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High Court Of Calcutta
M. M. DUTT, C. K. BANERJEE
TOBU ENTERPRISES PVT.LTD - Appellant
Versus
CAMCO INDUSTRIES LTD - Respondent
Appeal Nill Of 1983 And Special Suit No. 3a Of 1983
Decided On : 04/08/1983
ARBITRATION - LEAVE UNDER CLAUSE 12 OF LETTERS PATENT - JURISDICTION - COURT'S DISCRETION - ARBITRATION AGREEMENT - FORUM SELECTION - DELIMITATION OF JURISDICTION - INTERPRETATION OF ARBITRATION CLAUSE.
Fact of the Case:
The appellant and the respondent entered into an agreement for the distribution of children's vehicles. The agreement included an arbitration clause providing that disputes would be referred to arbitrators appointed by both parties and, failing that, the jurisdiction of the Delhi High Court would apply. The respondent filed an application under Section 20 of the Arbitration Act, 1940, in the Calcutta High Court, seeking leave under Clause 12 of the Letters Patent to file the application within the ordinary original jurisdiction of the court. The learned Judge granted leave, and the respondent obtained interim orders in its favor. The appellant challenged the grant of leave under Clause 12, arguing that the parties had agreed to restrict their forum to the Delhi High Court.
Finding of the Court:
The Calcutta High Court held that an application under Section 20 of the Arbitration Act is not a suit within the meaning of Clause 12 of the Letters Patent, but the jurisdiction of the court to entertain such an application depends on whether the court would have jurisdiction to entertain a suit involving the same matter. The court found that in the instant case, as the cause of action arose only in part within the ordinary original jurisdiction of the Calcutta High Court, leave under Clause 12 was imperative. However, the court also found that the arbitration agreement was vague and that the learned Judge should not have granted leave under Clause 12, given the parties' agreement to restrict their forum to the Delhi High Court.
Issues: 1. Whether leave under Clause 12 of the Letters Patent is required for filing an application under Section 20 of the Arbitration Act, 1940, when the cause of action arises only in part within the ordinary original jurisdiction of the Calcutta High Court. 2. Whether the court should grant leave under Clause 12 when the parties have agreed to restrict their forum to another court.
Ratio Decidendi: 1. The court held that leave under Clause 12 of the Letters Patent is required for filing an application under Section 20 of the Arbitration Act when the cause of action arises only in part within the ordinary original jurisdiction of the Calcutta High Court. The court interpreted Sections 2(c) and 31 of the Arbitration Act to mean that the jurisdiction of the court to entertain an application under Section 20 depends on whether the court would have jurisdiction to entertain a suit involving the same matter. Since the Calcutta High Court would not have jurisdiction to entertain a suit involving the entire cause of action in the instant case, leave under Clause 12 was necessary. 2. The court held that the learned Judge should not have granted leave under Clause 12, given the parties' agreement to restrict their forum to the Delhi High Court. The court found that there was no special reason or circumstance justifying the grant of leave under Clause 12, and that the arbitration agreement, as contained in Clause 4, appeared to be vague.
Final Decision: The Calcutta High Court allowed the appeal, set aside the impugned order granting leave under Clause 12 of the Letters Patent, and vacated all interim orders passed by the learned Judge. The court also directed that the application under Section 20 of the Arbitration Act be returned to the respondent for being presented to the proper court.
( 1 ) THE appellant Tobu Enterprises Private Limited has preferred this appeal against the judgment and order dated Jan. 25, 1983 of a learned single Judge of this Court granting leave to the respondent, Cameo Industries Limited, under Clause 12 of the Letters Patent to file an application under Section 20 of the Arbitration Act, 1940; the said application has since been registered as a suit being Special Suit No. 3a of 1983.
( 2 ) BY an agreement in writing dated Nov. 1, 1980 entered into in Calcutta within the ordinary original jurisdiction of this Court between the appellant and the respondent, it was agreed that the appellant would appoint the respondent its distributor of Children Vehicles produced by it. In the said agreement, the appellant was the first party and the respondent was the second party. The agreement, inter alia, provides as follows :" (1 ). The agreement can be terminated by a notice of three months in writ-Ing from either side. (2 ). The First Party will give the Children Vehicles for the aforementioned areas to the Party of the Second Part only till this agreement is in force. (3 ). Payment will be made in full advance for each supply by a crossed bank draft in favour of the First Party, payable at New Delhi. (4 ). In the event of any dispute arising out of the contract the matter will be given to arbitrators appointed by both the parties failing which the jurisdiction Of Delhi High Court will apply. "
( 3 ) THE agreement further provides that the distributorship of the respondent relates to the whole of West Bengal excluding Darjeeling and Jalpaiguri districts. Further, a sum of Rs. 1,00,000/-will be kept in deposit with the appellant by the respondent till the distributorship of the respondent continues. The deposit amount will bear simple interest at the rate of 12% per annum payable annually.
( 4 ) DISPUTES and differences arose between the parties in regard to the distributorship of the respondent which resulted in the filing of the application under Section 20 of the Arbitration Act by the respondent in this Court. In the said application, the respondent prayed for leave under Clause 12 of the Letters Patent alleging, inter alia, that a part of the cause of action arose within the ordinary original jurisdiction of this Court. The learned Judge, by the impugned order dated Jan. 25, 1983, granted leave under Clause 12 of the Letters Patent enabling the respondent to file the application under Section 20 of the Arbitration Act in this Court. Thereafter, the respondent, made an application under Section 41 of the Arbitration Act praying for an interim order in terms of prayers (a) and (b) of the application under Section 41. The learned Judge passed an interim order dated Jan. 25, 1983 in terms of prayers (a) and (b), which are as follows :" (a ). An injunction do issue restraining the defendant, its servants or agents or representatives or officers, employees or assigns or otherwise whosoever in the State of West Bengal (excluding Darjeeling and Jalpaiguri districts') of its products (sic) except through the petitioner until disposal of the arbitration proceedings and/or until further orders of this Hon'ble Court. (b ). An injunction do issue restraining the defendant, its servants or agents or representatives or officers or employees or assigns or otherwise whosoever from making any deliveries of any goods or giving effect to any contract or order or agreement made by the defendant directly with any party other than your petitioner in respect of its products in the State of West Bengal (excluding Darjeeling and Jalpaiguri districts) until further orders of this Hon'ble Court. "
( 5 ) ON Feb. 3, 1983, the said interim order was modified by the learned Judge to the following extent :"i modify the interim order already passed by me to this extent that it will be confined to Children Vehicles manufactured by Tobu Enterprises (P) Ltd. The petitioner and the respondent must, however, abid
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