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HIGH COURT OF CALCUTTA
P. C. Mallick
S. P. CONSOLIDATED ENGINEERING CO. (P) LTD. - Appellant
Versus
UNION OF INDIA - Respondent
Special Suit 5 Of 1964
Decided On : MAY 14, 1965
ARBITRATION - Filing of arbitration agreement - Jurisdiction of the court - Cause of action - Place of payment - Business of the defendant - Leave under Clause 12 of the Letters Patent - Notice under Section 80 of the Code of Civil Procedure - Subject-matter of the agreement or reference.
Fact of the Case:
The petitioner, a contractor, entered into a contract with the South-Eastern Railway for the construction of certain works. Disputes arose between the parties after the completion of the works, and the contractor invoked the arbitration clause in the contract. The General Manager of the Railway, however, did not appoint an arbitrator, and the contractor filed an application under Section 20 of the Indian Arbitration Act for filing the arbitration agreement and for an order of reference.
Finding of the Court:
The court held that it had jurisdiction to entertain the application under Section 20 of the Arbitration Act, as part of the cause of action arose within its jurisdiction. The court also held that the place of payment was not expressly or impliedly provided in the contract, and therefore, the rule applied that it was the duty of the debtor to find out the creditor and make payment at the creditor's place of business, which, in the instant case, was within the jurisdiction of the court. The court further held that the Government could not be said to carry on business within the meaning of Clause 12 of the Letters Patent, when it carries on undertakings such as running of Railways. However, the court declined to decide the question of whether leave under Clause 12 of the Letters Patent was imperative in the case of an application under Section 20 of the Arbitration Act, as it was not necessary for the decision of the case.
Issues: 1. Whether the court had jurisdiction to entertain the application under Section 20 of the Arbitration Act? 2. Whether the place of payment was expressly or impliedly provided in the contract? 3. Whether the Government could be said to carry on business within the meaning of Clause 12 of the Letters Patent, when it carries on undertakings such as running of Railways? 4. Whether leave under Clause 12 of the Letters Patent was imperative in the case of an application under Section 20 of the Arbitration Act?
Ratio Decidendi: 1. The court held that it had jurisdiction to entertain the application under Section 20 of the Arbitration Act, as part of the cause of action arose within its jurisdiction. The court relied on the line of cases in which it is held that if the contract is by correspondence, then part of cause of action as to the formation of the contract arises at the places from which any one of the correspondence was sent and/or received. 2. The court held that the place of payment was not expressly or impliedly provided in the contract, and therefore, the rule applied that it was the duty of the debtor to find out the creditor and make payment at the creditor's place of business, which, in the instant case, was within the jurisdiction of the court. The court relied on the decision of the Appeal Court in the case of State of Punjab v. A. K. Raha (Engineers) Ltd. 3. The court held that the Government could not be said to carry on business within the meaning of Clause 12 of the Letters Patent, when it carries on undertakings such as running of Railways. The court relied on the line of cases in which it is held that the State or the Government cannot be said to carry on business within the meaning of Clause 12 of the Letters Patent, when it carries on undertakings such as running of Railways. 4. The court declined to decide the question of whether leave under Clause 12 of the Letters Patent was imperative in the case of an application under Section 20 of the Arbitration Act, as it was not necessary for the decision of the case.
Final Decision: The court ordered that the arbitration agreement be filed and that an arbitrator be appointed.
( 1 ) THIS is an application under Section 20 of the Indian Arbitration Act for filing an arbitration agreement. The arbitration agreement is a clause in the contract subsisting between the parties. The petitioner is a contractor which did certain construction works for the South-Eastern Railway Clause 63 of the General Conditions of the contract which is applicable for this kind of contracts is the arbitration clause. During the execution of works payments were made to the contractor on running bills. After completion of works the contractor's claim in the final bill including the claim for refund of initial and subsequent security deposits has been disputed by the Government. The contractor invoked thereupon the arbitration clause and called upon the General Manager to appoint arbitrator in terms of the arbitration clause. The General Manager not having complied with the above requisition, the contractor has made this application for filing the arbitration agreement and for an order of reference.
( 2 ) THERE is no question in the instant case that there is an arbitration agreement and the claim in dispute is covered by the arbitration agreement. The only point of controversy is whether this Court has jurisdiction to make an order under Section 20 in the instant case. It is the Government's case that the contract was signed outside the jurisdiction of this Court, works under the contract were performed outside the jurisdiction of this Court and that no part of the cause of action arose within the jurisdiction of this Court. In consequence this Court is not competent to entertain the application and pass an order therein.
( 3 ) WHEN the application came up for hearing it was noticed that the petition does not clearly state on what basis the jurisdiction of the Court has been invoked and what are the jurisdictional facts in the instant case. I felt that the only point of controversy being the point of jurisdiction, the facts on which the jurisdiction is invoked by the petitioner should he clearly stated. Thereupon I gave leave to the petitioner to file a supplementary affidavit to state clearly the facts on which according to the petitioner the jurisdiction of this Court is founded. The Government was also given leave to file an additional affidavit in answer. Pursuant to such leave on March 8, 1966, the petitioner company filed an affidavit of one of its directors Dipakraj affirmed on March 8, 1965. On behalf of the Government an affidavit in answer has been filed by Manjul Prokash Banerjee affirmed on March 31, 1965.
( 4 ) IN the affidavit of Dipakraj, reliance is placed on the following fads on which it is contended that this Court has jurisdiction to entertain this matter: (1) The contractor had and has its registered office at 75/c, Vivekananda Road within Calcutta, The tender was submitted from Calcutta, the letter of acceptance of the lender was communicated to the contractor at Calcutta. The initial deposit or earnest was made at the Reserve Bank at Calcutta as directed by the tender. All written communications including order to commence work were sent to Calcutta. The security deposit was made at Calcutta and after completion of works the same is liable to be refunded at Calcutta. In refusing to pay the security deposit after demand the Government committed a breach and such breach took place at Calcutta. (2) The Government has its claim office at No. 1, India Exchange Place within Calcutta so that the Government must be held to carry on business at Calcutta within the jurisdiction of this Court. (3) No place for payment is provided in the contract either expressly or by implication In the premises the contractor's claim became due and payable at the contractor's registered office at Calcutta. After completion of work when the final bill became payable, the contractor had to wind up its temporary establishment at the works site at Bilaspur and bring all accounts and papers from Bilaspur to its re
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