Pin Code 584102) Karnataka State vs Industrial Facilitation Council
2013 Latest Caselaw 185 Bom

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               IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                              BENCH AT AURANGABAD




                                                                                                       
              CIVIL REVISION APPLICATION NO. 179 OF 2013




                                                                               
    M/s Bhandari Udyog Limited,
    No. 51, Rajendra Ganj, Raichur




                                                                              
    (Pin Code 584102) Karnataka State,
    through its Managing Director,
    Mr. Sowbhagraj Bhandari,                        PETITIONER
    R/o Raichur, District                       (Orig. Respondent 




                                                                
    Raichur                                         No.1.)



    1.
                           VERSUS
                                      
               Industrial Facilitation Council,
               Office of the Commissioner,
                                     
               For Industrial Development in
               Karnataka and Director of 
               Industries and Commerce,
               No. 14/3A, Nrupathunga Road,
      

               Bangalore.
   



    2.         Indira Sahakari Sut Girani Ltd.,
               Latur (Maharashtra), through its     RESPONDENTS
               Managing Director, R/o Latur,    (Respdt. No.1 is 
               Tq. and District Latur           orig. Respdt. No.





                                                                                       2   and   Respdt.   No.
                                                                                      2 is orig.
                                                                                     Applicant)

               .....
    Mr. S.P. Urgunde, Advocate for the Petitioner.





    Mr. Amit S. Deshpande, Advocate for the respondent No. 2.
               .....

                                                             CORAM             : M.T. JOSHI, J.

    DATE OF JUDGEMENT RESERVED  : 25th September, 2013
    DATE OF JUDGEMENT PRONOUNCED : 21st November, 2013




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    JUDGEMENT :

1. Rule. Rule made returnable forthwith. With

consent of learned counsel for both sides, heard

finally.

2. An application under section 34 of the

Arbitration and Conciliation Act, 1996 (for short,

"the Act") filed in the District Court, Latur by

present respondent No. 2 was held maintainable being

within the territorial jurisdiction of that Court.

Therefore, the original respondent No. 1 has

preferred the present Civil Revision Application.

3. Present petitioner i.e. original Respondent

No. 1 is an industry situated at Raichur, District

Raichur in the State of Karnataka. It filed

application under section 11 of the Act in the High

Court of Karnataka at Bangalore, which was decided by

the Designate of the Hon'ble Chief Justice of the

High Court of Karnataka. It was the case of the

petitioner that a dispute existed regarding payment

of Rs. 20,25,213.54 paise from the respondent No. 2

i.e. Indira Sahakari Sut Girani Ltd., Latur. In the

circumstances, in view of section 6 (1) of the

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Interest on Delayed Payments To Small Scale And

Ancillary Industries Undertakings Act, 1993 (for

short, "the IDP Act"), the parties can be referred to

the Industrial Facilitation Council for acting as an

Arbitrator - the present respondent No. 1.

4. The present respondent No. 2 contested the

application. It submitted that there is no agreement

to refer the dispute to the Arbitration. There is

also no relationship of supplier and buyer between

the parties. The Chief Justice Designate, relying on

the ratio in "Konkan Railway Corporation Limited Vs.

Mehul Construction Company" AIR 2000 S.C. 2821 and

"Konkan Railway Corporation Limited Vs. Rani

Construction Private Limited", AIR 2002 S.C. 778, as

were holding the field at the relevant time, held

that under section 11 of the Act, the Chief Justice

of the High Court or His/Her Designate is not

required to examine any question, except as to

existence of arbitration agreement. Therefore,

observing that it would be open to the respondent

i.e. present respondent No. 2 to place necessary

material before the Arbitral Tribunal to show that

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the claim is not maintainable and not arbitrable, the

parties were referred to present respondent No. 1 -

Industrial Felicitation Council at Bangalore.

5. The respondent No. 1 Council entered into

the arbitration. The case of the present respondent

No. 2 that there is no contract between the parties

and that it had a contract with selling agent Mr.

S.R. Mundada of Solapur, was pressed into service.

The copy of the award shows that the Arbitral

Tribunal i.e. respondent No. 1 Council sent notices

to said agent Mr. Mundada, which could not be served

and ultimately, concluded that the respondent No. 2

shall pay the sum with interest at the rate of 6% per

annum.

6. Aggrieved by the said award, the respondent

No. 2 has filed application under section 34 of the

Act in the District Court at Latur. The issue of

territorial jurisdiction was raised before the

District Court. The learned Principal District Judge

held that the Court has jurisdiction. Therefore, the

present Revision Application.

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7. Mr. S.P. Urgunde, learned counsel for the

petitioner submits that the application under section

11 of the Act was filed in the High Court of

Karnataka. The respondent No. 1 Council at Bangalore

has passed the award. Therefore, in view of

provisions of section 42 of the Act, the District

Court at Latur would have no jurisdiction to

entertain the application under section 34 of the

Act. He relies on the ratio in the cases of

"Khaleel Ahmed Dakhani Vs. Hatti Gold Mines Co. Ltd."

(2000) 3 S.C.C. 755 and "Jindal Vijayanagar Steel

(JSW Steel Ltd.) Vs. Jindal Praxair Oxygen Co.

Ltd." (2006) 11 S.C.C. 521.

8. On the other hand, Mr. Amit S. Deshpande,

learned counsel for respondent No.2, submits that the

application under section 11 of the Act or the place

of arbitration are irrelevant. The alleged cause of

action has arisen at Latur, since the cotton bales

were delivered at Latur and payment was made from

Latur. He relies on the ratio in the following four

authorities :

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    (i)                    Ion Exchange (India) Ltd. Vs.
                           Paramount Ltd. 




                                                                                                       
                           2006 (4) Bom CR 545




                                                                               
    (ii)                   Rodemadan India Ltd. Vs.

International Trade Expo Centre Ltd.

AIR 2006 S.C. 3456

(iii) ITI Ltd., Naini, Allahabad Vs. District Judge, Allahabad AIR 1998 Allahabad 313

(iv) Etizen Bulk A/S Vs.

Ashapura Minechem Ltd.

(Notice of Motion No. 3975/2009 in

Arbitration Petition No. 561/2009 Bombay High Court.

9. Upon hearing both sides, in my view, the

order of learned Principal District Judge, Latur

needs no interference, for the reasons to follow :

R E A S O N S

10. Section 42 of the Act provides as under :-

"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

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arbitral proceedings shall be made in that Court and in no other Court."

11. The provision would show that if earlier any

application is made to a Court, then the said Court

alone shall have jurisdiction over the arbitral

proceedings and all subsequent applications arising

out of that agreement.

12. The definition of the "Court", as found in

Section 2 (1) (e) of the Act 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 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."

13. It is thus clear that an application under

section 11 of the Act made either with the Chief

Justice of the High Court of His/Her Designate, would

not be an application in a "Court". The "Court",

according to the provisions of the Act, is a

principal Civil Court of original jurisdiction in a

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district, and includes the High Court in exercise of

its ordinary original civil jurisdiction. There

cannot be any different opinion that the High Court

of Karnataka is not having any original civil

jurisdiction. In the circumstances, it is clear that

prior to the filing of the present application under

section 34 of the Act, there was no any prior

application under the Act to any "Court".

14.

In "Khaleel Ahmed Dakhani Vs. Hatti Gold

Mines Co. Ltd." (cited supra), relied upon by the

learned counsel for the petitioner, arbitration

clause between the parties therein provided for a

jurisdiction only with a Court at Bangalore. An

application under section 34 challenging the award

was filed in the Court of Principal City Civil Judge,

Bangalore. While the said application was pending,

application under section 36 of the Act for execution

of the award was filed in the Court of Principal

District Judge, Raichur. In those circumstances, it

was held that the Principal District Judge, Raichur

should not have entertained the application. The

facts thus would make it clear that as the

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application under section 34 was already moved in the

Court of Principal City Civil Judge, Bangalore,

subsequent application to any other Court was barred

by the provisions of Section 42 of the Act. The

authority, therefore, has no application in the facts

of the present case.

15. In the case of "Jindal Vijayanagar Steel

(JSW Steel Ltd.) Vs. Jindal Praxair Oxygen Co. Ltd."

(cited supra), relied on by the learned counsel for

the petitioner, the Bombay High Court as a Chartered

High Court exercising its ordinary original civil

jurisdiction under its Letters Patent, held that

since the respondent in the petition under section 9

of the Act, after entering into an agreement to refer

the dispute to the arbitration, has changed its

registered address to Mumbai, it being the Court as

defined by section 2 (1) (e) of the Act, would have

jurisdiction to consider the same. In those

circumstances, it was held by the Supreme Court that

change in the registered address of the respondent,

after the parties entered into arbitration agreement,

would not clothe the Court with jurisdiction. The

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other contentions about the applicability of section

20 of the Code of Civil Procedure to the High Court

as a Court of original civil jurisdiction, were also

considered.

16. In the present case, what we find is that

there is no previous application to any "Court" prior

to the filing of the present application under

section 34 of the Act. The Chief Justice of High

Court dealing with the application under section 11

of the Act is not a "Court", as defined in the Act.

The pleadings of the respondent No. 2 in his petition

would show that the contract of supply of cotton

bales was entered into between it and Shrikant R.

Mundada from Solapur. Admittedly, the bales were

supplied at Latur. It is not the case of any of the

parties that the agreement of supply of bales was

entered into at Raichur. In view of all these facts,

the ratio laid down in the authorities, relied on by

the learned counsel for the respondent No. 2, as

detailed supra, would be applicable in the facts of

the present case. In the result, the following

order :-

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17. The Civil Revision Application is dismissed,

without any order as to costs. Rule discharged

accordingly.

[ M.T. JOSHI ] JUDGE

npj/cra179-13