TaxTMI 
TaxTMI 
2014 (1) TMI 966
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..... It also invoked the arbitration clause for resolution of the said disputes. The State of Maharashtra as also Atlanta Limited nominated their respective arbitrators, who in turn, appointed the presiding arbitrator. On the culmination of proceedings before the arbitral tribunal, an award was rendered on 12.5.2012. Almost all the claims raised by Atlanta Limited were granted. In sum and substance, Atlanta Limited was awarded a sum of Rs.58,59,31,595/- along with the contracted rate of interest (of 20 per cent per annum), with effect from 1.10.2009. Atlanta Limited was also awarded a sum of Rs.41,00,000/- towards costs. All the counter claims raised by the State of Maharashtra, before the arbitral tribunal, were simultaneously rejected. 2. On 7.8.2012, the State of Maharashtra moved Miscellaneous Application no. 229 of 2012 and Miscellaneous Application no. 230 of 2012 under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Arbitration Act') before the District Judge, Thane. The State of Maharashtra through the aforesaid Miscellaneous Applications sought quashing and setting aside of the arbitral award dated 12.5.2012. 3. On the same day,....
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.... this Court is already placed before the Single Judge of this Court and is now adjourned. It would be proper if the proceedings before the District Court, Thane are brought and are heard along with the Petition filed by the Petitioners in this Court. 33. As a result of the above discussion, this application succeeds. It is made absolute in terms of prayer clause (a) with no order as to costs." The above determination by the High Court, vide its order dated 15.3.2013, is the subject matter of challenge through Special leave Petition (C) No.18980 of 2013. 5. Leave granted. 6. The contention advanced at the hands of the learned counsel for the State of Maharashtra, while assailing the impugned order of the High Court dated 15.3.2013 was, that it was improper for the High Court to transfer the proceedings initiated by the appellant through Miscellaneous Application No.229 of 2012 and Miscellaneous Application No.230 of 2012 under Section 34 of the Arbitration Act before the Court of the District Judge, Thane to the High Court. In this behalf, the pointed submission of the learned counsel for the appellant was, that only the District Judge, Thane, had the jurisdiction to determ....
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....s,-- (a) for the recovery of immovable property with or without rent or profits, (b) for the partition of immovable property, (c) for foreclosure, sale or redemption in the case of a mortgage of or charge upon immovable property, (d) for the determination of any other right to or interest in immovable property, (e) for compensation for wrong to immovable property, (f) for the recovery of movable property actually under distraint or attachment, shall be instituted in the Court within the local limits of whose jurisdiction the property is situate: Provided that a suit to obtain relief respecting, or compensation for wrong to, immovable properly held by or on behalf of the defendant may, where the relief sought can be entirely obtained through hi s personal obedience, be instituted either in the Court within the local limits of whose jurisdiction the property is situate, or in the Court within the local limits of whose jurisdiction the defendant actually and voluntarily resides, or carries on business, or personally works for gain. Explanation .--In this section "property" means property situate in India." Relying on Section 16 extracted above, it was ass....
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....ovided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry or business, or personally work for gain, as aforesaid, acquiesce in such institution ; or (c) the cause of action, wholly or in part, arises. Explanation .--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. Illustrations (a) A is a tradesman in Calcutta, B carries on business in Delhi. B , by his agent in Calcutta, buys goods of A and requests A to deliver them to the East Indian Railway Company. A delivers the goods accordingly in Calcutta. A may sue B for the price of the goods either in Calcutta, where the cause of action has arisen or in Delhi, where B carries on business. (b) A resides at Simla, B at Calcutta and C at Delhi, A, B and C being together at Benaras, B and C make a joint promissory note payable on demand, and deliver it to A. A may sue B and C at Benaras, where the cause of action arose. He may also sue them at Calcutta, where B resides, or at Delhi, where C resides; but in each of these....
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....ake good the aforesaid submission, it was asserted, that the contractual agreement dated 12.7.2000, as also, the supplementary agreement dated 11.5.2005, were executed at Mumbai. Additionally, it was submitted that the parties had mutually agreed, that the seat of arbitration in case of any disputes arising between the parties, would be at Mumbai. Relying on the aforesaid undisputed factual position, learned counsel for the respondent invited our attention to the determination rendered by this Court in Bharat Aluminium Company & Ors. vs. Kaiser Aluminium Technical Services Inc & Ors. (2012) 9 SCC 559, and made pointed reliance to the following observations recorded therein: "96. xxx xxx xxx xxx We are of the opinion, the term "subject matter of the arbitration" cannot be confused with "subject matter of the suit". The term "subject matter" in Section 2(1)(e) is confined to Part I. It has a reference and connection with the process of dispute resolution. Its purpose is to identify the courts having supervisory control over the arbitration proceedings. Hence, it refers to a court which would essentially be a court of the seat of the arbitration process. In our opinion, the prov....
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.... question whether Part I applies to arbitrations which take place outside India. 98. We now come to Section 20, which is as under: "20. Place of arbitration-(1) The parties are free to agree on the place of arbitration. (2) Failing any agreement referred to in Sub-section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. (3) Notwithstanding Sub-section (1) or Sub-section (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, good or other property." A plain reading of Section 20 leaves no room for doubt that where the place of arbitration is in India, the parties are free to agree to any "place" or "seat" within India, be it Delhi, Mumbai etc. In the absence of the parties' agreement thereto, Section 20(2) authorizes the tribunal to determine the place/seat of such arbitration. Section 20(3) enables the tribunal to meet at any place for conducting hearings at a place of convenience ....
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....ot adjudicate upon the present controversy, on account of lack of jurisdiction. We shall therefore proceed in the first instance, on the premise that both the courts referred to above had jurisdiction in the matter. We shall independently record our reasons for the same, while dealing with the submissions advanced before us. We have chosen to do so, because we are of the view, that an important jurisdictional issue has been raised, which needs to be settled, one way or the other. We shall therefore, decide the controversy on merits, irrespective of the position expressed by the appellant, on the issue of jurisdiction. 14. During the course of hearing before us, learned counsel for the appellant had highlighted for our consideration, the factual/legal controversy which was agitated by the rival parties before the High Court. In this behalf it was further pointed out, firstly, that the respondent's case before the High Court was, that since the arbitral tribunal had its seat at Mumbai, and the works contract was executed at Mumbai, the original side of the High Court of Bombay was competent to entertain the controversy. On the other hand, the appellants before the High Court had p....
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....gs were conducted; the term "subject matter" used in Section 2(1)(e) of the Arbitration Act is only referable to the subject matter of the works contract, with respect to which the dispute is raised (with respect to which, there was a direction for extension of the concession period, under the award). Accordingly it was submitted, that although the High Court may also have jurisdiction, the District Court Thane is "more natural", "more suitable" and "more appropriate" for the adjudication of the claims, raised by the rival parties. Thirdly it was contended, that the original side of the High Court of Bombay, vis-à-vis, the District Judge, Thane, is a "superior" Court. According to the learned counsel for the appellants, even if it is acknowledged that the "ordinary original civil side" of the High Court of Bombay as also the "principal Civil Court of original jurisdiction" for the District Thane i.e., the District Judge, Thane, both have jurisdiction in the matter, there were many attributes on the basis of which it could be clearly established, that the original side of the High Court of Bombay, is superior to the Court of the District Judge, Thane. In this behalf it was so....
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....(were filed under Section 34 of the Arbitration Act) were filed during the three years before the High Court of Bombay. Based on the above factual position it was submitted, that it could be expected that the District Judge, Thane, would dispose of the matters under reference within a short period of about five years, whereas it was likely that the disposal of the said matters will take more than two decades if the matters are required to be adjudicated by the original side of the High Court of Bombay. On the instant aspect of the matter also, referring to available data it was submitted, that it takes more than 20 years for a suit to be heard and decided by the High Court of Bombay under its "ordinary original civil jurisdiction", whereas, it does not take more than 5 years for a suit filed before the District Judge, Thane, to be disposed of. Accordingly it was contended, that keeping in view the burden of litigation, the "natural choice" for adjudication of the matters under reference ought to be the District Judge, Thane, rather than the High Court of Bombay. 17. Besides the above submissions, no other contention was advanced before us. 18. We shall first endeavour to addr....
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....e superior most court exercising original civil jurisdiction, within the ambit of its original civil jurisdiction. On the same analogy and for the same reasons, the choice of jurisdiction, will clearly fall in the realm of the High Court, wherever a High Court exercises "ordinary original civil jurisdiction". Under the Arbitration Act, therefore, the legislature has clearly expressed a legislative intent, different from the one expressed in Section 15 of the Code of Civil Procedure. The respondent had chosen to initiate proceedings within the area of Greater Mumbai, it could have done so only before the High Court of Bombay. There was no other court within the jurisdiction of Greater Mumbai, where the respondent could have raised their challenge. Consequently, we have no hesitation in concluding, that the respondent by initiating proceedings under Section 34 of the Arbitration Act, before the original side of the High Court of Bombay, had not violated the mandate of Section 2(1)(e) of the Arbitration Act. Thus viewed, we find the submission advanced at the hands of the learned counsel for the appellants, by placing reliance on Section 15 of the Code of Civil Procedure, wholly irrel....
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.... a matter of "suitable choice", as also, as a matter of "more appropriate choice", the controversies raised by the rival parties ought to be collectively determined by the District Court, Thane, and not by the High Court of Bombay (in exercise of its "ordinary original civil jurisdiction"). In order to supplement the aforesaid contention, learned counsel for the appellant had depicted the quantum of filing of similar petitions before the High Court, as also, before the District Court Thane, and the time likely to be taken for the disposal of such matters by the Courts under reference. There is no statutory provision to our knowledge, wherein the determination of jurisdiction, is based on such considerations. No such provision was brought to our notice by learned counsel. The question of jurisdiction, is a pure question of law, and needs to be adjudicated only on the basis of statutory provisions. In view of the deliberations recorded hereinabove, it may not be wrong to observe, that the submissions advanced at the behest of the learned counsel for the appellants on the issue of jurisdiction, are submissions without reference to any principles known to law. To the credit of the lear....
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....s may legitimately lie before two or more courts. 23. Ordinarily Section 42 of the Arbitration Act would be sufficient to resolve such a controversy. For the determination of the present controversy, however, reliance cannot be placed on Section 42 of the Arbitration Act, because the State of Maharashtra had moved Miscellaneous Civil Application No. 229 and Miscellaneous Civil Application No 230 of 2012 under Section 34 of the Arbitration Act before the District Judge, Thane, on the same day as Atlanta Limited had filed Arbitration Petition No. 1158 of 2012 before the High Court. In this behalf it may be mentioned, that both the parties had approached the courts referred to hereinabove on 7.8.2012. The answer to the jurisdictional question, arising out in the facts and circumstances of this case, will therefore not emerge from Section 42 of the Arbitration Act. All the same it is imperative for us to give effect to the legislative intent recorded under Section 42 aforementioned, namely, that all disputes arising out of a common arbitration agreement, arbitral proceeding or arbitral award, would lie only before one court. 24. The very fact that the appellants before this Court....
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..... Jurisdiction of the above two courts on the "ordinary original civil side" is over the area of Greater Mumbai. Whilst examining the submissions advanced by the learned counsel for the appellant under Section 15 of the Code of Civil Procedure, we have already concluded, that in the above situation, jurisdiction will vest with the High Court and not with the District Judge. The aforesaid choice of jurisdiction has been expressed in Section 2(1)(e) of the Arbitration Act, without any fetters whatsoever. It is not the case of the appellants before us, that because of pecuniary dimensions, and/or any other consideration(s), jurisdiction in the two alternatives mentioned above, would lie with the Principal District Judge, Greater Mumbai. Under the scheme of the provisions of the Arbitration Act therefore, if the choice is between the High Court (in exercise of its "ordinary original civil jurisdiction") on the one hand, and the "principal civil court of original jurisdiction" in the District i.e. the District Judge on the other; Section 2(1)(e) of the Arbitration Act has made the choice in favour of the High Court. This in fact impliedly discloses a legislative intent. To our mind ther....