Madhya Pradesh High Court
Yashwardhan Raghuwanshi vs District And Sessions Judge on 26 February, 2021
Author: Chief Justice
WP-19656-2020
[1]
THE HIGH COURT OF JUDICATURE FOR MADHYA PRADESH,
AT JABALPUR
(DIVISION BENCH)
WP-19656-2020
Yashwardhan Raghuwanshi ............ Petitioner
Vs.
District & Sessions Judge and another ......... Respondents
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Coram :
Hon'ble Mr. Justice Mohammad Rafiq, Chief Justice
Hon'ble Mr. Justice Vijay Kumar Shukla, Judge
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Presence :
Mr. Deepesh Joshi, Advocate for the petitioner.
Mr. Swapnil Ganguly, Deputy Advocate General for the State.
Mr. Anshuman Singh, Advocate for the High Court of M.P.
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Whether approved for reporting: Yes.
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Law Laid Down:
➔ As seen from the language employed in the definition clause of "Court"
in Section 2(1)(e) of the Arbitration Act and Conciliation Act,1996, the
Legislature intended to confer power in respect of the disputes
involving arbitration on the highest judicial Court of the District so as
to minimize the supervisory role of the Courts in the arbitral process
and, therefore, purposely excluded any Civil Court of a grade inferior
to such Principal Civil Court, or any Court of Small Causes.
Thus, in respect of commercial disputes involving arbitration
only the Commercial Court of the status of District Judge or Additional
District Judge would be the competent court to entertain the matters
under Sections 9, 14, 34 & 36 of the Arbitration Act and Conciliation
Act,1996. The impugned order to the extent of classifying the
commercial disputes having arbitration as subject matter on the basis of
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[2]
Civil Judge Class-I, Bhopal, would be violative of relevant provisions
of law. However, it can be sustained in so far as distribution of the work
of commercial disputes as per the value of the claim in cases other than
arbitration matters are concerned.
➔ The District Judge by virtue of Sections 7 & 15 of the Civil Courts Act
of 1958 would be entitled to distribute such work amongst any of the
Additional District Judges under his supervision, but not to any Court
of Civil Judge Class-I or Senior Civil Judge, or any Court of Small
Causes.
➔ The Court referred:
• Ess Kay Fincorp Limited and ors. vs. Suresh Choudhary and
others, AIR 2020 Raj 56.
• Fun N. Fud vs. GLK Associates, 2019 SCC Online Guj 4236.
• Vijay Cotton and Fiber Company Vs. Agarwal Cotton Spinning
Private Limited, R/Appeal No. 216 of 2018 decided on 11.02.2019.
• Kirtikumar Futarmal Jain vs. Valencia Corporation, in 2019 SCC
Online Guj 3972.
• Kandla Export Corporation and another vs. OCI Corporation and
another, (2018) 14 SCC 715.
• State of Maharashtra, through Executive Engineer vs. Atlanta
Limited, (2014) 11 SCC 619.
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Significant paragraphs: 11, 12, 13, 14 & 15.
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Heard on : 11.02.2021 (Hearing Convened through Video Conferencing)
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ORDER
(Passed on this 26th day of February, 2021)
Per: Mohammad Rafiq, Chief Justice
This writ petition has been filed by Yashwardhan Raghuwanshi, who is
an advocate practising law at Bhopal, assailing the validity of order dated 20 th
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[3]
of powers conferred upon him by Section 15(1) of the Madhya Pradesh Civil
Courts Act, 1958 (for short "the Civil Courts Act") read with Sections 194,
381(1) & 400 of the Code of Criminal Procedure, 1973 (for short "CrPC"),
distributing civil and criminal business amongst the various Additional
District Judges and Subordinate Judges working under his supervision in the
District of Bhopal. Challenge in particular is made to Entry No.45 of the
aforesaid order vide which the disputes/cases filed under the provisions of
Sections 9, 14, 34 & 36 of the Arbitration and Conciliation Act, 1996 (for
short "the Arbitration Act") involving commercial disputes under the
provisions of the Commercial Courts Act, 2015 (further be called as "the
Commercial Courts Act") of specified value between Rs.3 lac. to Rs.1 crore,
have been assigned to the Court of XX Civil Judge Class-I, Bhopal.
2. Mr. Deepesh Joshi, learned counsel for the petitioner submitted that
allocation/distribution of the judicial work by the District Judge with regard to
the commercial disputes filed under Sections 9, 14, 34 & 36 of the Arbitration
Act to the Court of XX Civil Judge Class-I is wholly incompetent inasmuch
as such allocation is based on wrongful interpretation of the legal provisions
of the Arbitration Act, the Commercial Courts Act as well as the Civil Courts
Act. It is contended that the District Judge has passed the aforesaid order in
exercise of the powers conferred upon him under Sections 15(1) of the Civil
Courts Act read with Sections 194, 381(1) and 400 of CrPC. The work
distribution circular numbered as Q/EK-01/2020 dated 20.10.2020 at Paras-
(C) & (D) of Entry No.45 assigned power to undertake trial of commercial
disputes for a specific category as per the Commercial Courts Act to the Court
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[4]
of XX Civil Judge Class-I, Bhopal, having pecuniary jurisdiction over matters
valued between Rs. 3 lac. and Rs.1 crore, which also includes the matter that
comes under the purview of the Arbitration Act. Learned counsel submitted
that the term "specified value" is defined in Section 2(1)(i) of the Commercial
Courts Act. It is evident from the aforesaid provision that "specified value" in
relation to a commercial dispute is determined on the basis of the subject
matter of the respective suit, appeal or application. Sub-section (3) of Section
10 of the Commercial Courts Act provides that all applications or appeals
arising out of arbitration under the provisions of the Arbitration Act shall be
tried before any Commercial Court having territorial jurisdiction. It is true
that the Court of XX Civil Judge Class-I, Bhopal has been designated as a
Commercial Court vide notification dated 02-03.04.2019 (Annexure-P/2), but
the Arbitration Act is a consolidated statute for law relating to any form of
arbitration dispute. The Legislature in so providing, intended to streamline the
commercial disputes arising out of arbitration in speedy manner, for which
purpose the Special Courts have been set up. With that end in view, the
Parliament has time and again made amendments in tune with modern day
developments.
3. Mr. Deepesh Joshi, learned counsel further argued that the term
"Court" for the purpose of Arbitration Act has been defined under Section
2(1)(e) of the Arbitration Act which inter-alia provides that "Court" means, in
cases of an arbitration other than international commercial arbitration, the
Principal Civil Court of original jurisdiction in a district, and includes the
High Court in exercise of its ordinary original civil jurisdiction, having
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[5]
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. In view of this provision, it is clear that any
commercial dispute involving arbitration shall be tried only by Principal Civil
Court of the superior most jurisdiction in the District i.e. the Court of District
Judge or at the maximum, it could be assigned to the Court of Additional
District Judge in a district as per Section 7 read with Section 15 of the Civil
Courts Act but it cannot be assigned to a Court inferior thereto. It is contended
that a conjoint reading of two Acts, namely, Arbitration Act and Commercial
Courts Act, makes it clear that only such "commercial matters" which do not
involve the arbitration matters can be assigned to a notified Commercial
Court of the status of a Senior Civil Judge but all matters involving both
Commercial Courts Act as well as Arbitration Act can only be tried by the
Principal Civil Court of original jurisdiction. The Court of XX Civil Judge
Class-I, Bhopal is therefore wholly incompetent to entertain, try and decide
the arbitration disputes.
4. Mr. Deepesh Joshi, learned counsel for the petitioner invited attention
of the Court towards Section 11 of the Commercial Courts Act which inter-
alia provides that notwithstanding anything contained in this Act, a
Commercial Court or a Commercial Division, shall not entertain or decide
any suit, application or proceedings relating to any commercial dispute in
respect of which the jurisdiction of Civil Court is either expressly or
impliedly barred under any other law for the time being in force. The
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[6]
jurisdiction of Commercial Courts of the status of Senior Civil Judge to
entertain any suit, application or proceeding pertaining to Arbitration Act
involving commercial disputes is expressly barred. Moreover, as per Section
13 of the Commercial Courts Act, an appeal against the order of Commercial
Court (XX Civil Judge Class-I) shall lie to the Commercial Appellate Court
(XIX Additional District Judge), which has been designated as Commercial
Appellate Court by notification of the Government dated 26.10.2019 with
allocation of the work in sub-para (D) and sub-para (E) of Para-23 of the
order dated 04.02.2020 and then it has furrther provided appeal to the High
Court. On the other hand, the Arbitration Act provides for only one appeal to
the High Court under Section 37 of the Arbitration Act against the order of the
Principal Civil Court. When the "commercial arbitration matters" are clubbed
together, they create an ambiguity and conflict. It is however settled law that
when there is conflict between two central enactments, the provision of
special law should prevail over the general law. Thus on applying the doctrine
of harmonious construction on the provisions of both the statutes, it is clear
that they are best harmonized by giving effect to the special statute i.e. the
Arbitration Act vis-a-vis the more general statute i.e. the Commercial Courts
Act.
5. Mr. Deepesh Joshi, learned counsel for the petitioner in support of his
arguments has relied on a Division Bench judgment of Rajasthan High Court
in the case of Ess Kay Fincorp Limited and ors. vs. Suresh Choudhary and
others, reported in AIR 2020 Raj 56; another Division Bench judgment of
Gujarat High Court in the case of Fun N. Fud vs. GLK Associates reported in
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[7]
2019 SCC Online Guj 4236; judgments of Supreme Court in Kandla Export
Corporation and another vs. OCI Corporation and another reported in
(2018) 14 SCC 715 and State of West Bengal and other vs. Associated
Contractors reported in (2015) 1 SCC 32; judgment of Uttarakhand High
Court at Nainital passed in Appeal From Order No.378 of 2019, [M/s. Dalip
Singh Adhikari vs. State of Uttarakhand and another] dated 23.09.2019 and
judgment of this Court in the case of Mold-Tek Packaging Ltd. vs. S.D.
Containers, Indore reported in 2020 (4) MPLJ 353.
6. Mr. Swapnil Ganguly, learned Deputy Advocate General for the State
relying upon the judgment of Supreme Court in the case of Kandla Export
Corporation (supra) submitted that the Supreme Court in that case has held
that the Arbitration Act and the Commercial Court Act are both speedy
resolution disputes between the parties. These statutes can be best harmonized
by giving effect to the special statue i.e. the Arbitration Act vis-a-vis the more
general statute i.e. the Commercial Courts Act, which shall be left over to
operate in spheres other than arbitration. It is argued that as per Section 7 of
the Civil Courts Act the Principal Civil Court of original jurisdiction in a
District is the Court of District Judge. Sub-section (2) of Section 7 of the Civil
Courts Act provides that an Additional District Judge shall also discharge any
of the functions, of a District Judge, including the functions of a Principal
Civil Court of original jurisdiction which the District Judge may, by general
or special order, assign to him and in discharge of such functions, he shall
exercise the same powers as a District Judge. It is thus clear that it is the
Court of District Judge or the Court of Additional District Judge who both are
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[8]
competent to exercise the powers of Principal Civil Court of an original
jurisdiction. Since the High Court of Madhya Pradesh does not have the
ordinary original civil jurisdiction as far as arbitration matters are concerned,
it is the Principal Civil Court of original jurisdiction which has been vested
with the powers to entertain disputes under Sections 9 & 34 of the Arbitration
Act. Learned Deputy Advocate General argued that as per Section 10(3) of
the Commercial Courts Act, applications or appeals under the Arbitration Act,
which were earlier filed before the Principal Civil Court of original
jurisdiction in a district, are now being adjudicated by the Commercial Courts
exercising territorial jurisdiction over such arbitration matters. It is only the
Court of District Judge or the Additional District Judge who have the power
to exercise the original jurisdiction of a Principal Civil Court. Learned Deputy
Advocate General in support of his arguments relied on the judgment of
Rajasthan High Court in the case of Hindustan Copper Limited vs. M/s.
Bhagwati Gases Ltd, reported in 2005 Vol. IV WLC 251 and another
judgment of Rajasthan High Court in Hindustan Copper Ltd. vs. Paramount
Ltd. and another reported in 2018 SCC Online Raj 3055. As per Section 3
of the Commercial Courts Act there can be one or more Commercial Courts in
a district, one comprising of a District Judge or other of a Judge lesser than a
District Judge, depending upon the pecuniary limit of the matter involved.
However, when it comes to arbitration matters under the Commercial Courts
Act, the same are exclusively adjudicable by the Principal Civil Court of
original jurisdiction, which is clearly the Court of District Judge or the Court
of Additional District Judge. Therefore, the conferment of power on the Court
of Civil Judge Class-I is contrary to law.
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[9]
7. Mr. Anshuman Singh, learned counsel appearing for the Madhya
Pradesh High Court has argued that the question raised by the petitioner in the
present case stands already answered by the Supreme Court in State of
Maharashtra, through Executive Engineer vs. Atlanta Limited reported in
(2014) 11 SCC 619, wherein, in the context of two Courts having concurrent
jurisdiction, it was held that appeal against the award in cases where the
District Court as the Principal Civil Court exercises original jurisdiction under
the Arbitration Act, would lie to the High Court. It was held from the
definition of "Court" as provided under Section 2(1)(e) of the Arbitration Act,
it is imperative that within the area of jurisdiction of the Principal District
Judge, only the High Court of Bombay is exclusively the competent court
under its ordinary original civil jurisdiction to adjudicate upon the matter. The
very inclusion of the High Court "in exercise of its ordinary original civil
jurisdiction", within the definition of the "Court", will be rendered nugatory,
if the above conclusion is not to be accepted. This is because, the "Principal
Civil Court of Original Jurisdiction in a district", namely, the District Judge
concerned, being a court lower in grade than the High Court, the District
Judge concerned would always exclude the High Court from adjudicating
upon the matter. Accordingly, the principle enshrined in Section 15 of Code of
Civil Procedure cannot be invoked whilst interpreting Section 2(1)(e) of the
Arbitration Act, held the Supreme Court.
8. We have given our anxious consideration to the submissions made at
the Bar, studied the cited precedents and perused the material available on
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[10]
9. In order to appreciate the question of law raised in the matter, we deem
it appropriate to reproduce the provision of Section 2(1)(e) of the Arbitration
Act, which reads as under:
"2. Definitions.- (1) In this Part, unless the contest otherwise requires,-
(a) xxxxxx
(b) xxxxxx
(c) xxxxxx
(e) "Court" means,- in the case of an arbitration other than international
commercial arbitration, 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."
Also reproduced hereunder are the provisions of Sections 2(1)(b), 2(1)
(e), 3, 10 & 15(2) of the Commercial Courts Act, which read as under:-
"2. Definitions.- (1) In this Act, unless the context otherwise requires,-
(a) xxxxxx
(b) "Commercial Court" means the Commercial Court constituted under
sub-section (1) of section 3
(c) xxxxxx
(d) xxxxxx
(e) "District Judge" shall have the same meaning as assigned to it in
clause (a) of article 236 of the Constitution of India;
3. Constitution of Commercial Courts.-- (1) The State Government,
may after consultation with the concerned High Court, by notification,
constitute such number of Commercial Courts at District level, as it may
deem necessary for the purpose of exercising the jurisdiction and
powers conferred on those Courts under this Act:
Provided that with respect to the High Courts having ordinary original
civil jurisdiction, the State Government may, after consultation with the
concerned High Court, by notification, constitute Commercial Courts at
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[11]
Provided further that with respect to a territory over which the High
Courts have ordinary original civil jurisdiction, the State Government
may, by notification, specify such pecuniary value which shall not be
less than three lakh rupees and not more than the pecuniary jurisdiction
exercisable by the District Courts, as it may consider necessary.
(1A) Notwithstanding anything contained in this Act, the State
Government may, after consultation with the concerned High Court, by
notification, specify such pecuniary value which shall not be less than
three lakh rupees or such higher value, for whole or part of the State, as
it may consider necessary.
(2) The State Government shall, after consultation with the concerned
High Court specify, by notification, the local limits of the area to which
the jurisdiction of a Commercial Court shall extend and may, from time
to time, increase, reduce or alter such limits.
(3) The State Government may, with the concurrence of the Chief
Justice of the High Court appoint one or more persons having
experience in dealing with commercial disputes to be the Judge or
Judges, of a Commercial Court either at the level of District Judge or a
court below the level of a District Judge.
*** *** *** ***
10. Jurisdiction in respect of arbitration matters.- Where the subject-
matter of an arbitration is a commercial dispute of a Specified Value
and--
(1) If such arbitration is an international commercial arbitration, all
applications or appeals arising out of such arbitration under the
provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996)
that have been filed in a High Court, shall be heard and disposed of by
the Commercial Division where such Commercial Division has been
constituted in such High Court.
(2) If such arbitration is other than an international commercial
arbitration, all applications or appeals arising out of such arbitration
under the provisions of the Arbitration and Conciliation Act, 1996 (26 of
1996) that have been filed on the original side of the High Court, shall
be heard and disposed of by the Commercial Division where such
Commercial Division has been constituted in such High Court.
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[12]
(3) If such arbitration is other than an international commercial
arbitration, all applications or appeals arising out of such arbitration
under the provisions of the Arbitration and Conciliation Act, 1996 (26 of
1996) that would ordinarily lie before any principal civil court of
original jurisdiction in a district (not being a High Court) shall be filed
in, and heard and disposed of by the Commercial Court exercising
territorial jurisdiction over such arbitration where such Commercial
Court has been constituted.
*** *** *** ***
15. Transfer of pending cases.-
(1)xxxxxx
(2) All suits and applications, including applications under the
Arbitration and Conciliation Act, 1996 (26 of 1996), relating to a
commercial dispute of a specified Value pending in any civil court in
any district or area in respect of which a Commercial Court has been
constituted, shall be transferred to such Commercial Court:
Provided that no suit or application where the final judgment has been
reserved by the Court prior to the constitution of the Commercial
Division or the Commercial Court shall be transferred either under sub-
section (1) or sub-section (2)"
10. The Gujarat High Court in M/s. OCI Corporation vs. Kandla Export
Corporation reported in 2016 SCC Online Guj 5981 was dealing with a case
where M/s. OCI Corporation filed application under Section 15(5) of the
Commercial Courts Act read with Section 2(1)(e)(ii) and Section 47 of the
Arbitration Act, seeking clarification and appropriate direction for transfer of
execution petition pending before the District Court, Gandhidham-Kutch
either to the High Court of Gujarat or to appropriate Commercial
Court/Commercial Division. Gujarat High Court on analysis of provisions of
Sections 2(1)(e), 47 of the Arbitration Act and Section 2(1)(i), Sections 6, 10,
15 of the Commercial Courts Act in Para-11 held as under:
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[13]
"11. The sum and substance of the above discussion would be,
(1) Where the subject matter of an arbitration is a commercial dispute of
a specified value and if such arbitration is international commercial
arbitration, all the applications or appeals arising out of such arbitration
under the provisions of the Arbitration and Conciliation Act, 1996 shall
be heard, decided and disposed of by the Commercial Division where
such commercial Division has been constituted in the High Court i.e. in
the present case High Court of Gujarat.
(2) Where the subject matter of an arbitration is a commercial dispute
but not of a specified value and if such arbitration is international
commercial arbitration, considering the provisions of Arbitration and
Conciliation (Amendment) Act, 2015 the same shall be heard, decided
and disposed of by the concerned High Court.
(3) Where the subject matter of an arbitration is a commercial dispute of
a specified value and if such arbitration is other than international
arbitration, all the applications or appeals arising out of such arbitration
under the provisions of the Arbitration and Conciliation Act, 1996 shall
be filed in and heard, decided and disposed of by the Commercial Court
exercising territorial jurisdiction over such arbitration where such
commercial court has been constituted.
Considering section 15 of the Commercial Courts Act, all the
applications/appeals in question under the Arbitration and Conciliation
Act, 1996, therefore, are required to be transferred to the concerned
Commercial Division of the High Court of Gujarat or before the Gujarat
High Court or before the concerned commercial court and as observed
hereinabove and as the case may be."
The aforesaid judgment was subjected to challenge before the Supreme
Court by Kandla Export Corporation, which was dismissed vide order dated
03.03.2017. Similar dispute again arose before Gujarat High Court at
Ahmedabad in Vadodara Mahanag Seva Sadan Formaly known as
Municipal Corporation Vs. M S Khurana Engineering Ltd. (R/Special Civil
Application No. 13736 of 2018 decided on 06.09.2018) wherein Division
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[14]
Corporation (supra), reiterated the same view. The question as to which
Court would be competent to exercise jurisdiction for execution of award
passed under the Arbitration Act was also answered by the Gujarat High
Court in Vijay Cotton and Fiber Company Vs. Agarwal Cotton Spinning
Private Limited, R/Appeal No. 216 of 2018 decided on 11.02.2019 holding
that only the Commercial Court of competent jurisdiction would be the Court
to execute the decree and not the ordinary Civil Court constituted under
Gujarat Civil Courts Act.
11. The question that cropped up for consideration before the Division
Bench of the Rajasthan High Court in the case of Ess Kay Fincorp Limited
(supra) was as to which of the two Courts, namely, Principal Civil Court
having original jurisdiction in a district, as defined under Section 2(1)(e) of
the Arbitration Act, or the Commercial Court constituted under Section 3(1)
of the Commercial Courts Act, as defined under Section 2 (b) of that Act,
would be competent to execute arbitral award on a "commercial dispute"
passed under the Arbitration Act. The Rajasthan High Court on analysis of
law held as under:
"17. A conjoint reading of Section 10(3) and 15(2) of the
Commercial Courts Act makes it clear that an application under Section
36 of the Arbitration Act, seeking execution of award, satisfies the
requirement of "being application arising out of such arbitration under
the provisions of the Act of 1996". If such application is pending before
any Principal Civil Court of original jurisdiction in a district, the same
shall be transferred to Commercial Court exercising territorial
jurisdiction over such arbitration where such Commercial Court has
been constituted. In view of Section 10(3) of the Commercial Courts
Act, since the awards in the present set of cases have been rendered in
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[15]
of the Arbitration Act having regard to provisions of Section 15(3) of
the Commercial Courts Act, which contemplates transfer of all such
pending applications to Commercial Court, as a legal corollary thereto,
would also be liable to be filed and maintained before the Commercial
Court and not the ordinary Civil Court/Principal Court of District Judge.
*** *** *** ***
19. In view of above, we answer the question of law formulated
in the beginning of this judgment in the terms that the Commercial
Court constituted under Section 3(i) of the Commercial Courts,
Commercial Division and Commercial Appellate Division of High
Courts Act, 2015, as defined in Section 2(b) of that Act, would be the
only competent Court to execute an arbitral award on a "commercial
dispute" passed under the Arbitration and Conciliation Act, 1996 and
not the Principal Civil Court having the original jurisdiction in the
District i.e. the Court of District and Sessions Judge as defined under
Section 2(1)(e) of the Arbitration and Conciliation Act, 1996."
12. The Gujarat High Court in the case of Fun N fud (supra) was
examining the validity of the order passed by the 2 nd Additional District
Judge, Dahod by which it declined to hear an application preferred by the
applicant therein under Section 9 of the Arbitration Act on the ground that it
has no jurisdiction to hear and entertain such application and, therefore,
returned the application to be presented before the Court of Principal Senior
Civil Judge. It was argued that Section 2(1)(e) of the Arbitration Act,
expressly excludes any Civil Court of a grade inferior to such Principal Civil
Court, or any Court of Small Causes. In view of Section 11 of the
Commercial Courts Act, which bars a Commercial Court from deciding any
suit, application or proceedings relating to any commercial dispute in respect
of which the jurisdiction of the Civil Court is either expressly or impliedly
barred under any other law for the time being in force, the Commercial Court
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[16]
which is a Civil Court of a grade inferior to such Principal Civil Court, or any
Court of small causes, would be barred from exercising jurisdiction under
Section 9 or any provision of the Arbitration Act.
13. In Kirtikumar Futarmal Jain vs. Valencia Corporation reported in
2019 SCC Online Guj 3972 challenge was made to the order passed by the
Principal District Judge, Surat in the Commercial Appeal preferred by the
respondents against the order passed by the Arbitral Tribunal on the
application made by the applicant under Section 17 of the Arbitration Act.
The Commercial Court allowed the application filed under Section 37(2) of
the Arbitration Act. The applicant in those facts approached the Commercial
Court at Vadodara by way of application under Section 9 of the Arbitration
Act with the prayer that the respondents be restrained from transferring or
alienating the properties of the Firm or creating any right in favour of any
third party. On behalf of the petitioner it was argued that the impugned order
passed by the Principal District Judge was without jurisdiction inasmuch as
the Principal District Judge had no power to entertain an application under
Section 37 of the Arbitration Act. The Gujarat High Court in Paras- 16.1, 16.2
& 20.6 held as under:
"16.1 Insofar as the jurisdiction of the learned Principal District
Judge to entertain the appeal under section 37 of the Arbitration Act is
concerned, the learned counsel invited the attention of the court to sub-
section (2) of section 37 of the Arbitration Act to submit that the appeal
in the present case is preferred under clause (b) of sub-section (2) of
section 37, which provides for an appeal to a court from an order of an
Arbitral Tribunal granting or refusing to grant an interim measure under
section 17 of that Act. It was submitted that the expression employed in
sub-section (2) of section 37 is "court". Reference was made to clause
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[17]
(e) of section 2 of the Arbitration Act, which defines "court" to mean, in
the case of an arbitration other than international commercial arbitration,
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 question 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. It was submitted
that therefore clause (e) of section 2 of the Arbitration Act lays down
that "court"shall mean the principal Civil Court of original jurisdiction
in a district, and specifically excludes any civil court of a grade inferior
to such principal Civil Court or any court of Small Causes.
16.2 Reference was made to section 12 of the Gujarat Civil
Courts Act, 2005, which provides for jurisdiction of a court of District
Judge and postulates that a court of District Judge shall be the principal
Civil Court of original jurisdiction within the local limits of its
jurisdiction. It was submitted that the word "court" used under section
37(2)(b) of the Arbitration Act is the District Court. Moreover, section
2(e) of the Arbitration Act, specifically excludes any court of a grade
inferior to such principal Civil Court or any Court of Small Causes from
the ambit of the expression "court". It was submitted that source of
appeal in this case is under section 37 of the Arbitration Act and the
right flows from section 37. It was submitted that access to such appeal
can be channelised through the concerned section of the Commercial
Courts Act, but the right to appeal does not flow from the Commercial
Courts Act.
*** *** *** ***
20.5 In this regard it may be noted that section 11 of the
Commercial Courts Act provides that a Commercial Court or a
Commercial Division shall not entertain or decide any suit, application
or proceedings relating to any commercial dispute in respect of which
the jurisdiction of the civil court is either expressly or impliedly barred
under any law for the time being in force. Clause (i) of section 2(e) of
the Arbitration Act which defines the expression 'court' not only vests
jurisdiction in the principal Civil Court of original jurisdiction in a
district, including the High Court in exercise of its ordinary original
civil jurisdiction, having jurisdiction to decide the questions forming the
Signature
SAN Not subject matter of the arbitration if the same had been the subject matter
Verified
Digitally signed by
SAIFAN KHAN
Date: 2021.02.26
17:13:08 IST
WP-19656-2020
[18]
of a suit, but it expressly excludes any civil court of a grade inferior to
such principal Civil Court, or any Court of Small Causes.
20.6 Thus, section 2(e)(i) of the Arbitration Act expressly
excludes any civil court of a grade inferior to such principal Civil Court,
or any Court of Small Causes. Therefore, in view of section 11 of the
Commercial Courts Act, which bars a Commercial Court from deciding
any suit application or proceedings relating to any commercial dispute
in respect of which the jurisdiction of the civil court is either expressly
or impliedly barred under any other law for the time being in force; read
with the provisions of section 37(2)(b) of the Arbitration Act, any
Commercial Court which is a civil court of a grade inferior to such
principal Civil Court or any Court of Small causes, would be barred
from exercising jurisdiction under section 37(2) (b) of the Act. The
Supreme Court in State of West Bengal v. Associated Contractors
(supra), has held that section 2(1)(e) contains an exhaustive definition
marking out only the Principal Civil Court of original jurisdiction in a
district or a High Court having original civil jurisdiction in the State,
and no other court as 'court' for the purpose of Part 1 of the Arbitration
Act, 1996."
14. It would be thus evident from the language employed by the
Legislature in the definition clause of "Court" in Section 2(1)(e) of the
Arbitration Act that it intended to confer power in respect of the disputes
involving arbitration on the highest judicial Court of a District so as to
minimize the supervisory role of the Courts in the arbitral process and,
therefore, purposely excluded any Civil Court of grade inferior to such
Principal Civil Court, or any Court of Small Causes. The Court of superior
most jurisdiction in a District is the Court of District Judge as interpreted by
the Supreme Court in the case of Atlanta Limited (supra). The jurisdiction in
respect of arbitration matter is provided in Section 10 of the Commercial
Courts Act and Section 15 thereof contemplates transfer of all suits and
Signature
SAN Not applications including the application under the Arbitration Act pending in
Verified
Digitally signed by
SAIFAN KHAN
Date: 2021.02.26
17:13:08 IST
WP-19656-2020
[19]
Civil Courts in any district or pending in High Court where Commercial
Division is constituted or area in respect of which the Commercial Courts
have been constituted. While Section 11 of the Commercial Courts Act bars
the jurisdiction of a Commercial Court or a Commercial Division to entertain
or decide any suit, application or proceedings relating to any commercial
dispute in respect of which the jurisdiction of the Civil Court is either
expressly or impliedly barred under any other law for the time being in force,
Section 21 of the Commercial Courts Act stipulates that save as otherwise
provided, the provisions of this Act shall have effect, notwithstanding
anything inconsistent therewith contained in any other law for the time being
in force or in any instrument having effect by virtue of any law for the time
being in force other than this Act. Segregation of an arbitration matters on the
basis of a pecuniary limit is not what the law provides for. All the arbitration
matters, irrespective of the value of claim, are required to be adjudicated by
Principal Civil Court of original jurisdiction. Therefore, it is clear that in
respect of commercial disputes involving an arbitration dispute only the
Commercial Court of the status of District Judge or Additional District Judge
would be the competent court to entertain the matters under Sections 9, 14, 34
& 36 of the Arbitration Act. Although, the impugned order can be sustained in
so far as the distribution of the commercial disputes of the value of the claim
in cases other than arbitration matters are concerned. The impugned order to
the extent of classifying the commercial disputes having subject matter of
arbitration on the basis of valuation and conferring powers therefor on the
Court of XX Civil Judge Class-I, Bhopal, would be violative of relevant
provisions of law.
Signature
SAN Not
Verified
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SAIFAN KHAN
Date: 2021.02.26
17:13:08 IST
WP-19656-2020
[20]
15. In view of the above discussions, the present petition deserves to
succeed. The Entry No.45 of the impugned order dated 20.10.2020 is set
aside. It is hereby declared that the Court of District Judge as the Principal
Civil Court of original jurisdiction would be competent to decide the
matters/disputes filed under the provisions of Sections 9, 14, 34 & 36 of the
Arbitration Act and also under the provisions of the Commercial Courts Act
regardless of the value of claim. However, the District Judge by virtue of
Section 7 read with Section 15 of the Civil Courts Act would be entitled to
distribute such work amongst any of the Additional District Judges under his
supervision, but not to any Court of Civil Judge Class-I or Senior Civil Judge,
or any Court of Small Causes.
The writ petition is accordingly allowed. A copy of this order be
endorsed to the Registrar General of the High Court for being circulated
amongst all the District & Sessions Judges of the State.
(MOHAMMAD RAFIQ) (VIJAY KUMAR SHUKLA)
CHIEF JUSTICE JUDGE
[email protected]
Signature
SAN Not
Verified
Digitally signed by
SAIFAN KHAN
Date: 2021.02.26
17:13:08 IST
