Construction Base (P) Ltd. vs National Projects Construction ...
2001 Latest Caselaw 338 Del

JUDGMENT

Madan B. Lokur, J.

1. The Petitioner filed a petition under Section 14 of the Arbitration Act, 1940 (hereinafter referred to as the Act) for a direction to the learned Arbitrator to file the Award dated 28th September, 1997 in this Court.

2. After the Award was filed, the Respondent filed objections under Sections 30 and 33 of the Act for setting it aside.

3. As a "preliminary objection" the Respondent submitted that this Court has no territorial jurisdiction to

-: # :- Suit No.2172-A/1997

entertain and try the petition. This objection is based on fact that the letter of intent dated 27th December, 1981 was issued by the Respondent's office in Shakti Nagar (UP). It is averred that the work order was also issued in Shakti Nagar (UP) where the same was accepted by the Petitioner. Consequently, the agreement between the parties was executed in Shakti Nagar (UP). The disputes between the parties arose in Shakti Nagar (UP). In other words, according to the Respondent no part of the cause of action arose in Delhi.

4. The Petitioner filed a reply to the Respondent's objections. It was stated that the Respondent had filed a petition under Sections 11 and 12 of the Act being OMP No.179/97 in this Court. In that petition, the Respondent stated as follows:

"That the cause of action to file the present petition arose at Delhi, the offices of both the parties are also situated at Delhi, the ld. Arbitrator was also appointed at Delhi, he is also having its office at Delhi, hence this Hon'ble Court has got the territorial jurisdiction to entertain and try the present petition."

Learned counsel for the parties agreed that before proceeding further in this case, it would be appropriate to decide whether this Court has the territorial jurisdiction to entertain the petition for making the Award a rule of the Court. Accordingly, learned counsel for the parties were heard on 27th February, 2001 when orders were reserved.

5. Learned counsel for the Respondent relied upon B.B.

Verma Vs. National Projects Construction Corporation Ltd., and M/s Patel Roadways Ltd. Vs. M/s Prasad Trading Company, . Reliance was also placed on M/s R.K. Constructions Vs. National Thermal Power Corporation Ltd., 1996 (1) Arbitration Law Reporter 512 to contend that since no part of the cause of action arose in Delhi, this Court has no territorial jurisdiction to entertain the petition filed by the Petitioner.

6. Learned counsel for the Petitioner did not at all advert to this contention and proceeded on the basis that what learned counsel for the Respondent is saying may be correct. The contention of learned counsel for the Petitioner was that the Respondent having filed OMP No. 179/97 and having positively asserted that this Court has the territorial jurisdiction in respect of the reference, the provisions of Section 31(4) of the Act clearly operate and it is only this Court which has territorial jurisdiction to entertain the petition.

7. Learned counsel for the Respondent placed strong reliance on Virender Saigal Vs. Sumatilal Jamnalal, to contend that the mere filing of OMP No. 179/97 would not confer on this Court the necessary territorial jurisdiction. Reliance was placed on paragraph 6 of the Report. The relevant portion of this paragraph reads as follows:

"Reliance by the Petitioner on the filing of the previous application dated September 12, 1966 in the Delhi Court appears to me to be clearly misconceived because one of the conditions necessary to be fulfillled is that the earlier application must have been filed in a Court competent to entertain it. The mere filing of an application in any Court irrespective of whether such Court has jurisdiction in the matter to which the reference relates would not fix that Court permanently as the Court in which all subsequent applications are to be filed. As I have stated above, the question whether the application dated September, 12, 1966, had been filed in a competent Court having jurisdiction was not agitated before the Court because that application was withdrawn by the Petitioner for reasons which have already been stated above before the Respondents pleaded to it. In the result, in my view, the Petitioner cannot rely upon the previous application dated September 12, 1966 for the purpose of claiming jurisdiction in the Delhi Court".

According to learned counsel for the Respondent, this Court was not competent to entertain OMP No. 179/97 and, therefore, the mere filing of OMP No.179/97 did not confer jurisdiction on this Court.

8. I am of the view that the decision relied upon by learned counsel for the Respondent does not come to his aid. It appears to me that the learned Single Judge deciding Virendra Saigal used the expression "a Court competent to entertain" synonymously with the expression "such Court has jurisdiction in the matter". Having done so, the learned Single Judge appears to have equated "competence" with "jurisdiction". Therefore, the learned Single Judge concluded that the mere filing of a previous application in a Court which is not competent (which is apparently synonymous with a Court which has no jurisdiction) will not result in Section 31(4) of the Act becoming applicable. The conclusion arrived at by the learned Single Judge is no doubt correct, namely, that a previous application should have been filed in a Court competent to entertain it. But the error (if any) lies in equating competence with jurisdiction. To my mind, even if there is an error, it is absolutely insignificant. Nevertheless, learned counsel for the Respondent sought to capitalize on it, but to no avail.

9. In Hira Lal Patni Vs. Sri Kali Nath, , the Supreme Court has drawn a distinction between a Court being "competent" to entertain a matter and a Court having "jurisdiction" to entertain a matter. In paragraph 4 of the Report, the Supreme Court held as follows:

"The validity of a decree can be challenged in execution proceedings only on the ground that the Court which passed the decree was lacking in inherent jurisdiction in the sense that it could not have seizin of the case because the subject matter was wholly foreign to its jurisdiction or that the defendant was dead at the time the suit had been instituted or decree passed, or some such other ground which could have the effect of rendering the Court entirely lacking in jurisdiction in respect of the subject matter of the suit or over the parties to it. But in the instant case there was no such inherent lack of jurisdiction".

What is of importance is the use of the expression "inherent lack of jurisdiction" as opposed to merely lacking jurisdiction. This distinction is highlighted in the subsequent part of paragraph 4 of the Report when the Supreme Court holds as follows:

"The decision of the Privy Council in the case of 18 Ind. App. 134 (P.C) is an authority for the proposition that consent or waiver can cure defect of jurisdiction but cannot cure inherent lack of jurisdiction. In that case, the suit had been instituted in the Court of the Subordinate Judge, who was incompetent to try it. By consent of the parties, the case was transferred to the Court of the District Judge for convenience of trial. It was laid down by the Privy Council that as the Court in which the suit had been originally instituted was entirely lacking in jurisdiction, in the sense that it was incompetent to try it, whatever happened subsequently was null and void because consent of parties could not operate to confer jurisdiction on a Court which was incompetent to try the suit. That decision has no relevant to a case like the present where there could be no question of inherent lack of jurisdiction in the sense that the Bombay High Court was incompetent to try a suit of that kind. The objection to its territorial jurisdiction is one which does not go to the competence of the Court and can, therefore, be waived".

It was further held that:

"It is well settled that the objection as to local jurisdiction of a Court does not stand on the same footing as an objection to the competence of a Court to try a case. Competence of a Court to try a case goes to the very root of the jurisdiction, and where it is lacking. It is a case of inherent lack of jurisdiction. On the other hand an objection as to the local jurisdiction of a Court can be waived and this principle has been given a statutory recognition by enactments like S.21 of the Code of Civil Procedure".

This decision was followed by the Supreme Court in Bahrein Petroleum Co. Ltd. Vs. P.J. Pappu and Anr., . In paragraph 3 of the Report, the Supreme Court held as follows:-

"As a general rule, neither consent nor waiver nor acquiescence can confer jurisdiction upon a Court, otherwise incompetent to try the suit. But S.21 of the Code provides an exception, and a defect as to the place of suing, that is to say, the local venue for suits cognisable by the Courts under the Code may be waived under this section. The waiver under S. 21 is limited to objections in the appellate and revisional Courts. But S. 21 is a statutory recognition of the principle that the defect as to the place of suing under Ss. 15 to 20 may be waived. Independently of this section, the defendant may waive the objection and may be subsequently precluded from taking it".

That this Court is competent to entertain the disputes between the parties was not doubted. Indeed, it cannot be said that this Court lacks inherent jurisdiction in the sense that "it could not have seizin of the case because the subject matter was wholly foreign to its jurisdiction". In fact, the averments made by the Respondent in OMP No.179/97 were to the contrary. Therefore, it has to be held that this Court was "competent" to entertain OMP No.179/97 filed by the Respondent.

10. The next question is whether this Court had the territorial jurisdiction to entertain OMP No.179/97 filed by the Respondent. According to the assertions made by the Respondent in OMP No.179/97, this Court had the territorial jurisdiction to entertain the case. Who could have objected to this Court's territorial jurisdiction? Only the Petitioner, and he chose not to object. By his silence, the Petitioner waived his right to object to this Court exercising its territorial jurisdiction over the subject matter in dispute between the parties. In Hira Lal, the Supreme Court has said that this is permissible and that a lack of territorial jurisdiction "does not go to the competence of the Court".

This being the position, it has to be held that both the parties had accepted the territorial jurisdiction of this Court to entertain the disputes between them.

11. Learned counsel for the Petitioner did contend that the Respondent is estopped from reversing the position it took in OMP No.179/97 and now contending that this Court does not have the territorial jurisdiction to entertain the petition for making the Award a rule of the Court. I do not think it necessary to go into this contention in view of the specific mandate of Section 31(4) of the Act which reads as follows:

"Section 31. Jurisdiction.

(1) - (3) xxx xxx xxx

(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force where in any reference any application under this Act has been made in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall be made in that Court and in no other Court".

In view of this, the Petitioner had no option but to approach only this Court to make the Award a rule of the Court.

12. Consequently, the preliminary objection raised by the Respondent is overruled.

13. List the matter for final disposal on merits in the category of "Short Cause" on 8th August, 2001.