Bombay High Court
General Instruments Consortium vs Lanco Infratect Limited on 31 July, 2017
Bench: K.R. Sriram
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION APPLICATION NO.287 OF 2015
General Instruments Consortium ....Applicant
Vs.
Lanco Infratect Limited
....Respondent
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Mr. H. Toor a/w. Mr. Dilip Rai i/b. Mr. Ajay K. Rao for applicant.
Mr. Anoshak Daver a/w. Ms. Shobhana Waghmare i/b. Mulani and Co. for
respondent.
----
CORAM : K.R.SHRIRAM, J.
DATE : 31st JULY, 2017
P.C.:
1 This application is filed under Section 11 of the Arbitration and
Conciliation Act, 1996 (the said Act). Applicant is a Sole Proprietary
concern and respondent is a company whose shares are listed in the stock
exchange.
2 Applicant is a dealer for various parts used in various
industries. Respondent placed a purchase order from respondent's
Hyderabad office to applicant's Chennai office for purchase and supply of
orifice plates and flow nozzles of quantities, specifications, rates and terms
and conditions mentioned therein. It is applicant's case that respondent
have not paid for 5 invoices in the sum of Rs.15,55,158/-. It is the case of
applicant that they had raised various invoices and, except the 5 invoices
mentioned in paragraph 3 (v) of the petition, all other invoices have been
paid and they were paid in Mumbai. The purchase order at Clause 14
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provides as under :
"14. JURISDICTION
Arbitration shall be in accordance with Arbitration and Conciliation Act,
1996. Courts in Delhi shall have exclusive jurisdiction in all matters
arising under this PURCHASE ORDER."
3 It is applicant's case that since supplies were made in Mumbai
and payments for some of the invoices were made in Mumbai and part of
cause of action arose in Mumbai, Mumbai Court will also have jurisdiction.
Mr. Toor submitted that though respondent carries on business in Gurgaon
and purchase orders were placed from Hyderabad at applicant's Chennai
office, as materials were supplied from Mumbai and part payment was
made in Mumbai, this Court will have jurisdiction and Delhi Court cannot
have jurisdiction. Mr. Toor relying upon A.B.C. Laminart Pvt. Ltd. vs. A.P.
Agencies Salem1, submitted Delhi has nothing to do with this transaction
and Delhi Courts will otherwise not have jurisdiction.
4 Mr. Toor, counsel for applicant further submitted that the Apex
Court in Swastik Gases Pvt. Ltd. vs. Indian Oil Corporation Ltd. 2 has also
held that the Court need not be concerned with the use of words like
"exclusive" or "only" or "alone" because if the parties did not have intended
Courts in a particular jurisdiction should have exclusive jurisdiction, the
parties would not have included the ouster clause in their agreement were
it not to carry any meaning at all.
1. 1989 (2) SCC 163
2. 2013 (9) SCC 32
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5 Mr. Toor also submitted that the Apex Court in the recent
matter of Indus Mobile Distribution Pvt. Ltd. vs. Datawind Innovations
Pvt. Ltd. and Ors.3 has taken a view different from A.B.C. Laminart (supra)
but the Apex Court has not considered A.B.C. Laminart (supra) and the
judgment of the Apex Court passed by the 7 Judges Bench in the matter of
S.B.P. and Co. vs. Patel Engineering Ltd. and Anr.4 Mr. Toor states that the
decision of the Apex Court in Bharat Aluminium Co. Ltd. vs. Kaiser
Aluminium Technical Services, Inc.5, paragraph 96, has in effect been
misread in this judgment (Indus Mobile)
6 I do not agree with Mr. Toor. Paragraphs 20 and 21 of Indus
Mobile (supra) read as under :
"20. A conspectus of all the aforesaid provisions shows that the moment the
seat is designated, it is akin to an exclusive jurisdiction clause. On the facts
of the present case, it is clear that the seat of arbitration is Mumbai and
Clause 19 further makes it clear that jurisdiction exclusively vests in the
Mumbai courts. Under the Law of Arbitration, unlike the Code of Civil
Procedure which applies to suits filed in courts, a reference to "seat" is a
concept by which a neutral venue can be chosen by the parties to an
arbitration clause. The neutral venue may not in the classical sense have
jurisdiction - that is, no part of the cause of action may have arisen at the
neutral venue and neither would any of the provisions of Section 16 to 21
of the CPC be attracted. In arbitration law however, as has been held above,
the moment "seat" is determined, the fact that the seat is at Mumbai would
vest Mumbai courts with exclusive jurisdiction for purposes of regulating
arbitral proceedings arising out of the agreement between the parties.
21. It is well settled that where more than one court has jurisdiction, it is
open for parties to exclude all other courts. For an exhaustive analysis of the
case law, see Swastik Gases Private Limited v. Indian Oil Corporation
Limited, (2013) 9 SCC 32. This was followed in a recent judgment in B.E.
Simoese Von Staraburg Niedenthal and Another v. Chhattisgarh Investment
3. 2017 (3) Arb. LR 1 SC
4. 2005 (8) SCC 618
5. 2012 (9) SCC 552
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Limited, (2015) 12 SCC 225. Having regard to the above, it is clear that
Mumbai courts alone have jurisdiction to the exclusion of all other courts in
the country, as the juridical seat of arbitration is at Mumbai. This being the
case, the impugned judgment is set aside. The injunction confirmed by the
impugned judgment will continue for a period of four weeks from the date
of pronouncement of this judgment, so that the respondents may take
necessary steps under Section 9 in the Mumbai Court. Appeals are disposed
of accordingly.
7 The Apex Court has in effect stated that under the law of
arbitration, unlike the Code of Civil Procedure which applies to suits filed
in Courts, a reference to "seat" is a concept by which a neutral venue can
be chosen by the parties to an arbitration clause. The neutral venue may
not in the classical sense have jurisdiction - that is, no part of the cause of
action may have arisen at the neutral venue and neither would any of the
provisions of Section 16 to 21 of the Code of Civil Procedure be attracted.
The moment "seat" is determined, the Courts, within whose jurisdiction the
seat is, will have exclusive jurisdiction. I am in respectful agreement with
the Apex Court.
8 Therefore, the parties having chosen the seat to be Delhi, the
Courts in Delhi will have exclusive jurisdiction.
9 In the circumstances, the application be returned to applicant
to be filed in the Court having jurisdiction in Delhi. Application accordingly
stands disposed.
(K.R. SHRIRAM, J.)
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