JUDGMENT
Sanjiv Khanna, J.
1. By the present Order, we will be deciding the question of territorial jurisdiction.
2. On 30th October, 1996 an Award was passed by Mr. K.D. Thite, Retd. Chief Engineer, Central Water Commission. On 21st February, 1997, the appellants-M/s. National Projects Construction Corporation Ltd, who are questioning the jurisdiction of this Court, filed objections to the said Award under Sections 30 and 33 of the Arbitration Act, 1940 (hereinafter referred to as the Act, for short). After about 9 years when the matter was finally being heard by the learned Single Judge, the appellant herein raised objection to the territorial jurisdiction of this Court. The learned Single Judge noticed that the objection did not form part of the pleadings and held that it was too late for the appellants to raise the same. It was further held that this Court did not lack inherent jurisdiction and therefore the parties by consent or by act of omission and commission had waived their right to object to lack of territorial jurisdiction. Learned Single Judge also noticed that though the works were executed in the State of Himachal Pradesh but the contract between the parties was executed at New Delhi and therefore Courts, both at Himachal Pradesh and Delhi, had/have jurisdiction to take cognisance of the proceedings under the Act.
3. Learned Additional Solicitor General while questioning the Order passed by the learned Single Judge submitted that Section 34(1) of the Act is an over-riding provision and as proceedings for appointment of arbitrator had been initially initiated in the High Court of Himachal Pradesh, parties by consent or acquiescence or by act of omission and commission could not have conferred jurisdiction on this Court. It was argued that the present case is one of lack of inherent jurisdiction. In this regard, he relied upon two decisions of the Supreme Court in Kumbha Mawji v. Dominion of India and Guru Nanak Foundation v. Ratan Singh and Sons .
4. Per contra, Learned Counsel for the respondent submitted that the appellants had voluntarily invoked and unconditionally submitted to the jurisdiction of this Court by filing objections under Sections 30 and 33 of the Act. It was pointed out that the issues in the case were framed on 14th September, 1998. Reference was made to Section 41 of the Act and Section 21 of the Code of Civil Procedure, 1908 (hereinafter referred to as the Code, for short). Reliance was placed upon the following judgments : National Aluminium Co. Ltd v. Pressteel and Fabrication Pvt. Ltd and Anr. , Hira Lal Patni v. Kali Nath , Pathumma and Ors. (daughter of Koopilan Uneen) v. Kuntalan Kutty (son of Koopilan Uneen) , Koopilan Uneen’s v. Koopilan Uneen’s , M/s. Savani Transport Pvt. Ltd v. Gangadhar Ghosh reported in (1986) 1 CHN 443, Mazid Ali (decd.) through LRs v. Shri Lakshman Rabidas and Ors. reported in AIR 1992 Guahati 91, Punjab National Bank and Ors. v. M/s. Millen Sales Corporation and Ors. and Shri Prasun Roy v. The Calcutta Metropolitan Development Authority and Anr. .
5. Facts relevant for deciding the question may now be noticed. On 18th August, 1986, an Agreement was executed between the appellant and the respondent at Delhi for execution of works contract in the State of Himachal Pradesh.
6. Disputes and differences arose between the parties and the arbitration clause was invoked by the respondent. In May 1989, the respondent had filed a Petition under Sections 8 and 20 of the Act before the High Court of Himachal Pradesh at Shimla for filing of the arbitration Agreement and appointment of an Arbitrator. However, it appears that before the filing of the Petition, the appellant had appointed a sole Arbitrator and on 19th October, 1989 when this fact was brought to the notice of the High Court of Himachal Pradesh at Shimla, the Petition was dismissed as infructuous.
7. Subsequently, there was change in the sole Arbitrator with Mr.K.D. Thite, Retd. Chief Engineer, Central Water Commission being appointed as an arbitrator. He made and published his Award on 30th October, 1986.
8. Objections to the Award under Sections 30 and 33 of the Act were filed by the appellant in this Court on 21st February, 1997. In the objections no plea challenging the territorial jurisdiction of this Court was raised. On 14th September, 1998 issues were framed on the objections filed by the appellant under Sections 30 and 33 of the Act. It is admitted that objection to the territorial jurisdiction was raised before the learned Single Judge during the course of final arguments in the year 2006. Challenge to territorial jurisdiction was never raised in the pleadings.
9. The answer to the question depends upon the provisions of Sections 2(c) and 31(4) of the Act and Sections 20 and 21 of the Code. For the sake of convenience, the said provisions are reproduced below:
Section 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 arbitration proceedings under Section 21, include a Small Cause Court.
Section 31(4) : Jurisdiction- Notwithstanding anything contained elsewhere in this Act or in any 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 in no other Court.
Section 20, CPC : Other suits to be instituted where defendants reside or cause of action arises.-Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction-
(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such cases either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises.
Explanation: A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.
21. Objections to jurisdiction-(1) No objection as to the place of suing shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues are settled at or before such settlement, and unless there has been a consequent failure of justice.
(2) No objection as to the competence of a Court with reference to the pecuniary limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity, and, in all cases where issues are settled, at or before such settlement, and unless there has been a consequent failure of justice.
(3) No objection as to the competence of the executing Court with reference to the local limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the executing Court at the earliest possible opportunity, and unless there has been a consequent failure of justice.
10. Section 2(c) of the Act states that a Court has jurisdiction to decide the subject matter of arbitration, if on the same subject matter it had jurisdiction to entertain a civil suit. Thus, in view of Section 2(c) of the Act, if any of the parties were competent to invoke jurisdiction of this Court in a civil suit on the subject matter, this Court will be a competent court and have territorial jurisdiction. The contract between the parties was executed in Delhi and therefore at least part of cause of action has arisen in Delhi. To this extent, there is no dispute between the appellant and the respondent that this Court has territorial jurisdiction to decide the objections under Sections 30 and 33 of the Act in view of Section 20 of the Code read with Section 2(c) of the Act.
11. The appellant, however, contends that in view of the non-obstante provision in Section 31(4) of the Act, the High Court of Himachal Pradesh at Shimla alone has exclusive jurisdiction to decide the objections under Sections 30 and 33 of the Act as the respondent had earlier invoked jurisdiction of the said High Court by filing a Petition under Sections 8 and 20 of the Act. It has been held in Kumbha Mawji (supra) that Section 31(4) of the Act would apply even after award is made. The phrase “in a reference” it was observed, is comprehensive enough to also cover an application made after the arbitration is complete and the award is made. Accordingly, it was held that Section 31(4) of the Act would vest exclusive jurisdiction in the Court in which an application for filing of an Award was made for the first time under Section 14 of the Act. In the case of Guru Nanak Foundation (supra) it was held that Section 31(4) carves out an exception to general question of jurisdiction as it is a non-obstante clause and excludes anything contained in the whole Act or any other law for the time being in force. Once conditions of Section 31(4) of the Act are satisfied, the Court where the proceedings under reference were initiated at the first instance stands vested with exclusive jurisdiction to the exclusion of other Courts mentioned in Section 31(1) or as envisaged in Section 14(2) of the Act. Section 31(4) ousts the jurisdiction of other Courts and confers sole and exclusive jurisdiction to the court whose jurisdiction was invoked for the first time in a reference under the Act.
12. The object and purpose behind Section 31(4) is to avoid conflict of decisions by different Courts in respect of arbitration proceedings pursuant to a reference. Under the provisions of Sections 15 to 20 of the Code, different Courts can have concurrent jurisdiction on the subject matter of arbitration. Parties may have option to invoke jurisdiction of Courts at different places of their choice. To prevent scramble and conflicting decisions, with the parties having right to approach courts at different places under Sections 15 to 20 of the Code, Section 31(4) of the Act was enacted to ensure that once jurisdiction of a Court of competent jurisdiction at one place is invoked by one party then all further proceedings under the Act will take place in the Court whose jurisdiction was invoked first and not in the Courts at other places.
13. Section 31(4) therefore acts as an overriding exception to Sections 15 to 20 of the Code relating to the place of suing. The right and option of the parties under Section 15 to 20 of the Code gets curtailed and restricted. Section 31(4) of the Act is a non-obstante and a over-riding provision which applies irrespective of whether or not a court has jurisdiction to entertain subsequent proceedings under the Act in view of Sections 15 to 20 of the Code, when jurisdiction of a competent court has been earlier invoked.
14. Section 21 of the Code, on the other hand, does not deal with jurisdiction of the Courts to deal with a subject matter. Section 21 cannot be invoked by any party to institute a suit or file proceedings under the Act. Section 21 incorporates principle of estoppel and acquiescence as enshrined in Section 115 of the Evidence Act. It prohibits a person from challenging territorial jurisdiction of a Court after the said party has submitted to the jurisdiction of the Court. Section 21 of the Code does not confer jurisdiction on any Court but prevents a party from challenging and questioning the jurisdiction of the Court. The object and purpose of Section 21 of the Code is distinct and separate from the object and purpose behind Sections 15 to 20 of the Code.
15. Section 21 of the Code is applicable in view of Section 41 of the Act which makes all provisions of the Code applicable to proceedings in the Court initiated under the Act. The object and purpose behind Section 21 of the Code and the scope of it’s operation is not in any way curtailed, circumscribed or controlled by Sections 15 to 20 of the Code and also by Section 31(4) of the Act. In P.K. Ramachandran v. State of Kerala and Ors. reported in (2005) 11 SCC 486 question arose about territorial jurisdiction of the Court in proceedings relating to a challenge of the award under the Act. The High Court came to the conclusion that the Court where proceedings had been initiated did not have territorial jurisdiction. In these circumstances the orders were set aside as vitiated for want of territorial jurisdiction to be transferred to a competent court. The Supreme Court set aside the judgment holding that the matter was squarely covered by Section 21 of the Code and want of territorial jurisdiction must be pleaded at the earliest opportunity and in all cases before issues are settled. It was further held that the appellate or revisional court should not upset an order or decree for want of territorial jurisdiction unless it is satisfied that it has resulted in consequential failure of justice. This judgment does not directly deal with the question raised but holds that Section 21 of the Code is applicable to proceedings under the Act
16. If the above distinction between Sections 15 to 20 and Section 21 is kept in mind, there is no difficulty in applying the non-obstante provisions of Section 31(4) of the Act to Sections 15 to 20 of the Code and not to Section 21 of the Code. Section 31(4) of the Act will therefore over-ride and confer exclusive jurisdiction to the competent Court whose jurisdiction was first invoked by any of the parties on the basis of the provisions mentioned in Sections 15 to 20 of the Code. Section 21 of the Code operates in a different sphere and is not curtailed and over-written by non-obstante clause contained in Section 31(4) of the Act. Section 21 of the Code has independent existence and prevents a party from challenging the territorial jurisdiction of the Court, which is not subject matter of Section 31(4) of the Act. Section 31(4) of the Act does not state when and in what circumstances a party can or cannot challenge jurisdiction of the court.
17. It may also be mentioned here that it is well settled that there is difference between inherent lack of jurisdiction which goes to the root or competence of the Court to adjudicate a case and mere lack of territorial jurisdiction or pecuniary jurisdiction. (Refer, Kiran v. Chaman , Hira Lal v. Kalinath and Koopilan (supra).
18. In the case of Hira Lal Patni (supra) it was held as follows:
4. …There was no inherent lack of jurisdiction in the Bombay High Court where the suit was instituted by the plaintiff-decree holder. The plaint had been filed after obtaining the necessary leave of the High Court under Clause 12 of the Letters Patent. Whether the leave obtained had been rightly obtained or wrongly obtained is not a matter which can be agitated at the execution stage. The validity of a decree can be challenged in execution proceedings only on the ground that the court which passed the decree was lacking in inherent jurisdiction in the sense that it could not have seisin of the case because the subject-matter was wholly foreign to its jurisdiction or that the defendant was dead at the time the suit had been instituted or decree passed, or some such other ground which could have the effect of rendering the court entirely lacking in jurisdiction in respect of the subject-matter of the suit or over the parties to it. But in the instant case there was no such inherent lack of jurisdiction. The decision of the Privy Council in the case of Ledgard v. Bull [13 Indian Appeals 134] is an authority for the proposition that consent or waiver can cure defect of jurisdiction but cannot cure inherent lack of jurisdiction. In that case, the suit had been instituted in the Court of the Subordinate Judge, who was incompetent to try it. By consent of the parties, the case was transferred to the Court of the District Judge for convenience of trial. It was laid down by the Privy Council that as the court in which the suit had been originally instituted was entirely lacking in jurisdiction, in the sense that it was incompetent to try it, whatever happened subsequently was null and void because consent of parties could not operate to confer jurisdiction on a court which was incompetent to try the suit. That decision has no relevance to a case like the present where there could be no question of inherent lack of jurisdiction in the sense that the Bombay High Court was incompetent to try a suit of that kind. The objection to its territorial jurisdiction is one which does not go to the competence of the court and can, therefore, be waived. In the instant case, when the plaintiff obtained the leave of the Bombay High Court on the original side, under Clause 12 of the Letters Patent, the correctness of the procedure or of the order granting the leave could be questioned by the defendant or the objection could be waived by him. When he agreed to refer the matter to arbitration through court, he would be deemed to have waived his objection to the territorial jurisdiction of the court, raised by him in his written statement. It is well settled that the objection as to local jurisdiction of a court does not stand on the same footing as an objection to the competence of a court to try a case. Competence of a court to try a case goes to the very root of the jurisdiction, and where it is lacking, it is a case of inherent lack of jurisdiction. On the other hand, an objection as to the local jurisdiction of a court can be waived and this principle has been given a statutory recognition by enactments like Section 21 of the Code of Civil Procedure. Having consented to have the controversy between the parties resolved by reference to arbitration through court, the defendant deprived himself of the right to question the authority of the court to refer the matter to arbitration or of the arbitrator to render the award. It is clear, therefore, that the defendant is stopped from challenging the jurisdiction of the Bombay High Court to entertain the suit and to make the reference to the arbitrator. He is equally stopped from challenging the authority of the arbitrator to render the award. In our opinion, this conclusion is sufficient to dispose of the appeal.
19. In Koopilan (supra) the Supreme Court has held that in view of Section 21, the objections to place of suing can be entertained by the Appellate Court when three conditions are cumulatively satisfied and co-exist : (i) objection of territorial jurisdiction was taken at the first instance; (ii) taken at the earliest possibility and where issues are framed before settlement of issues and (iii) there has been consequential failure of justice. It has not been argued before us that there has been consequential failure of justice and/or the other two conditions are satisfied in the present case. In fact the appellant had filed objections under Sections 30 and 33 of the Act before this Court. The objection to territorial jurisdiction was raised for the first time after 9 years when the objections were being heard. It will be unjust and unfair to the court and the respondent to allow the appellant to raise this objection after substantial time has been spent by the court. In case of Church of South India Trust Association v. Telugu Church Council, the Supreme Court observed as under:
27. …In Section 21 of the present Code , it has been provided that No objection as to the place of suing shall be allowed by any appellate or revisional court unless such objection was taken in the court of first instance at the earliest possible opportunity and in all cases where issues are settled at or before such settlement, and unless there has been a consequent failure of justice. Having regard to the said provision, it has been held that though the defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of subject-matter of the action, strikes at the very authority of the court to pass any decree and such a defect cannot be cured even by consent of parties, the policy of the Legislature has been to treat objections to territorial jurisdiction as technical and not open to consideration by an appellate court, unless there has been a prejudice on the merits. (See: Kiran Singh v. Chaman Paswan).
20. It is accordingly held that the challenge to territorial jurisdiction therefore cannot be raised before us by the appellant as the three conditions mentioned above are not satisfied. Section 31(4) of the Act does not in any way over-ride and eclipse Section 21 of the Code. Section 21 of the Code continues to apply independently of Section 31(4) of the Act. We reject the contention and ground raised by the Learned Counsel for the appellant questioning the territorial jurisdiction of this Court to entertain and decide the objections filed by the appellant under Sections 30 and 33 of the Act.
21. To come up for further hearing on the objections filed by the appellant before the Regular Bench on 30th April, 2007. Costs of this order will form part of the final order.