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2006 Supreme(Cal) 734
High Court Of Calcutta
Before Justice Indira Banerjee
ZOOM DEVELOPERS PVT.LTD - Appellant
Versus
SMALL TOOLS MANUFACTURING CO.OF INDIA LTD - Respondent
G. A. 2825 Of 2006
Decided On : 11/27/2006
The Calcutta High Court does not have territorial jurisdiction to entertain an application under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief of appointment of Receiver over and injunction in respect of immovable property situate outside the Original Side Jurisdiction of the Court, if the subject-matter of the arbitration is a suit for land.
Headnote:
ARBITRATION - JURISDICTION - TERRITORIAL - SUIT FOR LAND - SECTION 9 OF THE ARBITRATION AND CONCILIATION ACT, 1996 - Whether the Calcutta High Court has territorial jurisdiction to entertain an application under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief of appointment of Receiver over and injunction in respect of immovable property situate outside the Original Side Jurisdiction of the Court.
Fact of the Case:
The petitioner, a company, entered into an agreement with the respondent No. 1, a company, and the respondent No. 2, a bank, for the development of a plot of land situated outside the Original Side jurisdiction of the Calcutta High Court. The petitioner was to pay Rs. 300 lacs to the respondent No. 2 and Rs. 200 lacs to the respondent No. 1 in consideration for the assignment of all rights in respect of the said premises, including beneficial ownership, and the sole and exclusive right to develop the said premises. The petitioner failed to pay the agreed amount within the stipulated time and the respondents terminated the agreement. The petitioner filed an application under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief of appointment of Receiver over and injunction in respect of the said premises.
Finding of the Court:
The Calcutta High Court held that it lacked territorial jurisdiction to entertain the application under Section 9 of the Arbitration and Conciliation Act, 1996, as the subject-matter of the arbitration was a suit for land and the land in question was situated outside the Original Side jurisdiction of the Court.
Issues: 1. Whether the Calcutta High Court has territorial jurisdiction to entertain an application under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief of appointment of Receiver over and injunction in respect of immovable property situate outside the Original Side Jurisdiction of the Court? 2. Whether the subject-matter of the arbitration in the present case is a suit for land?
Ratio Decidendi: 1. Under Section 2(b) of the Arbitration and Conciliation Act, 1996, 'court' means the principal Civil Court of original jurisdiction in a District including the High Court in exercise of its original jurisdiction having the jurisdiction to decide the questions forming the subject-matter of the arbitration, if the same had been the subject-matter of a suit. 2. In order to determine whether a suit is a suit for land, the Court must consider the essential nature of the relief sought. If the relief relates to adjudication of title to land or immovable property or delivery of possession of land or immovable property, it would be a suit for land. 3. In the present case, the relief sought in the arbitration is for delivery of possession of the land to the petitioner and assignment of ownership of the said premises. These are reliefs that would be available in a suit for land. Therefore, the subject-matter of the arbitration is a suit for land.
Final Decision: The Calcutta High Court dismissed the application under Section 9 of the Arbitration and Conciliation Act, 1996, on the ground of want of territorial jurisdiction.
( 1 ) THE respondent No. 1, hereinafter referred to as STMC was the owner of a plot of land measuring about 76. 5 Cottahs at Premises no. 33/1a, Upen Chandra Banerjee Road, Kolkata 700054, hereinafter referred to as the said premises, situate outside the Original Side jurisdiction of this Court.
( 2 ) THE said premises was, however, mortgaged to the respondent-Bank as security for loans advanced by the respondent-Bank to STMC. In 1998 the Board for Industrial and Financial Reconstructions (BIFR)declared STMC a sick company under the Sick Industrial Companies (Special Provisions) Act, 1985.
( 3 ) STMC preferred an appeal before the Appellate Authority for industrial and Financial Reconstruction, (AAIFR ). The appeal was, however, dismissed. Thereafter, STMC filed a writ petition being w. P. No. 1557 of 1998 in this Court challenging the order of AAIFR.
( 4 ) BY an order dated 19th April, 2000 in W. P. No. 1557 of 1998 this court approved the sale of the said premises to M/s. Shiva Technocom pvt. Ltd. at Rs. 10. 71 crores. It is alleged that the Shiva Technocom Pvt. Ltd. failed to pay the agreed consideration within the time stipulated in the order dated 19th April, 2000.
( 5 ) BY an order dated 8th June, 2000 this Court directed the forfeiture of the security deposit of the said Shiva Technocom Pvt. Ltd. and directed resale of the said premises.
( 6 ) AN appeal was preferred against the said order dated 8th June, 2000. The appeal was, however, dismissed. Thereafter, advertisements for sale of the said premises was issued. Pursuant to the sale notice the respondent No. 3, hereinafter referred to as the Martin Bum submitted its offer, which was accepted by the Division Bench.
( 7 ) THEREAFTER, a four-party agreement was executed between STMC, the respondent-Bank, Martin Burn and the petitioner, whereby it was agreed that the petitioner would procure Rs. 800 lacs for payment to the respondent-Bank. The amount would directly be paid by the petitioner to the Respondent-Bank. A further amount of Rs. 523 lacs would be paid by the petitioner to the owner, STMC through a non-lien account.
( 8 ) BY the aforesaid agreement, it was decided that the petitioner would provide finance for rehabilitation of STMC and would in turn have the sole and exclusive right to develop the said premises and to either sell or to retain the developed premises wholly or in part and realize the sale proceeds of any part of the said premises that might be sold.
( 9 ) IT was further agreed that the petitioner would pay the initial amount of Rs. 300 lacs to the STMC and to the respondent-Bank by 24th december, 2004.
( 10 ) IN Paragraph-11 of the petition, it is alleged that the petitioner paid Rs. 40 lacs to Martin Burn as per the particulars given in the said paragraph. Admittedly, as pleaded in the aforesaid paragraph, a further sum of Rs. 260 lacs which the petitioner had promised to pay remained outstanding.
( 11 ) BY an order dated 20th December, 2004, this Court extended the time for payment. On 15th January, 2005 Mr. Sujit Poddar, Regional director of the petitioner wrote a letter to Martin Burn, informing Martin burn that the petitioner was unable to make payment of Rs. 300 lacs as promised and that the four-party agreement was treated as cancelled. By the aforesaid letter Martin Burn was asked to locate another partner. A copy of the said letter was also marked to STMC.
( 12 ) THE petitioner contends that the Regional Director concerned was not authorized to write the letter and the letter was written by reason of a communication gap.
( 13 ) ACCORDING to the petitioner, immediately after issuance of the letter dated 15th January, 2005, the petitioner wrote a letter dated 17th january, 2005 to the respondent-Bank praying for extension of time of one month to make payment of the agreed amount of Rs. 300 lacs. The offer was rejected by the respondent-Bank by a letter dated 19th January, 2005.
( 14 ) IN the me
