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Sree Saraswathi Mills Ltd. Vs. Govindji Jevat and Co. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtMumbai High Court
Decided On
Case NumberArbitration Petition No. 24 of 1983, in Award No. 74 of 1982
Judge
Reported in1984(1)BomCR34
ActsArbitration Act, 1940 - Sections 31(1), 31(4), 33 and 33(4); Code of Civil Procedure (CPC) - Sections 21, 22 and 190B
AppellantSree Saraswathi Mills Ltd.
RespondentGovindji Jevat and Co.
Appellant AdvocateS.M. Jhunjhunwala, Adv.
Respondent AdvocateH.V. Gala, Adv.
Excerpt:
.....- by virtue of section 31(4) award ought to have been filed before court of sub-ordinate judge at madurai. - indian evidence act, 1872 section 24: [v.s. sirpurkar & deepak verma,jj] dying declaration - multiple murders by accused - dying declaration not implicating one accused - evidence of eye witnesses however completely fixing his criminal liability ocular evidence found credible held, absence of his name in dying declaration would be of no help to accused. - on the other hand, an objection as to the local jurisdiction of a court can be waived and this principle has been given a statutory recognition by enactments like section 21 of the code of civil procedure. in the circumstances of the present case, clearly the original agreement between the parties to submit to..........filed a petition under section 33 of the arbitration act, 1940, in the court of the subordinate judge, madurai, being c.p. no. 82 of 1978, inter alia, for a declaration that there was no second contract between the parties dated 27-5-1977, and for a declaration that there did not exist any arbitration agreement in respect of the transaction covered by the said second contract. by his order dated 24-7-1979, the learned subordinate judge, madurai dismissed the petition. a revision application being civil revision application no. 2183 of 1979, which was filed by the petitioners from the said order in the madras high court, was dismissed by the high court on 1-7-1981.3. thereafter the said arbitration reference, which was numbered as arbitration reference no. 20 of 1977-78, was proceeded.....
Judgment:

Sujata Manohar, J.

1. The petitioners have entered into two contracts with the respondents for the purchase of 700 and 500 bales of cotton. The first contract for the purchase of 700 bales of cotton was dated 16-5-1977, and there was a second contract entered into on 27-5-1977, for the purchase of 500 bales of cotton. The respondents are members of the East India Cotton Association Ltd., and both the contracts were entered into subject to the bye-laws of the East India Cotton Association Ltd. The petitioners are not members of this Association. However, the bye-laws provided for arbitration in respect of disputes between members and non-members also. The respondents carry on business at Bombay while the petitioners have their registered office at Madurai. The contracts were for the supply of cotton from Bombay for delivery at Tiruttani.

2. There were disputes between the parties in respect of these two contracts. The respondents referred their disputes to arbitration under bye-law 38 of the East India Cotton Association Ltd. The respondents called upon the petitioners to appoint their own arbitrator under the bye-laws. There upon on 16-5-1978, the petitioners filed a petition under section 33 of the Arbitration Act, 1940, in the Court of the Subordinate Judge, Madurai, being C.P. No. 82 of 1978, inter alia, for a declaration that there was no second contract between the parties dated 27-5-1977, and for a declaration that there did not exist any arbitration agreement in respect of the transaction covered by the said second contract. By his order dated 24-7-1979, the learned Subordinate Judge, Madurai dismissed the petition. A revision application being Civil Revision Application No. 2183 of 1979, which was filed by the petitioners from the said order in the Madras High Court, was dismissed by the High Court on 1-7-1981.

3. Thereafter the said arbitration reference, which was numbered as Arbitration Reference No. 20 of 1977-78, was proceeded with and ultimately in the said arbitration the arbitrators made and published their Award dated 1-3-1982. The award has been filed in this Court and it bears No. 74 of 1982. The present arbitration petition is filed under section 30 of the Arbitration Act, 1940, challenging this award on various grounds which at set out in the petition.

4. In paragraph 17 of the petition it has been stated that the award has been filed in Bombay ; the respondents are carrying on business at Bombay and 'The petitioner submits that this Hon'ble Court has the jurisdiction to entertain and try this petition'. The learned Advocate for the petitioners gave a notice dated 23-6-1983 to the learned Advocate for the respondents to the following effect :

'Please take Notice that at the hearing of the above petition, a point of law to the effect that on the facts on record, the Hon'ble High Court Bombay has no jurisdiction to entertain the impugned Award and that the impugned Award is liable to be taken off the file of the Hon'ble High Court at Bombay, shall also be argued on behalf of the petitioners.'

5. It is contended by the petitioners that under the provisions of section 31, sub-section (4), of the Arbitration Act, 1940 this Court has no jurisdiction to pass decree is terms of the award or to make any order in respect of the arbitration proceedings in this case. Mr. Gala, learned Advocate for the respondents, urged that by virtue of the plea taken in paragraph 17 of the petition, the petitioners have submitted to the jurisdiction of this Court and they cannot now argue that this Court has not jurisdiction to take the award on file. But paragraph 17 of the petition has no connection with the Court's jurisdiction to take the award on file. It only pertains to the present petition. Paragraph 17 of the petition does not in any manner preclude the petitioners from urging that this Court has no jurisdiction to take the award on file under section 31(4) of the Arbitration Act.

Sections 31(1) and (4) of the Arbitration Act are as follows :

31. (1) Subject to the provisions of this Act, an award may be filed in any Court having jurisdiction in the matter to which the reference relates.

XXX XXX XXX

(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference any application under this Act has been made in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall be made in that Court and in no other Court.

Thus, by virtue of these provisions, if in a given case more than one Court has jurisdiction in respect of the subject matter of reference to arbitration, if any application pertaining to that reference is made to one of the courts having jurisdiction, that Court alone will be competent to entertain all subsequent applications pertaining to that reference. In the present case, the respondents are carrying on business at Bombay while the petitioners have their registered office at Madurai. The petitioners are, therefore, carrying on business at Madurai. The contract was for the supply of goods from Bombay to a place called Tiruttani. Under section 31(1) of the Arbitration Act, an award may be filed in any Court having jurisdiction in the matter to which the reference relates. Under section 2, sub-section (c) of the Arbitration Act, the `Court' is defined to mean 'a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same has been the subject-matter of a suit, but does not ... ... include a small Causes Court.' Therefore, ordinarily under section 31(1) the courts having jurisdiction in the present case would be the Court at Bombay where a material part of the cause of action has arisen, and the Court where the defendants any on their business, namely, the Court at Madurai. The Court of the Subordinate Judge, Madurai has a lower pecuniary limit (at present) of Rs. 15,000 and it has an unlimited upper pecuniary limit. The Court of the Subordinate Judge at Madurai, therefore, is one of the courts having jurisdiction under section 31(1) of the Arbitration Act.

6. It was strenuously urged by Mr. Gala, learned Advocate for the respondents, that the Court of the Subordinate Judge at Madurai does not have any jurisdiction because no part of the cause of action has arisen at Madurai. He submitted that Tiruttani, the place where the goods were to be delivered, is no within Madurai district and hence no part of the cause of action has arisen within the jurisdiction of the Court of the Subordinate Judge at Madurai. Assuming that to be so, the defendants, that is to say, the petitioners in the present case, have their registered office, admittedly, at Madurai. Under the provisions of section 20 of the Code of Civil Procedure, the petitioners are admittedly carrying on business at Madurai where they have their principal office. There is, therefore, no merit in the contention of the respondents that the Court of the Subordinate Judge at Madurai would have no jurisdiction in respect of the subject-matter of the reference under section 31(1) of the Arbitration Act.

7. If, therefore, initially both the courts at Bombay and Madurai had jurisdiction and an application under section 33 of the Arbitration Act in respect of the present reference had been made to the Court at Madurai, then under the provisions of section 31(4) only the Court at Madurai would be competent to pass a decree in terms of the award herein or to entertain the present petition challenging the award.

8. It is, however, submitted by the respondents that the contract between the parties contained a clause that it was subject to Bombay Jurisdiction. By virtue of this clause the parties had agreed to submit to the jurisdiction of the Bombay High Court and in view of this agreement between the parties, the parties were precluded from filing any application before the Court at Madurai. It was, therefore, submitted by Mr. Gala that the Court at Madurai was not a Court competent to entertain that application and hence the provisions of section 31, sub-section (4) cannot be attracted in the present case.

9. Ordinarily, when the parties have agreed that out of two courts having jurisdiction, they will submit to the jurisdiction of one of the two courts, the parties are bound by their agreement and they are not allowed to go before any other Court. In the present case, however, when the petitioners made an application under section 33 of the Arbitration Act before the Court at Madurai, no objection was taken by the respondents to the jurisdiction of the Court at Madurai to entertain that application. They submitted to the jurisdiction of the Court at Madurai. They also did not raise any point relating to jurisdiction in the Civil Revision application which was filed before the High Court at Madras. In these circumstances, the agreement between the parties to submit only to the jurisdiction of the Bombay High Court must be taken to have been waived. The Court at Madurai has jurisdiction to entertain the subject-matter of the reference. It would have been precluded from exercising this jurisdiction by virtue of the agreement between the parties. The agreement, however, was not insisted upon and was waived by the parties. Needless to add, it is always open to the parties to waive a contractual obligation. It cannot, therefore, be said that the Madurai Court was not a Court of competent jurisdiction. In the case of Hiralal Patni v. Shri Kali Nath, reported in : [1962]2SCR747 the Supreme Court has held that the objection as to the local jurisdiction of a Court does not stand on the same footing as an objection to the competence of a Court to try a case. Competence of a Court to try a case goes to the very root of the jurisdiction, and where it is lacking, it is a case of inherent lack of jurisdiction. On the other hand, an objection as to the local jurisdiction of a Court can be waived and this principle has been given a statutory recognition by enactments like section 21 of the Code of Civil Procedure. Ispo facto, an agreement to submit to the jurisdiction of one of the two competent Courts can also be waived. In the circumstances of the present case, clearly the original agreement between the parties to submit to the jurisdiction of the Bombay High Court must be considered to have been waived. The Court of the Subordinate Judge, Madurai, therefore, was a Court of competent jurisdiction for entertaining an application under section 33 of the Act.

10. An application under section 33 of the Arbitration Act is an application, pertaining to the present reference. It has been held by the Supreme Court as far back as 1953 in the case of Kumbhe Mawji v. Dominion of India, reported in : [1953]4SCR878 that the words `in any reference' in section 31, sub-section (4) of the Arbitration Act must be widely construed to mean in the matter of a reference'. It held that the phrase is comprehensive enough to cover also an application first made after the arbitration is completed and a final award is made. In the present case, the application under section 33 was relating to the existence of the arbitration agreement itself and must be considered as an application in the reference within the meaning of section 31(4) of the Arbitration Act.

11. Thus, by virtue of the proceedings that have already taken place in the present reference before the Court of the Subordinate Judge at Madurai, that Court alone will have jurisdiction to take the present award on record and to entertain proceedings pertaining to that award.

12. It was next submitted by the learned Advocate for the respondents that under Bye-law 44-A of the East India Cotton Association Ltd., the Courts in Bombay have an exclusive jurisdiction over the arbitrations under the bye-laws of the Association. There bye-laws override the provisions of section 31(4) of the Arbitration Act. Hence the Court at Madurai has no jurisdiction over the present reference and the award is properly field here. In connection with this submission it is necessary to examine the provisions of section 46 of the Arbitration Act. Section 46 is as follows :

46. The provisions of this Act except sub-section (1) of section 6 and sections 7, 12, 36 and 37 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as this Act is inconsistent with that other enactment or with any rules made thereunder.

If there are any provisions of the Arbitration Act which are inconsistent with the provisions relating to arbitration in any enactment or rules made thereunder, then the enactment or the rules thereunder prevail over the provisions of the Arbitration Act. The bye-laws framed by the East India Cotton Association Ltd., are statutory bye-laws framed under the Forward Contracts (Regulation) Act, 1952. Hence if any provision under these bye-laws is inconsistent with section 31 of the Arbitration Act, that provision in the bye-laws will prevail. Now, under bye-law 44-A it is provided as follows :

44-A. Every cotton transaction entered into between Members and every contract made subject to these Bye-laws or subject to East India Cotton Association arbitration (sic) or containing words or abbreviations to a similar effect and every arbitration agreement to which those Bye-laws apply, shall be deemed in all respects to be subject to those Bye-laws and the parties to such transactions, contracts or agreements shall be deemed to have submitted to the jurisdiction of the Courts in Bombay for the purpose of giving effect to the provisions of those Bye-laws.

It is submitted by the respondents that bye-law 44-A confers on the courts in Bombay an exclusive jurisdiction in respect of any arbitration under the bye-law of the East India Cotton Association Ltd. According to the respondent, this bye-law is inconsistent with section 31 of the Arbitration Act, and hence bye-law 44-A must prevail over section 31 of the Arbitration Act. In view of this submission, it has to be considered whether bye-law 44-A is inconsistent with section 31 of the Arbitration Act. Bye-law 44-A came up for construction before a learned Single Judge of this Court in Arbitration Petition No. 124 of 1979 in Award No. 26 of 1979. Pendse, J. by his Judgment dated 11th February, 1980 has held that under bye-law 44-A an exclusive jurisdiction is not conferred on the courts in Bombay in respect of arbitrations under the bye-laws of the East India Cotton Association Ltd. The learned Judge has held that by virtue of the bye-law, jurisdiction is conferred on the courts in Bombay in addition to other competent courts. The bye-law does not exclude the jurisdiction of other competent courts. This interpretation is to some extent supported by bye-law 38-F under which it is provided that 'if either party to a dispute submitted to arbitration refuses to abide by the decision of the arbitrators ... ... and the award is filed in the appropriate Civil Court having jurisdiction (italics mine) in the matter he shall pay the costs between attorney and client in connection with the filing and enforcement of the award....'. This bye-law also suggests that the jurisdiction of competent courts under the Arbitration Act is not taken away. In view of the interpretation given to bye-law 44-A by my brother Judge, it would not be proper for me to interpret the same bye-law in a manner which would exclude the jurisdiction of courts other than the Bombay High Court. In these circumstances, bye-law 44-A cannot be considered as inconsistent with and therefore, prevailing over, the provisions of section 31, sub-section (4) of the Arbitration Act.

13. Mr. Gala sought to distinguish the judgment by pointing out that the attention of the learned Judge was not drawn in that case to the statutory character of bye-law 44-A. The learned Judge was, however, directly required to consider whether bye-law 44-A conferred on the courts in Bombay an exclusive jurisdiction in respect of the arbitrations under the bye-law of the East India Cotton Association Ltd. He was also required to consider bye-law 44-A in relation to section 31(4) of the Arbitration Act. Hence the judgment is directly applicable to the issues involved in the present case.

14. In the premises, bye-law 44-A does not deprive the Court at Madurai of its jurisdiction. By virtue of section 31(4) of the Arbitration Act, the award ought to have been filed before the Court of the sub-ordinate Judge at Madurai. This Court cannot pass any orders or decree in respect of the award.

15. It is agreed between the parties that the Prothonotary and Senior Master be directed to forward the award in this Court to the Court of the Subordinate Judge at Madurai and that the same will be treated as filing of the award by the arbitrators in the Court of the Subordinate Judge at Madurai.

Award is directed to be taken off the file accordingly.

In view of this order, there will be no order on the petition. It will be open to the petitioners to take up the grounds urged in the present petition in the proceedings before the Subordinate Judge, Madurai.

There will, in the circumstances of the case, be no order as to costs.


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