Maitry Exports Private Limited vs Jain Studio Limited

Anoop V. Mohta, J.—The present Notice of Motion has been taken out by the

defendant/respondent for dismissal of the Arbitration Petition filed u/s 34 of the Arbitration and Conciliation Act, 1996 (for short, the Act) against an Award dated 3.2.2009 by invoking the provisions of Section 42 of the Act and further that this Court has no jurisdiction to entertain and decide the Arbitration Petition in this Court at Mumbai.

By Order dated 15th June, 2009, as the impugned Award dated 3.2.2009 was against the total rejection of the claims of the petitioner, Rule was made returnable within twelve weeks. The Petition is pending for final hearing.

Admittedly, as dispute arose between the parties with regard to the monetary claim and as Criminal as well as Civil proceedings were pending, in a Summary Suit No. 3645/1999 during the hearing of Chamber Summons No. 1614/2005, on 27.02.2006, the parties agreed to refer the dispute to the arbitration. The matter was referred by the Order of the Court in Mumbai and accordingly both the parties appeared and filed their respective pleadings and led the evidence before the learned Sole Arbitrator at Mumbai.

An interim order was passed by the Arbitrator on 14.12.2006 which was challenged by the respondent in the Delhi High Court by filing an application u/s 34 of the Act. The Arbitration proceedings was also stayed by the learned Judge of Delhi High Court on 20.02.2007.

The learned Arbitrator had also decided and rejected an application filed u/s 16 of the Act by the respondent and proceeded with the Arbitration proceedings at Mumbai. The defendant/respondent had raised an issue with regard to the jurisdiction of the Arbitral proceedings at Mumbai apart from other grounds.

By Order dated 25.10.2007, the learned Judge of the Delhi High Court dismissed the Petition filed by the defendant/respondent by holding that the Delhi High Court has no jurisdiction. An Appeal was preferred by the respondent against the order, but ultimately on November 4, 2007, the same was withdrawn. On 3.2.2009 the sole Arbitrator has passed the Award and thereby rejected all the claims of the petitioner and imposed cost also. Therefore, the petitioner preferred Section 34 Application in this Court as noted above.

The word "Court" is defined u/s 2(1)(e) of the Arbitration Act, which is reproduced as under:

2 (1) In this Part, unless the context otherwise requires,

(e) "Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court an exercise of its ordinary original Civil jurisdiction having jurisdiction to decide the questions forming the subjectmatter of the arbitration if the same had been the subjectmatter of a suit, but does not include any civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes.

Section 42 of the Act, as relevant is reproduced 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.

The word "Court" as referred in Section 42 of the Act needs to be read in the context of the meaning provided with certain object and purpose as reproduced above. Section 42 which starts with non-absentee clause and considering the scope and purpose of the Act and settled principle of Law of Interpretation, it is clear that the mandate of Section 42 ousts the jurisdiction of all other Courts with respect to any other application under this Part having once made in the Court having jurisdiction and that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent application arising out of the Agreement and the arbitration proceedings and not other Court. It is a mandatory provision.

The basic cause of action arose with regard to the rival claims and contentions in Mumbai as the contract between the parties was itself arrived at and concluded in Mumbai. Summary Suit No. 3645/1999 was filed in the Bombay High Court. There was no objection about the jurisdiction at the relevant time. Both the parties, by consent, agreed to refer the dispute to the Arbitral Tribunal and, accordingly, appointed the Arbitrator and parties proceeded before the same at Mumbai. The Petition u/s 34 of the Act, to challenge the Award, therefore, needs to be filed in the Court at Mumbai. No other Court has jurisdiction to entertain, try and dispose of all the proceedings in view of the above undisputed position on record. There arose no cause of action at Delhi. There was no specific arbitration clause or agreement between the parties having exclusive jurisdiction at Delhi.

The Petition filed by the respondent against the interim order as referred above at Delhi, in my view, therefore, was without jurisdiction. There was no question of entertaining or filing such Petition u/s 34 of the Act at Delhi. The application filed u/s 16 of the Act was also rejected. Now the final Award as challenged is the result of the final arbitration proceedings concluded at Mumbai. Section 2 read with Section 42 of the Act contemplates that any application, if filed, in the Court which has jurisdiction over the arbitration proceedings and all subsequent applications arising out of that agreement and arbitration proceedings, in my view, need to be read as the Court of Competent jurisdiction and/or the Court having jurisdiction to entertain such application. Any application, if filed in the Court having no jurisdiction, such application, cannot be considered to be an application filed within the frame work of law and the scheme and purpose of Section 42 of the Act. The application, therefore, as filed by the respondent in Delhi whereby challenge was made to the interim Award, in my view, was without jurisdiction. The petitioner, therefore, raised objection before the Court at Delhi and ultimately the Petition was dismissed and the Appeal preferred against the same was also withdrawn by the respondent.

In view of above, the submission made by the learned Counsel for the respondent by referring to Shiva Carriers v. Royal Projects Ltd. and Ors. AIR 2000 Kol 138, is totally distinct and distinguishable on fact itself. It is not the case that the Delhi Court has jurisdiction or part of cause of action arose in Delhi and, therefore first application so filed in Delhi High Court and that Court alone has jurisdiction.

The Bombay High Court has jurisdiction to entertain and decide finally the present Petition u/s 34 of the Act as the first application u/s 34 as filed by; the respondent against the interlocutory order in the Delhi High Court was without jurisdiction.

The application filed by the respondent is also cannot be said to be bonafide application. The provisions of Section 42 of the Act therefore cannot be interpreted and read to support the respondent''s case to frustrate the whole object and purpose of the Act and specially Section 42 as referred above. The party deliberately had filed such application with malafide intention just to claim ouster of Bombay High Court jurisdiction. It, in my view, is impermissible in the present facts and circumstances of the case. Therefore, the Mumbai Court has only exclusive jurisdiction to entertain and deal with the application/petition under the Act. All subsequent proceedings including the present Petition, therefore, is maintainable only in Bombay High Court at Mumbai.

Resultantly, the Notice of Motion is dismissed. No costs.