M/S P.K. Kharya Transporter Bpcl ... vs Bharat Petroleum Corporation ...
2022 Latest Caselaw 15411 MP

                                                       1


                             IN THE HIGH COURT OF MADHYA PRADESH, AT
                                                 JABALPUR

                                                   BEFORE
                            (HON'BLE SHRI JUSTICE VIJAY KUMAR SHUKLA)
                                       ON THE 23nd OF NOVEMBER, 2022
                                          Arbitration Case No. 42/2021
                           Between:-
                           1. M/S P.K. KHARYA
                           TRANSPORTER       BPCL   BHITONI,   BPCL
                           PETROLPUMP,        GOTEGAON,    DISTRICT
                           NARSINGHPUR, A PROPRIETARY FIRM THR.
                           ITS PROP. PRASANNA KUMAR KHARYA, S/O.
                           LATE SHRI VALLABH DAS KHARYA, A/A 52
                           YEARS, OCC. BUSINESS, R/O. SHASTRI WARD,
                           GOTEGAON, DISTRICT-NARSINGHPUR (M.P).

                           2.    PRASANNA      KUMAR      KHARYA,
                           TRANSPORTER BPCL BHITONI, BPCL PETROL
                           PUMP, GOTEGAON, DISTT.-NARSINGHPUR, S/O
                           LATE SHRIVALLABH DAS KHARYA, AGE 52
                           YEARS, OCC.-BUSINESS,R/O-SHASHTRI WARD
                           GOTEGAON, DISTRICT-NARSINGHPUR (M.P).

                                                                   .....APPLICANTS

                           (SHRI SANJAY RUSIA, LEARNED COUNSEL
                           FOR THE APPLICANTS).

                           AND




Signature Not Verified
Signed by: APARNA TIWARI
Signing time: 11/24/2022
5:14:27 PM
                                                                  2




                                1. BHARAT PETROLEUM CORPORATION
                                LIMITED, THR. ITS CHIEF MANAGING
                                DIRECTOR, REGD. OFFICE- BHARAT BHAWAN,
                                4-6, CURRIM BHAI ROAD, BALLARD ESTATE PB
                                NO. 688, MUMBAI 400001 (MAHARASHTRA).

                                2. TERRITORY MANAGER (RETAIL) BHARAT
                                PETROLEUM      CORPORATION   LIMITED,
                                BHITONI, POL DEPOT, NH 12, SHAHPURA
                                DISTRICT-JABALPUR (M.P)

                                                                       .....NON-APPLICANTS

                             (SHRI KAPIL JAIN, LEARNED COUNSEL FOR
                             THE NON-APPLICANTS).
                           ........................................................................................

                                This petition coming on for final hearing this day, the court
                           passed the following:
                                                       ORDER

This application has been filed by the applicant under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "The Act") for appointment of an arbitrator for settlement of disputes between the applicant and the non-applicants. The facts adumbrated in a nutshell is that the applicant is a transporter and running business of transport and respondent is a company registered under the Company Act and running the business of petroleum product.

Signature Not Verified Signed by: APARNA TIWARI Signing time: 11/24/2022 5:14:27 PM

The applicant entered into an agreement for hiring of tank lorries for movement of petroleum products with the non-applicant company for the purpose of transporting the petroleum products upto the year 2021, subject to terms and conditions stipulated in the agreement. The applicant started transportation work after the signing of the agreement. On 15/9/2020 one tank lorry of the applicant was loaded with 12 KL BMS for Bhitoni Oil Depot of the respondent company and transporting the same to M/S Raj Petroleum, Kotma. On the way to Kotma, the tank lorry met with an accident at Umaria bypass as a result of which, it got toppled. An explanation was sought by the non-applicant from the applicant by letter dated 19/9/2020 under Clause 9(A) of the agreement. The applicant submitted the explanation but the non-applicant did not decide the same and on the contrary, the amount of Rs.1,18,000/-, Rs.3,54,000/- and Rs.12,58,523/- were deducted/adjusted from the running account of the applicant.

Being aggrieved by the act of the non-applicant company, the applicant submitted explanation and invoked arbitration Clause 18 of the agreement and requested the non-applicant to refund the withhold amount of Rs.17,30,523/- along with the interest and to drop the proceedings initiated or to appoint the arbitrator for the purpose of adjudicating the dispute arising between the non-applicant and the

Signature Not Verified Signed by: APARNA TIWARI Signing time: 11/24/2022 5:14:27 PM

applicant. The non-applicant terminated the agreement on 05/01/2017 and blacklisted 12 tank lorries of the applicant.

Being aggrieved, by the termination order and blacklisting of the 12 tank lorries by the non-applicant, the applicant again submitted letter dated 25/2/2021 to withdraw the order but no decision was taken. It is submitted that the remedy provided in house in Clause 16 of the agreement was not effective remedy for the applicant. The arbitration Clause 16 of the agreement mentions that Director (Marketing) or some officer of the company nominated by the Director (Marketing) will act as Sole Arbitrator. However, as per the Arbitration and Conciliation (Amendment) Act, 2015, the officer of the company has become ineligible to become an arbitrator.

The applicant by letter dated 04/03/2021 proposed Shri S.N Sharma, retired District Judge to Act as Sole Arbitrator. The non- applicant by letter dated 02/04/2021 has shown his disagreement to the name of arbitrator proposed by the applicant.

Counsel for the applicant submitted that although in the agreement, it is mentioned that the dispute between the parties will be subject to Courts at Mumbai only but since the agreement itself has been executed at Jabalpur and transportation work was carried out at adjoining Districts of Jabalpur (M.P) and cause of action arose within the territorial jurisdiction of Jabalpur, therefore, the present

Signature Not Verified Signed by: APARNA TIWARI Signing time: 11/24/2022 5:14:27 PM

application is filed for appointment of arbitrator. He submitted that since the cause of action has arisen within the territorial jurisdiction of this Court, therefore, there would be concurrent jurisdiction at Jabalpur and Mumbai. In support of his submission, he has placed reliance on Para 96 of the judgment passed by the Apex Court in the case of Bharat Aluminium Co. v. Kaiser Aluminium Technical Services INC. (2012) 9 SCC 552.

He has also placed reliance on an order passed by the Apex Court in the case of Hindustan Construction Company Ltd. Vs. NHPC Ltd. and another (TRANSFER PETITION (C) No.3053/2019) dated 4/3/2020 and order dated 04/02/2019 passed by the Coordinate Bench at Jabalpur in AC No.107/2017 (Cobra CIPL Vs. Chief Project Manager).

Per contra learned counsel for the non-applicant opposed the prayer and submitted that due to lack of territorial jurisdiction of this Court, no case for appointment of arbitrator is made out by the applicant as the parties have already agreed that the dispute shall be subject to the Courts at Mumbai only, which is apparent from Clause 16 of the agreement. In order to buttress his submission, he has relied upon a judgment passed by the Apex Court in the case of Swastik Gases Pvt. Ltd. Vs. Indian Oil Corportation Ltd. (2013) 9 SCC 32 and also placed reliance on the judgments passed by Coordinate

Signature Not Verified Signed by: APARNA TIWARI Signing time: 11/24/2022 5:14:27 PM

Bench at Gwalior in the case of M/S Raghunath Singh Vs. Bharat Petroleum and another AC No.31/20 where the same arbitration clause was considered by the Court and it was held that this Court has no jurisdiction to entertain the application for appointment of arbitrator under Section 11(6) of the Act and the arbitration case was dismissed with liberty to the applicant to approach High Court of Mumbai.

He also referred an order dated 22.07.2019 passed by a Co- ordinate Bench of this Court at Jabalpur in the case of Kartar Fill and Fly Vs. Bharat Petroleum Corporation Ltd. AC No.33/2019 where the same view was taken and after considering the pari materia, clause of the agreement, the Court held that this Court has no jurisdiction to decide the application for appointment of Arbitrator under the Act, 1996.

I have heard learned counsel for the parties and perused the record.

The only issue which has cropped up for consideration before this Court is regarding the territorial jurisdiction. The agreement contains Clause 16 regarding arbitration. The relevant Clauses 'a' and 'g' of the arbitration clause are reproduced here as under:-

"(a) Any dispute or difference of any nature whatsoever, any claim, cross-claim, counter-claim or set off of the company against the contractor or regarding any right, liability, act,

Signature Not Verified Signed by: APARNA TIWARI Signing time: 11/24/2022 5:14:27 PM

omission or account of any of the parties hereto arising out of or in relation to this agreement shall be referred to the Sole Arbitration of the Director (Marketing) of the company or of some officer of the company who may be nominated by the Director (Marketing). The licensee will not be entitled to raise any objection to any such arbitrator on the ground that the arbitrator is an officer of the Company or that he has dealt with the matters to which the contract relates or that in the course of his duties as an Officer of the company, he had expressed view on all or any other matters in dispute or difference. In the event of the arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, the Director (Marketing) as aforesaid at the time of such transfer, vacation of office or inability to act may in the discretion of the Director (Marketing) designate another person to act as arbitrator in accordance with the terms of the agreement to the end and intent that the original Arbitrator shall be entitled to continue the arbitration proceedings notwithstanding his transfer or vacation of office as an officer of the Company if the Director (Marketing) does not designate another person to act as arbitrator on such transfer, vacation of office or inability of original arbitrator.

Such person shall be entitled to proceed with the reference from the point at which it was left by his predecessor. It is also a term of this contract that no person other than the Director (Marketing) of the Company or a person nominated by such Director (Marketing) as aforesaid shall act as

Signature Not Verified Signed by: APARNA TIWARI Signing time: 11/24/2022 5:14:27 PM

arbitrator hereunder. The award of the arbitrator so appointed shall be final, conclusive and binding on all parties to the agreement subject to the provisions of Arbitration and Conciliation Act, 1996 or any statutory modification or re-enactment thereof and the rules made there under for the time being in force shall apply to the arbitration proceedings under this clause.

g) The parties hereby agree that the courts in the city of Mumbai alone shall have jurisdiction to entertain any application or other proceedings in respect of anything arising under this agreement and any award or awards made by the Sole Arbitrator here under shall be filed (if, so required) in the concerned courts in the city of Mumbai only."

Section 20 of the Arbitration Act on which strong reliance is placed by counsel for the applicant reads as under:

"20. Place of arbitration.--

(1) The parties are free to agree on the place of arbitration. (2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.

(3) Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its

Signature Not Verified Signed by: APARNA TIWARI Signing time: 11/24/2022 5:14:27 PM

members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property."

A perusal of the aforesaid section itself clearly reveals that the Act allows the parties to determine the place of arbitration failing which Sub-sections 2 of Section 20 shall be applicable and the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. And, as per Sub-section 3 it is for the Arbitration Tribunal only to meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property. Thus, this Court is of the considered view that no help can be had by the applicant in relying upon Section 20 of the Arbitration Act, 1996 which clearly provides that it is for the arbitration tribunal only to decide about the place of arbitration; otherwise also, the Apex Court in the case of Swastik Gases Private Limited (supra) has held as under:

"32. For answer to the above question, we have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst providing for jurisdiction clause in the agreement the words like "alone","only", "exclusive" or "exclusive jurisdiction" have not been used but this, in our view, is not decisive and does not make any material difference. The intention of the parties--by having Clause 18 in the

Signature Not Verified Signed by: APARNA TIWARI Signing time: 11/24/2022 5:14:27 PM

agreement--is clear and unambiguous that the courts at Kolkata shall have jurisdiction which means that the courts at Kolkata alone shall have jurisdiction. It is so because for construction of jurisdiction clause, like Clause 18 in the agreement, the maxim expressio unius est exclusio alterius comes into play as there is nothing to indicate to the contrary.

This legal maxim means that expression of one is the exclusion of another. By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts. Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner.

34. In view of the above, we answer the question in the affirmative and hold that the impugned order does not suffer from any error of law. The civil appeal is, accordingly, dismissed with no order as to costs. The appellant shall be at liberty to pursue its remedy under Section 11 of the 1996 Act in the Calcutta High Court.

37. In my opinion, the very existence of the exclusion of jurisdiction clause in the agreement would be rendered meaningless were it not given its natural and plain meaning. The use of words like "only", "exclusively","alone" and so on are not necessary to convey the intention of the parties in an exclusion of jurisdiction clause of an agreement. Therefore, I agree with the conclusion that jurisdiction in the subject- matter of the proceedings vested, by agreement, only in the courts in Kolkata.

57. For the reasons mentioned above, I agree with my learned Brother that in the jurisdiction clause of an agreement, the absence of words like "alone", "only","exclusive" or "exclusive jurisdiction" is neither decisive nor does it make any material difference in deciding the jurisdiction of a court. The very existence of a jurisdiction clause in an agreement makes the intention of the parties to an agreement quite clear and it is not advisable to read such a clause in the agreement like a statute. In the present case,only the courts in Kolkata had jurisdiction to entertain the disputes between the parties."

(Emphasis Supplied)

In the case of Bharat Aluminium Company (supra)relied by the

Signature Not Verified Signed by: APARNA TIWARI Signing time: 11/24/2022 5:14:27 PM

counsel for the applicant, it was held that once the seat of arbitration is designated such clause then becomes an exclusive jurisdiction clause as a result of which, only the Courts where the seat is located would then have jurisdiction to the exclusion of other Courts.

In the case of Cobra CIPL (supra) Coordinate Bench held that the 'venue' and 'seat' are not synonymous. Two Courts have jurisdiction as per Section 20 of the Act where the cause of action is located and where arbitration takes place. The seat of arbitration is intended to be its center of gravity and where no seat is prescribed in the agreement, the Court on the basis of cause of action can exercise jurisdiction. In the present case, the aforesaid judgments relied by the learned counsel for the applicant would not render any assistance in view of specific clause in the arbitration Clause i.e 16(a) and 16(g) where the 'seat' of arbitration has been prescribed as Mumbai alone and the jurisdiction of all other Courts have been excluded.

Para 16(g) of the agreement which is part of arbitration clause reveals that the parties to the agreement have agreed upon Mumbai as the place of arbitration. The plain reading of the aforesaid clause bestows jurisdiction upon Mumbai Court as regards the proceedings of arbitration gives exclusive jurisdiction to the Mumbai Courts to the exclusion of all other Courts.

Signature Not Verified Signed by: APARNA TIWARI Signing time: 11/24/2022 5:14:27 PM

In view of the aforesaid discussion, it is held that this Court has no jurisdiction to decide the application filed by the applicant under Section 11(6) of the Act.

Accordingly, the same is dismissed however liberty is reserved to the applicant to file application in accordance with law before the Court at Mumbai for appointment of arbitrator.

(Vijay Kumar Shukla) JUDGE Pramod

Signature Not Verified Signed by: APARNA TIWARI Signing time: 11/24/2022 5:14:27 PM