The main legal point established in the judgment is that a material part of the cause of action arising in a specific jurisdiction grants the court jurisdiction to entertain an application under section 11 of the Arbitration and Conciliation Act, without the need for obtaining leave under clause 12 of the Letters Patent.

This is an application under section 11 of the Arbitration and Conciliation Act, 1996.

2. The question that arises for consideration in this application is whether, in a case where a material part of the cause of action arises in Mumbai, this court would have jurisdiction to entertain and try an application under section 11 of the said Act, without the Applicant obtaining leave under clause 12 of the Letters Patent.

3. The parties had admittedly entered into an agreement in writing dated 26th August 2002 whereunder the Respondent was to sell and deliver to the Applicant, pharmaceutical products on the terms and conditions stated therein. Clause 32 thereof contains an arbitration agreement.

4. The parties thereafter entered into a supplemental agreement dated 29th March 2005 for including within the scope of the original agreement, additional products. Clause 3 of the supplemental agreement stated that save, as otherwise contained therein, all other terms and conditions of the agreement dated 26th August, 2002, would continue to be in full force and effect. There is no dispute that the arbitration clause contained in the agreement dated 26th August, 2002, was incorporated in the supplemental agreement.

5. Under the said agreement the Respondent sold and delivered to the Applicant, diverse quantities of the said products. Disputes and differences arose in respect of certain consignments. In this application under section 11 it is not necessary to refer to the details of the disputes, especially on merits. Suffice it to state that the Food and Drugs Administration had seized the products covered by some of the consignments in various parts of the country. According to the Applicant, this was entirely due to the Respondent’s fault. The Respondent denied the same stating that the Applicant was responsible for packing the material and that it is the Applicant who is entirely responsible for the same. The Respondent had raised an invoice dated 13th December, 2006, for an aggregate amount of about Rs.1,80,00,000/-. The Applicant, however, paid a sum of only Rs.98,49,388. The Applicant refused to pay the balance amount of about Rs.81,00,000 contending that it had raised a debit note on account of the aforesaid consignments seized by the FDA. The Applicant, therefore, seeks an adjustment in the accounts between the parties as well as an indemnity against the various losses suffered by it on account of the Respondent’s alleged defaults. Clause 12 of the agreement entitles the applicant to an indemnity including in such circumstances.

6. The above disputes must be decided by the arbitrator. They indisputably fall within the ambit of the arbitration clause in the agreement which reads and under:–

“32. In the event of any dispute, controversy or claim arising out of or relating to this Agreement or the breach, termination or invalidity thereof, the parties shall endeavor to resolve the same in an amicable manner in consonance with the spirit of the transaction recorded in this Agreement. If, however, parties fail to resolve such dispute through discussion as mentioned above, the same shall at the request of either party be referred and settled by arbitration in accordance with the Arbitration & Conciliation Act 1996. The place of Arbitration shall be Delhi and language to be used in such Arbitration proceeding shall be English. Any judgment, decision or award of the arbitrators shall be final and binding and shall be enforceable in any court of competent jurisdiction. The cost of arbitration shall be borne by the loosing party.”

7. The first question is whether a material part of the cause of action has arisen in Mumbai. Paragraph 23 of the application contains an averment that a part of the cause of action has arisen in Mumbai and that, therefore, this court is vested with jurisdiction to try this application.

8. It is true that this paragraph does not contain all the facts necessary to support this averment. That, however