Calcutta High Court
Bidyutlata Mahapatra And Anr vs Shrachi Developers Pvt Ltd And Ors on 24 July, 2025
Author: Arijit Banerjee
Bench: Arijit Banerjee
1
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
ORIGINAL SIDE
(COMMERCIAL DIVISION)
AO-COM/13/2024
WITH
AP-COM/217/2024
Bidyutlata Mahapatra And Anr.
VS
Shrachi Developers Pvt Ltd And Ors.
BEFORE: The Hon'ble JUSTICE ARIJIT BANERJEE
AND
The Hon'ble JUSTICE RAI CHATTOPADHYAY
For Appellants : Mr. Avishek Guha, Adv.
Mr. Ankush Majumdar, Adv.
For Respondents : Mr. Samrat Sen, Sr. Adv.
Ms. Manali Ali, Adv.
Mr. Paritosh Sinha, Adv.
Mr. Soubhik Chowdhury, Adv.
Ms. Tapasika Bose, Adv.
Ms. Sayantani Banerjee, Adv.
Judgment on : 24.07.2025
Arijit Banerjee, J. :-
1. This appeal is directed against a judgment and order dated February
28, 2024, whereby A.P. 359 of 2021 and a connected application being G.A.
2 of 2023 were disposed of by a learned Judge of this Court.
2. Briefly stated, the relevant facts of the case are that disputes arose
between the parties in connection with a partnership agreement dated
November 1, 2024. The agreement contemplated constitution of a
partnership firm between the appellants and the respondent nos. 2 and 3 on
one hand (in short referred to as the 'Mahapatras') and the respondent no. 1
herein (in short referred to as 'Shrachi'), under the name and style of
"Pancham Shrachi" for implementation of a housing project. The
understanding between the parties was that the Mahapatras would bring in
immovable property belonging to them as their capital contribution and
Shrachi would invest funds for development and construction work to be
undertaken by the said firm.
3. After the expiry of the original owner of the land in question, disputes
and differences arose between the parties. By a letter dated October 23,
2007, the Mahapatras attempted to terminate the partnership agreement. In
that factual background, Shrachi invoked the arbitration clause contained
in the partnership agreement. By consent of the parties, an Hon'ble former
Judge of the Hon'ble Supreme Court was appointed as the sole arbitrator.
4. Ten issues were framed by learned Arbitrator which read as follows:-
"1. Whether the partnership firm under the name and style of
'Pancham Shrachi' (the said Firm) is partnership at will.
2. Whether the Schedule "A" and Schedule "B" lands, described in the
statement of claim, is the property of the said firm.
3. Whether the said Firm stood validly dissolved by virtue of the notice
dated October 23, 2007, issued by the Respondents.
4. (a) If the answer to issue No. 3 is in the affirmative, to what reliefs
are the parties entitled.
(b) Conversely, if the answer to issue no. 3 be in the negative, to what
reliefs are the parties entitled.
5. (a) Whether the Declaration on page 1 of the application made in
Form 1 under Rule 3 of the Orissa Partnership Rules to the effect that
the said firm was a partnership 'at will' is a true and correct reflection
of the scope, intent and purport of the partnership.
(b) Whether the entry in respect of sl No. (4) made in Form A under
Rule 5 of the Orissa Partnership Rules, 1942, maintained by the
Registrar of Firms to the effect that the firm, 'Pancham Shrachi' is a
partnership 'At Will' is liable to be rectified and/or amended so to
record that the partnership is a particular partnership'.
(c) Whether the Claimant is entitled to a declaration that the parties
are not entitled to rely on; or act in furtherance of or on the basis of or
to give effect to the impugned entry in sl. No (4) made in Form A
maintained by the Registrar of Firms to the effect that the firm
'Pancham Shrachi' is a partnership 'At Will'.
(d) Whether the Registrar of Firms ought to rectify and/or amend the
entry in respect of sl. No. (4) made in Form A under Rule 5 of the
Orissa Partnership Rules relating to the duration of the partnership
firm Pancham Shrachi so as to indicate that the same is a particular
partnership and to delete the words 'at will' in the concerned entry in
the Registrar maintained by the Registrar of Firms.
6. Whether the claimant is entitled to a declaration that the firm
'Pancham Shrachi' is entitled to continue the development, promotion,
construction and marketing of the proposed residential housing
complex at Mouza: Rudrapur, District: Khurda, Tehsil: Bhubaneswar,
Thana: Ballanta as a specific undertaking under the partnership
agreement dated November 1, 2024 and that the respondents and/or
their men, servants, agents and assigns are not entitled to interfere in
or obstruct or impede the completion thereof.
7. Whether the claimant is entitled to an award for perpetual
injunction restraining the respondents and/or their men, servants,
assigns from interfering in or obstructing or creating any impediment
or impairment to the smooth functioning of the partnership firm of
'Pancham Shrachi' or in the conduct of its affairs or in the execution
of the project and/or undertaking of development, promotion,
construction and marketing of the residential housing project at
Mouza: Rudrapur, District: Khurda, Tehsil - Bhubaneshwar, Thana -
Ballanta or from encumbering, selling, dissipating, letting out
charging, creating third party rights, mortgaging or howsoever
otherwise dealing with the Schedule A and Schedule B lands
described in Annexures A & B to the Claimant's Brief of Documents.
8. Whether the claimant is entitled to an Award for damages against
the Respondent as claimed in the statement of claim or such other
sums as may be found due to be payable on enquiry.
9. Whether the respondents are entitled to their counter-claim.
10. What other relief or reliefs are the parties entitled to."
5. The arbitral award was made and published on August 25, 2020.
Issue no. 1 was decided in favour of Shrachi. It was held that the
partnership in question is not a "partnership at will" as was being contended
by the Mahapatras, and the firm was constituted to carry out a specific
project. It was categorially observed that the partnership was for a specific
undertaking i.e. development, construction, promotion and marketing of a
residential housing project on Schedule A lands. Shrachi's claim for
damages was, however, negated.
6. After about a year of publication of the award, Shrachi filed an
application under Section 9 of the Arbitration and Conciliation Act, 1996,
being A.P. No. 359 of 2021, in this Court praying for the following reliefs:-
"a) A fit and proper person be appointed as Receiver to do all acts
and deeds, sign and execute all documents on behalf of the
respondents nominee in respect of the residential project
undertaken by the partnership firm "Pancham Shrachi" at
Schedule "A" land which is described in Annexure "B" to this
petition;
(b) In the alternative, Mr. Promod Kumar Mohanty, appointed by
the Arbitral Tribunal by its order dated June 17, 2020 with
consent of both the parties, be given additional powers by this
Hon'ble Court to do all acts and deeds, sign and execute all
documents on behalf of the respondent nominee in respect of the
residential project undertaken by the partnership firm "Pancham
Shrachi" at Schedule "A" land which is described in Annexure "B"
to this petition.
(C) The Receiver be empowered and/or authorized and/or directed
to
(i) Sign all cheques on behalf of the respondents in respect of joint
account of the partnership firm;
(ii) Sign all the applications on behalf of the respondents which are
to be submitted before the respective statutory authorities;
(iii) Sign all the documents needed to be executed in respect of the
partnership firm "Pancham Shrachi" on behalf of the respondents;
(d) The receiver be directed to immediately ascertain the nature of
encroachment which has been taken place in the schedule "A"
property (as indicated by the aforesaid Mr. Tapan Chowdhury in
his email dated July 24, 2021).
(e) The respondents be directed to immediately share all the
information and/or details and/or particular they have about the
encroachment in the schedule "A" property, by way of filing of an
affidavit in the instant proceeding and/or otherwise.
(f) An order of injunction be passed restraining the respondents
from creating any hindrance and/or obstacle in execution of
documents and/or in commission of any other acts and/or deeds
by the learned Receiver as may be directed by this Hon'ble Court
for successful development, construction, promotion and
marketing of the residential complex on the Schedule 'A' lands, in
any manner whatsoever.
(g) An order of injunction be passed restraining the respondents
from creating any hindrance and/or disturbance and/or obstacles
for smooth running of the housing project as described in
Schedule "A": property;
(h) An order of injunction be passed restraining the respondents
from dealing with and/or creating third party interest and/or
transferring the Schedule A lands;
(i) Liberty be given to the Receiver (s) to appoint an agent for
carrying out the duties to be undertaken by Receiver(s) in terms of
the order (s) to be passed herein;"
7. In connection with the aforesaid application, Shrachi filed another
application being G.A. no. 2 of 2023 claiming the following reliefs:-
"a. Direct the respondents, especially respondent nos. 1 and 3 to
forthwith handover the originals of the title deeds in respect of the
Schedule A property as described in the partnership Deed as more
fully mentioned in Annexure Y to the Learned Special Officer,
namely Mr. Bhakti Prasad Das, Advocate so appointed by this
Hon'ble Court Vide order dated September 27, 2021 for his
inspection, verification and custody.
b. Direct the respondents, especially respondent nos. 1 and 3 to
forthwith make over the certified copies of the title deeds in respect
of the Schedule A property as described in the Partnership Deed as
morefully mentioned in Annexure Y to the Learned Special Officer,
namely Mr. Bhakti Prasad Das, Advocate so appointed by this
Hon'ble Court vide order dated September 27, 2021.
c. Restrain the respondent, especially respondent nos. 1 and 3,
jointly or severally, or their
representatives/men/assigns/employees from acting in any
manner whatsoever which would prevent the Learned Special
Officer, namely Mr. Bhakti Prasad Das, Advocate from complying
with the Directives as passed by this Hon'ble Court in its order
dated September 27, 2021."
8. By the order impugned in this appeal, GA 2 of 2023, was disposed of
by learned Single Judge by allowing prayers (a) + (b) of the application. A.P.
No. 359 of 2021 was disposed of by confirming an ad interim order dated
September 27, 2021, which had been passed earlier in terms of prayer (a) of
the petition.
9. Being aggrieved, some of the Mahapatras have come up by way of this
appeal.
10. Mr. Abhishek Guha, learned Advocate for the appellants urged two
points before us. Firstly, he argued that this Court lacks territorial
jurisdiction to entertain the application under Section 9 of the 1996 Act or
the connected application which were both disposed of by the impugned
order. This is because the land in question is situate at Bhubaneswar.
Further, there is a Forum Selection Clause in the partnership deed
conferring exclusive jurisdiction on the Orissa Courts.
11. Learned Counsel further submitted that although on earlier
occasions, this Court entertained applications under the 1996 Act, since
this Court never had territorial jurisdiction, Section 42 of the 1996 Act
would not come into play. Learned Counsel drew our attention to an order
dated April 8, 2010, passed in G.A. no. 2570 of 2008 filed in connection with
AP no. 376 of 2007 being a petition under Section 9 of the 1996 Act filed by
Shrachi in this Court. After the Section 9 application was disposed of on
January 8, 2008, the Mahapatras filed G.A. 2570 of 2008 for recalling such
order contending that this Court lacked territorial jurisdiction to entertain,
try or dispose of the Section 9 application. While passing the order dated
April 8, 2010, which was interim in nature, a learned Single Judge had
negated the objection taken on the ground of jurisdiction. Learned Counsel
submitted that subsequently while considering yet another application filed
by Shrachi, the same learned Judge who had passed the order dated April 8,
2010, passed an order dated December 5, 2013, inter alia, directing
exchange of affidavits. In that order the learned Judge observed:- "this order
is made without prejudice to the respondents' contention as to the
maintainability of the petition in this Court, though previous Section 9
applications in respect of the same arbitration agreement have been
entertained by this Court." It was urged that the learned Judge therefore left
open the question of territorial jurisdiction of this Court to entertain
applications under Section 9 of the 1996 Act in respect of the concerned
arbitration agreement.
12. Learned Counsel further drew our attention to an order dated
September 27, 2021, passed by another learned Judge in A.P. no. 359 of
2021. That was an interim order whereby the learned Judge overruled the
objection taken by the Mahapatras on the ground of territorial jurisdiction.
Learned Counsel submitted that this order was passed merely by following
the order dated April 8, 2010 and without any independent adjudication.
13. In this connection learned Counsel relied on the observations of the
Hon'ble Supreme Court in paragraphs 22 and 23 of the reported decision in
the case of State of West Bengal and Ors. v. Associate Contractors,
(2015) 1 SCC 32. The said paragraphs read as follows:-
"22. One more question that may arise under Section 42 is
whether Section 42 would apply in cases where an application
made in a court is found to be without jurisdiction. Under Section
31(4) of the old Act, it has been held in FCI represented by
Managing Director & Anr. v. A.M. Ahmed & Co., through MD &
Anr., (2001) 10 SCC 532 at para 6 and Neycer India Ltd. v. GNB
Ceramics Ltd., (2002) 9 SCC 489 at para 3 that Section 31(4) of
the 1940 Act would not be applicable if it were found that an
application was to be made before a court which had no
jurisdiction. In Jatinder Nath v. Chopra Land Developers Pvt. Ltd.,
(2007) 11 SCC 453 at para 9 and Rajasthan State Electrical Board
v. Universal Petrol Chemical Limited, (2009) 3 SCC 107 at paras
33 to 36 and Swastik Gases (P) Ltd. v. Indian Oil Corporation,
2013 (9) SCC 32 at para 32, it was held that where the agreement
between the parties restricted jurisdiction to only one particular
court, that court alone would have jurisdiction as neither Section
31(4) nor Section 42 contains a non-obstante clause wiping out a
contrary agreement between the parties. It has thus been held that
applications preferred to courts outside the exclusive court agreed
to by parties would also be without jurisdiction.
23. Even under Section 42 itself, a Designated Judge has held in
HBM Print Ltd. v. Scantrans India (Pvt.) Ltd., (2009) 17 SCC 338,
that where the Chief Justice has no jurisdiction under Section 11,
Section 42 will not apply. This is quite apart from the fact that
Section 42, as has been held above, will not apply to Section 11
applications at all."
14. The other argument advanced by learned Advocate for the appellants
is that the application under Section 9 was not maintainable before the
learned Single Judge since the award had become final and enforceable
prior to such application being filed. He submitted that although the scope
of Section 9 is wide, no application under that provision of law can be filed
praying for orders which may be obtained in proceedings for execution of the
award. He further submitted that Shrachi was not granted any substantive
relief under the award, in aid of which an interim order may be passed on a
Section 9 application. In this connection learned Counsel relied on a
decision of the Madras High Court in the case of Gopuram Enterprises
Ltd., Chennai v. Integrated Finance Company Ltd., Chennai, reported
at AIR 2021 MAD 119.
15. Learned Counsel then submitted that the contention of Shrachi that
the award is declaratory and incapable of execution, is without merits. In
this connection reference was made to the following three decisions:-
(i) Parkash Chand Khurana, Etc. v. Harnam Singh & Ors.,
reported at (1973) 2 SCC 484.
(ii) Dr. Ramesh C. Vaish and Ors. v. Banwarilal Jaipuria & Ors.,
reported at 1999 SCC OnLine Cal 118.
(iii) Dirk India Private Limited (Orig. Petitioner) v. Maharashtra
State Electricity Generation Company Limited, reported at
2013 SCC OnLine Bom 481.
I will revert to these decisions later in this judgment, if necessary.
16. Appearing for Shrachi, Mr. Meghojit Mukherjee learned Advocate
submitted that the order dated December 5, 2013, passed in A.P. No. 1181
of 2013 was an interim order. That arbitration petition was disposed of by
the final order dated March 20, 2014, by confirming the order of injunction
that had been passed earlier. At the time of disposal, of the application, the
Mahapatras did not press the point of lack of territorial jurisdiction of this
Court to entertain the Section 9 application. In fact, the parties agreed that
the arbitration petition may be disposed of by confirming the subsisting
order of injunction till the disposal of the arbitral reference.
17. Learned Counsel submitted that the jurisdiction of this Court has
been invoked on the basis of Section 42 of the 1996 Act. Referring to the
decision of the Hon'ble Supreme Court in the case of BGS SGS SOMA JV v.
NHPC LTD, reported at (2020) 4 SCC 234, learned Counsel submitted that
Section 42 is meant to avoid conflict in jurisdiction of Courts by placing the
supervisory jurisdiction over all arbitral proceedings in connection with the
concerned arbitration in one court exclusively. He also referred to the
decision in Kumbha Mawji v. Union of India reported at AIR 1953 SC
313, wherein while dilating on the legislative policy behind enacting Section
31(4) of the Arbitration Act, 1940 (which was in pari materia with Section 42
of the 1996 Act), the Hon'ble Supreme Court observed that "the necessity for
clothing a single Court with effective and exclusive jurisdiction, and to bring
about by the combined operation of these three provisions, the avoidance of
conflict and scramble is equally essential whether the question arises during
the pendency of the arbitration or after the arbitration is completed or before
the arbitration is commenced."
18. It was next submitted that Section 42 of the 1996 Act begins with a
non-obstante clause and therefore has overriding effect vis-à-vis all other
provisions contained in Part-I of the Act or any other law for the time being
in force. For the effect of a non-obstante clause the writ petitioner referred to
the decision of the Hon'ble Supreme Court in the case of Iridium India
Telecom Ltd. v. Motorola INC reported at (2005) 2 SCC 145.
19. Relying on the decision of the Hon'ble Supreme Court in the case of
State of West Bengal and Ors. v. Associated Contractors, reported at
(2015) 1 SCC 32 , Para 21, learned Advocate submitted that the expression
"with respect to an arbitration agreement" in Section 42 of the 1996 Act, is
of wide import and would encompass all applications made before, during or
after the arbitral proceedings are over. At least 4 earlier applications under
Section 9 of the 1996 Act have been entertained by this Court and diverse
interim protective orders have been passed from time to time. Such
applications are:- (1) AP No. 376 of 2007, (2) AP No. 1544 of 2015, (3)AP
No. 395 of 2020, (4) AP No. 359 of 2021. It was submitted that AP 376 of
2007 was filed in this Court by the respondent no. 1 after obtaining leave
under Clause 12 of the Letters Patent, 1865, on December 10, 2007. An
order was passed on that date. The application was disposed of on January
8, 2008, by confirming the order dated December 10, 2007. A vacating
application being GA no. 2570 of 2008 was filed by the appellants for recall
of the order dated January 8, 2008, contending that this Court had no
jurisdiction in the matter. That application was dismissed by a judgment
and order dated April 8, 2010. Such dismissal order was not challenged
before any higher forum. Accordingly, that order has attained finality on the
issue as to whether or not this Court has territorial jurisdiction to entertain
proceedings in connection with the concerned arbitration agreement and the
same is no more res integra.
20. Learned Advocate referred to paragraph 54 of the application filed I AP
No. 359 of 2021 which reads as follows:- "Moreover, by virtue of Section 42
of the said Act, this Hon'ble Court has the exclusive jurisdiction over the
arbitral proceedings and all subsequent applications arising out of the
arbitration agreement and the arbitral proceedings."
21. It was then submitted that when AP no. 1181 of 2013 was filed by the
respondent no. 1 in this Court, at the ad interim stage, the appellants had
raised the issue of territorial jurisdiction of this Court. However,
subsequently that issue was not pressed and that arbitration petition was
disposed of by an order dated March 20, 2014, passed on consent of the
parties. Therefore, the issue of territorial jurisdiction of this Court has been
raised only sporadically as a stray issue on some earlier occasions and not
at all on other occasions.
22. Learned Counsel submitted that in the aforesaid factual matrix, the
appellants are barred by the principles of waiver and/or estoppel from
raising the issue of territorial jurisdiction of this Court. An objection as to
territorial jurisdiction does not relate to inherent jurisdiction of the Court
and can be waived, as has been done by the appellants in the instant case.
Reliance was placed by learned Advocate on the following cases:- (1) Hira
Lal Patni v. Sri Kali Nath reported at AIR 1962 SC 199, (2) Harshad
Chiman Lal Modi v. DLF Universal Ltd. and Anr reported at (2005) 7
SCC 791, (3) Sneh Lata Goel v. Pushplata & Ors., reported at (2019) 3
SCC 594, (4) Hirok Chowdhury & Ors. v. Khagendra Nath Mandal &
Ors., reported at AIR 2018 Cal 272.
23. As regards the Forum Selection Clause in the subject agreement
(Clause 5), learned Counsel submitted that this Court, by its order dated
April 8, 2010, passed in GA No. 2570 of 2008, has already decided that the
said clause of the Partnership Agreement does not confer exclusive
jurisdiction on the Courts in Orissa. That judgment and order, not having
been assailed before any competent forum, has become final. In that
judgment it has also been held that the so called forum selection clause is
not clear or unambiguous. The Court also held that having regard to the
absence of words of exclusivity in the Forum Selection Clause and having
regard to the connecting factors which link the factual matrix with Kolkata,
this Court has jurisdiction to receive actions arising in connection with the
arbitration clause contained in the partnership agreement.
24. It was then submitted that Section 42 of 1996 Act, will operate
notwithstanding any Forum Selection Clause. The 1996 Act is an exhaustive
and comprehensive piece of legislation and is a self-contained Code. In this
connection learned Advocate referred to the decision in the case of Fuerst
Day Lawson Limited v. Jindal Exports Limited reported at (2011) 8
SCC 333.
25. On the scope of the reliefs which can be granted by the Court in a
Section 9 application filed after publication of an arbitral award, learned
Counsel submitted that the wording of Section 9 is very wide. In this
connection learned Counsel referred to decision of the Hon'ble Supreme
Court in the case of Hindustan Construction Company Limited & Anr. v.
Union of India & Ors., reported at (2020) 17 SCC 324.
26. It was submitted that the arbitral award in question has not attained
finality since both parties have filed applications under Sections 34 of the
1996 Act, challenging the validity of the award. Such applications are still
pending. Hence, the award has not become enforceable/executable under
Order 21 of the Code of the Civil Procedure. In any event, the protective
orders obtained by the respondent no. 1 from this Court under Section 9 of
the 1996 Act, could not have been obtained in an execution proceeding.
Therefore, the decision of the Madras High Court in the case of Gopuram
Enterprises Ltd., Chennai v. Integrated Finance Company Ltd.,
Chennai, (supra) would not apply to this case.
27. Learned Advocate submitted that the reliefs obtained by the
respondent no. 1 by way of the impugned order are limited to safeguarding
the fruit of the proceedings till the eventual enforcement of the arbitral
award in question and to ensure that the award is not rendered illusory by
dealings on the part of the appellants that would put the subject of the
award beyond the pale of enforcement.
28. It was finally submitted that the respondent no. 1 has challenged the
concerned award, aggrieved by the fact that the Arbitral Tribunal despite
having found that the partnership in question is not one at will but was
constituted to carry out a specific undertaking, refused to grant
consequential reliefs in terms of the other prayers in the statement of claim.
A mere declaratory award has been made which in its present form is not
executable /enforceable.
Court's View
29. Let me take the point of jurisdiction first as it goes to the root of the
matter. The appellants contended that this Court did not have territorial
jurisdiction to entertain the application under Section 9 of the 1996 Act or
the connected application which resulted in the impugned order. This is
because the land in question which is the subject matter of dispute between
the parties, is situated at Bhubaneswar, Orissa. It was also contended that
the partnership agreement between the parties contains a Forum Selection
Clause which clothes the Orissa Courts with exclusive jurisdiction. In my
view, none of these two points has any merit for the following reasons.
30. An application under Section 9 of the 1996 Act, being AP no. 376 of
2007 was filed by Shrachi in this Court claiming certain interim protections.
That application was disposed of by a learned Judge of this Court on
January 8, 2008, without any effective order being passed thereon.
31. The Mahapatras filed an application being GA no. 2570 of 2008 for
recalling the order dated January 8, 2008, contending that this Court lacked
jurisdiction to entertain any petition arising out of or in connection with the
partnership agreement dated November 1, 2004. The argument was that no
part of the cause of action arose within the jurisdiction of this Court and
that there was also a Forum Selection Clause in the partnership agreement.
By an order dated April 8, 2010, the learned Single Judge negated
both the contentions of the Mahapatras and dismissed the application for
recall of the order dated January 8, 2008. Such order of dismissal was not
challenged before any higher forum and thus attained finality.
32. Therefore, all subsequent applications in connection with the
concerned arbitration agreement necessarily had to be filed in this Court.
This is because of Section 42 of the Act which reads as follows:-
"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 arbitral proceedings shall be made in that Court
and in no other Court."
33. Learned Advocate for the appellant argued that Section 42 will not
come into play if the Court entertaining the earlier arbitration petition
lacked jurisdiction. That may be if the Court lacked inherent jurisdiction.
However, we are concerned with territorial jurisdiction of the Court, and that
issue has been decided by a learned Judge of this Court. Not only that, even
subsequently this Court entertained and decided another arbitration
petition being AP 359 of 2021 filed by Shrachi under Section 9 of the 1996
Act. In an order dated September 27, 2021, passed in AP 359 of 2021, a
learned Judge rejected the contention of the Mahapatras that this Court
lacked jurisdiction. The learned Judge noted that there are at least 9 orders
which have been passed by this Court in applications filed by Shrachi for
interim protection before passing of the Award on August 25, 2020.
34. It may also be noted that yet another application under Section 9 of
the 1996 Act being AP no. 1181 of 2013 was entertained by a learned Judge
of this Court. The learned Judge by an order dated December 5, 2013,
directed exchange of affidavits and also observed that "this order is made
without prejudice to the respondents' contention as to the maintainability of
the petition in this Court, though previous section 9 petitions in respect of
the same arbitration agreement have been entertained by this Court".
Relying on this observation, learned Advocate for the appellant argued
that the learned Judge reopened the question of territorial jurisdiction of
this Court.
The contention of learned Advocate for the appellant cannot be
accepted. Firstly, I have strong doubts whether, once a learned Judge
decides that this Court has territorial jurisdiction in a matter, the same
learned Judge or any other Single Judge could reopen that issue in a
separate proceeding. Probably that cannot be done. In any event, when AP
no. 1181 of 2013 came up for final hearing on March 20, 2014, the same
was disposed of by the learned Judge in terms of the following order:
"The Court: The parties agree that no further order need be passed
on this petition under Section 9 of the Arbitration and Conciliation
Act, 1996, save confirming the subsisting order of injunction till
the disposal of the arbitral reference.
The parties also indicate that they would withdraw their rival
nominees named as arbitrators and that the respondents would
withdraw their request under Section 11 of the 1996 Act lodged
before the Chief Justice of the Orissa High Court or his designate.
The parties also agree that Mr. R. K. Patra, a retired Judge of the
Orissa High Court, be appointed arbitrator at such remuneration
as may be agreed to by the arbitrator in the presence of the parties
or their representatives.
The Parties also agree that notwithstanding the arbitration
agreement between them providing for a summary award, reasons
must be indicated in support of the award in accordance with the
1996 Act and it will also be open to the arbitrator to receive oral
evidence.
AP No. 1181 of 2013 is disposed of by confirming the subsisting
order of injunction. There will be no order as to costs."
Therefore, the Mahapatras clearly waived any objection that they may
have had as regards the territorial jurisdiction of this Court.
In this connection, it may be noted that lack of territorial jurisdiction
of a Court does not render its order a nullity. It is only when there is
inherent lack of jurisdiction in a Court that its order or decree would be null
and void. In the case of Hira Lal Patni v. Shri Kali Nath, (Supra), a four
Judge Bench of the Hon'ble Supreme Court, referring to the decision of the
Privy Council in the case of Ledgard v. Bull reported at 1886 SCC Online
PC 16, held that consent or waiver can cure defect of jurisdiction although it
cannot cure inherent lack of jurisdiction. An objection to a Court's territorial
jurisdiction is one that does not go to the competence of the Court and can,
therefore, be waived. This principle has been given statutory recognition by
enactments like section 21 of the Code of Civil Procedure. The same
principle was reiterated by the Hon'ble Supreme Court in the case of
Harshad Chiman Lal Modi v. DLF, (Supra), and Sneha Lata Goel v.
Pushplata and Ors, (Supra).
35. As regards the point of their being a 'Forum Selection Clause' in the
partnership agreement, the same reads as follows:-
"5. Jurisdiction: All matters arising in connection with the
Agreement shall be settled by the Courts within the Jurisdiction of
the Bhubaneswar High Court of Orissa."
36. By the judgment and order dated April 8, 2010, whereby GA no. 2570
of 2008 dismissed by a learned Single Judge of this Court as noted above,
the argument of the Mahapatras on the Forum Selection Clause was
rejected in the following words:
"To start with there is no High Court in this country by the name of
Bhubaneswar High Court. Even if one were to ignore such minor
matter and consider the clause to imply the Orissa High Court at
Cuttack it would still not be a forum selection clause conferring
exclusivity on any specific court as is ordinarily required for a forum
selection clause to be effective. The Orissa High Court has no original
jurisdiction and as such the forum selection clause could not have
provided that only the Orissa High Court would have exclusive
authority to entertain petitions arising out of the agreement. Further,
the clause does not contain the words of exclusivity that have to be
incorporated in a clause to make it an effective forum selection
clause. If the clause implies that the agreed Court would be a Court
over which the Orissa High Court exercises Superintendence under
Article 227 of the Constitution of India, it would rob the Clause of
any sense of exclusivity that is essential for a forum selection clause
to possess. After all, the Orissa High Court exercises
superintendence under Article 227 of the Constitution over all
subordinate Courts from the eastern-most and northern most of its
districts to the western-most and southern-most of them."
37. As I have indicated above, the said order dated April 8, 2010, was not
assailed before any higher forum and has therefore become final and
binding between the parties. In my opinion, the issue of territorial
jurisdiction of this Court to entertain arbitration petitions arising out of or
in connection with the partnership agreement is res judicata between the
parties hereto. Putting it in different words, the principle of issue estoppel
precludes the Mahapatras from urging that this Court did not have
territorial jurisdiction to entertain the arbitration petition and the connected
application which were disposed of by the judgment and order impugned in
this appeal.
38. Once it is established that this Court had jurisdiction to entertain and
dispose of AP no.376 of 2007, all subsequent applications in connection
with the concerned arbitration agreement could be and can be filed only in
this Court and in no other Court. That is the mandate of Section 42 of the
1996 Act. In fact, having entertained AP no. 376 of 2007, this Court has the
exclusive jurisdiction to entertain, try and determine arbitration petitions
filed in connection with the arbitration clause in question. As has been
observed by the Hon'ble Supreme Court in the case of BGS SGS SOMA JV
v. NHPC limited, (Supra), Section 42 is meant to avoid conflict in
jurisdiction of Courts by placing the supervisory jurisdiction over all arbitral
proceedings in connection with an arbitration in one Court exclusively. It
may also be noted that in the case of Kumbha Mawji v. Union of India
reported at AIR 1953 SC 313, the Hon'ble Supreme Court observed that
the legislative policy behind enacting Section 31(4) of the Arbitration Act
1940 (which is in pari materia with Section 42 of the 1996 Act) was "the
necessity for clothing a single Court with effective and exclusive jurisdiction,
and to bring about.....the avoidance of conflict and scramble whether the
question arises during the pendency of the arbitration or after the
arbitration is completed or before the arbitration is commenced." There is,
therefore, no doubt that Section 42 of the 1996 Act, which starts with a
non-obstante clause, shall operate notwithstanding the Forum Selection
Clause in the partnership agreement. Therefore, the point of lack of
territorial jurisdiction of this Court urged by the appellants is rejected.
39. Coming to the second point urged on behalf of the appellants, i.e.,
that the learned Single Judge ought not to have entertained the application
under Section 9 of the 1996 Act since the Arbitral Award had become final
and enforceable prior to such application being filed, also lacks merit.
Section 9 of the 1996 Act reads as follows:-
"9. Interim measures, etc., by Court.--1[(1)]A party may, before or
during arbitral proceedings or at any time after the making of the
arbitral award but before it is enforced in accordance with section
36, apply to a court--
(i) for the appointment of a guardian for a minor or person of
unsound mind for the purposes of
arbitral proceedings; or
(ii) for an interim measure of protection in respect of any of the
following matters, namely:--
(a) the preservation, interim custody or sale of any goods which are
the subject-matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing
which is the subject matter of the dispute in arbitration, or as to
which any question may arise therein and authorising for any of the
aforesaid purposes any person to enter upon any land or building in
the possession of any party, or authorising any samples to be taken
or any observation to be made, or experiment to be tried, which may
be necessary or expedient for the purpose of obtaining full
information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the
Court to be just and convenient, and the Court shall have the same
power for making orders as it has for the purpose of, and in relation
to, any proceedings before it.
[(2) Where, before the commencement of the arbitral proceedings, a
Court passes an order for any interim measure of protection under
sub-section (1), the arbitral proceedings shall be commenced within
a period of ninety days from the date of such order or within such
further time as the Court may determine.
(3) Once the arbitral tribunal has been constituted, the Court shall
not entertain an application under sub-section (1), unless the Court
finds that circumstances exist which may not render the remedy
provided under section 17 efficacious.]"
The opening words of the aforesaid provision make it clear that the
scope of that provision is extremely wide. An application for interim
protection can be made to a Court prior to commencement of arbitral
proceedings. In fact, before arbitration commences, the Court is the only
forum available to a party seeking interim protection in connection with the
proposed arbitration. During pendency of the arbitral proceeding also the
Court has jurisdiction to entertain an application under Section 9 of the
1996 Act. However, that is a matter of discretion for the court. In view of
availability of the arbitral tribunal and the power of the arbitral tribunal to
grant interim protection under Section 17 of the 1996 Act, the Court may
refuse to entertain an application under Section 9 once arbitration
commences. Even after making of an arbitral award, the Court has
jurisdiction to entertain an application under Section 9 but only till such
time when the award is enforced in accordance with Section 36 of the Act. In
view of the clear and unambiguous language of the Section, I see no
justification in restricting the scope thereof.
40. Section 36 of the 1996 Act, provides for enforcement of an arbitral
award. The Section says that where the time for making an application to
set aside the arbitral award under Section 34 has expired, then subject to
the provisions of sub section (2), such award shall be enforced in
accordance with the provisions of the Code of Civil Procedure, 1908, in the
same manner as if it were a decree of the Court. Sub Section (2) of Section
36 clarifies that mere filing of an application for setting aside the award
shall not per se render that award unenforceable, unless the Court grants
an order of stay of operation of the arbitral award in accordance with the
provisions of sub section (3), on a separate application made for that
purpose. It is not necessary for the present purpose to advert to sub Section
(3) of Section 36. What is important is that till an award is enforced in
accordance with Section 36, either party to the arbitral agreement or the
arbitral proceedings can approach the Court for interim measures under
Section 9 of the 1996 Act.
41. In this connection, one may refer to the decision of the Hon'ble
Supreme Court in the case of Hindustan Construction Company Limited
& Anr. v. Union of India & Ors., Supra, wherein a three Judge Bench of
the Hon'ble Supreme court held, inter alia, as follows at paragraphs 36 to 38
of the reported judgment.
"36. Interpreting Section 9 of the Arbitration Act, 1996, a Division
Bench of the Bombay High Court in Dirk India Pvt. Ltd. v.
Maharashtra State Power Generation Company Ltd. 2013 SCC
Online Bom 481 held that:
"13....The second facet of Section 9 is the proximate nexus
between the orders that are sought and the arbitral proceedings.
When an interim measure of protection is sought before or
during arbitral proceedings, such a measure is a step in aid to
the fruition of the arbitral proceedings. When sought after an
arbitral award is made but before it is enforced, the measure of
protection is intended to safeguard the fruit of the proceedings
until the eventual enforcement of the award. Here again the
measure of protection is a step in aid of enforcement. It is
intended to ensure that enforcement of the award results in a
realisable claim and that the award is not rendered illusory by
dealings that would put the subject of the award beyond the
pale of enforcement."
37. This being the legislative intent, the observation in NALCO
(supra) that once a Section 34 application is filed, "there is no
discretion left with the Court to pass any interlocutory order in
regard to the said Award..." flies in the face of the opening words of
Section 9 of the Arbitration Act, 1996, extracted above.
38. Thus, the reasoning of the judgments in NALCO (supra), and Fiza
Developers and Intra-trade Pvt. Ltd. (supra) being per incuriam in
not noticing Sections 9, 35 and the second part of Section 36 of the
Arbitration Act, 1996, do not commend themselves to us and do not
state the law correctly. The fact that NALCO (supra) has been
followed in National Buildings Construction Corporation Ltd. v.
Lloyds Insulation India Ltd. (supra) does not take us any further, as
National Buildings Construction Corporation Ltd. (supra) in following
NALCO (supra), a per incuriam judgement, also does not state the law
correctly. Thus, it is clear that the automatic-stay of an award, as
laid down by these decisions, is incorrect. The resultant position is
that Section 36 - even as originally enacted - is not meant to do away
with Article 36(2) of the UNCITRAL Model Law, but is really meant to
do away with the two bites at the cherry doctrine in the context of
awards made in India, and the fact that enforcement of a final award,
when read with Section 35, is to be under the CPC, treating the
award as if it were a decree of the court."
42. The fulcrum of the appellant's argument on this point was the
decision of the Madras High Court in the case of Gopuram Enterprises
Ltd., Chennai v. Integrated Finance Company Ltd., Chennai, (Supra).
Apart from the fact that in that case, the attention of the Court was not
drawn to the decision of the Hon'ble Supreme Court in Hindustan
Construction Company Limited & Anr. v. Union of India & Ors., Supra,
what was decided in that case is that however wide the powers of a Court
under section 9 of the 1996 Act may be, such powers may not extend to
issuing orders for discovering the assets of an award debtor. Order XXI of
the Code of Civil Procedure provides for execution and carries the necessary
provisions for such purpose. Section 9 of the Act cannot be enlarged to
incorporate the wide authority that an executing Court has to aid the award-
holder, who metamorphoses as a decree holder by the legal fiction contained
in Section 36(1) of the 1996 Act, to seek or obtain orders of such nature or
of arrest or detention of the award debtor or the sequestration of its assets
and properties. I am unable to read the said case as an authority for the
proposition that once an award becomes final and enforceable, an
application under Section 9 of the 1996 Act cannot be filed in the Court. In
my considered opinion, such an application would lie inter alia, to preserve
and protect the fruits of the award at the instance of the award holder. One
must keep in mind the difference between enforceability of an award and
enforcement of an award. A Court retains jurisdiction under Section 9 even
after an arbitral award may become enforceable but till it is in fact enforced
in accordance with the provisions of Section 36 of the Act.
43. In view of the aforesaid, we do not find any infirmity in the judgment
and order of the learned Single Judge sought to be assailed before us.
Consequently, the appeal and the connected applications stand dismissed.
There will be no order as to costs.
44. Urgent Photostat certified copies of this judgment, if applied for, be
supplied to the parties on compliance of all necessary formalities.
I agree.
(Arijit Banerjee, J.) (Rai Chattopadhyay, J.)
