JUDGMENT
S.M. Jhunjhunuwala, J.
1. By this petition, the petitioner seeks direction of this Court for return of the Award filed in this Court to the respondent for being filed in the Court having jurisdiction.
2. Food Corporation of India is a Government of India Undertaking established under the provisions of the Food Corporation Act, 1964 for the purpose of trading in foodgrains and other food stuffs including edible oilseeds and for matters connected therewith and incidental thereto. For import of 15,000 Metric Tons (5 percent more or loss in respondents’ option) of Bagged Rice from Thailand to India, the petitioner chartered the vessel MV ‘ANEMI’ of the respondent on the Terms and Conditions set out in the charter party dated 24th October, 1988. The respondent did carry the said cargo from Thailand and the same was fully discharged at Calcutta. The said charter party provided for reference of disputes to arbitration, each party appointing an arbitrator and the two arbitrators appointing an Umpire whose decision, in the event of disagreement between the arbitrators, was to be final and binding upon the parties thereto. Disputes did arise for the resolution of which the respondent appointed one R.S. Cooper and the petitioner appointed one Saradhar Datta as their respective arbitrators. The said arbitrators appointed one K.P. Patel as Umpire. The arbitrators made the Award dated 1st March, 1993 which has been filed in this Court and numbered as ‘Award No. 73 of 1993’ (for short ‘the said Award’).
3. According to the petitioner, since the said Charter Party Agreement was executed at New Delhi and the entire cargo carried from Thailand per MV ‘ANEMI’ was discharged fully at Calcutta, no part of cause of action arose within the jurisdiction of this Court, and as such the said Award could not have been filed in this Court. The said Award is thus liable to be returned to the respondent for being filed in the Court having jurisdiction.
4. The respondent has denied that no part of the cause of action arose within the jurisdiction of this Court or that this Court had have no jurisdiction to entertain the said Award and/or take the same on its file. According to the respondent, besides the arbitrators holding hearing of the said arbitration reference also at Bombay, at all material times, the Food Corporation of India, an undertaking of the Government of India, was carrying on business in and from Bombay and had/have place of business situate at Mistry Bhavan, 2nd floor, Dinshaw Vachha Road, Churchgate, Bombay – 400 020 and as such, this Court has the jurisdiction to entertain the said Award and/or to take the same on its file.
5. Sub-section (2) of section 14 of the Arbitration Act, 1940 (for short, ‘the Act’) contemplates filing of an award by the arbitrator or umpire in Court. Sub-section (1) of section 31 of the Act provides that an award may be filed in any Court having jurisdiction in the matter to which the reference relates, section 2(c) of the Act which defines ‘Court’ for purposes of the Act reads as under :
“Section 2(c) :
2. Definitions – In this Act, unless there is anything repugnant in the subject or context –
(a) …
(b) …
(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 Causes Court.”
‘Civil Court’ is a Court exercising civil jurisdiction. This Court while trying a suit in exercise of its Original Civil Jurisdiction is a ‘Civil Court’. The Small Causes Court, though a ‘Civil Court;, has been expressly excluded from the definition of ‘Court’ in Clause (c) of section 2 of the Act, except for the purpose of making a reference to arbitration in a suit pending before it. It will not be a Court for the purposes of the other provisions of the Act. Thus, sub-section (1) of section 31 of the Act provides for the forum before which an award has to be filed. In an arbitration without the intervention of the Court, an award can be filed in the Court which has jurisdiction to entertain a suit in respect of the dispute which forms the subject matter of the reference to arbitration. To give the Court jurisdiction, it is not necessary that the whole cause of action should arise there.
6. Section 41 of the Act provides in so far as it is relevant :
“Subject to the provisions of this Act and of rules made thereunder :
(a) the provisions of the Code of Civil Procedure, 1908, shall apply to all proceedings before the Court, and to all appeals under this Act”.
The Code of Civil Procedure, 1908, in its entirety applies to the proceedings before the Court under the Act. The jurisdiction of the courts under the Act to entertain a proceeding for filing an award is accordingly governed by the provisions of the Code of Civil Procedure. Section 20 of the Code of Civil Procedure provides :
“Section 20 : 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 case 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.”
Section 41 of the Act having made the provisions of the Code of Civil Procedure applicable to all proceedings before the Court, and to all appeals under the Act, it can not be said that the provisions of section 2(c) of the Act and section 20 of the Code of Civil Procedure are mutually destructive to each other and incapable of being harmonised. Thus, apart from a Court 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 and/or take on its file an award under the Act. Before the jurisdiction of a Court can be invoked under sub-sections (a) and (b) of section 20 of the Code of Civil Procedure, it must be shown that the defendant was actually and voluntarily residing or carrying on business or personally working for gain within its jurisdiction at the time of the suit.
7. Mr. Ramchandani, the learned advocate for the petitioner, has submitted that the words ‘actually and voluntarily resides’ in Clauses (a) and (b) of section 20 of the Code of Civil Procedure do not apply to Union of India or State Government. They refer only to natural persons and not to juristic persons. In support of his this submission, Mr. Ramchandani has relied upon the case of Associated Commercial Engineers, Tawanagar v. State of Madhya Pradesh and another, as also upon the case of Sushil Ansal v. Union of India and another, reported in A.I.R. 1980 Delhi 43. In support of his submission that merely because the arbitrators chose to hold proceedings of the said reference at Bombay, this Court did not acquire territorial jurisdiction to entertain the said award and/or to have it on its file, Mr. Ramchandani has put reliance on M/s. Gulati Construction Co., Jhansi v. Betwa River Board and another, .
8. In the case of Associated Commercial Engineers, Tawanagar (supra) the Madhya Pradesh High Court was considering the appeal of the plaintiff under section 39(1) of the Act against the dismissal of suit under section 20 of the Act filed in the Court of Third Additional District Judge, Bhopal praying that the arbitration agreement be filed in Court and an independent person be appointed an arbitrator to decide the dispute between the parties thereto. The contract was for construction of dam and it was, inter alia, contended by the plaintiff-appellant therein that the construction of dam being a business, the suit could be filed at Bhopal where the State Government was located. The High Court held –
“Under section 20 of C.P.C. a suit could be filed at the place where the defendants or any of them actually and voluntarily resides or carries on business or personally works for gain and (ii) where cause of action wholly or in part arises. It is now settled law that the words ‘actually and voluntarily resides’ do not apply to Union of India or State Government. They refer only to natural persons and not to legal entities. However, the Government can carry on business and, therefore, a suit can be filed where the business is carried on”.
The Court then considered the question whether construction of dam amounted to carrying on business by the Government. In the facts of the case, it was held by the Madhya Pradesh High Court that:
“In the absence of any material on record, the learned Judge was justified in rejecting the contention of the plaintiff that construction of dam is a business activity by the State”.
In the circumstances the Court further held that a suit based on contract could be filed at the place where the contract was made or where breach was committed and that the Court at Bhopal could only have jurisdiction if any part of cause of action arose within its jurisdiction.
9. In the case of Sushil Ansal (supra), the petitioner had entered into contract with the Union of India at Lucknow relating to provisions of flooring etc. in certain buildings at Kanpur. Disputes arose between the parties which were referred to sole-arbitrator for adjudication. The award was made. The petitioner filed the petition under sections 14 and 17 of the Act for filing of the award and proceedings in the Court by the arbitrator and for making the same a rule of the Court. The jurisdiction of the Delhi High Court was claimed on the basis that the arbitrator was appointed and he made the award at Delhi and that the Union of India has its headquarters at Delhi. The award was filed in the Delhi High Court by the arbitrator. The respondent Union of India objected to the jurisdiction of the Delhi High Court. It was held –
“The questions forming subject matter of the reference to arbitration are the various questions which were raised before the arbitrator. All such questions and claims before arbitrator related to compensation, refund of excess recovery, payment for work done, cost of arbitration proceedings, and amount of final bill, for the contract performed at Kanpur. All these questions thus arose at Kanpur only as the work under the contract was done at Kanpur. The contract in question was accepted at Lucknow and the place of performance of the work was at Kanpur. If the suit is to be filed on the basis of these questions, it cannot be filed under section 20(c) of the Code of Civil Procedure in the Court at Delhi. The matters, as alleged by the petitioner, relating to appointment of arbitrator at New Delhi, making of award by him at New Delhi and the Union of India having its head quarters at New Delhi are not the questions forming the subject matter of reference and therefore do not confer jurisdiction upon this Court”.
As regards applicability of section 20 of the Code of Civil Procedure, the Court held –
“The contract in question relates to the provision of flooring in certain buildings at Kanpur. The construction of the work under the contract is not the business of the Union of India. This is only an executive function to be performed by the officers. The Union of India no doubt has its office at Delhi but the Court does not exercise its jurisdiction against the Union of India simply because it has its office at Delhi. The Union of India is not a natural person. The expression ‘voluntarily resides’ in section 20 of the Code of Civil Procedure does not refer to legal entity but to natural persons. Similarly, the expression ‘carries on business or personally works for gain ‘does not refer to functions carried on by the Union of India in discharge of its executive powers as held by the Division Bench of this Court in Binani Bros. (P) Ltd. v. Union of India, I.I.R. (1975)2 Delhi 196. The present case thus is not covered either under Clause (a) or Clause (b) of section 20 of the Code of Civil Procedure. The case is also not covered under Clause (c) of section 20 of the Code of Civil Procedure. No part of the cause of action arose at Delhi and, therefore, this Court has no jurisdiction”.
10. In the case of M/s. Gulati Construction Co., Jhansi (supra) the agreement was entered into between the parties for the construction of the Left Main Earth Dam, Rajghat Project. The work was awarded by 1st respondent to the petitioner therein. The contract was concluded at Jhansi. The work was carried out in the territory of Chanderi, District Guna (M.P.). In respect of certain claims of the petitioner, the arbitrator carried on the arbitration proceedings in Delhi and made and signed his award at New Delhi which was filed in Delhi High Court. The 1st respondent Board filed objections under sections 30 and 33 of the Act and the petitioner applied for making the award a rule of the Court and passing of decree in terms thereof. The issue of jurisdiction was raised by the 1st respondent Board contending that no part of cause of action arose within the territorial jurisdiction of that Court. The Court, in the facts of the case, held that no part of cause of action arose within its jurisdiction and that the factum of the arbitration proceedings having been conducted at Delhi and award being filed in that Court were not relevant for the purpose of deciding as to which is the Court of competent jurisdiction. It further held-
“Merely because the arbitrator chooses to hold the proceedings in a place where admittedly no suit could be instituted, and chooses to make and publish an award at that place it would not give the courts of that place territorial jurisdiction to decide the matters arising under the Arbitration Act”.
11. It is correct that the expression ‘Voluntarily resides’ or ‘personally works for gain’ can not be appropriately applied to the case of the Government. However, as held by the Supreme Court in the case of Union of India v. Ladulal Jain, , the Government can, however, carry on business. The mere fact that the expression ‘carries on business’ in Clauses (a) and (b) of section 20 of the Code of Civil Procedure is used alongwith the other expressions does not mean that it would apply only to such persons to whom the other two expressions regarding residence or of personally working for gain, would apply.
Article 298 of the Constitution of India provides that the executive power of the Union and of each State shall extend to the carrying on of any trade or business and Clause (6) of Article 19 provides that nothing in sub-clause (g) of Clause 1 of that article shall prevent the State from making any law relating to the carrying on by the State or by a Corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise. Those provisions clearly indicate that the State can carry on business and can even exclude citizens completely or partially from carrying on that business. It is the nature of the activity which defines its character. The nature of activities carried by Union of India through Food Corporation of India come within the expression ‘business’. The Food Corporation of India has been carrying on business and said Charter party was entered into the Food Corporation of India through the Government of India in conncection with and/or in relation to the business carried by the Food Corporation of India. It is not in dispute that the Food Corporation of India was and is having the place of business at Bombay. Hence, this Court has the jurisdiction to entertain the said Award and/or to take the same on its file. In this view of mine, I am supported by the Full Bench decision of Delhi High Court in the case of Shri Ram Rattan Bhartia v. Food Corporation of India and another, on which reliance has been placed by Mr. Venketswaran, the learned Counsel for the respondents. In that case the petitioner had entered into a contract with the Food Corporation of India for handling and transportation of food grains at Chandansi Depot, District Moradabad. The contract contained arbitration agreement providing that all disputes and differences arising out of or in any way touching or concerning the agreement whatsoever (except as to any matter the decision of which was expressly provided for in the contract) would be referred to the sole arbitration of any person appointed by the Managing Director of the Food Corporation of India. Disputes arose between the parties in respect of claim of the petitioner on account of transportation of foodgrains. The petitioner moved petition under section 20 of the Act in Delhi High Court. The jurisdiction of the Delhi High Court was invoked on the ground that the Food Corporation of India had its office at Delhi. The Food Corporation of India contended that the Delhi High Court had no jurisdiction. The Court held that the residence or carrying on business of a party was relevant for determining the territorial jurisdiction and since the Food Corporation of India was having its place of business at Delhi, the Delhi High Court had the jurisdiction in the matter.
13. The facts in the case of Associated Commercial Engineers, Tawanagar and in the case of Sushil Ansal being different than the facts in the present case, the decisions in those cases have no applicability to the facts in the present case.
14. Although in the petition the petitioner has prayed to have the award set aside, Mr. Ramchandani, the learned advocate for the petitioner has not pressed the said prayer and no argument in this connection has been advanced by him.
15. It is correct that merely because the Arbitrators chose to hold proceedings of the said reference also at Bombay, this Court did not acquire territorial jurisdiction to entertain the said Award and/or to have it on its file. However, since the Food Corporation of India is carrying on business and is having the place of business at Bombay as aforesaid, this Court has the jurisdiction to entertain the said Award and/or to have it on its file.
16. In the result the petition is dismissed with costs.