Khaleel Ahmed Dakhani Vs. The Hatti Gold Mines Co. Ltd.
EmailAppeal: Civil Appeal No. 2232 of 2000
(Arising out of S.L.P. (C) No. 17169 of 1999)
(From the Judgment and Order dated 29/30.7.99 of the Karnataka High Court in C.R.P. No. 1876 of 1999)
Petitioner: Khaleel Ahmed Dakhani
Respondent: The Hatti Gold Mines Co. Ltd.
Apeal: Civil Appeal No. 2232 of 2000
(Arising out of S.L.P. (C) No. 17169 of 1999)
(From the Judgment and Order dated 29/30.7.99 of the Karnataka High Court in C.R.P. No. 1876 of 1999)
Judges: D.P. WADHWA & DORAISWAMY RAJU, JJ.
Date of Judgment: Mar 27, 2000
Appearances:
Mr. Rajiv Dutta, Ms. Enakshi Kulshrestha, Advocates for the Appellant.
Ms. Indu Malhotra, Ms. Monika Arora, Advocates for the Respond-ent.
Head Note:
ARBITRATION LAW
The Arbitration and Conciliation Act, 1996
Sections 9, 34 and 36 – Code of Civil Procedure, 1908, Sections 20 and 148A – Arbitration – Application for setting aside arbitral award by one party and for execution of award by the other party – Scope of interim measures by court – Arbitration arising from contract for executing certain works at Raichur – Arbitration agreement pro-viding that only courts in Bangalore would have jurisdiction to entertain claim for enforcement of award – Arbitration proceed-ings held at Bangalore which was the place of residence of the arbitrator – Respondent government company making application in Principal City Civil Court at Bangalore for setting aside the award – During pendency of the application appellant contractor as decree holder filing application for execution of the award in the court of Principal District Judge at Raichur – Court issuing orders for attachment of properties of respondent -Raichur Court also holding that the City Civil Court at Bangalore had no juris-diction to entertain the application of respondent for setting aside the award – High Court on revision setting aside the orders of the Raichur Court. Held award not having attained finality Raichur Court not correct in entertaining the application for execution . While Raichur Court had the jurisdiction in the matter it was wrong in holding that the Bangalore court had no jurisdiction . High Court therefore correct in setting aside the orders of the Raichur Court.
Held:
In view of the decision of this Court in Patel Roadways Limit-ed, Bombay v. Prasad Trading Company (JT 1991 (3) SC 337) = ((1991) 4 SCC 270), it cannot be said that the Principal District Judge, Raichur had no jurisdiction to entertain the matter. But then the question arises, as rightly posed by the High Court, if in the given facts and circumstances of the case, could the Principal District Judge, Raichur had made the orders which are impugned, particularly, when it was brought to his notice penden-cy of the proceedings under Section 34 of the Act in the Court of Principal City Civil Judge, Bangalore where the appellant itself had filed a CAVEAT under Section 148A of the Code and also an application under Section 9 of the Act seeking interim relief. Learned Principal District Judge, Raichur also did not take notice of clause (35) of the contract which constituted arbitra-tion agreement between the parties which specifically provided that only the courts in Bangalore would have jurisdiction to entertain any claim for enforcement of the award. Principal District Judge Raichur had no doubt jurisdiction in the matter. But his holding that the Principal City Civil Judge, Bangalore would have no jurisdiction does not commend to us. It cannot always be said, in view of Section 20 of the Code, that only one court will have jurisdiction to try the suit. It is not that the Principal City Civil Court, Bangalore is not a court within the meaning of Section 2(e) of the Act. Whether Principal City Civil Judge has jurisdiction in the matter or not is still pending with him which proceedings were filed earlier in time than the execu-tion application by the appellant in the District Court at Raichur. The award had not attained finality. In these circum-stances we are of the view that the Principal District Judge, Raichur should not have entertained the application for execution and order attachment of movable properties of the respondents. The High Court referred to the concession by both the parties that all the applications under the Act had to be treated as original suits and if the court finds that it had no jurisdiction to entertain, it cannot dismiss the suit but has to return the same for the presentation to the proper Court. Whatever may be the concession of the parties, we are of the view in the circum-stances of the present case Principal District Judge, Raichur should have stayed his hands and should not have entertained the execution application by the appellant. High Court took a correct view of the matter and rightly set aside the impugned orders. (Para 6)
Cases Reffered:
1. Patel Roadways Limit-ed, Bombay v. Prasad Trading Company (JT 1991 (3) SC 337)
JUDGEMENT:
D.P. WADHWA, J.
1. We grant leave to appeal.
2. This appeal is directed against judgment dated 29/30.7.1999 of the High Court of Karnataka given in revision filed by the respondent whereby High Court set-aside the orders dated 24.5.1999 and 21.6.1999 of the Principal District Judge, Raichur. By order dated 24.5.1999 the Principal District Judge, Raichur issued warrants of attachments of moveable properties of the respondent as described in the application for execution filed by the appellant. By order dated 21.6.1999 the learned Principal District Judge dismissed the application of the respondent pray-ing for lifting of the attachment already issued against it.
3. Appellant is a building contractor. Respondent is a Government company of the Government of Karnataka under the Companies Act, 1956. Respondent awarded the contract for construction of a school building at Hatti in District Raichur to the appellant. An agreement dated 9.3.1995 was duly entered into. Clause 35 of the agreement contained the arbitration clause. Disputes and differ-ences having arisen appellant moved the Chief Justice of the High Court of Karnataka under Section 11 of the Arbitration and Con-ciliation Act, 1996 (for short the ‘Act’) for appointment of an arbitrator. The application was allowed and Mr. H.S. Bhat, Chief Engineer (retired) who was resident of Bangalore was appointed as an arbitrator with a direction to complete the arbitration pro-ceedings and to submit his Award within four months. Arbitration proceedings were held at Bangalore where also the Award dated 28.8.1998 was made. Arbitrator awarded some of the claims of the appellant while disallowing a few others. Respondent filed appli-cation for setting aside the Award by making an application under Section 341 of the Act in the court of Principal City and Civil Judge, Bangalore. While this application was pending appellant as decree-holder filed an application for execution of the Award in the court of Principal District Judge, Raichur. It was on this application that orders for attachment of properties of the respondent were issued. When respondent sought lifting of its attachment by filing an application, the same was dismissed. Aggrieved respondent went to the High Court in revision. High Court allowed the revision of the respondent and set aside the two orders of the Principal District Judge, Raichur which we have mentioned above. Now it is the appellant who has come to this Court.
4. It would appear that by filing the execution application in the court at Raichur appellant wanted to enforce the Award under Section 362 of the Act. When the court at Raichur issued warrants of attachment it was not aware of pendency of the application of the respondent under Section 34 of the Act in the court at Banga-lore. Appellant had made no mention in his application about the pendency of the proceedings at Bangalore. However, when the respondent filed application before the Principal District Judge, Raichur for lifting of the order of attachment it was brought to his notice the pendency of the application under Section 34 of the Act for setting aside the Award. Now, the learned Principal District Judge, Raichur held that Principal City Civil Court, Bangalore had no jurisdiction to entertain the application under Section 34 of the Act. On this premise he dismissed the applica-tion of the respondent and confirmed the order of attachment.
5. In support of his argument that court at Bangalore would have no jurisdiction. Mr. Rajiv Dutta, learned counsel for the appell-ant, referred to a decision of this Court in Patel Roadways Limited, Bombay v. Prasad Trading Company JT 1991 (3) SC 337 = ((1991) 4 SCC 270). In this case Patel Roadways Limited had its principal office at Bombay and branch offices at various other places. Prasad Trading Company entrusted certain consignments of goods to Patel Roadways Limited at its subordinate office in the State of Tamil Nadu for delivery at Delhi. The goods reached Delhi but in damaged condi-tions. Prasad Trading Company instituted a suit for damages in the court at Madras within whose jurisdiction the subordinate offices of Patel Roadways Limited were situated and where the goods were entrusted for transport. A plea was raised by the Patel Roadways Limited in its defence that when the contract was entered into between the parties it was agreed that only Bombay Court would have jurisdiction and as such court in Madras had no jurisdiction. It was in this context that this Court considered clause (a) of Section 20 and explanation thereto in Code of Civil Procedure (for short ‘Code’)3. The question which was before this Court was as to whether in view of the relevant clause in the contract between the parties the court at Bombay alone had juris-diction and the jurisdiction of the courts at Madras where the suit was instituted was barred. It was submitted by the Patel Roadways that apart from the courts within whose territorial jurisdiction the goods were delivered to the appellant for trans-port, the courts at Bombay also had jurisdiction to entertain a suit arising out of the contract between the parties in view of the Explanation to Section 20 of the Code inasmuch as the princi-pal office of the appellant was situated in Bombay. According to it since courts at two places namely Madras and Bombay had juris-diction in the matter, the jurisdiction of the courts in Madras was ousted by the clause in the contract whereunder the parties had agreed that jurisdiction to decide any dispute under the contract would be only in the courts at Bombay. Consequently the courts where the suit was instituted had no jurisdiction to entertain it. This Court said that “the explanation is really an Explanation to clause (a) viz. as to where the corporation can be said to carry on business. This, it is clarified, will be the place where the principal office is situated (whether or not any business actually is carried on there) or the place where a business is carried on giving rise to a cause of action (even though the principal office of the corporation is not located there) so long as there is a subordinate office of the corpora-tion situated at such place. The linking together of the place where the cause of action arises with the place where a subor-dinate office is located clearly shows that the intention of the legislature was that, in the case of a corporation, for the purposes of clause (a), the location of the subordinate office, within the local limits of which a cause of action arises, is to be the relevant place for the filing of a suit and not the prin-cipal place of business. If the intention was that the location of the sole or principal office as well as the location of the subordinate office (within the limits of which a cause of action arises) are to be deemed to be places where the corporation is deemed to be carrying on business, the disjunctive “or” will not be there. Instead, the second part of the Explanation would have read “and, in respect of any cause of action arising at any place where it has a subordinate office, also at such place”.” It therefore held that the explanation provides an alternative locus for the Corporation’s place of business, not an additional one. Thus, this Court was of the view that clause (c) was not attract-ed to confer jurisdiction on courts at Bombay and the appellant has admittedly its subordinate offices at Madras where the goods in the case were delivered to it for the purpose of transport, the Court at Bombay had no jurisdiction at all to entertain the suit and that the parties could not confer jurisdiction on the courts at Bombay by an agreement.
6. In view of the decision of this Court in Patel Roadways Limit-ed, Bombay v. Prasad Trading Company (JT 1991 (3) SC 337) = ((1991) 4 SCC 270), it cannot be said that the Principal District Judge, Raichur had no jurisdiction to entertain the matter. But then the question arises, as rightly posed by the High Court, if in the given facts and circumstances of the case, could the Principal District Judge, Raichur had made the orders which are impugned, particularly, when it was brought to his notice penden-cy of the proceedings under Section 34 of the Act in the Court of Principal City Civil Judge, Bangalore where the appellant itself had filed a CAVEAT under Section 148A of the Code and also an application under Section 94 of the Act seeking interim relief. Learned Principal District Judge, Raichur also did not take notice of clause (35) of the contract which constituted arbitra-tion agreement between the parties which specifically provided that only the courts in Bangalore would have jurisdiction to entertain any claim for enforcement of the award. Principal District Judge Raichur had no doubt jurisdiction in the matter. But his holding that the Principal City Civil Judge, Bangalore would have no jurisdiction does not commend to us. It cannot always be said, in view of Section 20 of the Code, that only one court will have jurisdiction to try the suit. It is not that the Principal City Civil Court, Bangalore is not a court within the meaning of Section 2(e)5 of the Act. Whether Principal City Civil Judge has jurisdiction in the matter or not is still pending with him which proceedings were filed earlier in time than the execu-tion application by the appellant in the District Court at Raichur. The award had not attained finality. In these circum-stances we are of the view that the Principal District Judge, Raichur should not have entertained the application for execution and order attachment of movable properties of the respondents. The High Court referred to the concession by both the parties that all the applications under the Act had to be treated as original suits and if the court finds that it had no jurisdiction to entertain, it cannot dismiss the suit but has to return the same for the presentation to the proper Court. Whatever may be the concession of the parties, we are of the view in the circum-stances of the present case Principal District Judge, Raichur should have stayed his hands and should not have entertained the execution application by the appellant. High Court took a correct view of the matter and rightly set aside the impugned orders.
7. We, therefore, find no merit in the appeal. It is dismissed with costs.
1. We grant leave to appeal.
2. This appeal is directed against judgment dated 29/30.7.1999 of the High Court of Karnataka given in revision filed by the respondent whereby High Court set-aside the orders dated 24.5.1999 and 21.6.1999 of the Principal District Judge, Raichur. By order dated 24.5.1999 the Principal District Judge, Raichur issued warrants of attachments of moveable properties of the respondent as described in the application for execution filed by the appellant. By order dated 21.6.1999 the learned Principal District Judge dismissed the application of the respondent pray-ing for lifting of the attachment already issued against it.
3. Appellant is a building contractor. Respondent is a Government company of the Government of Karnataka under the Companies Act, 1956. Respondent awarded the contract for construction of a school building at Hatti in District Raichur to the appellant. An agreement dated 9.3.1995 was duly entered into. Clause 35 of the agreement contained the arbitration clause. Disputes and differ-ences having arisen appellant moved the Chief Justice of the High Court of Karnataka under Section 11 of the Arbitration and Con-ciliation Act, 1996 (for short the ‘Act’) for appointment of an arbitrator. The application was allowed and Mr. H.S. Bhat, Chief Engineer (retired) who was resident of Bangalore was appointed as an arbitrator with a direction to complete the arbitration pro-ceedings and to submit his Award within four months. Arbitration proceedings were held at Bangalore where also the Award dated 28.8.1998 was made. Arbitrator awarded some of the claims of the appellant while disallowing a few others. Respondent filed appli-cation for setting aside the Award by making an application under Section 341 of the Act in the court of Principal City and Civil Judge, Bangalore. While this application was pending appellant as decree-holder filed an application for execution of the Award in the court of Principal District Judge, Raichur. It was on this application that orders for attachment of properties of the respondent were issued. When respondent sought lifting of its attachment by filing an application, the same was dismissed. Aggrieved respondent went to the High Court in revision. High Court allowed the revision of the respondent and set aside the two orders of the Principal District Judge, Raichur which we have mentioned above. Now it is the appellant who has come to this Court.
4. It would appear that by filing the execution application in the court at Raichur appellant wanted to enforce the Award under Section 362 of the Act. When the court at Raichur issued warrants of attachment it was not aware of pendency of the application of the respondent under Section 34 of the Act in the court at Banga-lore. Appellant had made no mention in his application about the pendency of the proceedings at Bangalore. However, when the respondent filed application before the Principal District Judge, Raichur for lifting of the order of attachment it was brought to his notice the pendency of the application under Section 34 of the Act for setting aside the Award. Now, the learned Principal District Judge, Raichur held that Principal City Civil Court, Bangalore had no jurisdiction to entertain the application under Section 34 of the Act. On this premise he dismissed the applica-tion of the respondent and confirmed the order of attachment.
5. In support of his argument that court at Bangalore would have no jurisdiction. Mr. Rajiv Dutta, learned counsel for the appell-ant, referred to a decision of this Court in Patel Roadways Limited, Bombay v. Prasad Trading Company JT 1991 (3) SC 337 = ((1991) 4 SCC 270). In this case Patel Roadways Limited had its principal office at Bombay and branch offices at various other places. Prasad Trading Company entrusted certain consignments of goods to Patel Roadways Limited at its subordinate office in the State of Tamil Nadu for delivery at Delhi. The goods reached Delhi but in damaged condi-tions. Prasad Trading Company instituted a suit for damages in the court at Madras within whose jurisdiction the subordinate offices of Patel Roadways Limited were situated and where the goods were entrusted for transport. A plea was raised by the Patel Roadways Limited in its defence that when the contract was entered into between the parties it was agreed that only Bombay Court would have jurisdiction and as such court in Madras had no jurisdiction. It was in this context that this Court considered clause (a) of Section 20 and explanation thereto in Code of Civil Procedure (for short ‘Code’)3. The question which was before this Court was as to whether in view of the relevant clause in the contract between the parties the court at Bombay alone had juris-diction and the jurisdiction of the courts at Madras where the suit was instituted was barred. It was submitted by the Patel Roadways that apart from the courts within whose territorial jurisdiction the goods were delivered to the appellant for trans-port, the courts at Bombay also had jurisdiction to entertain a suit arising out of the contract between the parties in view of the Explanation to Section 20 of the Code inasmuch as the princi-pal office of the appellant was situated in Bombay. According to it since courts at two places namely Madras and Bombay had juris-diction in the matter, the jurisdiction of the courts in Madras was ousted by the clause in the contract whereunder the parties had agreed that jurisdiction to decide any dispute under the contract would be only in the courts at Bombay. Consequently the courts where the suit was instituted had no jurisdiction to entertain it. This Court said that “the explanation is really an Explanation to clause (a) viz. as to where the corporation can be said to carry on business. This, it is clarified, will be the place where the principal office is situated (whether or not any business actually is carried on there) or the place where a business is carried on giving rise to a cause of action (even though the principal office of the corporation is not located there) so long as there is a subordinate office of the corpora-tion situated at such place. The linking together of the place where the cause of action arises with the place where a subor-dinate office is located clearly shows that the intention of the legislature was that, in the case of a corporation, for the purposes of clause (a), the location of the subordinate office, within the local limits of which a cause of action arises, is to be the relevant place for the filing of a suit and not the prin-cipal place of business. If the intention was that the location of the sole or principal office as well as the location of the subordinate office (within the limits of which a cause of action arises) are to be deemed to be places where the corporation is deemed to be carrying on business, the disjunctive “or” will not be there. Instead, the second part of the Explanation would have read “and, in respect of any cause of action arising at any place where it has a subordinate office, also at such place”.” It therefore held that the explanation provides an alternative locus for the Corporation’s place of business, not an additional one. Thus, this Court was of the view that clause (c) was not attract-ed to confer jurisdiction on courts at Bombay and the appellant has admittedly its subordinate offices at Madras where the goods in the case were delivered to it for the purpose of transport, the Court at Bombay had no jurisdiction at all to entertain the suit and that the parties could not confer jurisdiction on the courts at Bombay by an agreement.
6. In view of the decision of this Court in Patel Roadways Limit-ed, Bombay v. Prasad Trading Company (JT 1991 (3) SC 337) = ((1991) 4 SCC 270), it cannot be said that the Principal District Judge, Raichur had no jurisdiction to entertain the matter. But then the question arises, as rightly posed by the High Court, if in the given facts and circumstances of the case, could the Principal District Judge, Raichur had made the orders which are impugned, particularly, when it was brought to his notice penden-cy of the proceedings under Section 34 of the Act in the Court of Principal City Civil Judge, Bangalore where the appellant itself had filed a CAVEAT under Section 148A of the Code and also an application under Section 94 of the Act seeking interim relief. Learned Principal District Judge, Raichur also did not take notice of clause (35) of the contract which constituted arbitra-tion agreement between the parties which specifically provided that only the courts in Bangalore would have jurisdiction to entertain any claim for enforcement of the award. Principal District Judge Raichur had no doubt jurisdiction in the matter. But his holding that the Principal City Civil Judge, Bangalore would have no jurisdiction does not commend to us. It cannot always be said, in view of Section 20 of the Code, that only one court will have jurisdiction to try the suit. It is not that the Principal City Civil Court, Bangalore is not a court within the meaning of Section 2(e)5 of the Act. Whether Principal City Civil Judge has jurisdiction in the matter or not is still pending with him which proceedings were filed earlier in time than the execu-tion application by the appellant in the District Court at Raichur. The award had not attained finality. In these circum-stances we are of the view that the Principal District Judge, Raichur should not have entertained the application for execution and order attachment of movable properties of the respondents. The High Court referred to the concession by both the parties that all the applications under the Act had to be treated as original suits and if the court finds that it had no jurisdiction to entertain, it cannot dismiss the suit but has to return the same for the presentation to the proper Court. Whatever may be the concession of the parties, we are of the view in the circum-stances of the present case Principal District Judge, Raichur should have stayed his hands and should not have entertained the execution application by the appellant. High Court took a correct view of the matter and rightly set aside the impugned orders.
7. We, therefore, find no merit in the appeal. It is dismissed with costs.
