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2020 DIGILAW 320 (CAL)

Narayan Prasad Saraff v. Ashok Kr. Saraff

2020-02-28

KAUSIK CHANDA, SANJIB BANERJEE

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JUDGMENT : 1. The appeal is directed against a rather terse order of November 18, 2019 dismissing a petition under Section 34 of the Arbitration and Conciliation Act, 1996. 2. The impugned order reads as follows: “Considering the averments made in the application under Section 34 of the Arbitration and Conciliation Act, 1996 it appears that this Court does not have the pecuniary jurisdiction to entertain this application. “Accordingly, the application, A.P. No. 446 of 2018 stands dismissed on the ground of lack of jurisdiction.” 3. It is not in dispute that in respect of the relevant arbitration agreement, no previous application under Part-I of the Act of 1996 was carried to any court. As to which court may receive an application under Part-I of the Act of 1996 is governed by Section 2(1)(e) of such Act. In essence, Section 2(1)(e) empowers a court to receive an application pertaining to an arbitration agreement if such court could have received the suit if the subject-matter of the arbitration had been the subject-matter of the suit. The only qualification is that such a court has to be a principal court of a district or a High Court exercising original jurisdiction. 4. Just as several courts may have the authority to receive a civil suit and the choice is of the plaintiff to pick one of several such courts, an application under Part-I of the Act of 1996 may be carried to one of the several courts entitled to receive the same. There is, however, the caveat to this principle in the form of the rule enunciated in Section 42 of the Act 1996: that once an application pertaining to an arbitration agreement has been carried to one of the several courts entitled to receive it, it is such court to which all future applications under Part-I of the Act of 1996 has to be carried. 5. What is important for the present purpose is to ascertain whether this Court had the authority to receive the challenge to the arbitral award. From the order impugned it is evident that the challenge has not been entertained only on the ground that this Court lacks the pecuniary jurisdiction to receive the same. In other words, the Court may have been satisfied that it had the territorial jurisdiction to receive the challenge. 6. From the order impugned it is evident that the challenge has not been entertained only on the ground that this Court lacks the pecuniary jurisdiction to receive the same. In other words, the Court may have been satisfied that it had the territorial jurisdiction to receive the challenge. 6. When assessing whether a court has the pecuniary jurisdiction to entertain an application pertaining to an arbitration agreement, certain difficulties arise at the stage prior to the filing of the statement of claim in the arbitral reference. The court then has to search for the averments in the relevant application at such stage indicating the quantum of the claim that would be carried to the arbitral reference. The court has to accept such figure at face value. However, in any application filed under Part-I of the Act of 1996 after the statement of claim has been filed in the arbitral reference, the pecuniary jurisdiction of the court is assessed on the basis of the quantum of claim carried to the arbitral reference. Section 2(1)(e) of the Act refers to “the subject-matter of the arbitration.” There is also a deeming provision since the subject-matter of the arbitration has to be seen as if it were the subject-matter of a suit if a suit were to be filed in the court. It is only such court which would have authority under Section 2(1)(e) of the Act, which has to be a principal court in the district or the High Court in exercise of its original jurisdiction, if the court was capable of entertaining a suit, if instead of the arbitral reference, a civil suit covering the subject-matter of the arbitral reference had been filed. Thus, the amount awarded by the arbitral tribunal at the end of the reference is not the basis on which the pecuniary jurisdiction of a court to which a challenge to the award has been carried has to be assessed. The assessment has to be based on the statement of claim and the quantum of claim evident therefrom. 7. Since the quantum of claim in this case carried to the arbitral reference was in excess of Rs.10 lakh and the threshold of the pecuniary jurisdiction in this Court is above Rs.10 lakh, this Court possesses the pecuniary jurisdiction to entertain the challenge under Section 34 of the Act to the award. 7. Since the quantum of claim in this case carried to the arbitral reference was in excess of Rs.10 lakh and the threshold of the pecuniary jurisdiction in this Court is above Rs.10 lakh, this Court possesses the pecuniary jurisdiction to entertain the challenge under Section 34 of the Act to the award. Accordingly, the order impugned dated November 18, 2019 is set aside. The matter is restored to the board of the Arbitration Bench for it to be decided in accordance with law. 8. APO No.194 of 2018 and GA No.578 of 2020 are allowed as above. 9. There will be no order as to costs.