Engineering Project (India) Ltd. vs Indiana Engineering Works Pvt. ...
2004 Latest Caselaw 651 Del

JUDGMENT

Vikramajit Sen, J.

1. The petitioner herein, namely M/s. Engineering Projects (India) Ltd. has filed this application under Section 36 of the Arbitration and Conciliation Act, 1996 read with Order XXI, Rule 1 of the Code of Civil Procedure which I find has the oblique motive to confine jurisdiction to Courts in Delhi. The facts, briefly narrated are that the respondent, namely, M/s. Indiana Engineering Works Pvt. Ltd. had filed a winding-up petition in the High Court at Ranchi, which petition was allowed. The petitioner filed an appeal and in the course of its hearing it came to light that the disputes between the parties were governed by an Arbitration clause. At that juncture, a Consent Order was passed referring the disputes to the Sole Arbitration of Justice L.N. Prasad (Retd.). An Award has since been published, against which objections have been filed by the respondent in the principal city Civil Court, Ranchi. These objections are pending adjudication.

2. This petition has been filed on the assertions that the petitioner/ judgment debtor had addressed numerous communications to the respondent/decree holder, asking the latter to furnish an unconditional acceptance of the Award and a receipt of payment in full and final settlement of all the respondent's claims. A photocopy of a cheque dated 22,05.2003 for an amount of Rs. 25,89,035 drawn on Syndicate Bank, Connaught Place, New Delhi has been filed along with the petition. However, this cheque had not been tendered to the respondent. Reliance has been placed on Section 36 of the Arbitration Act, a reading whereof discloses that it merely enunciates that where the time for making an application to set aside the Arbitral Award under Section 34 has expired, or such application having been made, it has been refused, the Award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the Court. There is some controversy as to whether the objections had been filed within the statutory period and whether they had been filed prior to the initiation of the present petition. The respondent has pleaded in unequivocal terms that the objections to the Award dated 24.03.2003 had been filed and were admitted vide Orders of the Court dated 08.09.2003 and notice thereof was issued on 17.09.2003. These averments have not been categorically denied, and the reply of the petitioner herein, principally assails the jurisdiction of Courts in Ranchi, Jharkhand. This petition under Section 36 of the said Act has been filed on 03.09.2003 and notice was ordered by the Court to issue on 09.09.2003.

3. It has also been contended before me by learned counsel for the petitioner that the objections had been filed in a Court which does not possess territorial jurisdiction to decide them. There can be no gainsaying that so far as the question of jurisdiction of a Court is concerned, it is not proper for one Court to decide or pronounce upon the issue of whether another Court has jurisdiction or not. Each Court must satisfy itself that it possesses jurisdiction whether territorial or pecuniary, especially when such a ground is asserted. It would offend judicial comity & propriety and would be impermissible even otherwise for me to pronounce upon whether the Courts at Ranchi should desist from exercising jurisdiction. For these reasons, reliance of the petitioner on National Aluminium Co. Ltd. v. Pressteel & Fabrications Pvt. Ltd., as well as Jagson Airlines Ltd. and Anr. v. Bannari Amman Exports (P) Ltd., (Del.), is otiose and irrelevant for the decision of this petition. The opinion of the Hon'ble Supreme Court which arguably militates against the argument of Ms. Chopra, is in these words :

"it is to be noted that as per the above order, this Court has not retained any power or control over the Arbitration proceedings while appointing the Arbitrator by consent of parties ; on the contrary, it seems this Court has merely recorded a submission of the parties as to their agreement in appointing a particular Arbitrator. Even the time-limit fixed therein is only a request to the learned Arbitrator to conclude the proceedings within four months from the day he enters upon the Arbitration and it is not a mandate in the sense that the failure to do so would have entitled the parties to approach this Court for suitable remedy. On facts, it is admitted that the learned Arbitrator has extended the time suo motu a few times before making the Award, without reference to this Court, therefore, it is clear on facts of this case that it is the Arbitrator who had the control over the proceedings and not this Court. Therefore, in our opinion, the two judgments relied on by the applicant do not help the applicant because in those judgments this Court had held that while appointing an Arbitrator this Court had retained control over the Arbitral proceedings, therefore, under the provisions of the 1940 Act, it was this Court which could entertain an application for making the Award a rule of the Court and not any other Court.

The next question to be considered by us in this application is whether the dispute having arisen prior to the coming into force of the 1996 Act and the proceedings having continued under the provisions of the 1996 Act, would the provisions of the 1940 Act, still be applicable for making an application for the modification of the Award, and if so, before which Court. First part of this issue need not detain us because of the admitted fact that by consent of the parties provisions of the 1996 Act have been made applicable to the proceedings, which is in conformity with Section 85(2)(a) of 1996 Act, hence, it is futile to contend that for the purpose of challenge to the Award the 1940 Act will apply. Hence, we reject this contention. In regard to the forum before which the application for modification or setting aside the Award is concerned, we find no difficulty in coming to the conclusion that in view of the provisions of Section 34 read with Section 2(e) of the 1996 Act it is not this Court which has the jurisdiction to entertain an application for modification of the Award and it could only be the principal Civil Court of original jurisdiction as contemplated under Section 2(e) of the Act, therefore, in our opinion, this application is not maintainable before this Court."

4. I am also unable to appreciate how Section 2(e) of the Act is of assistance to the petitioner. It reads thus :

""Courts" 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 Court of a grade inferior to such principal Civil Court, or any Court of Small Causes ;"

5. This provision is similar in scope to Section 15 of the Code of Civil Procedure, and would thus refer only to pecuniary and not territorial jurisdiction as is also clear from the above extracted opinion of the Hon'ble Supreme Court. If the Courts in Ranchi do not enjoy territorial jurisdiction as is argued by Ms. Chopra before me, the petitioner herein will have to approach the concerned Court at Ranchi with a view to having the objections returned to the objector or dismissed, as the case may be on this ground. The petitioner herein must make its submission pertaining to alleged lack of territorial jurisdiction of the Ranchi Court to that very Court only.

6. Resort to Section 36 of the Arbitration and Conciliation Act, 1996 may not always be innocuous, in that Section 42 of the Act stipulates that where, with respect to an Arbitration agreement, any application under Part I comprising Sections 1 to 43 of the Act has been made in a Court, that Court alone shall have jurisdiction over the Arbitral proceedings and all subsequent applications arising out that obligation and the Arbitral proceedings shall be made in that Court and in no other Court. The palpably obvious and salutary intendment of Section 42 is to restrict to one Court the adjudication of all disputes pertaining to the Arbitration, and thereby eradicating the possibility of multiplicity of actions and likelihood of conflicting judgments/orders. But this intendment would be vitiated if a party is permitted to file and maintain a petition under Section 36 which is devoid of merit and has the hidden agenda of ousting jurisdiction that are inconvenient to the petitioner.

7. After the matter has been heard in some detail, learned counsel for the petitioner has drawn attention to the provisions of Order XXI, Rule 1 to predicate her argument that any judgment debtor, such as the petitioner in the present case, can approach the Court whose duty it is to execute the decree, for orders either for deposit of the decreetal amount into Court or for its tender to the decree holder. At the initial stages of the argument, counsel for the petitioner had pressed that the payment should be allowed to be deposited by the petitioner/judgment debtor or accepted by the respondent/decree holder in full and final settlement. This, however, is not the scope of Order XXI, Rule 1. Learned counsel for the petitioner states that the Court may pass appropriate orders under Rule 1 of the said order, without prejudice to the rights of either parties. In these circumstances, I am satisfied that the petition should be disposed of at this stage by permitting the petitioner/judgment debtor to deposit the said sum of Rs. 25,89,035 or any greater or lesser amount in discharge of its legal obligation to pay the amounts due in respect of the Award dated 24.03.2003.

8. At this stage, counsel for the petitioner now states that the question of whether this Court or the Ranchi Court possesses territorial jurisdiction or not, should be decided here and now, thereby resiling from the position mentioned earlier in these orders. It will be relevant to mention that execution proceedings have not been initiated by the respondent/decree holder either in this Court or in any other Court in India. The insistence that territorial jurisdiction at New Delhi should be decided pursuant to an attempted invocation of Section 36 is not always innocuous, as I have already observed at the beginning of the order, but on the contrary is mala fide in this case. A party cannot be permitted to abuse judicial process by filing a frivolous petition in order to invoke the territorial jurisdiction of particular Court and thereby oust jurisdiction of all others. The correspondence which has been addressed by the petitioner shows that it had unfairly and unjustifiably insisted that the tender of money was to be in full and final settlement. If there is an insistence of this nature, Order XXI, Rule 1 does not come into operation. It is palpably clear to me that without any cause of action the present petition under Section 36 of the Act has been filed in order to unfairly take advantage of Section 42 of the Act. A dispute created by the petitioner of its own making is sought to be made the subject matter of the present petition. The observations in Pressteel's case (supra), sufficiently show that if an adjudication contested rights is insisted upon as in the present case, the Court has no alternative but to reject it as not maintainable. Since objections have been filed by the respondent, the Award will not be executable till such time as they are disposed of. The Hon'ble Supreme Court had opined as follows :

"Learned counsel then prayed that at least the amount representing that part of the Award which is in its favor should be directed to be deposited in the competent Civil Court by the respondents herein so that the applicant could enjoy the fruits of the said Award during further proceedings. At one point of time, considering the Award as a money decree, we were inclined to direct the party to deposit the awarded amount in the Court below so that the applicant can withdraw it, on such terms and conditions as the said Court might permit it to do as an interim measure. But then we noticed from the mandatory language of Section 34 of the 1996 Act, that an Award, when challenged under Section 34 within the time stipulated therein, becomes unexecutable. There is no discretion left with the Court to pass any interlocutory order in regard to the said Award except to adjudicate on the correctness of the claim made by the applicant therein. Therefore, that being the legislative intent, any direction from us contrary to that, also becomes impermissible. On facts of this case, there being no exceptional situation which would compel us to ignore such statutory provision, and to use our jurisdiction under Article 142, we restrain ourselves from passing any such order, as prayed for by the applicant."

9. Since the learned counsel for the petitioner has insisted that a ruling should be made on territorial jurisdiction, I have no alternative but to reject the petition, since, in my considered opinion, this Court does not have any territorial jurisdiction to entertain a petition under Section 36 of the Arbitration and Conciliation Act, 1996 or Order XXI of the Code of Civil Procedure as it does not have an executable decree before it.

10. It is clarified however that these orders should not be construed as deciding the issue of whether the Courts at Ranchi have jurisdiction to entertain and decide the objections filed by the respondent herein. It has been argued by Ms. Chopra that the contract between the parties contains a covenant that Delhi Courts alone shall have jurisdiction over future disputes. However, these considerations should be canvassed before the Court where the objections are presently pending.

11. Dismissed.