w w w . L a w y e r S e r v i c e s . i n



DIC - NCC (JV) - A Joint Venture Of M/S Daelim Industrial Co v/s M Sahai & Associates Pvt Ltd


Company & Directors' Information:- NCC LIMITED [Active] CIN = L72200TG1990PLC011146

Company & Directors' Information:- NCC LIMITED [Active] CIN = L72200AP1990PLC011146

Company & Directors' Information:- DIC INDIA LIMITED [Active] CIN = L24223WB1947PLC015202

Company & Directors' Information:- DAELIM E AND C INDIA LIMITED [Strike Off] CIN = U45207DL1996PLC082272

Company & Directors' Information:- B B VENTURE PRIVATE LIMITED [Active] CIN = U52209CT2008PTC020645

Company & Directors' Information:- M SAHAI AND ASSOCIATES PRIVATE LIMITED [Active] CIN = U24119DL1996PTC079681

Company & Directors' Information:- S A R VENTURE PRIVATE LIMITED [Active] CIN = U70102DL2015PTC275704

Company & Directors' Information:- N J VENTURE PRIVATE LIMITED [Strike Off] CIN = U70101MH2008PTC186387

Company & Directors' Information:- INDUSTRIAL ASSOCIATES LIMITED [Dissolved] CIN = U99999MH1945PTC004483

    Petn. Under Arbitration Act No. 6 of 2010

    Decided On, 10 May 2010

    At, High Court of Gujarat At Ahmedabad

    By, THE HONOURABLE MR. JUSTICE M.R. SHAH

    For the Petitioner: Mr KG Sukhwani, Advocate. For the Respondent: Mr Sudhakar B Joshi, Advocate.



Judgment Text

ORAL JUDGMENT


1. Present petition has been preferred by the petitioner - DIC-NCC (JV), a Joint Venture of M/s.Daelim Industrial Co.Ltd. And Nagarjuna Construction Co.Ltd., having its office at Ahmedabad under sec.11 of the Arbitration and Conciliation Act, 1996 to appoint an arbitrator to resolve the dispute between the parties arising out of the Work Order dtd.22/6/2005.


2. It is the case on behalf of the petitioner that by Work Order dtd.2/2/2006 Labour Rate Contract for ROB's Grade Separator and Slab/Box Culverts, including pile foundation for rehabilitation and upgrading of Garamore Gagodhar Section of NH-8A and NH-15 from Km.254+000 to Km.308+000 and from Km.281+300 to Km.245+000 (Pkg-IV). It is the case on behalf of the petitioner that work in question was executed in Rajkot District and the petitioner had issued work order to the respondent in Gujarat.


3. It is the case on behalf of the petitioner that the disputes arose between the parties, and the petitioner was constrained to terminate the contract vide letter/communication dtd.20/11/2006. It is the case on behalf of the petitioner that after termination of the contract final bill and claims were submitted by the respondent vide letter dtd.18/1/2007 which was replied by the petitioner on 23/1/2007. It is the case on behalf of the petitioner that along with the subsequent letter dtd.23/4/2007, details of measurement, payment made, reconciliation of materials issued, etc were intimated to the respondent and the respondent was informed that an amount of Rs.12,61,115=19 ps. was required to be paid to the petitioner and accordingly notice was also served on 17/9/2007 thorough Advocate Mr.S.T. Zumkawala. It is submitted on behalf of the petitioner that since the requirements of the aforesaid notice were not complied with, by further notice dtd.16/1/2009 once again the respondent was given chance and opportunity to clear outstanding amount of Rs.12,61,115=19 ps. It is submitted that notice dtd.16/1/2009 was replied by advocate Mr.Vinod B. Mathur & Company on 3/3/2009. It is the case on behalf of the petitioner that thereafter by notice dtd.27/4/2009 the petitioner invoked arbitration clause and requested the respondent to agree to one name to appoint as arbitrator to resolve the dispute. It is the case on behalf of the petitioner that since the respondent had not agreed to any name suggested in the notice dtd.27/4/2009, the petitioner once again called upon the respondent by notice dtd.31/7/2009 to agree with the name of Hon'ble Mr.Justice M.S.Parikh, Former Judge of the Gujarat High Court and Chairman, State Consumer Commission, as Sole Arbitrator within a period of 30 days from the date of receipt of the said notice, failing which the petitioner shall be compelled to approach this Court as per the provisions of sec.11 of the Arbitration and Conciliation Act, 1996. It is the case on behalf of the petitioner that though the said notice dtd.31/7/2009 has been served upon the respondent, the same has not been replied by the respondent and therefore, the petitioner has approached this Court to appoint sole arbitrator to resolve the disputes between the parties.


4. Mr.K.G. Sukhwani, learned advocate appearing on behalf of the petitioner has submitted that there is a dispute between the parties arising out of the Work Order / Agreement dtd.22/6/2005 and therefore, as per clause 30 of the Work Order / Agreement dtd.22/6/2005, the dispute is required to be referred for adjudication to a sole arbitrator. Therefore, it is requested to appoint sole arbitrator as the respondent has failed to agree with the appointment of the sole arbitration for adjudication of the disputes between the parties under the Work Order / Agreement dtd.22/6/2005.


5. In response to the notice issued by this Court, Mr.Sudhakar Joshi, learned advocate has appeared on behalf of the respondent. Preliminary objection has been raised on behalf of the respondent with respect to maintainability of the present petition before this High Court. It is submitted that as per clause 30 of the Work Order / Agreement dtd.22/6/2005 only the Courts in the City of Hyderabad shall have exclusive jurisdiction to entertain any suit or other claims arising out of or touching upon the matters contained in the Work Order, the Gujarat High Court has no jurisdiction to entertain any suit or other claims arising out of or touching upon the matters contained in the said Work Order, therefore, Gujarat High Court would not have jurisdiction to entertain present petition and to appoint sole arbitrator for adjudication of the disputes between the parties arising out of the Work Order. Mr.Joshi, learned advocate appearing on behalf of the respondent has heavily relied upon the decision of the Andhra Pradesh High Court in the case of TPR Marketing Pvt.Ltd. Vs. Kingsbury Personal Care Pvt. Ltd., reported in 2010 (1) Arbitration Law Report in support of his above submission.


6. It is submitted by Mr.Joshi, learned advocate appearing on behalf of the respondent that the parties have agreed and they have subjected themselves to jurisdiction of the Courts at Hyderabad only and therefore, because of the said conscious decision of the parties to exclude the jurisdiction of other Courts including the Court in Gujarat, only the Chief Justice of Andhra Pradesh High Court or his designate alone would have been approached by the petitioner for appointment of arbitrator. It is submitted that in the aforesaid decision, Andhra Pradesh High Court dealing with the similar set of facts where the parties mutually and consciously agreed that in case of dispute at any level, it shall be solved within the jurisdiction of Mumbai by arbitration only, when a petition for appointment of arbitrator was submitted before the Andhra Pradesh High Court, considering two decisions of the Hon'ble Supreme Court in the case of ABC Laminart Pvt.Ltd. V/s. A.P. Agencies, Salem, reported in AIR 1989 SC 1239 and in the case of Shree Subhlaxmi Fabrics Pvt.Ltd. Vs. Chand Mal Baradia, reported in AIR 2005 SC 2161, Andhra Pradesh High Court has held that application to appoint sole arbitrator under sec.11 of the Arbitration and Conciliation Act, 1996 before the Andhra Pradesh High Court is not maintainable and only the Chief Justice of the Bombay High Court and/or his designate alone would have jurisdiction. Therefore, it is requested to dismiss the present petition.


7. Mr.K.G. Sukhwani, learned advocate appearing on behalf of the petitioner has submitted that as such no cause of action has arisen within the territorial jurisdiction of Hyderabad and/or even Andhra Pradesh. It is submitted that admittedly the Work Order was issued in Gujarat and the Work in question was executed in Rajkot District, Gujarat State. It is further submitted that even the respondent is having its registered office at Delhi and the petitioner is having his registered office at Ahmedabad. It is submitted that as no cause of action at all has been arisen within the territorial jurisdiction of Hyderabad or Andhra Pradesh, even by consent or agreement, party cannot confer jurisdiction on the Court which is not possessed by it. It is submitted that only in a case where more than one Courts have jurisdiction and by agreement parties have agreed to confer jurisdiction with respect to one of the Court having jurisdiction, such a contract/agreement is valid and only that Court would have jurisdiction which otherwise would have jurisdiction as per sec.20 of the Code of Civil Procedure.


8. Mr.Sukhwani, learned advocate appearing on behalf of the petitioner has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Hakam Singh V/s. M/s. Gammon (India) Ltd., reported in AIR 1971 SC 740. It is submitted by Mr.Sukhwani, learned advocate appearing on behalf of the petitioner that the Hon'ble Supreme Court in the case of Hakam Singh (supra), has held that it is no open to the parties to confer by agreement jurisdiction on a Court which it does not possess under the Code of Civil Procedure. Therefore, it is submitted that, that part of clause-30 of the Work Order / Agreement dtd.22/6/2005 which provides that only Hyderabad Court would have jurisdiction to adjudicate the disputes between the parties arising out of the contract, is void and as the cause of action has arisen within the territorial jurisdiction of Gujarat, only Gujarat High Court has jurisdiction to refer the parties to the arbitration and to appoint arbitrator under sec.11 of the Arbitration and Conciliation Act, 1996. Therefore, it is requested to allow the present petition.


9. Heard the learned advocates appearing on behalf of the respective parties.


10. At the outset, it is required to be noted and it is not in dispute that there are disputes between the parties arising out of Work Order / Agreement dtd.22/6/2005. Relevant Clause-30 reads as under:-


Clause -30:- Dispute Settlement on Arbitration.


All differences and disputes arising during the performance of above said work shall as far as possible be settled with mutual discussions amongst us only. If, however, such differences and disputes still persist, the same shall be referred for necessary adjudication to a sole Arbitrator mutually agreed upon in terms of Arbitration and Conciliation Act, 1996 and the award given by the said Sole Arbitration shall be final and binding on both the parties to the agreement made between us. Venue of the same will be at Hyderabad. The Courts in the City of Hyderabad shall have exclusive jurisdiction to entertain any suits or other claims arising out of or touching upon the matters contained in this work order.


11. Relying upon Clause-30, which provides that venue of the arbitration shall be at Hyderabad and the Courts in the City of Hyderabad shall have exclusive jurisdiction to entertain any suits or other claims arising out of or touching upon the matters contained in the said work order, it is sought to be contended on behalf of the respondent that this Court has no jurisdiction to entertain the present petition under sec.11 of the Arbitration and Conciliation Act, 1996 and to appoint arbitrator and that the petitioner has to approach the Chief Justice of the Andhra Pradesh High Court or his designate for appointment of arbitrator to adjudicate the disputes between the parties arising out of the Work Order / Agreement dtd.22/6/2005.


12. While dealing with the jurisdiction of the Courts at Hyderabad as conferred by the parties, as contained in Clause-30 of the Work Order / Agreement dtd.22/6/2005, first of all it is required to be considered whether any cause of action or even part of cause of action has arisen within the jurisdiction of Hyderabad Court? It is to be noted and it is an admitted position that the Work Order dtd.22/6/2005 has been issued by the petitioner to the respondent in Gujarat. It is also an admitted position that the Work Order in question was executed in Rajkot District, Gujarat State. It is also an admitted position that the registered office of the petitioner Company is situated at Ahmedabad. It is also an admitted position that the registered office of the respondent Company is at Delhi. Therefore, as such no cause of action has arisen within the territorial jurisdiction of Hyderabad Court. It is sought to be contended on behalf of the respondent that as the petitioner is the Joint Venture of one Nagarjuna Construction Co. Ltd., whose registered office is situated at Hyderabad, Hyderabad Court would have jurisdiction, which cannot be accepted. Merely because the petitioner is Joint Venture of one Nagarjuna Construction Co. Ltd., whose registered office is situated at Hyderabad, it cannot be said that Hyderabad Court would have jurisdiction to entertain the suit or other claims arising out of or touching upon the matters contained in the Work Order / Agreement dtd.22/6/2005 executed between the petitioner and the respondent. By no stretch of imagination Hyderabad Court would have any jurisdiction as provided under sec.20 of the Code of Civil Procedure to entertain any suit or other claims arising out of or touching upon the matters contained in the Work Order / Agreement dtd.22/6/2005 executed between the petitioner and the respondent. No cause of action or even part cause of action has arisen within the territorial jurisdiction of the Court of City of Hyderabad.


13. In light of the above facts and the finding, the objection on behalf of the respondent is required to be considered.


14. It is the case on behalf of the respondent that as the parties have consciously agreed to resolve their disputes only by the Court in the City of Hyderabad, only the Court in the City of Hyderabad would have exclusive jurisdiction, which cannot be accepted. As observed and held by the Hon'ble Supreme Court in the case of Hakam Singh (supra) it is not open to the parties to confer by agreement jurisdiction on a Court which does not possess under the Code of Civil Procedure. It is further observed by the Hon'ble Supreme Court that where two or more Courts under the Code of Civil Procedure have jurisdiction to try a suit or proceeding, an agreement between the parties that the disputes between them shall be tried in one of such courts, is not contrary to public policy and does not contravene section 28 of the Contract Act. In the present case, as stated above, the Courts in Hyderabad have no jurisdiction to entertain any suit or other claims arising out of or touching upon the matters contained in the Work Order / Agreement dtd.22/6/2005 executed between the petitioner and the respondent, as no cause of action or even part of cause of action has arisen within the territorial jurisdiction of Courts at Hyderabad. Therefore, as observed and held by the Hon'ble Supreme Court in the case of Hakam Singh (supra), Clause-30 of the Work Order / Agreement dtd.22/6/2005, which provides that Courts in the City of Hyderabad shall have exclusive jurisdiction to entertain any suit or other claim arising out of or touching upon the matters contained in the Work Order / Agreement dtd.22/6/2005 is void and hit by sec.28 of the Contract Act. Therefore, the objection raised by the learned advocate appearing on behalf of the respondent with respect to maintainability of the present petition before this High Court relying upon clause-30 of the Work Order / Agreement dtd.22/6/2005 is hereby overruled and considering the fact that the cause of action has arisen within Rajkot and Ahmedabad i.e. within the territorial jurisdiction of State of Gujarat, High Court of Gujarat has jurisdiction and therefore, the present petition before this Court, for appointment of arbitrator under sec.11 of the Arbitration and Conciliation Act, 1996 to adjudicate the disputes between the parties, is maintainable and in view of the arbitration Clause-30 of the Work Order / Agreement dtd.22/6/2005, the disputes between the parties are required to be referred to arbitration and as there is no consensus between the parties with respect to appointment of arbitrator, arbitrator is appointed by this Court, however, venue of the arbitration shall be at Hyderabad.


15. Now, so far as the reliance placed upon the decision of Andhra Pradesh in the case of TPR Marketing Pvt.Ltd. (supra) is concerned, first of all it is to be noted that there was no issue/dispute before the Andhra Pradesh whether the Bombay High Court would have any jurisdiction or not and/or there was no issue/dispute with respect to cause of action within the territorial jurisdiction of Bombay High Court. On the contrary, considering the facts of the case before the Andhra Pradesh High Curt, it appears that the cause of action/part cause of action has arisen within the limits of State of Andhra Pradesh as well as Mumbai also and therefore, it was found that both the courts would have jurisdiction concerning the subject matter of the disputes between the parties and considering the above facts and the decision of the Hon'ble Supreme Court in the case of ABC Laminart Pvt.Ltd. (supra) and Shree Shubhlaxmi Fabrics Pvt. Ltd. (supra), Andhra Pradesh High Court has held that only Mumbai Court would have jurisdiction and therefore, the application to appoint arbitrator before the Andhra Pradesh High Court was held to be not maintainable.


16. Considering clause-30 of the Work Order /

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Agreement dtd.22/6/2005 and the fact that the registered office of the petitioner is at Ahmedabad and even the registered office of the respondent is at New Delhi and the respondent is carrying its business at New Delhi, it was suggested by the Court to mutually agree to fix the venue of arbitration at Ahmedabad to avoid wastage of time and expenditure, however, Mr.Joshi, learned advocate appearing on behalf of the respondent has not agreed to the same and therefore, as per Clause-30 of the Work Order / Agreement dtd.22/6/2005, the venue of the arbitration shall be at Hyderabad. 17. In view of the above and for the reasons stated above, the petition succeeds and Hon'ble Mr.Justice M.S. Parikh, Retired Judge of the Gujarat High Court, residing at 12, Niyojannagar Co-operative Housing Society, Opp. Manekbaug Hall, Ambawadi, Ahmedabad-380 015, is hereby appointed as sole arbitrator to adjudicate the disputes between the parties arising out of the Work Order / Agreement dtd.22/6/2005 executed between parties. However, as stated above, the venue of the arbitration shall be at Hyderabad as per clause-30 of the Work Order / Agreement dtd.22/6/2005. It is hoped that the learned sole arbitrator shall adjudicate the disputes between the parties at the earliest so as to achieve the object and purpose of Arbitration and Conciliation Act, 1996. The learned sole arbitrator to declare the Award preferably within a period of 15 (fifteen) months from the date of this judgement and order. All concerned are directed to cooperate the learned sole arbitrator in adjudicating the disputes between the parties and awarding the award by the learned sole arbitrator within the time stated hereinabove. Present petition is allowed to the aforesaid extent. In the facts and circumstances of the case, there shall be no order as to costs.
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