Tribal Cooperative Marketing ... vs Manjula Traders
2002 Latest Caselaw 588 Del

JUDGMENT

J.D. Kapoor, J.

1. This is a petition seeking appointment of Arbitrator as the respondent has failed to approach Indian Council of Arbitrator, New Delhi for appointment of Arbitrator despite being noticed by the petitioner.

2. The petitioner is a Multi-cooperative Society working under the aegis of Ministry of Welfare, Government of India and is registered as a Society under the Cooperative Societies Act. Respondent is a proprietorship firm. It took on lease Brehampur Multi Purpose Cooperative Cold Storage Ltd. Ambapuna vide Government of Orissa order No. 3149 dated 1.3.2000 issued by the Registrar of cooperative Societies, Orissa, Bhubneshwar. The petitioner after procuring seeded tamarind for worth of Rs. 90 lakhs entered into an agreement with the respondent for storage of the said stock in latter's cold storage in Orissa. Some disputes have arisen between the parties regarding maintenance of prescribed temperature mentioned in the agreement resulting in deterioration of the stock. The jurisdiction of this court has been invoked for appointment of Arbitrator under the garb of Section 15 of the Agreement which reads as under:-

15. All disputes or differences whatsoever arising between the parties out of or relating to the construction, meaning, scope, operation or effect or this Agreement or the validity or the breach thereof shall be settled by arbitration through the Indian Council of Arbitration (ICA), New Delhi in accordance with the ICA Rules and the provisions of Indian Arbitration and Conciliation Act, 1996. The award made in pursuance thereof shall be binding on both the parties. The venue of Arbitration shall be at New Delhi."

3. Perusal of Clause 15 shows that the parties had only chosen venue at New Delhi for holding arbitration proceedings whereas neither does the respondent reside nor does it work for gain in New Delhi nor any part of cause of action has arisen at New Delhi. Admittedly respondent owns cold storage which is situated in Orissa. Seeded Tamarind was also stored in Orissa. Section 20 of Code of Civil Procedure provides jurisdiction to a court where defendant resides or cause of action arises. Merely because the parties had agreed for holding arbitration proceedings at New Delhi or that the agreement between the parties was executed at Delhi does not mean that they had agreed for jurisdiction of New Delhi courts. Territorial jurisdiction is to be determined either in terms of the agreement between the parties or in terms of Section 20 of Code of Civil Procedure. The nature of disputes raised by the petitioner does not vest territorial jurisdiction in New Delhi courts in case suit is filed. Suit has to be instituted in Orissa.

4. This court has taken view in Gulati Construction Co. Jhansi v. Betwa River Board and Anr. that merely because arbitrator chooses to hold proceedings in a place where no suit could be instituted and chooses to make award at that place, it would not give Court of that place territorial jurisdiction. Section 2(c) read with Section 31 of Arbitration Act, 1940 (Section 2(e) and Section 42 are equivalent sections of the New Act of 1996) deals with territorial jurisdiction of the court. As per Section 2

(e) "Court" means the principal Civil Court of original jurisdiction in a district and includes the High Court in exercise of its ordinary original civil jurisdiction having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil of a grade inferior to such principal Civil Court, or any Court of Small Causes."

5. In M/s. Gulati Construction's case (supra), it was held that reading of Section 31(1) and Section 2(c) shows that in order to decide which is the Court which has jurisdiction in the matter to which a reference relates, what has to be ascertained is the Court before whom the suit could have been instituted for the claim which was raised in the reference.

6. In the instant case, there is no doubt that if a suit for recovery of money is to be filed, the said suit has to be filed in court in Orissa and not in Delhi. Mere incorporation of a clause in the arbitration agreement that venue of arbitration proceedings will be at New Delhi does not mean that civil suit for recovery can also be filed at Delhi.

7. For instituting a civil suit for recovery, a party if it is an individual has to show that at the commencement of suit, he actually and voluntarily resides, or carries on business or personally works for gain at the place where suit has been instituted. However a corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place it has also a subordinate office, at such place. Apart from this, territorial jurisdiction of a court also can be invoked where whole cause of action or any part arise. In the instant case, none of the aforesaid ingredients conferring jurisdiction in Delhi court exist.

8. In view of aforesaid facts, particularly the view taken in M/s. Gulati Construction's case (supra) which has identical facts, the instant application is not maintainable on account of territorial non jurisdiction of this court and is hereby dismissed.

9. However, this order is confined only to the jurisdiction of this court and not to the venue of the Arbitrator. Petitioner is at liberty to approach Indian Council of Arbitration in accordance with law and in terms of clause 15 of the agreement.

Petition as well as interim applications stand disposed of.