Sarup Lal Singla vs National Fertilizers Ltd.
1993 Latest Caselaw 190 Del

JUDGMENT

Arun Kumar, J.

(1) The plaintiff filed a petition under Section 20 of the Arbitration Act in the Civil Courts at Bhatinda. The said petition was ordered to be returned to the plaintiff for presentation to appropriate Court on the ground that the Courts at Bhatinda had no territorial jurisdiction vide order dated 16th October 1990. The plaintiff filed the present petition in this court on 6th December 1990 Along with an application for leave to exclude the time spent by the plaintiff in pursuing his remedy in the Civil Courts at Bhatinda. This order will dispose of plaintiffs application under Sections 12 and 5 of the Limitation Act 1963.

(2) At the outset counsel for the plaintiff has regretted the fact that in the title of the petition it has been stated that the petition is under Section 12 and 5 of the Limitation Act. According to the counsel it should read as Sections 14 and 5 of the Limitation Act. The mention of a wrong provision of law in the heading of the application does not disentitle the plaintiff to relief as per the appropriate provisions of law.

(3) The plaintiff had entered into a contract with the defendant for construction of external services in Phase-111 of Nfl Town at Bhatinda for its Bhatinda Fertilizer Factory. The invitation to tender was issued by the defendant on 16th April 1981. The plaintiff submitted its tender at Bhatinda on 3rd June 1981. According to the plaintiff the tender was accepted on 24th August 1981 at Bhatinda and communication of acceptance was communicated to him at Bhatinda. The plaintiff completed the work on 31st December 1983 and submitted the final bill on 6th February 1984. The agreement contained an arbitration clause. The plaintiff invoked the arbitration clause on 16th January 1985. This was declined by the defendant on 18th March 1985. The plaintiff repeated his request for arbitration on 27th August 1985 and ultimately filed a petition under Section 20 of the Arbitration Act in the Civil Courts at Bhatinda on 2nd April 1986. As already noticed- the Civil Court at Bhatinda vide its order dated 16th October 1990 held that the Court at Bhatinda had no territorial jurisdiction in the matter and ordered the plaint to bereturned. The plaintiff applied for certified copy of the order on 17th October 1990. The copy was delivered to the plaintiff on 16th November 1990. On 3rd December 1990 the petition was actually returned to the plaintiff and the same was filed by the plaintiff in this Court on 6th December 1990.

(4) It is further the case of the plaintiff that the invitation to tender was issued at Bhatinda. The tender was submitted by the plaintiff at Bhatinda. Acceptance of tender was communicated to the plaintiff at Bhatinda. The work was executed at Bhatinda where the various payments under the contract were also made to the plaintiff. On the basis of these facts it is submitted on behalf of the plaintiff that the plaintiff acted bona fide in filing the petition under Section 20 of the Arbitration Act in the Civil Courts at Bhatinda. The cause of action had arisen within the territorial jurisdiction of the Civil Courts at Bhatinda, therefore, the plaintiff has prayed that the time spent by the plaintiff in prosecuting the petition under Section 20 of the Arbitration Act in the Civil Courts at Bhatinda be excluded for purposes of counting the limitation and the present petition be held to be filed within time.

(5) On the other hand the learned counsel for the defendant has submitted that in view of the provisions contained in the arbitration clause the plaintiffs action in instituting proceedings in the Civil Courts at Bhatinda cannot be said to be bona fide and therefore the plaintiff is not entitled to exclusion of the time spent in prosecuting the proceedings at Bhatinda. The relevant portion of the Arbitration Clause is reproduced as under:- "ARTICLE4 4.Notwithstanding any other Court or Courts having jurisdiction to decide the question forming the subject matter of the reference if the same had been subject matter of the Suit, any and all actions and proceedings arising out of or relative to the contract including any arbitration terms thereof shall lie only in the Court of Competent Civil Jurisdiction in this behalf at Delhi (where this contract has been signed on behalf of the owner) and only the said Court shall have jurisdiction and entertain and try any such actions and or proceedings to the exclusion of all other Courts."

(6) According to the above clause only the competent Civil Courts at Delhi would have jurisdiction in the matter. Therefore, the only question for consideration is whether the plaintiff acted bona fide in instituting the proceedings in Civil Courts at Bhatinda in spite of the aforesaid provision in the Arbitration Clause. There can be no dispute that in the ordinary circumstances the Civil Courts at Bhatinda would have jurisdiction to deal with the matter because the cause of action or the major part of the cause of action arose at Bhatinda. The facts relied upon by the plaintiff in this connection, i.e. issuance of invitation to tender at Bhatinda, acceptance of tender at Bhatinda, execution of work at Bhatinda and payments being made at Bhatinda have not been disputed. At best the defendant may have to say that part of cause of action arose at Delhi and, therefore. Courts at Delhi also have jurisdiction to deal with the matter. However, in view of the portion of the Arbitration Clause quoted above, it is submitted on behalf of the defendant that where two Courts are competent to deal with the matter having territorial jurisdiction, it is open to the parties to exclude the jurisdiction of one Court and agree that only Courts at one place will have exclusive territorial jurisdiction.

(7) The learned counsel for the defendants has relied on Firm Bansi Dhar Baldeo Pershad & Anr. vs. Firm Alopi Pershad & Sons Ltd.. . In the said case the Court was considering that where the agreement between the parties unequivocally provided that if for any reason Court proceedings are taken then only the Courts at Delhi shall have jurisdiction to hear the cases which shall be filed in regard to the disputes arising out of the agreement because it had been executed and completed at Delhi and all amounts had been agreed to be paid at this very place. It was held that in view of the unequivocal term in the agreement restricting the jurisdiction of Courts to Delhi Courts alone, the plaintiffs could not be considered to have instituted the suit at Kheri in good faith so as to allow exclusion of time under Section 4 of the Limitation Act.

(8) Another decision relied upon on behalf of the defendants is Surendra Nath vs. O.L.,Puri Bank Ltd.,. In this case it was held that the lawyer in charge of the plaintiff's case had completely ignored the provisions of the Banking Companies Act, so also the legal position settled by an earlier decision of the same Court and, therefore, it was held that it could not be held that the plaintiff had acted with due care and attention in filing the suit in the Court which was held to be the appropriate forum. The benefit of Section 14 of the Limitation Act was declined.

(9) The distinguishing feature of the present case in relation to the authorities cited above is that admittedly a major part of cause of action had arisen at Bhatinda. In the Punjab judgment the major part of cause of action had arisen in Delhi and according to the Arbitration Clause also the Delhi Courts were to have jurisdiction in the matter. Therefore, the question still remains whether the plaintiff in the present suit acted bona fide in pursuing his remedy at Bhatinda in the background of the facts that almost everything in relation to the contract was done within the territorial limits of the Civil Courts at Bhatinda. The position in law does not appear to be crystal clear because the matter was finaly decided by the Supreme Court in A.B.C. Laminart Pvt.Ltd. vs. A.P. Agencies, . It was held in the said case that where there may be two or more competent Courts which can entertain a suit consequent upon a part of the cause of action having arisen therewithin, if the parties to the contract agreed to vest jurisdiction in one such Court to try the dispute which might arise as between themselves, the agreement would be valid. Such agreements are not hit by Sections 23 and 28 of the Contract Act. This cannot be understood as parties contracting against the Statute. Merchantile Law and practice permit such agreements.

(10) With reference to a clause like the one in the case in hand it was held by the Supreme Court "where the clause under which it was claimed that there was ouster of jurisdiction of Courts only stated that any dispute arising out of sale would be subject to jurisdiction of Court within whose jurisdiction order was placed but there were no exclusive words like 'exclusive', 'alone', 'only' and the like, other jurisdictions having connecting factors were not clearly, unambiguously and explicitly excluded".

(11) Therefore, in the facts of the present case it is difficult to say that the plaintiff was not acting bona fide or the legal advice on the basis of which the plaintiff filed the proceedings in the Civil Courts at Bhatinda was not bona fide.

(12) It has been held by a Division Bench of the Calcutta High Court in Somnath Banerjee vs. Vivek Salvi, , that on account of mistake of lawyer in filing appeal in a Court having no jurisdiction the litigant should not suffer and time spent in prosecuting such appeal deserves to be condoned. To test the bona fides of the plaintiff in instituting the proceedings at Bhatinda it may be relevant to notice that after all the plaintiff is invoking the arbitration clause for purposes of raising certain claims before the Arbitrator against the defendant, i.e. the owner. Why would the plaintiff like to institute proceedings in a wrong forum and suffer delay which in the present case has been more than four years on account of pendency of the proceedings in Civil Courts at Bhatinda? As already stated the belief of the lawyer on the basis of facts giving jurisdiction to Civil Courts at Bhatinda cannot be said to be negligent nor can lack of due diligence be attributed to the plaintiff in this behalf.

(13) I may note here that counsel for the plaintiff has relied on Rejendra Sethia vs. Punjab National Bank. , Sushil Ansal vs. Union of India,AIR 1980 Delhi 43,North Eastern Electricity Power Corporation Ltd. vs. Lakhi Enterprises,AJR 1992 Guwahati 42,& Bakhtawar Singh Balkrishan vs. Union of India. . I do not consider it necessary to deal with these judgments because the point in issue in the present case is really not the subject matter of any of these decisions. These decisions are mainly on the question as to whether the Court where the work has been executed or the contract has been entered into or where arbitration proceedings took place j etc. has territorial jurisdiction or not. In none of these cases the clause conferring exclusive jurisdiction on a particular court when two courts have territorial jurisdiction, like the clause in the present case, was under consideration.

(14) In view of the above discussion I allow the application. The time spent by the plaintiff in prosecuting the proceedings in the Civil Courts at Bhatinda is permitted to be excluded. The result is that delay in filing the present petition in this court is condoned. The application stands disposed of. No order as to costs.