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National Metal Craft Co. Vs. Ratan Steel Ltd. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberSuit Appeal No. 336(A) of 1972
Judge
Reported in1973RLR403
ActsArbitration Act, 1940 - Sections 2
AppellantNational Metal Craft Co.
RespondentRatan Steel Ltd.
Advocates: S.K. Tiwari and; B. Mohan, Advs
Excerpt:
a petition was filed for arbitration over the disputes between parties touching various questions related to the rights and obligations of parties involved in the lease deed- as per section 2( c ) and section 31 of the arbitration act, 1940, the court competent to adjudge over the matter would be the one having jurisdiction to decide questions related to subject matter of suit between parties - it was held that residence of parties or the arbitrator or the place where the arbitrator conducted or signed award would be irrelevant for determining jurisdiction of court - .....arbitration act would be the court which would have jurisdiction to decide questions forming the subject-matter of the reference, that is the court which could be competent to entertain the suit if the subject-matter of the reference had been the subject-matter of the suit between the parties. the residence of the parties or the arbitrator or the place where the arbitration proceedings may be or may have been conducted or the place where arbitrator may have made or signed the award would be wholly irrelevant for the determination of the jurisdiction of the court to with the proceedings under the arbitration- act. (8) 'jurisdiction' denotes the authority or power which the court would have to deal with the matter brought before it and the jurisdiction of the court may have reference.....
Judgment:

H.L. Anand, J.

(1) This is a petition under section 8, 9, 10, 11 and 20 of the Arbitration Act.

(2) The facts are not in dispute and may be briefly stated. On or about August 25, 1970, defendant No. 1 entered into an agreement of lease with the petitioner and its partners who are cited as respondents 3 to 5 in respect of the factory premises known as 'Rattan Steel Ltd.' situated in village Lohta Dehat Amanat in the District of Varanasi consisting of lands and plants, machineries and other equipments in working and running condition as detailed in schedule annexed to the lease deed, which was duly registered with the Sub Registrar at Varanasi. The lease was for a period of three years with effect from July 1, 1970, with, a renewal option on the same terms and conditions. The lease deed contained an arbitration clause.

(3) It appears that some disputes arose between the parties touching the various questions with regard to the rights and obligations of the parties flowing from the lease deed which were sought to be referred by respondent No.1 to the arbitration of Shri A.N.Parikh, Advocate, who is cited as respondent No. 2 in the petition. The petitioner, however, claims to have nominated L.R.Gupta, Advocate, as their nominee, but it seems that not-with standing the contention of the petitioner, respondent No.1 treats respondent No. 2 as having become the sole arbitrator and by the petition the petitioner seeks a direction to respondent No.1 for the filing of the agreement containing the arbitration clause, for the removal of respondent No. 2 who claims to be the sole arbitrator and for the appointment of any other person or persons as arbitrator or arbitrators in accordance with the provisions of the Arbitration Act.

(4) In the affidavit filed in reply to the petition on behalf of respondent No.1, a preliminary objection has been raised that in as much as the lease deed in question had been entered into and signed by the parties at Varanasi, the property to which the deed related was situated in the District of Varanasi, the payments envisaged by the deed were to be made at the registered office of respondent No. 1 at Calcutta, this Court would have no jurisdiction to entertain the present petition.

(5) Counsel for the petitioner does not dispute the aforesaid facts but invokes the jurisdiction of this Court on the ground that Shri A.N.Parikh, Advocate, who claims to be the sole arbitrator is residing in Delhi where the proceedings of arbitration were being conducted and submits that this would give jurisdiction to this Court by virtue of the provisions of S.20 of the Code of Civil Procedure.

(6) It appears to me that the contention of respondent No. 1 must prevail. Section 8, 9, 10, 11 and 20 of the Arbitration Act merely provi- de for the institution of certain proceedings and for making of directions by a Court having jurisdiction in the matter to which the reference relates. After citing S. 2(c) and 31 the judgment proceeds)

(7) It is clear on a reference to the provisions to section 2(c) and of section 31 of the Arbitration Act that the Court which would have jurisdiction to entertain the proceedings under the Arbitration Act would be the Court which would have jurisdiction to decide questions forming the subject-matter of the reference, that is the Court which could be competent to entertain the suit if the subject-matter of the reference had been the subject-matter of the suit between the parties. The residence of the parties or the arbitrator or the place where the arbitration proceedings may be or may have been conducted or the place where arbitrator may have made or signed the award would be wholly irrelevant for the determination of the jurisdiction of the Court to with the proceedings under the Arbitration- Act.

(8) 'JURISDICTION' denotes the authority or power which the Court would have to deal with the matter brought before it and the jurisdiction of the Court may have reference either to the subject-matter brought before it or on account of the parties. A reference to section 20 of the Code of Civil Procedure would show that a Court may have jurisdiction to deal with the matter either because of the subject-matter of the dispute or because of residence of the parties, but the framers of the Arbitration Act do not appear to have incorporated both the tests into the Arbitration Act for the purpose of determiting the jurisdiction of the Court to deal with the matters arising out of the Arbitration Act and merely confined the test to one with regard to the subject-matter of the reference. The reason for such exclusion appear to be that while the test with regard to the subject- matter of a reference is a definite test, the one with regard to the residence of the parlies would have been an indefinite one, and, hence, incapable of application. If the test of residence had been applied to arbitration proceedings for the purpose of determining the jurisdiction of the Count, it would have been difficult to determine where the defendant resides because one would not know who the defendant would be if the subject-matter of the arbitration were to be filed in the form of a suit in civil court because it would dependon who initiates the action.

(9) The view that I have taken of the jurisdiction of the Court to deal with the proceedings under the Arbitration Act finds support form a Division Bench Judgment of the Madras High Court in the case of Vekatasamipada V Srinidhi Ltd. 1950 1 MLJ 709, a Single Bench Judgment of the Punjab High Court in the case of Inder Chand Jam V Pooran Chand Bansi Dhar A.I.R. 1956 P&H; 614, and two unreported judgments of this court in The National Tubing Co. V Punjab State Electricity Board (Suit No. 470 (A) of 1971, decided by Kapoor J. on 21st September, 1972), and M/S. Bhilai Construction Co. V M/s. Bokaro Steel, Ltd, (O.M.P. 103/72, decided by Kapoor J. on August 8, 1972).

(10) In the circumstances I hold that this Court has no jurisdiction to entertain the petition and I direct that the same be returned to the petitioner for presentation to a Court of competent jurisdiction.


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