IMPORTANT POINT
Where two courts or more have jurisdiction to try a suit or proceeding under the provisions of the Code of Civil Procedure, an agreement between the parties that one of such courts would have jurisdiction to decide the disputes arising between the parties from such agreement would not be contrary to public policy and would not, therefore, be contrary to the provisions of Section 28 of the Indian Contract Act, 1872.

JUDGMENT

Altamas Kabir, J.

1. This Transfer Petition under Article 139A(2) of the Constitution of India read with the relevant provisions of the Supreme Court Rules and Section 25 of the Code of Civil Procedure has been filed by Balaji Coke Industries Pvt. Ltd. for transfer of Arbitration Application No.1 of 2008, titled M/s Maa Bhagwati Coke (Guj) Pvt. Ltd. vs. Balaji Coke Industry Pvt. Ltd., pending in the Court of the rincipal Senior Civil Judge at Bhavnagar (Gujarat) to the Calcutta High Court.

2. Briefly stated, the facts are that the Petitioner Company registered under the Companies Act and having its registered office at 12, Ho-Chi Minh Sarani, Flat 2B, Second Floor, Kolkata, is carrying on business in the trade of coking coal. The Respondent, which is engaged in the business of processing coking coal into hard coke, requires coking coal as raw material to be used in its processing unit for transformation into met coke (hard coke). On 29th April, 2005, the Petitioner Company entered into an agreement with the Respondent Company to supply 15,000 Metric Tonnes of coking coal of Indonesian Origin. The agreement to sell provided that the cargo would be sold to the Respondent on High Seas basis. The said agreement was executed in Kolkata within the jurisdiction of the Calcutta High Court.

3. Clause 11 of the aforesaid agreement contains an Arbitration Clause which reads as under :-

“In case of any dispute or difference arising between the parties hereto or any claim or thing herein contained or the construction thereof or as to any matter in any way connected with or arising out of these presents or the operation thereof or the rights, duties or liabilities of either party thereof, then and in every such case the matter, differences in disputes shall be referred to an arbitrator in Kolkata, West Bengal, India in accordance with and subject to the provisions of the Arbitration and Conciliation Act, 1996, or any other enactment or statutory modifications thereof for the time being in force. The place of arbitration shall be Kolkata.”

[Emphasis supplied]

Pursuant to the aforesaid agreement dated 29th April, 2005, the parties entered into a specific High Seas Sale Agreement on 7th May, 2005, wherein it was specified that the contracted coal would be supplied to the Respondent from a vessel named MV Gulf Ranger. The total sale consideration for the consignment was mentioned as Rs.8,11,80,000/-. Clause 14 of the said High Seas Sale Agreement provided that the sale contract would be subject to Kolkata jurisdiction.

4. Disputes having arisen between the parties, the Respondent herein by its letter dated 20th December, 2008, invoked the arbitration clause and requested the Petitioner Company to confirm the appointment of a retired Judge of the Gujarat High Court, Hon’ble Mr. Justice K.M. Mehta, to be the Sole Arbitrator. In the said letter, the Respondent alleged that the Petitioner was in possession of Rs.3,43,73,485/- which belonged to the Respondent and was being enjoyed by the Petitioner instead of handing over the same to the Respondent. It was also alleged that the Respondent was entitled to receive 6,793 Metric Tonnes of material from the Petitioner on the basis of the aforesaid sum lying with the Petitioner. It was alleged that the Petitioner was not issuing delivery orders in favour of the Respondent for release of the said material and that the same was currently lying in a plot owned by the Respondent, but under the control and supervision of the Petitioner in Gujarat within the jurisdiction of the Bhavnagar Civil Courts.

5. The petitioner wrote back to the Respondent on 9th January, 2009, denying all the allegations and in particular denying the fact that it had received any sum of money from the Respondent or that the Respondent was entitled to receive any material, as alleged. A preliminary objection was also raised by the Petitioner to the appointment of Mr. Justice K.M. Mehta as the Sole Arbitrator in terms of Claus