JUDGMENT
R. Pal, J.
1. This appeal has been preferred from an order dated 15th January 1992 directing the filing of an agreement under section 20(1) of the Arbitration Act, 1940 (hereinafter referred to as the Act). According to the appellant, the court lacked the territorial Jurisdiction either to entertain the application under section 20 or to pass any order thereon.
2. According to the appellant only the court having jurisdiction with respect to the subject matter of the agreement could entertain an application under section 20 of the Act. It is stated that the agreement had been executed in Bihar. The entire work and/or transaction had been carried on
under the agreement in Bihar and that no part of the cause of action had arisen within the jurisdiction of this court it is submitted that as the subject matter of the agreement had taken place wholly outside the jurisdiction of this court, the order under appeal was passed without Jurisdiction. The appellants have relied upon M. Venkatosamlappa v. Srtntdht Limited : 1950 (1) MLJ 709; SusM Ma/umdar v. Sova Rant Blswas : (DB); Union of india v. Electronic Controls and instrument Engineers : 1997(2) Arb. LR 691; M/5. Pate! Roadways Ltd. v. M/s Prasad Trading Co.: ; Altgarh Muslim University and Anr. v. Vinay Engineering Enterprises (P) Ltd. : and an unreporled order dated 31st March 1995 of the Supreme Court in Civil appeal No. 586178 of 1995 arising out of Special Leave Petition (Civil) No. 17131 of 1994; Bharat Coking Coal Ltd. v. M/s. Chakraborty & Mondal in support of their submission.
3. The respondent has conceded that no part of the cause of action has arisen within the Jurisdiction of this court but has sought to justify the making of the application before this court on the basis of the provisions of Clause 12 of the Letters Patent it is argued that Clause 12 allows for a suit to be filed against a defendant carrying on business within the jurisdiction of this court. The respondent has relied upon the statement in the affidavit of the appellant that the appellant had a sales office within this court’s Jurisdiction, to contend that therefore this court could entertain the application under section 20. The respondent has contended that the Explanation to section 20 of the Civil Procedure Code whereby a defendant which was a corporate entity was deemed to carry on business at its subordinate office only if part of the cause of action arose where the subordinate office was situate, was inapplicable to clause 12. The decision of a learned Single Judge of this court in Babu Lall Choukhant v. Caltex (india) Ltd. : as well a Full Bench decision of the Delhi High Court in Shrt Rom Ratan Bhartta v. Food Corporation of india : have been cited for this purpose.
4. Before considering the decisions cited, the issue must first be determined on an interpretation of sub-section (1) of section 20 of the Act itself. Section 20(1) provides as follows :
“20. (1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in court.”
5. The language expressly indicates that it is only in the Court having Jurisdiction in respect of “the matter to which the agreement relates” that an application under section 20(1) would lie. “The matter” in terms of the section refers to the “difference” between the parties to the agreement “to which the agreement applies”. The “difference” in turn must be in respect of the “subject matter of the agreement or any part of it”. Analysed thus, it is clear that it is the situs of the difference or the dispute or the cause of action which is the determining factor.
6. Clause 12 of the Letters Patent on the other hand, confers Jurisdiction on the Calcutta High Court to receive, try and determine suits of every description subject to certain qualifications namely, if it is a suit for land the land must be situated wholly or partly within the jurisdiction of this court and in all other cases if the cause of section arises wholly or partly within the Jurisdiction of this court or if the defendant at the time of the commencement of the suit dwells, or carries on business or works for gain within its local limits. Section 20(1) does not seek to confer jurisdiction on any court but places an embargo on the applicant under section 20 to apply to only that court which has “the Jurisdiction in the matter to which the agreement relates”.
7. Therefore by virtue of section 20(1) the respondent being the applicant under section 20 was restricted to filling the application under section 20 only before that court which had the Jurisdiction over the matter to which the agreement related. The respondent could not choose any other forum on any other basis.
8. The word “court” in section 20 must be read in the context in which the word is used in that section and must be read subject to the qualifications expressly indicated in section 20. The respondent could not legally file its application under section 20(1) before this court and consequently this court could not have entertained it.
9. Seen from the angle of the definition of the word “court” in section 2(c) of the Act, the same conclusion follows, section 2(c), reads as follows :
“2(c) “Court” means a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit, but does not, except for the purpose of the arbitration proceedings under Section 21, include Small Cause Court.”
10. There is no reference to a court having jurisdiction because of the residence of or the carrying on business by the defendant it follows that the court which has jurisdiction over the subject matter alone is the competent court for the purpose of section 20 and indeed for the purposes of all applications under the Act. Section 31 which deals with question of Jurisdiction under the Act provides :
“31. Jurisdiction.–(1) Subject to the provisions of this Act, an award may be filed in any court having jurisdiction in the matter to which the reference relates.
(2) Notwithstanding anything contained in any other law for the time being in force and save as otherwise provided in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the court in which the award under the agreement has been, or may be, tiled, and by no other court.
(3) All applications regarding the conduct of the arbitration proceedings or otherwise arising out of such proceedings shall be made to the court where the award has been, or may be, fied, and to no other court.
(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference any application under this Act has been made in a court competent to entertain it, that court alone shall have Jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall be made in that court and no other court.”
11. We see no distinction as a matter of interpretation between the scope and effect of section 31 and section 20(1) for the purpose of jurisdiction. This is not only apparent from the language of the two provisions but must necessarily be so in order to avoid a conflict between the two. If the provisions of section 20(1) were to be construed as allowing an application thereunder to be made to a court other than the court where the award may be filed under section 31(1), it would mean that by virtue of section 31(4) such other court alone would be the competent court for making all subsequent applications regarding the conduct of the arbitration proceedings, applications for challenging the validity, effect or existence of an award or an arbitration agreement and even for the filing of the award and not the ‘court having jurisdiction in the matter to which the reference relates”, contrary to the provisions of section 31 itself. Therefore, the principles laid down Judicially in interpreting section 31 are and must be equally applicable to the interpretation of section 20.
12. In Venfcafosomfappa’s case relied on by the appellant, the question arose as to which was the appropriate court for filing of the award under section 31, Division Bench of Madras High Court in construing section 2(c) together with section 31(1) of the Act held :
‘The combined effect of these two provisions would appear to be this: in order to determine which is the court having jurisdiction in the matter, you should flrst of all ascertain what the question are, which form the subject matter of the reference to arbitration. You then proceed to ask; supposing these question had arisen in a suit, which is the court which would have Jurisdiction to entertain the suit? That court would be the court having Jurisdiction under the Arbitration Act also it was admitted before us that in the present case the contract between the appellant and the respondent was entered into in Bangalore. The appellant supplied the labour and the materials in Bangalore; the respondent had also a subsidiary office in Bangalore and the payments made were also at Bangalore. The questions between the parties arose out of this contract and what the arbitrators had to determine was how much on a settlement of the accounts was due to one side or the other. Obviously, if these questions had arisen in a suit, the court which would ordinarily have had jurisdiction in the matter is not this court but the court of Bangalore. That result cannot be avoided if the jurisdiction of the Court were made dependent on the subject matter of the action.
…it will be noticed that there is no reference either in section 2(c) or section 31(1), of the Act to the place where the parties dwell, or carry on business, personally work for gain. The jurisdiction of the Court is made to depend not on any of these factors, but solely on the subject matter; there is no reference to any other circumstances.
…The words employed in the Act lay stress on the subject matter of the reference; there is such an avoidance of words having reference to the place of residence or place of business of the parties that the omlsston must have been deliberate, And we can think of at least one good reason why the court having Jurisdiction should have been defined in relation to the subject matter of the dispute or action. Otherwise, the court having jurisdiction might depend on the accident as to who first raised the dispute or decides to file a suit.
… it is only when the subject matter of the dispute itself makes the Jurisdiction dependent on residence, that the question of residence need arise at all…………regard being had to the phraseology of the Act, the
question of residence in such cases would, it seems to us, become relevant only should it arise out of; or in connection with the subject matter of the dispute and the reference.”
13. The Calcutta High Court in the case of Sushll Majumdar v. Soua Rant Biswas : followed the reasoning of Madras High Court in Venkatastuniappa’s case, in the Calcutta case an application had been filed under section 20 of the Arbitration Act before the City Civil Court at Calcutta. The question arose whether the City Civil Court had the pecuniary Jurisdiction to entertain the application under section 20. The City Civil Court Judge found that the subject matter of the dispute was valued at above the pecuniary limits of the City Civil Court at Calcutta and returned the application for presentation before appropriate court in allowing the appeal the Division Bench adopted the reasoning in Venkatopasamt’s case and also held that in order to determine which is the court having-Jurisdiction in the matter, one should first inquire into what the disputes are which formed the subject matter of reference to arbitration and then proceed to consider whether the dispute had been raised in the appropriate court.
“it is significant to note “that in section 20 the expression “the subject matter of the agreement” and the “the matter to which the agreement relates” have been used in different contexts. The expression “subject matter of the agreement” is couched in the alternative to “any part of it” and both have been used with reference to the institution of a prior suit while the expression “matter to which the agreement relates” has been used for determining the jurisdiction of the court to which the application under section 20 may be filed. The latter expression means not the property involved but the difference which has arisen and consequently the relief claimed.”
14. Similarly in Sk. Yunus v. Eastern Coal flelds Ltd.: 1997 (1) CHN 342 a learned single Judge following his earlier unreported decision in Western india industries Ltd, v. Central Coal flelds Ltd. said :
“it appears on perusal of sections 2(c) and 31 of the Arbitration Act that only the court having Jurisdiction to decide the question forming subject matter of reference alone would have Jurisdiction to decide questions regarding validity, effect or existence of an award or arbitration between the parties to the agreement or persons claiming under them having Jurisdiction over the conduct of the Arbitration proceedings. In view of
the aforesaid only the residence of the defendant or the place where the defendant carries on business or work for gain alone would not give Jurisdiction to the court for entertaining proceedings if the question forming subject-matter of reference arises outside the jurisdiction of this court”
15. In the decision in Aligarh Muslim University & Ore. v. Vlnay Engineering Enterprises (P) Ltd. : , although no reasoning on section 2(c) appears, the Supreme Court held that where the entire cause of action had been taken place outside the Jurisdiction of the Calcutta High Court the Calcutta High Court could not entertain an application under section 31 of the Act.
16. The unreported order of the Supreme Court (supra) relied on by the appellant also appears to support the view taken by us. The order which is brief, is set out verbatim :
“The question for decision in the present case is whether the Calcutta High Court had the jurisdiction in the matter. The material facts indicate that the entire cause of action arose outside the Jurisdiction of the Calcutta High Court inasmuch as the contract was made at Dhanbad and was required to be performed there. Learned counsel for the respondent attempted to support the Jurisdiction of the Calcutta High Court by contending that the registered office of appellant company (defendant in the suit) is at Calcutta. He have been shown in the Memorandum of Association of the appellant Bharat Coking Coal Ltd. which clearly says that the registered office of the company will be situated at Dhanbad in the State of Bihar. This being so, it cannot be said that the defendant was carrying on their business in that sense within the Jurisdiction of the Calcutta High Court because the location of its registered office. This being so, with no part of the cause of action having arisen within the Jurisdiction of the Calcutta High Curt and the registered office of the defendant company being located at Dhanbad, it is obvious that the Calcutta High Court had no jurisdiction in the matter.”
17. The decision of the Calcutta High Court in Babulal Chokhanl’s case (supra) on the construction of Clause 12 as well as the decision of the Supreme Court in M/s. Patel Roadways Ltd. (supra) on the construction of section 20 of Code of Civil Procedure are not material for the purpose of this appeal as, in our opinion, the issue of jurisdiction is to be determined on the language of section 20 of the Act alone.
18. Ofcourse the Full Bench of the Delhi High Court decided the question of Jurisdiction under section 20 with reference to section 20 of the Civil Procedure Code (the Code for short) it held that since section 20 of the Code enabled the plaintiff to file a suit in the circumstances in any of the courts therein mentioned, it was open to the applicant under section 20 of the Act to file the application in any of the courts so provided. it was accordingly said that :
“A court having jurisdiction to entertain the proceedings under the Act within whose jurisdiction the cause of action to sue arises, the court within the local limits of whose Jurisdiction the defendant or each of the
defendants at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, will also have Jurisdiction to entertain the proceedings under the Act in terms of cls. (a) and (b) of section 20 of the Code.”
19. For the reasons earlier stated we record our respectful inability to agree with the reasoning of the Full Bench. In any event the Delhi High Court in Union of india v. Electronic Control & instrument Engineers : 1997(2) ALR 691 has subsequently held that the Full Bench decision in Srt Ram Ratan Bhartia’s case did not correctly represent the law. The Division Bench approved the earlier decisions of the Delhi High Court in Komal Pushp Enterprises v. Chairman cum Managing Director, Gall & Ore. : 56 (1994) DLT 259; Awn Khosla v. Union of india (1995) 32 DRJ 94; M/ s. Haryana Breweries Limited v. Haryana Beer Agency & Ore. : (1935) 2 ALR 44 and M/s. R.K. Constructions v. National Thermal Power Corporation Ltd. : 1996 (I) Arb. LR 512 in which it was held that section 20 of the Code had no application to applications under the Act. The Division Bench further noted that the Full Bench decision in S;1 Ram Ratan Bharlla’s case had correctly not been noticed in all these four cases because the Full Bench question was contrary to the view expressed by the Supreme Court in M/s. Bakhtwar Singh Balkrishna v. Union of india & Ore. : AIR 1998 SC 1003. The Division Bench approved the ratio of the decisions in the 4 cases noted by it and held that “proceedings under the Act can be initiated only in a Court within whose territorial Jurisdiction the cause of action had arisen”.
20. Thus, apart from the interpretation of section 20(1) of the Act, the weight of Judicial authority on the issue is against the respondent. Given the fact that the subject matter of the difference has admittedly taken place wholly outside this court’s Jurisdiction, we hold that the respondent could not legally have fied the application under section 20 in this High Court and that therefore the order dated 15th January, 1992, was passed without Jurisdiction. The order dated 15th January, 1992 is accordingly set aside and the appeal is allowed with costs.
B. Panlgrahi, J.
21. I agree.
22. Appeal allowed with cost