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Arbitration Act Sec.2(e)(1) and sec.42 – sec.15,16 and 20 of C.P.C – Sec.24 of C.P.C- Jurisdiction – Greater Mumbai has no other principal court for Great Mumbai District except high court so it is a principal court like District court of Thane – Award was passed on arbitration agreement at Greater Mumbai for the execution of Road works at Thane District – aggrieved by award one party approached District Court of Thane and other party approached High court – Transfer petition – High court order to transfer the case to High court from District court Thane to avoid conflict opinions – Which court holds Jurisdiction over the arbitration Award whether High court Mumbai or District court Thane? leads to civil appeal – Apex court held that as per sec. 42 of Arbitration act- No proceedings in different courts not allowable – as per sec. 2 (e)(1) .. court includes High court – Transferring a case from District court Thane to the High court is legal one and appropriate – Apex court clarified that provisions of C.P.C. in respect of jurisdiction Sec.15,16 and 20 have no application in this case as it is totally governed by sec. 2 (e)(1) of Arbitration Act = Executive Engineer, Road Development Division No.III, Panvel & Anr. … Appellants Versus Atlanta Limited … Respondent = 2014 ( January – Vol – 1) Judis.nic.in/ S.C./ file name =41151

Arbitration Act  Sec.2(e)(1) and sec.42 – sec.15,16 and 20 of C.P.C – Sec.24 of C.P.C- Jurisdiction – Greater Mumbai has no other principal court for Great Mumbai District  except high court so it is a principal court like District court of Thane – Award was passed on arbitration agreement at Greater Mumbai for the execution of Road works at Thane District – aggrieved by award one party approached District Court of Thane and other party approached High court – Transfer petition – High court order to transfer the case to High court from District court Thane to avoid conflict opinions – Which court holds Jurisdiction over the arbitration Award  whether High court Mumbai or District court Thane? leads to civil appeal – Apex court held that as per sec. 42 of Arbitration act- No proceedings in different courts not allowable – as per sec. 2 (e)(1) .. court includes High court – Transferring a case from District court Thane to the High court is legal one and appropriate – Apex court clarified that provisions of C.P.C. in respect of jurisdiction Sec.15,16 and 20 have no application in this case as it is totally governed by sec. 2 (e)(1) of Arbitration Act =

one

Atlanta  Limited  raised  some

disputes through a communication  dated  1.10.2009.   

It  also  invoked  the

arbitration clause for resolution  of  the  said  disputes.   

The  State  of

Maharashtra as also Atlanta Limited nominated their respective  arbitrators,

who in turn, appointed the presiding  arbitrator.   

On  the  culmination  of

proceedings  before  the  arbitral  tribunal,  an  award  was  rendered   on

12.5.2012.  Almost all the claims raised by Atlanta  Limited  were  granted.

In sum and substance, Atlanta Limited was awarded a sum of Rs.58,59,31,595/-

 along with the contracted rate of interest (of  20  per  cent  per  annum),

with effect from 1.10.2009.  Atlanta Limited  was  also  awarded  a  sum  of

Rs.41,00,000/- towards costs.  All the counter claims raised  by  the  State

of Maharashtra, before the arbitral tribunal, were simultaneously rejected.

 

2.    On 7.8.2012, the State of Maharashtra moved Miscellaneous  Application

no. 229 of 2012 and Miscellaneous Application no. 230 of 2012 under  Section

34 of the Arbitration and Conciliation Act, 1996  (hereinafter  referred  to

as the ‘Arbitration Act’) before the District Judge, Thane.   

The  State  of

Maharashtra  through  the  aforesaid   Miscellaneous   Applications   sought

quashing and setting aside of the arbitral award dated 12.5.2012.

 

3.    On the same day, i.e., 7.8.2012,  Atlanta  Limited  filed  Arbitration

Petition no.1158 of 2012 before the  High  Court  of  Judicature  at  Bombay

(hereinafter referred to as the ‘High Court’),  for  the  setting  aside  of

some of the directions issued by the arbitral tribunal (in its  award  dated

12.5.2012).   Atlanta  Limited  also  claimed  further  compensation,  which

according to the respondent, had  wrongfully  not  been  considered  by  the

arbitral tribunal.

 

 

“2 – Definitions— (1) In this Part, unless the context otherwise

      requires,—

 

           (e)  “Court”  means  the  principal  Civil  Court  of   original

           jurisdiction in a district,  and  includes  the  High  Court  in

           exercise of its ordinary  original  civil  jurisdiction,  having

           jurisdiction to decide the questions forming the  subject-matter

           of the arbitration if the same had been the subject-matter of  a

           suit, but does not include any civil court of a  grade  inferior

           to such principal Civil Court, or any Court of Small Causes.”

whether a challenge  to

an arbitration  award  (or  arbitral  agreement,  or  arbitral  proceeding),

wherein jurisdiction lies with more than one  court,  can  be  permitted  to

proceed  simultaneously  in  two   different   courts.   =

 

To  remedy

such a situation Section 42 of the Arbitration Act mandates, that the  court wherein the first application arising out of  such  a  challenge  is  filed, shall alone have the jurisdiction to adjudicate upon the  dispute(s),  which are filed later in point of time.  

 

since the  arbitral  tribunal  had  its

seat at Mumbai, and the works contract was executed at Mumbai, the  original

side  of  the  High  Court  of  Bombay  was  competent  to   entertain   the

controversy.  

On the other hand, the appellants before the  High  Court  had

pointed out, that 

since the works contract relating to the construction  and

maintenance of the Mumbra  byepass  on  the  Mumbai-Pune  road  (located  on

national highway no. 4), and the toll collection site were  situated  within

Thane District, the District Judge, Thane, was  the  “more  suitable”  court

for determining the controversies raised by the  rival  parties.   

Secondly,

 

All the same, it is imperative for  us  to  determine,  which  of  the

above two courts which have been approached by the rival parties, should  be

the one, to adjudicate upon the disputes  raised.   

For  an  answer  to  the

controversy in hand,  recourse  ought  to  be  made  first  of  all  to  the

provisions of the Arbitration Act.  

On  the  failure  to  reach  a  positive

conclusion, other principles of law, may have to  be  relied  upon.   

Having

given out thoughtful consideration to the issue  in  hand,  we  are  of  the

view, that the rightful answer can be determined  from  Section  2(1)(e)  of

the Arbitration Act, which defines the term “Court”.  

We shall endeavour  to

determine this issue, by examining how litigation is divided between a  High

Court exercising “ordinary original civil jurisdiction”, and the  “principal

civil court of original jurisdiction” in a district.  

What needs to be  kept

in mind is, that the High Court of Bombay is vested with “ordinary  original

civil jurisdiction” over the same area,  over  which  jurisdiction  is  also

exercised by the “principal Civil Court of original  jurisdiction”  for  the

District of Greater Mumbai  (i.e.  the  Principal  District  Judge,  Greater

Mumbai).  

Jurisdiction of the above two courts  on  the  “ordinary  original

civil side” is over the  area  of  Greater  Mumbai.   

The  aforesaid  choice  of  jurisdiction  has   been

expressed in Section 2(1)(e) of the Arbitration  Act,  without  any  fetters

whatsoever. 

 It is not the case of the appellants before  us,  that  because

of pecuniary dimensions, and/or any other consideration(s), jurisdiction  in

the two alternatives mentioned above, would lie with the Principal  District

Judge,  Greater  Mumbai.  

Under  the  scheme  of  the  provisions   of   the

Arbitration Act therefore, if the choice  is  between  the  High  Court  (in

exercise of its “ordinary original civil jurisdiction”)  on  the  one  hand,

and the “principal civil court of original  jurisdiction”  in  the  District

i.e. the District Judge on the other; 

Section  2(1)(e)  of  the  Arbitration

Act has made the  choice  in  favour  of  the  High  Court.   This  in  fact

impliedly discloses a legislative intent.  

To our mind therefore,  it  makes

no difference, if the “principal civil court of original  jurisdiction”,  is

in  the  same  district  over  which  the  High  Court  exercises   original

jurisdiction, or some other district. 

 In case an option is to be  exercised

between a High Court (under its “ordinary original civil  jurisdiction”)  on

the one hand, and a District Court (as “principal Civil  Court  of  original

jurisdiction”) on the other, the choice under the Arbitration Act has to  be

exercised in favour of the High Court.

 

26.   In the present controversy also, we must choose  the  jurisdiction  of

one of two courts i.e. either the “ordinary original civil jurisdiction”  of

the High Court  of  Bombay;  or  the  “principal  civil  court  of  original

jurisdiction” in District Thane i.e. the District Judge, Thane. 

 In view  of

the inferences drawn by us, based on the legislative intent emerging out  of

Section 2(1)(e) of the Arbitration Act, we are of the considered view,  that

legislative choice is  clearly  in  favour  of  the  High  Court.   

We  are,

therefore  of  the  view,  that  the  matters  in  hand  would  have  to  be

adjudicated upon by the High Court of Bombay alone.

In view of the conclusions drawn by us  above,  we  uphold  the  order

passed by the High Court requiring the matters  to  be  adjudicated  on  the

“ordinary original civil side” by the High Court  of  Bombay.   The  reasons

recorded by the High Court, for the above conclusion, were  different.   The

reasons for our consideration have already been notice above.   In  view  of

the above,  we  dispose  of  the  instant  appeal,  with  a  direction  that

Arbitration Petition No. 1158 of 2012 filed  by  the  Atlanta  Limited  (the

respondent herein) before the  High  Court  of  Judicature  at  Bombay,  and

Miscellaneous Application No. 229 of 2012 and Miscellaneous Application  No.

230 of 2012 filed by the appellants before the District Judge, Thane,  shall

be heard and disposed of by  the  High  Court  of  Bombay.   We  accordingly

hereby  direct  the  District  Judge,  Thane,  to  transfer  the  files   of

Miscellaneous Application No. 229 of 2012 and Miscellaneous Application  No.

230 of 2012 to the High Court, for disposal in accordance with law.

 

2014 ( January – Vol – 1) Judis.nic.in/ S.C./ file name  =41151
“REPORTABLE”

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 673 OF 2014
(Arising out of SLP (C) No.18980 of 2013)
Executive Engineer, Road Development
Division No.III, Panvel & Anr. … Appellants

Versus

Atlanta Limited … Respondent
J U D G M E N T
Jagdish Singh Khehar, J.
1. State of Maharashtra, through its Public Works Department, awarded a
contract dated 12.7.2000 to the respondent-Atlanta Limited (a public
limited company) for the construction of the Mumbra byepass. On 11.5.2005,
a supplementary agreement for additional work was executed between the
parties. It would be relevant to mention, that the Mumbra byepass falls on
National highway no. 4. The construction envisaged in the contract awarded
to the respondent-Atlanta Limited was, from kilometer 133/800 to kilometer
138/200. The contract under reference envisaged, settlement of disputes
between the parties, through arbitration. Atlanta Limited raised some
disputes through a communication dated 1.10.2009. It also invoked the
arbitration clause for resolution of the said disputes. The State of
Maharashtra as also Atlanta Limited nominated their respective arbitrators,
who in turn, appointed the presiding arbitrator. On the culmination of
proceedings before the arbitral tribunal, an award was rendered on
12.5.2012. Almost all the claims raised by Atlanta Limited were granted.
In sum and substance, Atlanta Limited was awarded a sum of Rs.58,59,31,595/-
along with the contracted rate of interest (of 20 per cent per annum),
with effect from 1.10.2009. Atlanta Limited was also awarded a sum of
Rs.41,00,000/- towards costs. All the counter claims raised by the State
of Maharashtra, before the arbitral tribunal, were simultaneously rejected.

2. On 7.8.2012, the State of Maharashtra moved Miscellaneous Application
no. 229 of 2012 and Miscellaneous Application no. 230 of 2012 under Section
34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to
as the ‘Arbitration Act’) before the District Judge, Thane. The State of
Maharashtra through the aforesaid Miscellaneous Applications sought
quashing and setting aside of the arbitral award dated 12.5.2012.

3. On the same day, i.e., 7.8.2012, Atlanta Limited filed Arbitration
Petition no.1158 of 2012 before the High Court of Judicature at Bombay
(hereinafter referred to as the ‘High Court’), for the setting aside of
some of the directions issued by the arbitral tribunal (in its award dated
12.5.2012). Atlanta Limited also claimed further compensation, which
according to the respondent, had wrongfully not been considered by the
arbitral tribunal.

4. A perusal of the averments made in the foregoing two paragraphs
reveal, that on the same day i.e., on 7.8.2012, the State of Maharashtra as
also Atlanta Limited questioned the award of the arbitral tribunal dated
12.5.2012. Whilst the State of Maharashtra questioned the same before the
District Judge, Thane; Atlanta Limited raised its challenge before the High
Court. Since the same award dated 12.5.2012 was subject matter of
challenge before two different courts, Atlanta Limited preferred
Miscellaneous Civil Application no. 162 of 2012 under Section 24 of the
Code of Civil Procedure, 1908 praying for transfer of Miscellaneous
Application no. 229 of 2012, as also, Miscellaneous Application No.230 of
2012 (both filed by the State of Maharashtra) before the District Court,
Thane, to the original side of the High Court, for being heard along with
Arbitration Petition No.1158 of 2012. The aforestated Miscellaneous Civil
Application No.162 of 2012 was allowed by the High Court on 15.3.2013. The
operative part of the order passed by the High Court is being extracted
hereunder:

“32. In the light of the above conclusion, the argument that this
Court can only direct consolidation of both Petitions without passing
any order with regard to their transfer, need not be considered in
this case. Apart therefrom, once I find that the Respondents have no
objection to consolidation of the proceedings so as to avoid
conflicting decisions or simultaneous trial/hearing, then, all the
more, the powers to transfer needs to be exercised in this case. It
is undisputed that the parties are common to both matters. In both
matters the same Award is under scrutiny. In such circumstances, the
argument that both Petitions need to be consolidated but before the
District Court at Thane cannot be accepted. That would mean two Courts
render decisions and more or less on the same issue and may be at the
same time. The arbitration petition filed by the Petitioners in this
Court is already placed before the Single Judge of this Court and is
now adjourned. It would be proper if the proceedings before the
District Court, Thane are brought and are heard along with the
Petition filed by the Petitioners in this Court.
33. As a result of the above discussion, this application succeeds.
It is made absolute in terms of prayer clause (a) with no order as to
costs.”

 

The above determination by the High Court, vide its order dated 15.3.2013,
is the subject matter of challenge through Special leave Petition (C)
No.18980 of 2013.

5. Leave granted.

6. The contention advanced at the hands of the learned counsel for the
State of Maharashtra, while assailing the impugned order of the High Court
dated 15.3.2013 was, that it was improper for the High Court to transfer
the proceedings initiated by the appellant through Miscellaneous
Application No.229 of 2012 and Miscellaneous Application No.230 of 2012
under Section 34 of the Arbitration Act before the Court of the District
Judge, Thane to the High Court. In this behalf, the pointed submission of
the learned counsel for the appellant was, that only the District Judge,
Thane, had the jurisdiction to determine the controversy emerging out of
the award of the arbitral tribunal dated 12.5.2012. It was also submitted,
that the proceedings initiated by Atlanta Limited through Arbitration
Petition no. 1158 of 2012, ought to have been transferred from the High
Court to the District Judge, Thane. In order to make good the aforesaid
submission, learned counsel for the appellant placed reliance on the
definition of the term “Court” expressed in Section 2(1)(e) of the
Arbitration Act. Section 2(1)(e) aforementioned is being reproduced
hereunder :

“2 – Definitions— (1) In this Part, unless the context otherwise
requires,—

(e) “Court” means the principal Civil Court of original
jurisdiction in a district, and includes the High Court in
exercise of its ordinary original civil jurisdiction, having
jurisdiction to decide the questions forming the subject-matter
of the arbitration if the same had been the subject-matter of a
suit, but does not include any civil court of a grade inferior
to such principal Civil Court, or any Court of Small Causes.”

 

Drawing the court’s pointed attention to the definition of the term
“Court”, it was the vehement contention of the learned counsel for the
appellant, that to determine which court would have jurisdiction to decide
the subject matter of an arbitral dispute, it was essential to find out the
particular court which would have had jurisdiction in the matter, had the
dispute been agitated through a civil suit. According to learned counsel,
the latter determination, would answer the jurisdictional avenue of the
arbitral dispute, in terms of Section 2(1)(e) extracted above. In this
behalf it was submitted, that in the absence of any express exclusion
clause between the parties, on the subject matter under reference, in order
to settle the dispute inter-parties, it would have been imperative for the
parties to raise their respective challenges only before the District
Judge, Thane.

7. For the above submission, learned counsel also placed reliance on
Section 16 of the Code of Civil Procedure. Section 16, according to
learned counsel, would be relevant to determine the jurisdictional court,
if the dispute had been agitated through a civil suit. Section 16
aforementioned is being extracted hereunder:

“16. Suits to be instituted where subject-matter situate.—Subject to
the pecuniary or other limitations prescribed by any law, suits,–

(a) for the recovery of immovable property with or without
rent or profits,

(b) for the partition of immovable property,

(c) for foreclosure, sale or redemption in the case of a
mortgage of or charge upon immovable property,

(d) for the determination of any other right to or interest in
immovable property,

(e) for compensation for wrong to immovable property,

(f) for the recovery of movable property actually under
distraint or attachment,

shall be instituted in the Court within the local limits of whose
jurisdiction the property is situate:

Provided that a suit to obtain relief respecting, or compensation for
wrong to, immovable properly held by or on behalf of the defendant
may, where the relief sought can be entirely obtained through hi s
personal obedience, be instituted either in the Court within the local
limits of whose jurisdiction the property is situate, or in the Court
within the local limits of whose jurisdiction the defendant actually
and voluntarily resides, or carries on business, or personally works
for gain.

Explanation .–In this section “property” means property situate in
India.”

 

Relying on Section 16 extracted above, it was asserted by learned counsel,
that the original agreement between the parties dated 12.7.2000, and the
supplementary agreement dated 11.5.2005, related to the construction of the
Mumbra byepass. The said construction is from Kilometer 133/800 to
Kilometer 138/200. The aforesaid location of construction, according to
the undisputed position between the parties, is within Thane District, and
as such, within the territorial jurisdiction of the Sessions Division,
Thane. Therefore, according to learned counsel for the appellant, only the
“principal civil court of original jurisdiction” in District Thane i.e.,
the District Judge, Thane, would have jurisdiction in the matter. It was
also the submission of the learned counsel for the appellant, that the toll
stations for collecting toll constructed by the respondent-Atlanta Limited,
are also located at the venue of the Mumbra byepass. Thus viewed,
according to the learned counsel for the appellant, the collection of toll
(which inter alia constitutes the subject of dispute, between the parties)
is also carried on by the respondents within District Thane, i.e., within
the territorial jurisdiction of the District Judge, Thane. Based on
Section 16 of the Code of Civil Procedure, and more particularly of clause
(d) thereof, it was the pointed submission of the learned counsel for the
appellant, that only the District Judge, Thane has the jurisdiction to
entertain an arbitral dispute, arising between the rival parties to the
present appeal.

8. In order to further support his contention, that the District Judge,
Thane alone would have jurisdiction in the matter, learned counsel for the
appellant, also placed emphatic reliance on Section 20 of the Code of Civil
Procedure which is being reproduced hereunder:

“20. 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 case either the leave
of the Court is given, or the defendants who do not reside,
or carry or 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.

Illustrations

(a) A is a tradesman in Calcutta, B carries on business in Delhi. B
, by his agent in Calcutta, buys goods of A and requests A to deliver
them to the East Indian Railway Company. A delivers the goods
accordingly in Calcutta. A may sue B for the price of the goods either
in Calcutta, where the cause of action has arisen or in Delhi, where B
carries on business.

(b) A resides at Simla, B at Calcutta and C at Delhi, A, B and C
being together at Benaras, B and C make a joint promissory note
payable on demand, and deliver it to A. A may sue B and C at Benaras,
where the cause of action arose. He may also sue them at Calcutta,
where B resides, or at Delhi, where C resides; but in each of these
cases, if the non-resident defendant objects, the suit cannot proceed
without the leave of the Court.”

 

Relying on the above provision, it was asserted, that a reading of Section
20 of the Code of Civil Procedure shows, that a preference has been
postulated for certain provisions including Section 16 of the Code of Civil
Procedure, which was evident from the opening words of Section 20 of the
Code of Civil Procedure, which clearly denoted, that the issue of
jurisdiction expressed in Section 20 of the Code of Civil Procedure, would
be subject to the overriding effect in the matter of jurisdiction,
expressed in the provisions preceding Section 20 (i.e. including Section
16).

9. Learned counsel for the respondent-Atlanta Limited, however, strongly
opposed the submissions advanced at the hands of the learned counsel for
the appellant, on the issue of jurisdiction. In this behalf, learned
counsel for the respondent invited our attention to the reply affidavit
filed on behalf of the State of Maharashtra, to Miscellaneous Civil
Application No.162 of 2012 (filed by Atlanta Limited before the High
Court), para 8 of the reply affidavit which was pointedly brought to our
notice is being extracted hereunder :

“8. In fact it is an admitted position and common ground that both;
this Hon’ble Court and the District Court at Thane have jurisdiction
in respect of the subject-matter in issue. Peculiarly this Hon’ble
Court falls within the definition of the term “Court” under Section
2(e) of the Arbitration Act by virtue of being a High Court in the
Mumbai District having Original Jurisdiction, and on the other hand
the District Court at Thane being the Principal Civil Court of
original jurisdiction in the Thane District also falls within the same
definition.”

(emphasis is ours)
In view of the stand adopted in writing by the appellants, in response
Miscellaneous Civil Application no. 162 of 2012, it was sought to be
asserted, that the appellants had no right to raise the issue of
jurisdiction before this Court.

10. Despite the objection noticed in the aforegoing paragraphs, it was
the vehement contention of the learned counsel for the respondent, that the
High Court and not the District Judge, Thane, had the jurisdiction to
adjudicate the controversy raised by the rival parties with reference to
the award of the arbitral tribunal dated 12.5.2012. In order to make good
the aforesaid submission, it was asserted, that the contractual agreement
dated 12.7.2000, as also, the supplementary agreement dated 11.5.2005, were
executed at Mumbai. Additionally, it was submitted that the parties had
mutually agreed, that the seat of arbitration in case of any disputes
arising between the parties, would be at Mumbai. Relying on the aforesaid
undisputed factual position, learned counsel for the respondent invited our
attention to the determination rendered by this Court in Bharat Aluminium
Company & Ors. vs. Kaiser Aluminium Technical Services Inc & Ors. (2012) 9
SCC 559, and made pointed reliance to the following observations recorded
therein:

“96. xxx xxx xxx xxx

We are of the opinion, the term “subject matter of the arbitration”
cannot be confused with “subject matter of the suit”. The term
“subject matter” in Section 2(1)(e) is confined to Part I. It has a
reference and connection with the process of dispute resolution. Its
purpose is to identify the courts having supervisory control over the
arbitration proceedings. Hence, it refers to a court which would
essentially be a court of the seat of the arbitration process. In our
opinion, the provision in Section 2(1)(e) has to be construed keeping
in view the provisions in Section 20 which give recognition to party
autonomy. Accepting the narrow construction as projected by the
Learned Counsel for the Appellants would, in fact, render Section 20
nugatory. In our view, the legislature has intentionally given
jurisdiction to two courts i.e. the court which would have
jurisdiction where the cause of action is located and the courts where
the arbitration takes place. This was necessary as on many occasions
the agreement may provide for a seat of arbitration at a place which
would be neutral to both the parties. Therefore, the courts where the
arbitration takes place would be required to exercise supervisory
control over the arbitral process. For example, if the arbitration is
held in Delhi, where neither of the parties are from Delhi, (Delhi
having been chosen as a neutral place as between a party from Mumbai
and the other from Kolkata) and the tribunal sitting in Delhi passes
an interim order Under Section 17 of the Arbitration Act, 1996, the
appeal against such an interim order under Section 37 must lie to the
Courts of Delhi being the Courts having supervisory jurisdiction over
the arbitration proceedings and the tribunal. This would be
irrespective of the fact that the obligations to be performed under
the contract were to be performed either at Mumbai or at Kolkata, and
only arbitration is to take place in Delhi. In such circumstances,
both the Courts would have jurisdiction, i.e., the Court within whose
jurisdiction the subject matter of the suit is situated and the courts
within the jurisdiction of which the dispute resolution, i.e.,
arbitration is located.

97. The definition of Section 2(1)(e) includes “subject matter of the
arbitration” to give jurisdiction to the courts where the arbitration
takes place, which otherwise would not exist. On the other hand,
Section 47 which is in Part II of the Arbitration Act, 1996 dealing
with enforcement of certain foreign awards has defined the term
“court” as a court having jurisdiction over the subject-matter of the
award. This has a clear reference to a court within whose jurisdiction
the asset/person is located, against which/whom the enforcement of the
international arbitral award is sought. The provisions contained in
Section 2(1)(e) being purely jurisdictional in nature can have no
relevance to the question whether Part I applies to arbitrations which
take place outside India.

98. We now come to Section 20, which is as under:

“20. Place of arbitration—(1) The parties are free to agree on
the place of arbitration.

(2) Failing any agreement referred to in Sub-section (1), the
place of arbitration shall be determined by the arbitral
tribunal having regard to the circumstances of the case,
including the convenience of the parties.

(3) Notwithstanding Sub-section (1) or Sub-section (2), the
arbitral tribunal may, unless otherwise agreed by the parties,
meet at any place it considers appropriate for consultation
among its members, for hearing witnesses, experts or the
parties, or for inspection of documents, good or other
property.”

A plain reading of Section 20 leaves no room for doubt that where the
place of arbitration is in India, the parties are free to agree to any
“place” or “seat” within India, be it Delhi, Mumbai etc. In the
absence of the parties’ agreement thereto, Section 20(2) authorizes
the tribunal to determine the place/seat of such arbitration. Section
20(3) enables the tribunal to meet at any place for conducting
hearings at a place of convenience in matters such as consultations
among its members for hearing witnesses, experts or the parties.”

(emphasis is ours)

11. We have heard learned counsel for the parties.

12. We have recorded hereinabove the foundation, on the basis whereof,
the present controversy was adjudicated before the High Court. As noticed
above, the challenge to the impugned order passed by the High Court, is
based on the question of jurisdiction. While the learned counsel for the
appellants has placed reliance on Section 2(1)(e) of the Arbitration Act
read with the provisions of Code of Civil Procedure to contend, that the
District Judge, Thane, alone would have the jurisdiction in the matter; the
contention raised on behalf of the respondent is, that the High Court alone
in exercise of its “ordinary original civil jurisdiction”, has the
jurisdiction to determine the controversy arising out of the impugned award
dated 12.5.2012.

13. In our view, it is not open to the appellants to advance such
submission before this Court. Firstly, because the appellants had in
paragraph 8 of the reply affidavit filed before the High Court, clearly
acknowledged the legal position, that both the High Court as also the
District Judge, Thane, in so far as the present controversy is concerned,
fall within the definition of the term “Court” under Section 2(1)(e) of the
Arbitration Act. And secondly, because the impugned order passed by the
High Court expressly notices in paragraph 10, that it was admitted by the
rival parties before the High Court, that the High Court on the original
side, as also the District Judge, Thane, had the jurisdiction in respect of
the subject matter. Relevant part of para 10 of the impugned judgment of
the High Court is being extracted hereunder:-

“10. Mr. Vashi, learned counsel appearing on behalf of the
Petitioner submitted that in the Affidavit-in-Reply which has
been filed in this petition, it is admitted by the Respondents
that the place of arbitration in terms of the arbitration clause
in the contract was Mumbai. It is also admitted that both, this
Court on the Original Side and the District Court at Thane have
jurisdiction in respect of the subject matter in issue.”
(emphasis is ours)

 

It was therefore not open to the appellants to canvass before this Court
that the High Court of Bombay in exercise of its “ordinary original civil
jurisdiction” could not adjudicate upon the present controversy, on account
of lack of jurisdiction. We shall therefore proceed in the first instance,
on the premise that both the courts referred to above had jurisdiction in
the matter. We shall independently record our reasons for the same, while
dealing with the submissions advanced before us. We have chosen to do so,
because we are of the view, that an important jurisdictional issue has been
raised, which needs to be settled, one way or the other. We shall
therefore, decide the controversy on merits, irrespective of the position
expressed by the appellant, on the issue of jurisdiction.

14. During the course of hearing before us, learned counsel for the
appellant had highlighted for our consideration, the factual/legal
controversy which was agitated by the rival parties before the High Court.
In this behalf it was further pointed out, firstly, that the respondent’s
case before the High Court was, that since the arbitral tribunal had its
seat at Mumbai, and the works contract was executed at Mumbai, the original
side of the High Court of Bombay was competent to entertain the
controversy. On the other hand, the appellants before the High Court had
pointed out, that since the works contract relating to the construction and
maintenance of the Mumbra byepass on the Mumbai-Pune road (located on
national highway no. 4), and the toll collection site were situated within
Thane District, the District Judge, Thane, was the “more suitable” court
for determining the controversies raised by the rival parties. Secondly,
it was pointed out, that before the High Court an application under Section
24 of the Code of Civil Procedure was filed in the matter pending before
the High Court, for transfer of proceedings filed by the respondents. It
was submitted, that through the above application, it was not open to the
High Court to have transferred the proceedings pending before the District
Judge, Thane. It was further pointed out, that before the High Court the
appellants had orally submitted, that if the High Court was inclined to
invoke its jurisdiction under Section 24 of the Code of Civil Procedure,
the proceedings filed by the respondent before the High Court should have
been transferred to the District Judge, Thane, and not the other way
around. According to the learned counsel, the instant submission has been
duly noticed in the impugned judgment. Lastly, it was contended, that
Section 24 of the Code of Civil Procedure could not be invoked in a
petition filed under Section 34 of the Arbitration Act, and therefore,
Section 24 of the Code of Civil Procedure ought not to have been relied
upon by the High Court for transferring the proceedings from the Court of
District Judge, Thane, to the High Court of Bombay.

15. The following submissions were advanced before us. Firstly,
considering clause (c) of the operative part of the award, according to
learned counsel it was clear, that enforcement of such a clause in the
award was site-specific, since Mumbra byepass is located on the Mumbai-Pune
road (on national highway no. 4) and falls in Thane District, the District
Judge, Thane, ought to be “natural choice” for consideration of the issues
advanced by the appellants, as also the respondent. Secondly, according to
the learned counsel for the appellants, the definition of the term “Court”
expressed in Section 2(1)(e) of the Arbitration Act uses the expression
“subject matter” and not “cause of action”. While “cause of action” can be
referable to places where the works contract is executed, or where
arbitration proceedings were conducted; the term “subject matter” used in
Section 2(1)(e) of the Arbitration Act is only referable to the subject
matter of the works contract, with respect to which the dispute is raised
(with respect to which, there was a direction for extension of the
concession period, under the award). Accordingly it was submitted, that
although the High Court may also have jurisdiction, the District Court
Thane is “more natural”, “more suitable” and “more appropriate” for the
adjudication of the claims, raised by the rival parties. Thirdly it was
contended, that the original side of the High Court of Bombay, vis-à-vis,
the District Judge, Thane, is a “superior” Court. According to the learned
counsel for the appellants, even if it is acknowledged that the “ordinary
original civil side” of the High Court of Bombay as also the “principal
Civil Court of original jurisdiction” for the District Thane i.e., the
District Judge, Thane, both have jurisdiction in the matter, there were
many attributes on the basis of which it could be clearly established, that
the original side of the High Court of Bombay, is superior to the Court of
the District Judge, Thane. In this behalf it was sought to be pointed out,
that the High Court could take cognizance of contempt of its own orders,
and furthermore, a judgment delivered by the original side of a High Court
operated as a binding precedent. It was submitted, that the District
Court, Thane, does not have any such attributes. In the above view of the
matter it was submitted, that reliance could be placed on Section 15 of the
Code of Civil Procedure, to determine which of the two courts should
adjudicate upon the matter. Section 15 is being extracted hereunder:-
“15. Court in which suits to be instituted-

Every suit shall be instituted in the Court of the lowest grade
competent to try it.”

 

Based on Section 15 extracted above it was submitted, that in case
jurisdiction could be exercised by two Courts, it was imperative to choose
the Court of the lowest grade competent to try the suit. Accordingly, it
was contended, that from amongst the original side of the High Court of
Bombay and the District Court, Thane, in terms of the mandate of Section 15
of the Code of Civil Procedure, the District Court, Thane, being the Court
lower in grade than the original side of the High Court of Bombay, ought to
have been chosen to adjudicate upon the matters. It was also pointed out,
that the choice of District Court, Thane, would even otherwise be
beneficial to the rival parties on account of the fact, that the
determination by the said Court, would be open for re-examination before
the High Court of Bombay, which exercises supervisory jurisdiction over it.
16. Additionally, it was contended, that the choice would fall in favour
of the District Judge, Thane, even on account of the likely expeditious
disposal of the matter by the District Judge, Thane, in comparison with the
“original side of the High Court of Bombay”. In this behalf it was
submitted, that there were only 42 petitions filed under Section 34 of the
Arbitration Act before the District Judge, Thane, during the entire year
2012, whereas, there were 1317 petitions filed under Section 34 before the
High Court of Bombay, under its “ordinary original civil jurisdiction”,
during the year 2012. Referring to the preceding three years, namely,
2009, 2010 and 2011 it was submitted, whereas a very few petitions were
filed under Section 34 of the Arbitration Act before the District Judge,
Thane, as many as, 1033, 1443 and 1081 petitions respectively (were filed
under Section 34 of the Arbitration Act) were filed during the three years
before the High Court of Bombay. Based on the above factual position it
was submitted, that it could be expected that the District Judge, Thane,
would dispose of the matters under reference within a short period of about
five years, whereas it was likely that the disposal of the said matters
will take more than two decades if the matters are required to be
adjudicated by the original side of the High Court of Bombay. On the
instant aspect of the matter also, referring to available data it was
submitted, that it takes more than 20 years for a suit to be heard and
decided by the High Court of Bombay under its “ordinary original civil
jurisdiction”, whereas, it does not take more than 5 years for a suit filed
before the District Judge, Thane, to be disposed of. Accordingly it was
contended, that keeping in view the burden of litigation, the “natural
choice” for adjudication of the matters under reference ought to be the
District Judge, Thane, rather than the High Court of Bombay.

17. Besides the above submissions, no other contention was advanced
before us.

18. We shall first endeavour to address the submissions advanced at the
hands of the learned counsel for the appellants, with reference to Section
15 of the Code of Civil Procedure. In terms of the mandate of Section 15
of the Code of Civil Procedure, the initiation of action within the
jurisdiction of Greater Mumbai had to be “in the Court of lowest grade
competent to try it”. We are, however, satisfied, that within the area of
jurisdiction of Principal District Judge, Greater Mumbai, only the High
Court of Bombay was exclusively the competent Court (under its “ordinary
original civil jurisdiction”) to adjudicate upon the matter. The above
conclusion is imperative from the definition of the term “Court” in Section
2(1)(e) of the Arbitration Act. Firstly, the very inclusion of the High
Court “in exercise of its ordinary original civil jurisdiction, within the
definition of the term “Court”, will be rendered nugatory, if the above
conclusion was not to be accepted. Because, the “principal Civil Court of
original jurisdiction in a district” namely the District Judge concerned,
being a court lower in grade than the High Court, the District Judge
concerned would always exclude the High Court from adjudicating upon the
matter. The submission advanced by the learned counsel for the appellant
cannot therefore be accepted, also to ensure the inclusion of “the High
Court in exercise of its ordinary original civil jurisdiction” is given its
due meaning. Accordingly, the principle enshrined in Section 15 of the
Code of Civil Procedure cannot be invoked whilst interpreting Section
2(1)(e) of the Arbitration Act. Secondly, the provisions of the
Arbitration Act, leave no room for any doubt, that it is the superior most
court exercising original civil jurisdiction, which had been chosen to
adjudicate disputes arising out of arbitration agreements, arbitral
proceedings and arbitral awards. Undoubtedly, a “principal Civil Court of
original jurisdiction in a district”, is the superior most court exercising
original civil jurisdiction in the district over which its jurisdiction
extends. It is clear, that Section 2(1)(e) of the Arbitration Act having
vested jurisdiction in the “principal Civil Court of original jurisdiction
in a district”, did not rest the choice of jurisdiction on courts
subordinate to that of the District Judge. Likewise, “the High Court in
exercise of its ordinary original jurisdiction”, is the superior most court
exercising original civil jurisdiction, within the ambit of its original
civil jurisdiction. On the same analogy and for the same reasons, the
choice of jurisdiction, will clearly fall in the realm of the High Court,
wherever a High Court exercises “ordinary original civil jurisdiction”.
Under the Arbitration Act, therefore, the legislature has clearly expressed
a legislative intent, different from the one expressed in Section 15 of the
Code of Civil Procedure. The respondent had chosen to initiate proceedings
within the area of Greater Mumbai, it could have done so only before the
High Court of Bombay. There was no other court within the jurisdiction of
Greater Mumbai, where the respondent could have raised their challenge.
Consequently, we have no hesitation in concluding, that the respondent by
initiating proceedings under Section 34 of the Arbitration Act, before the
original side of the High Court of Bombay, had not violated the mandate of
Section 2(1)(e) of the Arbitration Act. Thus viewed, we find the
submission advanced at the hands of the learned counsel for the appellants,
by placing reliance on Section 15 of the Code of Civil Procedure, wholly
irrelevant.

19. Reliance placed on Section 16 of the Code of Civil Procedure, by the
learned counsel for the appellants, for the ouster the jurisdiction of the
High Court of Bombay is equally misplaced. All that needs to be stated
while dealing with the aforesaid contention is, that the controversy
between the parties does not pertain to recovery of immoveable property,
partition of immoveable property, foreclosure sale or redemption of
immoveable property, determination of any other right to immoveable
property, for determination of compensation for wrong to immoveable
property and/or for the recovery of moveable property under distraint or
attachment. It is only in the aforesaid exigencies that Section 16 of the
Code of Civil Procedure could have been invoked. The construction of the
Mumbra byepass, would only entitle Atlanta Limited to payments contemplated
under the contract dated 12.7.2007, and no more. A brief description of
the reliefs sought by the rival parties, in the separate proceedings
initiated by them, does not indicate that either of the parties were
claiming any right to or interest in any immovable property. Since none of
the above exigencies contemplated in Section 16 prevail in the dispute
between the rival parties, reliance on Section 16 of the Code of Civil
Procedure is clearly misplaced.
20. Insofar as the jurisdiction within the District Thane, is concerned,
the “principal Civil Court of original jurisdiction” is the court of the
District Judge, Thane. Consequently, within the territorial jurisdiction
of District Thane, in terms of Section 2(1)(e) of the Arbitration Act, the
challenge could have only been raised before the “principal Civil Court of
original jurisdiction” of the district, namely, before the District Judge,
Thane. There was no other court within the jurisdiction of District Thane,
wherein the instant matters could have been agitated. Therefore, the
appellants having chosen to initiate the proceedings before the District
Judge, Thane, i.e., in respect of a cause of action falling in the
territorial jurisdiction of the District Thane, they too must be deemed to
have chosen the rightful court i.e., the District Judge, Thane.

21. Shorn of the aforesaid determination, our only understanding of the
submission advanced at the hands of the learned counsel for the appellants
would be, that as a matter of “natural choice”, as a matter of “suitable
choice”, as also, as a matter of “more appropriate choice”, the
controversies raised by the rival parties ought to be collectively
determined by the District Court, Thane, and not by the High Court of
Bombay (in exercise of its “ordinary original civil jurisdiction”). In
order to supplement the aforesaid contention, learned counsel for the
appellant had depicted the quantum of filing of similar petitions before
the High Court, as also, before the District Court Thane, and the time
likely to be taken for the disposal of such matters by the Courts under
reference. There is no statutory provision to our knowledge, wherein the
determination of jurisdiction, is based on such considerations. No such
provision was brought to our notice by learned counsel. The question of
jurisdiction, is a pure question of law, and needs to be adjudicated only
on the basis of statutory provisions. In view of the deliberations
recorded hereinabove, it may not be wrong to observe, that the submissions
advanced at the behest of the learned counsel for the appellants on the
issue of jurisdiction, are submissions without reference to any principles
known to law. To the credit of the learned counsel for the appellants, it
may however be observed, that the above considerations may constitute a
relevant basis for transfer of proceedings from one court to the other.
Before the above considerations can be examined, there would be one pre-
condition, namely, that the above considerations could be applied for
transfer of a case, where statutory provisions (express or implied) do not
provide for the exercise of a definite choice. As a matter of expressing
ourselves clearly, it may be stated, that inference of legislative intent
from statutory provisions, would exclude from the realm of consideration,
submissions of the nature relied upon by the learned counsel for the
appellant.
22. The first issue which needs to be examined is, whether a challenge to
an arbitration award (or arbitral agreement, or arbitral proceeding),
wherein jurisdiction lies with more than one court, can be permitted to
proceed simultaneously in two different courts. For the above
determination, it is necessary to make a reference to Section 42 of the
Arbitration Act. The aforesaid provision accordingly is being extracted
hereunder:

“42. Jurisdiction – Notwithstanding anything contained
elsewhere in this Part or in any other law for the time being in
force, where with respect to an arbitration agreement any
application under this Part has been made in a Court, that Court
alone shall have jurisdiction over the arbitral proceedings and
all subsequent applications arising out of that agreement and
the arbitral proceedings shall be made in that Court and in no
other Court.”

 

A perusal of Section 42 of Arbitration Act reveals a clear acknowledgment
by the legislature, that the jurisdiction for raising a challenge to the
same arbitration agreement, arbitral proceeding or arbitral award, could
most definitely arise in more than one court simultaneously. To remedy
such a situation Section 42 of the Arbitration Act mandates, that the court
wherein the first application arising out of such a challenge is filed,
shall alone have the jurisdiction to adjudicate upon the dispute(s), which
are filed later in point of time. The above legislative intent must also
be understood as mandating, that disputes arising out of the same
arbitration agreement, arbitral proceeding or arbitral award, would not be
adjudicated upon by more than one court, even though jurisdiction to raise
such disputes may legitimately lie before two or more courts.

23. Ordinarily Section 42 of the Arbitration Act would be sufficient to
resolve such a controversy. For the determination of the present
controversy, however, reliance cannot be placed on Section 42 of the
Arbitration Act, because the State of Maharashtra had moved Miscellaneous
Civil Application No. 229 and Miscellaneous Civil Application No 230 of
2012 under Section 34 of the Arbitration Act before the District Judge,
Thane, on the same day as Atlanta Limited had filed Arbitration Petition
No. 1158 of 2012 before the High Court. In this behalf it may be
mentioned, that both the parties had approached the courts referred to
hereinabove on 7.8.2012. The answer to the jurisdictional question,
arising out in the facts and circumstances of this case, will therefore not
emerge from Section 42 of the Arbitration Act. All the same it is
imperative for us to give effect to the legislative intent recorded under
Section 42 aforementioned, namely, that all disputes arising out of a
common arbitration agreement, arbitral proceeding or arbitral award, would
lie only before one court.

24. The very fact that the appellants before this Court, have chosen to
initiate proceedings against the arbitral award before “principal Civil
Court of original jurisdiction in a district” i.e., before the District
Judge, Thane, and the respondent before this Court, has raised a challenge
to the same arbitral award before the “ordinary original civil side” of the
High Court of Bombay, clearly demonstrates, that the underlying principle
contained in Section 42 of the Arbitration Act would stand breached, if two
different courts would adjudicate upon disputes arising out of the same
arbitral award. There can be no doubt, that adjudication of a controversy
by different courts, can easily give rise to different conclusions and
determinations. Therefore, logic and common sense also require, the
determination of all such matters, by one jurisdictional court alone. In
the present case, the complication in the matter has arisen only because,
the proceedings initiated by the appellants before the District Judge,
Thane, and proceedings initiated by the respondent on the “ordinary
original civil side” of the High Court of Bombay, were filed on the same
day (i.e. on 7.8.2012). Therefore, Section 42 of the Arbitration Act,
cannot be of any assistance in the matter in hand.

25. All the same, it is imperative for us to determine, which of the
above two courts which have been approached by the rival parties, should be
the one, to adjudicate upon the disputes raised. For an answer to the
controversy in hand, recourse ought to be made first of all to the
provisions of the Arbitration Act. On the failure to reach a positive
conclusion, other principles of law, may have to be relied upon. Having
given out thoughtful consideration to the issue in hand, we are of the
view, that the rightful answer can be determined from Section 2(1)(e) of
the Arbitration Act, which defines the term “Court”. We shall endeavour to
determine this issue, by examining how litigation is divided between a High
Court exercising “ordinary original civil jurisdiction”, and the “principal
civil court of original jurisdiction” in a district. What needs to be kept
in mind is, that the High Court of Bombay is vested with “ordinary original
civil jurisdiction” over the same area, over which jurisdiction is also
exercised by the “principal Civil Court of original jurisdiction” for the
District of Greater Mumbai (i.e. the Principal District Judge, Greater
Mumbai). Jurisdiction of the above two courts on the “ordinary original
civil side” is over the area of Greater Mumbai. Whilst examining the
submissions advanced by the learned counsel for the appellant under Section
15 of the Code of Civil Procedure, we have already concluded, that in the
above situation, jurisdiction will vest with the High Court and not with
the District Judge. The aforesaid choice of jurisdiction has been
expressed in Section 2(1)(e) of the Arbitration Act, without any fetters
whatsoever. It is not the case of the appellants before us, that because
of pecuniary dimensions, and/or any other consideration(s), jurisdiction in
the two alternatives mentioned above, would lie with the Principal District
Judge, Greater Mumbai. Under the scheme of the provisions of the
Arbitration Act therefore, if the choice is between the High Court (in
exercise of its “ordinary original civil jurisdiction”) on the one hand,
and the “principal civil court of original jurisdiction” in the District
i.e. the District Judge on the other; Section 2(1)(e) of the Arbitration
Act has made the choice in favour of the High Court. This in fact
impliedly discloses a legislative intent. To our mind therefore, it makes
no difference, if the “principal civil court of original jurisdiction”, is
in the same district over which the High Court exercises original
jurisdiction, or some other district. In case an option is to be exercised
between a High Court (under its “ordinary original civil jurisdiction”) on
the one hand, and a District Court (as “principal Civil Court of original
jurisdiction”) on the other, the choice under the Arbitration Act has to be
exercised in favour of the High Court.

26. In the present controversy also, we must choose the jurisdiction of
one of two courts i.e. either the “ordinary original civil jurisdiction” of
the High Court of Bombay; or the “principal civil court of original
jurisdiction” in District Thane i.e. the District Judge, Thane. In view of
the inferences drawn by us, based on the legislative intent emerging out of
Section 2(1)(e) of the Arbitration Act, we are of the considered view, that
legislative choice is clearly in favour of the High Court. We are,
therefore of the view, that the matters in hand would have to be
adjudicated upon by the High Court of Bombay alone.

27. In view of the conclusions drawn by us above, we uphold the order
passed by the High Court requiring the matters to be adjudicated on the
“ordinary original civil side” by the High Court of Bombay. The reasons
recorded by the High Court, for the above conclusion, were different. The
reasons for our consideration have already been notice above. In view of
the above, we dispose of the instant appeal, with a direction that
Arbitration Petition No. 1158 of 2012 filed by the Atlanta Limited (the
respondent herein) before the High Court of Judicature at Bombay, and
Miscellaneous Application No. 229 of 2012 and Miscellaneous Application No.
230 of 2012 filed by the appellants before the District Judge, Thane, shall
be heard and disposed of by the High Court of Bombay. We accordingly
hereby direct the District Judge, Thane, to transfer the files of
Miscellaneous Application No. 229 of 2012 and Miscellaneous Application No.
230 of 2012 to the High Court, for disposal in accordance with law.

…..…………………………….J.
(A.K. Patnaik)
…..…………………………….J.
(Jagdish Singh Khehar)
New Delhi;
January 16, 2014.

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