M.P.Windfarms Ltd vs Malwa Vanaspati & Chemical Co.Ltd

Heard on the preliminary objection of the respondent in respect of the territorial jurisdiction of the Indore Bench to decide the present application

under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 (for short the “Act of 1996â€​.

The agreements dated 7.4.1997 and 15.4.1998 between the parties in respect of the installation of Wind Electric Generator at Jamgodrani village in

Dewas in respect of the generation and sale of Electricity by the petitioner to the respondent is not in dispute. The said agreements contain Clause

No.21 as the Arbitration Clause which reads as under:-

“21) In the event of any dispute the matter shall be resolved through mutual discussion failing which each party shall appoint one arbitrator to

resolve the dispute in terms of the provisions of Indian Arbitration Act.The Courts at Bhopal shall have exclusive jurisdiction in the event of any

dispute arising out of the this settlement.â€​

The preliminary objection of the respondent is that in terms of the aforesaid Clause the Courts at Bhopal have the exclusive jurisdiction; therefore, the

applicant should file the application under Section 11 before the principal seat at Jabalpur which has territorial jurisdiction over Bhopal.

Having heard learned counsel for the parties and on the perusal of the record, it is noticed that, apart from Dewas a part of cause of action has arisen

at Bhopal also. The applicant in the legal notice dated 29.5.2007 (Annexure P-6) has admitted that the agreement was executed at Bhopal. The bills

for sale of Electricity generated by Wind ElectricGenerators Annexure P-3 was also issued by the applicant from Bhopal and the communication

dated 2.1.2006 (Annexure P-4) for conforming the balance due and indicating the firm schedule for settlement of dues was also issued from Bhopal.

The applicant himself vide communication dated 16.5.2007 (Annexure P-5) had appointed Shri G.S.Palnitkar at Bhopal as Arbitrator for resolving the

dispute, but since in terms of the Arbitration Clause the respondent had not appointed the Arbitrator; therefore, this Arbitration case has been filed.

The aforesaid facts clearly reveal that cause of action has arisen with the jurisdiction of both the Dewas and Bhopal Courts. Having regard to Section

11 (12) (b) and 2(e) of the Act of 1996 read with Section 20(c) of the CPC, both the Courts at Bhopal and Dewas have jurisdiction.

In terms of Clause 21 of the Arbitration agreement the parties have mutually agreed for the exclusive jurisdiction of the Bhopal Court; therefore, by

agreement they have excluded the jurisdiction of Dewas Court which falls within the territorial jurisdiction of the Indore Bench.

The Supreme Court in the matter of Swastik Gases Private Limited Vs. Indian Oil Corporation Limited reported in (2013) 9 SCC 32

while considering the similar controversy in respect of the jurisdiction to entertain the application under Section 11 of the Act of 1996 in a case where

the parties had agreed for the jurisdiction of the Court at Calcutta has held as under:

“28. Section 11(12) (b) of the 1996 Act provides that where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an

arbitration other than the international commercial arbitration, the reference to ‘Chief Justice’ in those sub-sections shall be construed as a

reference to the Chief Justice of the High Court within whose local limits the Principal Civil Court referred to in Section 2(1)(e) is situate, and where

the High Court itself is the court referred to in clause (e) of sub- section

(1) of Section 2, to the Chief Justice of that High Court. Clause (e) of sub-section (1) of Section 2 defines ‘Court’ which means the principal

Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary civil jurisdiction, having jurisdiction to decide the

questions forming the subject matter of the arbitration if the same had been the subject matter 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.

When it comes to the question of territorial jurisdiction relating to the application under Section 11, besides the above legislative provisions, Section

20 of the Code is relevant. Section 20 of the Code states that subject to the limitations provided in Sections 15 to 19, every suit shall be instituted in a

Court within the local limits of whose jurisdiction

(a) the defendant, or each of the defendants where there are more than one, at the time of commencement of the suit, actually and voluntarily resides,

or carries on business, or personally works for gain; or

(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on

business, or personally works for gain, provided that in such case either the leave of the court is given, or the defendants who do not reside, or carry

on business, or personally work for gain, as aforesaid, acquiesce in such institution; or

(c) the cause of action, wholly or in part arises.

The explanation appended to Section 20 clarifies that a corporation shall be deemed to carry on business at its sole or principal office in India or, in

respect of any cause of action arising at any place where it has also a subordinate office, at such place.

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(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 â€" 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.

The above view finds support from the decisions of this Court in Hakam Singh4, A.B.C. Laminart1, R.S.D.V. Finance6, Angile Insulations7,

Shriram City8, Hanil Era Textiles9 and Balaji Coke13.

In view of the above, we answer the question in the affirmative and hold that the impugned order does not suffer from any error of law. The Civil

appeal is, accordingly, dismissed with no order as to costs. The appellant shall be at liberty to pursue its remedy under Section 11 of the 1996 Act in

the Calcutta High Court. “

Having regard to the aforesaid factual and legal position I am of the opinion that the Indore Bench has no territorial jurisdiction to entertain the present

application under Section 11 of the Act of 1996 and proper remedy available to the applicant is to approach the principal seat; hence the Arbitration

case is rejected on the ground of lack of territorial jurisdiction with liberty to the applicant to approach the principal seat at Jabalpur.