of raw materials to various industries after procuring them. The petitioner entered in to an agreement with respondent on 03.01.2017 for purchase of 15000 tones of cocking coal, which was to be supplied by the respondent by importing the same from South Africa. The delivery of the coal was to be at New Mangaluru port and they were supposed to reach on 09.01.2017. The price of the coal was fixed at US $ 75.50 per metric tones. Prior to the purchase agreement, the parties had exchanged the terms of the agreement. On 30.12.2016 the respondent had not entered into a final agreement for purchase of coal. On 03.01.2017 on the request of the respondent quantum of purchase was enhanced to 9500 tones. There was exchange of mail between the parties. As per the quantity supplied by the respondent, the respondent shall be liable to refund the remaining amount. After long period of communication the amount has not been refunded by the respondent. So as per clause in the purchase contract at Clause 15 the dispute has to be referred to arbitrator. As the respondent has failed to make payment in respect of exporting earlier, petitioner has filed this petition for appointment of arbitrator as provided under the provisions of the Act. 3. The respondent has filed a memo for disposal of the petition on ground of maintainability and due to want of jurisdiction and hence, prayed for dismissal of petition. At the out set, the entire averments made by the petitioner are denied as false. The respondent has raised objections on jurisdiction in filing the main petition before this Court. The petition before this Court is not maintainable for want of jurisdiction and is liable to be dismissed. The petitioner has alleged that the there is a dispute between the parties herein in respect of sale/purchase contract dated 03.01.2017 and has sought for appointment of Arbitrator under Section 11 of the Act. As per Clause 15 of the agreement dispute between the parties arising out of the agreement shall be referred to Arbitration under the provisions of the Act. As per Clause 15 of the agreement dispute between the parties arising out of the agreement shall be referred to Arbitration under the provisions of the Act. Clause 15 further provides that the arbitration proceedings shall be held in New Delhi. This being the case that when the agreement clearly provides the venue of the arbitration as New Delhi, the petitioner has deliberately filed the petition before this Court knowing very well that the same is not maintainable, in view of lack of territorial jurisdiction of this Court to adjudicate the petition only with an intention to harass respondent. The petitioner ought to have filed the petition before the proper Court in New Delhi and not before this Court. The Court where the seat of the arbitrator is designated, shall have the supervisory power over the arbitration. Remedy provides only in the instance case, the seat designated is New Delhi and hence, this Court have no jurisdiction to entertain the petition and therefore, the petition be dismissed as not maintainable. 4. Heard the learned counsel for the parties and perused the record. 5. A short question which arises before this Court is as to whether the respondent has made out that this Court has no territorial jurisdiction to entertain the petition and therefore, the petition is liable to be dismissed as not maintainable. 6. The learned counsel for the petitioner submitted that Section 42 of the Act deals with the jurisdiction and that the appointment of the arbitrator has to be at the first instance in terms of the agreement until the arbitrator is appointed, the venue of the arbitration is not relevant for consideration. The learned counsel for the petitioner also submitted that Section 20C of CPC also vested the jurisdiction with this court as the part of cause of action arises within the jurisdiction of this Court. 7. Per contra, the learned counsel for the respondent submitted that Clause 15 of the agreement provides that venue of arbitration is New Delhi, the officer named in the agreement is assigned to appoint the arbitrator and therefore, it is not hit by provision of Section 12(5) or the VII Schedule under the Act. 8. The learned counsel for the petitioner has relied on the decision in the case of State of West Bengal and others V/s. Associated Contractors, (2015) 1 SCC 32 . 8. The learned counsel for the petitioner has relied on the decision in the case of State of West Bengal and others V/s. Associated Contractors, (2015) 1 SCC 32 . The Hon'ble Supreme Court in para 25 of the judgment has held as under: 25. Our conclusions therefore an Section 2(1)(e) and Section 42 of the Arbitration Act, 1996 are as follows: (a) Section 2(1)(e) contains a exhaustive definition marking out only the Principal Civil Court of original jurisdiction in a district or a High Court having original civil jurisdiction in the State, and no other Court as "Court" for the purpose of Part I of the Arbitration Act, 1996. (b) The expression "with respect to an arbitration agreement" makes it clear that Section 42 will apply to all applications made whether before or during arbitral proceedings or after an award is pronounced under Part I of the 1996 Act. Therefore, in the present case also the venue of arbitration proceedings agreed between the parties is New Delhi and the petitioner herein has not invoked the jurisdiction before any of the courts in the state of Karnataka prior to filing the present petition and as such the petitioner seeking appointment of arbitrator for conducting arbitration proceedings at New Delhi is not maintainable before this Court. 9. The learned counsel for the respondent has relied on the judgment in the case of Indus Mobile Distribution Private Limited Vs. Datawind Innovations Private Limited, reported in LAWS (Hon'ble Supreme Court) 2017/4/31, the Hon'ble Supreme Court in para 20 of the judgment has held as follows: 20. A conspectus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. On the facts of the present case, it is clear that the seat of arbitration is Mumbai and Clause 19 further makes it clear that jurisdiction exclusively vests in the Mumbai courts. Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to "seat" is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to "seat" is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Section 16 to 21 of the CPC be attracted. In arbitration law however, as has been held above, the moment "seat" is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties. Therefore, the seat of arbitration under Section 2(1)(e) refers to Court which would essential be "Court" and seat of arbitration proceedings provided under Section 2(1)(e) has to be considered in order to ascertain the jurisdiction of the Court. 10. Therefore, the Court where the arbitration takes place would require to exercise supervisory control over the arbitration proceedings. In the present case, admittedly the seat of arbitration as agreed between the parties is New Delhi and in case, the arbitrator is being appointed by this Court, this Court would not be in a position to exercise supervisory control over the arbitration proceedings. Therefore, the respondent has made out that this Court has no territorial jurisdiction to entertain the present petition for appointment of arbitrator to conduct the arbitration proceedings at New Delhi. Hence, the point for consideration is answered accordingly. In the result, the petition is liable to be dismissed for want of jurisdiction. Accordingly it is dismissed.