Tata Motors Finance Limited vs Bhagwan Das Auto Finance Ltd
2009 Latest Caselaw 81 Bom

                           1


       IN THE HIGH COURT OF JUDICATURE AT BOMBAY
         ORDINARY ORIGINAL CIVIL JURISDICTION




                                                         
          ARBITRATION PETITION NO.664 OF 2009




                                 
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     ARBITRATION   PETITION (LODGING)       NO.860 OF 2009
   



     TATA MOTORS FINANCE LIMITED              ..Petitioner





                V/s.

     BHAGWAN DAS AUTO FINANCE LTD.             ..Respondents
     & ANR.





     Mr.Chinmay S.   Gupte i/b.Mohit Gadkari & Co.,
     Advocate, for   the petitioner
     Sonali Shinde   i/b.M/s.Consulta Juris,
     Advocate, for   the respondents

                   CORAM    :       ANOOP V. MOHTA, J.

                   DATE     :       14TH DECEMBER, 2009








     P.C.




                                                                        
                                                
     .          The matters are on the final hearing

     board.




                                               

2. The petitioner has invoked Section 9

of the Arbitration and Conciliation Act, 1996

(for short

Arbitration Act) thereby seeking

interim protection against respondent No.1,

who is also a Company registered under the

provisions of the Company Act, having his

Office at Kolkata and is also doing business

of finance with the due permission/license

from the Competent Authority.

3. The basic objection raised is with

regard to the jurisdiction of this Court in

view of the fact that an Agreement between the

parties took place at Kolkata. The

respondents' Office is also situated at

Kolkata. The vehicles are also at Kolkata.

Therefore, there arose no cause of action in

Mumbai.

4. The Arbitration Clause and

Jurisdiction Clause 23 and 24 are reproduced

herein as under :-

23.ARBITRATION :

All disputes, differences

and/or claims arising out of this Loan Agreement or as to the construction, meaning or effect hereof or as to the

rights and liabilities of the parties hereunder shall be

settled by arbitration to be held in Mumbai in accordance with the Arbitration and Conciliation Act, 1996, or any

statutory amendments thereof and shall be referred to a person to be appointed by the Lender. In the event of death, refusal, neglect,

inability or incapability of the person so appointed to act as an Arbitrator, the Lender may appoint a new arbitrator. The award of the arbitrator shall be final and binding on all parties concerned.

24.JURISDICTION :

Subject to the provisions of

clause 23 above, any suit, petition, reference or other filing permitted or required to be made pursuant to the

Arbitration and Conciliation Act, 1996 in respect of the matters arising out of this Agreement including, without limitation, a petition for

appointment of an arbitrator or arbitrators under section

11 of the Arbitration and Conciliation Act, 1996 shall be instituted only in

competent courts at Mumbai.

5. The above two Clauses provide that the

parties have specifically agreed that the

place of Arbitration, as well as, the Court at

Mumbai shall have jurisdiction with regard to

any dispute or difference that may arise out

of this Agreement. Clause 24 provides that

even Petition under Section 11 of the

Arbitration Act should be filed/instituted in

the Court at Mumbai. Having once agreed under

the above two Clauses and even for the

Petition under Section 11 of the Arbitration

Act, there is no reason that the present

application under Section 9 of the Arbitration

Act is not maintainable at Mumbai.

6. I have already observed in the

Judgment bearing Arbitration Petition No. 152

of 2009, Networth Stock Broking Ltd. Vs.

Madhava Rao Nadella, dated 7th November, 2009

as under:-

9. This admitted clause of Arbitration

and submission to the jurisdiction of Mumbai

Court in a Commercial Transaction like this,

in my view, sufficient to pass interim

protection/ measure as passed in other

connected matters. I have already observed in

number of cases by relying on various Supreme

Court as well as the Bombay High Court

Judgments as under:-

4. The Apex Court in Rajasthan State

Electricity Board V/s. Universal

Petrol Chemicals Ltd. (2009) 3 Supreme

Court Cases 107 has reiterated in

following words about agreed

territorial jurisdiction :

Paragraph No. 27 :

The aforesaid legal proposition settled by this Court in respect of territorial jurisdiction and applicability of Section 20 of the

Code to the Arbitration Act is clear, unambiguous and explicit. The said

parties

position is binding on both the who were contesting present proceeding. Both the parties the

with their open eyes entered into the aforesaid purchase order and agreements thereon which categorically provide that all disputes arising between the parties

out of the agreements would be adjudicated upon and decided through

the process of arbitration and that no court other than the court at Jaipur shall have jurisdiction to

entertain to try the same. In both the agreements in Clause 30 of the general conditions of the contract it was specifically mentioned that the contract shall for all purposes be construed according to the laws of

India and subject to jurisdiction only at Jaipur in Rajasthan Courts only and in addition in one of the purchase order the expression used was that the court at Jaipur only would have jurisdiction to entertain or try the same.

Paragraph No. 32 :

We may also at this stage

appropriately refer to the definition of the word court as appearing in Section 2(c) of the Act wherein the expression court is defined to mean

:

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 the suit, but does

not, except for the purpose of arbitration proceedings under Section 21 include a Small Cause Court.

Paragraph No. 35 :

The parties have clearly stipulated and agreed that no other

Court, but only the Court at Jaipur will have jurisdiction to try and decide the proceedings arising out of the said agreements, and therefore,

it is the civil court at Jaipur which would alone have jurisdiction to try and decide such issue and that is the Court which is competent to entertain such proceedings. The said Court

being competent to entertain such proceeding, the said Court at Jaipur alone would have jurisdiction over the arbitration proceedings and all subsequent applications arising out of the reference. The arbitration proceedings have to be made at Jaipur Court and in no other Court.

10. The Apex Court in Shree Baidyanath

Ayurved Bhawan Private Limited Vs. Praveen

Bhatia & Ors., (2009) 8 S.C.C. 779 has

reiterated by relying on Rajasthan SEB (Supra)

that the agreement between the parties with

regard to the jurisdiction of the Court needs

to be accepted.

11. There is admittedly no complete

ousting clause of exclusion of jurisdiction of

this Court. [(2009) 8 S.C.C. 646, Nahar

Industrial Enterprises Limited Vs. Hong Kong

And Shanghai Banking Corporation]

12. The legislative intent is that the

parties are abide by the terms of the

arbitration Clause. [(2009) 8 S.C.C. 520,

Indian Oil Corporation Limited Vs. Raja

Transport (P) Ltd.

13. In Adhunik Steels Ltd. V/s. Orissa

S.C.C. 125), the Apex Court observed are as

under :

It is true that Section 9 of the Act speaks of the Court by way of an interim measure passing an order

for protection, for the preservation, interim custody or

sale of any goods, which are the subject-matter of the arbitration agreement and such interim measure

of protection as may appear to the court to be just and convenient. Moreover, when a party is given a right to approach an ordinary court

of the country without providing a special procedure or a special set

of rules in that behalf, the ordinary rules followed by that court would govern the exercise of

power conferred by the Act. On that basis also, it is not possible to keep out the concept of balance of convenience, prima facie case, irreparable injury and the concept

of just and convenient while passing interim measures under Section 9 of the Act.

There is no dispute that both the

parties/institutions have executed such

Agreement. Having once enjoyed the vehicles

based upon this Agreement, I am inclined to

come to the conclusion that this Court has

jurisdiction. The Arbitration Petition under

Section 9 of the Arbitration Act at Mumbai is

maintainable.

                                         
     7.        Admittedly,      Arbitration           Clause           has




                               
     already invoked.        The respondents have also

     raised    such
                   ig   issue      before        the         Arbitral

     Tribunal, Mumbai.
                 

     8.        Admittedly,       the      respondents                have
      

enjoyed the possession of the vehicles based

upon the Agreement dated 14th December, 2006.

The respondents had paid the same instalments

upto December, 2008. They stopped making

payment thereafter. Therefore, arose the

arbitral dispute between the parties.

9. With regard to the authorization and

verification of the present Arbitration

Petitions, the submission is made that there

is nothing on record to show that Mr.Pramod

Gode, Legal Manager, of e-Nxt Financials Ltd.

(e-Nxt) has been specifically authorized by

the Company to file the present Petitions.

There is a document dated 26th May, 2009,

signed by one Mr.Rahul Sundaram, a Constituted

Attorney, authorizing Mr.Pramod Gode, Legal

Manager, to file such petitions, including

Petitions under Section 9 of the Arbitration

Act. Thus, the objection which was raised in

a situation like this has been considered by

the Apex Court in United Bank of India Vs.

Naresh Kumar & Ors., AIR 1997 S.C. 3, that

such a technical reason as a plaint is not

signed by competent person which does not go

to the root of the matter and even if any,

such defects are curable basically in a suit

filed by a bank for recovery of the amount

from the borrower, as well as, the guarantors.

Even otherwise, it is difficult to accept the

case of the respondents that the petition is

filed without any authorization to the

authorized signatory.

10. After considering the averments made

in the Arbitration Petition and as there is no

denial to the basic liability. On the

contrary, there is a denial at this stage by

the respondents even the Agreement itself.

This, in my view, is also an additional factor

which goes in favour of the petitioner. The

contract of the parties also grants such

interim protection. The fact remains that the

respondents even enjoyed those vehicles based

upon the Agreement dated December, 2006.

Admittedly, all these vehicles are under the

control of the respondents. Therefore, I am

inclined to confirm the earlier Order dated

12th October, 2009.

11. With regard to the prayer of

appointment of the Court Receiver I am

granting liberty to the petitioner to take out

appropriate application either by filing a

fresh Arbitration Petition and/or by applying

before the Tribunal with detailed particulars.

Respondent No.1 is also a financial

institution and is doing business of finance.

Such finances are always under the License and

control of Reserve Bank of India. Therefore,

at this stage, there is no such averment made

to grant appointment of Court Receiver, as

prayed.

Resultantly, in all the above

Arbitration Petitions the respondents are

common/same. Therefore, the above Arbitration

Petitions are allowed in terms of prayer

clause (d) only.

12. The learned counsel for the

respondents relied upon the Judgment of the

Apex Court reported in 2004-AIR (SC)-0-2432 in

the case of HANIL ERA TEXTILES LTD. VS.

PUROMATIC FILTERS (P) LTD. and contended that

this Court at Mumbai has no jurisdiction. On

the contrary, this Judgment itself has

observed by referring Clause 17 of the

Agreement whereby parties ought to have

invoked the jurisdiction of the Court at

Mumbai. The Hon'ble Apex Court has observed

that Delhi Court has no territorial

jurisdiction to try the suit. Therefore, in

my view, this Judgment is of no assistance to

the respondents. On the contrary, supports

the petitioner's case.

13. All the above Arbitration Petitions

are, accordingly, partly allowed. Interim

relief in terms of prayer Clause (d) only with

liberty.

14. No Order as to costs.

(ANOOP V. MOHTA, J.)