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Sunday, September 28, 2014

Arbitration Act - disputes - Jurisdiction for setting aside award etc., - when arbitrator was appointed by High court - whether District Judge or High court - filed an application under sec.9 before High court - interim orders passed - Arbitrator was also appointed - Award was passed - sec.34 application filed for setting aside award before District Judge - objection as to Jurisdiction of District Judge - single judge allowed the same on the ground that since the parties already had submitted to the jurisdiction of this Court in its Ordinary Original Civil jurisdiction in connection with different earlier proceedings arising out of the said contract, as indicated above, the jurisdiction of the court of the learned District Judge at Jalpaiguri to entertain the said application for setting aside of the award was excluded under Section 42 of the said Act. - Apex court held that as per sec.2(1)(e) - court means only Principal District court and High court having original jurisdiction over the subject matter - sec.42 defines the jurisdiction of the court which first seized the matter , all subsequent applications has to be filed in that court only except few which were made before the Judicial authorities as chief justice etc., and further held that since all the proceedings initiated at High court including appointment of arbitrator - for setting aside award also has to be filed in High court but not in District court and as such dismissed the appeal= CIVIL APPEAL NO. 6691 OF 2005 State of West Bengal & Ors. … Appellants Versus Associated Contractors … Respondent = 2014- Sept. - Month - http://judis.nic.in/supremecourt/filename=41899

  Arbitration Act - disputes - Jurisdiction for setting aside award etc., - when arbitrator was appointed by High court - whether District Judge or High court - filed an application under sec.9 before High court - interim orders passed - Arbitrator was also appointed - Award was passed - sec.34 application filed for setting aside award before District Judge - objection as to Jurisdiction of District Judge - single judge allowed the same on the ground that since the parties already  had  submitted  to  the jurisdiction of this Court in its Ordinary Original  Civil  jurisdiction  in connection with different  earlier  proceedings  arising  out  of  the  said contract, as indicated above, the jurisdiction of the court of  the  learned District Judge at Jalpaiguri to entertain the said application  for  setting aside of the award was excluded under Section 42 of the said Act. - Apex court held that as per sec.2(1)(e) - court means only Principal District court and High court having original jurisdiction over the subject matter - sec.42 defines the jurisdiction of the court which first seized the matter , all subsequent applications has to be filed in that court only except few  which were made before the Judicial authorities as chief justice etc., and further held that since all the proceedings initiated at High court including appointment of arbitrator - for setting aside award also has to be filed in High court but not in District court and as such dismissed the appeal=

 which    Court     will    have     the     jurisdiction
to  entertain and decide an application under Section 34 of the  Arbitration
and Conciliation Act, 1996 (hereinafter  for short 'the Act'). =

“2(1)(e) “Court” means 
the principal Civil Court of  original  jurisdiction
in a district, and includes the High  Court  in  exercise  of  its  ordinary
original civil jurisdiction, having jurisdiction  to  decide  the  questions
forming the subject-matter of the arbitration  if  the  same  had  been  the
subject-matter of a suit, but does not include any civil court  of  a  grade
inferior to such principal Civil Court, or any Court of small Causes.

42.  Jurisdiction
Notwithstanding anything  contained  elsewhere  in  this
Part or in any other law for the time being in force, where with respect  to
an arbitration agreement any application under this Part has been made in  a
Court,  that  Court  alone  shall  have  jurisdiction  over   the   arbitral
proceedings and all subsequent applications arising out  of  that  agreement
and the arbitral proceedings shall be made in that Court  and  in  no  other
Court.”=

In 1995-96 an Item Rate Tender was duly executed  and  signed  between
the respondent  Associated  Contractors  and  the  concerned  Superintending
Engineer for execution of the work  of  excavation  and  lining  of  Teesta-
Jaldhaka Main Canal from Chainage 3 Kms. to 3.625 Kms.  in  Police  Station:
Mal, District: Jalpaiguri, West Bengal.
Para  25  of  the  said
Item  Rate Tender and Contract contained an arbitration clause.

3.    The respondent herein filed an application  under  Section  9  of  the
Arbitration Act, 1996 for interim orders in the High Court of  Calcutta.  
A
learned Single Judge of the High Court of  Calcutta,  after  granting  leave
under Clause 12  of  the  Letters  Patent,  passed  an  ad-interim  ex-parte
injunction order.
  The  arbitration
proceedings culminated in an Award  dated  30th  June,  2004  by  which  the
claimant was awarded a sum of Rs.2,76,97,205.00  with 10% interest from  1st
July, 1998 till the date of the Award. If not paid within four  months,  the
same would then attract interest at the rate of 18% per annum.   Costs  were
also awarded  in  the  sum  of  Rs.50,000/-.  
The  counter  claims  of  the respondent were rejected.

6.     On  21st  September,  2004,  the  State  of  West  Bengal  filed   an
application under Section 34 of the 1996  Act  to  set  aside  the  arbitral
Award before the Principal Civil Court of  the  learned  District  Judge  at
Jalpaiguri, West Bengal.
On 6th October, 2004, the learned  District  Judge
at Jalpaiguri issued notice to the other side directing  the  respondent  to
appear and file its written objections on or before 4th January,  2004.  
On
10th December, 2004, the respondent filed an application under  Article  227
of the Constitution  challenging  the  jurisdiction  of  the  court  of  the
learned District Judge at Jalpaiguri.   
By the impugned judgment dated  11th
April, 2005, a Single Judge of  the  High  Court  of  Calcutta  allowed  the
petition under Article 227 holding:

“Accordingly, I hold that since the parties already  had  submitted  to  the
jurisdiction of this Court in its Ordinary Original  Civil  jurisdiction  in
connection with different  earlier  proceedings  arising  out  of  the  said
contract, as indicated above, the jurisdiction of the court of  the  learned
District Judge at Jalpaiguri to entertain the said application  for  setting
aside of the award was excluded under Section 42 of the said Act.   Thus,  I
find that this Court in its Ordinary  Original  Civil  Jurisdiction  is  the
only court which can entertain an application for  setting  aside  the  said
award.  The Revisional Application,  thus,  stands  allowed.   The  impugned
notice is, thus, quashed.”
 =
 Mr.   Bikas   Ranjan  Bhattacharya, learned senior counsel  appearing
for the appellants cited the judgments in the  case  of  National  Aluminium
Co. Ltd. Vs. Pressteel & Fabrications (P) Ltd. And Anr. (2004)  1  SCC  540,
Bharat Coking Coal Ltd. Vs. Annapurna Construction (2008) 6 SCC 732,  Bharat
Coking Coal Ltd. Vs. H.P. Biswas and Company (2008) 6 SCC  740  and  Garhwal
Mandal Vikas Nigam Ltd. Vs. Krishna  Travel  Agency  (2008)  6  SCC  741  in
support of his submission that it is only  the  Principal  Civil  Court,  as
defined in Section 2(e) of the Act, which  can  entertain  and  decide    an
application      under       Section    34   of     the   Act   for  setting
aside the Award.

 3.       Mr.  Pradip  Ghosh,  learned  senior  counsel  appearing  for  the
respondent on the  other  hand  submitted  that  in  the  present  case  the
Calcutta High Court exercising jurisdiction under Clause 12 of  the  Letters
Patent had passed an interim  order  under  Section  9  of  the  Act  before
commencement of the arbitration proceedings and by virtue of Section  42  of
the Act, it is only the Calcutta High Court which will have jurisdiction  to
entertain and decide an application under Section 34 of the Act for  setting
aside the Award. In support of his submission, he relied  upon  judgment  of
this Court in the case of Jindal  Vijaynagar  Steel  (JSW  Steel  Ltd.)  Vs.
Jindal Praxair Oxygen Co. Ltd. (2006) 11 SCC 521. =

 In
our opinion, the law has to be clarified beyond  doubt  as  to  which  Court
will have the jurisdiction  to  entertain  and  decide  an  application  for
setting aside the Award under  Section 34 of the Act read with Section  2(e)
of the Act and other provisions, including  Section  42  of  the  Act.
 We,
therefore, refer the matter to a larger Bench to  decide  this  question  of
law. =

Our conclusions therefore on Section 2(1)(e) and  Section  42  of  the
Arbitration Act, 1996 are as follows:

(a)   Section 2(1)(e) contains an exhaustive  definition  marking  out  only
the Principal Civil Court of original jurisdiction in a district or  a  High
Court having original civil jurisdiction in the State, and  no  other  court
as “court” for the purpose of Part-I of the Arbitration Act, 1996.

(b)   The expression “with respect to an  arbitration  agreement”  makes  it
clear that Section 42 will apply to all applications made whether before  or
during arbitral proceedings or after an Award is pronounced under Part-I  of
the 1996 Act.

(c)   However, Section 42 only applies to applications made under Part-I  if
they are made to a court as defined.  Since applications made under  Section
8 are made to judicial authorities and since applications under  Section  11
are made to the Chief Justice or his designate, the judicial  authority  and
the Chief Justice  or  his  designate  not  being  court  as  defined,  such
applications would be outside Section 42.

(d)   Section 9 applications being applications made to a court and  Section
34 applications to set aside arbitral  awards  are  applications  which  are
within Section 42.

(e)   In no circumstances can the Supreme Court be “court” for the  purposes
of Section 2(1)(e), and whether the Supreme Court does or  does  not  retain
seisin after appointing an Arbitrator, applications will  follow  the  first
application made before either a High Court having original jurisdiction  in
the State or a Principal Civil court having original  jurisdiction  in   the
district as the case may be.

(f)   Section  42  will  apply  to  applications  made  after  the  arbitral
proceedings have come to an end provided they are made under Part-I.

(g)   If a first  application  is  made  to  a  court  which  is  neither  a
Principal Court of original jurisdiction in  a  district  or  a  High  Court
exercising original jurisdiction in a State, such application not  being  to
a court as defined would be outside Section 42. Also,  an  application  made
to a court without subject matter jurisdiction would be outside Section  42.

      The reference is answered accordingly.

On the facts of the present case, nothing has been  shown  as  to  how
the  High Court of Calcutta does not  possess  jurisdiction.
 It  has  been
mentioned above that leave  under  Clause  12  has  been  granted.  
In  the
circumstances of the  present  case,  therefore,  the  judgment  dated  11th
April, 2005 passed by the High Court of Calcutta is  correct  and  does  not
need  any  interference.  Civil  Appeal  No.6691/2005   and   Civil   Appeal
No.4808/2013 are hereby dismissed.

2014- Sept. - Month - http://judis.nic.in/supremecourt/filename=41899 

                                                               REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 6691 OF 2005


State of West Bengal & Ors.                         …    Appellants

                                   Versus

Associated Contractors                                        …
Respondent

                                    WITH

                        CIVIL APPEAL NO. 4808 OF 2013




                               J U D G M E N T

R.F. Nariman, J.



1.    This matter has come before  a  three  Judge  Bench  by  an  order  of
reference of a Division Bench of this Hon’ble Court dated 7th  April,  2010.
The referral order reads thus:

      “In  this  appeal,    the     question        that     arises      for
decision      is    which    Court     will    have     the     jurisdiction
to  entertain and decide an application under Section 34 of the  Arbitration
and Conciliation Act, 1996 (hereinafter  for short 'the Act').

2.     Mr.   Bikas   Ranjan  Bhattacharya, learned senior counsel  appearing
for the appellants cited the judgments in the  case  of  National  Aluminium
Co. Ltd. Vs. Pressteel & Fabrications (P) Ltd. And Anr. (2004)  1  SCC  540,
Bharat Coking Coal Ltd. Vs. Annapurna Construction (2008) 6 SCC 732,  Bharat
Coking Coal Ltd. Vs. H.P. Biswas and Company (2008) 6 SCC  740  and  Garhwal
Mandal Vikas Nigam Ltd. Vs. Krishna  Travel  Agency  (2008)  6  SCC  741  in
support of his submission that it is only  the  Principal  Civil  Court,  as
defined in Section 2(e) of the Act, which  can  entertain  and  decide    an
application      under       Section    34   of     the   Act   for  setting
aside the Award.

 3.       Mr.  Pradip  Ghosh,  learned  senior  counsel  appearing  for  the
respondent on the  other  hand  submitted  that  in  the  present  case  the
Calcutta High Court exercising jurisdiction under Clause 12 of  the  Letters
Patent had passed an interim  order  under  Section  9  of  the  Act  before
commencement of the arbitration proceedings and by virtue of Section  42  of
the Act, it is only the Calcutta High Court which will have jurisdiction  to
entertain and decide an application under Section 34 of the Act for  setting
aside the Award. In support of his submission, he relied  upon  judgment  of
this Court in the case of Jindal  Vijaynagar  Steel  (JSW  Steel  Ltd.)  Vs.
Jindal Praxair Oxygen Co. Ltd. (2006) 11 SCC 521.

4.   We    have   perused    the    decisions      cited      by     learned
counsel for the parties, which are all decisions of two Judges  Bench.    In
our opinion, the law has to be clarified beyond  doubt  as  to  which  Court
will have the jurisdiction  to  entertain  and  decide  an  application  for
setting aside the Award under  Section 34 of the Act read with Section  2(e)
of the Act and other provisions, including  Section  42  of  the  Act.   We,
therefore, refer the matter to a larger Bench to  decide  this  question  of
law.

5.     Let    the   papers    of     this   case    be      placed    before
Hon'ble the Chief Justice for constituting an appropriate Bench.

6.   Till the disposal of the appeal  by  a  larger  Bench,  the     interim
order    dated       17.05.2007      shall    continue     to operate.”

2.    The facts necessary to decide this matter are as follows:

      In 1995-96 an Item Rate Tender was duly executed  and  signed  between
the respondent  Associated  Contractors  and  the  concerned  Superintending
Engineer for execution of the work  of  excavation  and  lining  of  Teesta-
Jaldhaka Main Canal from Chainage 3 Kms. to 3.625 Kms.  in  Police  Station:
Mal, District: Jalpaiguri, West Bengal.  Para  25  of  the  said  Item  Rate
Tender and Contract contained an arbitration clause.

3.    The respondent herein filed an application  under  Section  9  of  the
Arbitration Act, 1996 for interim orders in the High Court of  Calcutta.   A
learned Single Judge of the High Court of  Calcutta,  after  granting  leave
under Clause 12  of  the  Letters  Patent,  passed  an  ad-interim  ex-parte
injunction order.  This order was continued from time to time until  it  was
confirmed  by  an  order  dated  10th  December,  1998.   Meanwhile,  in  an
application under Section 11 of the Arbitration Act, Justice  B.P.  Banerjee
(retired), was appointed as an Arbitrator to adjudicate  upon  the  disputes
between the parties.   A  Recalling  Application  filed  by  the  State  was
dismissed on 20th January, 2000.

4.    An appeal was filed against  the  order  dated  10th  December,  1998,
confirming the ad-interim ex-parte injunction.  On 5th July, 2000, delay  in
filing the appeal was condoned and on 20th July,  2000,  the  interim  order
was stayed by the Division Bench.  The Arbitrator  was,  however,  asked  to
complete the proceedings before him which would go on uninterrupted.

5.    Meanwhile, several orders were passed  by  the  High  Court  regarding
remuneration of the Arbitrator and payment of  the  same.   The  arbitration
proceedings culminated in an Award  dated  30th  June,  2004  by  which  the
claimant was awarded a sum of Rs.2,76,97,205.00  with 10% interest from  1st
July, 1998 till the date of the Award. If not paid within four  months,  the
same would then attract interest at the rate of 18% per annum.   Costs  were
also awarded  in  the  sum  of  Rs.50,000/-.   The  counter  claims  of  the
respondent were rejected.

6.     On  21st  September,  2004,  the  State  of  West  Bengal  filed   an
application under Section 34 of the 1996  Act  to  set  aside  the  arbitral
Award before the Principal Civil Court of  the  learned  District  Judge  at
Jalpaiguri, West Bengal.  On 6th October, 2004, the learned  District  Judge
at Jalpaiguri issued notice to the other side directing  the  respondent  to
appear and file its written objections on or before 4th January,  2004.   On
10th December, 2004, the respondent filed an application under  Article  227
of the Constitution  challenging  the  jurisdiction  of  the  court  of  the
learned District Judge at Jalpaiguri.   By the impugned judgment dated  11th
April, 2005, a Single Judge of  the  High  Court  of  Calcutta  allowed  the
petition under Article 227 holding:

“Accordingly, I hold that since the parties already  had  submitted  to  the
jurisdiction of this Court in its Ordinary Original  Civil  jurisdiction  in
connection with different  earlier  proceedings  arising  out  of  the  said
contract, as indicated above, the jurisdiction of the court of  the  learned
District Judge at Jalpaiguri to entertain the said application  for  setting
aside of the award was excluded under Section 42 of the said Act.   Thus,  I
find that this Court in its Ordinary  Original  Civil  Jurisdiction  is  the
only court which can entertain an application for  setting  aside  the  said
award.  The Revisional Application,  thus,  stands  allowed.   The  impugned
notice is, thus, quashed.”



7.    In an S.L.P. filed against this  order,  Mr.  Anip  Sachthey,  learned
advocate for the State of West Bengal, argued  that  since  the  application
itself made under Section 9 was without  jurisdiction,  Section  42  of  the
Arbitration Act would not be attracted.   He  argued  that  the  reason  the
Division Bench stayed the interim order passed under Section 9  was  because
it was convinced  prima  facie  that  the  High  Court  had  no  territorial
jurisdiction in the matter.

8.     Mr.   P.K.  Ghosh,  learned  senior  advocate  for  the   respondent,
contended that Clause 12 leave had already been  granted  and  a  number  of
orders have been passed after  the  ad-interim  ex-parte  order  dated  22nd
July, 1998 by the learned Single Judge of the  High  Court.   There  is,  in
fact, no order of any court which  has  pronounced  upon  jurisdiction,  and
therefore, Section 42 would necessarily apply to the facts of the case.

9.     As  the  matter  has  been  referred  to  us  for  an   authoritative
pronouncement on Section 2(1)(e) and Section 42 it will be important to  set
out Section 2(1)(e) and Section 42 of the Arbitration Act, 1996  which  read
as follows:

 “2(1)(e) “Court” means the principal Civil Court of  original  jurisdiction
in a district, and includes the High  Court  in  exercise  of  its  ordinary
original civil jurisdiction, having jurisdiction  to  decide  the  questions
forming the subject-matter of the arbitration  if  the  same  had  been  the
subject-matter of a suit, but does not include any civil court  of  a  grade
inferior to such principal Civil Court, or any Court of small Causes.

42.  Jurisdiction – Notwithstanding anything  contained  elsewhere  in  this
Part or in any other law for the time being in force, where with respect  to
an arbitration agreement any application under this Part has been made in  a
Court,  that  Court  alone  shall  have  jurisdiction  over   the   arbitral
proceedings and all subsequent applications arising out  of  that  agreement
and the arbitral proceedings shall be made in that Court  and  in  no  other
Court.”



10.   Section 2(1)(e) had its genesis in  Section  2(c)  of  the  1940  Act.
Section 42 had its  genesis  in  Section  31(4)  of  the  1940  Act.   These
sections of the 1940 Act read as follows:

“2(c) "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
arbitration proceedings under section 21, include a Small Cause Court;

31(4) Notwithstanding anything contained elsewhere in this  Act  or  in  any
other  law  for  the  time  being  in force,  where  in  any  reference  any
application under this Act has been made in a Court competent  to  entertain
it,  that  Court  alone  shall  have  jurisdiction  over   the   arbitration
proceedings-,  and  all  subsequent  applications  arising,  out   of   that
reference, and the arbitration proceedings shall be made in that  Court  and
in no other Court.”



11.   It will be noticed that Section 42 is in almost the same terms as  its
predecessor  Section  except  that  the  words  “in   any   reference”   are
substituted with the  wider  expression  “with  respect  to  an  arbitration
agreement”. It will also be noticed that the expression “has been made in  a
court competent to entertain it”, is no longer there in  Section  42.  These
two changes are of some significance as will be pointed out  later.  Section
42
                           starts with  a  non-obstante  clause  which  does
away with anything which may be inconsistent  with  the  Section  either  in
Part-I of the Arbitration Act, 1996 or in any other law for the  time  being
in force. The expression “with respect to an arbitration  agreement”  widens
the scope of Section 42 to include all matters which directly or  indirectly
pertain to an arbitration agreement.  Applications made to Courts which  are
before, during or after arbitral proceedings made under Part-I  of  the  Act
are all covered by Section 42. But an essential ingredient  of  the  Section
is that an application under Part-I must be made in a court.

12.    Part-1  of  the   Arbitration   Act,   1996,   contemplates   various
applications  being  made  with  respect  to  arbitration  agreements.   For
example, an application under Section  8  can  be  made  before  a  judicial
authority before which an action  is  brought  in  a  matter  which  is  the
subject of an arbitration agreement.  It is obvious that  applications  made
under Section 8 need not be to courts,  and  for  that  reason  alone,  such
applications would be outside the scope of Section 42.  It was  held  in  P.
Anand Gajapathi Raju & Ors. v. P.V.G. Raju (Dead) & Ors., (2000) 4  SCC  539
at para 8  that applications under Section 8 would be  outside  the  ken  of
Section  42.  We  respectfully  agree,  but  for  the   reason   that   such
applications are made before “judicial  authorities”  and  not  “courts”  as
defined. Also, a party who  applies  under  Section  8  does  not  apply  as
dominus litis, but has to go wherever the `action’   may  have  been  filed.
Thus, an application under Section 8 is parasitical in nature -  it  has  to
be filed only before the judicial authority  before  whom  a  proceeding  is
filed by someone else. Further, the “judicial authority” may or may  not  be
a Court. And a Court before which an action may be  brought  may  not  be  a
Principal Civil Court of original jurisdiction or a  High  Court  exercising
original jurisdiction.  This brings us then to  the  definition  of  “court”
under Section 2(1)(e) of the Act.

13.   It will be noticed that whereas the earlier  definition  contained  in
the 1940 Act spoke of any civil court, the definition in the 1996 Act  fixes
“court” to be the Principal  Civil  Court  of  original  jurisdiction  in  a
district or  the High Court in  exercise  of  its  ordinary  original  civil
jurisdiction.  Section 2(1)(e) further goes on to say  that  a  court  would
not include any civil court of a grade  inferior  to  such  Principal  Civil
Court, or a Small Causes Court.

14.   It will be noticed that the definition is  an  exhaustive  one  as  it
uses the expression “means and includes”.   It  is  settled  law  that  such
definitions are meant to be exhaustive in nature – See P. Kasilingam &  Ors.
v. P.S.G. College of Technology & Ors., (1995) Suppl. 2 SCC 348 at para 19.

15.   A  recent  judgment  of  this  Hon’ble  Court  reported  in  Executive
Engineer, Road Development Division  No.  III,  Panvel  &  Anr.  v.  Atlanta
Limited, AIR 2014 SC 1093 has taken the view that Section  2(1)(e)  contains
a scheme different from that contained in Section 15 of the  Code  of  Civil
Procedure.  Section 15 requires all suits to be filed in  the  lowest  grade
of court.  This Hon’ble Court has construed Section 2(1)(e)  and  said  that
where a High Court exercises ordinary original  civil  jurisdiction  over  a
district, the High Court will have preference to the Principal  Civil  Court
of original jurisdiction in  that  district.   In  that  case,  one  of  the
parties moved an application under Section 34  before  the  District  Judge,
Thane.  On the same day, the opposite party moved an application before  the
High Court of Bombay for setting aside some of the directions  contained  in
the Award.  In the circumstances, it was decided that the  “Court”  for  the
purpose of Section 42 would be the High Court and not  the  District  Court.
Several reasons were given for this.  Firstly, the  very  inclusion  of  the
High Court in the  definition  would  be  rendered  nugatory  if  the  above
conclusion was not to be accepted, because  the  Principal  Civil  Court  of
original jurisdiction in a district is always a court lower  in  grade  than
the High Court, and such District Judge being lower in grade than  the  High
Court would always  exclude  the  High  Court  from  adjudicating  upon  the
matter. Secondly, the provisions of the Arbitration Act leave  no  room  for
any  doubt  that  it  is  the   superior  most  court  exercising   original
jurisdiction which has been chosen to adjudicate  disputes  arising  out  of
arbitration agreements. We respectfully concur with the reasoning  contained
in this judgment.

16.   Similar is  the  position  with  regard  to  applications  made  under
Section  11  of  the  Arbitration  Act.   In   Rodemadan   India   Ltd.   v.
International Trade Expo Centre Ltd., (2006) 11 SCC 651, a Designated  Judge
of this Hon’ble Court following the seven Judge Bench in S.B.P. and  Co.  v.
Patel Engineering Ltd. & Anr.,  (2005) 8 SCC 618,  held that instead of  the
court,  the  power  to  appoint  arbitrators  contained  in  Section  11  is
conferred on the Chief Justice or his delegate. In  fact,  the  seven  Judge
bench held:

“13. It is common ground that the Act has adopted the UNCITRAL Model Law  on
International Commercial Arbitration. But at the  same  time,  it  has  made
some  departures  from  the  model  law.  Section 11 is  in  the  place   of
Article 11 of the Model Law. The Model Law provides  for  the  making  of  a
request under Article 11 to "the  court  or  other  authority  specified  in
Article 6 to take the necessary measure". The  words  in  Section 11 of  the
Act, are "the Chief Justice or  the  person  or  institution  designated  by
him". The fact that instead of the court, the powers are  conferred  on  the
Chief Justice, has to be appreciated in the context of the statute.  'Court'
is defined  in  the  Act  to  be  the  principal  civil  court  of  original
jurisdiction of the district and includes the High Court in exercise of  its
ordinary original civil jurisdiction. The principal civil court of  original
jurisdiction is normally the  District  Court.  The  High  Courts  in  India
exercising ordinary original civil jurisdiction are  not  too  many.  So  in
most of the  States  the  concerned  court  would  be  the  District  Court.
Obviously, the Parliament did not want to confer the power on  the  District
Court,  to  entertain  a  request  for  appointing  an  arbitrator  or   for
constituting an arbitral tribunal under Section 11 of the Act. It has to  be
noted that under Section 9 of the Act, the District Court or the High  Court
exercising original jurisdiction, has  the  power  to  make  interim  orders
prior to, during or  even  post  arbitration.  It  has  also  the  power  to
entertain a challenge to the award that may ultimately be made. The  framers
of the statute must certainly  be  taken  to  have  been  conscious  of  the
definition of 'court' in the Act. It is easily possible to contemplate  that
they did not  want  the  power  under  Section 11 to  be  conferred  on  the
District Court or the  High  Court  exercising  original  jurisdiction.  The
intention apparently was  to  confer  the  power  on  the  highest  judicial
authority in the State and in the country, on Chief Justices of High  Courts
and on the Chief Justice of India. Such a provision is necessarily  intended
to add the greatest credibility to the arbitral process.  The argument  that
the power thus conferred on the Chief Justice could not  even  be  delegated
to any other Judge of the  High  Court  or  of  the  Supreme  Court,  stands
negatived  only because of  the  power  given  to  designate  another.   The
intention of the legislature appears to be clear that it  wanted  to  ensure
that the power under Section 11(6) of the Act was exercised by  the  highest
judicial authority in the concerned State or in  the  country.  This  is  to
ensure the utmost authority to the  process  of  constituting  the  arbitral
tribunal.

18. It is true  that  the  power  under  Section 11(6) of  the  Act  is  not
conferred on the Supreme Court or on the High Court, but it is conferred  on
the Chief Justice of India or the Chief  Justice  of  the  High  Court.  One
possible reason for specifying the authority as the Chief Justice, could  be
that if it were merely the conferment of the power on  the  High  Court,  or
the Supreme Court, the matter would be governed by the normal  procedure  of
that Court, including the right  of  appeal  and  the  Parliament  obviously
wanted to avoid that situation, since one of the  objects  was  to  restrict
the interference by Courts in the arbitral  process.  Therefore,  the  power
was conferred on the highest judicial authority in the country  and  in  the
State in their capacities as Chief Justices. They have  been  conferred  the
power or the right to pass an order contemplated by Section 11 of  the  Act.
We have already seen that it is not possible to envisage that the  power  is
conferred on the Chief Justice as persona  designata.  Therefore,  the  fact
that the power is conferred on the Chief  Justice,  and  not  on  the  court
presided over by  him  is  not  sufficient  to  hold  that  the  power  thus
conferred is merely an administrative power and is not a judicial power.”



  It is obvious that Section 11 applications are not to be moved before  the
“court” as defined but before the Chief Justice either of the High Court  or
of the Supreme Court, as the case may  be,  or  their  delegates.   This  is
despite the fact that the Chief Justice or his delegate have now  to  decide
judicially and not administratively. Again, Section 42 would  not  apply  to
applications made before the Chief Justice or his delegate  for  the  simple
reason that the Chief Justice or his delegate is not “court” as  defined  by
Section 2(1)(e).  The said  view  was  reiterated  somewhat  differently  in
Pandey & Co. Builders (P) Ltd. v. State of Bihar & Anr., (2007)  1  SCC  467
at Paras 9, 23-26.

17.   That the Chief Justice does not represent the High  Court  or  Supreme
Court as the case may be is also clear from Section 11(10):

      “The Chief Justice may make such scheme as  he  may  deem  appropriate
for dealing with matters entrusted by sub-section (4) or  sub-section(5)  or
sub-section (6) to him.”



The scheme referred to in this sub-section is a scheme by  which  the  Chief
Justice may provide for the procedure to be followed in cases dealt with  by
him under Section 11. This again shows that it is not the High Court or  the
Supreme Court rules that are to be followed but  a  separate  set  of  rules
made by the Chief Justice for the purposes of Section 11.

Sub-section 12 of Section 11 reads as follows:

“(a) Where the matters referred to in sub-sections (4), (5), (6),  (7),  (8)
and (10) arise in an international commercial arbitration, the reference  to
‘‘Chief Justice'' in those sub-sections shall be construed  as  a  reference
to the ‘‘Chief Justice of India''.

(b) Where the matters referred to in sub-sections (4), (5),  (6),  (7),  (8)
and (10) arise in any other arbitration, the reference  to  “Chief  Justice”
in those sub-sections shall  be  construed  as  a  reference  to  the  Chief
Justice of the High Court within whose  local  limits  the  principal  Civil
Court referred to in clause (e) of sub-section (1) of section 2  is  situate
and, where the High Court itself is the Court referred to  in  that  clause,
to the Chief Justice of that High Court.”



It is obvious that Section 11(12)(b) was necessitated in order  that  it  be
clear that the Chief Justice of “the High Court” will  only  be  such  Chief
Justice within whose local limits the Principal Civil Court referred  to  in
Section 2(1)(e) is situate and the Chief Justice of that  High  Court  which
is referred to in the inclusive part of the definition contained in  Section
2(1)(e). This sub-section also  does  not  in  any  manner  make  the  Chief
Justice or his designate “court” for the purpose  of  Section  42.    Again,
the decision of the Chief Justice or his designate, not being  the  decision
of the Supreme Court or  the  High  Court,  as  the  case  may  be,  has  no
precedential value being a decision of a judicial authority which is  not  a
Court of Record.

18.   In contrast with applications moved under Section 8  and  11  of   the
Act, applications moved under Section 9 are to the “court”  as  defined  for
the passing of interim orders before or during arbitral  proceedings  or  at
any time after the making of the arbitral Award but before its  enforcement.
 In case an application is made, as has  been  made  in  the  present  case,
before a particular court, Section 42 will apply to preclude the  making  of
all subsequent applications under Part-I to any court except  the  court  to
which an application has been made under Section 9 of the Act.

19.   One of the questions that arises in the  reference  order  is  whether
the Supreme Court is a court within the meaning of Section  2(1)(e)  of  the
Act.  In two judgments under the 1940 Act, namely, State of  Madhya  Pradesh
v. Saith and Skelton (P) Ltd., (1972) 1 SCC 702 and  Guru  Nanak  Foundation
v. Rattan Singh & Sons, (1981) 4 SCC 634, the Supreme Court  took  the  view
that where an Arbitrator was appointed by the Supreme Court itself  and  the
Supreme Court retained seisin over the arbitration proceedings, the  Supreme
Court would be “court” for the purpose of Section  2(c)  of  the  1940  Act.
These judgments  were  distinguished  in  National  Aluminium  Co.  Ltd.  v.
Pressteel & Fabrications (P) Ltd. & Anr., (2004) 1 SCC  540,  Bharat  Coking
Coal Limited v. Annapurna Construction, (2008) 6 SCC 732 and Garhwal  Mandal
Vikas Nigam Ltd. v. Krishna Travel Agency, (2008) 6 SCC 741.  The  first  of
these judgments was a judgment under the 1996 Act wherein it was  held  that
when the Supreme Court appoints an Arbitrator but  does  not  retain  seisin
over the proceedings, the Supreme Court  will  not  be  “court”  within  the
meaning of Section 2(1)(e) of the Act.   Similar  is  the  position  in  the
third judgment, the Garhwal case.   Even  under  the  1940  Act,  in  Bharat
Coking Coal, the same distinction was made and  it  was  held  that  as  the
Supreme Court did not retain seisin over the  proceedings  after  appointing
an Arbitrator, the Supreme Court would not be “court” within the meaning  of
the Arbitration Act, 1940.

20.   As noted above, the  definition  of  “court”  in  Section  2(1)(e)  is
materially different from its predecessor contained in Section 2(c)  of  the
1940 Act.  There are a variety of  reasons  as  to  why  the  Supreme  Court
cannot possibly be considered to be “court” within the  meaning  of  Section
2(1)(e) even if it retains seisin over the arbitral  proceedings.   Firstly,
as noted above, the definition is exhaustive and recognizes only one of  two
possible courts that could be “court” for the purpose  of  Section  2(1)(e).
Secondly, under the 1940 Act, the expression “civil court” has been held  to
be wide enough to include an appellate court and,  therefore  would  include
the Supreme Court as was held in the two judgments aforementioned under  the
1940 Act.  Even though this proposition itself is  open  to  doubt,  as  the
Supreme Court exercising jurisdiction under Article 136 is not  an  ordinary
Appellate Court, suffice it to say that even this  reason  does  not  obtain
under the present definition, which speaks of  either  the  Principal  Civil
Court or the High Court exercising original jurisdiction.   Thirdly,  if  an
application would have to be preferred to the Supreme  Court  directly,  the
appeal that is available so far as applications under Sections 9 and 34  are
concerned,  provided  for  under  Section  37  of  the  Act,  would  not  be
available.  Any further appeal to the Supreme Court under Article 136  would
also not be available. The only other argument that could possibly  be  made
is that all definition sections are subject  to  context  to  the  contrary.
The context of Section 42 does not in any manner lead to a  conclusion  that
the word “court” in  Section  42  should  be  construed  otherwise  than  as
defined.  The context of Section 42 is merely to see that  one  court  alone
shall have jurisdiction over all applications with  respect  to  arbitration
agreements which context does not in any manner enable the Supreme Court  to
become a “court” within the meaning  of  Section  42.   It  has  aptly  been
stated that the rule of forum conveniens is expressly  excluded  by  section
42. See: JSW Steel Ltd. vs. Jindal Praxair Oxygen  Co.Ltd.,  (2006)  11  SCC
521 at para 59. Section 42 is also markedly different from Section 31(4)  of
the 1940 Act in that the expression “has been made in a court  competent  to
entertain it” does not find place in Section 42.  This  is  for  the  reason
that, under Section 2(1)(e), the competent Court is fixed as  the  Principal
Civil Court exercising original jurisdiction  or  a  High  Court  exercising
original civil jurisdiction, and no other court. For all these  reasons,  we
hold that the decisions under the 1940 Act would not obtain under  the  1996
Act, and the Supreme Court cannot be “court” for  the  purposes  of  Section
42.

21.   One other question that may arise is as to whether Section 42  applies
after the arbitral proceedings come to an end.  It has already been held  by
us that the expression “with respect to an arbitration agreement” are  words
of wide import and would take in all  applications  made  before  during  or
after the arbitral proceedings are over.  In  an  earlier  judgment,  Kumbha
Mawji v. Dominion of India, (1953) SCR 878, the question which arose  before
the Supreme Court was whether the expression used in Section  31(4)  of  the
1940 Act “in any  reference”  would  include  matters  that  are  after  the
arbitral proceedings are over and have culminated in an award.  It was  held
that the words “in any reference” cannot be taken to mean “in the course  of
a reference”, but mean “in the matter of a reference” and that  such  phrase
is wide enough and  comprehensive enough to cover an application made  after
the arbitration is completed and the final Award is made.  (See  Paras  891-
893). As has been noticed above, the expression used in Section 42 is  wider
being “with  respect  to  an  arbitration  agreement”  and  would  certainly
include such applications.

22.   One more question that may arise under Section 42 is  whether  Section
42 would apply in cases where an application made in a court is found to  be
without jurisdiction.  Under Section 31(4) of the old Act, it has been  held
in   FCI represented by Managing Director  &  Anr.  v.  A.M.  Ahmed  &  Co.,
through MD & Anr., (2001) 10 SCC 532 at para 6   and Neycer  India  Ltd.  v.
GNB Ceramics Ltd., (2002) 9 SCC 489 at para 3  that  Section  31(4)  of  the
1940 Act would not be applicable if it were found that  an  application  was
to be made before a court which had no jurisdiction.  In  Jatinder  Nath  v.
Chopra Land Developers Pvt. Ltd., (2007) 11 SCC 453 at para 9 and  Rajasthan
State Electrical Board v. Universal Petrol Chemical Limited,  (2009)  3  SCC
107 at paras 33 to 36 and Swastik Gases (P) Ltd. v. Indian Oil  Corporation,
2013 (9) SCC 32 at para 32,  it was held that where  the  agreement  between
the parties restricted jurisdiction  to  only  one  particular  court,  that
court alone would have jurisdiction as neither Section 31(4) nor Section  42
contains a non-obstante clause wiping out a contrary agreement  between  the
parties.  It has thus  been  held  that  applications  preferred  to  courts
outside the exclusive court agreed to  by  parties  would  also  be  without
jurisdiction.

23.   Even under Section 42 itself, a  Designated  Judge  has  held  in  HBM
Print Ltd. v. Scantrans India (Pvt.) Ltd., (2009) 17  SCC  338,  that  where
the Chief Justice has no jurisdiction under Section 11, Section 42 will  not
apply.  This is quite apart from the fact that Section 42, as has been  held
above, will not apply to Section 11 applications at all.

24.   If an application were to be preferred to  a  Court  which  is  not  a
Principal Civil Court of original jurisdiction in  a  district,  or  a  High
Court exercising original  jurisdiction  to  decide  questions  forming  the
subject matter of an arbitration if the same had been the subject matter  of
a suit, then obviously such application would be outside  the  four  corners
of Section 42.  If, for example, an application were to be filed in a  court
inferior to a Principal Civil Court,  or  to  a  High  Court  which  has  no
original jurisdiction, or if an application were  to  be  made  to  a  court
which has no subject matter jurisdiction, such application would be  outside
Section 42 and would not debar subsequent applications from being  filed  in
a court other than such court.

25.   Our conclusions therefore on Section 2(1)(e) and  Section  42  of  the
Arbitration Act, 1996 are as follows:





(a)   Section 2(1)(e) contains an exhaustive  definition  marking  out  only
the Principal Civil Court of original jurisdiction in a district or  a  High
Court having original civil jurisdiction in the State, and  no  other  court
as “court” for the purpose of Part-I of the Arbitration Act, 1996.

(b)   The expression “with respect to an  arbitration  agreement”  makes  it
clear that Section 42 will apply to all applications made whether before  or
during arbitral proceedings or after an Award is pronounced under Part-I  of
the 1996 Act.

(c)   However, Section 42 only applies to applications made under Part-I  if
they are made to a court as defined.  Since applications made under  Section
8 are made to judicial authorities and since applications under  Section  11
are made to the Chief Justice or his designate, the judicial  authority  and
the Chief Justice  or  his  designate  not  being  court  as  defined,  such
applications would be outside Section 42.

(d)   Section 9 applications being applications made to a court and  Section
34 applications to set aside arbitral  awards  are  applications  which  are
within Section 42.

(e)   In no circumstances can the Supreme Court be “court” for the  purposes
of Section 2(1)(e), and whether the Supreme Court does or  does  not  retain
seisin after appointing an Arbitrator, applications will  follow  the  first
application made before either a High Court having original jurisdiction  in
the State or a Principal Civil court having original  jurisdiction  in   the
district as the case may be.

(f)   Section  42  will  apply  to  applications  made  after  the  arbitral
proceedings have come to an end provided they are made under Part-I.

(g)   If a first  application  is  made  to  a  court  which  is  neither  a
Principal Court of original jurisdiction in  a  district  or  a  High  Court
exercising original jurisdiction in a State, such application not  being  to
a court as defined would be outside Section 42. Also,  an  application  made
to a court without subject matter jurisdiction would be outside Section  42.


      The reference is answered accordingly.

26.   On the facts of the present case, nothing has been  shown  as  to  how
the  High Court of Calcutta does not  possess  jurisdiction.   It  has  been
mentioned above that leave  under  Clause  12  has  been  granted.   In  the
circumstances of the  present  case,  therefore,  the  judgment  dated  11th
April, 2005 passed by the High Court of Calcutta is  correct  and  does  not
need  any  interference.  Civil  Appeal  No.6691/2005   and   Civil   Appeal
No.4808/2013 are hereby dismissed.




..............................................CJI
                                        (R.M. Lodha)


                                        ………………………………..J.
                                        (Kurian Joseph)


                                        ………………………………..J.
                                        (R.F. Nariman)
New Delhi,
September 10, 2014


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