IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF APRIL 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE C.M.P.No.8 OF 2019 BETWEEN:
TOYOTA KIRLOSKAR MOTOR PVT LTD.
A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 & HAVING ITS REGISTERED OFFICE AT PLOT NO.1, BIDADI INDUSTRIAL AREAS, RAMANAGAR DISTRICT, KARNATAKA 562 109.
ALSO AT:
10TH FLOOR, CANBERRA BLOCK, UB CITY, NO.24, VITTAL MALLYA ROAD, BANGALORE 560001.
(By MR. VIVEK HOLLA, ADV. FOR SMT. K N CHETHANA, ADV.) AND:
TOPLINK MOTORCAR PRIVATE LIMITED (FORMERLY TOPLINK MOTORS PVT. LTD.) A COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 & HAVING ITS REGISTERED OFFICE AT PULSAR PLAZA, LINE TANK ROAD, NEAR FIRAYLAL CHOWK, RANCHI - 834001 JHARKHAND (INDIA) ALSO AT:
TOPLINK AT N.H. 33, OPP. ZOO, NEAR APOLLO HOSPITAL, CHAKLA, ORMANJHI, RANCHI - 835219.
(By MR. A RAVISHANKAR, ADV.) … PETITIONER … RESPONDENT THIS CIVIL MISC. PETITION IS FILED UNDER SECTION 11(2), (5), (6) OF THE ARBITRATION AND CONCILIATION ACT, 1996 WITH A PRAYER THIS HON’BLE COURT TO A) APPOINT HON'BLE MR. JUSTICE KUKKAJE RAMAKRISHNA BHATT (RETD.) AS SOLE ARBITRATOR, UNDER CLAUSE I SECTION P OF THE DEALERSHIP AGREEMENT DATED: 19.01.2011, VIDE (ANNEXURE-A) EXECUTED BY AND BETWEEN THE PETITIONER AND THE RESPONDENT ABOVE NAMED, ALSO IN TERMS OF SECTION 11(2),(5),(6) OF THE ACT, TO ADJUDICATE UPON THE DISPUTES AS DETAILED HEREIN ABOVE IN THE INSTANT PETITION BETWEEN THE PETITIONER AND THE RESPONDENT ABOVE NAMED IN ACCORDANCE WITH THE PROVISIONS OF ARBITRATION AND CONCILIATION ACT, 1996 AND ETC., THIS CIVIL MISC. PETITION COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER In this petition under Section 11(5) of Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’ for short) petitioner seeks appointment of an Arbitrator to adjudicate the dispute between the parties.
2. Facts giving rise to filing of this petition briefly stated are that the petitioner had entered into a Distributorship agreement with Toyota Motor Asia Pacific PTE Limited. The petitioner by virtue of aforesaid distributorship agreement was granted an exclusive distributorship for India in respect of vehicles parts and accessories of Toyota products. The petitioner entered into a Dealership agreement on 19.01.2011 with respondent for sale of Toyota products in Ranchi in the State of Jharkhand. The aforesaid agreement was admittedly executed at Bidadi Industrial Area in the State of Karnataka. Thereafter, a renewal agreement was executed on 03.02.2014.
3. It is the case of the petitioner that since the respondent committed several irregularities, a notice of termination of the agreement dated 08.12.2017 was issued. Being aggrieved, the respondent filed a civil suit viz., O.S.No.758/2017 along with an application under Order 39 Rule 1 and 2 of Code of Civil Procedure, 1908. The Trial Court by an order dated 22.12.2017 granted an ex-parte ad-interim injunction. Thereafter, the civil suit was dismissed by order dated 24.07.2018. The petitioner thereafter by a notice dated 14.11.2018 invoked the arbitration clause. However, no response was received from the respondent. In the aforesaid factual background, the petitioner has approached this Court.
4. Learned counsel for the petitioner while inviting the attention of this court to the agreement executed between the parties submitted that the arbitration clause provides that the venue of arbitration proceedings shall be Bengaluru and the proceeding shall be held in accordance with the provisions of Arbitration and Conciliation Act, 1996. Therefore, this court has jurisdiction to deal with the prayer made by the petitioner under Section 11 of the Act. In support of his submissions, learned counsel for the petitioner has relied on decision of the Supreme Court in ‘INDUS MOBILE DISTRIBUTI0N PRIVTE LIMITED VS. DATAWIND INNOVATIONS PRIVATE LIMITED AND OITHERS’, (2017) 7 SCC 678. On the other hand, learned counsel for the respondent submitted that the subject matter of the agreement falls within the territorial jurisdiction at Ranchi in the State of Jharkand and therefore, this court has no territorial jurisdiction to deal with the application under Section 11 of the Act. In this connection attention of this court has been invited to Section 2(e) and Section 11(12)(b) of the Act. It is submitted that the decision relied on by learned counsel for the petitioner has no application to the fact situation of the case as the same deals with Chapter V of the Act and the parties by consent cannot confer jurisdiction on any court. In support of his submissions, learned counsel for the respondent has placed reliance on decision of Division Bench of this Court in ‘KRISHNE GOWDA VS. SHIVAPPA’, ILR 1988 KAR 733.
5. I have considered the submissions made by learned counsel for the parties and have perused the record. Before proceeding further, it is apposite to refer to the arbitration clause, which reads as under:
I.Arbitration All disputes or difference whatsoever arising between the parties to this Agreement out of or relating to the construction, meaning and operation or effect of this agreement or breach thereof shall be resolved by mutual discussion, failing which the same shall be referred to the arbitration of the sole arbitrator to the appointed by the consent of both the parties. In case the consensus is not reached for the appointment of the sole arbitrator within 15 days, the matter shall be referred to the sole arbitration of the Managing Director of the Company or his nominee including any officer of the company or any other person appointed by the Managing Director of the Company and the Dealer shall not raise an objection to such arbitration on the ground that the arbitrator is an officer of the company and as such is an interested party or that the Arbitrator so appointed as earlier dealt with the subject matter of this letter of intent. Any orders/directions/awards of the Arbitrator shall be final and binding on both the parties. Arbitrator shall pass a speaking award. The Arbitration proceedings shall be held at Bangalore in accordance with the Arbitration and Conciliation Act, 1996.
Law:
II. Jurisdiction and Governing This agreement is executed at Bidadi Industrial Area and only the competent courts in Ramanagar District of Karnataka State shall have the exclusive jurisdiction over any legal proceedings arising out of this agreement or relating to or in any manner connected with the Dealership. The Agreement is subject to the laws prevailing in the State of Karnataka and any future enactments of the State legislature.
6. From conjoint reading of the aforesaid clauses, it is evident that the agreement has been executed in Bidadi Industrial Area and the agreement provides that the competent courts at Karnataka State shall have the exclusive jurisdiction over any legal proceeding arising out of this agreement or relating to or in any manner connected with the Dealership agreement. The aforesaid clause clearly provides that the arbitration proceeding shall be held at Bengaluru in accordance with the Act. Admittedly, the agreement has been executed within the territorial jurisdiction of this Court. Therefore, in any case, part of cause of action has arisen within the territorial jurisdiction of this Court. It is well settled in law that if two Courts have jurisdiction, the parties with consent can confer jurisdiction on any one of them. The Supreme Court in the case of INDUS MOBILE supra in para 19 has held as under:
“19.A conspectus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. On the facts of the present case, it is clear that the seat of arbitration is Mumbai and Clause 19 further makes it clear that jurisdiction exclusively vests in the Mumbai courts. Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to “seat” is a concept by which a neutral venue can be chosen by the parties to the arbitration clause. The neutral venue may not in the classical sense have jurisdiction – that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Sections 16 to 21 of CPC be attracted. In arbitration law however, as has been held above, the moment “seat” is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties.”
7. Thus, in view of aforesaid enunciation of law read with stipulations contained in the arbitration clause, it is evident that this court has territorial jurisdiction to deal with the application filed by the petitioner under Section 11 of the Act. The submission made by the learned counsel for the respondent in this regard that this court has no territorial jurisdiction does not deserve acceptance. Bearing in mind the mandate contained under Section 11(6A) of the Act and taking into account the fact that admittedly, the parties had entered into an agreement, same contains an arbitration clause and in view of the fact that dispute has arisen between the parties, I deem appropriate to appoint Mr.Justice Ajit J. Gunjal a former Judge of this Court as sole Arbitrator to adjudicate the dispute between the parties.
8. A copy of this order be dispatched to the Arbitration Centre, Khanija Bhavan, Bengaluru for necessary action in that regard. Learned counsel for the petitioner to also approach the Arbitration Centre with the relevant papers to be filed therein. The learned Arbitrator appointed herein shall thereupon enter reference and proceed with the matter in accordance with law and the Rules governing the Arbitration Centre.
Accordingly, petition is disposed of.
Sd/- JUDGE ss