Dismissed

M/S. Bhandari Udyog Limited v. Industrial Faciliation Council and Another

Bombay HC21 Nov 2013CRA/179/2013

Case brief

AI extract

What is this about?

This civil revision application challenged the jurisdiction of the District Court at Latur to entertain a Section 34 application under the Arbitration and Conciliation Act, 1996, challenging an award passed by a Designated Chief Justice of Karnataka. The Bombay High Court held that Section 42 bars such jurisdiction as the initial Section 11 application was before the High Court, not a 'Court' as d

What did the court decide?

The Civil Revision Application is dismissed without any order as to costs. Rule is discharged accordingly.

M/S. Bhandari Udyog Limited Vs Industrial Faciliation Council and… — Arbitration | Bombay HC (2013)

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(1)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD

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CIVIL REVISION APPLICATION NO. 179 OF 2013

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M/s Bhandari Udyog Limited,
No. 51, Rajendra Ganj, Raichur
(Pin Code 584102) Karnataka State,
through its Managing Director,
Mr. Sowbhagraj Bhandari,PETITIONER

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R/o Raichur, District (Orig. Respondent
RaichurNo.1.)

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VERSUS

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1.Industrial Facilitation Council,
Office of the Commissioner,
For Industrial Development in
Karnataka and Director of
Industries and Commerce,
No. 14/3A, Nrupathunga Road,
Bangalore.

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2.Indira Sahakari Sut Girani Ltd.,
Latur (Maharashtra), through itsRESPONDENTS
Managing Director, R/o Latur, (Respdt. No.1 is
Tq. and District Laturorig. Respdt. No.
 2 and Respdt. No.
 2 is orig.
 Applicant)

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.....

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Mr. S.P. Urgunde, Advocate for the Petitioner.
Mr. Amit S. Deshpande, Advocate for the respondent No. 2.

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.....

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CORAM : M.T. JOSHI, J.

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DATE OF JUDGEMENT RESERVED : 25th September, 2013
DATE OF JUDGEMENT PRONOUNCED : 21st November, 2013

(2)

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JUDGEMENT :

1.Rule. Rule made returnable forthwith. With
consent of learned counsel for both sides, heard
finally.

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2.An application under section 34 of the
Arbitration and Conciliation Act, 1996 (for short,
“the Act”) filed in the District Court, Latur by
present respondent No. 2 was held maintainable being
within the territorial jurisdiction of that Court.
Therefore, the original respondent No. 1 has
preferred the present Civil Revision Application.

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3.Present petitioner i.e. original Respondent

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No. 1 is an industry situated at Raichur, District

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Raichur in the State of Karnataka. It filed

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application under section 11 of the Act in the High
Court of Karnataka at Bangalore, which was decided by

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the Designate of the Hon’ble Chief Justice of the
High Court of Karnataka. It was the case of the
petitioner that a dispute existed regarding payment
of Rs. 20,25,213.54 paise from the respondent No. 2

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i.e. Indira Sahakari Sut Girani Ltd., Latur. In the

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circumstances, in view of section 6 (1) of the

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(3)

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Interest on Delayed Payments To Small Scale And
Ancillary Industries Undertakings Act, 1993 (for
short, “the IDP Act”), the parties can be referred to
the Industrial Facilitation Council for acting as an
Arbitrator – the present respondent No. 1.

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4.The present respondent No. 2 contested the
application. It submitted that there is no agreement
to refer the dispute to the Arbitration. There is
also no relationship of supplier and buyer between

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the parties. The Chief Justice Designate, relying on
the ratio in “Konkan Railway Corporation Limited Vs.

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Mehul Construction Company” AIR 2000 S.C. 2821 and

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“Konkan Railway Corporation Limited Vs. Rani
Construction Private Limited”, AIR 2002 S.C. 778, as
were holding the field at the relevant time, held
that under section 11 of the Act, the Chief Justice

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of the High Court or His/Her Designate is not
required to examine any question, except as to
existence of arbitration agreement. Therefore,
observing that it would be open to the respondent
i.e. present respondent No. 2 to place necessary
material before the Arbitral Tribunal to show that

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(4)

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the claim is not maintainable and not arbitrable, the
parties were referred to present respondent No. 1 –
Industrial Felicitation Council at Bangalore.

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5.The respondent No. 1 Council entered into

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the arbitration. The case of the present respondent
No. 2 that there is no contract between the parties
and that it had a contract with selling agent Mr.
S.R. Mundada of Solapur, was pressed into service.
The copy of the award shows that the Arbitral
Tribunal i.e. respondent No. 1 Council sent notices
to said agent Mr. Mundada, which could not be served
and ultimately, concluded that the respondent No. 2
shall pay the sum with interest at the rate of 6% per
annum.

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6.Aggrieved by the said award, the respondent
No. 2 has filed application under section 34 of the

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Act in the District Court at Latur. The issue of
territorial jurisdiction was raised before the
District Court. The learned Principal District Judge

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held that the Court has jurisdiction. Therefore, the
present Revision Application.

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(5)

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7.Mr. S.P. Urgunde, learned counsel for the

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petitioner submits that the application under section
11 of the Act was filed in the High Court of
Karnataka. The respondent No. 1 Council at Bangalore

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has passed the award. Therefore, in view of
provisions of section 42 of the Act, the District
Court at Latur would have no jurisdiction to

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entertain the application under section 34 of the
Act. He relies on the ratio in the cases of

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“Khaleel Ahmed Dakhani Vs. Hatti Gold Mines Co. Ltd.”
(2000) 3 S.C.C. 755 and “Jindal Vijayanagar Steel
(JSW Steel Ltd.) Vs. Jindal Praxair Oxygen Co.
Ltd.” (2006) 11 S.C.C. 521.

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8.On the other hand, Mr. Amit S. Deshpande,

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learned counsel for respondent No.2, submits that the
application under section 11 of the Act or the place
of arbitration are irrelevant. The alleged cause of
action has arisen at Latur, since the cotton bales

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were delivered at Latur and payment was made from
Latur. He relies on the ratio in the following four

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authorities :

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(6)

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(i)Ion Exchange (India) Ltd. Vs.
Paramount Ltd.
2006 (4) Bom CR 545

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(ii)Rodemadan India Ltd. Vs.
International Trade Expo Centre Ltd.
AIR 2006 S.C. 3456

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(iii)ITI Ltd., Naini, Allahabad Vs.
District Judge, Allahabad
AIR 1998 Allahabad 313

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(iv)Etizen Bulk A/S Vs.
Ashapura Minechem Ltd.
(Notice of Motion No. 3975/2009 in
Arbitration Petition No. 561/2009
Bombay High Court.

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9.Upon hearing both sides, in my view, the

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order of learned Principal District Judge, Latur
needs no interference, for the reasons to follow :

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R E A S O N S

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10.Section 42 of the Act provides as under :-

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“42.Jurisdiction. - Notwithstanding
anything contained elsewhere in this Part or
in any other law for the time being in
force, where with respect to an arbitration
agreement any application under this Part
has been made in a Court, that Court alone
shall have jurisdiction over the arbitral
proceedings and all subsequent applications
arising out of that agreement and the

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(7)

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arbitral proceedings shall be made in that
Court and in no other Court.”

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11.The provision would show that if earlier any
application is made to a Court, then the said Court
alone shall have jurisdiction over the arbitral
proceedings and all subsequent applications arising
out of that agreement.

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12. The definition of the “ Court ”, as found in

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Section 2 (1) (e) of the Act reads thus :

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“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.”

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13.It is thus clear that an application under

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section 11 of the Act made either with the Chief

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Justice of the High Court of His/Her Designate, would

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not be an application in a “Court”. The “Court”,

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according to the provisions of the Act, is a
principal Civil Court of original jurisdiction in a

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(8)

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district, and includes the High Court in exercise of

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its ordinary original civil jurisdiction. There
cannot be any different opinion that the High Court
of Karnataka is not having any original civil
jurisdiction. In the circumstances, it is clear that
prior to the filing of the present application under
section 34 of the Act, there was no any prior
application under the Act to any “Court”.

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14.In “Khaleel Ahmed Dakhani Vs. Hatti Gold

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Mines Co. Ltd.” (cited supra), relied upon by the
learned counsel for the petitioner, arbitration
clause between the parties therein provided for a
jurisdiction only with a Court at Bangalore. An
application under section 34 challenging the award

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was filed in the Court of Principal City Civil Judge,
Bangalore. While the said application was pending,
application under section 36 of the Act for execution

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of the award was filed in the Court of Principal
District Judge, Raichur. In those circumstances, it

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was held that the Principal District Judge, Raichur

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should not have entertained the application. The
facts thus would make it clear that as the

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application under section 34 was already moved in the
Court of Principal City Civil Judge, Bangalore,
subsequent application to any other Court was barred
by the provisions of Section 42 of the Act. The
authority, therefore, has no application in the facts
of the present case.

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15.In the case of “Jindal Vijayanagar Steel

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(JSW Steel Ltd.) Vs. Jindal Praxair Oxygen Co. Ltd.”
(cited supra), relied on by the learned counsel for
the petitioner, the Bombay High Court as a Chartered
High Court exercising its ordinary original civil
jurisdiction under its Letters Patent, held that
since the respondent in the petition under section 9
of the Act, after entering into an agreement to refer
the dispute to the arbitration, has changed its
registered address to Mumbai, it being the Court as
defined by section 2 (1) (e) of the Act, would have
jurisdiction to consider the same. In those
circumstances, it was held by the Supreme Court that
change in the registered address of the respondent,
after the parties entered into arbitration agreement,

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would not clothe the Court with jurisdiction. The

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other contentions about the applicability of section
20 of the Code of Civil Procedure to the High Court
as a Court of original civil jurisdiction, were also
considered.

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16.In the present case, what we find is that
there is no previous application to any “Court” prior
to the filing of the present application under
section 34 of the Act. The Chief Justice of High
Court dealing with the application under section 11

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of the Act is not a “Court”, as defined in the Act.
The pleadings of the respondent No. 2 in his petition
would show that the contract of supply of cotton
bales was entered into between it and Shrikant R.
Mundada from Solapur. Admittedly, the bales were
supplied at Latur. It is not the case of any of the
parties that the agreement of supply of bales was
entered into at Raichur. In view of all these facts,

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the ratio laid down in the authorities, relied on by
the learned counsel for the respondent No. 2, as
detailed supra, would be applicable in the facts of
the present case. In the result, the following
order :-

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(11)

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17.The Civil Revision Application is dismissed,
without any order as to costs. Rule discharged

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accordingly.

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[ M.T. JOSHI ]
JUDGE

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npj/cra179-13

M/S. Bhandari Udyog Limited v. Industrial Faciliation Council and Another

Case brief

What is this about?

What did the court decide?

M/S. Bhandari Udyog Limited v. Industrial Faciliation Council and Another

Case brief

What is this about?

What did the court decide?

What the court decided

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Cases cited

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