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High Court Of Calcutta
A. K. GANGULY
HUKUM RAJ SAJJAN RAJ KUMBAT - Appellant
Versus
El DORADO GUARANTEE LIMITED - Respondent
A. P. 144 Of 2000
Decided On : 11/22/2001
ARBITRATION - JURISDICTION - SECTION 9 OF ARBITRATION AND CONCILIATION ACT, 1996 - COURT'S JURISDICTION TO ENTERTAIN PETITION UNDER SECTION 9 IN CONTEXT OF FORUM SELECTION CLAUSE - COURT FOUND THAT IT HAD JURISDICTION TO ENTERTAIN PETITION DESPITE FORUM SELECTION CLAUSE SPECIFYING MUMBAI JURISDICTION, AS FACTS INDICATED THAT CALCUTTA HIGH COURT WAS APPROPRIATE COURT UNDER SECTION 2(E) OF ACT.
Fact of the Case:
Petitioner filed an application under section 9 of Arbitration and Conciliation Act, 1996 (ACA 96) seeking interim protection in connection with proposed arbitration proceedings over a dispute with respondent, a sharebroker. Petitioner claimed that respondent owed them Rs. 1,74,54,140.10p as a result of transactions carried out on petitioner's behalf. Respondent objected to the jurisdiction of the Calcutta High Court, arguing that the appropriate court was the Mumbai Court as per the forum selection clause in the contract.
Finding of the Court:
The court found that the Calcutta High Court had jurisdiction to entertain the petition under section 9 of ACA 96, despite the forum selection clause specifying Mumbai jurisdiction. The court relied on the following factors: 1. The petitioner placed orders for buying or selling shares at respondent's office in Calcutta. 2. Instructions for all shares required to be delivered were executed by the petitioner in Calcutta and communicated to respondent's office in Calcutta. 3. Shares purchased on behalf of the petitioner by the respondent were delivered to the petitioner in Calcutta, either through the petitioner's demat account in Calcutta or by physically handling over Share Certificates in Calcutta. 4. Payments were made by the petitioner in Calcutta through its bankers in Calcutta, which cheques were handed over to the respondent's office in Calcutta and/or deposited with the bank account of the respondent in Calcutta. 5. The respondent made payments to the petitioner in Calcutta by cheques received by the petitioners in Calcutta. 6. All contract notes and bills were handed over by the respondent's Calcutta office to the petitioner in Calcutta.
Issues: 1. Whether the Calcutta High Court had jurisdiction to entertain the petition under section 9 of ACA 96, despite the forum selection clause specifying Mumbai jurisdiction.
Ratio Decidendi: The court held that the jurisdiction under section 42 of ACA 96 is attracted even if at the stage of an arbitration agreement, any application under this part has been made in a Court and that Court alone will have jurisdiction. The court further held that the 'court' must satisfy the requirement of section 2 (e) of ACA 96, which defines 'court' as the principal civil Court of original jurisdiction in a District, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit.
Final Decision: The court overruled the preliminary objection relating to the jurisdiction of the Calcutta High Court and held that it had jurisdiction to entertain the petition under section 9 of ACA 96. The court also clarified that if it was shown that the arbitration proceeding had not commenced and the delay was attributable to the petitioner, the respondents could make an application for vacation of the interim order before the appropriate Bench of the Court.
( 1 ) IN this matter an application was filed under section 9 of Arbitration and Conciliation Act, 1996 [hereinafter called ACA 96] by the petitioner praying for interim protection in connection with the proposed artitration proceeding over the dispute between the parties.
( 2 ) THE material facts which appear from pleadings between the parties are as follows : the petitioner during the period between 19th April 2000 and 30th April 2001 placed various orders for sale and purchase of different shares with the respondent which is a company carrying on business, inter alia, as a sharebroker. The case of the petitioner is that as a result of such transaction, an amount of Rs. 1,74,54,140. 10p. became due and payable to the petitioner. It is the further case of the petitioner that the respondent received all the sums in respect of such transaction carried on by it for and on behalf of the petitioner with various stock exchanges only as a broker and trustee of the petitioner and the respondents are obliged to pay it back to the petitioner after deducting the brokerage.
( 3 ) THE case of the petitioner is that by a letter dated 15th May, 2001, the respondent acknowledged its liability to the petitioner in the aforesaid sum of Rs. 1,74,54,140. . 10p. According to the petitioner, the same would appear from Annexure 'f' to the petition. The petitioner further alleged that it is difficult for the petitioner to realise the said amount in the event an award in its favour is passed in the arbitration between the parties. So certain interim protection to secure the amount was prayed for.
( 4 ) ON such a petition being filed in this Court an interim order on 23rd May, 2001 was passed by this Court appointing a receiver to take possession of the respondent's membership card on Stock-Exchange Mumbai and National Stock-Exchange and the documents and statements in relation thereto. The receiver was also directed to make initials in respect of books and accounts of the respondent-company at Nilhut House, 6th Floor, R. N. Mukherjee Road, Calcutta.
( 5 ) PURSUANT thereto, the receiver went and submitted a report before the Court on the returnable date. In the affidavit which was filed to the said petition by the respondent-company, the main objection was taken on the question of territorial jurisdiction. It was stated that the appropriate Court would be the Mumbai Court for adjudication of the controversies between the parties. In support of the said contention, the respondents have referred to the contract note which according to the respondent made it clear that the arbitration shall be held in Mumbai and the appropriate Court for adjudication of any dispute raised in such arbitration shall be the Court in Mumbai. It was also stated that the existence of forum selection clause had been suppressed by the petitioner and the interim order was obtained ex parte by suppressing the said fact. In the affidavit, it has been admitted that there was one Bimal Gandhi who was the Managing Director and main shareholder of the respondent-company and was in sole control and was responsible for the business of the respondent-company. But since the said Bimal Gandhi expired on 8th May, 2001 under a tragic circumstance, there is no other person who is in control of the management of the respondent-company and the respondents have suspended all its business operations both in Mumbai Stock Exchange and National Stock Exchange. The petitioner has however pleaded that Bimal Gandhi committed suicide in view of the financial mess that he unfortunately found him in.
( 6 ) THE other objection which was taken in the said affidavit is that no arbitration proceedings were filed before the Stock Exchange, Mumbai. In so far as the petitioner's financial claim is concerned, the same was not seriously disputed.
( 7 ) A second application was also filed by the petitioner under section 9 of ACA 96 after the filing of the first application. Both the applicat
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