2005 (11) TMI 439 - SC - Companies Law

Supreme Court dismisses petition lacking jurisdiction due to specific arbitration clause.

RITE APPROACH GROUP LTD. Versus M/s ROSOBORON EXPORT

The Supreme Court of India dismissed the petition, ruling that it lacked jurisdiction to entertain the arbitration petition due to the specific ... Arbitration petition filed before this Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of the Arbitrator Held that:- In the present case, as per the Agency Agreement dated 14.4.2000, Clause 6.2 categorically states that if any dispute arises between the parties then the same shall be submitted to Arbitration Court under the Chamber of Commerce and Trade of the Russian Federation. Therefore there is a specific clause mentioned in the Agency Agreement as to which court will have jurisdiction to try and dispose of the matter. In view of the specific provision specifying the jurisdiction of the Court to decide the matter, this Court cannot assume the jurisdiction. Whenever there is a specific clause conferring jurisdiction on particular Court to decide the matter then it automatically ousts the jurisdiction of other Court. In this agreement, the jurisdiction has been conferred on the Chamber of Commerce and Trade of the Russian Federation as the authority before whom the dispute shall be resolved. In view of the specific arbitration clause conferring power on the Chamber of Commerce and Trade of the Russian Federation, it is that authority which alone will arbitrate the matter and the finding of that arbitral tribunal shall be final and obligatory for both the parties. This Court has no jurisdiction and the Chamber of Commerce and Trade of Russian Federation alone has jurisdiction to act as an arbitrator and resolve the dispute. Hence this application is rejected. Issues Involved:1. Jurisdiction for Arbitration2. Validity of Arbitration Agreement3. Appointment of Arbitrator4. Enforcement of Commission PaymentDetailed Analysis:1. Jurisdiction for Arbitration:The primary issue was whether the Supreme Court of India had jurisdiction to entertain the arbitration petition under Section 11(6) of the Arbitration and Conciliation Act, 1996. The respondent argued that Clause 6.2 of the Agency Agreement dated 14.04.2000 explicitly provided that any disputes would be submitted to the Arbitration Court under the Chamber of Commerce and Trade of the Russian Federation. The court held that 'whenever there is a specific clause conferring jurisdiction on a particular Court to decide the matter then it automatically ousts the jurisdiction of other Court.' Therefore, the court concluded that it had no jurisdiction and that the Chamber of Commerce and Trade of the Russian Federation alone had jurisdiction to act as an arbitrator and resolve the dispute.2. Validity of Arbitration Agreement:The petitioner contended that due to apprehensions of not getting justice in Russia, the arbitration should be conducted under the Indian Arbitration Act. However, the court noted that the arbitration clause in the Agency Agreement was clear and unambiguous, specifying that disputes would be resolved by the Arbitration Court under the Chamber of Commerce and Trade of the Russian Federation. The court emphasized that 'in view of the specific provision specifying the jurisdiction of the Court to decide the matter, this Court cannot assume the jurisdiction.'3. Appointment of Arbitrator:The petitioner sought the appointment of an arbitrator in India, arguing that the respondent had failed to comply with the arbitration clause. The court referred to the recent decision by the Seven Judge Bench in Civil Appeal No. 4168 of 2003 (M/s S.B.P. & Co. vs M/s Patel Engineering Ltd. & Anr.), which clarified that the power exercised by the Chief Justice of India under Section 11(6) of the Act is judicial and not administrative. However, the court reiterated that the specific arbitration clause in the Agency Agreement mandated arbitration under the Chamber of Commerce and Trade of the Russian Federation, thereby precluding the appointment of an arbitrator in India.4. Enforcement of Commission Payment:The petitioner claimed a 16% commission for facilitating the supply of helicopters to the Border Security Force, Ministry of Home Affairs, Government of India. Despite the petitioner's efforts and the execution of a contract for the supply of six helicopters, the respondent denied the obligation to pay the commission. The petitioner invoked the arbitration clause and sought an injunction to prevent the respondent from evading payment. The court noted that the petitioner had already approached the Delhi High Court, which had issued an interim order directing the Border Security Force to hold back 16% of the amount payable to the respondent. However, the court concluded that the dispute over the commission payment should be resolved by the designated arbitration authority as per the Agency Agreement.Conclusion:The Supreme Court of India rejected the petition, holding that it had no jurisdiction to entertain the arbitration petition due to the specific arbitration clause in the Agency Agreement, which conferred jurisdiction on the Chamber of Commerce and Trade of the Russian Federation. The court emphasized that the arbitration clause was clear and unambiguous, and the designated arbitration authority alone had the jurisdiction to resolve the dispute. Consequently, the application for the appointment of an arbitrator in India was dismissed.