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2005 Supreme(Cal) 183

High Court Of Calcutta
Ashim Kumar Banerjee
I.K.MERCHANTS (P) LTD - Appellant
Versus
SIRPUR PAPER MILLS LTD - Respondent
A. P. 122 Of 2004
Decided On : 03/17/2005

Advocates Appeared:
IPSITA BANERJEE

A court has territorial jurisdiction to entertain an application under Section 11 of the Arbitration and Conciliation Act, 1996, if it would have jurisdiction to try and determine the controversy between the parties if a civil suit were filed on the same cause of action.

Headnote:

JURISDICTION - CONTRACTUAL DISPUTE - ARBITRATION ACT, 1996 - SECTION 11 - FORUM SELECTION CLAUSE - INTERPRETATION - COURT'S JURISDICTION TO APPOINT ARBITRATOR - TERRITORIAL JURISDICTION REQUIREMENTS.

Fact of the Case:

A contract between parties in Andhra Pradesh contained clauses stipulating jurisdiction at Sirpur-Kagaznagar and final decision by the General Manager of the respondent's mills in case of disputes. The petitioner filed a suit in the City Civil Court at Calcutta, which was stayed under Section 34 of the Arbitration Act, 1940. The petitioner then filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, for the appointment of an arbitrator in the Calcutta High Court.

Finding of the Court:

The Calcutta High Court held that it lacked territorial jurisdiction to entertain the application under Section 11 of the Arbitration and Conciliation Act, 1996, as the contract was executed and the goods were supplied outside its jurisdiction.

Issues: 1. Whether the Calcutta High Court has territorial jurisdiction to entertain an application under Section 11 of the Arbitration and Conciliation Act, 1996, when the contract was executed and the goods were supplied outside its jurisdiction. 2. Whether a forum selection clause excluding the jurisdiction of other competent courts ousts the jurisdiction of the Calcutta High Court.

Ratio Decidendi: 1. The court has territorial jurisdiction to entertain an application under Section 11 of the Arbitration and Conciliation Act, 1996, if it would have jurisdiction to try and determine the controversy between the parties if a civil suit were filed on the same cause of action. 2. A forum selection clause excluding the jurisdiction of other competent courts does not oust the jurisdiction of the court if the intention of the parties is not clear and unambiguous. 3. The court cannot appoint an arbitrator under Section 11 if it lacks territorial jurisdiction to entertain the controversy between the parties.

Final Decision: The Calcutta High Court dismissed the application for appointment of an arbitrator for lack of territorial jurisdiction.

ASHIM KUMAR BANERJEE, J.

( 1 ) PARTIES before me entered into a contract for supply of goods at Andhra Pradesh. The petitioner before me is carrying on business at Calcutta whereas the respondent is situated at Andhra Pradesh Clauses 16 and 17 of the contract stipulate as follows: 16. That for the purpose of jurisdiction of Court, this contract shall be deemed to have been entered into at Sirpur-Kagaznagar, south Central Railway, District Adilabad, Andhra Pradesh. 17. That in case of any dispute the decision of the General manager of our Mills shall be final and binding on you.

( 2 ) THE petitioners allege that they were not paid their dues far that they were compelled to file a Civil Suit in the City Civil Court at Calcutta. The said suit has, however, been stayed at the instance of the respondent under Section 34 of the Arbitration Act, 1940. The present application has been made by the petitioner under Section 11 of the Arbitration and conciliation Act, 1996, inter alia, praying for appointment of Arbitrator. Clause 17 did not stipulate reference to arbitration. However, the parties understood the said clause as such. The respondent has filed the affidavitin opposition contending that this Court has no territorial jurisdiction, rather lacks territorial jurisdiction to entertain the present application.

( 3 ) MR. Surajit Nath Mitra, learned Counsel appearing in support of this application, contends as follows : i) Clause 16 of the contract does not put any ouster or fetter on this Court from entertaining the present application in absence of specific words i. e. 'exclusive only alone etc. II) The plea of territorial jurisdiction should have been taken at the earliest opportunity. The respondent did not take such plea before the City Civil Court while making the application under section 34 of the Act of 1940 and as such, they are debarred from taking this plea at this belated stage. III) Part of the cause of action arose within the jurisdiction in view of the fact that the goods were supplied from Calcutta being the petitioners' place of business and the money was also payable at Calcutta. Hence, this Court is otherwise competent to entertain this application.

( 4 ) MR. Mitra, in support of his contention, has relied upon two decisions of the Apex Court, i. e. in the case of New Moga Transport Company vs. United India Insurance Company Ltd, and Ors. , reported in AIR 2,004 sc 2154 and in the case of R. S. D. V. Finance Co. Pvt. Ltd. vs. Shree vallabh Glass Works Ltd. , reported in AIR 1993 SC 2094 and a Single bench decision of this Court in the case of Prakash Ores Carrier vs. Steel Authority of India and Ors. , reported in 2003 (3) CHN 596.

( 5 ) THE first Apex Court decision in the case of the Moga Transport company (Supra) has been relied upon by Mr. Mitra for the proposition that the intention of the parties should be curled out from the use of expression of these words 'only alone' or 'exclusive' or the like to exclude jurisdiction of the other competent Courts. Paragraph 19 of this decision has been relied upon by Mr. Mitra in this regard.

( 6 ) CITING the second decision of the Apex Court in the case of R. S. D. V. Finance (supra), more particularly, relying upon paragraph 9 of the said decision, Mr. Mitra submits that mere mentioning of forum would not per se operate as ouster of jurisdiction of other competent Courts having jurisdiction to entertain the dispute.

( 7 ) IN the third decision cited by Mr. Mitra in the case of Prakash Ores carrier (supra), the learned Single Judge of this Court observed that the question of territorial jurisdiction of this Court to entertain an application under Section 11 of the Act of 1996, in His Lordship's view, cannot be gone into at the time of hearing of the said application.

( 8 ) OPPOSING the application, Mrs. Ipsita Banerjee, learned Counsel, contends that this Court, while entertaining an application under Section 11, should give due regard to the intention of the pa













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