1. Heard Sri Manu Khare, learned counsel for the revisionists, Sri Manoj Kumar Mishra, learned counsel appearing for the respondent no. 1 and Sri K.K. Arora, learned counsel appearing for the respondent nos. 2 and 3.
2. Learned counsel for the parties are agreed that the present revision alongwith Civil Revision No. 431 of 2015 (Smt. Manjusha Premi and others Vs. Ideal Carpet Industries and others) be heard together as the common controversy is involved in both the revisions and they can be decided by a common judgment. They further submitted that the revisions may be decided at this stage itself as it involves only legal questions and no further records are required to decide the controversy.
3. The property involved in the present dispute is the premises No. S-20/51-1 A, 2A and 3A situated at the Mall Cantt. Road district Varanasi. The facts of the Civil Revision No. 430 of 2015 are being taken up for deciding the controversy as they essentially cover all the relevant facts required in dealing with the controversy.
4. A memorandum of understanding was executed between the parties on 10.4.2006 for sharing transfers of share being held by the opposite parties for Ideal Hotel and Industries Limited to the revisionists-applicants (hereinafter referred as the applicants).
5. On the same date i.e. 10.4.2006 an agreement to sell regarding property in question was executed between the parties. The said agreement was admittedly an unregistered document executed between the parties. Clause 9 of the agreement to sell provided that the venue of the arbitration shall be at New Delhi. It is alleged that the opposite parties illegally terminated the agreement to sell. Admittedly, pursuant to the aforesaid agreement to sell dated 10.4.2006 the sale deed was not registered and the opposite parties forfeited the amount paid by the applicants.
6. Consequently, a dispute arose between the parties and on 28.10.2006 a petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred as the Act) was filed by the Ideal Carpet Company through its Partner Sri Ram Maurya- opposite party no. 2 and Sri Kundan Arya and Sri Ram Arya as the Director of Ideal Hotel and Industries Limited-opposite party no. 3 in the Court of district Varanasi, which was registered as Misc. Case No. 96 of 2006. On the same date i.e. 28.10.2006, the applicants filed a Caveat application under Section 148-A of C.P.C. before the High Court of Delhi.
7. The applicants also on 20.4.2007 independently filed Original Misc. Petition No. 204 of 2007 (Sri Sukhnandan Premi and others Vs. Mr. Prakash Gupta and another) under Section 9 of the Act before the High Court of Delhi wherein interim order dated 20.4.2007 was passed directing that till the next date of hearing the respondents, their servants, agents and employees are hereby restrained from selling, alienating and transferring possession of the said land bearing No. S-20/51-1 A, 2A and 3A situated at Varanasi.
8. The opposite parties filed an application No. 5172 of 2007 under Order 7 Rule 10 and 11 of C.P.C. read with Section 42 of the Act.
9. The Delhi High Court vide its order dated 31.5.2007 found that the Varanasi Court will have the jurisdiction in the matter as the earlier application under the Act was pending before the Court at Varanasi and therefore returned the Misc. Case No. 204 of 2007 to the applicants to be filed in the appropriate Court having jurisdiction. The review application No. 212 of 2007 was also dismissed on 5.7.2007.
10. Being aggrieved, the applicants filed F.A.O. (O.S) No. 284 of 2007 challenging the aforesaid orders dated 31.5.2007 and 5.7.2007. During hearing of the appeal the Appellate Court vide order dated 13.9.2007 maintained status quo with regard to the properties in question. Subsequently, vide order dated 22.12.2007 the learned District Judge, Varanasi held that this Court has got the jurisdiction to entertain the petition under Section 9 (c) of the Act and accordingly the objection regarding territorial jurisdiction raised by the applicants was over-ruled.
11. Subsequently, some agreement took place between the parties and a Terms of Reference was entered into, which was filed by the parties in F.A.O. (O.S) No. 284 of 2007, (filed by the applicants against rejection of their application under Section 9 of the Act which was registered as O.M.P. No. 204 of 2007, returning the petition for being filed before the Court of Varanasi). In Terms of Reference F.A.O. (O.S) No. 284 of 2007 was disposed of by the High Court of Delhi on 24.9.2008. The Terms of Reference was only an interim arrangement agreed upon between the parties for duration of arbitration upto date for passing of award. It was provided that the venue of arbitration shall be New Delhi. It was also agreed that they shall withdraw every litigation against one another, which is pending before any court. Clause 8 of the aforesaid terms of reference provided that the question as to which court shall have jurisdiction to entertain the applications arising out of or relating to the arbitral proceedings be left open.
12. Subsequently, as per the terms of reference the sole Arbitrator Hon'ble Mr. Justice D.P. Wadhwa (retired Justice of Supreme Court of India) was appointed as the sole Arbitrator. In this arbitration Ideal Hotel and Industries Limited was not a party. Further, in terms of reference Ideal Carpet Industry withdrew their applications under Section 9 of the Act at district Varanasi. Subsequently, before the sole Arbitrator a counter claim was preferred on behalf of the Ideal Hotel and Industries Limited. The sole Arbitrator declined to entertain the counter claim, therefore, Ideal Hotel and Industries Limited filed an application C.M. No. 5022 of 2009 in F.A.O. (O.S) No. 284 of 2007, which was withdrawn on 4.5.2009 and thereafter a fresh application for impleadment being Arbitration Application No. 260 of 2009 under Section 11 (6) of the Act was filed before the Court. The said application was allowed on 10.9.2009 and M/s Ideal Hotel and Industries Limited was also impleaded in award and was heard. Finally, an award dated 16.4.2014 was passed by the sole Arbitrator allowing the claim of the applicants with interest and costs.
13. The opposite party no. 1 in the present revision, who is also the opposite party no. 3 in the connected Civil Revision No. 431 of 2015 challenged the award by filing Arbitration Misc. Case No. 88 of 2014 before the learned District Judge, Varanasi. The applicants filed application on 17.9.2014 under Section 151 of C.P.C. challenging the territorial jurisdiction of the Court at Varanasi. The opposite parties filed objection to the aforesaid application on 29.9.2014. Finally, by the impugned order the application filed by the applicants was rejected and it was held by the learned District Judge, Varanasi that it had jurisdiction to decide the matter, hence, the present revision.
14. Before proceeding further, it would be appropriate to refer the relevant clauses of the memorandum of understanding, agreement to sell executed between the parties as well as relevant clauses of terms of reference filed before the High Court of Delhi, on the basis of which the F.A.O. (O.S) No. 284 of 2007 was disposed of.
15. Clause 12 of the memorandum of understanding dated 10.4.2006 is quoted as under:-
"12. Law and Resolution of Dispute This MOU shall be governed by and construed in all respect in accordance with the laws of India. The parties shall negotiate in good faith and attempt to resolve any dispute, controversy or claim arising out of or relating to this agreement or the breach interpretation termination or validity thereof (a dispute) by mutual deliberations. However, the dispute / difference, if any, remained un-settled / un-resolved shall be settled by Arbitration under the provisions of Arbitration and Conciliation Act, 1996 by reference to one arbitrator each appointed by the parties hereto. The decision of the arbitrators shall be final and conclusive on the parties hereto in accordance with the Provision of the Arbitration and Conciliation Act, 1996. The venue of arbitration shall be at New Delhi. The arbitrator so appointed shall be person of high repute. Each party shall bear its own arbitration proceedings cost including attorney fee, if any." (emphasis supplied)
16. Clause 9 of the unregistered agreement to sell dated 10.4.2006 is also quoted as under:-
"9. Law and Resolution of Dispute
1. This Agreement shall be governed by and construed in all respect in accordance with the laws of India.
1. Law and Resolution of Dispute This Agreement shall be governed by and construed in all respect in accordance with the laws of India. The Parties shall negotiate in good faith and attempt to resolve any dispute, controversy or claim arising out of or relating to this agreement or the breach interpretation termination or validity thereof (a dispute) by mutual deliberations. However, the dispute / differences, if any, remained un-settled / un-resolved shall be settled by Arbitration under the provisions of Arbitration and Conciliation Act, 1996 by reference to one arbitrator each appointed by the parties hereto. The decision of the arbitrators shall be final and conclusive on the parties hereto in accordance with the Provision of the Arbitration and Conciliation Act, 1996. The venue of arbitration shall be at New Delhi. The arbitrator so appointed shall be person of high repute. Each party shall bear its own arbitration proceedings cost including attorney fee, if any.
"XXVI. It is submitted that the Respondents are residents of Delhi. The MOU dated 23.3.2006 and 10.4.2006 were signed at executed at New Delhi and also the venue of arbitration is Delhi. Moreover, the instant petition is a petition for appointment of arbitrator and as such the order by which the disputes were referred to arbitration was passed by this Hon'ble Court. Hence, this Hon'ble Court has jurisdiction to entertain the instant petition."
19. Before proceeding further, it would also be appropriate to notice the relevant provisions to act and as such provision of Sections 2 (1) (e), 20 and 42 of the Act are being quoted as under:-
"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 a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes;
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, goods or other property.
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." (emphasis supplied)
20. By the impugned order the learned District Judge had dismissed the objection of the territorial jurisdiction raised by the applicants holding that both the courts at Varanasi and Delhi have the jurisdiction and as such the application filed under Section 34 of the Act challenging the arbitral award is maintainable before the District Judge, Varanasi and the Court have jurisdiction to hear the same.
21. Sri Manu Khare, learned counsel appearing for the revisionists (applicants) submitted that the order impugned herein dated 15.9.2015 is totally illegal and misconceived as the Varanasi Court had no jurisdiction to entertain the petition challenging the arbitral award at Varanasi. He further submitted that the finding of the court below that the Courts at Varanasi and Delhi have jurisdiction is contrary to law and also to the facts of the present case. He further submitted that the dispute in question was referred to arbitration in pursuance of the orders passed by the High Court of Delhi and the sole Arbitrator, who conducted the entire proceedings of arbitration at Delhi and the award dated 16.4.2014 was also given at New Delhi. He also pointed out that memorandum of understanding dated 23.3.2006 and 10.4.2006 and agreement to sell dated 10.4.2006 all were executed in New Delhi within the jurisdiction of the High Court of Delhi. For this purpose, drawing attention to Clause XXVI of Arbitration Case No. 260 of 2009 (Ideal Hotel and Industries Limited Vs. Sukhnandan Premi and others) he submitted that the opposite parties M/s Ideal Hotel and Industries Limited and their Directors have themselves submitted that the jurisdiction of the High Court at New Delhi clearly mentioning therein that the High Court at New Delhi is the jurisdiction to entertain the petition under Section 11 (6) of the Act and therefore, now they cannot take u-turn and submit that the Court at Varanasi had no jurisdiction to entertain the petition challenging the arbitral award.
22. Drawing attention of this Court to paragraph 96 and 97 of the law laid down by Hon'ble Apex Court in the case of Bharat Aluminium Company Vs. Kaisar Aluminium Technical Services INC, 2012 (9) SCC 552; paragraph 10 of M/s Bhandari Udyog Limited Vs. Industrial Facilitation Council and another, 2015 SCC Online SC 146 and paragraph 15 of State of West Bengal and others Vs. Associated Contractors, 2015 (1) SCC 32 he submitted that the Court at New Delhi alone would have the jurisdiction to entertain application under Section 34 (2) of the Act.
23. Per contra Sri K.K. Arora submitted that on a conjoint reading of Section 2 (1) (e), 20 and 42 of the Act leaves no room to doubt that the 'Court' means Principal Civil Court of original jurisdiction in a district having jurisdiction to decide the question forming the subject matter of the arbitration would alone have territorial jurisdiction to entertain any application under Section 34 of the Act. He submitted that Section 20 of the Act only provides for place of arbitration to the extent that the parties are free to agree on any place of arbitration. Drawing attention to Section 42 much emphasis was laid that Section 42 clearly provides that the court shall have the jurisdiction over the arbitral proceedings where the proceedings was started. He pointed out that the first application under Section 9 of the Act was filed before the District Judge, Varanasi on 28.10.2006, as such, the Principal Civil Court of original jurisdiction in a district would be Varanasi as the property in dispute is undisputedly situated at Varanasi. He also pointed out that even the High Court of Delhi while rejecting the application O.M.P. No. 204 of 2009 filed by the applicants held that to determine the jurisdiction of a Court for the purpose of Arbitration Act, one has to look at the subject matter of the arbitration, and not at the situs of the arbitration became that is wholly irrelevant. Thus the subject matter of the present case being situated at Varanasi, it is the court at Varanasi, which is entitled to adjudicate the present application. In this regard, Section 42 of the Act was specifically taken into consideration.
24. He further submitted that the claim of the other side is that since the caveat under Section 148-A of C.P.C. was filed before the High Court of Delhi only court at Delhi will have the jurisdiction, is of no consequence inasmuch as a caveat does not grant any substantive relief to the party. The appeal being F.A.O. (O.S) No. 284 of 2007 was disposed of in Terms of Reference; under the memorandum of understanding and agreement to sell, although unregistered agreement which could not have been taken into account in view of the provisions of the Indian Stamp Act, it was clearly provided that the venue of arbitration shall be at New Delhi. Highlighting Clause 8 of terms of reference he submitted that the question as to which court the jurisdiction to entertain the petition relating to arbitral proceedings was clearly left open as such any proceedings which had taken at New Delhi including the arbitration proceedings can have no adverse impact or effect on the jurisdiction of the Principal Civil Court of Varanasi as the subject matter is admittedly situated at Varanasi, moreso, when the application under Section 9 of the Act was firstly filed on 28.10.2006 in the court of District Judge Varanasi.
25. He had further submitted that agreement to sell dated 10.4.2006 is an unregistered document, which required registration in terms of Section 17 of the Act read with Section 54 of the Transfer of Property Act. He also placed Section 49 of the Indian Registration Act and the U.P. Amendment to substantiate his arguments.
26. In his support learned counsel appearing for the opposite parties has place reliance to the judgments of Hon'ble Apex Court in the case of M/s Pandey and Company Builders Vs. State of Bihar, AIR 2007 SC 465. Paragraphs 30 to 33 is of the aforesaid judgment are quoted as under:-
"30. In Mukesh K. Tripathi v. Senior Division Manager, LIC and others [(2004) 8 SCC 387], this Court observed:
"The interpretation clause contained in a statute although may deserve a broader meaning having employed the word "includes" but therefor also it is necessary to keep in view the scheme of the object and purport of the statute which takes him out of the said definition. Furthermore, the interpretation section begins with the words "unless the context otherwise requires".
In Ramesh Mehta v. Sanwal Chand Singhvi, 2004 AIR SCW 2586, it was noticed:
"A definition is not to be read in isolation. It must be read in the context of the phrase which would define it. It should not be vague or ambiguous. The definition of words must be given a meaningful application; where the context makes the definition given in the interpretation clause inapplicable, the same meaning cannot be assigned.
In State of Maharashtra v. Indian Meical Assn. one of us (V.N. Khare, C.J.) stated that the definition given in the interpretation clause having regard to the contents would not be applicable. It was stated: (SCC p. 598, para 8) 'A bare perusal of Section 2 of the Act shows that it starts with the words "in this Act, unless the context otherwise requires.... " Let us find out whether in the context of the provisions of Section 64 of the Act the defined meaning of the expression "management" can be assigned to the word "management" in Section 64 of the Act. In para 3 of the Regulation, the Essentiality Certificate is required to be given by the State Government and permission to establish a new medical college is to be given by the State Government under Section 64 of the Act. If we give the defined meaning to the expression "management" occurring in Section 64 of the Act, it would mean the State Government is required to apply to itself for grant of permission to set up a government medical college through the University. Similarly it would also mean the State Government applying to itself for grant of Essentiality Certificate under para 3 of the Regulation. We are afraid the defined meaning of the expression "management" cannot be assigned to the expression "management" occurring in Section 64 of the Act. In the present case, the context does not permit or requires to apply the defined meaning to the word "management" occurring in Section 64 of the Act.'"
31. In M/s Raval and Co. v. K.G. Ramachandran and others [(1974) 1 SCC 424], whereupon reliance has been placed by the leaned counsel, the question arose as to whether the landlord can file an application for fixation of fair rent under Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. In that context, it was held:
"......As the object of the statute was to protect those inhabitants who had previously no access to the rates (which the churchwardens had), the meaning of the term "inhabitants" was limited to them. The same approach in interpretation must be adopted by us in the present case. We must not allow ourselves to be unduly obsessed by the meaning of "landlord" given in the definition or by its ordinary etymological meaning but we must examine the scheme of the relevant provisions of the statute, the contextual setting in which Section 4, sub- section (1) occurs and the object which the legislation is intended to achieve, in order to determine what is the sense in which the word "landlord" is used in Section 4, sub-section (1) whether it is intended to include contractual landlord."
No such anomaly arises in the instant case.
32. To the similar effect is the decision of this Court in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and others [(1998) 8 SCC 1] wherein it was stated:
"Now, the principle is that all statutory definitions have to be read subject to the qualification variously expressed in the definition clauses which created them and it may be that even where the definition is exhaustive inasmuch as the word defined is said to mean a certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or context. That is why all definitions in statutes generally begin with the qualifying words, similar to the words used in the present case, namely "unless there is anything repugnant in the subject or context". Thus there may be sections in the Act where the meaning may have to be departed from on account of the subject or context in which the word had been used and that will be giving effect to the opening sentence in the definition section, namely "unless there is anything repugnant in the subject or context". In view of this qualification, the court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words "under those circumstances"
33. There exists a distinction between an appeal and an application. Whereas Section 31 (4) of the 1940 Act or Section 42 of the 1996 Act provides for an application, Sub-section (2) of Section 37 of the 1996 Act provides for a statutory appeal. A forum of an appellate court must be determined with reference to the definition thereof contained in the 1996 Act."
27. He further placed reliance to a judgment of Hon'ble Apex Court in the case of Rajasthan Electricity Board Vs. Universal Petrol Chemicals Limited, 2009 (3) SCC 107. Paragraphs 34 and 35 of the aforesaid judgment are also quoted as under:-
34. An analytical look at the provisions of sub-Sections (3) and (4) will make it explicitly clear that any application in any reference, meaning thereby even an application under Section 20 of the Act could or should be filed in a court competent to entertain such proceeding and having jurisdiction to decide the subject of the reference. Such jurisdiction would or could be restricted by the agreements entered into by and between the parties.
35. The parties have clearly stipulated and agreed that no other court, but only the court at Jaipur will have jurisdiction to try and decide the proceedings arising out of the said agreements, and therefore, it is the Civil Court at Jaipur which would alone have jurisdiction to try and decide such issue and that is the court which is competent to entertain such proceedings. The said court being competent to entertain such proceedings, the said Court at Jaipur alone would have jurisdiction over the arbitration proceedings and all subsequent applications arising out of the reference. The arbitration proceedings have to be made at Jaipur Court and in no other court.
28. He further placed reliance to a judgment of Hon'ble Apex Court in the case of Bharat Aluminium Company Vs. Kaisar Aluminium Technical Services INC, 2012 (9) SCC 552. Paragraphs 95 and 96 of the aforesaid judgment are also quoted as under:-
"95. Learned counsel for the appellants have submitted that Section 2(1)(e), Section 20 and Section 28 read with Section 45 and Section 48(1)(e) make it clear that Part I is not limited only to arbitrations which take place in India. These provisions indicate that Arbitration Act, 1996 is subject matter centric and not exclusively seat centric. Therefore, "seat" is not the "centre of gravity" so far as the Arbitration Act, 1996 is concerned. We are of the considered opinion that the aforesaid provisions have to be interpreted by keeping the principle of territoriality at the forefront. We have earlier observed that Section 2(2) does not make Part I applicable to arbitrations seated or held outside India. In view of the expression used in Section 2(2), the maxim expressum facit cessare tacitum, would not permit by interpretation to hold that Part I would also apply to arbitrations held outside the territory of India. The expression "this Part shall apply where the place of arbitration is in India" necessarily excludes application of Part I to arbitration seated or held outside India. It appears to us that neither of the provisions relied upon by the learned counsel for the appellants would make any section of Part I applicable to arbitration seated outside India. It will be apposite now to consider each of the aforesaid provisions in turn.
96. Section 2(1)(e) of the Arbitration Act, 1996 reads as under:
"2. Definitions (1) In this Part, unless the context otherwise requires -
(a)-(d)
(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."
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 provision in Section 2(1)(e) has to be construed keeping in view the provisions in Section 20 which give recognition to party autonomy. Accepting the narrow construction as projected by the learned counsel for the appellants would, in fact, render Section 20 nugatory. In our view, the legislature has intentionally given jurisdiction to two courts i.e. the court which would have jurisdiction where the cause of action is located and the courts where the arbitration takes place. This was necessary as on many occasions the agreement may provide for a seat of arbitration at a place which would be neutral to both the parties. Therefore, the courts where the arbitration takes place would be required to exercise supervisory control over the arbitral process. For example, if the arbitration is held in Delhi, where neither of the parties are from Delhi, (Delhi having been chosen as a neutral place as between a party from Mumbai and the other from Kolkata) and the tribunal sitting in Delhi passes an interim order under Section 17 of the Arbitration Act, 1996, the appeal against such an interim order under Section 37 must lie to the Courts of Delhi being the Courts having supervisory jurisdiction over the arbitration proceedings and the tribunal. This would be irrespective of the fact that the obligations to be performed under the contract were to be performed either at Mumbai or at Kolkata, and only arbitration is to take place in Delhi. In such circumstances, both the Courts would have jurisdiction, i.e., the Court within whose jurisdiction the subject matter of the suit is situated and the courts within the jurisdiction of which the dispute resolution, i.e., arbitration is located."
(emphasis supplied)
29. He further placed reliance to a judgment of Hon'ble Apex Court in the case of Swastik Gas Private Limited Vs. Indian Oil Corporation, 2013 (9) SCC 32. Paragraph 55 of the aforesaid judgment is also quoted as under:-
"55. It will be seen from the above decisions that except in A.B.C. Laminart where this Court declined to exclude the jurisdiction of the Courts in Salem, in all other similar cases an inference was - drawn (explicitly or implicitly) that the parties intended the implementation of the exclusion clause as it reads notwithstanding the absence of the words "only", "alone" or "exclusively" and the like. The reason for this is quite obvious. The parties would not have included the ouster clause in their agreement were it not to carry any meaning at all. The very fact that the ouster clause is included in the agreement between the parties conveys their clear intention to exclude the jurisdiction of Courts other than those mentioned in the concerned clause. Conversely, if the parties had intended that all Courts where the cause of action or a part thereof had arisen would continue to have jurisdiction over the dispute, the exclusion clause would not have found a place in the agreement between the parties."
30. He further placed reliance to a judgment of Hon'ble Apex Court in the case of State of West Bengal Vs. Associated Contractors, 2015 (1) SCC 32 and submitted that since application under Section 11 of the Act is filed / decided by Hon'ble The Chief Justice or his delegates and settled law is that they are not 'court' under Section 2(1) (e) of the Act, the bar under Section 42 would not apply but if any application is filed under Section 9 of the Act, the bar created under Section 42 would apply and thus, court at Varanasi alone would have jurisdiction in this case.
31. He has also placed reliance to a judgment of Hon'ble Apex Court in the case of Avinash Kumar Chauhan Vs. Vijay Krishna Mishra, JT 2009 (1) SC 656.
32. Sri Manu Khare, learned counsel for the revisionists-applicants has placed reliance on paragraphs 96 and 97 of the judgment of Hon'ble Apex Court in the case of Bharat Aluminium Company (supra). Paragraph 96 has already been quoted. Paragraphs 97 and 98 of the aforesaid judgment is quoted as under:-
97. The definition of Section 2 (1)(e) includes "subject matter of the arbitration" to give jurisdiction to the courts where the arbitration takes place, which otherwise would not exist. On the other hand, Section 47 which is in Part II of the Arbitration Act, 1996 dealing with enforcement of certain foreign awards has defined the term "court" as a court having jurisdiction over the subject-matter of the award. This has a clear reference to a court within whose jurisdiction the asset/person is located, against which/whom the enforcement of the international arbitral award is sought. The provisions contained in Section 2(1)(e) being purely jurisdictional in nature can have no relevance to the 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 in matters such as consultations among its members for hearing witnesses, experts or the parties."
33. Paragraphs 96 and 97 cannot be read in isolation and if the observation of the Hon'ble Apex Court in paragraphs 95, 96, 97, 98 and 99 are taken into consideration it leaves no room for doubt that the provisions of the Arbitration Act 1996 is "subject matter centric" and not exclusively "seats centric". It may be noted that the Hon'ble Apex Court in paragraph 95 clearly observed that the Court therefore "seat" is not the "centre of gravity" so far as the Arbitration Act 1996 is concerned.
34. The fact that in the aforesaid case the Hon'ble Apex Court was interpreting the law where foreign award was involved in the case and the dispute was relating to venue of arbitration as distinguish from place or seat or situs, which is an actual physical location or sides involved in the case. In paragraph 96 of the aforesaid judgment which had also been considered by the court below it was clearly held that in such a situation where the parties have chosen a different place for arbitration but the property is situated at a different place or obligation to be performed under the contract were to be performed at a different place both the court would have jurisdiction i.e. the court within whose jurisdiction the subject matter of the suit is suited and the courts within the jurisdiction of which the dispute resolution i.e. arbitration is located. The aforesaid decision was rendered by five Judges Constitutional Bench of the Hon'ble Apex Court.
35. In so far as paragraph 10 of the judgment rendered by the Hon'ble Apex Court in the case of Bhandari Udyog Limited (supra) is concerned, in fact, the Division Bench of Hon'ble Apex Court has held that the arbitration proceeding has been conducted within the jurisdiction of Raichur court, which has jurisdiction as per Section 20 of C.P.C. and is subordinate to the High Court of Karnataka which entertained the application under Section 11 of the Act will have the jurisdiction. Paragraph 10 of the aforesaid judgment is quoted as under:-
"10. Indisputably, the Arbitration proceeding has been conducted within the jurisdiction of Raichur court, which has jurisdiction as per Section 20 of the Code of Civil Procedure and is subordinate to the High Court of Karnataka which entertained Section 11 Application. Hence, the Award cannot be challenged before a Court subordinate to the High Court of Bombay. Exercise of jurisdiction by such court shall be against the provision of Section 42 of the Act."
36. In the present case, first application under Section 9 of the Act was admittedly moved on 28.10.2006 before the District Judge, Varanasi and all proceedings were subsequent thereof. Any such fact was involved in the case of Bhandari Udyog Limited (supra) is not reflected from the facts of the aforesaid case. Moreover, in the present case application under Section 11 (6) of the Act filed by the M/s Ideal Hotel and Industries Limited was to implead the M/s Ideal Hotel and Industries Limited in the arbitration proceedings already pending before the sole Arbitrator, who has rejected counter claim filed by the M/s Ideal Hotel and Industries Limited. As such, in view of the aforesaid this case is of no help to the applicants. On the contrary, admittedly even in this case the small scale industries was disputed that Raichur in the State of Karnataka and it was held that award cannot be challenged before the Court subordinate to High Court of Bombay.
37. Learned counsel for the revisionists further referred to paragraph 15 of the decision rendered by Hon'ble Apex Court in the case of State of West Bengal and others (supra) to contend that the superior-most court exercising original jurisdiction which has been chosen to adjudicate disputes arising out of arbitration agreements and submitted that in the present case Delhi High Court in its original State being a superior-most court to District Court Varanasi, as such the High Court of Delhi will have the jurisdiction and any application challenging the arbitral award will be maintainable before the High Court of Delhi only.
38. Learned counsel for the revisionists had referred paragraph 15 of the aforesaid judgment. However, a reference may be made to paragraph 25 which spell out the conclusion drawn out by the Hon'ble Apex Court. The same is quoted as under:-
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."
39. Sri K.K. Arora, who had argued on behalf of all the opposite parties, placing reliance on paragraphs 30 to 33 of the judgment of Hon'ble Apex Court in the case of M/s Pandey and Company Builders (supra) submitted that Hon'ble Apex Court held that the appellate court must be determined with reference to definition of the court under Section 2 (1) (e) deciding the original civil jurisdiction. He further placed reliance on paragraphs 34 and 35 of the judgment rendered in the case of Rajasthan Electricity Board (supra) submitted that unless the jurisdiction with regard to decide the subject of the reference, jurisdiction shall remain be available where the subject matter is disputed. In the light of the aforesaid, he submitted that since the property situates at Varanasi, therefore, the Varanasi Court alone would have the jurisdiction.
40. Sri K.K. Arora has also made a reference to paragraphs 95 and 96 of the judgment rendered by Hon'ble Apex Court in the case of Bharat Aluminium Company (supra) submitted that the five Judges Bench of Hon'ble Apex Court had held after taking into consideration the fact that Section 2 (1) (e), 20, 28 of the Act that the jurisdiction is to vest in Court where the subject matter of the arbitration is situated. The court had held that the jurisdiction would be at (1) within whose the subject matter of suit is disputed and (2) within the jurisdiction of which the disputed resolution i.e. arbitration is located. He submitted that therefore the court below has committed no error of law in holding that both courts at Varanasi and at Delhi may have the jurisdiction in the present case.
41. He had further submitted that since first application under Section (9) of the Act was filed before the District Judge, Varanasi on 28.10.2006, the Varanasi Court in the light of Section 42 of the Act would alone have the jurisdiction. The aforesaid case has also discussed in detailed in previous paragraphs.
42. Referring to the judgment of Hon'ble Apex Court in the case of Swastik Gases Private Limited (supra) he submitted that unless the jurisdiction of the Court is excluded in expression as such "exclusive" "alone" "only" the jurisdiction of a Court would not be excluded. For this purpose, a reference would not be excluded. On the strength of the aforesaid, he submitted that since there was no specific clause providing jurisdiction to a court, thus the jurisdiction of a civil court is to be decided with reference to Section 2 (1) (e) of the Act and thus the same would be at Varanasi in the present case.
43. Sri K.K. Arora had also placed reliance on a decision of Hon'ble Apex Court in the case of State of West Bengal and others (supra) to submit that if the proceedings initiated is one of the nature of Section 8 (before judicial authority) and Section 11 of the Act (the Chief Justice or his delegates) applications filed before the Court inferior to the Principal Civil Court or to High Court having no original jurisdiction, the bar contained in Section 42 would not apply. However, application filed under Section 9 of the Act very much within the purview of Section 42 as they are filed before the Court.
44. Undisputedly, the application under Section 11 of the Act is filed before the Hon'ble Chief Justice or his delegates, which is not a "court" in the eye of law and as such clearly, the provision of Section 42 of the Act would not apply but the same would certainly be applicable if the application is filed under Section 9 of the Act, which was done at the first instance before the District Judge, Varanasi on 28.10.2006 in the present case.
45. In view of the aforesaid discussion and the fact that admittedly the property in dispute is situated at Varanasi and the first application under Section 9 of the Act was filed on 28.10.2006 in the court of District Judge, Varanasi, which is undisputedly the Principal Civil Court of original jurisdiction in a district having jurisdiction to decide questions forming subject matter of the arbitration as provided under Section 2 (1) (e) of the Act, as Section 42 of the Act had specifically provided that where with respect to any arbitration agreement when any application under this part (part 1 of the act which relates to domestic award) has been made in a Court, that court shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of the agreement and the arbitral proceedings shall be made in that court and in no other court, leaves no doubt that the Principal Civil Court of original jurisdiction at Varanasi i.e. District Judge, Varanasi will have the jurisdiction to entertain application under Section 34 of the Act against the arbitral award.
46. Since it is a settled law that under Section 11 of the Act the Chief Justice or his delegates is not a "Court", therefore, any application moved by the opposite party Ideal Hotel and Industries Limited being Arbitration Application No. 260 of 2009 and contents thereof would have no adverse effect to the jurisdiction of the Court at Varanasi in view of harmonious interpretation of Section 2 (1) (e), 20 and 42 of the Act in the present case.
47. A reference may also be made in this regard to the Terms of Reference particularly Clause 2, which provides that only for venue of the arbitration that it shall be at Delhi. Further, Clause 8 clearly provided that the question as to which the Court shall entertain applications arising out of relating to the arbitral proceedings be left open, as such the jurisdiction of the Court has to be necessarily decided in the light of the conjoint reading of Section 2 (1) (e), 20 and 42 of the Act.
48. In view of the aforesaid jurisdiction, I do not find any legal infirmity in the order impugned herein dated 15.9.2015 passed by the learned District Judge, Varanasi.
49. The revision lacks merit and is accordingly dismissed.
50. Since both the parties have agreed that both the revisions can be decided by a common judgment as the common controversy involved, let a copy of this judgment be placed on the record of Civil Revision No. 431 of 2015.
Order Date :- 14.1.2016 Lalit Shukla