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B.C. Paul and Sons (P) Ltd. Vs. Union of India (Uoi) - Court Judgment

LegalCrystal Citation
SubjectArbitration;Contract
CourtKolkata High Court
Decided On
Case NumberCivil Revn. Case No. 1523 of 1972
Judge
Reported inAIR1978Cal423,82CWN1074
ActsArbitration Act, 1940 - Sections 2 and 33; ;Code of Civil Procedure (CPC) , 1908 - Section 20
AppellantB.C. Paul and Sons (P) Ltd.
RespondentUnion of India (Uoi)
Advocates:Manindranath Ghose and ;Samarendranath Banerjee, Advs.
Excerpt:
- .....of the petitioner under section 33 of the indian arbitration act, 1940. 2. it appears that the opposite party, the union of india, invited tenders from madras for the supply of 'oil cocoanut' on certain terms and conditions. the petitioner submitted a tender for the supply of oil cocoanut. it was alleged that the opposite party prescribed a new standard of specifications whereupon the petitioner claimed an extra charge at the rate of rs. 25/- for such new specifications. ultimately the union of india accepted the tender as submitted by the petitioner and issued the letter of acceptance to the petitioner from madras, it was, however, alleged by the petitioner that by accepting such tender the opposite party did not accept the extra charge which was claimed by the petitioner for new.....
Judgment:

M.M. Dutt, J.

1. This Rule is directed against order No. 69 dated Feb. 8, 1972 of the Subordinate Judge, First Court, Alipore. By the said order, the learned Subordinate Judge dismissed the application of the petitioner under Section 33 of the Indian Arbitration Act, 1940.

2. It appears that the opposite party, the Union of India, invited tenders from Madras for the supply of 'oil cocoanut' on certain terms and conditions. The petitioner submitted a tender for the supply of oil cocoanut. It was alleged that the opposite party prescribed a new standard of specifications whereupon the petitioner claimed an extra charge at the rate of Rs. 25/- for such new specifications. Ultimately the Union of India accepted the tender as submitted by the petitioner and issued the letter of acceptance to the petitioner from Madras, It was, however, alleged by the petitioner that by accepting such tender the opposite party did not accept the extra charge which was claimed by the petitioner for new specifications. Further, the opposite party imposed a condition, namely, the furnishing of security deposit of 5 per cent by the petitioner to which the petitioner never agreed. Upon the said allegations, it was the case of the petitioner that there was no concluded contract and, accordingly, the arbitration clause, which was contained in that contract, never came into existence. The opposite party, however, claimed that because of the non-performance of the terms of the contract, the opposite party had suffered damages to the extent of Rs. 60,340.44 and informed the petitioner that it would refer the matter to arbitration. In the application under Section 33, the petitioner has challenged the existence and validity of the arbitration agreement as contained in the alleged contract, which, according to the petitioner, was not a concluded contract.

3. The opposite party entered appearance in the proceedings which arose out of the said application under Section 33 and opposed the same. The opposite party denied the allegations made in the application. It was the case of the opposite party that the contract was a concluded one and according to the arbitration clause, it was binding upon, the parties. It was further contended by the opposite party that the learned Subordinate Judge had no jurisdiction to entertain and hear the application under Section 33.

4. The only question that had to be considered by the learned Subordinate Judge was whether the had jurisdiction to hear and dispose of the application under Section 33. After considering the submission made on behalf of the parties and also the provision of Clause 20 (3) of the alleged contract, the learned Subordinate Judge came to the finding that he had no jurisdiction to entertain the application. In that view of the matter, he dismissed the application under Section 33. Hence this Rule.

5. Mr. Ghose, learned Advocate appearing on behalf of the petitioner, submits that as the petitioner had challenged the very existence of the arbitration agreement which was embodied in the alleged contract, the learned Subordinate Judge was not justified in referring to Clause 20 (3) of the said contract for the purpose of ascertaining whether he had jurisdiction to entertain and hear the application under Section 33. Further, it is submitted by Mr. Ghose that in the facts and circumstances of the case, the learned Subordinate Judge was wrong in holding that he had no jurisdiction so far as the application under Section 33 was concerned.

6. Section 33 provides as follows :

'Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits :

Provided that where the Court deems it just and expedient it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit.'

Section 33 does not give any indication as to the Court where an application under that section can be filed. Section 2(c), however, defines the word 'Court' as meaning civil court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit but does not, except for the purpose of arbitration proceedings under Section 21, include a Small Cause Court. In our view, Section 2(c) lays down the forum where such an application under Section 33 can be filed by an aggrieved party. The questions forming the subject-matter of reference in the instant case would be as follows :

(1) Whether there was a concluded contract; and

(2) if so, whether the opposite party Ss entitled to recover damages to the extent of Rs. 60,340.44 from the petitioner. Now we are to consider which court would be entitled to entertain a suit having for its subject-matter the above questions. The forum of the suit will, however, be according as who will be the plaintiff in such a suit. But whether the petitioner or the opposite party brings such a suit against the other, the forum will have to be decided in accordance with the provisions of the Code of Civil Procedure. Now, if the petitioner files the suit, he has to ask for declaratory reliefs in terms of the questions that would be the subject-matter of the reference. The forum of such suit would be the court within whose jurisdiction the opposite party resides or carries on business. Admittedly, in the facts and circumstances of the instant case the opposite party Union of India cannot be said to reside or carry on business within the State of West Bengal. Accordingly, such a suit cannot be filed by the petitioner against the opposite party in any court within the State of West Bengal. If the suit is to be instituted by the opposite party, in that case, it may be filed within the State of West Bengal as the petitioner resides or carries on business or works for gain within this State. Be that as it may, in view of Section 2(c) read with Section 33 of the Arbitration Act, any court in the State of West Bengal will not be competent to hear and dispose of the application under Section 33 at the instance of the petitioner. Even if we consider the suit that may be filed by the petitioner as one on contract, still it cannot be filed in any court within the State of West Bengal. Under Clause (c) of Section 20 of the Code of Civil Procedure, a suit can be filed in a court within the local limits of whose jurisdiction the cause of action, wholly or in part, arises. It is now well settled that in the case of a contract, the cause of action arises in the following places:

(1) The place where the contract has been entered into.

(2) The place where the contract has been performed or is required to be performed under the terms thereof.

(3) The place where, in terms of the contract any payment has to be made. The petitioner has not made out any case that even a part of the cause ofaction has arisen within the State of West Bengal and we do not find any material on record to hold in that regard. Mr. Ghose also cannot say how and on what basis the Court of the Sub-ordinate Judge at Alipore has jurisdiction to hear the said application under Section 33. In these circumstances, the learned Subordinate Judge has rightly come to the conclusion that he had no jurisdiction to entertain and hear the application under Section 33. There is, however, some justification for the contention as made by Mr. Ghose that the learned Subordinate Judge should not have referred to the terms of the alleged contract, the very existence of which has been challenged in that application. Be that as it may, in view of the aforesaid reasons, the court of the learned Subordinate Judge has no jurisdiction to hear and dispose of the application.

7. The rule is, accordingly, discharged, but there will be no order for costs.

8. Mr. Banerjee, learned Advocate appearing on behalf of the petitioner, orally prays for a certificate for appeal to the Supreme Court under Article 133(1) of the Constitution. It is doubtful whether such an oral application can be made. Be that as it may, we refuse to grant a certificate, as prayed for.

D.C. Chakravorti, J.

9. I agree.


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