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Judgment
Mohit S. Shah, C.J—These appeals are directed against the judgment dated 21 November 2014 of the learned Single Judge of this Court in the petitions filed by the respondent herein under section 9 of the Arbitration and Conciliation Act, 1996.
In 2006, the parties herein entered into the loan cum hypothecation agreements, pursuant to which the respondent herein advanced various sums to the appellant to enable the appellant to purchase the motor vehicles. The motor vehicles so purchased were hypothecated to the respondent to secure the due repayment of the aforesaid loan amounts. The hypothecation agreements required the appellant to repay the aggregate amounts advanced in monthly instalments. Since the appellant committed defaults in repaying the EMIs, the respondent herein declared the entire loan amounts, to be due and payable forthwith and to recall the entire loans and instituted the arbitration proceedings under the above agreements.
Pending the final disposal of the arbitration proceedings, on 11 August 2009 the respondent filed petitions under section 9 of the Act for interim measures. At the hearing of the said petitions, the present appellant raised an objection with regard to the jurisdiction of the Bombay High Court on the ground that the agreement took place at Kolkata, the respondent''s office is situated at Kolkata, the vehicles are at Kolkata and, therefore, no cause of action or any part thereof arose in Mumbai.
After hearing the arguments of the learned counsel for the parties, the learned Single Judge took the view that this Court had jurisdiction to entertain Section 9 petitions of the respondent-company herein. The finding was given by the learned Single Judge in para 10.
After hearing the learned counsel for the parties, the learned Single Judge overruled the appellant''s objection to jurisdiction of this Court to entertain Section 9 petitions and proceeded to pass orders in the said petitions.
It is necessary to note that the above order dated 14 December 2009 of the learned Single Judge of this Court in Section 9 petition was not challenged by the appellant and thus, the order holding that this Court had jurisdiction to entertain section 9 petition became final. It is pertinent to note that the seat of arbitration was in Mumbai and all the hearings before the Arbitral Tribunal took place at Mumbai. Thereafter, the Arbitral Tribunal passed the arbitration award dated 28 March 2012 and awarded a sum of Rs. 9,81,951.11 under the aforesaid loan cum hypothecation agreement alongwith further interest thereon at 18% from 3 July 2009 till payment. The award also granted the respondent-finance company liberty to sell the hypothecated vehicle for realization of the sum awarded by the Arbitral Tribunal. The appellant has filed the petition under section 34 of the Act before the District Court, Alipur, Kolkata to challenge the Arbitral Award. The said petition is pending before the District Court, Alipur, Kolkata and in view thereof, the respondent-finance company is unable to seek execution of the arbitral award passed in its favour. The respondent-finance company, therefore, filed section 9 petition giving rise to the present appeal praying for appointment of Court Receiver and/or for a direction to the present appellant to furnish a bank guarantee for and to secure the sum due and payable to the respondent under the said arbitral award.
The appellant filed an affidavit objecting to the jurisdiction of the learned Single Judge of this Court to entertain section 9 petition on the ground that in view of section 34 petition filed by the appellant before the District Court at Alipur, Kolkata to the jurisdiction of this Court on the ground that no cause of action or any part thereof has arisen within the territorial jurisdiction of this Court. The learned Single Judge rejected the above objection to jurisdiction of the Court on the ground that the order dated 14 December 2009 of this Court in the first section 9 petition was not challenged by the appellant and, therefore, the order had become final and that, therefore, in view of section 42 of the Act, all the subsequent proceedings were required to be filed before this Court. In fact, that contention has also been raised by the respondent-finance company before the District Court at Alipur, Kolkata.
The learned Single Judge by the impugned order dated 21 November 2014 rejected the preliminary contention raised by the appellant regarding the jurisdiction of this Court and thereafter passed a final order on the section 9 petition filed by the respondent which the appellant has challenged in the present appeal.
The learned counsel for the appellant sought to raise a contention that the learned Single Judge had no jurisdiction to entertain second section 9 petition after the award nor did the learned Single Judge have jurisdiction to the first section 9 petition before the award.
In our view, since the appellant had not challenged the order dated 14 December 2009 nor has the said order been challenged in the present appeal, this Court cannot go behind the order dated 14 December 2009 which had become final. Since Section 9 petition was already filed earlier in this Court, section 42 would come into operation. Section 42 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 that agreement and the arbitral proceedings shall be made in that Court and in no other Court."
Mr. Tulzapurkar, in the alternative submitted that in view of paras 23 and 24 of the agreement, the seat of the arbitration was at Mumbai and, therefore, also the Court at Mumbai would have the jurisdiction to entertain section 9 petition under the Act. Paras 23 and 24 of the agreement read thus-
"23. ARBITRATION:
All disputes, differences and/or claims arising out of this Loan Agreement or as to the construction, meaning or effect hereof or as to the rights and liabilities of the parties hereunder shall be settled by arbitration to be held in Mumbai in accordance with the Arbitration and Conciliation Act 1996, or any statutory amendments thereof and shall be referred to a person to be appointed by the lender. In the event of death, refusal, neglect, inability, or incapability of the person so appointed to act as an Arbitrator, the Lender may appoint a new arbitrator. The award of the arbitrator shall be final and binding on all parties concerned.
JURISDICTION :
Subject to the provisions of clause 23 above, any suit, petition, reference or other filing permitted or required to be made pursuant to the Arbitration and Conciliation Act, 1996 in respect of the matters arising out of this Agreement including, without limitation, a petition for appointment of an arbitrator or arbitrators under section 11 of the Arbitration and Conciliation Act, 1996 shall be instituted only in competent courts at Mumbai."
In support of this contention, the learned counsel for the respondent has appropriately relied upon the decision of the Supreme Court in Bharat Aluminium Company and Others Vs. Kaiser Aluminium Technical Service, Inc. and Others etc. etc., (2012) 3 ARBLR 515 : (2012) 110 CLA 293 : (2012) 4 CompLJ 345 : (2012) 5 CTC 615 : (2012) 9 JT 27 : (2012) 9 JT 105 : (2013) 1 RCR(Civil) 1 : (2012) 8 SCALE 333 : (2012) 9 SCC 552 and the decision of another Division Bench of this Court in Konkola Copper Mines (PLC) Vs. Stewarts and Lloyds of India Limited, (2013) 4 ARBLR 19 : (2013) 5 BomCR 29 equivalent to 2013(4) Arbitration Law Report 19 (Bom) CR 29. In the decision of the Supreme Court in the case Bharat Aluminum Company Ltd." (supra) in dealing with the jurisdiction of the Court which would be competent to entertain an application under Section 9 of the Act, the Supreme Court observed thus:-
"We are of the opinion, the term "subject matter of the arbitration" cannot be confused with "subject matter of the suit". The term "subject matter" in Section 2(1)(e) is confined to Part I. It has a reference and connection with the process of dispute resolution. Its purpose is to identify the courts having supervisory control over the arbitration proceedings. Hence, it refers to a court which would essentially be a court of the seat of the arbitration process. In our opinion, the provision in Section 2(1)(e) has to be construed keeping in view the provisions in Section 20 which give recognition to party autonomy. Accepting the narrow construction as projected by the learned counsel for the appellants would, in fact, render Section 20 nugatory. In our view, the legislature has intentionally given jurisdiction to two courts i.e. the court which would have jurisdiction where the cause of action is located and the courts where the arbitration takes place. This was necessary as on many occasions the agreement may provide for a seat of arbitration at a place which would be neutral to both the parties. Therefore, the courts where the arbitration takes place would be required to exercise supervisory control over the arbitral process. For example, if the arbitration is held in Delhi, where neither of the parties are from Delhi, (Delhi having been chosen as a neutral place as between a party from Mumbai and the other from Kolkata) and the tribunal sitting in Delhi passes an interim order under Section 17 of the Arbitration Act, 1996, the appeal against such an interim order under Section 37 must lie to the Courts of Delhi being the Courts having supervisory jurisdiction over the arbitration proceedings and the tribunal. This would be irrespective of the fact that the obligations to be performed under the contract were to be performed either at Mumbai or at Kolkata, and only arbitration is to take place in Delhi. In such circumstances, both the Courts would have jurisdiction, i.e., the Court within whose jurisdiction the subject matter of the suit is situated and the courts within the jurisdiction of which the dispute resolution, i.e., arbitration is located."
(emphasis supplied)
The Division Bench of this Court in the case of "Konkola Copper Mines (PLC)" (supra) while referring to the decision of the Supreme Court in the case of Bharat Aluminum Co. Ltd. (supra) has held that when the arbitration was held at Mumbai this Court would be competent to entertain the petition under Section 9 of the Act as Section 9 is a provision ancillary to its supervisory role. The observations of the Division Bench are as under:-
"Secondly, the Learned Single Judge erred in proceeding on the basis that Mumbai was a venue as distinguished from the place of arbitration. We have indicated earlier our reasons for holding that the place of arbitration was Mumbai. Hence this Court in the exercise of its ordinary original civil jurisdiction over the place of arbitration can entertain a petition under Section 9. Section 9 is a provision ancillary to its supervisory role. Hence, even as regards the second ground, the Learned Single Judge was in error in holding that the seat of arbitration that was initially agreed upon remained as the place of arbitration. The clear material demonstrates on the record that the subsequent agreement between the parties was not in relation to the venue of arbitration. By their exchange of emails on 10 May 2011 and 24 May 2011, parties clearly indicated that the place of arbitration shall be Mumbai. Once that be the position, this Court would have jurisdiction having regard to the fact that the place of arbitration was agreed upon as Mumbai."
(emphasis supplied)
No other contentions are raised. We are, thus, of the clear opinion that the impugned order does not call for any interference. All the appeals are accordingly dismissed.
At this stage, the learned counsel for the appellant prays for stay of operation of this judgment for some time
The impugned order of the learned Single Judge has never been stayed earlier. Therefore, there is no question of granting stay of operation of this order. The appellant shall comply with the order of the learned Single Judge within four weeks from today.