IMPORTANT POINT
For the purpose of determining the Original Civil Jurisdiction of the Bombay High Court, Section 20 of the CPC, 1908 has been specifically excluded and has no application. Under Clause 12 of the Letters Patent, the Bombay High Court would have jurisdiction to entertain and try an Arbitration Petition even if no cause of action has arisen within its jurisdiction, provided the petitioner has an office at Mumbai.

Headnote:Arbitration and Conciliation Act, 1996—Section 9—Civil Procedure Code, 1908—Sections 20, 120, 16, 17—Letters Patent—Jurisdiction of Bombay High Court to entertain petitions u/s 9 of the Act—Appellant company entered into agreements to incorporate respondent Company in Karnataka—Pipeline Supply Agreement (PSA) was entered into between appellant and respondent at Bangalore wherein respondent would supply to appellant its requirement of industrial gases—Disputes of technical and commercial nature in relation to implementation of PSA had arisen between the parties—Settlement Agreement between parties—Respondent implemented those provisions of the Settlement Agreement which were favourable to it—To settle disputes, respondent invoked dispute resolution process by issuing a notice from Bellary—Respondent filed Arbitration Petition u/s 9 of the Act in Bombay High Court—Objections—Whether Bombay High Court was justified in holding that Bombay High Court had jurisdiction to entertain Arbitration Petition—(Yes)—By virtue of clause 12 of the Letters Patent Act, Bombay High Court had jurisdiction to entertain the petition filed by respondent.
       Held : It may be noted that the following sub paragraphs below have been noted by the Bombay High Court in impugned order dated 2.3.2006.
       (a)The parties themselves have chosen Mumbai to be the situs for the Arbitration proceedings (clause 17.2 (i) of the Agreement)
       (b)The arbitration clause specifically provides for a dispute resolution meeting to be held to resolve the dispute between the parties as a pre-condition for invocation of the arbitration clause which meeting was held at Bombay at the request of the appellant.
       (c)The Pipeline Supply Agreement (under which the disputes have arisen) was approved by the Board of Directors of the appellant Company in Bombay.
       (d)The Pipeline Supply Agreement as amended was reviewed and discussed by the Board of Directors of the appellant Company in Bombay.
       (e)The Settlement Agreement dated 23.6.2003 was adopted at the meeting of the respondent Board of Directors where the appellants nominees on the respondents Board were also present.
       (f)That the entire Senior Management of the appellant is located at Mumbai. It may be noted that in Mayur (H.K) Ltd. & Ors. vs. Owners & Parties, Vessel M. V. Fortune Express & Ors. (2006) 3 SCC 100 this Court (in para 27) observed that the principal place of business would be where the governing power of the Corporation is exercised or the place of a Corporations Chief Executive Offices which is typically viewed as the verve centre or the place designated as the principal place of business of the Corporation in its incorporation under various statutes.
       (g)when the section 9 petition was filed the appellant had its office at Mumbai and was carrying on business at Mumbai and its Directors were stationed in Mumbai.
       (h)The appellant had in fact shifted its registered office to Mumbai during the pendency of the section 9 petition in the Bombay High Court as it was more convenient to operate its registered office from Mumbai. It is submitted that where a Court has jurisdiction to try the suit when it comes up for disposal, it then cannot refuse to assume jurisdiction by reason of the fact that it had no jurisdiction to entertain it at the date of institution as held in Sudhir G. Angur & Ors. vs. M. Sanjeev & Ors. (2006) 1 SCC 141 para 11)
       (i)That at the time the question of jurisdiction was heard and gone into and decided by the Bombay High Court, the Registered Office of the appellant had been shifted to and was in fact situated in Mumbai.(Para 65)
       It may be noted that when the section 9 Petition was tried in Bombay on the issue of jurisdiction, the Respondent had transferred its registered office to Mumbai.(Para 66)
       If a court has no territorial jurisdiction (but is otherwise competent to hear a matter) should the matter be heard and decided by such Court without demur, the judgment will be valid and not void or non est. It is for this reason that insofar as territorial jurisdiction is concerned, the relevant time to determine the existence of the jurisdiction would be when the matter is heard.(Para 68)
       For the foregoing reasons, we are of the considered opinion that the Bombay High Court has jurisdiction to entertain Section 9 application of the respondents herein. We, therefore, request the Bombay High Court to proceed on merits to determine the matter in accordance with law. For the reasons set out above, the civil appeal ought to be rejected by this Court and we do so accordingly.(Para 83)

JUDGMENT

Dr. AR. Lakshmanan, J.—Leave granted.

2. The above appeal was filed by the appellant seeking special leave to appeal against the final order dated 02.03.2006 passed by the High Court of Bombay in Arbitration Petition No. 459 of 2004. By the said order, the High Court, according to the appellant, has wrongly assumed jurisdiction to entertain petitions under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) despite holding that the entire cause of action has arisen outside its territorial jurisdiction.

3. In other words, the appellant seek to impugn the judgment dated 02.03.2006 whereby the High Court has held that jurisdiction of the Court under the provisions of the Arbitration Act may be assumed by a Court exercising jurisdiction in a place where no part of the cause of action has arisen, if the respondent being a Company has a Corporate Office at the place where the Court is moved.

4. The facts leading to the filing of the above appeal are as follows:

The appellant was in the process of setting up an integrated steel plant having the capacity of 1.25 million tonnes of the manufacture of iron and steel in Bellary District, Karnataka. For its manufacturing operations, the appellant required large quantities of industrial gases, namely, oxygen, nitrogen and argon for such production. To this end, the appellant, in conjunction with M/s Praxair Pacific Limited decided to enter into agreements to incorporate the respondent-Company in Karnataka. The respondent-Company was to set up an Air Separation Plant (ASP) in the same complex in Bellary, Karnataka for the purpose of supplying the appellant with the required quantities of industrial gases.

5. The respondent-Company was incorporated in Bangalore with a 50:50 share holding between the appellant and the Praxair Pacific Limited, which was subsequently changed to 26:74 . On 19.02.1996, Pipeline Supply Agreement (PSA) was entered into between the appellant and the respondent at Bangalore wherein the respondent would supply to the appellant its requirement of industrial gases, namely, gaseous oxygen, gaseous nitrogen and the gaseous argon. Product Supply Agreement was entered into between the respondent and Praxair India Private Limited (PIPL), a wholly-owned subsidiary of Praxair Pacific Limited at Bangalore for supply of liquid oxygen, nitrogen and argon to PIPL. This agreement was entered into on 01.06.1996. As several disputes/issues of technical and commercial nature in relation to the implementation of the PSA and the performance of the ASPs had arisen between the parties, the representatives of the appellant, respondent, Praxair Pacific Limited, Praxair Inc. and PIPL made in Singapore to resolve the issues.

6. On 23.06.2002, an agreement was arrived at between the parties (Settlement Agreement). The Settlement Agreement was approved by the Board of Directors of both the parties in Bangalore. The interpretation of the obligations of parties under various provisions of the Settlement Agreement including the above provisions and the PSA is presently in dispute in arbitration invoked by the respondent against the appellant.

7. Accordingly, the respondent implemented those provisions of the Settlement Agreement which were favourable to it, whilst delaying the implementation of terms favourable to the appellant. As a result thereof in various issues/disputes including all power norms, reimbursement of excise duty and income-tax claims, maintenance of adequate quantities of suppliable liquids in the storage tanks of the respondent etc. arose between the parties.

8. To settle the disputes, the respondent invoked dispute resolution process pursuant to Article 17 of the PSA by issuing a notice from Bellary, Karnataka to the appellant in Bellary Karnataka.

9. Article 17 of the Dispute Resolution reads as follows:

"17.1. In the event that a party to this Agreement has reasonable grounds to believe that the other Party hereto has fail

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2006 Supreme(SC) 793

Cases Referred (11)