Dhruba Charan Mekap vs ACC Ltd., Mumbai

S.C. Parija, J.—Heard learned counsel for the parties.

This is an application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, for appointment of Arbitrator.

The brief facts of the case is that the opposite party no.1 Company had entered into an Agreement dated 01.7.2011 with the petitioner for sale

and distribution of cement products purchased from the Company to retail dealers and retail customers, as per the terms and conditions

enumerated therein.

Clause-26 of the Agreement provided for arbitration, which reads as under:-

Arbitration

26.1 The Parties hereto shall make an endeavour to settle by mutual conciliation any claim, dispute, or controversy (Dispute) arising out of, or in

relation to, this Agreement, including any dispute with respect to the existence or validity or the breach hereof.

Any dispute which cannot be settled within 30 days of consultation as provided above, shall be submitted to arbitration at the request of a Party

(affected Party) upon written notice to that effect to the other Party and such arbitration shall be conducted in accordance with the rules of the

Indian Council of Arbitration (ICA), which rules as modified from time to time, are deemed to be incorporated by reference into this section (the

Arbitration Rules) by a Sole Arbitrator.

The Sole Arbitrator as referred to above shall be appointed by the ICA. The venue of the Arbitration shall be at Mumbai, India. The Sole

Arbitrator shall deliver the Award in the arbitration proceedings within three months from reference of any dispute to arbitration.

The Parties agree that the award of the Sole Arbitrator shall be final and binding upon the Parties, and that the parties shall not be entitled to

commencement of any action in a court of law upon any matter in dispute arising from or in relation to this Agreement, except for the enforcement

of an arbitral award granted pursuant to this section.

26.2 Jurisdiction

The Courts in Mumbai will have the exclusive jurisdiction in matters arising from the arbitral proceedings and/or matters for injunctory relief''s there

under.

The case of the petitioner is that during subsistence of the agreement, dispute arose with regard to the supply of cement products and in spite of

notice, as the opposite parties failed to resolve the same, the petitioner issued a registered notice dated 17.12.2012 (Annexure-4), demanding

appointment of sole Arbitrator and reference of the dispute for arbitration, as provided under Clause-26.1 of the Agreement.

Learned counsel for the petitioner submits that the opposite parties having failed to act in the matter in spite of notice, as per Clause-26 of the

Agreement, this Court has the jurisdiction to appoint the Arbitrator in exercise of its powers conferred under Section 11(6) of the Arbitration and

Conciliation Act, 1996 (''the Act'' for short).

Learned counsel for the opposite parties with reference to the counter affidavit submits that as Clause-26.1 of the Agreement provides for

appointment of sole Arbitrator by the Indian Council of Arbitration and the venue of the arbitration shall be at Mumbai, this Court has no

jurisdiction to entertain the present application. In this regard, learned counsel for the opposite parties has relied upon a decision of the apex Court

in Swastik Gases P. Ltd. v. Indian Oil Corp. Ltd., 2013(3) Arb. LR 161 (SC), in support of his contention that the venue of the arbitration

can only be at Mumbai and the Courts in Mumbai have the exclusive jurisdiction in the matter.

It is now well settled in law that parties by agreement cannot confer jurisdiction on a Court. Only where two competent Courts have jurisdiction

over the subject matter of the dispute, the parties may by agreement confer jurisdiction on any one of such Courts, to the exclusion of the other.

However, if a Court has no jurisdiction over the subject matter of the dispute at all, the parties by agreement cannot confer jurisdiction on such a

Court, to the exclusion of the competent Court having jurisdiction over the matter.

The aforesaid principles of law has been elucidated by the apex Court in A.B.C. Laminart Pvt. Ltd. and another v. A.P. Agencies, Salem,

(1989) 2 SCC 163, which is as follows:-

So long as the parties to a contract do not oust the jurisdiction of all the courts which would otherwise have jurisdiction to decide the cause of

action under the law it cannot be said that the parties have by their contract ousted the jurisdiction of the courts. If under the law several courts

would have jurisdiction and the parties have agreed to submit to one of these jurisdictions and not to other or others of them it cannot be said that

there is total ouster of jurisdiction. In other words, where the parties to a contract agreed to submit the disputes arising from it to a particular

jurisdiction which would otherwise also be a proper jurisdiction under the law their agreement to the extent they agreed not to submit to other

jurisdictions cannot be said to be void as against public policy. If on the other hand the jurisdiction they agreed to submit to would not otherwise be

proper jurisdiction to decide disputes arising out of the contract it must be declared void being against public policy.

Similar question came up for consideration before the apex Court in Balaji Coke Industry Private Limited v. Maa Bhagwati Coke

Gujarat Private Limited, (2009) 9 SCC 403, where the Hon''ble Court, while referring to its earlier decisions on the point, has held as under:-

Faced with the question as to whether an agreement arrived at between two parties that one of the two courts having jurisdiction, would

decide all the disputes relating to such agreement, was hit by the provisions of Section 28 of the Contract Act, 1872, this Court in Hakam Singh

case (AIR 1971 SC 740) held that where two courts or more have the jurisdiction to try a suit or proceeding under the provisions of the Code of

Civil Procedure, an agreement between the parties that one of such courts would have the jurisdiction to decide the disputes arising between the

parties from such agreement would not be contrary to public policy and would not, therefore, be contrary to the provisions of Section 28 of the

Contract Act, 1872.

The said question once again arose in A.B.C. Laminart (P) Ltd. ((1989) 2 SCC 163), wherein following the decision in Hakam Singh, but

relying on the maxim ex dolo malo non oritur actio, this Court held that by an agreement which absolutely ousted the jurisdiction of a court having

the jurisdiction to decide the matter, would be unlawful and void, being contrary to public policy under Section 28 of the Contract Act. But so long

as the parties to a contract do not oust the jurisdiction of all the courts, which would otherwise have the jurisdiction to decide the cause of action

under the law, it could not be said that the parties had by their contract ousted the jurisdiction of the court.

This Court in A.B.C. Laminart case went on to observe that where there may be two or more competent courts which can entertain a suit

consequent upon a part of the cause of action having arisen there within, if the parties to the contract agree to vest jurisdiction in one such court to

try the dispute which might arise between them, the agreement would be valid.

The aforesaid view has been reiterated in Swastik Gases P. Ltd. (supra), on which reliance has been placed by learned counsel for the

opposite parties. In the said decision, it has been reiterated that the parties by agreement can only confer jurisdiction on a competent Court having

jurisdiction over the subject matter of the dispute, to the exclusion of the other Courts. Relevant findings of the apex Court is extracted below:-

In the instant case, the appellant does not dispute that part of cause of action has arisen in Kolkata. What appellant says is that part of cause

of action has also arisen in Jaipur and, therefore, Chief Justice of the Rajasthan High Court or the designate Judge has jurisdiction to consider the

application made by the appellant for the appointment of an arbitrator under Section 11. Having regard to Section 11(12)(b) and Section 2(1)(e)

of the 1996 Act read with Section 20(c) of the Code, there remains no doubt that the Chief Justice or the designate Judge of the Rajasthan High

Court has jurisdiction in the matter. The question is, whether parties by virtue of clause 18 of the agreement have agreed to exclude the jurisdiction

of the courts at Jaipur or, in other words, whether in view of clause 18 of the agreement, the jurisdiction of Chief Justice of the Rajasthan High

Court has been excluded. 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 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.

In the present case, no part of the cause of action arises at Mumbai, where the registered office of the opposite parties is situated. The parties

have entered into agreement at Bhubaneswar and the obligations to be performed under the said agreement were to be performed at

Bhubaneswar.

In view of the position of law as detailed above, the contention of the learned counsel for the opposite parties that the Courts in Mumbai alone

has the jurisdiction cannot be accepted and the same is accordingly rejected.

From the facts narrated above, it is abundantly clear that there was an agreement between the parties, which had an arbitration clause. The

petitioner having raised a dispute and made a demand for appointment of a sole Arbitrator to adjudicate the dispute, which having not been

acceded to by the opposite parties in spite of service of registered notice, this Court has the jurisdiction to appoint the Arbitrator in exercise of its

powers conferred under Section 11(6) of the Act.

In view of the above, I hereby appoint Shri Yeeshan Mohanty, Senior Advocate, as the sole Arbitrator to adjudicate the dispute between the

parties. The venue of the arbitration shall be at the High Court of Orissa Arbitration Centre and the proceeding shall be conducted by the learned

Arbitrator as per the High Court of Orissa Arbitration Centre (Arbitration Proceedings) Rules, 2014.

It is needless to say that the fees of the Arbitrator shall be as per the Fourth Schedule of the Arbitration and Conciliation (Amendment) Act,

2015.

ARBP is accordingly disposed of.

Issue urgent certified copy as per rules.

This order be communicated to Shri Yeeshan Mohanty, Senior Advocate, forthwith.