2001 (4) TMI 957 - HC - Indian Laws

Appeals Granted: Interim Order Reinstated, Arbitration Act Sections 41 and 31(4) Override Forum Clauses.

Universal Petrochemicals Ltd. Versus Rajasthan State Electricity

Universal Petrochemicals Ltd. Versus Rajasthan State Electricity - AIR 2001 Cal 102 Issues Involved:1. Jurisdiction of the Calcutta High Court under section 20 and section 41 of the Arbitration Act, 1940.2. Impact of forum selection clause on jurisdiction.3. Validity of interim orders under section 41.4. Appealability of orders under section 41.Detailed Analysis:1. Jurisdiction of the Calcutta High Court under section 20 and section 41 of the Arbitration Act, 1940:The appellant entered into two contracts with the Board for the supply of transformer oil, which led to disputes over the quality of the oil and the invocation of bank guarantees. The appellant filed an application under section 20 of the Arbitration Act, 1940, in the Calcutta High Court, seeking arbitration and an interim order under section 41 to restrain the Board from invoking the bank guarantees. The Court confirmed the interim order. The Board filed an application for dismissal of the section 20 application and revocation of the interim order. The trial Judge dismissed the section 20 application and vacated the interim order, which was later set aside by the Appeal Court, remanding the matter for fresh consideration.2. Impact of Forum Selection Clause on Jurisdiction:The second contract contained a forum selection clause, while the first did not. The appellant argued that section 31(4) of the Arbitration Act, 1940, which contains a non-obstante clause, overrides any private contract, including forum selection clauses. The Court agreed, stating that section 31(4) confers exclusive jurisdiction on the Court where the first application is made and ousts the jurisdiction of other Courts. The Court held that the forum selection clause cannot prevail over the statutory provision of section 31(4).3. Validity of Interim Orders under Section 41:The trial Judge vacated the interim order passed under section 41, which was contested by the appellant. The Court found that the trial Judge erred in recalling the final order passed on the section 41 application, as the Judge was not exercising appellate, revisional, or review jurisdiction. The Court emphasized that the interim order, once finalized, could not be reopened and recalled by the trial Judge.4. Appealability of Orders under Section 41:The respondent argued that no appeal lies from an order under section 41 of the Arbitration Act. However, the Court held that the order passed by the trial Judge on the section 41 application was interconnected with the section 20 application and could not be disassociated. The appellate court has the jurisdiction to rectify errors in such orders. The Court also noted that disputes relating to bank guarantees are connected with the quality of oil supplied and should be resolved through arbitration.Conclusion:The Court allowed the appeals, set aside the judgments and orders passed by the trial Judge, and restored the interim order under section 41. The section 20 application filed by the appellant was deemed maintainable before the Calcutta High Court, and the matter was directed to be placed before the appropriate Bench for early disposal. The Court reiterated that statutory provisions override private contracts, and the jurisdiction conferred by section 31(4) of the Arbitration Act, 1940, is exclusive.