2007 Supreme(Cal) 359

High Court Of Calcutta
Before: Sanjib Banerjee, J.
APEEJAY OXFORD BOOKSTORES PRIVATE LIMITED - Appellant
Versus
HOTEL LEELA VENTURE LIMITED - Respondent
A. P.  164  Of  2006
Decided On : 05/10/2007

The validity of a request for reference under section 11(6) of the Arbitration and Conciliation Act, 1996 is to be tested on the conditions found in section 2(1)(e) of the Act, which defines the jurisdiction of the Court to receive a suit on the same cause of action as the reference.

Headnote:

ARBITRATION - JURISDICTION - CHIEF JUSTICE - VALIDITY OF REQUEST FOR REFERENCE - ARBITRABILITY OF DISPUTES - JURISDICTION OF COURT TO RECEIVE PETITION - FORUM SELECTION CLAUSE - EXCLUSIVITY - SUBSTANCE OF DISPUTE - "SUIT FOR LAND" - SECTION 2(1)(E) OF THE ARBITRATION AND CONCILIATION ACT, 1996 - LETTERS PATENT, CLAUSE 12.

Fact of the Case:

The petitioner, a bookstore operator, entered into an agreement with the respondent, a hotel, to run the bookstore at the respondent's hotel in Bangalore. The agreement contained an arbitration clause and provided that the jurisdiction of the agreement would be at Bangalore. A dispute arose between the parties, and the respondent invoked the arbitration agreement and indicated its nominee as arbitrator. The petitioner did not agree to the name suggested by the respondent and instituted proceedings seeking leave under clause 12 of the Letters Patent and requesting for the appointment of an arbitrator. The respondent applied for revocation of the leave granted under clause 12 of the Letters Patent and contended that this Court could not have received the petition.

Finding of the Court:

1. The power exercised by the Chief Justice of the High Court or the Chief Justice of India under section 11(6) of the Act is a judicial power. 2. The Chief Justice or his designate will have the right to decide the preliminary aspects as indicated in the earlier part of this Judgment. These will be, his own jurisdiction, to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. 3. A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justice or the person or institution designated by him is final. 4. Section 42 of the Act does not apply to applications made under section 11. 5. The validity of a request for reference under section 11(6) [or section 11(4) or section 11(5)] is to be tested on the conditions found in section 2(1)(e) of the Act. 6. The composition of the designated institution or the wherewithal of the designated person, is of no significance in discharging the judicial function under section 11(6) [and section 11(4) and section 11(5)]. 7. A forum selection clause, to be effective, must confer exclusive jurisdiction on a particular Court in clear and unambiguous terms. 8. In the absence of clear and unambiguous terms conferring exclusive jurisdiction, the Court will have to examine the substance of the dispute to determine whether it is a "suit for land" within the meaning of section 2(1)(e) of the Act.

Issues: 1. Whether the Chief Justice of the High Court has jurisdiction to receive a request for reference under section 11(6) of the Arbitration and Conciliation Act, 1996. 2. Whether the validity of a request for reference under section 11(6) is to be tested on the conditions found in section 2(1)(e) of the Act. 3. Whether section 42 of the Act applies to applications made under section 11. 4. Whether a forum selection clause, to be effective, must confer exclusive jurisdiction on a particular Court in clear and unambiguous terms. 5. Whether, in the absence of clear and unambiguous terms conferring exclusive jurisdiction, the Court will have to examine the substance of the dispute to determine whether it is a "suit for land" within the meaning of section 2(1)(e) of the Act.

Ratio Decidendi: 1. The power exercised by the Chief Justice of the High Court or the Chief Justice of India under section 11(6) of the Act is a judicial power. 2. The validity of a request for reference under section 11(6) [or section 11(4) or section 11(5)] is to be tested on the conditions found in section 2(1)(e) of the Act. 3. Section 42 of the Act does not apply to applications made under section 11. 4. A forum selection clause, to be effective, must confer exclusive jurisdiction on a particular Court in clear and unambiguous terms. 5. In the absence of clear and unambiguous terms conferring exclusive jurisdiction, the Court will have to examine the substance of the dispute to determine whether it is a "suit for land" within the meaning of section 2(1)(e) of the Act.

Final Decision: The petition is dismissed and the application for revocation of leave granted under clause 12 of the Letters Patent is allowed. The respondent is entitled to recover actual costs of these proceedings if a reference is ultimately made.