Bombay High Court
M/S. Nomula Brothers vs M/S. Ruchi Worldwide Ltd on 20 July, 2016
Bench: R.D. Dhanuka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 1635 OF 2015
M/s.Nomula Brothers )
163/1A, Nallapadu Road, Guntur - 522005) ..... Petitioner
VERSUS
M/s.Ruchi Worldwide Ltd., )
Ruchi House, Royal Palms, Aarey Colony,)
Mayur Nagar, Goregaon (E), )
Mumbai - 400 065 ) ..... Respondent
Mr.P.D.Prasad Rao for the Petitioner.
Ms.Bharati Narichania, i/b. Vibha Jurisconsult Co. for the Respondent.
CORAM : R.D. DHANUKA, J.
DATED : 20th JULY, 2016
JUDGMENT
By this petition filed under section 34 of the Arbitration and Conciliation
Act, 1996, the petitioner has impugned the award dated 24 th August, 2012 passed
by the learned arbitrator of Cotton Association of India. The respondent has raised
a preliminary objection about maintainability of this arbitration petition in this
court. Since the respondent has raised an objection about the maintainability of
this petition in this court, I have heard learned counsel appearing for the parties on
the issue of maintainability of this petition in this court only.
2. Learned counsel appearing for the respondent at the first instance invited
my attention to the purchase order annexed to the notice of motion which was
issued by the respondent to the petitioner. She submits that in the said purchase
order it was clearly mentioned that the head office of the respondent is situated at
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Indore (M.P.). My attention is also invited to the annextures to the said purchase
order which provides that the contract incorporated the rules and bye-laws of the
Cotton Association of India in force at that time when the said contract was
entered into. All disputes will be settled amicably or will be referred to arbitration
in accordance with the rules and bye-laws of the Cotton Association of India. It is
provided that the said contract was subject to Indore jurisdiction.
3. It is submitted by the learned counsel for the respondent that no part of
cause of action had arisen at Mumbai. It is submitted that since the head office of
the respondent was situated at Indore, part of the cause of action had arisen at
Indore and thus in view of the agreement between the parties conferring the
jurisdiction on Court in Indore, the application filed by the petitioner under section
34 could have been filed only in the appropriate court at Indore.
4. Learned counsel appearing for the respondent placed reliance on the
judgment of Division Bench of this court dated 17 th February, 2016 in case of
M/s.Subramanya Cotton Ginning Industries vs. M/s.Ruchi World Wide Ltd. in
Appeal (L) No.209 of 2014 in Notice of Motion No.1288 of 2014 in Appeal (L)
No.209 of 2014. She submits that merely because the arbitral proceedings were
held by the learned arbitrator at Mumbai, the same would not confer any
jurisdiction on the court at Mumbai.
5. Learned counsel appearing for the petitioner on the other hand submits that
the registered office of the respondent is admittedly situated at Mumbai. He
submits that merely because the head office of the respondent is situated at Indore,
that would not confer any jurisdiction on the court at Indore. It is submitted by the
learned counsel that the respondent herein had applied for transfer of the decree in
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this court to the court at Andhra Pradesh (T.D.No.94/2013). He submits that since
the respondent had made an application under Part I of the Arbitration and
Conciliation Act, 1996 for transfer of decree in this court, in view of section 42 of
the Arbitration and Conciliation Act, 1996 all subsequent application including this
arbitration petition filed under section 34 also could be filed only in this court and
not in other courts.
6. Learned counsel appearing for the petitioner placed reliance on the judgment
of Supreme Court in case of State of West Bengal & Others vs. Associated
Contractors, AIR 2015 SC 260 and more particularly paragraph 25 which reads
thus:-
25. Our conclusions therefore on Section 2(1)(e) and Section
42 of the Arbitration Act, 1996 are as follows:
(a) Section 2(1)(e) contains an exhaustive definition marking
out only the Principal Civil Court of original jurisdiction in a
district or a High Court having original civil jurisdiction in the
State, and no other court as "court" for the purpose of Part-I of
the Arbitration Act, 1996.
(b) The expression "with respect to an arbitration agreement"
makes it clear that Section 42 will apply to all applications
made whether before or during arbitral proceedings or after an
Award is pronounced under Part-I of the 1996 Act.
(c) However, Section 42 only applies to applications made
under Part-I if they are made to a court as defined. Since
applications made Under Section 8 are made to judicial
authorities and since applications Under Section 11 are made
to the Chief Justice or his designate, the judicial authority and
the Chief Justice or his designate not being court as defined,
such applications would be outside Section 42.
(d) Section 9 applications being applications made to a court
and Section 34 applications to set aside arbitral awards are
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applications which are within Section 42.
(e) In no circumstances can the Supreme Court be "court" for
the purposes of Section 2(1)(e), and whether the Supreme
Court does or does not retain seisin after appointing an
Arbitrator, applications will follow the first application made
before either a High Court having original jurisdiction in the
State or a Principal Civil court having original jurisdiction in
the district as the case may be.
(f) Section 42 will apply to applications made after the arbitral
proceedings have come to an end provided they are made
under Part-I.
(g) If a first application is made to a court which is neither a
Principal Court of original jurisdiction in a district or a High
Court exercising original jurisdiction in a State, such
application not being to a court as defined would be outside
Section 42. Also, an application made to a court without
subject matter jurisdiction would be outside Section 42.
7. There is no dispute that the head office of the respondent is situated at
Indore. There is also no dispute that in the purchase order relied upon by the
respondent, the parties had agreed that the dispute if any between the parties was
to be referred to arbitration in accordance with the rules and bye-laws of Cotton
Association of India and that the said contract was subject to the Indore
jurisdiction. In my view since part of the cause of action had arisen at Indore and
part of cause of action within the jurisdiction of the other court, the parties could
by agreement confer jurisdiction in one of the two courts having concurrent
jurisdiction. It is not the case of the petitioner that the contract was executed
between the parties at Mumbai.
8. Insofar as the submission of the learned counsel for the petitioner that since
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the respondent had made an application for transfer of decree in this court to the
court in Andhra Pradesh and therefore in view of section 42 of the Arbitration and
Conciliation Act,1996, this court alone will have jurisdiction to entertain this
petition is concerned, in my view the application for transfer of a decree is not an
application under Part I of the Arbitration and Conciliation Act, 1996.
9. A perusal of section 42 of the Arbitration and Conciliation Act, 1996 clearly
indicates that if in respect of an arbitration agreement any application under Part I
is 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
arbitral proceedings shall be made in that court and no other court. In my view the
first application which is made before a court should have jurisdiction to entertain
that application. Secondly for the purpose of applicability of the section 42 of
Arbitration Act, the court has to decide whether the first application was the
application provided in the first part of the Arbitration and Conciliation Act, 1996.
In my view since the application for transfer of decree was not an application
under Part I of the Arbitration and Conciliation Act, 1996, section 42 of the
Arbitration and Conciliation Act, 1996 will not be attracted to the facts of this
case.
10. Insofar as judgment of Supreme Court in case of State of West Bengal &
Others (supra) relied upon by the learned counsel for the petitioner is concerned,
the issue before the Supreme Court was whether any application filed under
section 11 of the Arbitration and Conciliation Act, 1996 was an application before
a court. The Supreme Court in that context held that since the application under
section 11 which was filed in that matter before the Supreme Court which was not
a court within the meaning of section 2(1)(e) of the Arbitration and Conciliation
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Act, 1996, the application under section 34 could not have been filed before the
Supreme Court challenging an arbitral award. In my view the judgment of
Supreme Court in case of State of West Bengal & Others (supra) thus does not
assist the case of the petitioner and is clearly distinguishable in the facts of this
case.
11. In my view, the learned counsel appearing for the respondent is right in her
preliminary objections that this court has no territorial jurisdiction to entertain this
petition. I, therefore, pass the following order :-
(a)
Arbitration Petition No. 1635 of 2015 is dismissed due
to lack of territorial jurisdiction of this court.
(b) No order as to costs.
[R.D. DHANUKA, J.]
