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S.P. Consolidated Engineering Co. (P) Ltd. Vs. Union of India (Uoi) and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberSpecial Suit No. 5 of 1964
Judge
Reported inAIR1966Cal259
ActsConstitution of India - Articles 299 and 300; ;Contract Act, 1872 - Sections 2, 5 and 7; ;Code of Civil Procedure (CPC) , 1908 - Sections 20, 20(2), 26 and 80 - Order 6; ;Calcutta High Court Rules - Rule 20; ;Arbitration Act, 1940 - Sections 2 and 20
AppellantS.P. Consolidated Engineering Co. (P) Ltd.
RespondentUnion of India (Uoi) and anr.
Appellant AdvocateSalil Roy Choudhary and ;Protibha Banerjee, Advs.
Respondent AdvocateB.N. Sen, Adv.
Cases ReferredCarsetji Jamshedj Ardaseer Wadia v. R. D. Shiralee
Excerpt:
- p.c. mallick, j.1. this is an application under section 20 of the indian arbitration act for filing an arbitration agreement. the arbitration agreement is a clause in the contract subsisting between the parties. the petitioner is a contractor which did certain construction works for the south-eastern railway clause 63 of the general conditions of the contract which is applicable for this kind of contracts is the arbitration clause. during the execution of works payments were made to the contractor on running bills. after completion of works the contractor's claim in the final bill including the claim for refund of initial and subsequent security deposits has been disputed by the government. the contractor invoked thereupon the arbitration clause and called upon the general manager to.....
Judgment:

P.C. Mallick, J.

1. This is an application under Section 20 of the Indian Arbitration Act for filing an arbitration agreement. The arbitration agreement is a clause in the contract subsisting between the parties. The petitioner is a contractor which did certain construction works for the South-Eastern Railway Clause 63 of the General Conditions of the contract which is applicable for this kind of contracts is the arbitration clause. During the execution of works payments were made to the contractor on running bills. After completion of works the contractor's claim in the final bill including the claim for refund of initial and subsequent security deposits has been disputed by the Government. The contractor invoked thereupon the arbitration clause and called upon the General Manager to appoint arbitrator in terms of the arbitration clause. The General Manager not having complied with the above requisition, the contractor has made this application for filing the arbitration agreement and for an order of reference.

2. There is no question in the instant case that there is an arbitration agreement and the claim in dispute is covered by the arbitration agreement. The only point of controversy is whether this Court has jurisdiction to make an order under Section 20 in the instant case. It is the Government's case that the contract was signed outside the jurisdiction of this Court, works under the contract were performed outside the jurisdiction of this Court and that no part of the cause of action arose within the jurisdiction of this Court. In consequence this Court is not competent to entertain the application and pass an order therein.

3. When the application came up for hearing it was noticed that the petition does not clearly state on what basis the jurisdiction of the Court has been invoked and what are the jurisdictional facts in the instant case. I felt that the only point of controversy being the point of jurisdiction, the facts on which the jurisdiction is invoked by the petitioner should he clearly stated. Thereupon I gave leave to the petitioner to file a supplementary affidavit to state clearly the facts on which according to the petitioner the jurisdiction of this Court is founded. The Government was also given leave to file an additional affidavit in answer. Pursuant tosuch leave on March 8, 1966, the petitioner company filed an affidavit of one of its directors Dipakraj affirmed on March 8, 1965. On behalf of the Government an affidavit in answer has been filed by Manjul Prokash Banerjee affirmed on March 31, 1965.

4. In the affidavit of Dipakraj, reliance is placed on the following fads on which it is contended that this Court has jurisdiction to entertain this matter:

(1) The contractor had and has its registered office at 75/C, Vivekananda Road within Calcutta, The tender was submitted from Calcutta, the letter of acceptance of the lender was communicated to the contractor at Calcutta. The initial deposit or earnest was made at the Reserve Bank at Calcutta as directed by the tender. All written communications including order to commence work were sent to Calcutta. The security deposit was made at Calcutta and after completion of works the same is liable to be refunded at Calcutta. In refusing to pay the security deposit after demand the Government committed a breach and such breach took place at Calcutta.

(2) The Government has its claim office at No. 1, India Exchange Place within Calcutta so that the Government must be held to carry on business at Calcutta within the jurisdiction of this Court.

(3) No place for payment is provided in the contract either expressly or by implication In the premises the contractor's claim became due and payable at the contractor's registered office at Calcutta. After completion of work when the final bill became payable, the contractor had to wind up its temporary establishment at the works site at Bilaspur and bring all accounts and papers from Bilaspur to its registered office at Calcutta. The amount of the final bill in the premises became payable at Calcutta within the jurisdiction of this Court.

5. In the affidavit of Manjul Prokash Banerjee it is not admitted that the plaintiff had and has its registered office al 75-C, Vivekananda Road. It is not also admitted that security money was deposited through Reserve Bank at Calcutta. It is contended that the tender was submitted by the plaintiff from its Bilaspur Office and the acceptance of the tender was also communicated to the Bilaspur office. Further, the contract itself was signed at Bilaspur. It is contended that at no relevant point of time any communication regarding the contract was sent to OK received by the Government from Calcutta. It is admitted that there is claim office of the Railway at No. 1. India Exchange Place but the function of that office is to deal with claims against the Railway as carriers. It is not empowered to deal with the claim of the engineering or constructional works or for payment to the contractor for such works. All payments for constructional works of such type are made normally at the works office at the place where the contract was entered into or in the exceptional cases at the Head Office and nowhere else. Every contractor including the plaintiff knew it very well that payments were never made at any place other than the place of the contract or the HeadOffice. The payments on running bills according to the deponent were made at the work site office at Bilaspur and final payment is payable after the submission of the final bill and no (on ?) claim certificate at work site as well or in exceptional cases at the Head Office. The contractor had several contracts and there has not been a single occasion when the contractor has been paid at his Calcutta address. This is the practice and procedure followed in every case. The address of the contractor given in the contract is at Bilaspur Office and not at Calcutta. It is denied that security is refundable at Calcutta.

6. The case was argued with thoroughness and tenacity by the learned counsel appearing on either side. Mr. Salil Roy Chowdhury and Mrs. Pratima Banerjee appeared and argued for the plaintiff and Mr. B. N. Sen appeared for the defendant. All of them took part in the debate in court.

7. It is contended on behalf of the plaintiff that this court has jurisdiction firstly because part of the cause of action arose within the jurisdiction of this Court and secondly because the defendant carries on business amongst other place at No. 1, India Exchange Place within the jurisdiction of this Court, Taking first ground first. It was contended by Mr. Roy Chowdhury that the contract in the instance case is concluded by acceptance of tender. The tender was sent from Calcutta and the communication of acceptance of the tender was made to the office at Calcutta. In compliance with the invitation for tender the initial security deposit was made at the Reserve Bank at Calcutta. Correspondence carried on with the plaintiff both before and after the contract was addressed to and from Calcutta the last notice of demand made by the plaintiff and/or its solicitor was from Calcutta, The argument is that the claim is founded on a contract and each one of the bundle of facts necessary to be proved for the formation of the contract and/or its breach constitutes a part of the cause of action. Mr. Roy Chaudhury referred to the line of cases in which it is held that if the contract is by correspondence, then part of cause of action as to the formation of the contract arises at the places from which any one of the correspondence was sent and/or received. He cited certain authorities which I do not think it necessary to consider. The instant contract is, however, in my judgment, not a contract by correspondence. The contract like the present is required to be in a formal document, in compliance with the requirement of the Constitution. In fact, a formal document was executed in the instance case in conformity with the provisions of the Constitution In that view of the matter, I am unable to hold that the instance contract was a contract by correspondence In the view that I have taken, the principle relied on by Mr Roy Chaudhury and the authorities cited in support have no application to the instant case. The formal contract in the instant case having been executed at Bilaspur, outside the jurisdiction of this court, jurisdiction of this court cannot be invoked, on the ground that the contract waspartly entered into at Calcutta, from where the lender was sent or the acceptance note was sent and /or letters were sent or received, even if they were so. As indicated, however, it is not admitted by Government that the tender was sent from Calcutta or acceptance note was sent to Calcutta. This is not the only contract subsisting between the parties. The plaintiff had other contracts and had an office at Bilaspur for executing those contracts. It is stated in the contract itself that the parties to the contract are the President of India, on the one part, and ' Messrs. S. P. Consolidated Engineering Co. (P,) Ltd. near Co-operative. Bilaspur, on the other, ' The point, therefore, is disputed and had I considered the point to be necessary for the adjudication of the dispute in the instant case, I would have directed the matter to be tried on evidence. As indicated before, in my view, in a case like the present in which the contract is evidenced by a formal document, required by the provisions of the Constitution to be executed in the manner laid down by the Constitution, these questions are irrelevant, haying regard to the fact that the execution of the instant agreement admittedly took place at Bilaspur, outside the jurisdiction of this Court. The place from where the plaintiff submitted his tender or note of acceptance received prior to the execution of the formal document is irrelevant for the purpose of determining the jurisdiction of the Court.

8. It was strenuously urged that the fact that the security deposit was made with the Reserve Bank at Calcutta gives jurisdiction to this Court, inasmuch as it is a vital fact on which the existence of the contract depends. The General Conditions of contracts like the present are in printed form, a copy of which is placed before me. Clauses (6), (10), (10-A) and 16 of the conditions of tender read as follows :

(6) The tenderer/tenderers are required to deposit as earnest money a sum of Rs. .... in cash or in any of the following forms ;--

(1) Deposit receipts, pay orders, demand drafts, or guarantee bonds of the State Bank of India;

(2) Guarantee bonds executed by a Scheduled bank, provided

(i) the bond in question is counter-signed by the State Bank of India, whereby the Stale Bank of India undertakes full responsibility to indemnify the Railway in case of default; or

(ii) the bank concerned lodges with the Reserve Bank of India requisite securities, namely, cash deposits or Government securities in respect of the guarantees executed by it and the Reserve Bank advises the Railway concerned that the bond may be executed, and attach official receipt therefor failing which the tender will not be considered. No interest shall be allowed on the earnest money deposit.

(10) The earnest money will be refunded to the unsuccessful tenderer/tenderers within a reasonable time without any interest. The earnest money deposited by the unsuccessful tenderer/tenderers will be retained towards the security deposit for the due fulfilment of thecontract but shell be forfeited if the contractor fails/contractors fail to deposit the requisite security money and execute the agreement bond or start the work within a reasonable time (to be determined by the Engineer-in-charge) after notification of the acceptance of his/their tender.

(10-A) Upon acceptance of the tender the successful tenderer should pay security deposit as below on the value of the works at the accepted rates. The successful tenderer will have to make a further payment of the amount by which the earnest money paid by him falls short of the security money due for the work on the following basis :

Upto Rs. 2 lakhs 5 per cent of the value of the work at the accepted rateFor the next Rs. 3 lakhs 2 per cent For the balance 1 per cent'' The balance to make up 10 per cent of the total value of the contract will be recovered by a percentage deduction, ordinarily 10 percent from periodic payment to be made on account of the work done.

Security deposit may be :--

deposit of cash, Government securities at 5 percent below the market value, deposit receipts of the State Bank of India, Guarantee bonds executed by the State Bank of India, Demand drafts of the Slate Bank of India, Guarantee bonds of the scheduled banks countersigned by the State Bank of India or advised by the Reserve Bank of India for acceptance, deposit in the Post Office Savings Bank or a deposit in National Savings Certificates.

Deposit receipts of banks and Post Office savings Bank deposits should be pledged or hypothecated to the Accounts Officer of the Rail way.

No interest will be paid on the said security when deposited in cash

15. The successful tenderer/tenderers shall be required to execute an agreement with the President of India, acting through.. ..... of the Railway, for carrying out the work according to the General Conditions of contract and Specification for works and Materials as given in parts 3 and 4 of the Schedule of rates of the South-Eastern Railway. '

In compliance with this clause, the plaintiff executed the formal contract in the instant case which contains the following recital :--

' And whereas the contractor has deposited with the Railway Administration by way of security deposit for the due fulfilment of/ the terms of this contract the sum of Rs. 4,375 repayable as hereinafter provided receipt whereof by the Railway Administration is hereby acknowledged . . '

The argument is that though technically it can be said that a binding contract cannot take place unless the formal document is executed as prescribed in the Constitution, yet, if it is provided in the General Conditions that earnest or security deposit must be furnished in the manner indicated it becomes an essential fact and the place where the earnest is paid is the place where cause of action arises in part. The earnest or security deposit in the instant case havingbeen made at Calcutta with the Reserve Bank in accordance with the provisions of the General Conditions, cause of action arose in part within the jurisdiction of this court. I, entirely agree that earnest or security deposit is an essential term under the Conditions of Contract applicable to the instant case. I further agree that the fact of deposit having been made or being required to be made before the formal contract is executed, does not necessarily take away its essential character. I am, however, unable to agree that the different places where the deposit could be made was intended to be a fact on which jurisdiction of the court was to be founded. The conditions relied on are conditions of tender and not conditions of contract. The tender constitutes the offer which, after acceptance and being embodied in a formal document, becomes a contract. In order that there may be a valid tender, so that the tender or offer can be considered or accepted, the contractor is required to deposit the earnest or security. Deposit must be made at Bilaspur where the tender is to be submitted. The contractor is given the option of either depositing it in cash at Bilaspur or evidence that the same has been paid in any one of the numerous places where the Reserve Bank, State Bank or Exchange Bank or their branches are situate. The receipt is required to be annexed to the tender. The jurisdictional fact, in my judgment, is the place where the deposit if in cash or deposit receipt, if not in cash, has to be tendered. Such place is at Bilaspur in the instant case. The fact of the deposit having been made at the Reserve Bank at Calcutta is no more important than the fact of signing the tender at or sending the same from Calcutta. The important point to note is that the deposit receipt is required to be annexed to the tender and the same along with the tender was to be lodged at Bilaspur. Deposit no doubt was an essential fact, without which no tender was acceptable or liable to be considered. The point for the purpose of jurisdiction is not whether security deposit is essential or not. For the purpose of jurisdiction, the point of importance is where the tender is to be submitted In my judgment, the place of deposit was never intended to be and can never be a jurisdictional fact. The formal contract contains the recital that ' the contractor has deposited with the Railway Administration by way of security '

This recital is binding on the parties and when the execution of the contract is proved and/or admitted, the fact of the earnest or security having been deposited is not required to be proved further. It is not an essential fact to be proved in a contract like the present and if not it cannot be considered to be a part of the cause of action. Subsequent deposit by way of percentage deduction from periodic payments to be made from running bills on account of works done have been made at Bilaspur. It cannot be said therefore that the balance of security deposit required to be made under the contract has been made at Calcutta. It was deducted from the contractors running bills at Bilaspur. This is also an indication that the security deposit in the Instant contract was intended to be made at Bilaspur and not at any other place where the initial deposit was made. In my judgment, no fact necessary for the formation of the contract in the instant case arose within the jurisdiction of this Court and I record a finding accordingly.

9. It is next contended that, in any event the money is payable at Calcutta, within the jurisdiction of this Court. It is the plaintiff's case that no place of payment is indicated in the contract either expressly or by implication. Therefore, the rule will apply that it is the duty of the debtor to find out the creditor and make payment at the creditor's place of business which, in the instant case, is at 10-A, Vivekananda Avenue, within the jurisdiction of this Court. I hold in favour of the plaintiff that the registered office of the plaintiff is at 10-A, Vivekananda Avenue within the jurisdiction of this Court, even though the plaintiff had a branch office at Bilaspur during the continuance of the work and till the work under the contract was completed. It seems to me that the Railway Administration knew that the registered office of the plaintiff is at Calcutta. If the rule above referred to applies to the instant case and it is held that no place of payment is expressly or impliedly provided in the contract, then money must be held to be payable at Calcutta, within the jurisdiction of this court. Direct authority in support of this argument is the decision of the Appeal Court in the case of State of Punjab v. A.K. Raha (Engineers) Ltd : AIR1964Cal418 . In the cited case the contractor instituted a suit against the State of Punjab on a contract exactly similar to the contract in the instant case. After the works had been completed and the contractor had wound up its office at the work site, which was outside the jurisdiction of the Court, a dispute arose in respect to the contractor's claim in the Final Bill. The State of Punjab having repudiated its liability a suit was filed in this court. The jurisdiction of this court was challenged, on the ground that no part of the cause of action arose within the jurisdiction of this Court. The plaintiff contended that the Slate of Punjab was under an obligation to pay the contractor's debt at Calcutta, where the plaintiff had its place of business, and hence a part of the cause of action arose within the jurisdiction of this Court The obligation to pay at the plaintiff's place of business was contended to be founded on twofold grounds. There being no place of payment expressly indicated in the contract, the contractor's due was payable, by necessary implication, at the contractor's place of business, on the facts of the case. Alternately, the general rule will apply to the effect that where no place of payment is specified in the contract, either expressly or impliedly, the debtor must seek the creditor and pay at the creditor's place. The obligation to pay the debt involves the obligation to find the creditor and to pay him at the place where he is when the money is payable, Bachawat, J. who delivered the judgment of the Appeal Court, upheld both the contentions, He found that by necessary implication the debt was payable at the plaintiff's place of business. He further held that if by necessary implication the debt was not payable at the plaintiff's place of business, the above rule will apply and the money was payable at the plaintiff's place of business. A number of decisions, both of English Courts and of Indian Courts were cited in support by learned Counsel appearing for either party. Mr Sen, learned counsel appearing for Government, vigorously contested this proposition and cited a number of authorities against the applicability of the rule. The decisions relied on are both English and Indian. It is contended that the rule is outmoded and was applicable only in a society where there were no big corporations, Banking Corporations or Government carrying on business in a big way. In modern society big corporations and Governments carrying on business in a big way have invariably the pay office from where payments are made to creditors, if so, then even if the contract does not expressly indicate the place of payment, the Court may very well hold that by necessary implication the place of payment is the place where the Bank, Corporation or Government has its pay Office and not the place where the creditor resides or carries on business. If the Court can determine impliedly, though not expressly that the debt was payable at the debtor's place, then, the rule ex hypothesis has no application. The rule is inapplicable not because it is outmoded but because the condition of its applicibility does not exist. The rule is only applicable when the place of payment is not stated expressly or by implication in the contract and when the Court can find out from facts proved that the debt was payable at the debtor's place, there is no scope 01 occasion to apply the rule. The rule is also held to be inapplicable in case the creditor is not within the realm. In such cases the Court will construe a negative intention. I consider the rule to be universal in its application based, as it is, on justice and equity. It is emphatically not a technical rule of English law, wrongly made applicable to India. It is a beneficent rule, inflexible and is of universal application. It is not correct to consider this rule to be nothing more than a presumption, rebuttable by contrary evidence. If there is other evidence to indicate the place where the parties intended that the debt was payable, then the Court will hold that such place of payment has been indicated in the contract itself, though not expressly but by implication. It is only when the Court is unable to do so, that the occasion arises for applying this rule. I am, therefore, unable, with respect to agree with the reasoning given in some of the Punjab decisions cited by Mr. Sen including the Full Bench decision of the Punjab High Court in the case of Firm Hiralal Girdhari Lal v. Baijnath Hardia Khatri (FB) I note that in the Punjab case none of the Calcutta cases on the point, has been cited and considered. In my judgment, once the Court finds that no place of payment is expressly stated in the contract nor is it possible to find such place of payment indicated in the contract by necessary, implication, on the relevant evidence on record, the Court must applythe rule, as a rule of justice, equity and good conscience. There is no scope for the application of the rule in cases where the Court can find, on construction, a positive or a negative intention as to the place of payment--positive intention to pay not at the creditor's place, as for example where the debtor-bank or company, to the knowledge of all, pays its debt to the creditors at its place of business or negative intention when the creditor resides outside the realm. In the last case the Court will hold that by necessary implication there was no obligation for the debtor to find out the creditor outside the realm and in consequence the debt is payable not at the creditor's residence or place of business but at the debtor's. We must keep in mind that the question becomes important for the purpose of determining the jurisdiction of the Court and for such purpose the residence or place of business of a foreign creditor is irrelevant. In any event, it is too late in the day to contend in this court that the rule does not apply. There are decisions binding on this Court and it is not open to me to hold otherwise.

10. It is argued by Mr. Sen that in the instant case the rule is not applicable, because the debt is payable at the defendant's work place at Bilaspur. Mr. Roy Chaudhury contended that on the construction of an identical contract and on facts exactly similar, Bachawat J. came to the conclusion that the contractor's claim was impliedly payable at the plaintiff's place. In both cases the contractor had a temporary office at the work site where payment of the running bills was made. After completion of work and before the final bill was payable, the contractor had closed its temporary office at the place of work. It is contended by Mr. Sen that in the cited case Bachawat, J. was unable to accept the suggestion of Mr. B. K. Ghosh, learned counsel appearing for Government, that money was payable at either of the innumerable treasuries of Government scattered in Punjab. The suggestion was not acceptable to the learned Judge. In the instant case the suggestion is that it was payable either at the work site or at the head office of the Punjab Government. The reasoning of Bachawat, J. on the point will appear from his observation at page 421 of the report which reads as follows :--

' Mr. Ghosh did not make any other positive suggestion with regard to the place of payment of the final bill. On the other hand, we find that the plaintiff company had all along their registered office in Calcutta. They had a temporary establishment at Nangal during the progress of the work; but with the conclusion of till work the temporary establishment was closed down. Before the commencement of the work the defendant sent to the plaintiffs at their registered office at Calcutta the tender notice, the request in writing to send the security deposit and also the order to commence the work. After the conclusion of the work the plaintiff company sent all their communications to the defendant from their registered office at Calcutta The final bill was sent by the plaintiff company from their registered office wheretheir measurements and calculations were available. In the light of those surrounding circumstances and on a fair reading of the contract, we think that the obligation under the contract to pay to the plaintiff company the amount due on their final bill by necessary implication involved the obligation to pay them at their registered office where their measurements and calculations were available, The breach of this obligation therefore took place at Calcutta. ''

Even if these observations do not fully apply to the facts of the instant case, I may at best agree with Mr Sen that in the facts of the instant case, it is not possible to hold that the contractor's claim is payable by necessary implication at the plaintiff's place of business. But I will not hold that on the facts of this case the contractor's claim is, by necessary implication, made payable at the head-quarters of the company or at the place of work of the company. It is a case in which the court must hold that no place of payment has been indicated in the contract where the final bill was payable either expressly or by necessary implication. That being so, it is the duty of the debtor to find a creditor and make payment at the creditor's place of business.

11. The next jurisdictional fact on which the plaintiff relies is that the Government carries on business at No 1 India Exchange Place, where the claim office of the Railway is situate. There is a long line of cases of this Court and other Courts in which it is held that the Stale or the Government cannot be said to carry on business within the meaning of Clause 12 of the Letters Patent, when it carries on undertakings such as running of Railways. Hence the jurisdiction of this Court cannot be invoked on the ground that the Government has its place of business or head office at Calcutta within the jurisdiction of this Court. See Calcutta Motor Cycle Co. v. Union of India : AIR1953Cal1 ; Bata Shoe Co. Ltd. v. Union of India : AIR1954Bom129 ; Azizuddin and Co. v. Union of India, (S) AIR 1956 Mad 345; Nagi Brothers v. Dominion of India, AIR 1951 Punj 92; Trilok Chand Agarwal v. Dominion of India : AIR1959Cal281 ; K. G. Kalwani v. Union of India : AIR1960Cal430 , It is, however, contended by the learned counsel appearing for the plaintiff that in the modern set up after the Constitution these authorities are no longer good and binding. A decision of the Supreme Court is cited in support of this argument. In the case of Union of India v. Ladulal Jain reported in : [1964]3SCR624 it is held by the Supreme Court that Union of India carries on business of running Railways and Union Government can be sued in a court within whose territorial jurisdiction the headquarters of the Railway run by the Union Government is situate, The Supreme Court case noted above is no doubt an authority for the proposition that the place where the Government carries on business is a jurisdictional fact. But the authority cannot be relied on in the instant case because the Head Office of the South-Eastern Railway is at Garden Reach outside the jurisdiction of this Court. Mrs. Banerjee. however, strenuously contended that the implication of the decision of the Supreme Court is thatthe Government is equated to a private corporation in every respect. If a corporation can be said to carry on business not only at its head office but in its branch offices, as well, the railways owned and operated by the Government must be held to carry on business not only at its head office but also at any other place in which it has a branch office. There are authorities to the effect that a Corporation carries on business not only at the head office but also at other branch offices, and this fact gives jurisdiction to the Court to entertain a suit against such corporation where the branch office is situate. Judgment of Tek Chand J. of the Punjab High Court in the case of Kashi Ram v. Dule Rai and Co. AIR 1983 Lah 11 has been stated in support along with other cases. There are however decisions which lay down what is known as the 'brain centre' principle, according to which the Railway carries on business at the head office which is the brain centre of the Railway administration. I am not prepared to equate the Railway administration with a private corporation in every respect as Mrs. Banerjee wants me to do. There are substantial differences in the manner of conducting business of a corporation and the manner in which the railway administration is carried on. I am unable to differ from the views expressed in those cases and hold that for the purpose of jurisdiction the railways not merely carry on business at its head office but also at innumerable other places throughout the length and breadth of the country in which an office of the Railways is located. If jurisdiction is to be invoked on the basis of the place of business, the Court where the head office of the Railway is situate must have jurisdiction. Otherwise the plaintiff must invoke jurisdiction on the basis of cause of action so that the receiving station or the Station of delivery will have jurisdiction to entertain suits against the Railways, In such event no inconvenience is caused to the plaintiff. Otherwise there would be substantial inconvenience if a plaintiff is given liberty to institute a suit anywhere against the railway administration. Having regard however, to my finding that in the instant case cause, of action arose partly within the jurisdiction of this Court it is not necessary for me to decide the question raised by Mrs. Banerjee and the opinion expressed must not be considered to be my final opinion on this point.

12. It is contended by Mr. Sen that application under Section 20 of the Indian Arbitration Act is a 'suit' within the meaning of Clause 12 of the Letters Patent and unless the whole of the cause of action arises within the jurisdiction of this Court, this Court is not competent to entertain a suit unless leave is previously obtained. In the instant case, the entirely of the cause of. action did not arise within the jurisdiction of this Court and no leave having been obtained, the plaintiff must fail on the point of jurisdiction. Mr. Sen's argument is that a suit need not necessarily originate by the presentation of a plaint. Section 26 of the Code of Civil Procedure provides that a suit shall be instituted by the presentation of theplaint or in such other manner as may be prescribed. Suit has nowhere been defined. Section 26 indicates that suit can well be instituted otherwise than by presentation of a plaint. There is, therefore, no ground for contending that leave under Clause 12 of the Letters Patent is imperative only in the cases of suits instituted by presentation of plaint as provided in Order 6 of the Code of Civil Procedure. Chapter 13 of the Original Side Rules prescribes the institution of a suit by taking out originating summons. After the summons is taken out, the opposite party is required to file affidavit in opposition. Rule 14 Ch. XIII then provides that after an Originating Summons is taken out 'The affidavit where accepted shall be filed and numbered as an ordinary suit, and entered in the register of suits, but after the serial number the letters 'O.S.' shall be placed to distinguish it from plaints in ordinary suits.' Similarly Arbitration Act Section 20 prescribes the institution of the suit by presentation of a petition Mr. Sen's contention is that leave is necessary not merely to the ordinary suits, but to the suits under Chapter 13 or suits under Section 20 of the Arbitration Act. There is substance in the contention of Mr. Sen that the two kinds of suits referred to above should also be considered as suit even though i! is not initiated by the presentation of the plaint. But the question is not whether the proceeding under Section 20 is or is not a suit but the question is whether it is a suit within the meaning of Clause 12 of the Letters Patent. In my judgment the test to be applied for determining whether a proceeding is a suit within the meaning of Clause 12 of the Letters Patent is not whether it is initiated by presentation of plaint, or by summons or by notice. The test is whether the proceeding is intended to terminate in a final adjudication of the rights of the parties by a decree in that proceeding. An order passed by a Judge in an originating summons suit is required to be drawn up under Chapter XIII, Rule 20 as 'a decree of the Court' apparently because the rights of the parties are inally adjudicated by the judgment or order, because of this O.S. suits are treated as suits within the meaning of Clause 12 of the Letters Patent. In the case of an application under Section 20 however, all that the court is required to do is to pass an order filing the agreement and making an order of reference. The proceedings comes to an end by the passing of the said order. The wording of Section 20(2) is the ' application shall be numbered and registered as a suit,' does suggest that it is not a suit in the fullest sense of the term. It seems to me that because of this that an application under Section 20 of the Arbitration Act has never been treated as a suit within the meaning of Clause 12 of the Letters Patent. No decision has been cited in which it has been held that leave is imperative in such suits, when only a part of the cause of action on which the suit is founded arises within the jurisdiction of this Court. In the absence of a compelling decision I am unable to acceptMr. Son's contention that leave under Clause 12 is Imperative in the case of an application under Section 20 of the Arbitration Act even though such a proceeding may well be characterised as a suit.

13. Another point taken by Mr. Sen is that it being a suit notice under Section 80 of the Code of Civil Procedure is imperative in the instant case before a suit can be instituted. No decision has been cited in which it is held that notice under Section 80 of the Code is imperative in the case of a proceeding under Section 20 of the Arbitration Act, even though such proceeding may be described as a suit. In the absence of any compelling decision I am not prepared to non-suit the plaintiff in the instant case on the ground that notice has not been served in accordance with the provisions of Section 80 of the Code of Civil Procedure.

14. Mr. Sen has also contended that the jurisdiction of the Court to entertain application under Section 20 of the Arbitration Act has been laid down in the Act itself. Section 20 gives a Court having a jurisdiction in the matter to which the agreement relates jurisdiction to entertain the application. In Section 2(c) 'the Court' is defined. It means the Civil Court having jurisdiction to decide a question forming the subject-matter of the reference, if the same had been the subject-matter of a suit. Jurisdiction is determined therefore 'with reference to the matters to which the agreement relates', which may be equated to 'the subject-matter of the reference.' If the Civil Court as defined in Section 2(c) is competent to entertain the subject-matter of the reference, then alone the court is competent under Section 20 to entertain the suit. 'Subject-matter of the agreement' or 'subject-matter of the reference' in Mr. Sen's submission is the bundle of facts that constitute the cause of action. If such cause of action, wholly or in part arise within the jurisdiction of the Court then only the court is competent to entertain an application under Section 20 of the Indian Arbitration Act. It may not entertain a suit on the ground that the defendant resides or personally works for gain or carries on business at the place within the jurisdiction of the Court. If no part of the cause of action has arisen within the jurisdiction of the court, the court is not competent to entertain an application under Section 20 even though the party described as defendant resides or personally works for gain or carries on business within the jurisdiction of the court. Had this subject-matter of the agreement or reference been the subject-matter of a suit the court might have been competent to entertain such suit on the ground that the defendant resides or personally works for gain or carry on business within the jurisdiction of this Court under Clause 12 of the Letters Patent. But that is not so in the case of an application or suit under Section 20 of the Arbitration Act. There is, however, a decision of Kania, J.. in the case reported in Carsetji Jamshedj Ardaseer Wadia v. R. D. Shiralee, AIR 1948 Bom 32 which held that jurisdiction of this court can be invoked on the ground that the defendant oppositeparty resides or personally works for gain or carries on business within the jurisdiction of this Court. It is unnecessary in the instant case to give my decision on the point raised by Mr. Sen and I do not decide the same. The point is important and may have to be considered in a case in which a decision on the point is palled for.

15. For reasons given above, there mustbe an order of filing the agreement and anorder of reference. Under the Arbitration Clausethe General Manager has the right to nominatean Arbitrator. It is my practice to give an opportunity to the General Manager. I, therefore,direct this matter to appear in my list fororders three weeks from this dale within whichthe General Manager may send 3 names outof which one may be appointed by me as anArbitrator. Cost of this application cost in thearbitration proceeding.


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