2009 Supreme(SC) 751

Supreme Court of India
THE HONOURABLE MR. JUSTICE TARUN CHATTERJEE & THE HONOURABLE MR. JUSTICE H.L. DATTU
Petine Shipping Inc. of Monrovia
Versus
The Minerals and Metals Trading Corporation of India Ltd.
Civil Appeal No.2627 of 2009 (Arising out of SLP(C) No. 10840 of 2008)
Decided on : 17-04-2009

IMPORTANT POINTS
All applications regarding conduct of arbitration proceedings or arising out of such proceedings or in which the court has to decide questions regarding the validity, effect, or existence of an award or an arbitration agreement between the parties to the agreement, should be treated as "application in a reference" under Arbitration Act, 1940.
Applications under both sections 33 and 34 fall within purview of Section 31(4).
Application filed before Delhi High Court on which no order was passed and the High Court did not retain control over arbitration proceedings is not a reference made under Section 31(4).
Port of Mumbai was chosen as port of delivery and goods delivered at port of Mumbai. Therefore Bombay High Court has jurisdiction in the Arbitration Petition.

Headnote:(a) Arbitration Act, 1940 – Section 31(4) – "Application in a reference" used in sub-section (4) – Should be related to sub-sections (2) and (3) – Accordingly, all applications regarding conduct of arbitration proceedings or arising out of such proceedings or in which the court has to decide questions regarding the validity, effect, or existence of an award or an arbitration agreement between the parties to the agreement, should be treated as "application in a reference". (Para 12)

       (1969) 2 SCC 211; (1981) 4 SCC 634 – Referred

       (b) Arbitration Act, 1940 – Section 31(4) r/w section 33 and 34 – Section 33 intends to make an arbitration agreement ineffective and section 34 intends to make it effective – Applications under both sections are in the matter of arbitration proceedings – Fall within purview of Section 31(4). (Para 13)

       (c) Arbitration Act, 1940 – Section 31(4) – Application filed before Delhi High Court – Court not passing any order – Not retaining control over arbitration proceedings – Respondent not filing another application for appointment of arbitrator – Application filed before the Delhi High Court not a reference made under Section 31(4). (Para 17)

       (1972) 1 SCC 702; (2008) 6 SCC 732 – Relied upon

       (d) Arbitration Act, 1940 – Section 31(4) – Port of Mumbai chosen as port of delivery – Goods delivered at port of Mumbai – Bombay High Court has jurisdiction in the Arbitration Petition. (Para 18, 19)

       Facts of the case:

       The appellant is a Liberian Shipping Company carrying on business through their protecting agents M/s. G.A.C. Shipping India Ltd. The respondent is a government company, which by charter party dated 2.6.1989 chartered the appellants vessel M.V. Animar to carry Rock Phosphate from Togo to West Coast India. The respondent chose Mumbai as the port of delivery. The dispute resolution clause of the charter party provided that each party may appoint one arbitrator, who in the event of disagreement shall appoint an umpire, whose decision shall be final. The arbitrators and the umpire were required to be commercial men.

       When a dispute arose in 1990, the appellant vide letter dated 29.5.90 nominated Mr. A.K. Khandwala and the respondent vide telegram dated 18.6.90 appointed Justice Deshpande (Retired Chief Justice of the Delhi High Court). The appellant intimated the respondent by letter dated 9.7.90, that since their nominee was not a commercial man as required under the charter party clause; Mr. Khandwala would be the sole arbitrator. The respondent filed Arbitration Petition before the Delhi High Court, for a declaration that their nomination of Justice Deshpande as arbitrator was valid. During pendency of the said petition, Justice Deshpande expired. Vide letter dated 14.8.92, the respondent appointed Mr. K. Parthasarthi, as Arbitrator, and on 18.8.92 the petition of the respondent was dismissed as having become infructuous. The court has not passed any other order in the petition filed by respondent.

       The Arbitrators could not arrive at a unanimous decision and they appointed Mr. R. C. Cooper as the Umpire. When Mr. Cooper sought to proceed with the matter, the respondent inter alia raised objection as to the validity of the appointment of the umpire and the umpire informed the parties that it would be prudent to approach the appropriate court for orders before proceeding further with the matter.

       The appellant moved the High Court of Bombay with a prayer for conformation/ appointment of Mr. Cooper as Umpire and to enlarge the time for making the award.

       The Single Judge as well as Division Bench in Arbitration Petition dismissed the appellants petition and appeal respectively, solely on the ground that in view of Section 31(4) of the Arbitration Act, 1940 and in view of the Arbitration Petition filed by the respondent earlier before the Delhi High Court, which had been dismissed as having become in fructuous; the Bombay High Court cannot adjudicate upon the appellants petition. The Division Bench of Bombay High Court has observed, that, if the Delhi High Court was one of the courts having jurisdiction and if the parties have already approached that court once, all future applications should also be made to that court.

       Finding of the Court:

       Bombay High Court has jurisdiction in the matter.

       Result:

       Appeal allowed.