Bombay High Court
M/S. Roman Tarmat Ltd vs Ivrcl Ltd. Behind Amar Son on 16 October, 2012
Bench: R.D. Dhanuka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION (L) NO. 1293 OF 2012
M/s. Roman Tarmat Ltd.
A Public Limited Company incorporated under the
provisions of the Companies Act, 1956
having its registered office at Tank Road,
Off General Vaidya Marg, Goregaon (E),
Mumbai 400 063 ... Petitioner
Versus
M/s. (Indukuru Venku Reddy Constructions) IVRCL),
a Public Limited company incorporated under the
provisions of the Companies Act, 1956
having its registered office at M-22/3, R.T. Vijay Nagar
Colony, Hyderabad and Regional Office at No. 30-A,
South Phase, 6th Cross Road, Thiru Vika Industrial Estate,
Guindy, Chennai 600 032 and
also having office at IVRCL Ltd. MCGM Bhandup
Complex, Bhandup (W) area, Khnidipada,
MumBai 400 078 and
IVRCL Ltd. Behind Amar Son, S.V. Road,
Road NO. 36, Bandra (West), Mumbai 400 050 ...Respondent
Mr. Shailesh Shah, Senior Advocate i/by Prashant Jadhav for the petitioner.
Mr. Rajiv Narula alongwith Ms. Shweta Doshi i/by M/s. Jhangiani Narulla &
Associates for the respondent.
CORAM : R.D. DHANUKA, J.
DATE : 16TH OCTOBER, 2012.
JUDGMENT :
1. By this petition under section 9 of the Arbitration and Conciliation Act, 1996
petitioner seeks an order of injunction restraining the respondent in any manner
utilizing the amount of Rs.14,59,19,989/- received by the respondent from
encashment of the bank guarantee and for a direction to the respondent to secure the
petitioner to the extent of the said amount by depositing the same in this court. The
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respondent has raised a preliminary objection about territorial jurisdiction of this
court to entertain, try and dispose of the present petition filed under section 9 of the
Act in its affidavit in reply. This court has thus directed both the parties to address
this court on the preliminary objection raised by the respondent. Some of the relevant
facts on this issue are as under :
2. By Piece Rate Work Contract executed on 16 th June, 2010 at Chennai by and
between the petitioner and respondent, the petitioner was awarded the project of
construction of automotive test tracks at GARC, Chennai. The respondent has been
awarded the said contract by NATRIP implementation society having its office at
New Delhi. The work has to be executed under the said contract at Chennai. The said
agreement indicates that the respondent is a public limited company having its
registered office at M-22/3, R.T. Vijay Nagar Colony, Hyderabad and having its
regional office at no. 30-A, South Phase, 6th Cross Road, Thiru Vika Industrial Estate,
Guindy, Chennai and is engaged in the business of construction of infrastructure
projects and represented by its Deputy General Manager (Projects), Chennai region.
Clause 26.1 and 2 and 27 of the said contract rads thus :
"26.1. Where a dispute arises under both the Main
Contract and this PRW contract with respect to the same
subject mater, the resolution of the dispute under this PRW
contract shall not be proceeded with, while dispute under the
Main Contract is in progress. Further more, RTI shall be
bound by the resolution of the dispute under the Main
Contract.
26.2. Subject to clause 25 and clause 26.1, other disputes
shall be resolved by mutual discussions by the Parties. In case
of failure to arrive a decision by mutual discussion, the officer
of IVRCL and who is not connected with this work, to be
nominated by the Manging Director of IVRCL. The award of
the Arbitrator so nominated shall be final, conclusive and is
binding on the parties to this Contract. The Arbitration shall be
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conducted in accordance with the Arbitration and Conciliation
Act, 1996. The venue of arbitration shall be Chennai, India.
The fees and other expenses to be paid to the Arbitrator shall
be borne by the Invoking party. All other expenditure such as
venue, attorney fees, making and presenting their case etc.
shall be borne by the respective parties on their own.
27. GOVERNING LAW : This PRW Contract shall be
governed by and construes in accordance with the laws of
India and under the exclusive jurisdiction of courts at
Chennai."
3. The said contract has been admittedly executed at Chennai. The Petitioner
had issued seven bank guarantees in favour of the respondent through Vijaya Bank,
Vile Parle, Mumbai branch. One bank guarantee out of the said seven bank
guarantees was given as performance bank guarantee and remaining against
mobilization advance given by the respondent to the petitioner. It is the case of the
petitioner that the respondent encashed all the seven bank guarantees and recovered
payments through bankers of the petitioner at Mumbai. The Petitioner has filed this
proceedings against the respondent seeking mandatory injunction to deposit the
amount of Rs.14,59,19,989/- in this Court which was encashed by the respondent by
invoking the bank guarantees. In Para 26 of the Petition, it is averred that the cause
of action arose on 15th September, 2012 when the respondent had invoked through
fax and encashed the bank guarantees issued by Vijaya Bank. In Para 23, the
petitioner has made averments stating as to how this court has jurisdiction to try,
entertain and dispsoe of this petition which reads thus :
"23. The Agreements in question were executed at Chennai and the
project work awarded to the Petitioner is also situated at Chennai.
However, the respondent has office behind Amar Son, S.V. Road, Road No.
36, Bandra (W), Mumbai 400 050 and also at MCGM Bhandup Complex,
Bhandup (w), Mumbai 400 078. The Respondent group company are also
having its Registered office at Dorr Oliver House, Chakala, Andheri (E),
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Mumbai 400 099. The Respondent is carrying out its business from the
aforesaid offices in Mumbai and this Hon'ble Court being a chartered
High Court and therefore, this court has jurisdiction to try, entertain and
dispose off this Petition since Clause 12 of Letters Patent is applicable in
the instant case. Further the cause of action arose in Mumbai since Vijaya
Bank Vile Parle Branch which issued all the Bank Guarantees were
provided by the Petitioner from Mumbai."
4. The respondents have filed affidavit in reply raising the issue of jurisdiction of
this court to entertain the above petition. It is stated that the agreement in question
was executed at Chennai. The project work was also awarded by the respondent to
the petitioner at Chennai. The registered office of respondent is situated at
Hyderabad. The regional office of the respondent is at Chennai. Under Clause 27 of
the contract, both the parties have explicitly, clearly and specifically agreed to confer
exclusive jurisdiction on the courts at Chennai. It is stated that the petitioner and the
respondents had agreed that the said contract shall be governed and construed in
accordance with the laws of India and under the exclusive jurisdiction of the courts
at Chennai and thus this court has no jurisdiction to try, entertain and dispose of this
petition. It is submitted that clause 12 of the Letters Patent would not be applicable
to this petition. It is submitted that in view of clause 27, both the parties have inter
alia conferred exclusive jurisdiction on the courts at Chennai and thus only the
courts at Chennai alone shall have jurisdiction to try and decide the disputes arising
out the the contract. It is stated that the respondent company is engaged in the
business of construction and has set up temporary communication centers at all the
places where the projects are undertaken by them. The respondent has denied that the
respondent is carrying out any business at Bandra and or Bhandup or that it has any
office at such places. It is stated that the respondent does not have any subordinate
office in Mumbai. The learned counsel appearing for the respondents however,
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admitted that two of the projects awarded to the respondent by its clients are being
executed at Mumbai. However, it is denied that any subordinate office or any other
office of permanent basis started by the respondent at Mumbai.
5. The learned senior counsel for the petitioner submits that the cause of action
for filing section 9 application arose at Mumbai. The bank guarantees were furnished
by the petitioners to the respondents through bankers of the petitioner at Mumbai.
The bank guarantees were encashed by the respondents at Mumbai. By this petition,
the petitioners are seeking an order of interim measures against the respondents and
by mandatory order to deposit the amounts realized by the encashment of the bank
guarantees or to provide security in the like amount in this court. It is submitted that
thus for interim measures this court has jurisdiction under section 9 of the Act. It is
not disputed that the work is being carried out at Chennai, the registered office of
the respondent is at Hyderabad and the regional office is at Chennai. It is not in
dispute that both the parties have agreed that venue of arbitration will be
Chennai and the contract shall be governed by and construed in accordance with the
laws of India and under exclusive jurisdiction of courts at Chennai. It is submitted
that though for the main reliefs which the petitioner would be applying for against
the respondent, the court at Chennai would have jurisdiction to entertain, try and
dispose of the proceedings, however in view of the bank guarantees having been
encashed at Mumbai, this court has jurisdiction to entertain this petition for interim
measures.
6. The learned counsel for the petitioner submits that in view of clause 12 of the
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Letters Patent, and in view of the fact that the respondents are carrying on business at
Mumbai and the bank guarantees have been encashed at Mumbai, the part of the
cause of action has arisen at Mumbai and thus this court has jurisdiction to entertain,
try and dispose of the petition. Clause 12 of the Letters Patent describes the
jurisdiction of the chartered high courts and reads as under :
"Original jurisdictions as to suits.- 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 , or the Bombay City Civil Court."
7. The learned counsel placed reliance on the judgment of the Supreme Court in
the case of Jindal Vijayanagar Steel (JSW Steel Ltd. ) Vs. Jindal Praxair
Oxygen Company Ltd.1 in support of the plea that if the respondent carries on
business at Mumbai and even if no cause of action has arisen at Mumbai, in view
of clause 12 of the Letters Patent, this court would have jurisdiction to decide the
petition. The learned senior counsel places reliance on Para 39, 49, 52, 53, 65, 66,
74 and 82 of the said judgment which reads as under :
"39.Under Clause 12 of the Letters Patent, the Bombay High Court would
have jurisdiction to entertain and try an Arbitration Petition even if no
cause of action has arisen within its jurisdiction, provided the Respondent
has an office at Mumbai.
49. The principles of Section 20 cannot be made applicable to Clause 12 of
the Letters Patent since the CPC itself by Section 120 specifically excludes the
applicability of Section 20 of the CPC to Chartered High Courts. It is submitted
that when the CPC itself provides that Section 20 is specifically excluded, the
principles of Section 20 cannot be made applicable or be attracted when a
1 2006 (8) JT 230
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corporation is being sued under the Letters Patent. The judgment of this Court in
Sarguja Transport case MANU/SC/0114/1986 : [1987]1SCR200 cannot apply
for the following reasons:
(i) the principles of CPC were made applicable to Writ Petitions on the premise
that these would not be contrary to the provisions of Article 226.
(ii) If the appellant's argument is accepted it would render Section 120 of the
CPC nugatory and otiose since Section 120 expressly refers to three sections
(i.e. Sections 16, 17 and 20) and makes them inapplicable.
(iii) The Letters Patent, is a special charter conferring jurisdiction on Chartered
High Courts. When there is a special enactment such as the Letters Patent, which
expressly lays down the criteria on the jurisdiction of the Chartered High Court,
it is totally unnecessary and in fact futile to refer to another legislation such as
the CPC (which is not applicable) to determine the jurisdiction of the Chartered
High Court.
(iv) The facts in the Sarguja Transport Case (supra) were entirely different since
there was no corresponding legislation which laid down the territorial of the
Court exercising Writ Jurisdiction.
52. Thus neither of the CPC nor its principles can be made applicable to the
Letters Patent qua Sections 16, 17 and 20 of CPC. It is therefore not only
impermissible but also unnecessary to apply the CPC or import the principles of
Section 20 of the CPC into the Letters Patent more so when the court has
already held in the FCI case that the jurisdiction of the Civil Court under Section
20 of CPC is different from the jurisdiction of the High Court under Clause 12
of Letters Patent.
53. The appellant has urged that P.S. Satthappan's case will apply
only in case there is a conflict between the Letters Patent and the CPC
and that there is no conflict. Such a submission, in our view, is clearly
fallacious for the following reasons:
(i) the Letters Patent and CPC operate in separate fields i.e. The Letters Patent
specifically conferring jurisdiction on Chartered High Courts and the CPC
conferring jurisdiction on all other courts.
(ii) There is clearly a difference between the scope of the Letters Patent and the
CPC. The difference being evident upon a plain reading of Section 120 of the
CPC.
65. Though the Bombay High Court has in the impugned order dated
2.3.2006 observed that no part of the cause of action has arisen at
Mumbai, it is submitted that the cause of action against the respondents
has in fact arisen within the Ordinary Original Jurisdiction of the Bombay
High Court for the following reasons: It may be noted that the following
sub paragraphs below have been noted by the Bombay High Court in
impugned order dated 2.3.2006.
(a) The parties themselves have chosen Mumbai to be the situs for the
Arbitration proceedings (clause 17.2 (i) of the Agreement)
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(b) The arbitration clause specifically provides for a dispute resolution meeting
to be held to resolve the dispute between the parties as a pre-condition for
invocation of the arbitration clause which meeting was held at Bombay at the
request of the appellant.
(c) The Pipeline Supply Agreement (under which the disputes have arisen) was
approved by the Board of Directors of the appellant Company in Bombay .
(d) The pipeline Supply Agreement as amended was reviewed and discussed by
the Board of Directors of the appellant Company in Bombay .
(e) The Settlement Agreement dated 23.6.2003 was adopted at the meeting of
the respondent Board of Directors where the appellant's nominees on the
respondents Board were also present.
(f) That the entire Senior Management of the appellant is located at Mumbai. It
may be noted that in Mayur (H.K) Ltd. and Ors. v. Owners & Parties, Vessel
M.V. Fortune Express and Ors. MANU/SC/8083/2006 : AIR2006SC1828 this
Court (in para 27) observed that the principal place of business would be where
the governing power of the Corporation is exercised or the place of a
Corporation's Chief Executive Offices which is typically viewed as the verve
center or the place designated as the principal place of business of the
Corporation in its incorporation under various statutes.
(g) when the Section 9 petition was filed the appellant had its office at Mumbai
and was carrying on business at Mumbai and its Directors were stationed in
Mumbai.
(h) The appellant had in fact shifted its registered office to Mumbai during the
pendency of the Section 9 petition in the Bombay High Court as it was more
convenient to operate its registered office from Mumbai. It is submitted that
where a Court has jurisdiction to try the suit when it comes up for disposal, it
then cannot refuse to assume jurisdiction by reason of the fact that it had no
jurisdiction to entertain it at the date of institution as held in Sudhir G. Angur
and Ors. v. M. Sanjeev and Ors. MANU/SC/1647/2005 : AIR2006SC351 )
(i) That at the time the question of jurisdiction was heard and gone into and
decided by the Bombay High Court, the Registered Office of the appellant had
been shifted to and was in fact situated in Mumbai. The Bombay High Court in
the case of Fazlehussein v. Yusufully MANU/MH/0072/1955 : AIR1955Bom55
has held that:
Even if the Court had jurisdiction to entertain the suit as filed, if by reason of
subsequent events the Court has lost jurisdiction to entertain or try the suit, the
Court will not be justified in dealing with the suit with reference to
circumstances as they existed at the date of the institution of the suit but must
proceed to decide the dispute on the footing that if the suit had been filed at the
later date, the Court would have been incompetent to grant the reliefs in respect
of the properties and of the persons who are not within the limits of the
jurisdiction of the Court. Normally, a Court must have regard to circumstances
existing as at the date when the issue of jurisdiction is tried and must decide it
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in the light of circumstances existing as at that date.
66. It may be noted that when the Section 9 Petition was tried in Bombay on
the issue of jurisdiction, the Respondent had transferred its registered office to
Mumbai. It is submitted that the ratio for this would be that territorial
jurisdiction does not go to the competence of the Court as in the case of a court
having jurisdiction on the subject matter of the dispute.That is why if a court has
no territorial jurisdiction (but is otherwise competent to hear a matter) should the
matter be heard and decided by such Court without demur, the judgment will be
valid and not void or non est. It is for this reason that insofar as territorial
jurisdiction is concerned, the relevant time to determine the existence of the
jurisdiction would be when the matter is heard.
74. Mr. Sundaram submitted that the appellant's contention that
Bombay High Court was not a convenient forum is totally fallacious for
the following reasons apart from being taken for the first time in the oral
submissions before this Court.
(a) The arbitration hearings are being conducted at Bombay
ig as per the
Agreement. (Clause 17.2)
(b) 8 full days of hearings had already been held before this appeal was heard.
Further hearings of 4 days have also taken place on the 7th, 9th, 10th and 11th of
August, 2006 and further 5 days hearing for final and submissions are scheduled
for 16th to 20th October, 2006.
(c) The record comprises of several thousand pages of documents complied in
over 12 voluminous box files all available in Mumbai.
(d) The appellants Directors and Senior Officers are in Mumbai and have been
attending the hearings to instruct their lawyers in Mumbai.
(e) Evidence has been recorded and closed by both parties in the arbitration.
(f) The parties had agreed on Mumbai as a convenient location for the conduct
of the arbitration.
It is contended that the appellant is indulging in forum shopping to vest
jurisdiction at Bellary, Karnataka with an ultimate objective of challenging the
Award before the Civil Court at Bellary rather than the Bombay High Court.
82. For the foregoing reasons, we are of the considered opinion that the
Bombay High Court has jurisdiction to entertain Section 9 application of
the respondents herein. We, therefore, request the Bombay High Court to
proceed on merits to determine the matter in accordance with law. For the
reasons set out above, the civil appeal ought to be rejected by this Court
and we do so accordingly. No costs. In view of this order, the appellant is
directed to file their affidavit in reply on merits in the pending Section 9
proceedings."
8. The learned senior counsel for the petitioner also places reliance on the
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judgment of this court in the case of Pratap Singh Vs. The Bank of America 2.
Para 32 of the said judgment reads thus :
"32. In Kessowji Damodar Jairam v. Khimji Jairam (1888) I.L.R. 12
Bom. 507 the view was taken by the learned single Judge (Scott J.) that
Clause 12 of the Letters Patent was required to be read in the light of the
general principles of municipal jurisdiction and all legislation was prima
facie territorial. In the light of these observations the words "if the
defendant... shall... carry on business" occurring in Clause 12 were
interpreted to mean "if the defendant being a British subject... shall...
carry on business". It was further observed that where the liability of a
foreigner was in question, the "carrying on business" must include actual
residence. Applying this principle it was held that a person not a British
subject residing out of the jurisdiction but carrying on business at a
branch in Bombay through an agent was not liable to be sued in the High
Court at Bombay where the cause of action had arisen wholly outside the
jurisdiction, These principles enunciated in Kessowji's case certainly lay
down the principles which could be availed of by the defendant and had
that decision stood, the defendant could have certainly relied upon it for
the support of its contention that the same principle as was made
applicable to a foreigner should be applied to a foreign corporation and
such a corporation was not liable to be sued in Bombay in respect of the
cause of action which had wholly arisen outside Bombay . It appears,
however, that subsequently a Division Bench of this High Court in
Girdhar Damodar v. Kassigar Hiragar (1893) I.L.R. 17 Bom. 662 did not
find the earlier decision as laying down good law. In Girdhar Damodar's
case the Division Bench of the Bombay High Court was considering the
provisions contained in h. 18 of the Presidency Small Cause Courts Act
(15 of 1882), which provisions are very similar to the provisions of
Section 20 of our Code of Civil Procedure with slight differences. It was
observed in the said case that although it is true that a non-British
subject, who does not personally carry on business within the territorial
limits of the Court, does not make himself personally subject to the
municipal law of British India, still, by establishing his business in British
India, from which business he expects to derive profit, lie accepts the
protection of the territorial authority for his business and his property
resulting from it, and may be fully regarded as submitting to the Courts of
the country."
9. The learned counsel for the petitioner also placed reliance on the judgment of
this court in the case of Kotak Mahindra Finance Ltd. Vs. T. Thomas
2 decided on 30th July, 1976 in Appeal No. 53 of 1976
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Educational Trust and Others3. Para 5 of the said judgment reads thus :
"5. That would be the position under Section 20 of the C.P.C. Considering
Section 120 of C.P.C. Sections 16, 17 and 20 shall not apply to the High
Court in the exercise of its Original Civil Jurisdiction which includes this
High Court. Therefore, the judgment in M/s. Patel Roadways Ltd. (supra)
in so far as this Court is concerned will be inapplicable as the judgment is
based on the interpretation of the explanation to Section 20. Filing of Suits
on the Original Side of this court are governed by Clause 12 of the
Amended Letters Patent of this Court. The same reads as follows:-
"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 Causes
Court at Bombay , or the Bombay City Civil Court."
Applying Clause 12 it will be clear that as the defendants do not dwell, carry on
business or personally work for gain and for that matter the suit is not in respect
of immovable property situated within the jurisdiction of this Court and as no
part of the cause of action has arisen, wholly within the jurisdiction of this
Court, this Court could not be the Court having jurisdiction over the subject
matter considering Section 2(e) of the Arbitration & Conciliation Act, 1996. It
is, therefore, clear that the application under Section 9 moved before this Court
would be without jurisdiction."
10. On the other hand the learned counsel appearing for the respondent submits as
under :
The registered office of the respondent is admittedly situated at Hyderabad.
The regional office of the respondent is at Chennai. There is no subordinate office at
Mumbai. The contract was executed at Chennai. The work is being executed by the
petitioner at Chennai. Both the parties have agreed that the venue of the arbitration
would be at Chennai and both the parties would be governed by the jurisdiction
3 2003 (5) Bom. C.R. 579.
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of courts at Chennai. It is submitted that merely because two of the projects
undertaken by the respondents are at Mumbai amongst several other projects
outside Mumbai, it cannot be construed that the respondents are carrying on
business at Mumbai. The respondent does not have any office at Mumbai. The
respondent has only set up temporary communication center which cannot be
construed as office for the purposes of carrying on business. It is submitted that
even if the argument of the petitioner is accepted that the part of the cause of
action had arisen at Mumbai, it is not in dispute that substantial part of the cause of
action had arisen at Chennai and thus two courts having concurrent jurisdiction to
decide the subject matter of the dispute, the parties by agreement have chosen to
confer jurisdiction on courts at Chennai i.e. one of such courts by excluding the
jurisdiction of any other court. This court, therefore, does not have jurisdiction. It is
submitted that merely because the bank guarantees were furnished from Mumbai
and are encashed at Mumbai, that does not confer jurisdiction on the courts in
Mumbai. It is submitted that ultimately the petitioner would have to invoke
arbitration clause for the purpose of seeking reliefs of the amount recovered by the
respondents by encashment of bank guarantees, which would be only at Chennai. If
the main reliefs would have to be tried at Chennai, proceedings for interim reliefs
cannot be filed at Mumbai. The reliance is placed on section 42 of the Arbitration and
Conciliation Act, 1996 in support of the plea that if this application is entertained
by this court which has no jurisdiction, all subsequent applications arising out of that
agreement and the arbitral proceedings shall have to be made in this court and not
other court which would be without jurisdiction. It is submitted that admittedly the
cause of action had arisen at Chennai, even according to petitioner in so far as
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execution of contract, execution of work, registered office of the respondents having
situated at Hyderabad, the regional office of the respondent is situated at Chennai
and the agreement conferred jurisdiction at courts at Chennai, no interim relief can be
considered by this court.
11. The learned counsel for the respondent submits that the respondent company
which is carrying out business of construction may have various projects all over
India and that does not mean that at any places where the project is being undertaken,
though no cause of action had arisen between the petitioner and respondent at that
place, where some other project is undertaken, the petitioner can file proceedings
within the jurisdiction of that court. It will lead to absurdity. The learned counsel
places reliance on the judgment of the Supreme Court in the case of Rajasthan
State Electricity Board Vs. Universal Petrol Chemicals Ltd4.
12. The question that raises for the consideration of this court is whether the
encashment of bank guarantees at Mumbai would give cause of action to file section
9 application at Mumbai when admittedly the entire cause of action has arisen at
Chennai and the proceedings for recovery of the claims would be maintainable only
before the appropriate courts in Chennai. The question arises is as to whether the
respondents carrying on two projects at Mumbai would amount to carrying on
business for the purposes of applicability of clause 12 of Letters Patent.
13. The pleadings filed by the petitioner indicates that except making a bald
statement that the respondents are carrying on business at Mumbai, the petitioner
4 2009 (3) SCC 107
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has not produced any proof in support of the said plea. The Petitioner has also not
shown any proof to show that the respondents have set up any regional office or any
other office in Mumbai for the purpose of carrying on business.
14. In my view, the judgment of the Supreme Court relied upon by the petitioner
in the case of Jindal Steel (supra) is clearly distinguishable in the facts of this case.
In that matter, the corporate office of the defendant was at Mumbai and it was
carrying on business within the local limits of the ordinary original jurisdiction of
Bombay High Court. During the pendency of section 9 petition, the registered
office of the appellant was transferred to Mumbai. When the issue of jurisdiction
was argued before the learned Single Judge of this court, the registered office of the
defendant had already been transferred to and was situated at Mumbai. The
agreement in question was approved by the Board of Directors of the defendant in
Mumbai. The parties shown Mumbai to be situs for the arbitration proceedings.
The agreement provided that the dispute resolution meeting to be held to resolve
the dispute between the parties as a pre-condition for invocation of arbitration clause
which meeting was held at Mumbai at the request of the defendant. The entire
senior Management of the defendant was located at Mumbai. When section 9
petition was filed, the defendant was carrying on business at Mumbai and its
Directors were stationed at Mumbai. Considering these facts, the Supreme Court
held that in view of clause 12 of Letters Patent, the Courts at Mumbai will have
jurisdiction.
15. However, on the facts of this case, admittedly the agreement was executed at
Chennai. The registered office of the respondent company is at Hyderabad. The
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regional office of the respondent is at Chennai. The work was being executed at
Chennai. The venue of arbitration is at Chennai. All parties have agreed in the
agreement to confer jurisdiction on court at Chennai. In my view, the judgment
thus relied upon by the petitioner in the case of Jindal Steel (supra) is of no
assistance to the petitioner.
16. I am not inclined to accept the submission of the learned counsel for the
petitioner that since the bank guarantees were obtained by the petitioner from the
bank having its office at Mumbai and the same was encashed at Mumbai and since
in this application, the petitioners are seeking direction against the respondent for
furnishing security of like amount or to deposit the same in this court, this court will
have jurisdiction to entertain, try and dispose of the section 9 application. In my
view, if the petitioner cannot make claim for substantial reliefs i.e. for reliefs of the
amount recovered by the respondent by encashing the bank guarantees and or
other ancillary reliefs at Mumbai and can claim only at Chennai, the application
for interim measures cannot be filed in this court. In view of section 42 of the
Arbitration Act, 1996, if this application is entertained in this court which does not
have jurisdiction, all subsequent proceedings shall also have to be entertained in this
court, which would be without jurisdiction. Considering the plain language of
section 42 of the Arbitration Act read with section 9 of the Arbitration Act, 1996, it is
clear that the application under section 9 has to be made before the court. The
court is defined under section 2(1)(e) of the Act which reads thus :
""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
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16 ARBPL-1293.12
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".
It is thus clear that this court does not have jurisdiction to decide the question
forming the subject matter of arbitration and thus the application filed under section
9 before this court is not maintainable.
18. The Supreme court in the case of State of Punjab and another Vs. Bajaj
Electricals Ltd.5 has considered the expression trade. The relevant portion of the
judgment of the Supreme Court reads thus :
"The expression "trade" is not defined in the Act. "Trade" in its primary
meaning is the exchanging of goods for goods or goods for money; in its
secondary meaning it is repeated activity in the nature of business carried on
with a profit motive, the activity being manual or mercantile, as distinguished
from the liberal arts or learned professions or agriculture. The question whether
trade is carried on by a person at a given place must be determined on a
consideration of all the circumstances. No test or set of tests which is or are
decisive for all cases can be evolved for determining whether a person carries
on trade at a particular place. The question, though one of mixed law and fact,
must in each case be determined on a consideration of the nature of the trade,
the various steps taken for carrying on the trade and other relevant fact."
19. In my view, merely because at the time of filing of section 9 application by
the petitioner, the respondents are having few projects at Mumbai, it cannot be
construed that the respondent has been carrying on business at Mumbai for the
purpose of jurisdiction under clause 12 of the Letters Patent. Whether any business
is carried on by the person at the given place must be determined on the
consideration of all the circumstances. The question whether the respondent has
been carrying on business at Mumbai or not is a mixed question of act and law and
has to be determined on the consideration of the nature of the business and various
steps taken for carrying on the business and other relevant facts. The petitioner has
5 AIR 1968 SC 739
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17 ARBPL-1293.12
failed to prove that the respondent has been carrying on any business at Mumbai and
within the territorial jurisdiction of this court.
20. In my view the submissions advanced by Mr. Narula, the learned counsel for
the respondent is correct that even if the part of cause of action had arisen at
Mumbai, relying upon the encashment of bank guarantees at Mumbai and part of
cause of action has arisen at Chennai, if by agreement both the parties have
conferred jurisdiction on one of such courts having concurrent jurisdiction, this
petition is not maintainable before this court.
21. I therefore, pass the following order :
This court has no jurisdiction to entertain, try and dispose of this petition. The
Petition is returned to the petitioner for presentation before appropriate court. There
shall be no order as to costs. It is made clear that this court has not expressed any
views on the merits of the case.
(R.D. DHANUKA, J.)
