National Hydro-Electric Power Corporation Ltd. vs Sova Enterprises

A.M. Sinha, J.—This Revisional application at the instance of the Petitioner National Hydroelectric Power Corporation Ltd. and other principal officers, namely, the Chief Project Manager, Senior Manager and the Manager of the said Corporation, is directed against the judgment and order passed by the learned Asstt. District Judge, Jalpaiguri, in O.C. Suit No. 27 of 1988 on August 6, 1990. The facts leading to the Revisional application may briefly be stated below:

The Petitioner, National Hydroelectric Power Corporation Ltd. (shortly to be called ''Corporation'' hereafter) entered into a contract with the opposite party No. 1 at Malda, West Bengal, for carrying out certain electrification jobs. Some of the works are to be executed at Malda and some at Salakati, Dist. Kokrajhor, Assam. The contract between the parties was reduced to a written agreement. Form the allegations and counter allegations as can be discerned from records, the controversy appears as follows:

The contractor, the opposite party No. 1, could not complete the work of the construction within scheduled time, extension of time was prayed for by him for execution of the works of the contract. The time was extended from time to time only on condition that there would be no demand for escalation of prices or any increment in labour wages. Some defects were detected by the Corporation in the work and they demanded rectification of the same. The opposite party completed the work on November 27, 1986, but left out the rectification work. He did not take up the work of rectification in spite of repeated reminders and instead demanded release of security money and payment of bill. At last, he filed a suit in the Court of the Asstt. District Judge, Jalpaiguri, on April 6, 1988, for filing arbitration agreement in Court in terms of Section 20(i) of the Arbitration Act, 1940. The suit was registered as O.C. (Arbitration) Suit No. 27 of 1988. The reliefs claimed in the suit, inter alia, are that the Corporation should be directed to show cause as to why the agreement for arbitration should not be filed in the Court and that the Court should on examination of the arbitration agreement pass appropriate orders in the suit. The Corporation entered appearance in the suit and raised a preliminary objection to the effect that the Court had no jurisdiction to entertain the suit. The Court on such objection formulated issue No. 2 relating to jurisdiction.

The learned Asstt. District Judge on hearing the submissions and arguments of the contesting parties has come to the finding that his Court has jurisdiction to try the suit and, accordingly, decided the issue No. 2 in favour of the Plaintiff-opposite party No. 1.

Mr. Sakti Nath Mukherjee, the learned Advocate for the revisionist, has contended that 3 of the work sites were at Salakati, Assam, and one at Malda, and the endeavour of the opposite party to file this suit in the Court of the Asstt. District Judge, Jalpaiguri, u/s 20(i) of the Arbitration Act, should be taken as an attempt to bring the suit at a Court which had no jurisdiction to entertain it. It has further been urged by him that the learned Asstt. District Judge not only committed an error in the exercise of his jurisdiction but also misguided himself on the question of fact as well as on law.

Mrs. Sunila Mukherjee representing the opposite party in this revision, on the other hand, has supported the order of the learned Asstt. District Judge and contends that there is nothing wrong either in the exercise of jurisdiction or in the pronouncement on the question of fact and on law by the learned Asstt. District Judge who has passed the impugned order. For arriving at a decision on the contentions raised by the parties, it is necessary to refer to Section 20(i) of the Arbitration Act:

(1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court.

It is seen that any of the parties to the arbitration agreement may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court. According to Section 2, Clause (c) of the Arbitration Act ''Court'' means a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit, but does not, except for the purpose of the arbitration proceedings u/s 21, include Small Cause Court. Therefore, any Civil Court which would have jurisdiction to decide the question arising from the subject- matter of the reference, would be the proper Court which can entertain an application u/s 20 of the Arbitration Act. If the Court has jurisdiction to determine the subject-matter of the disputes between the parties, it can very well entertain an application u/s 20 of the Arbitration Act. Mrs. Mukherjee, the learned Advocate for the opposite party, has referred to a Division Bench decision of the Patna High Court in Chandra Dhan Singh Vs. The State of Bihar and Others, It has been laid down that the Section does not (sic)ean that a Court has jurisdiction to receive an award only of the whole cause of action arose within its jurisdiction. According to Section 2(c) of the Act any Court which would lave jurisdiction to decide the question arising from the Subject-matter of the reference would be the proper Court on which the award may be filed and to give the Court jurisdiction, it is not necessary that the whole cause of action should arise there. The Court has the jurisdiction to determine the subject-matter of the disputes between the parties also when the parties reside within its jurisdiction or a part of the cause of action arises there. She has also referred to a decision in State of Maharashtra and Others Vs. Ranjeet Construction, which lays down that in the absence of any pecific stipulation in the agreement the Court within the jurisdiction of which part of the cause of action arises, has jurisdiction to entertain the petition. It adds that cause of action comprises of a bundle of facts and all these facts may not necessarily occur within the jurisdiction of the came Court. Part of the cause of action may arise within he jurisdiction of one Court and part within the jurisdiction of another Court. (Para. 2)

She has taken us to various documents which have been made annexures. It would appear from Annexs. A (sic)eries that the agreement between the parties were signed (sic)t Bidyutnagar, P.O. Bhaktinagar, District Jalpaiguri. The (sic)eries of correspondence relating to the contract would in(sic)cate that the office of the National Hydroelectric Power Corporation Ltd. is situated at Bidyutnagar, Dist. Jalpaiguri, Annexs. B series. The relevant Annex. A also indicates that he Corporation can be represented by the Manager Central) in the Hydroelectric Power Corporation Ltd., Bidyutnagar, P.O. Bhaktinagar, Dist. Jalpaiguri. It is not disputed that the contracts or agreements were executed at Bidyutnagar between the contracting parties. The xerox copy of the plaint was placed before us. It has been stated (sic) para. 20 of the plaint that cause of action arose firstly on January 18, 1988, and finally on February 26. 1989 within the jurisdiction of the Court on the failure of the Defendants to refer the matter for arbitration with reference to the last letter as per annexures. The Corporation, the Petitioner in this revision, could not place anything or record to indicate that there was specific stipulation as to the jurisdiction or place of suing in case of difference and disputes arise between the parties over the subject-matter of the contract. That being the case, as laid down in the decision of the Bombay High Court, a suit may be brought according to Section 20 subject to limitation of the Sections 15 to 19 of the CPC within the jurisdiction of the Court. It may be brought in the Court in whose jurisdiction the Defendants voluntarily reside or carry on business or personally work for gain or if the Defendants are more than one, then with the leave of the Court a suit may be instituted within the jurisdiction of such Court. Lastly, a suit may be brought where the cause of action, wholly or in part, arises. The explanation to Section 20 of the Code lays down 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.

Next she has relied on a Division Bench decision in Salem Chemical Industries, a registered Firm Vs. Bird and Co. (P) Ltd., Calcutta, in support of her contention that in the contract there was no stipulation of conferring an exclusive jurisdiction to a particular Court and debarring the jurisdiction of other Courts to entertain the suit of the nature, i.e. a suit u/s 20(1) of the Arbitration Act. The contract in respect of the work site may be at different places, three being at Assam and one at Malda. But it is clear that the contract was entered into between the parties at Bidyutnagar, Dist. Jalpaiguri. So, there is no bar to the Civil Court of Jalpaiguri to entertain the suit u/s 20(1) of the Arbitration Act inasmuch as a Civil Court can have jurisdiction in any matter to which the agreement relates in respect of the subject-matter of the agreement which were executed within the jurisdiction of that Court. Again reference may be made to Section 2(c) of the Arbitration Act which defines the Court as a Civil Court having jurisdiction to decide the question forming the subject-matter of a reference if the same had been the subject-matter of the suit. So, the jurisdiction of the Civil Court to entertain suits is governed by Sections. 15 to 20 of the Code of Civil Procedure. It has been laid down in this decision that where there are two or more competent Courts which can entertain a suit on a contract consequent upon a part of the cause of action havintg arisen within the jurisdiction of each of those Courts, the parties to the concerned transaction can contract to vest jurisdiction in one of such Courts to try disputes which might arise between themselves and that such an agreement is not hit by Section 28 of the Contract Act as being opposed to public policy. It adds that it is equally well-established that such an agreement to exclude the jurisdiction of one Court and to confer an exclusive jurisdiction of another Court in whose jurisdiction also part of the cause of action arose should be clear, unambiguous and explicit.

As already stated in the agreements the Annexs. A series clearly indicate that the opening recital of those agreements say that the National Hydroelectric Power Corporation Ltd. has its registered office at New Delhi and that such Corporation shall include the successors and assigns represented by the Manager (Central), National Hydroelectric Power Corporation Ltd., Bidyutnagar, P.O. Bhaktinagar, Dist. Jalpaiguri. Therefore, the Corporation comes within direct explanation to Section 20 of the Code and it shall be deemed to carry on business at its sole or principal office or at any place where it has also a subordinate office, and if cause of action arises in relation to transaction entered into at the subordinate office, the suit or proceeding can be initiated within the jurisdiction of the Court where the subordinate office is situated. Mr. Mukherjee has urged that ''Corporation'' should not be taken to ''reside'' within the meaning of Clause (a) of Section. 20 for the purpose of invoking the jurisdiction of Jalpaiguri Court. In our view, this argument is not acceptable to u/s for Clause (a) of Section 20 clearly speaks for alternatives for invoking jurisdiction of a particular Court. It says that a suit can be instituted in a Court within the legal limits of whose jurisdiction the Defendant actually or voluntarily carries on business or personally works for gain. The words ''carries on business'' therefore applies to the Corporation working through its subordinate office at Bidyutnagar, Dist. Jalpaiguri. The agreements were executed by both the parties, i.e., the Manager and the Plaintiffs opposite parties.

Thus, on consideration of the facts as disclosed by the materials placed before us and the law applicable to this case, we are of the opinion that the learned Asstt. District Judge has not committed any jurisdictional error in deciding issue No. 2 and by holding that his Court has jurisdiction to entertain the suit. We do not find anything wrong, illegal or irregular in such order. Accordingly, we reject the re-visional application on contest with cost.

Cost of hearing is assessed at 30 G. Ms.

S.K. Mookherjee, J.

I had the advantage of reading the judgment of my learned brother A.M. Sinha J. I agree with his conclusions as I am of the view that the materials on record unequivocally establish the jurisdiction of the Court if not otherwise at least on the basis that a part of the cause of action within the meaning of Section 20(c) of the CPC read with Sections. 2(c) and 20 of the Arbitration Act arises thus vesting the concerned Court with the required jurisdiction.

After the judgment is delivered, a prayer for stay of operation of this order is made on behalf of the Petitioner and the same is refused.

Let this order be communicated to the Court below forthwith.

If an urgent certified copy is applied for, the same be delivered within 10 days from the date of deposit of the requisite stamps and folios.