Tata International Ltd., Mumbai vs Trisuns Chemical Industry Ltd., ...
2001 Latest Caselaw 815 Bom

JUDGMENT

F.I. Rebello, J.

1. The petitioners have a foreign award in their favour. They have applied to this Court under Section 47 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as : "Act"), for enforcement of the Award as a deemed decree under Section 49 of the Act. Respondents had appeared and filed objection to the maintainability of the petition on the ground that considering the explanation to Section 47 of the Act, as no part of cause of action in respect of the subject matter of the Award has arisen within the jurisdiction of this Court, this Court would have no jurisdiction. The petition as

filed it was contended, is before a Court having no jurisdiction and consequently application must be rejected.

The petitioners have thereafter sought leave under Clause 12 of the Letters Patent. It is their contention that the cause of action in respect of the subject matter of the arbitral agreement under Reference as well as the subject matter of the Award arose within the jurisdiction of this Court. A part of the cause of action has arisen outside the jurisdiction of this Court. In these circumstances, by way of abundant precaution, petitioners have applied for leave under Clause 12 of the Letters Patent. This is without prejudice to their contention that leave is not required. The respondents have again opposed this application on the ground that no part of cause of action has arisen within the jurisdiction of this Court. It is their contention that the offer made by the petitioner was accepted at Gandhidham. A contract therefore, was entered into at Gandhidham or came into existence there. The goods were shipped from Kandla Port (Gujarat) and sent to France directly. In terms of the invoices, it was a stipulation that money was to be paid to the respondents bankers, State Bank of India overseas Branch, Ahmedabad (Gujarat). In fact for the goods shipped from Gujarat to France, the payment was credited in the respondent's account maintained with their bankers at Ahmedabad. The petitioners, it is contended, have their head office at Gandhidham and branch office at Ahmedabad. They have no office within the jurisdiction of this Court. It is also contended that leave under Clause 12 cannot be sought after the application had been filed. The leave had to be sought before filing of the Application. The application for leave therefore, ought to be rejected on this count alone.

2. The first question therefore, which has to be considered is whether leave under Clause 12 is required to maintain a petition under Section 47 of the Act, to enforce a foreign award. Explanation to Section 47 defines the Court to mean the principal Civil Court of original jurisdiction in the district and includes High Court in exercise of its Ordinary Original Civil Jurisdiction, having jurisdiction over the subject matter of the award if the same had been the subject matter of the suit. This is for the purpose of Part II of the Act including chapter I which cover foreign awards. Insofar as Part I of the Act which covers domestic arbitrations, the Court has been defined under Section 2(e) to mean the principal Civil Court of original jurisdiction in the District and includes High Courts in exercise of its Original Civil Jurisdiction having jurisdiction to decide questions forming the subject matter of the arbitration, if the same had been subject matter of the suit. Therefore, both the explanation to Section 47 and under Section 2(e), Court means the principal Civil Court of original jurisdiction in the district and includes High Court having original jurisdiction. Considering the pecuniary limits and the amount involved in the present petition, it will be the High Court which will be the principal Civil Court of original jurisdiction insofar as present award is concerned. Expression Court came up for consideration before me in R. J. Shah and Co. v. Konkan Railway Corporation Ltd. by judgment dated 31st July, 2001. On the consideration of the expression District Court and Principal Civil Court, it has been held that it would be the principal Civil Court having jurisdiction over the subject matter and not the District Court even if it will be principal Civil Court in the District unless the jurisdiction to try suits had been

conferred on such District Court. The jurisdiction of this Court as a chartered High Court is regulated by Clause 12 of Letters Patent. Under Section 120 of the Code of Civil Procedure, provisions of Section 16, 17 and 20 shall not apply to the High Court in exercise of its Original Civil Jurisdiction. Clauses (a) to (e) of Section 16 are in respect of suits where the subject matter is immovable property. The only exception is Clause (f) which provides for recovery of movable property actually in distress or attachment. Section 17 again provides for filing of the suit to obtain relief respecting, or compensation for wrong to, immovable property situate within the jurisdiction of different Courts. Section 20 provides for cases in respect of other suits. Clause 12 of the amended Letters Patent of this Court reads as under:

"And We do further ordain that the said High Court of Judicature at Bombay, in the exercise of its Ordinary Original Civil Jurisdiction, shall be empowered to receive, try and determine suits of every description, if, in the case of suits for land or other immovable property such land or property shall be situated, or in all other cases if the cause of action shall have arisen, either wholly, or in case the leave of the Court shall have been first obtained, in part, within the local limits of the ordinary original jurisdiction of the said High Court, or if the defendant at the time of the commencement of the suit shall dwell or carry on business, or personally work for gain, within such limits, except that the said High Court shall not have such original jurisdiction in cases falling within the jurisdiction of the Small Cause Court at Bombay, in which the debt or damage, or value of property sued for does not exceed one hundred rupees."

Therefore, in respect of suits for immovable property such as land, the whole of the cause of action must have arisen within the jurisdiction of this Court. If a part of cause of action has arisen then the suit would be maintainable provided leave of the Court is first obtained under Clause 12 of the Letters Patent. The power of this Court under the amended Letters Patent has been saved even on the coming into force of the Constitution, the power was saved under Article 225 when new High Court known as "High Court of Bombay" has been constituted by Parliament pursuant to Goa, Daman and Diu Reorganization Act, 1987. In the present matter, it is contended that considering the agreement and the documents signed by the petitioners to which the respondent was a party, respondent could have called on the petitioners to make payment in Mumbai. We may now address ourselves to the question whether leave under Clause 12 is required at all under the Act of 1996 considering the judgment cited at the bar of a Single Judge of this Court under Section 20 of the Arbitration Act, 1940. In the case of Harishankar Singhania and Ors. v. Dr. Gaur Hari Singhania and Ors., 1997 (I) Mh.LJ. 9 one of the findings by the Court is that the Court can have jurisdiction as can be seen from the Paragraph 11 of the judgment as the Court had jurisdiction to entertain and try the suit considering Section 20 of the Civil Procedure Code, 1908. Apparently the attention of the learned Judge was not drawn to Section 120 of the Code of Civil Procedure which specifically excludes jurisdiction insofar as Section 20 of the Civil Procedure Code is concerned as there is no discussion on that aspect. The next aspect which the learned Judge considered was that an application under Section 20 of the Act of 1940 is not to be treated as suit within the meaning of Clause 12 of the Letters Patent Act and as such leave as contemplated by Clause 12 is not required to be obtained before filing of such application. It is no doubt true that even under the Act of 1940, under Section 2(c) Court meant Civil Court having jurisdiction to decide questions forming subject matter of the Reference, if the same had been subject matter of the suit. The question however is whether this Court would have jurisdiction to entertain the petition if it does not fall within Clause 12 of its amended Letters Patent. Clause 12 is the clause which confers jurisdiction on this Court in respect of the subject matter. The learned Single Judge after having held that Section 20 of the Code of Civil Procedure applies, has proceeded thereafter to hold that in respect of an application under Section 10 of the Act of 1940, Clause 12 would not apply. The explanation to Section 47 contemplates that the application must be made to the Court having jurisdiction over the subject matter of the Award. In other words, the Court must be the Civil Court, competent to have pecuniary jurisdiction, territorial jurisdiction and jurisdiction as to subject matter. Absence of any of these factors would exclude the principal Civil Court from exercising jurisdiction in respect of the subject matter. The jurisdiction in respect of the subject matter is as conferred by Clause 12; Other clauses provide for territorial and pecuniary jurisdiction, which need not be referred to. Insofar as a chartered High Court is concerned, a suit in respect of the subject matter of the Award will have to be filed considering Clause 12. The only other way of looking at the issue is that in respect of the Arbitration Act, jurisdiction is conferred by the provisions of the Code of Civil Procedure and not by the amended Letters Patent. It is however, impossible to accept such an interpretation. The Principal Civil Court of original jurisdiction includes the High Court in the exercise of its Ordinary Original Civil Jurisdiction. Therefore, it is the Letters Patent which will have to be considered including-Clause 12. Once Clause 12 is attracted, I see no reason why power conferred on this Court under Clause 12 to grant leave should not be available also in proceedings in Arbitration whether it be Part I or Part II in absence of any express exclusion clause. In the absence of such power otherwise if part of cause of action in respect of the Award insofar as Part I is concerned, has arisen within the jurisdiction of this Court, the party may have to invoke jurisdiction of a Court elsewhere where part of cause of action arises as per the provisions of Section 20 of the Code of Civil Procedure. Such construction is neither desirable nor in the interest of justice as the object of the Act of 1996 is to remove such hurdles as can be discerned on a reading of the aims and objects Clause. Similar construction will have to be given also in respect of enforcement of foreign award.

3. In my opinion therefore, once the power has been conferred on this Court to entertain the application either under Part I or under Part II, Clause 12 would be attracted and as such would include the power to grant leave to a party who seeks to invoke it. The Act of 1996 confers power on this Court in the exercise of its Ordinary Original Civil Jurisdiction. To understand what is its Ordinary Original Civil Jurisdiction, one has to refer to the Amended Letters Patent. In my opinion, therefore, the Judgment in Harishankar firstly was under the Arbitration Act, 1940 but secondly did not consider the provisions of Section 120

of the Code of Civil Procedure. That Judgment therefore, will have no binding effect warranting reference of the issue by this Court to a larger Bench of this Court. It is further made clear that it is only when there is conflict in the ratio decidendi as culled from the Judgments can it be said that there is conflict. If the ratio culled discloses that the Judgment was passed by ignoring provisions of the Act which confer jurisdiction then that ratio of that judgment cannot be said to be binding. Law of precedents is the ratio decidendi of the Judgment. Judicial consistency must be in respect thereof. A Judgment ignoring relevant provisions of law would not be a binding precedent.

4. We then come to the issue as to the meaning of the expression subject matter of the Award and whether that would mean also subject matter of the arbitration proceedings. This is important because under Section 2(e) the expression with reference to the expression Court means the subject matter of the arbitration. The subject matter of the arbitration would include contracts. The subject matter of an Award cannot include a contract as adjudication in respect of the claims under the contract has been done and has resulted into an award. The subject matter of the Award therefore, is liable to be construed to mean what is the relief finally awarded by the Award. It may be in the form of money, it can be for specific performance, or the like. Under the Foreign Awards (Recognition and Enforcement) Act, 1961, the said issue was in issue before the Apex Court in the case of Brace Transport Corporation of Monrovia Bermuda v. Orient Middle East Lines Ltd. Saudi Arabia and Ors., 1993(4) Scale 33. Two paragraphs from the judgment may be reproduced.

"14. It was then submitted by Dr. Ghosh that the subject matter of the award was money and the 1st and 2nd respondents had money in the jurisdiction of the Bhavnagar Court in the form of part of the purchase price of the said vessel payable to them by the 3rd and 4th respondents."

"15. This being an award for money its subject matter may be said to be money, just as the subject matter of the money decree may be said to be money."

It is therefore, clear that in respect of an award for money, subject matter can be said to be money. In other words, therefore, petition for enforcement of the foreign award can be filed in the Court where the party may have money. This is important consideration considering a party need not be tied down as in the case of Part I where the subject matter is the subject matter of the arbitration. In other words, if the party has a foreign award in its favour, it can seek to enforce the award in any part of the country where it is sought to be enforced as long as money is available or suit for recovery of money can be filed. In my opinion, therefore, expression subject matter of the award to the explanation under Section 47 is different from the expression subject matter of the arbitration under Section 2(e) of Part I of the Act.

A foreign award if allowed to be enforced is a deemed decree. It can be enforced anywhere that the respondents may have money. In other words it is in the nature of forum hunting. The expression subject matter of the award and the subject matter of the arbitration agreement are two different and distinct expressions. In respect of a foreign award, if the expression subject matter of the award was to mean the same thing as the subject matter of the arbitration

agreement, in most cases there would be no Court available where the award could be enforced as the entire cause of action in respect of the subject matter of the arbitration could be the foreign country. Merely because in the instant case, the contract was entered into in India cannot result in a different interpretation. The expression as the explanation itself permits forum hunting if that expression can be used. After considering all these provisions a similar view was taken in Arbitration Petition Lodg. No. 427 of 2001 in the case of Naval Gent Marline Ltd. v. Shivnath Rai Harnarain (I) Ltd. and Ors., decided on 5th July, 2001 in which at the ad interim stage, apart from other issues, the issue as to the meaning of the expression "subject matter of the award" was in issue and has been similarly answered.

In the instant case, defendants do not have their office or carry on business within the jurisdiction of this Court. The Offices are either at Gandhidham or Ahmedabad. It is not averred in the petition that the respondents have any money within the jurisdiction of this Court. In these circumstances, to my mind in the absence of the subject matter of the Award being within the jurisdiction of this Court, this Court would have no jurisdiction to hear and decide this petition.

5. Lastly, even otherwise, from the reading of the language of Clause 12 leave has to be sought before the application under Section 47 is made. In the instant case, leave was sought after the application was made. It is settled law in this Court that such application is not maintainable. In the light of that, application for leave must be rejected.

Once the application for leave is rejected and once it is held that subject matter of the Award is not within the jurisdiction of this Court, the petition itself before this Court is not maintainable and consequently is liable to be rejected being without jurisdiction. On the petitioners filing zerox copies of the original documents filed before this Court office to return original to the petitioners to enable them to take out appropriate proceedings before the Court of competent jurisdiction.