Kerala High Court
Bhagyasurya Engineers And Contractors ... vs Siemens Limited on 30 April, 2024
Author: T.R.Ravi
Bench: T.R.Ravi
AR.No.32 of 2023
1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE T.R.RAVI
TUESDAY, THE 30TH DAY OF APRIL 2024 / 10TH VAISAKHA, 1946
AR NO. 32 OF 2023
PETITIONER:
BHAGYASURYA ENGINEERS AND CONTRACTORS PRIVATE LIMITED
3RD FLOOR DEVAKI CASTLE, KALOOR, KOCHI, KERALA - 682017. REPRESENTE
BY ITS MANAGING DIRECTOR MR SUNIL KUMAR KP
BY ADVS.
MS. LIZA MEGHAN CYRIAC
JOLLY JOHN
RESPONDENTS:
1 SIEMENS LIMITED
BIRLA AURORA, LEVEL 21, PLOT NO. 1080, DR. ANNIE
BESANT ROAD, WORLI, MUMBAI 400 030 REPRESENTED BY ITS
MANAGING DIRECTOR MR. YOGESH KUMAR MASIWAL.
2 SIEMENS LIMITED-COCHIN OFFICE
KG OXFORD BUSINESS CENTER, NO. 39/4609, A, SREEKANDATH
ROAD, RAVIPURAM, ERNAKULAM 682016 REPRESENTED BY ITS
MANAGER MR SHARMA MANOJ KUMAR,
BY ADVS.
SRI AADITHYAN S.MANNALI
MS.PARVATHY KOTTOL(K/000654/2013)
THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON
24.01.2024, THE COURT ON 30.04.2024 DELIVERED THE FOLLOWING:
AR.No.32 of 2023
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T.R. RAVI, J.
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AR.No.32 of 2023
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Dated this the 30th day of April, 2024
ORDER
Heard the counsel for the petitioner and counsel for the respondents.
2. The petitioner has filed the arbitration request seeking the appointment of an Arbitrator, invoking Section 11(5) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act). The respondent objects to the request on the ground that as per the agreement between the parties, the seat of Arbitration is at Mumbai. It is contended that this Court does not have jurisdiction to consider an application under Section 11(5) of the Act.
3. The respondents entered into an agreement with the KSEB for the construction of Air Insulated Substations at Manjeri, Chalakudy, Kothamangalam, and Chithirapuram. The respondents thereafter floated enquiry to various subcontractors for AR.No.32 of 2023 3 procurement and construction of civil works for the project. Ext.P2 is the minutes of a meeting held on 9.7.2018 and 10.7.2018 between the officers of the petitioner and the respondents. A reading of the minutes would show that the minutes is not intended to be a confirmation of the order and that the order will be decided only after another meeting which was scheduled before 13.7.2018. It is also stated that the annexures to the minutes are an integral part of the contract and that other terms and conditions are based on the Standard Terms and Conditions (STC) finally concluded, signed off, and attached as reference. STC has been produced as Ext.P3. Serial No.32 of Ext.P3 shows that the petitioner agreed to Arbitration at Mumbai. It can be seen from Ext.P3 that wherever the petitioner wanted modification to the STC, the same has been specifically stated. With regard to Arbitration at Mumbai, all that is stated is "agreed".
4. The respondent issued a purchase order for civil work at Manjeri site from its Mumbai office on 25.7.2018 and for civil work at Chalakudy site from its Mumbai office on 21.11.2018. The copies of the purchase orders have been produced by the respondents along with their counter affidavit as Exts.R1(c) and AR.No.32 of 2023 4 R1(d). The General Terms and Conditions in the Purchase orders specifically state that the current General Terms and Conditions (GTC) will apply to the purchase orders and that the GTC can be downloaded from the website. The petitioner accepted the purchase orders and proceeded to carry out the work. The copy of the GTC has been produced as Ext.R1(e) along with the counter affidavit. Clause 25 of Ext.R1(e) deals with "Dispute Resolution". It says that the seat of arbitration shall be Mumbai, that the language to be used in Arbitration shall be English, and that each party submits to the jurisdiction of the Courts of Mumbai for the purposes only of compelling compliance with the arbitration provisions and for enforcement of any arbitration award made, in accordance with the provision.
5. The counsel for the petitioner relied on the judgment of the Hon'ble Supreme Court in Ravi Ranjan Developers Pvt. Ltd v. Aditya Kumar Chatterjee [2022 SCC Online SC 568] to contend that an application under Section 11(6) cannot be moved in any High Court in India irrespective of its territorial jurisdiction and that the provision has to be harmoniously read with Section 2(1)(e) of the Act. It is submitted that when harmoniously read, the application has to be moved in a High AR.No.32 of 2023 5 Court with supervisory jurisdiction. The counsel submits that the subject matter of the case comes under the jurisdiction of the High Court of Kerala and all elements pertaining to the cause of action, have arisen in Kochi, and Ext.R1(a) has been signed at the office of the respondents in Kochi. The petitioner contends that there has been no agreement on an exclusive jurisdiction clause and the agreement is only as to the place of meeting as provided in Section 20(1) of the Act. It is also contended that if an arbitration clause contained in GTC is to be read into the contract, such incorporation should be as per Section 7(5) of the Act and that there is no mention of arbitration in the purchase orders. It is further contended that through incorporation by reference, there cannot be an amendment of the arbitration clause already existing. The counsel for the respondents, on the other hand contends that the parties have agreed on a seat of arbitration which is to be at Mumbai and hence an application under Section 11(5) is not maintainable before this Court.
6. This Court had occasion to consider the question regarding seat of arbitration in the judgment in I.D.A. Malappuram Branch through its Executive Committee v. Indian Dental Association represented by its Hon'ble AR.No.32 of 2023 6 Secretary [2024 SCC OnLine Ker 1358]. Paragraph 6 of the above judgment is extracted for easy reference.
"6. In Brahmani River Pellets Limited v. Kamachi Industries Limited reported in [(2020) 5 SCC 462], which is a judgment referred to by either side, the Hon'ble Supreme Court has dealt with the question of jurisdiction. In paragraph 16 of the judgment, the Court has laid down that where the contract specifies the jurisdiction of the court at a particular place, only such court will have the jurisdiction to deal with the matter and parties intended to exclude all other courts. On facts, in the said case, it is noted that the parties have agreed that the "venue"
of arbitration shall be at Bhubaneswar, and the court found that the intention of the parties is to exclude all other courts. The Court held that a non-use of words like, "exclusive jurisdiction", "only", "exclusive" "alone" is not decisive and does not make any material difference. In the said case the Court found that since the "venue" of arbitration was at Bhubaneswar, the Madras High Court could not have assumed jurisdiction under Section 11(6) of the Act. The Hon'ble Supreme Court has in the said judgment referred to the judgment in Bharat Aluminium Company v. Kaiser Aluminium Technical Service, Inc. [(2012) 9 SCC 552], wherein the Court had considered the distinction between the words "seat" and "venue" in the context of Section 20(3). In the said judgment the Hon'ble Supreme Court has held that the hearing of the arbitration at the venue fixed by the parties could not have the effect of changing AR.No.32 of 2023 7 the seat of arbitration. In BBR (India) Private Limited v. S.P. Singla Constructions Private Ltd. [(2023) 1 SCC 693 : AIR 2022 SC 2673], the Hon'ble Supreme Court after referring to the previous decisions held that the venue could not by itself assume the status of 'the seat', instead a venue could become 'the seat' only if "something else is added to it as a concomitant". The Court held that the place of the jurisdiction or the seat must be certain and static and not vague or changeable, as the parties should not be in doubt as to the jurisdiction of the courts for availing of judicial remedies. It was further held that where the seat is designated in the agreement the courts of the seat alone will have jurisdiction and all applications under Part I will have to be made in the Court where the seat is located, as that court alone will have jurisdiction over the arbitral proceedings and all subsequent proceedings. A similar view has been expressed by the Hon'ble Supreme Court in Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar Chatterjee [2022 SCC OnLine SC 568]. The above said judgments have been followed by a learned Single Judge of this Court in The Kerala Minerals and Metals Ltd. v. GMM Pfaudler Ltd. [OP(C) No. 1254 of 2019, order dated 8-7-2022 (Ker)]. The Calcutta High Court has in the decision in Homevista Decor and Furnishing Pvt. Ltd. v. Connect Residuary Private Limited [2023 SCC OnLine Cal 1405], considered the question and after referring to the decisions held that contractual interpretation necessitates taking into consideration all clauses and relevant factors to propound the proper AR.No.32 of 2023 8 intention of the parties. The Court held that a clause opting a place as 'venue' or 'place' read with another clause which mentions courts of another location to have jurisdiction over disputes that may arise, inhibits the promotion of such 'venue' to 'seat'. The intention that emerges from an aggregate understanding of such clause is that the 'venue' or 'place' was to be a convenient location for holding of arbitration seatings. The courts of the place selected as having exclusive jurisdiction over disputes should be considered as the 'seat' and having jurisdiction to entertain applications under the Act. In Inox Renewables Ltd. v. Jayesh Electricals Ltd. [(2023) 3 SCC 733], the Hon'ble Supreme Court considered the question of "venue" and "seat". The Court relied on the decision of the Hon'ble Supreme Court in BSG SGS Soma JV v. NHPC Limited [(2020) 4 SCC 234], wherein it was held that, where an agreement provides that arbitral proceedings "shall be held" at a particular venue that would indicate that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby, that that place is the seat of arbitral proceedings."
7. Applying the legal position aforesaid to the facts of this case, it is evident that in the Standard Terms and Conditions (STC), the parties have agreed that Arbitration will be at Mumbai. In the purchase order issued thereafter, it is specifically stated that the current GTC will apply to the purchase order. The current GTC in clause 25 says that the seat of arbitration will be Mumbai AR.No.32 of 2023 9 and that the parties have agreed on the jurisdiction of the Court of Mumbai. A reading of the STC, the Purchase Order and the GTC, together, do not leave any doubt in the mind regarding the intention of the parties to have arbitration at Mumbai. The question of incorporation by reference does not arise in the case since the STC which is relied on by the petitioner also shows that parties have agreed to arbitration at Mumbai. The clauses in the GTC only elaborate upon the term already agreed upon in the STC.
8. In the result, the arbitration request is dismissed, without prejudice to the right of the petitioner to approach the appropriate forum for reliefs.
Sd/- Sd/-
T.R. RAVI
JUDGE
dsn
AR.No.32 of 2023
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APPENDIX OF AR 32/2023
PETITIONER EXHIBITS
Exhibit P1 TRUE COPY OF THE EMAIL COMMUNICATIONS
PERTAINING TO THE FINAL QUOTE DISCUSSIONS BETWEEN THE PETITIONER AND RESPONDENTS Exhibit P2 TRUE COPY OF THE SIGNED MINUTES OF THE MEETING HELD AT KOCHI DATED 10.07.2018 BETWEEN THE PETITIONER AND RESPONDENTS Exhibit P3 TRUE COPY OF THE SIGNED STANDARD TERMS AND CONDITIONS IN KOCHI DATED 10.07.2018 BY THE PETITIONER Exhibit P4 NOTICE OF ARBITRATION ISSUED BY THE PETITIONER TO THE RESPONDENT DATED 21.02.2022 Exhibit P5 FIRST REPLY OF THE RESPONDENTS DATED 29.03.2022 TO EXHIBIT P4 Exhibit P6 SECOND DETAILED REPLY OF THE RESPONDENTS DATED 15.06.2022 TO EXHIBIT P4 RESPONDENT EXHIBITS EXHIBIT R1(A) A COPY OF THE STANDARD TERMS AND CONDITIONS EXHIBIT R1(B) A COPY OF THE MINUTES OF THE MEETING DATED 10TH JULY 2018 EXHIBIT R1(C) TRUE COPY OF THE PURCHASE ORDER DATED 25TH JULY 2018 BEARING NO. 4508459618 EXHIBIT R1(D) PURCHASE ORDER DATED 21ST NOVEMBER 2018 BEARING NO. 4508719202 EXHIBIT R1(E) A TRUE COPY OF THE GENERAL CONDITIONS OF CONTRACT