Gujarat High Court Case Information System
Print
IAAP/6/2010 1/ 12 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
PETN.
UNDER ARBITRATION ACT No. 6 of 2010
For
Approval and Signature:
HONOURABLE
MR.JUSTICE M.R. SHAH
=========================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
YES
2
To be
referred to the Reporter or not ? YES
3
Whether
their Lordships wish to see the fair copy of the judgment ?
NO
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ? NO
5
Whether
it is to be circulated to the civil judge ?
NO
=========================================================
DIC
- NCC (JV) - A JOINT VENTURE OF M/S DAELIM INDUSTRIAL CO -
Petitioner(s)
Versus
M
SAHAI & ASSOCIATES PVT LTD - Respondent(s)
=========================================================
Appearance
:
MR
KG SUKHWANI for
Petitioner(s) : 1,
MR SUDHAKAR B JOSHI for Respondent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE M.R. SHAH
Date
: 10/05/2010
ORAL
JUDGMENT
Present
petition has been preferred by the petitioner
– DIC-NCC (JV), a Joint Venture of M/s.Daelim
Industrial Co.Ltd. And Nagarjuna Construction Co.Ltd., having its
office at Ahmedabad under sec.11 of the Arbitration and Conciliation
Act, 1996 to appoint an arbitrator to resolve the dispute between
the parties arising out of the Work Order dtd.22/6/2005.
It
is the case on behalf of the petitioner
that by Work Order dtd.2/2/2006 Labour Rate Contract
for ROB’s Grade Separator and Slab/Box Culverts, including pile
foundation for rehabilitation and upgrading of Garamore Gagodhar
Section of NH-8A and NH-15 from Km.254+000 to Km.308+000 and from
Km.281+300 to Km.245+000 (Pkg-IV). It is the case on behalf of the
petitioner
that work in question was executed in Rajkot District
and the petitioner
had issued work order to the respondent in Gujarat.
It
is the case on behalf of the petitioner
that the disputes arose between the parties, and the
petitioner
was constrained to terminate the contract vide
letter/communication dtd.20/11/2006. It is the case on behalf of
the petitioner
that after termination of the contract final bill
and claims were submitted by the respondent vide letter
dtd.18/1/2007 which was replied by the petitioner
on 23/1/2007. It is the case on behalf of the
petitioner
that along with the subsequent letter
dtd.23/4/2007, details of measurement, payment made, reconciliation
of materials issued, etc were intimated to the respondent and the
respondent was informed that an amount of Rs.12,61,115=19 ps. was
required to be paid to the petitioner
and accordingly notice was also served on 17/9/2007
thorough Advocate Mr.S.T. Zumkawala. It is submitted on behalf of
the petitioner
that since the requirements of the aforesaid notice
were not complied with, by further notice dtd.16/1/2009 once again
the respondent was given chance and opportunity to clear outstanding
amount of Rs.12,61,115=19 ps. It is submitted that notice
dtd.16/1/2009 was replied by advocate Mr.Vinod B. Mathur &
Company on 3/3/2009. It is the case on behalf of the petitioner
that thereafter by notice dtd.27/4/2009 the
petitioner
invoked arbitration clause and requested the
respondent to agree to one name to appoint as arbitrator to resolve
the dispute. It is the case on behalf of the petitioner
that since the respondent had not agreed to any name
suggested in the notice dtd.27/4/2009, the petitioner
once again called upon the respondent by notice
dtd.31/7/2009 to agree with the name of Hon’ble Mr.Justice
M.S.Parikh, Former Judge of the Gujarat High Court and Chairman,
State Consumer Commission, as Sole Arbitrator within a period of 30
days from the date of receipt of the said notice, failing which the
petitioner
shall be compelled to approach this Court as per the
provisions of sec.11 of the Arbitration and Conciliation Act, 1996.
It is the case on behalf of the petitioner
that though the said notice dtd.31/7/2009 has been
served upon the respondent, the same has not been replied by the
respondent and therefore, the petitioner
has approached this Court to appoint sole arbitrator
to resolve the disputes between the parties.
Mr.K.G.
Sukhwani, learned
advocate appearing on behalf of the petitioner has
submitted that there is a dispute between the parties arising out of
the Work Order / Agreement dtd.22/6/2005 and therefore, as per
clause 30 of the Work Order / Agreement dtd.22/6/2005, the dispute
is required to be referred for adjudication to a sole arbitrator.
Therefore, it is requested to appoint sole arbitrator as the
respondent has failed to agree with the appointment of the sole
arbitration for adjudication of the disputes between the parties
under the Work Order / Agreement dtd.22/6/2005.
In
response to the notice issued by this Court, Mr.Sudhakar Joshi,
learned
advocate has appeared on behalf of the respondent. Preliminary
objection has been raised on behalf of
the respondent with respect to maintainability of the present
petition before this High Court. It is submitted that as per clause
30 of the Work Order
/ Agreement dtd.22/6/2005 only the Courts in the City of Hyderabad
shall have exclusive jurisdiction to entertain any suit or other
claims arising out of or touching upon the matters contained in the
Work Order, the Gujarat High Court has no jurisdiction to entertain
any suit or other claims arising out of or touching upon the
matters contained in the said Work Order, therefore, Gujarat High
Court would not have jurisdiction to entertain present petition
and to appoint sole arbitrator for adjudication of the disputes
between the parties arising out of the Work Order. Mr.Joshi, learned
advocate appearing on behalf of the respondent has
heavily relied upon the decision of the Andhra Pradesh High Court in
the case of TPR Marketing Pvt.Ltd. Vs. Kingsbury Personal Care
Pvt. Ltd., reported in 2010 (1) Arbitration Law Report in
support of his above submission.
It
is submitted by Mr.Joshi, learned
advocate appearing on behalf of the respondent that the parties have
agreed and they have subjected themselves to jurisdiction of the
Courts at Hyderabad only and therefore, because of the said
conscious decision of the parties to exclude the jurisdiction of
other Courts including the Court in Gujarat, only the Chief Justice
of Andhra Pradesh High Court or his designate alone would have been
approached by the petitioner for appointment of
arbitrator. It is submitted that in the aforesaid decision, Andhra
Pradesh High Court dealing with the similar set of facts where the
parties mutually and consciously agreed that in case of dispute at
any level, it shall be solved within the jurisdiction of Mumbai by
arbitration only, when a petition for appointment of arbitrator was
submitted before the Andhra Pradesh High Court, considering two
decisions of the
Hon’ble Supreme Court in the case of ABC Laminart
Pvt.Ltd. V/s. A.P. Agencies, Salem, reported in AIR 1989 SC
1239 and in the case of Shree Subhlaxmi Fabrics Pvt.Ltd. Vs.
Chand Mal Baradia, reported in AIR 2005 SC 2161, Andhra
Pradesh High Court has held that application to appoint sole
arbitrator under sec.11 of the Arbitration and Conciliation Act,
1996 before the Andhra Pradesh High Court is not maintainable and
only the Chief Justice of the Bombay High Court and/or his designate
alone would have jurisdiction. Therefore, it is requested to dismiss
the present petition.
Mr.K.G.
Sukhwani, learned
advocate appearing on behalf of the petitioner
has submitted that as such no cause of action has
arisen within the territorial jurisdiction of Hyderabad and/or even
Andhra Pradesh. It is submitted that admittedly the Work Order was
issued in Gujarat and the Work in question was executed in Rajkot
District, Gujarat State. It is further submitted that even the
respondent is having its registered office at Delhi and the
petitioner
is having his registered office at Ahmedabad. It is
submitted that as no cause of action at all has been arisen within
the territorial jurisdiction of Hyderabad or Andhra Pradesh, even by
consent or agreement, party cannot confer jurisdiction on the Court
which is not possessed by it. It is submitted that only in a case
where more than one Courts have jurisdiction and by agreement
parties have agreed to confer jurisdiction with respect to one of
the Court having jurisdiction, such a contract/agreement is valid
and only that Court would have jurisdiction which otherwise would
have jurisdiction as per sec.20 of the Code of Civil Procedure.
Mr.Sukhwani,
learned
advocate appearing on behalf of the petitioner has
heavily relied upon the decision of the
Hon’ble Supreme Court in the case of Hakam Singh
V/s. M/s. Gammon (India) Ltd., reported in AIR 1971 SC 740.
It is submitted by Mr.Sukhwani, learned
advocate appearing on behalf of the petitioner that
the
Hon’ble Supreme Court in the case of Hakam Singh
(supra), has held that it is no open to the parties to confer by
agreement jurisdiction on a Court which it does not possess under
the Code of Civil Procedure. Therefore, it is submitted that, that
part of clause-30 of the Work Order / Agreement dtd.22/6/2005 which
provides that only Hyderabad Court would have jurisdiction to
adjudicate the disputes between the parties arising out of the
contract, is void and as the cause of action has arisen within the
territorial jurisdiction of Gujarat, only Gujarat High Court has
jurisdiction to refer the parties to the arbitration and to appoint
arbitrator under sec.11 of the Arbitration and Conciliation Act,
1996. Therefore, it is requested to allow the present petition.
Heard
the learned advocates appearing on behalf of the respective parties.
At
the outset, it is required to be noted and it is not in dispute that
there are disputes between the parties arising out of Work Order /
Agreement dtd.22/6/2005. Relevant Clause-30 reads as under:-
Clause
-30:- Dispute Settlement on Arbitration.
All
differences and disputes arising during the performance of above said
work shall as far as possible be settled with mutual discussions
amongst us only. If, however, such differences and disputes still
persist, the same shall be referred for necessary adjudication to a
sole Arbitrator mutually agreed upon in terms of Arbitration and
Conciliation Act, 1996 and the award given by the said Sole
Arbitration shall be final and binding on both the parties to the
agreement made between us. Venue of the same will be at Hyderabad.
The Courts in the City of Hyderabad shall have exclusive jurisdiction
to entertain any suits or other claims arising out of or touching
upon the matters contained in this work order.
Relying
upon Clause-30, which provides that venue of the arbitration shall
be at Hyderabad and the Courts in the City of Hyderabad
shall have exclusive jurisdiction to entertain any suits or other
claims arising out of or touching upon the matters contained in the
said work order, it is sought to be contended on behalf of the
respondent that this Court has no jurisdiction to entertain the
present petition under sec.11 of the Arbitration and Conciliation
Act, 1996 and to appoint arbitrator and that the petitioner
has to approach the Chief Justice of the Andhra
Pradesh High Court or his designate for appointment of arbitrator to
adjudicate the disputes between the parties arising out of the
Work Order / Agreement dtd.22/6/2005.
While
dealing with the jurisdiction of the Courts at Hyderabad as
conferred by the parties, as contained in Clause-30 of the Work
Order / Agreement dtd.22/6/2005, first of all it is required to be
considered whether any cause of action or even part of cause of
action has arisen within the jurisdiction of Hyderabad Court? It is
to be noted and it is an admitted position that the Work Order
dtd.22/6/2005 has been issued by the petitioner
to the respondent in Gujarat. It is also an admitted
position that the Work Order in question was executed in Rajkot
District, Gujarat State. It is also an admitted position that the
registered office of the petitioner
Company is situated at Ahmedabad. It is also an
admitted position that the registered office of the respondent
Company is at Delhi. Therefore, as such no cause of action has
arisen within the territorial jurisdiction of Hyderabad Court. It
is sought to be contended on behalf of the respondent that as the
petitioner
is the Joint Venture of one Nagarjuna Construction
Co. Ltd., whose registered office is situated at Hyderabad,
Hyderabad Court would have jurisdiction, which cannot be accepted.
Merely because the petitioner
is Joint Venture of one Nagarjuna Construction Co.
Ltd., whose registered office is situated at Hyderabad, it cannot be
said that Hyderabad Court would have jurisdiction to entertain the
suit or other claims arising out of or touching upon the matters
contained in the Work Order / Agreement dtd.22/6/2005 executed
between the petitioner
and the respondent. By no stretch of imagination
Hyderabad Court would have any jurisdiction as provided under sec.20
of the Code of Civil Procedure to entertain any suit or other
claims arising out of or touching upon the matters contained in the
Work Order / Agreement dtd.22/6/2005 executed between the petitioner
and the respondent. No cause of action or even part
cause of action has arisen within the territorial jurisdiction of
the Court of City of Hyderabad.
In
light of the above facts and the finding, the objection on behalf of
the respondent is required to be considered.
It
is the case on behalf of the respondent that as the parties have
consciously agreed to resolve their disputes only by the Court in
the City of Hyderabad, only the Court in the City of Hyderabad would
have exclusive jurisdiction, which cannot be accepted. As observed
and held by the
Hon’ble Supreme Court in the case of Hakam Singh
(supra) it is not open to the parties to confer by agreement
jurisdiction on a Court which does not possess under the Code of
Civil Procedure. It is further observed by the
Hon’ble Supreme Court that where two or more Courts
under the Code of Civil Procedure have jurisdiction to try a suit
or proceeding, an agreement between the parties that the disputes
between them shall be tried in one of such courts, is not contrary
to public policy and does not contravene section 28 of the Contract
Act. In the present case, as stated above, the Courts in Hyderabad
have no jurisdiction to entertain any suit or other claims arising
out of or touching upon the matters contained in the Work Order /
Agreement dtd.22/6/2005 executed between the petitioner
and the respondent, as no cause of action or even
part of cause of action has arisen within the territorial
jurisdiction of Courts at Hyderabad. Therefore, as observed and held
by the
Hon’ble Supreme Court in the case of Hakam Singh
(supra), Clause-30 of the Work Order / Agreement dtd.22/6/2005,
which provides that Courts in the City of Hyderabad shall have
exclusive jurisdiction to entertain any suit or other claim arising
out of or touching upon the matters contained in the Work Order /
Agreement dtd.22/6/2005 is void and hit by sec.28 of the Contract
Act. Therefore, the objection raised by the learned advocate
appearing on behalf of the respondent with respect to
maintainability of the present petition before this High Court
relying upon clause-30 of the Work Order / Agreement dtd.22/6/2005
is hereby overruled and considering the fact that the cause of
action has arisen within Rajkot and Ahmedabad i.e. within the
territorial jurisdiction of State of Gujarat, High Court of Gujarat
has jurisdiction and therefore, the present petition before this
Court, for appointment of arbitrator under sec.11 of the
Arbitration and Conciliation Act, 1996 to adjudicate the disputes
between the parties, is maintainable and in view of the arbitration
Clause-30 of the Work Order / Agreement dtd.22/6/2005, the disputes
between the parties are required to be referred to arbitration and
as there is no consensus between the parties with respect to
appointment of arbitrator, arbitrator is appointed by this Court,
however, venue of the arbitration shall be at Hyderabad.
Now,
so far as the reliance placed upon the decision of Andhra Pradesh
in the case of TPR Marketing Pvt.Ltd. (supra) is concerned, first of
all it is to be noted that there was no issue/dispute before the
Andhra Pradesh whether the Bombay High Court would have any
jurisdiction or not and/or there was no issue/dispute with respect
to cause of action within the territorial jurisdiction of Bombay
High Court. On the contrary, considering the facts of the case
before the Andhra Pradesh High Curt, it appears that the cause of
action/part cause of action has arisen within the limits of State of
Andhra Pradesh as well as Mumbai also and therefore, it was found
that both the courts would have jurisdiction concerning the subject
matter of the disputes between the parties and considering the above
facts and the decision of the
Hon’ble Supreme Court in the case of ABC Laminart
Pvt.Ltd. (supra) and Shree Shubhlaxmi Fabrics Pvt. Ltd. (supra),
Andhra Pradesh High Court has held that only Mumbai Court would have
jurisdiction and therefore, the application to appoint arbitrator
before the Andhra Pradesh High Court was held to be not
maintainable.
Considering
clause-30 of the Work Order / Agreement dtd.22/6/2005 and the fact
that the registered office of the petitioner
is at Ahmedabad and even the registered office of the
respondent is at New Delhi and the respondent is carrying its
business at New Delhi, it was suggested by the Court to mutually
agree to fix the venue of arbitration at Ahmedabad to avoid wastage
of time and expenditure, however, Mr.Joshi, learned
advocate appearing on behalf of the respondent has
not agreed to the same and therefore, as per Clause-30 of the Work
Order / Agreement dtd.22/6/2005, the venue of the arbitration shall
be at Hyderabad.
In
view of the above and for the reasons stated above, the petition
succeeds and Hon’ble Mr.Justice M.S. Parikh, Retired Judge of the
Gujarat High Court, residing at 12, Niyojannagar Co-operative
Housing Society, Opp. Manekbaug Hall, Ambawadi, Ahmedabad-380 015,
is hereby appointed as sole arbitrator to adjudicate the
disputes between the parties arising out of the Work Order /
Agreement dtd.22/6/2005 executed between parties. However, as
stated above, the venue of the arbitration shall be at Hyderabad as
per clause-30 of the Work Order / Agreement dtd.22/6/2005. It is
hoped that the learned sole arbitrator shall adjudicate the disputes
between the parties at the earliest so as to achieve the object and
purpose of Arbitration and Conciliation Act, 1996. The learned sole
arbitrator to declare the Award preferably within a period of 15
(fifteen) months from the date of this judgement and order. All
concerned are directed to cooperate the learned sole arbitrator in
adjudicating the disputes between the parties and awarding the award
by the learned sole arbitrator within the time stated hereinabove.
Present petition is allowed to the aforesaid extent. In
the facts and circumstances of the case, there shall be no order as
to costs.
[M.R.
SHAH, J.]
rafik
Top