JUDGMENT
Shyamal Kumar Sen, J.
1. This is an application for revocation of authority of the Chairman cum Managing Director to appoint sole arbitrator and also for direction to appoint an arbitrator by court.
2. Pursuant to an invitation of Tender for execution of the work of “construction of Booster Pumping Station at IWSP Kaju” the petitioner submitted its tender which was opened on or about December 15, 1986.
3. Negotiations ensured between the parties in connection with the acceptance of tender and from time to time at the behest of the respondent No. 1 the validity of tender was extended by the petitioner. The revised price bid was submitted by the petitioner on August 25, 1987 and the same was opened by the respondent No. 1 on or about 14th September, 1987. The Tender was accepted on behalf of the respondent No. 1 on or about 23rd July, 1988 and the detailed letter of acceptance was issued in favour of the petitioner on 25th August, 1988.
4. Pursuant to the acceptance of tender, the formal agreement was signed by and between the parties on September 6, 1988.
5. The execution of the work was unusually delayed and as a result thereof disputes and differences arose between the parties. The petitioner by letters dated 7th January and 31st January, 1994 addressed to the General Manager (Construction) Central Coalfields Ltd. Darbhanga House specifically intimated that the contract of execution of the work should be treated as ‘closed’, without prejudice to the petitioner’s rights, claims, remedies which may be available under the relevant provisions of the contract.
6. It was also mentioned in the said letter dated 31st January, 1994 that in the event of failure of respondent No. 1 to make such payment of the amount due to the petitioner as mentioned therein it would be construed that disputes and differences had arisen in terms of the Arbitration Clause of agreement between the parties, and the petitioner would formally requested the Chairman cum Managing Director, CCL, Ranchi, the respondent No. 2, in terms of Clause 58 of the general conditions of contract for nominating arbitrator for adjudication of the said disputes and differences. However neither any reply was received in respect of the said letter not any action was taken.
7. The petitioner by letter dated April 15, 1994 had formally requested the respondent No. 2 to appoint an arbitrator within a period of 20 days from the receipt of the said letter. It was also made clear by the petitioner that in the event of failure of respondent No. 2 to make such appointment within the said period of thirty days, the petitioner would approach the court for appointment of arbitrator. Xerox copy of the said letter dated April 15, 1994 has been annexed.
8. The petitioner again by letter dated May 6, 1994 called upon the respondent No. 2 to nominate sole Arbitrator in terms of Clause 58 of the general conditions of contract within a period of 21 days from the date of receipt of the said letter. Since there was no action on the said letter, the petitioner again sent another letter dated June 23, 1994 calling upon the respondent No. 2 to appoint sole Arbitrator within 15 days from the receipt of the said letter. By letter dated August 24, 1994, however, a notice was issued to the petitioner for showing cause within a week’s time from the date of receipt of said notice as to why the contract should not be terminated and as to why the balance work should not be got executed by different agency/agencies at the risk and cost of the petitioner. The petitioner duly replied to the said notice by his letter dated September 1, 1994 and the copy of the said letter was endorsed to the respondent No. 2 finally reminding him to appoint Arbitrator within a period of seven days from the date of receipt of the said letter.
9. Clause 58 of the general conditions of contract is set out hereinbelow:
“Clause 58-Settlement of disputes, Claims etc: If any dispute, question of controversy, claim etc, settlement of which is not herein specifically provided for shall any time arise between the employer and the contractor (during the progress of work) touching this agreement or any clause or anything herein contained on the construction thereof or any matter connected with this agreement or the right operation of the same of duties or liabilities of either party, then and in every such case the contractor, forthwith give to the employer notice of such difference within 30 days of such occurrence and no dispute shall be entertained thereafter. Such dispute or difference shall be referred to an arbitrator nominated by the Chairman-cum-Managing Director, CCL, Ranchi, the reasoned award of such arbitrator shall be final and binding on the parties. The arbitrator may from time to time with the consent of the parties enlarge the time for making and publishing the award.
The arbitration proceeding shall be in accordance with the Arbitration Act, 1940″.
10. It may be noted that the respondent No. 2 has failed and neglected to appoint any Arbitrator for settlement of any disputes and difference which he was under obligation to appoint.
11. It has been contended on behalf of the petitioner that since respondent No. 2 has failed to carry out the obligation under the contract, his authority should be revoked and a fit and proper person should be appointed to adjudicate the claims.
12. It has also been contended that since the respondent No. 2 is carrying on business inter-alia at 15, Park Street, Calcutta, this court has territorial jurisdiction to entertain and determine the application.
13. It has been specifically submitted on behalf of the respondent on the other hand that this court has no jurisdiction to determine the application. The contract was entered into at Bihar, the transaction relating to the contract took place at Bihar. Invocation of Arbitration agreement by letter of demand for arbitration was received by respondent No. 2 at Bihar.
14. It has also been submitted on behalf of the respondent No. 1 that any suit for recovery of alleged claim would have been filed at the appropriate District Court at Bihar and the office of Central Coalfiled Ltd. at 15, Park Street, Calcutta is no way concerned with the contract and dispute relating to the contract. Central Coalfields Ltd. having its office at Darbhanga House, Ranchi is the concerned respondent. It has accordingly been submitted on behalf of the respondent No. 1 that the application should be dismissed on the point of jurisdiction alone. Accordingly a preliminary objection as to jurisdiction has been raised on the ground that the contract was neither made at Calcutta nor was it executable within the jurisdiction of this court. It was further contended that invocation of Arbitration agreement by letter of demand for Arbitration was issued by the petitioner haying its office outside the jurisdiction and same was received by the respondent No. 2 at Bihar.
15. It has also been urged that the agreement relates to or pertains to construction of Booster Pumping Station IWSP, Kaju at Bihar. So, no part of the cause of action arose within the jurisdiction of this court.
16. Accordingly it has been submitted that the provisions contained in Sections 2(c) and 31 of the said Arbitration Act unmistakably point out that only the court having jurisdiction to decide the question forming subject matter of reference to entertain the application in question and that such a court alone would have jurisdiction to decide all questions regarding validity, effect or existence of an award or Arbitration agreement between the parties to the agreement or persons claiming under them having jurisdiction over the conduct of the Arbitration proceedings. That being so residence of defendant or the place where they carried on business or worked or gain alone in total disregard of the question forming subject matter of reference, would not give Jurisdiction to the court at those places for entertaining proceedings arising under the said Act. In the instant case as stated earlier the contract was entered into and entire work to which the alleged dispute partains was performed at Bihar. This court, in the circumstances has no Jurisdiction to entertain the present application on the basis of the residence of the respondent No. 1 when the contract was neither made at Calcutta nor was it executable within the jurisdiction of this court.
17. The learned Advocate for the respondent in this connection has relied upon the judgment and decision in the case of Sri Ram Ratan Bhartia v. Food Corporation of India and Anr. wherein it was held in the similar circumstances that apart from a court having jurisdiction to entertain the proceeding under said 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 said Act in terms of Clauses (a), (b) of Section 20 of Civil Procedure Code.
18. It has been submitted that in the instant case both the respondents are carrying on business outside the jurisdiction of this court and the whole of the cause of action arose at Bihar. So merely because the respondent No. 1 having an office at Calcutta does not confer any right to initiate proceedings within the jurisdiction of this court unless the petitioner shows that part of cause of action arose within the Jurisdiction of this court and unless leave under Clause 12 of the letter patent was obtained.
19. In this connection the learned Advocate for the respondent No. 1 has relied upon the Judgment and decision in the case of Tobu Enterprise Pvt. Ltd. v. Camco Industries .
20. The Advocate for the respondent No. 1 has also relied upon the judgment and decision in the case of Indian Oxygen Ltd. v. National Oxygen Ltd. reported in 1990(1) CLT 275, wherein it was held that “execution of agreement does not confer jurisdiction on the basis of the Arbitration Act since the execution of the agreement is not in dispute but the subject matter of performance relates to dispute arising outside the jurisdiction. It cannot be said that this court has jurisdiction to decide the questions forming the subject matter of reference. The subject of reference refers to execution or performance of contract which took place outside the jurisdiction of this court. There is an agreement that all disputes would be referred to the Tribunal of Arbitration of the Bengal Chamber of Commerce but it cannot confer jurisdiction on this score.
21. In the instant case the contract in question was executed outside the jurisdiction of the court and all works was to be done under the contract outside the Jurisdiction. There is no question of any breach taking place within the Jurisdiction. The entire cause of action arises outside the Jurisdiction of the court. Questions relating to the reference arose outside the jurisdiction of the court and merely because the defendant has local office, the same cannot confer jurisdiction on the court to entertain the matter. In this connection the judgment and decision in the case of Aligarh Muslim University and Anr. v. Vinoy Engineering Enterprises(p) Ltd. and Anr., relied upon by learned advocate for respondent may be taken note of. In the aforesaid decision it was held that “in case where the contract in question was executed, and the construction work was to be carried out outside the jurisdiction of this court, no part of the cause of action arose within the territorial jurisdiction of the said court merely because the respondent was a Calcutta based firm and therefore exercise of jurisdiction by it amounted to abuse of jurisdiction. Hence, the proceeding is unsustainable. The petitioner had deliberately moved to the court ignoring the fact that no part of the cause of action had arisen within the jurisdiction of that court. So heavy cost was awarded against the persons who initiated the proceedings.”
22. I have considered the submissions of the learned Advocates for the parties and also the decisions cited by them. In my view, the question whether the court has jurisdiction has to be considered in the light of relevant sections of the Arbitration Act. For the purpose of definition of the court and its jurisdiction the sections namely 2(C) and 31 of the Arbitration Act 1940 have to be considered and read as a whole and not in isolation.
23. The said Sections 2(C) and 31 of the Arbitration Act are set out here in 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 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 question 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, filed, and by no other court
(3) All application regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings shall be made to the court where the award has been, or may be, filed, and to no other court.
(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, wherein 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.”
24. Notwithstanding anything contained in any other law for 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 them shall be decided by the court in which the award under the agreement has been, or may be, filed and by no other court.
25. All applications regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings shall be made to the court where the award has been, or may be filed, and to no other court.
26. Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, wherein 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.
27. 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 on 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 proceeding. 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 no give jurisdiction to the court for entertaining proceedings if the question forming subject matter of reference arises outside the Jurisdiction of this court.
28. Considering the facts and circumstances of the case in my view this court does not have any Jurisdiction to entertain the disputes and differences arising out of the reference and as such the question relating to conduct of arbitration proceeding cannot also be decided by this court.
29. Accordingly the application fails and is dismissed on the ground of jurisdiction alone.
30. It is made clear that I have not adjudicated on the merits of the disputes.
31. There will be no order as to costs.
32. The department concerned is directed to draw up the order expeditiously.