I. D. A. Malappuram Branch v. Indian Dental Association
2024-03-07
T.R.RAVI
body2024
DigiLaw.ai
ORDER : 1. The application has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator by this Court. The petitioner is a branch of the 2 nd respondent and is aggrieved by the decision to start a branch at Tirur, which is within the Malappuram District. According to the petitioner, it will be bifurcation of the petitioner branch into two. It is contended that a dispute has arisen between the branch office and the central council and hence the matter needs to be referred to arbitration, going by Annexure A1 Constitution of the 3 rd respondent,. 2. Respondents 2, 3 & 5 have filed a counter affidavit opposing the application. The Constitution which has been produced as Annexure A1 deals with disputes and arbitration. The disputes that are contemplated in Annexure A1 includes disputes between a branch office and a head office also. A contention is raised that the head office is not the same as the central council and hence reference made to the different kinds of disputes in Clause 1 under the Chapter Disputes and Arbitration does not say about a dispute between the branch and the central council. The petitioner submits that in case of disputes between the branch and the central council, there is no pre- arbitral steps contemplated in the Constitution and the matter has to be directly referred to arbitration. It is also submitted that the petitioner cannot approach the civil court since such a remedy is barred by the clause relating to exclusion of jurisdiction of the civil court contained in Annexure A1. 3. The primary contention of the counsel for the respondents is that this Court has no jurisdiction to entertain the arbitration request. It is submitted that going by clause 6 under the chapter Disputes and Arbitration in the Constitution, the petitioner will have to approach a Court at the place where the Honorary Secretary General of the Association resides and practises at the time the cause arises and not anywhere else. As the Honorary Secretary General is admittedly residing at Mumbai, it is contended that action should be initiated at the seat of arbitration at Mumbai.
As the Honorary Secretary General is admittedly residing at Mumbai, it is contended that action should be initiated at the seat of arbitration at Mumbai. It is submitted that in case this Court is of the opinion that the Court has territorial jurisdiction to consider the request for reference to arbitration, even then the petitioner would not be entitled to approach the Court at this stage since the petitioner has not gone through the pre-arbitral procedure which has been contemplated in Annexure A1. It is hence submitted that the clause relating to reference to arbitration can be invoked only after completing the pre-arbitral steps and the application at this stage cannot be entertained. Reference is made to several decisions which will be dealt with later. Annexure R5(a) produced along with the counter affidavit of the respondents is a copy of the Rules of the Association with regard to Arbitration. Reference is made to clauses 2, 4, 5 and 17 to submit that there is no ambiguity regarding place of arbitration as per the Rules and no proceedings can be initiated in this Court. 4. Clause 6 in chapter “Disputes and Arbitration” in Annexure A1 reads thus: 6. Exclusion of Jurisdiction of Civil Court: A. All dispute/s, Arbitration and legal proceeding can be initiated/commenced by the member/s; Branches/es and outsider concerning functioning/business of IDA and / or bye- laws; rule and regulations and any mater relating to constitution of IDA only at the place where the Honorary Secretary General of IDA resides and practices at the time of cause of arises and not any where else. B. in view of the arbitration clause for all disputes and grievances by a member/s or a State/Local/Defence Branch, the remedy to approach for a decree in Civil Court is barred. All such disputes and grievance shall be decided only by Arbitration. If any member or State or Local Branch of Association persist to file any suit, which can be questioned as to its jurisdiction and maintainability, it shall be filed against the Indian Dental Association, Head Office represented by the Honorary Secretary General in the City where he resides/practices and not in any other place in India or nor against any other office bearers of the Association. 5.
5. A reading of the Clause would show that parties have agreed that all disputes, arbitrations and legal proceedings can be initiated only at the place where the Honorary Secretary General of IDA resides and practices at the time of arising of the cause of action. According to the counsel for the petitioner, if the said clause is to be understood as to mean that the proceeding can be initiated only in the courts where the Secretary General resides, it would be an uncertain term of contract. It is submitted that the residence of the Secretary General may change from time to time and would not be the same at the time the dispute arises and at the time when the contract was entered into. It is hence submitted that in such contingency, it cannot be held that the seat of arbitration has been specifically stated in the agreement. It is hence submitted that there is no ouster of jurisdiction of this Court in such cases. 6. In Brahmani River Pellets Limited Vs. Kamachi Industries Limited, (2020) 5 SCC 462 , which is a judgment referred to by either side, the Hon'ble Supreme Court has dealt with the question of jurisdiction. In paragraph 16 of the judgment, the Court has laid down that 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. On facts, in the said case, it is noted that the parties have agreed that the “venue” of arbitration shall be at Bhubaneswar, and the court found that the intention of the parties is to exclude all other courts. The Court held that a non-use of words like, “exclusive jurisdiction”, “only”, “exclusive” “alone” is not decisive and does not make any material difference. In the said case the Court found that since the “venue” of arbitration was at Bhubaneswar, the Madras High Court could not have assumed jurisdiction under Section 11(6) of the Act. The Hon'ble Supreme Court has in the said judgment referred to the judgment in Bharat Aluminium Company and Ors. Vs. Kaiser Aluminium Technical Service, Inc. and Ors. (2012) 9 SCC 552 , wherein the Court had considered the distinction between the words “seat” and “venue” in the context of Section 20(3).
The Hon'ble Supreme Court has in the said judgment referred to the judgment in Bharat Aluminium Company and Ors. Vs. Kaiser Aluminium Technical Service, Inc. and Ors. (2012) 9 SCC 552 , wherein the Court had considered the distinction between the words “seat” and “venue” in the context of Section 20(3). In the said judgment the Hon'ble Supreme Court has held that the hearing of the arbitration at the venue fixed by the parties could not have the effect of changing the seat of arbitration. In BBR (India) Private Limited Vs. S.P. Singla Constructions Private Ltd. AIR 2022 SC 2673 , the Hon'ble Supreme Court after referring to the previous decisions held that the venue could not by itself assume the status of ‘the seat’, instead a venue could become ‘the seat’ only if “something else is added to it as a concomitant”. The Court held that the place of the jurisdiction or the seat must be certain and static and not vague or changeable, as the parties should not be in doubt as to the jurisdiction of the courts for availing of judicial remedies. It was further held that where the seat is designated in the agreement the courts of the seat alone will have jurisdiction and all applications under Part I will have to be made in the Court where the seat is located, as that court alone will have jurisdiction over the arbitral proceedings and all subsequent proceedings. A similar view has been expressed by the Hon'ble Supreme Court in Ravi Ranjan Developers Pvt. Ltd. Vs. Aditya Kumar Chatterjee , MANU/SC/0428/2022. The above said judgments have been followed by a learned Single Judge of this Court in The Kerala Minerals and Metals Ltd. Vs. GMM Pfaudler Ltd. MANU/KE/2150/2022. The Calcutta High Court has in the decision in Homevista Decor and Furnishing Pvt. Ltd. and Ors. Vs. Connect Residuary Private Limited, MANU/WB/1155/2023 considered the question and after referring to the decisions held that contractual interpretation necessitates taking into consideration all clauses and relevant factors to propound the proper intention of the parties. The Court held that a clause opting a place as 'venue' or 'place' read with another clause which mentions courts of another location to have jurisdiction over disputes that may arise, inhibits the promotion of such 'venue' to 'seat'.
The Court held that a clause opting a place as 'venue' or 'place' read with another clause which mentions courts of another location to have jurisdiction over disputes that may arise, inhibits the promotion of such 'venue' to 'seat'. The intention that emerges from an aggregate understanding of such clause is that the 'venue' or 'place' was to be a convenient location for holding of arbitration seatings. The courts of the place selected as having exclusive jurisdiction over disputes should be considered as the 'seat' and having jurisdiction to entertain applications under the Act. In Inox Renewables Ltd. Vs. Jayesh Electricals Ltd. MANU/SC/0285/2021 , the Hon'ble Supreme Court considered the question of “venue” and “seat”. The Court relied on the decision of the Hon'ble Supreme Court in BSG SGS Soma JV Vs. NHPC Limited, 2020 (4) SCC 234 , wherein it was held that, where an agreement provides that arbitral proceedings “shall be held” at a particular venue that would indicate that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby, that that place is the seat of arbitral proceedings. 7. I have considered the relevant arbitration clause in Annexure A1 in the light of the judgments of the Hon'ble Supreme Court and this Court and the Calcutta High Court. It can be seen that the agreement specifically says that an arbitration proceeding shall be “only at the place where the Honorary Secretary General of IDA resides and practises”. Clause 6 is specific as to the place. It is true that the clause does not refer to a particular place, but the specification that it should be at the place of residence of the Honorary Secretary General, would show there is no vagueness in the clause. The Association might have several reasons for fixing the seat at the place of residence or practice of the Honorary Secretary General, particularly since, the activities of the Association are spread over the entire stretch of the country. If the Association intended to anchor arbitral proceedings or other legal proceedings to a particular place, it cannot be found fault with and the intention cannot be defeated by saying that there is likelihood of a change of the seat depending on the residence of the Honorary Secretary General.
If the Association intended to anchor arbitral proceedings or other legal proceedings to a particular place, it cannot be found fault with and the intention cannot be defeated by saying that there is likelihood of a change of the seat depending on the residence of the Honorary Secretary General. In that view of the matter, I am of the opinion that this Court does not have jurisdiction to consider the issue and the parties are bound to initiate proceedings in the place of residence or practice of Honorary Secretary General of the Association. In the above circumstances, I do not propose to go into the merits of the contentions regarding arbitrability or otherwise of the alleged dispute and the requirement of compliance with pre-arbitral steps. The said issues are left open and the arbitration request is dismissed without prejudice to the right of the petitioner to move the appropriate forum.