1971 (1) TMI 109 - SC - Companies Law

Supreme Court Affirms Bombay Jurisdiction for Arbitration Dispute Resolution

HAKAM SINGH Versus M/s. GAMMON (INDIA) LTD.

HAKAM SINGH Versus M/s. GAMMON (INDIA) LTD. - 1971 SCC (1) 286, 1971 AIR 740, 1971 (3) SCR 314 Issues: Jurisdiction of Courts under Arbitration Act and Code of Civil Procedure, Interpretation of contractual clauses, Applicability of terms in arbitration agreementIn this case, the main issue revolved around the jurisdiction of the Courts under the Arbitration Act and the Code of Civil Procedure, specifically concerning the interpretation and applicability of certain contractual clauses in an arbitration agreement. The appellant had agreed to construction work for the respondent based on a written tender that contained clauses referring disputes to arbitration and specifying the jurisdiction of the Courts in Bombay. Disputes arose, leading to the appellant seeking an order for arbitration in Varanasi, while the respondent argued that only the Courts in Bombay had jurisdiction based on the agreement's terms.The Trial Judge initially ruled in favor of the appellant, stating that the jurisdiction could not be conferred on the Courts in Bombay as the cause of action had arisen in Varanasi. However, the High Court of Allahabad, in its revisional jurisdiction, overturned this decision, declaring that the Courts in Bombay had jurisdiction under general law and that the agreement's terms were binding, thus directing the case to be filed in Bombay. The appellant then appealed to the Supreme Court.The Supreme Court analyzed the relevant provisions of the Arbitration Act and the Code of Civil Procedure, emphasizing that the entire Code of Civil Procedure applies to proceedings under the Arbitration Act. The Court noted that while parties cannot confer jurisdiction on a Court that it does not possess under the Code, an agreement specifying a particular Court for dispute resolution is not against public policy if multiple Courts have jurisdiction. The Court further clarified that the respondent company, having its principal office in Bombay, could be sued there as per the Code.The Court rejected the appellant's argument that the term 'corporation' in the Code's Explanation II only referred to a statutory corporation, not a company under the Indian Companies Act. The Court held that a company registered under the Indian Companies Act falls under the definition of a corporation in the Code. Ultimately, the Court upheld the High Court's decision, stating that the agreement's terms regarding jurisdiction were binding due to the respondent's business presence in Bombay. The appeal was dismissed, affirming the jurisdiction of the Courts in Bombay for the arbitration proceedings.