Express Cables (P) Ltd. vs Punjab State Electricity Board

Pratibha Bonnerjea, J.—This is an application by the Express Cables Private Ltd. u/s 41 of the Arbitration Act for an order of injunction restraining the respondent Punjab State Electricity Board from making any claim and or demand from the United Bank of India, Patna or the Head Office of the United Bank of India at Calcutta, in connection with the two Bank guarantees being annexure ''B'' and ''C'' to the petition until the "disposal of the pending arbitration proceedings and for other orders. The facts alleged in the petition in short are that in accordance with the Tender Specification No. DTQ-26 and general instruction received by the petitioner at its registered office at Calcutta, the petitioner by its letter dated 30.5.77 offered to supply certain electrical goods to the respondent on terms and conditions contained therein. The respondent in its turn made a counter offer by its letter dated 13.9.77 on some different terms and the said counter offer was communicated to the petitioner at its Calcutta office within jurisdiction. A purchase order No. 4663|DTP-47 dated 7.10.77 was thereafter placed with the petitioner. This counter offer was accepted by the petitioner on 17.10.77 at its registered office at Calcutta. The aforesaid two Bank guarantees, being annexures ''B'' and ''C'' to the petition were given by the petitioner in connection with this contract. Disputes and differences having aisen between the parties in connection with this contract, the same were referred to one Shri J.M. Gupta, for arbitration and the same is pending. It is alleged that the respondent is wrongfully trying to enforce the said two Bank guarantees without waiting for the result of the arbitration. Hence the application.

The respondent filed its affidavit-in-opposition on 9.6.79 alleging inter alia that this court has no jurisdiction to entertain this application.

I need not go into the merit of this case as the only point agitated before me is the question of jurisdiction of this court.

The counsel for the petitioner strongly relied on section 2(c) and 31 (3) of the Arbitration Act 1940 and argued that for the determination of the question as to whether a particular court has jurisdiction to entertain an application under the Arbitration Act or not it has to be found out whether the claimant in the arbitration proceeding could have filed a suit against the respondent in that particular court in respect of the subject matter covered by the arbitration agreement. In the present case the respondent could have filed a suit in respect of its alleged claims under this contract in this court as part of the cause of action under the contract arose within the jurisdiction. The respondent could file a suit here on the ground that the petitioner has its registered office situate within the jurisdiction of this court. The counsel for the respondent was frank enough to admit that this court has jurisdiction and that a suit could have been filed in this court although in the affidavit-in-opposition it was alleged that no part of the cause of action arose within the jurisdiction of this court. He, however, pointed out an express agreement in clause 30 of the purchase order being annexure ''A'' to the petition which is as follows:

All civil suits in connection with this purchase order shall be to the jurisdiction of local courts at Patiala.

Relying very strongly on the foresaid clause, he submitted that parties are bound by this express contract and as such no suit could be filed, in this court. He cited Hakam Sing Vs. Gammon (India) Ltd., . in support of his contention, where in paragraph 3 at page 741 it was held as follows" -

It is not open to the parties by agreement to confer by their agreement jurisdiction on a court which it does not possess under the code. But where two courts or more have under the CPC jurisdiction to try a suit or proceeding an agreement between the parties that the dispute between them shall be tried in one of such courts is not contrary to public policy. Such an agreement does not contravene S. 28 of the Contract Act.

He also cited Balsukh Refractories and Ceramics Ltd. Vs. Hindusthan Steel Ltd. and Others, where the parties, by express agreement had agreed that only the courts at Durg would entertain the legal proceeding.

The exact language of the chase 24 in that case was as follows :-

That in case any legal proceedings are instituted against the plant (Hindusthan Steel Ltd.) they shall be instituted in the appropriate Civil Court of Durg (District).

In that case, Balsukh Refractories and Ceramics Ltd had moved an application under sections 9, 31 and 33 of the Arbitration Act against the Hindusthan Steel in the Court of Subordinate Judge at Asansol. The Hindusthan Steel Ltd., took the plea of absence of jurisdiction of that court on the basis of the aforesaid agreement. The said application was dismissed holding that Asansol court had no jurisdiction. From that order the Supreme Court was moved under sections 115 of the Code of Civil Procedure. The Supreme Court, relying on its earlier decision reported in Hakam Sing Vs. Gammon (India) Ltd., mentioned above, held at paragraph 13 :-

It is evident from clause 24 of the general conditions of contract that any legal proceedings against the Plaint that is, the Opposite party No. 1, shall be instituted in the appropriate Civil Court of Durg (District). Now the question is whether in view of this specific agreement between the parties as to the venue of bringing any action against the opposite party No. 1, the said Misc case which was held in the court of the Subordinate Judge, Asansol was maintainable or not..........................

................ Asansol Court, ordinarily has jurisdiction to entertain the said application filed under the provisions of the Arbitration Act...........................

In view of the express agreement between the petitioner and the opposite party No. 1, the application was not maintainable in the court of Subordinate Judge, Asansol.

The Counsel for the petitioner, streneously argued that in Balsukh Refractories and Ceramics Ltd. Vs. Hindusthan Steel Ltd. and Others, an application under Arbitration Act was moved in the Asansol Court which was clearly prohibited under clause 24 of the agreement. But if Balsukh Refractories and Ceramics had instituted a suit against the Hindusthan Steel in the Asansol Court the result might have been entirely different. According to him "legal proceedings" and "suits" are not the same thing. A legal proceeding would include applications, other proceedings and proceedings under the Arbitration Act out would exclude a regular suit. in Balsukh Refractories and Ceramics Ltd. Vs. Hindusthan Steel Ltd. and Others, by agreement or the parties "legal proceedings" were to be instituted at the Courts at Durg only. In violation of that agreement a legal proceeding by way or an application under the Arbitration Act was started at Asansol Court and it was rightly held that Asanol Court had no jurisdiction. But in the present case, by agreement of parties the venue to institute a regular suit has been agreed to be at the Courts at Patiala only. Hence if the petitioner has started a legal proceeding by way of an application under sec. 41 of the Arbitration Act in this court, which admittedly has jurisdiction, this proceeding cannot be hit by this express agreement. Balsukh Refractories and Ceramics Ltd. Vs. Hindusthan Steel Ltd. and Others, has no application on the facts of this case.

In Strouds'' Judicial Dictionary 4th Edn, page 2674 the word ''suit'' has been defined as follows :-

Though it has been said that ''suit'' is a term of Wider signification than ''Action'' and may include proceedings on a petition................ yet, generally speaking, the two words are very nearly synommous.

In Law Lexicon, 1940 Edn, page 1233, the general definition of ''suit'' is as follows:

A suit is any proceeding in a Court of Justice on which a plaintiff pursues his remedy to recover a right or claim.

The word ''suit'' embraces actions at law as well as equity cases.

The term ''suit is a very comprehensive one, and is said to apply to any proceeding in a court of Justice by which an individual person pursue that remedy which the law affords him. The modes of proceeding may be various, but if the right is litigated between the parties, in the court of Justice, the proceeding is a suit.

From the above definitions, I have no doubt in my mind that the word ''suit'' and the phrase ''legal proceedings'' are very nearly synonymous. The phrase legal proceedings as been defined in Law Lexicon, 1940 Edn, page 718 as follows:

''The phrase ''legal proceeding'' is any proceeding in a court of Justice by which a party pursues a remedy with the law affords him. The term embraces any of the formal steps or measures employed in the prosecution or derence of a suit. It refers to the use of a judicial process.

In the present agreement, the phrase uses is "All Civil Suits" which clearly indicates that the parties to the agreement intended that all civil proceedings and|or legal proceedings to be instituted at courts at Patiala. In the premises, I hold that this Court has no jurisdiction to entertain this application and the same is dismissed with costs.