B.S. Virdi Electric Works vs Union Of India And Anr.
2002 Latest Caselaw 108 Del

JUDGMENT

Mukundakam Sharma, J.

1. The present proceeding is registered on the basis of the petition filed by the petitioner under Sections 14, 17 & 29 of the Arbitration Act, 1940 praying for issuance of a direction to respondent No. 2, the Arbitrator to file the original award dt. 4.10.1999 and also for a further direction that on a receipt of the proceedings and the award, the same should be made a rule of the court and a decree be ordered to be drawn in terms thereof.

2. The petitioner herein entered into a work contract with respondent No. 1 for construction of T.V. Studio-cum-Office building at Bhopal. The aforesaid agreement also contains an arbitration Clause being Clause No. 25, which provides that in case of disputes and differences between the parties to the agreement, the same are required to be adjudicated upon in terms of the said arbitration Clause. During execution of the aforesaid work contract, certain disputes arose between the parties and accordingly the petitioner invoked the arbitration Clause. The respondent No. 1 appointed Sh. A.C. Panchdari as the sole Arbitrator to decide and make an award on the aforesaid disputes. After the aforesaid appointment, Sh. A.C. Panchdhari entered into the reference and proceeded with the arbitration proceedings. However, before making and publishing the award, Sh. A.C. Panchdhari died and, therefore, the respondent No. 1 vide their letter dt. 24.2.98 appointed Sh. J.S. Lamba, respondent No. 2 herein, as the sole Arbitrator in place of the Arbitrator earlier appointed. Sh. J.S. Lamba, respondent No. 2 considered the disputes and after conclusion of the proceedings made and published his award on 4.10.99. In view of the aforesaid position, the present petition is filed in this court seeking for the aforesaid reliefs. In paragraph 9 of the petition, the petitioner has stated that the offices of the parties are situated within the jurisdiction of Delhi Court and that the cause of action of file the present petition has arisen at New Delhi and, therefore, this court can entertain the present petition.

3. After notice was served on the respondents, respondent No. 1 filed an application in this court under Section 31 of the Arbitration Act, 1940 read with Sections 20 and 151 of the Code of Civil Procedure, which was registered as I.A. No. 957/2001. In the said application the respondent No. 1 has stated that it is a department of Civil Construction Wing of Prasar Bharti Broadcasting Corporation of India and that the Executive Engineer is the authority, Who is empowered to sign on behalf of the respondent No. 1/ department. It is also stated that after the award was so made and published by the Arbitrator, respondent No. 1 filed an objection under Sections 31 & 33 of the Arbitration Act on 27.4.2000 before the Sixth Joint Civil Judge, Senior Division, Nagpur, which was registered as Suit No. 317/2000 wherein the respondent No. 1 had challenged the award dt. 4.10.99 made and published by the Arbitrator. It is further stated that notice on the said suit was issued to the parties for 16.10.2000. It is also stated that the aforesaid proceedings are pending before the Civil Judge at Nagpur and that the original copy of the award has also been filed before the Nagpur Court. It is further stated that the respondent No. 1 has not received any notice from this court in respect of the present proceedings but it had come to know about the present proceedings from the notice received from the Arbitrator, respondent No. 2 herein. In the said application, it is also stated by respondent No. 1 that the Courts at Delhi have no territorial jurisdiction to entertain the present proceedings initiated under Sections 14 & 17 in view of Section 20 of the Code of Civil Procedure read with Section 31 of the Arbitration Act. It is stated that the agreement was signed at Bombay between the Executive Engineer (E.E.) and the petitioner but the same was transferred to Nagpur Electrical Division some time towards the end of 1999 and that then onwards the contract was further carried out from the Nagpur Office.

4. Since a controversy is raised by the respondent No. 1 with regard to territorial jurisdiction of this court of entertain the present proceedings, the application filed by the respondent No. 1 under Section 31 of the Arbitration Act read with Sections 20 & 151 of the Code of Civil Procedure, was taken up for consideration and on the said application, I have heard the learned counsel for the parties.

5. Counsel appearing for the petitioner submitted that the principal/Head Office of the respondent No. 1 is situated at New Delhi and, therefore, in terms of explanation to Section 20 of the Code of Civil Procedure, this court has the territorial jurisdiction to entertain the present proceedings. It is submitted by him that since the Arbitrator conducted the proceedings in Delhi, therefore, on that count also this court has the territorial jurisdiction to entertain the present petition filed by the petitioner under Section 14 &17 of the Arbitration Act.

6. Counsel appearing for the respondents, on the other hand, submitted that in view of the decision of the Supreme Court in the case of Patel Roadways Limited, Bombay v. Prasad Trading Company , this court would not have the territorial jurisdiction to entertain and proceed with the present proceedings.

7. Since reliance is heavily placed on the decision of M/s. Patel Roadways (supra), I have noticed the said judgment very carefully. The said judgment lays down that if a subordinate office of the respondent is located where the cause of action has arisen, the courts of that subordinate office would alone have jurisdiction rather than the registered or principal office where no cause of action has arisen. This decision has been followed by several Division Benches of this court. In this connection, reference may be made to the Division Bench decisions of this court in B.B. Verma v. National Projects Construction Corporation Ltd. and in Union of India v. Electronic Controls & Instrument Engineers . In the subsequent Division Bench decision of this court, this court held that as the work in question was to be carried out at Patiala, which was to be supervised by the Executive Engineer stationed at Patiala and the tenders were also called at Patiala, as such the entire cause of action arose at Patiala, which is not within the territorial jurisdiction of this court. While coming to the aforesaid conclusion the Division Bench of this court referred to a Full Bench decision of this court in Ram Rattan Bhartia v. Food Corporation of India as also the decisions in Patel Roadways Limited, Bombay (supra) and in Bakhtawar Singh Bal Krishan v. Union of India and Ors. . The Division Bench also referred to the decision of Binani Brothers (P) Ltd. v. Union of India reported in 2nd (1975) II Delhi 196. Having noticed the ratio of the aforesaid decision, the Division Bench held that the decision of the Full Bench in Shri Ram Rattan Bhartia (supra) cannot be said to be holding the filed in view of the decision of the Supreme Court in the case of Bakhtawar Singh Bal Krishan (supra).

8. In Binani Brothers' case (supra), the petitioner company having its registered office at Calcutta, entered into an a contract with the Director of Supplies and Disposals, Bombay. The latter unilaterally altered a Clause of the contract is regard to Payment of sales-tax and sent to the company a demand for refund of the amount already paid to it. Pursuant thereto, a dispute was raised and the Director of Supplies and Disposals, Bombay, in terms of the contract called upon the Director General of Supplies and Disposals, New Delhi to enter upon reference and to decide the disputes. The company thereafter, filed a petition under Section 33 of the Arbitration Act in a Court at Delhi. In the light of the aforesaid background facts, it was held that the Courts at Delhi had no jurisdiction to entertain the application, as against which the company preferred an appeal in which the Division Bench held that reading Section 2(c) of the Arbitration Act and Section 20 of the Code of Civil Procedure together, it is obvious that the Court having jurisdiction under the Act would be the Court competent to entertain a suit in regard to the subject matter of reference i.e. the dispute which is sought to be referred to arbitration. It was further held that the expression "voluntarily resides" appearing in Section 20 of the Civil Procedure Code refers to natural persons and not to legal entities.

9. In Bakhtawar Singh's case (supra), the Supreme Court fully approved the reasoning and conclusions of Division Bench of this Court in Binani Brother's case (supra) and laid down that although the Union of India carried on business and worked for gain through the Director of Supplies and Disposals, New Delhi, the same would not confer jurisdiction on the Courts at Delhi as the expression "voluntarily resides" under Section 20 is significant, which necessarily refers to natural persons and not to legal entities. It was also held that likewise the expression "carries on business" or "personally works for gain" do not refer to functions carried on by the Union of India in discharge of its executive powers conferred by Article 298 of the Constitution.

10. Strong reliance was placed by the counsel for the petitioner on the Full Bench decision of this court in Kuldeep Singh v. Union of India and Ors. . IN the said decision, it was held by the Full Bench of this Court that a suit can be filed at the Headquarters of Northern Railway at Delhi even though the contract was entered into by the Superintendent of Railways at Lucknow. In my considered opinion, reliance on the said decision is misplaced. The same was not a case of corporation unlike the present case. Besides, there is considerable difference in the concept of the Headquarters of Northern Railway and the Principal Office of the corporation. Besides, the said part of the Full Bench decision shall not hold the filed after the decision of the Supreme Court in Patel Roadways Ltd. (supra).

11. The Supreme Court in the case of M/s. Patel Roadways Ltd. Bombya (supra) interpreted the explanation to Section 20 of the Code of Civil Procedure saying that the Explanation clarifies the scope of Clause (a) to Section 20, which is in two parts, one before the word "or" occurring between the word "office in India" and the words "in respect of" and the other thereafter. When the ratio of aforesaid decision is applied to the facts of the present case, it can be noticed that the aforesaid explanation applies to respondent No.1 herein, which is a Corporation. The first part of the explanation applies only to such a Corporation, which has its sole or principal office at a particular place. In such a case, the Courts within whose jurisdiction the sole or principal office is situated will also have jurisdiction inasmuch as even if the defendant may not be actually carrying on business at that place, it will "be deemed to carry on business" at that place because of the fiction created by the Explanation. On the other hand, latter part of the Explanation takes care of the case where the defendant does not have a sole office but has a principal office at one place and has also a subordinate office at another place. If the case falls within the latter part of the Explanation, it is not the Court within whole jurisdiction the principal office of the defendant is situated but the Court within whose jurisdiction it has a subordinate office, which alone shall have jurisdiction "in respect of any cause of action arising at any place where it has also a subordinate office".

12. In the present case, although the principal office of the respondent is situated in Delhi, but it also has subordinate office at Nagpur. Therefore, to the facts and circumstances of the present the latter part of the Explanation is attracted. It is the court, within whose jurisdiction it has a subordinate office, alone shall have the territorial jurisdiction in respect of any cause of action arising at any place where it also has a subordinate office. Therefore, the first contention of the counsel appearing for the petitioner that since principal/Head Office of the respondent No. 1 is situated at New Delhi, this court shall have the territorial jurisdiction, runs counter to the aforesaid ratio laid down by the Supreme Court and is accordingly rejected.

13. So far the second contention of the petitioner that this court shall have territorial jurisdiction to entertain the present proceedings, in view of the fact that the Arbitrator conducted the proceedings in Delhi, is concerned, the same cannot be accepted and stands rejected in the light of the decision of this Court in Sushil Ansal v. Union of India reported in AIR 1980 Delhi 43 and also in the light of the decision of the Supreme Court in Patel Roadways Ltd. Bombay (supra). In the case of Sushil Ansal (supra) it was held that the Delhi Court had no jurisdiction to entertain petition under Sections 14 & 17 notwithstanding the fact that the Arbitrator was appointed at Delhi and he made award at Delhi and that the Union of India had its headquarters at Delhi. In Binani Brothers Pvt. Ltd. (supra), a similar contention that the sole Arbitrator was functioning in Delhi and, therefore, the Courts at Delhi shall have territorial jurisdiction, was negatived by the Division Bench of this court, which was also approved in the subsequent Division Bench decision of this court in the case of Electronic Controls & Instruments (supra) and in the Supreme Court decision in Bakhtawar Singh (supra).

14. In view of the aforesaid position and in the light of the ratio laid down by the Supreme Court and the Division Bench decisions of this court, I hold that this court has no territorial jurisdiction to entertain that present proceedings. The petition filed by the petitioner under Sections 14 & 17 of the Arbitration Act shall, therefore, be returned to the petitioner for presentation to the Court having territorial jurisdiction in the matter. There shall be no order as to costs.