Research › Search › Judgment

Madhya Pradesh High Court · body

2020 DIGILAW 1247 (MP)

Raghunath Singh (M/S) v. Bharat Petroleum

2020-12-02

SHEEL NAGU

body2020
ORDER 1. The instant application has been filed u/s. 11 of the Arbitration and Conciliation Act, 1996 (for brevity, 1996 Act') for a direction to appoint Sole Arbitrator for adjudication of the dispute between the petitioner and respondent/Corporation arising out of termination of contract for transportation of bulk petroleum products by road, ExBPCL, Rairu and also out of blacklisting. 2. It is the contention of learned counsel for applicant that the said agreement between applicant and respondent/Corporation was entered into vide Annexure P-1, dated 1.9.2016 for a period of five years till 31.8.2021. It is submitted that due to certain alleged deficiencies and shortcomings on the part of applicant, the respondent/Corporation issued a show-cause notice in May, 2019 which was replied to by the applicant by denying the allegations. However, it is alleged that the said explanation was found to be unsatisfactory resulting into termination and blacklisting vide Annexure P-10 & P-11. It is further submitted that in terms of arbiration clause contained in Para 16 of the agreement, applicant requested for appointment of Sole Arbitrator. The pleadings further reveal that the respondent/Corporation responded vide Annexure P-14 that Corporation is unable to appoint the Sole Arbitrator in view of statutory bar contained in seventh schedule to the amended 1996 Act against appointment of an employee of one of the parties as an Arbitrator. In this factual background, applicant has approached this Court u/s. 11 of 1996 Act for appointment of Sole Arbitratator. 3. Learned senior counsel appearing on behalf of respondent/Corporation has raised preliminary objection by pointing out the fact that registered head office of the respondent/Corporation is at Mumbai and all litigation arising out of any dispute coming from the agreement which was executed in Mumbai lies within the teritorial jurisdiction of Mumbai Courts, and therefore, this Court is bereft of jurisdiction u/s. 11 (6). 4. On the other hand, learned counsel for the applicant submits that the lion's share of the cause of action lies within the territorial jurisdiction of Gwalior Bench of the High Court. It is submitted that work order was issued in Gwalior, the transportation under the agreement is to be done from Gwalior district and the termination and blacklisting orders which are the foundation of dispute herein have also been issued within Gwalior/Morena district. It is submitted that work order was issued in Gwalior, the transportation under the agreement is to be done from Gwalior district and the termination and blacklisting orders which are the foundation of dispute herein have also been issued within Gwalior/Morena district. Consequently, it is argued by the counsel for applicant that this Court has jurisdiction to invoke section 11 (6) of 1996 Act. 5. This Court can assume jurisdiction for invoking it's powers u/s 11 (6) in terms of section 20 of 1996 Act, which reads thus : “20. Place of arbitration.—(1) The parties are free to agree on the place of arbitration. (2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. (3) Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.” 6. From the bare reading of section 20 (1), it is obvious that if the parties have agreed in the agreement for a particular place for arbitration then the Court having territorial jurisdiction over such place would alone have jurisdiction to entertain an application u/s. 11 (6) of 1996 Act. The question of the place of arising of cause of action (fully or in part) to be the deciding factor for the Court to assume jurisdiction u/s. 11 (6) would only arise if the parties have not agreed to for a particular place of arbitration. 7. Para 16 (g) of the agreement which is part of arbitration clause reveals that the parties to the agreement have agreed upon Mumbai as the place of arbitration. The said clause 16 (g) is reproduced below for ready reference and convenience : “16. (g) The parties hereby agree that the Courts in the city of Mumbai alone shall have jurisdictiton to entertain any application or other proceedings in respect of anything arising under this agreement and any award or awards made by the Sole Arbitrator hereunder shall be filed (if so required) in the concerned Courts in the city of Mumbai only.” 8. (g) The parties hereby agree that the Courts in the city of Mumbai alone shall have jurisdictiton to entertain any application or other proceedings in respect of anything arising under this agreement and any award or awards made by the Sole Arbitrator hereunder shall be filed (if so required) in the concerned Courts in the city of Mumbai only.” 8. Plain reading of aforesaid clause which bestows jurisdiction upon Mumbai Court as regards the proceedings of arbitration gives exclusive jurisdiction to the Mumbai Courts to the exclusion of all other Courts. 9. This Court is bolestered in it's view by the decision of apex Court in Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited and Others [ (2017) 7 SCC 678 ], wherein it has been held : “19. 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. 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 sections 16 to 21 of 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. 20. It is well settled that where more than one Court has jurisdiction, it is open for parties to exclude all other Courts. For an exhaustive analysis of the case law, see Swastik Gases Private Limited v. Indian Oil Corporation Limited [ (2013)9 SCC 32 ]. This was followed in a recent judgment in B.E. Simoese Von Staraburg Niedenthal and Another v. Chhattisgarh Investment Limited [ (2015) 12 SCC 225 ]. For an exhaustive analysis of the case law, see Swastik Gases Private Limited v. Indian Oil Corporation Limited [ (2013)9 SCC 32 ]. This was followed in a recent judgment in B.E. Simoese Von Staraburg Niedenthal and Another v. Chhattisgarh Investment Limited [ (2015) 12 SCC 225 ]. Having regard to the above, it is clear that Mumbai Courts alone have jurisdiction to the exclusion of all other Courts in the country, as the juridical seat of arbitration is at Mumbai. This being the case, the impugned judgment is set aside. The injunction confirmed by the impugned judgment will continue for a period of four weeks from the date of pronouncement of this judgment, so that the respondents may take necessary steps under section 9 in the Mumbai Court. Appeals are disposed of accordingly.” 10. In case of Brahmani River Pellets Limited v. Kamachi Industries Limited [ (2020) 5 SCC 462 ], the apex Court has held as under : “18. Where the contract specifies the jurisdiction of the Court at a particular place, only such Court will have the jurisdiction to deal with the matter and parties intended to exclude all other Courts. In the present case, the parties have agreed that the“venue” of arbitration shall be at Bhubaneswar. Considering the agreement of the parties having Bhubaneswar as the venue of arbitration, the intention of the parties is to exclude all other Courts. As held in Swastik, non-use of words like “exclusive jurisdiction”, “only”, “exclusive”, “alone” is not decisive and does not make any material difference. 19. When the parties have agreed to have the “venue” of arbitration at Bhubaneswar, the Madras High Court erred in assuming the jurisdiction under section 11(6) of the Act. Since only Orissa High Court will have the jurisdiction to entertain the petition filed under section 11(6) of the Act, the impugned order is liable to be set aside.” 11.In view of the clear agreement between the parties in the arbitration clause having already decided upon the jurisdiction of the Courts where issue relating to artibtration is to be decided to the exclusion of all Courts by Courts at Mumbai. 12.Thus, this Court has no hesitation to hold that the High Court of Mumbai has exclusive jurisdiction for entertaining an application u/s. 11 (6) in regard to a dispute arising out of agreement in question, to the exclusion of this Court. 12.Thus, this Court has no hesitation to hold that the High Court of Mumbai has exclusive jurisdiction for entertaining an application u/s. 11 (6) in regard to a dispute arising out of agreement in question, to the exclusion of this Court. 13.Consequently, this High Court has no jurisdiction to entertain this application, and therefore, present arbitration case is dismissed with liberty to the applicant to approach High Court of Mumbai. D.D. Bansal for applicant; K.N. Gupta with Praveen Newasker for respondents.