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Zillion Infra Projects Pvt. Ltd. Represented By K.M. Gopalakrishnan Authorized Signatory v/s A.I. Kuriakose & Another


Company & Directors' Information:- V S A INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45400TG2011PTC074588

Company & Directors' Information:- K N INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45200TG2008PTC058128

Company & Directors' Information:- B L INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45400DL2014PTC266491

Company & Directors' Information:- K. C. INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45209NL1990PTC003414

Company & Directors' Information:- K K INFRA PROJECTS (INDIA) PRIVATE LIMITED [Active] CIN = U45200TG2007PTC056630

Company & Directors' Information:- A E INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45200MH2009PTC196191

Company & Directors' Information:- S R R INFRA PROJECTS LIMITED [Strike Off] CIN = U45209TG2008PLC058571

Company & Directors' Information:- N R R INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U70200TG2010PTC067299

Company & Directors' Information:- K AND G INFRA PROJECTS PRIVATE LIMITED [Under Process of Striking Off] CIN = U45200KL2010PTC027108

Company & Directors' Information:- R Y INFRA PROJECTS PRIVATE LIMITED [Under Process of Striking Off] CIN = U45400TG2013PTC091764

Company & Directors' Information:- K C R INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45200TG2009PTC064374

Company & Directors' Information:- M. D. INFRA - PROJECTS PRIVATE LIMITED [Active] CIN = U45400MH2009PTC193074

Company & Directors' Information:- V G INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45209TG2011PTC074184

Company & Directors' Information:- J S V INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U70200TN2010PTC078632

Company & Directors' Information:- KM INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45400WB2007PTC117379

Company & Directors' Information:- S. G. INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U45400DL2009PTC192400

Company & Directors' Information:- D & G INFRA AND PROJECTS PRIVATE LIMITED [Active] CIN = U45203PN2009PTC133571

Company & Directors' Information:- G INFRA PROJECTS LIMITED [Active] CIN = U45400TG2015PLC102010

Company & Directors' Information:- D. K. INFRA PROJECTS (INDIA) LIMITED [Strike Off] CIN = U45400WB2011PLC170421

Company & Directors' Information:- J S INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45400WB2011PTC163788

Company & Directors' Information:- B S INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45400WB2010PTC151174

Company & Directors' Information:- M R INFRA & PROJECTS INDIA PRIVATE LIMITED [Strike Off] CIN = U45209TG2011PTC074858

Company & Directors' Information:- G-9 INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45202MP2021PTC054704

Company & Directors' Information:- S V V INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U45200TG2009PTC065498

Company & Directors' Information:- K M M INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45209TG2013PTC088878

Company & Directors' Information:- A R INFRA PROJECTS LIMITED [Active] CIN = U45400DL2010PLC198594

Company & Directors' Information:- N-INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U45200TG2008PTC057620

Company & Directors' Information:- M. M. INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U70109WB2011PTC165005

Company & Directors' Information:- D R R INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U45200TG2007PTC055772

Company & Directors' Information:- R V INFRA PROJECTS INDIA PRIVATE LIMITED [Active] CIN = U45400WB2011PTC158257

Company & Directors' Information:- U M T INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45400MH2013PTC244469

Company & Directors' Information:- R K B INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U45400WB2009PTC132587

Company & Directors' Information:- A H V INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U74999WB2012PTC180309

Company & Directors' Information:- G. S. INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U45400DL2008PTC174931

Company & Directors' Information:- P B S INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U70102TG2008PTC060836

Company & Directors' Information:- R M INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U45400MH2011PTC224655

Company & Directors' Information:- M C W INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U74120MH2013PTC244153

Company & Directors' Information:- S. A. INFRA PROJECTS (INDIA) PRIVATE LIMITED [Active] CIN = U45400TG2015PTC099812

Company & Directors' Information:- C Z INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45400TG2016PTC103916

Company & Directors' Information:- P AND C INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U45200TN2014PTC096607

Company & Directors' Information:- U K PROJECTS AND INFRA PRIVATE LIMITED [Active] CIN = U45200TN2015PTC102111

Company & Directors' Information:- M N C INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45200TG2008PTC058369

Company & Directors' Information:- K V P INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U45209TG2011PTC073318

Company & Directors' Information:- L K D INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U45209TG2013PTC085748

Company & Directors' Information:- B R S INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45201DL2013PTC248023

Company & Directors' Information:- D V INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U45200AP2014PTC095005

Company & Directors' Information:- N V R INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U70100AP2015PTC097985

Company & Directors' Information:- K.M. PROJECTS PRIVATE LIMITED [Strike Off] CIN = U70109HR2007PTC036697

Company & Directors' Information:- D. B. INFRA PROJECTS PRIVATE LIMITED [Strike Off] CIN = U45201GJ2010PTC059696

Company & Directors' Information:- R A INFRA PROJECTS PRIVATE LIMITED [Active] CIN = U29309RJ2021PTC075070

Company & Directors' Information:- V J INFRA PROJECTS INDIA PRIVATE LIMITED [Active] CIN = U45500AP2021PTC118892

    Arb. A. No. 37 of 2016

    Decided On, 17 October 2016

    At, High Court of Kerala

    By, THE HONOURABLE MR. JUSTICE K. SURENDRA MOHAN & THE HONOURABLE MR. JUSTICE K. ABRAHAM MATHEW

    For the Appellant: P. Sreekumar, S. Ganesh, Advocates. For the Respondents: R2, M. Gopikrishnan Nambiar, P. Gopinath, P. Benny Thomas, K. John Mathai, Joson Manavalan, Kuryan Thomas, Varghese K. Paul, R1, S. Vinod Bhat, Advocates.



Judgment Text

Surendra Mohan, J.

Both these appeals are directed against orders passed by the Ist Additional District Court, N.Paravur, Ernakulam in two different Original Petitions, O.P.No.100 of 2016 and O.P.No.101 of 2016. The parties are the same. The original Petitions were filed by the first respondent under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act for short) seeking interim orders of attachment. The District court has passed the orders appealed against, issuing ex parte orders of attachment. The appellant has filed these appeals challenging the said orders. The contentions of the appellant in both these cases is that, the Ist additional District Court, N.Paravur lacks jurisdiction to entertain the Original Petitions. Since the parties are the same and the issues that arise for consideration identical, both the appeals are heard and disposed of together.

2. The appellant, a private limited company, has entered into a contract with the second respondent, M/S Bharat Petroleum Corporation limited, for the erection of some plant and machinery. The appellant had given on sub contract certain components of the work undertaken by it to the first respondent herein under separate agreements entered into between them for the purpose. The agreements in both these appeals are identical. In the contract, it has been agreed between the parties that disputes if any that may arise between them shall be referred to or resolved through arbitration in accordance with the provisions of the Act. It has also been agreed upon that, the seat of arbitration shall be at New Delhi. A further clause confining the jurisdiction in respect of any dispute/disputes arising out of the work order to the courts at New Delhi also forms part of the agreement. The contention that is advanced before us is that, in view of the exclusion of jurisdiction of all other Courts with respect to the disputes that may arise under the terms of the agreement, the Ist Additional District Court, N.Paravur does not have jurisdiction in the matter. Consequently, the orders appealed against are liable to be set aside, for want of jurisdiction. In view of the limited question that arise for consideration, other facts with respect to these cases are not relevant.

3. According to Advocate Naveen Sharma who appears for the appellant, in both these appeals, the parties have, by entering into a contract evidenced herein by Annexure A, agreed to the manner in which the disputes between them are to be resolved. Clause No.24 of Annexure A in Aribtration Appeal No.38 of 2016 provides that dispute/disputes arising out of the work order shall be resolved by arbitration in accordance with the Act. The venue for arbitration shall be at New Delhi. The clause further provides that the Courts at New Delhi alone shall have jurisdiction in respect of any dispute/disputes arising out of the work order in question. Clause No. 23 of Annexure A in Arb.Appeal No.37 of 2016 is similarly worded. Therefore, according to the counsel, the parties have agreed upon and decided on the manner in which their disputes are to be resolved and also by agreement, stipulated that the courts in New Delhi alone shall have jurisdiction in the matter. For the above reason, it is contended that the District Court, Paravur does not have jurisdiction in the matter and has erred in passing the orders appealed against. The counsel places reliance on the Constitutional Bench Decision of the Apex Court in Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc [(2012)9 SCC 552] as well as State of West Bengal v. Associated Contractors [2015(1) SCC 32] and a Division Bench Decision of the Andhra Pradesh High Court in Jyothi Turbo Power Services Pvt Ltd v. Shenzhen Shandong Nuclear Power Construction Co. Ltd [2011 KHC 2499] to contend that once the parties have chosen the venue of arbitration under Section 20 of the Act only the Courts at the said place would qualify as 'Court' under Section 2(1)(e) of the Act. Section 20, Section 2(i)(e) as well as Section 42 of the Act have been considered, interpreted and explained by the Apex Court in the said manner, according to the counsel. Therefore, it is contended that, these appeals are only to be allowed by setting aside the orders appealed against.

4. Advocate Vinod Bhat appears for the first respondent. According to the learned counsel, the entire cause of action has arisen within the jurisdiction of the Additional District Court, N. Paravur. Since no part of the cause of action has arisen within the jurisdiction of the New Delhi Courts, according to the counsel, the parties cannot confer jurisdiction on the courts at New Delhi. Section 20 confers a right on the parties only to choose the seat of arbitration. The seat of arbitration has no doubt been chosen as New Delhi by the parties. However that does not deprive the competent court of jurisdiction of its power to entertain matters over which it has jurisdiction as per law. If at all, the appellant has any dispute regarding the jurisdiction, it is contended that the same has to be raised before the District Court, North Paravur itself. Therefore, it is contended that these appeals are only to be dismissed.

5. Heard. As we have already noticed above, the facts in these cases are not in dispute. For the purpose of convenience of reference, we extract below clause No.24 of of Annexure A agreement in Arb. Appeal No.38 of 2016.

24) DISPUTES

1. ARBITRATION: In case of any dispute/ disputes arising out of this work order, the same shall be referred and resolved only by way of arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 by a sole Arbitrator who shall be appointed by the Managing Director of the company Zillion Infraprojects Private Ltd and any award or final order passed by such appointed sole arbitrator shall not be questioned only on the ground that it was passed by an appointee of the Managing Director acting as such sole arbitrator. The procedure to be adopted for such arbitration proceedings shall be determined by the sole Arbitrator at his sole discretion. The fact that such sole arbitrator so appointed was in any manner connected with the subject matter of the dispute shall not be considered as a disqualification for such appointment. The venue of the arbitration shall only be at New Delhi.

2. JURISDICTION: The courts at New Delhi alone shall have the exclusive jurisdiction in respect of any dispute/disputes arising out of this work order.

6. A perusal of the above clause shows that –

i) in case of any dispute/disputes arising out of the work order, the same shall be referred and resolved by way of arbitration in accordance with the provisions of the Act.

ii) The sole Arbitrator shall be appointed by the Managing Director of the appellant.

iii) Any Award or final order passed by such sole Arbitrator shall not be questioned only on the ground that it was passed by an appointee of the Managing Director acting as such sole Arbitrator.

iv) The procedure to be adopted for such arbitration proceedings shall be determined by the sole arbitrator.

v) The venue of arbitration shall only be at New Delhi.

7. It has been further agreed that the Courts at New Delhi alone shall have exclusive jurisdiction in respect of any dispute/disputes arising out of the work order.

8. The contentions of the parties have to be considered in the context of the above clause. It is clear from the above clause that the parties have unequivocally agreed to have their disputes settled through arbitration, to be held at New Delhi. It has also been agreed that, only the Courts at New Delhi shall have jurisdiction in respect of the disputes arising out of the work order. Section 2(1)(e) defines the expression 'Court' as follows:-

2(1)(e) 'Court' means--

(i) in the case of an arbitration other than international commercial arbitration, 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 subjectmatter 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;

(ii) in the case of international commercial arbitration, 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, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court.

The above provision had come up for consideration before the Apex Court in Bharat Aluminium Company vs. Kaiser Aluminium Technical Services Inc. (Supra). It has been noticed by the Court that Section 20 confers a right on the parties to agree on the place of arbitration. Therefore, whether the expression 'Court' was controlled by the expression 'subject-matter of the arbitration' or ' subject- matter of the suit' has been considered and explained at paragraph 96 of the said judgment in the following words:-

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 ' subjectmatter 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 courts 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 Kolkota, 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.

9. In paragraph 97, the Court has gone on to categorically lay down as follows:-

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.

10. Therefore, the Court that has been defined by Section 2(1)(e) has been unmistakably held to be the Court having supervisory control over the Arbitration proceedings or the Court at the seat of the arbitration process. In the present case, the court of the arbitration process is at New Delhi. The above aspect has been reiterated and affirmed by a three Judge Bench of the Apex Court in State of West Bengal v. Associated Contractors (Supra).

11. Rohinton Fali Nariman, J. has after considering the question in the context of the applicability of Section 42 of the Act concluded the issue at paragraph 25 of the judgment as follows:-

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.

12. In view of the above authoritative pronouncements what emerge

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s is that, by the operation of Section 20 of the Act, the parties are free to confer jurisdiction even on a Court that does not ordinarily have jurisdiction to entertain the matter. Once the parties exercise their right under Section 20 and confer jurisdiction on a Court that does not have jurisdiction to entertain the matter, such Court would also have jurisdiction, together with the court/courts that would originally have jurisdiction to try the matter. Therefore, the parties are at liberty to exclude the jurisdiction of either of the said courts by agreement. In the present case, though the cause of action in this case has arisen within the jurisdiction of the Ist additional District Court, N.Paravur, Ernakulam, the jurisdiction of the said Court has been excluded by agreement of the parties. Therefore, the parties have by agreement confined jurisdiction over the subject matter, only to the Courts at New Delhi. Consequently, the first Additional District Court, North Paravur, Ernakulam does not have jurisdiction to entertain the petition under Section 9 of the Act. For the above reason, it also lacked the power to pass the orders appealed against. As held by the Supreme Court, to concede any such jurisdiction to the said Court would bring into operation, Section 42 of the Act conferring jurisdiction for all further proceedings also on the said Court thereby rendering Section 20 of the Act, otiose. For the foregoing reasons, these appeals are allowed. The order dated 04.08.2016 of the Ist Additional District Court, N.Paravur in I.A.No.711 of 2016 in Arbitration O.P.No.101 of 2016 and the order dated 04.08.2016 in I.A.No.709 of 2016 in Arbitration O.P.No.100 of 2016 are set aside.
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