Dass And Co. vs India Tourism Development Corpn. ...
2002 Latest Caselaw 1808 Del

JUDGMENT

S. Mukerjee, J.

1. An arbitration award has been filed in this Court by one Shri K.L. Sahgal, Sole Arbitrator. This award has been registered as a suit in terms of the Arbitration Act of 1940.

2. At the threshold, the petitioner has preferred I.A.No.90/2001 under Order 7 Rule 10 read with Section 151 CPC Section 31 of the 1940 Act, for contending that this Court has no jurisdiction to register the Award dated 1.9.1999 as a suit. Rather the said original award should be returned to be presented in the competent Court which, according to the plaintiff, is the Court of Sub-Judge at Bhubaneswar before whom O.S.No. 549/99 filed by the petition is already pending.

3. The case of the plaintiff is that in the year 1984, the respondent awarded a contract to the petitioner for the construction of Hotel Kalinga Ashok at Bhubaneshwar, Orissa, being Phase-II, Civil Sanitary and electrical work for an estimated value of Rs. 76,21,347.00 in terms of a letter of intent dated 6/5/84.

4. Subsequently an agreement was executed on 22.6.84 between the parties. The stipulated date of commencement of work was 6.5.1984 and the stipulated date of completion was 5.1.1985.

5. The petitioner claims that he completed the work on 23.4.1987 notwithstanding several hindrances caused by the respondents.

6. Certain disputes arose between the parties and in terms of Clause 48 of the agreement the petitioner called upon the respondents/ appointing authority to appoint an Arbitrator to decide the disputes as per the said arbitration clause.

7. The respondents failed to appoint an Arbitrator as per the terms of the agreement and within the stipulated time.

8. The petitioner thereafter filed Misc. Case No. 1/87 before the Sub Judge, Bhubaneswar, under Section 8 & 20 of the Act challenging the appointment of Shri M.C. Aggarwal, Arbitrator and praying for appointment of independent arbitrator by the Court.

9. With the consent of both parties, the Sub Judge, Bhubaneswar, vide order 29.1.88/ 5.4.88, appointed Justice B.K. Behara, Retired Judge of the Orissa High Court, as an Arbitrator to decide the dispute.

10. The Respondent Corporation still preferred Civil Revision No. 372 and 422 of 1988 in the High Court of Orissa, Cuttack against the order dated 29.1.1988 and 5.4.1988 of the learned Sub Judge Bhubaneswar.

11. The High Court of Orissa, by its order dated 19.12.1988, allowed the Civil Revision and set aside the order dated 5.4.1988 of the Sub Judge Bhubaneswar.

12. Meanwhile, it so happened that vide letter dated 7.8.1987, Shri M.C. Aggarwal Sole Arbitrator resigned and the ITDC vide order dated 12.11.1997 appointed Shri K.L. Sahgal as Sole Arbitrator, to decide the dispute between the parties.

13. As against the petitioner's claim totalling Rs. 1.78 crores approximately, the Arbitrator Shri K.L. Sahgal made and published an award dated 1.9.1999 allowing total claim of only Rs. 4.46 Lacs in favor of the petitioner, and disallowed the other claims of the petitioner as also the counter claims of the respondents.

14. The Arbitrator Shri K.L. Sahgal sent a copy of his Award dated 1.9.1999, to the petitioner who, on 24.9.1999, filed Original Suit No. 585/99 before the Court of Sub Judge Bhubaneswar, inter-alia praying for direction calling for the original award under Section 14 of the 1940 Act.

15. The petitioner also claims to have filed objection to the award dated 1.9.1999 under Section 30 & 33 of the 1940 Act which was numbered as Misc.. Case No 526/99.

16. While the proceedings were pending before the Court of Sub-Judge Bhubaneswar, the petitioner claims that he came across a communication of the Arbitrator regarding sending of the original Award to this Court, and thereupon petitioner filed a Misc. Case No. 526/99 in OS No. 585/99 (A)-I inter-alia praying for rejection of the said plea/ communication of the Learned Arbitrator, and instead that copy of the Award filed by the petitioner, may be acted upon in accordance with the law.

17. The submission of the petitioner is that in terms of Section 31(1) of the Arbitration Act 1940, the Award relation to the matter to which the reference relates. Further petitioner submits that in terms of Section 31(4) of the 1940 Act, it is stipulated that " where in any reference any application under this Act has been made in 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".

18. Reliance has been placed by the petitioner upon the judgment of the Supreme Court in the case of Kumbha Mawli v. Dominion of India and to the decision of this Court in the case of Gulati Construction Co. v. Betwa River Board and Anr.; for the preposition that only the Bhubaneswar Court has jurisdiction and not this Court simply because the Arbitrator chose to hold proceedings at Delhi.

19. Shri Sandeep Sharma, learned counsel for the respondent has submitted that in this case the Arbitrator had not been appointed as a result of the orders passed by the Bhubaneswar Court. In fact the order passed by the Sub-Judge Bhubaneswar, was set aside in the Revision Petition preferred by the respondent. The actual arbitrators who adjudicated upon the matter, viz Shri M.C. Aggarwal and later on Sh. K.S. Sahgal, have both been appointed by the respondent itself in the exercise of the powers of persona designata under the contract.

20. Initially the respondent denied that any original Suit No. 589/99 had been instituted by the petitioner, but later on at the stage of arguments it is admitted by the learned counsel for the respondent that it has also entered appearance in the proceedings at Bhubaneswar, and was contesting the proceedings there.

21. The respondent contends that the award has been correctly filed in this Court which has exclusive jurisdiction to entertain the award and also the objections, since the tenders had been received in Delhi, the negotiations were also held in Delhi and the Letter of Intent as well as Work Order, was issued from Delhi as also since the agreement between the parties was executed at Delhi.

22. The alternative submission of the respondent is that, in any case, even if the Courts at Bhubaneswar are held to have jurisdiction, it was the higher Court - the Revision Court which would be the Competent Court, and not the Court of Sub-Judge.

23. The defendant relies upon the judgment of the Apex Court reported in AIR 1981 SC 27 (Gyan Prakash v. Rattan Singh). The submission of the learned counsel for the defendant is that in the above said authoritative judgment of the Apex Court, it has been clearly held that since in the further proceedings, i.e. at the level of the Apex Court, the Arbitrator had been appointed/ changed, therefore it is the said Court which had considered the matter by way of further proceedings, which would be the Competent Court and not the original Court in which the proceedings were instituted (viz not the Court of Sub Judge Bhubaneswar).

24. Strong reliance was placed upon the aforesaid Apex Court decision turning down the argument that the High Court would have jurisdiction. On the same analogy the respondent contends that it would be the Revision Court at Bhubaneswar viz the High Court there which would have the jurisdiction, and not the Court of Sub-Judge.

25. By way of rebuttal, learned counsel for the petitioner has relied upon the judgment of Single Judge of this Court dated 6.9.2001 passed in OMP No. 154/2000 (National Thermal Power Corporation v. R.S. Avtar Singh & Co. and Anr.) 2001 VII AD (Delhi) 370, wherein this Court has considered also the Apex Court judgment in the case of Gurunanak Foundation v. Rattan Singh & sons; .

26. However respondent submits that this judgment of V.S. Aggarwal J. may not concludes the matter, since this judgment is under the new Act of 1996, while the judgment of the Supreme Court in Gurunanak Foundation case, as well as the present case, are under Arbitration Act of 1940.

27. In this connection reference needs to be made to the judgment of the Supreme Court reported in Sundaram Finance Ltd. v. NEPC India Ltd.;

where the Supreme Court has held that the Arbitration and Conciliation Act 1996, is very different from the 1940 Act and therefore these two enactments have to be interpreted independently.

28. However I find certain the observations of V.S. Aggarwal J. as contained in the concluding lines of Para 8 of the said judgment, would certainly have a bearing on the interpretation of the Supreme Court judgment in Gurunanak Foundation case, inasmuch as it is noted that in the said latest decision that the proceedings before the First Court in Guru Nanak case, was only under Section 20 of the 1940 Act, and then a subsequent application under Section 5 read with Section 11 of the Arbitration Act 1940 for removal of the appointed Arbitrator, had been filed, which was dismissed.

29. When the mater was taken to the Supreme Court, the Supreme court, vide its orders, removed the Arbitrator and appointed another person as the Arbitrator.

30. Not only that, thereafter the Supreme Court also gave further directions about the manner and method of conducting the arbitration proceedings, and fixed the time for completion of those proceedings. It was primarily in these circumstances, that the Supreme Court held that keeping in view the provisions of Section 31(4) of the 1940 Act, the subsequent applications could be filed only in the Supreme Court.

31. To my mind, this Court cannot have jurisdiction, merely because the Arbitrator has chosen to hold proceedings at Delhi or on other contentions of respondent. The difficulty is in deciding whether the Competent Court would be the Court of Sub-Judge at Bhubaneswar or the Court which decided the Revision (viz the High Court at Cuttack). No doubt at first flush it does appear that the Supreme Court has held in Gurunanak Foundation case, that once the Supreme Court removed the earlier Arbitrator and appointed another arbitrator, thereupon the said Apex Court was seisin of the matter, and therefore in terms of Section 31(4), that Court alone had the jurisdiction to entertain the Award which could not have been filed before the first Court (just as in Gurunanak Foundation case was held could not have been filed before the High Court which entertained the petition under Section 20 or the application for removal under Section 5 and 11 of the Act of 1940).

32. However if the judgment of the Apex Court in Gurunanak Foundation case is carefully analysed, it would become immediately clear that, as compared to that case, in the present case the High Court of Orissa while dealing with the revision petition, did not itself appoint any Arbitrator and rather set aside the original order of the Sub-Judge by holding that the appointment has to be made by the persona designata under the contract and not by the Court.

33. Once this aspect is out of the way, then in terms of the judgment of this Court in Gulati Construction Co. v. Betwa River Board and Anr. (AIR 1984 299) merely because the arbitrator chooses to hold proceedings at Delhi, that would not give the Courts at Delhi territorial jurisdiction to decide the matters arising under the Arbitration Act. Further more in terms of AIR 1980 Delhi 43 in the case of Sunil Ansal v. Union of India and Anr. and in the case of he Municipal Corporation of Delhi though G.M.D.T.U. Scindia House, New Delhi v. Kuldip Lal Bhandari and Ors. , also this Court would not have jurisdiction in the matter.

34. Finally as held by the Apex Court in the case of Kumbha Mawli v. Dominion of India the phrase "in any reference in the context of Section 31(4)" would cover an application first made after the arbitration is completed and a final award is made. In the present case such an application has been moved earlier in point of time by the petitioner, Along with his copy of the award in the Court at Bhubaneswar and therefore in terms of the Apex Court pronouncement in Kumbha Mawli case (Para 15), Section 31(4) would vest exclusive jurisdiction in the said Court to which an application for the filing of an award has been first made under Section 14 of the Act.

35. Resultantly there is no option but to hold that the Court of Sub-Judge Bhubaneswar had exclusive jurisdiction in relation to this award, and the application of the petitioner under Order 7 Rule 10 read with Section 151 CPC and Section 31(4) of the Arbitration Act 1940, is allowed.

36. The original award is accordingly to be returned for being filed in the Court of Sub-Judge Bhubaneswar. Consequently the Suit No. 181/2000 which is nothing else but the registration of the award filed in this Court, would also have to stand as dismissed, by the finding that the exclusive jurisdiction in relation to the said award in question vests only in the Court of Sub-Judge at Bhubaneswar. The application (IA.No. 90/2001) and the suit are accordingly disposed of, but with no order as to costs.