Madhya Pradesh High Court
Shabban Khan vs Hdfc Bank Ltd. on 17 June, 2025
Author: Vishal Dhagat
Bench: Milind Ramesh Phadke, Vishal Dhagat
1
IN THE HIGH COURT OF MADHYA PRADESH
AT G WA L I O R
BEFORE
HON'BLE SHRI JUSTICE MILIND RAMESH PHADKE
ARBITRATION APPEAL NO. 13 of 2019
SHABBAN KHAN
Versus
HDFC BANK LIMITED & ANR.
Appearance:
Shri N.K. Gupta - learned senior counsel with Shri Shatru
Daman Singh Bhadouriyia - learned counsel for the appellant.
Shri S.K. Shrivastava - learned counsel for the respondent
No.1.
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Reserved on : 01.05.2025
Delivered on : 17.06.2025
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ORDER
Invoking the appellate jurisdiction of this Court under
Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter
called as "Act of 1996"), the appellant has preferred this appeal
questioning the order passed by VIth Additional District Judge,
Guna in MJC No. 40/2018 dated 13.08.2018 whereby the
proceedings with regard to the application under Section 34 of the
Act of 1996 filed by the appellant has been closed for want of
jurisdiction.
2. Short facts of the case are that one vehicle bearing
regstration No MP08 HA 3008 TATA 2518 was financed by
respondent No 1/Bank to the appellant and respondent No 2 was the
surety. The appellant failed to deposit the installment as per
agreement, hence the matter was referred to the Arbitrator at Indore
and the Arbitrator had passed an award on 27.06.2014 ex-parte in
absence of any notice received by the appellant and as he was
absent, he was not having any knowledge about passing of the
award by the Arbitrator. On the basis of award dated 27.06.2014, the
respondent No l filed an execution application in the Court of
District Judge Guna which was assigned as per Distribution Memo
to Third Additional District Judge Guna from where the appellant
received a notice for appearance in the execution case on
10.05.2018. After receiving the execution notice, the appellant got
knowledge that an award has been passed by the Arbitrator at Indore
while the respondent No l Bank had financed the vehicle at Guna as
the respondent No l Bank is having branch office at Guna. Hence,
the Appellant filed an application under Section 34 of the Act
alongwith the application under Section 5 of Limitation Act. In para
4 of the application, it was mentioned by the appellant that he had
no knowledge about the award and it was only when he received
notice issued by the Executing Court i.e. Third Additional District
Judge Guna and on appearance, copy of the award was supplied that
he got knowledge that there is an award of which execution was
filed and since the Civil Court was closed due to summer vacation,
on the next opening day i.e. 18.06.2018 an application under Section
34 of the Act was filed . On the appellant's application, no notice
was issued to the respondent rather the learned Sixth Additional
District Judge Guna to whom the case was assigned by the District
Judge as per Distribution Memo vide impugned order dated
13.08.2018 held that since the award has been passed at Indore,
therefore, the application under Section 34 of the Act would lie at
Indore and not at Guna and held that the Court is not having
jurisdiction. Hence, assailing the order dated 13.08.2018, the present
petition has been filed.
3. Learned senior counsel for the petitioner submits that the
respondent No l himself has filed execution application which is
pending before Third Additional District Judge Guna and without
considering the facts pleaded in the application learned court below
has erred in holding that the Court is not having jurisdiction at Guna
which is prima facie wrong.
4. It is further submitted that as per Section 42 of the Act of
1996 also the Court where any application under this part has been
made that Court alone shall have jurisdiction over the arbitral
proceedings and all other subsequent applications arising out of that
agreement or the arbitral proceeding. In the case in hand, the first
application was moved by the respondent No l for execution with
regard to the arbitral proceeding at Guna, hence on this count also
the Court at Guna was having jurisdiction but without considering
the fact in right perspective, the order impugned has been passed
which is bad in law.
5. It is further submitted that the HDFC Bank branch is
situated at Guna, the vehicle was financed at Guna and the parties
are living in Guna, hence, the District Court Guna is having
jurisdiction to hear and decide the application under Section 34 of
the Act but contrary to law the order impugned has been passed.
6. It is further submitted that learned trial Court has erred in
not perusing the contents of the application of the appellant wherein
in para 4 of the application all facts have already been narrated by
the appellant hence the order impugned can be said to have been
passed without going through the contents of the application, thus,
deserves to be quashed and therefore, it is prayed that the impugned
order dated 13.08.2018 be set-aside. To bolster his submissions,
learned senior counsel has relied upon the judgment of Hon'ble
Apex Court rendered in the case of State of West Bengal and Ors.
Vs. Associated Contractors reported in (2015) 1 SCC 32.
7. Per contra, learned counsel for the respondent No.1 submits
that the Court where the award has been passed alone has
jurisdiction to examine the validity of the same. Thus, no illegality
has been committed by learned court below in holing that the Court
at Guna is having no jurisdiction to entertain the application filed by
the appellant under Section 34 of the Act of 1996. To bolster his
submissions, learned counsel for the respondent no.1 has relied upon
the judgment of High Court of Chhattisgarh at Bilaspur rendered in
Arbitration Appeal No. 19 of 2019 (Shail Shrivastava Vs. Magma
Fincrop Ltd.) dated 22.06.2018 and in Arbitration Appeal no. 32 of
2018 (Sachin Choudhary & Anr. Vs. Cholamandalam Investment
and Finance Company Ltd.) dated 17.01.2019.
8. Heard counsel for the parties and perused the record.
9. Admittedly, the Arbitrator has passed the award dated
27.06.2014 at Indore. The said award has been questioned by way of
application under Section 34 of the Act, 1996 on 18.06.2018 before
the learned District Judge at Guna. Since the award has been passed
at Indore, therefore, the Court below has no jurisdiction to decide
the same in view of the provisions prescribed under Section 42 of
the Act, 1996, which reads as under:
"42. Jurisdiction.-- Notwithstanding anything contained
elsewhere in this Part or in any other law for the time being in
force, where with respect to an arbitration agreement any
application under this Part has been made in a Court, that
Court alone shall have jurisdiction over the arbitral proceedings
and all subsequent applications arising out of the agreement and
the arbitral proceedings shall be made in that Court and in no
other Court."
10. In a very recent judgment rendered by the Apex Court in
the case of BBR (India) Pvt. Ltd. vs S.P. Singhla Constructions
Private Ltd. Passed in Civil Appeal Nos. 4130-4131 OF 2022
dated 18.05.2022 in Para 31 has held as under:-
"31. We have already referred to the first few sentences of
the aforementioned paragraph and explained the reasoning
in the context of the present case. The paragraph BGS SGS
Soma (supra) also explains the non-obstante effect as
incorporated in Section 42 to hold that it is evident that the
application made under Part-I must be to a court which
has a jurisdiction to decide such application. Where 'the
seat' is designated in the agreement, the courts of 'the seat'
alone will have the jurisdiction. Thus, all applications
under Part-I will be made in the court where 'the seat' is
located as that court would alone have jurisdiction over the
arbitration proceedings and all subsequent proceedings
arising out of the arbitration proceedings. The quotation
also clarifies that when either no 'seat' is designated by an
agreement, or the so- called 'seat' is only a convenient
venue, then there may be several courts where a part of the
cause of action arises that may have jurisdiction. An
application under Section 9 of the Act may be preferred
before the court in which a part of cause of action arises in
the case where parties had not agreed on the 'seat of
arbitration'. This is possible in the absence of an
agreement fixing 'the seat', as an application
under Section 9 may be filed before 'the seat' is determined
by the arbitral tribunal under Section 20(2) of the Act.
Consequently, in such situations, the court where the
earliest application has been made, being the court in
which a part or entire of the cause of action arises, would
then be the exclusive court under Section 42 of the Act.
Accordingly, such a court would have control over the
arbitration proceedings."
11. By virtue of the aforesaid provision, it is clear that the
Court with whose limits the seat had been determined by the arbitral
tribunal will alone has the jurisdiction and to examine the validity of
the award. The issue of a like nature in relation to the aforesaid
provision has been dealt with by the Supreme Court in the matter of
M/s. Bhandari Udyog Limited v. Industrial Facilitation Council
and another reported in AIR 2015 SC 1320 and observed at
paragraphs 8, 9 & 10 of its judgment as under:
"8. ........... Admittedly, the arbitration proceeding was concluded
within the jurisdiction of Raichur Court. The only forum available
to respondent No. 2 was to make an application under Section 34 of
the Act before the Civil Court of original jurisdiction at Raichur,
since the Karnataka High Court has no original jurisdiction.
9. Recently, when a similar question for consideration arose before
three Judges Bench of this Court in the case of State of West Bengal
& Ors. v. Associated Contractors (2015) 1 SCC 32 : (AIR 2015 SC
260), this Court held :---
"22. One more question that may arise under Section 42 is whether
Section 42 would apply in cases where an application made in a
court is found to be without jurisdiction. Under Section 31(4) of the
old Act, it has been held in F.C.I. v. A.M. Ahmed & Co. (2001) 10
SCC 532 at p. 532, para 6 and Neycer India Ltd. v. GMB Ceramics
Ltd. (2002) 9 SCC 489 at pp. 490-91, para 3 that Section 31 (4) of
the 1940 Act would not be applicable if it were found than an
application was to be made before a court which had no
jurisdiction. In Jatinder Nath v. Chopra Land Developers (P) Ltd.
(2007) 11 SCC 453 : (AIR 2007 SC 1401) at p. 460, para 9 (at
P.1405 of AIR) and Rajasthan SEB v. Universal Petro Chemicals
Ltd. (2009) 3 SCC 107 : (2009 AIR SCW 607) at p. 116, paras 33 to
36 (at P. 615, paras 26 to 28 of AIR) and Swastik Gases (P) Ltd. v.
Indian Oil Corpn. Ltd. (2013) 9 SCC 32 at pp. 47-48, para 32, it
was held that where the agreement between the parties restricted
jurisdiction to only one particular court, that court alone would
have jurisdiction as neither Section 31(4) nor Section 42 contains a
non-obstante clause wiping out a contrary agreement between the
parties. It has thus been held that applications preferred to courts
outside the exclusive court agreed to by parties would also be
without jurisdiction."
10. Indisputably, the Arbitration proceeding has been conducted
within the jurisdiction of Raichur Court, which has jurisdiction as
per Section 20 of the Code of Civil Procedure and is subordinate to
the High Court of Karnataka which entertained Section 11
Application. Hence, the Award cannot be challenged before a Court
subordinate to the High Court of Bombay. Exercise of jurisdiction
by such court shall be against the provision of Section 42 of the
Act."
12. By applying the aforesaid principles to the case in hand, it
is evident that since the alleged award has been passed by the sole
Arbitrator on 27.06.2014 at Indore and only thereafter the execution
and objections under Section 34 of the Act were filed, this Court
does not find any scope of interference in the order impugned
rejecting the application filed under Section 34 of the Act, 1996
holding the same to be barred by jurisdiction.
13. This appeal is accordingly dismissed. No order as to costs.
(MILIND RAMESH PHADKE)
ojha JUDGE
