2011 Supreme(Cal) 1546
High Court Of Calcutta
Sanjib Banerjee, J.
Eastern Coalfields Ltd. : Appellant
Versus
Deep Sikha : Respondent
GA No. 3524 of 1999
Decided On : Dec 22, 2011
S.S.Bose
A party to Section 20 proceedings under the Arbitration Act, 1940, who fails to object to the jurisdiction of the court at that stage, is precluded from raising the ground of lack of jurisdiction at a later stage, by virtue of Section 31(4) of the Act and the principles of res judicata.
Headnote:
ARBITRATION - JURISDICTION - SECTIONS 30, 31(4), 33 OF THE ARBITRATION ACT, 1940 - ARBITRAL TRIBUNAL'S JURISDICTION - SECTION 20 PETITION FILED IN INCOMPETENT COURT - SUBSEQUENT CHALLENGE TO AWARD ON GROUND OF LACK OF JURISDICTION - HELD, PETITIONER PRECLUDED FROM RAISING CHALLENGE - SECTION 31(4) BARS SUBSEQUENT CHALLENGE TO JURISDICTION OF COURT THAT RECEIVED SECTION 20 PETITION - PRINCIPLE OF RES JUDICATA APPLIES.
Fact of the Case:
Petitioner challenged an arbitral award on the grounds of lack of jurisdiction of the arbitral tribunal, contending that the respondent's Section 20 petition under the Arbitration Act, 1940 was filed in an incompetent court and that the subsequent order for setting up the arbitral tribunal and all proceedings before the arbitrator were therefore nullities.
Finding of the Court:
1. The court held that the petitioner was precluded from challenging the jurisdiction of the court that received the Section 20 petition, as the petitioner was a party to the Section 20 proceedings and ought to have objected to the jurisdiction at that stage. 2. The court relied on Section 31(4) of the Arbitration Act, 1940, which provides that once an application pertaining to a reference has been carried to a particular civil court, if such court was competent to receive it, future applications relating to the reference have to be carried to the same court. 3. The court also noted that the petitioner had not preferred an appeal against the order for filing of the arbitration agreement in the Section 20 proceedings, and was therefore precluded from raising the ground of lack of jurisdiction at a later stage.
Issues: 1. Whether the petitioner was precluded from challenging the jurisdiction of the court that received the Section 20 petition. 2. Whether the arbitral tribunal lacked jurisdiction to take up the reference due to the alleged incompetence of the court that received the Section 20 petition.
Ratio Decidendi: 1. The court held that the petitioner was precluded from challenging the jurisdiction of the court that received the Section 20 petition, as the petitioner was a party to the Section 20 proceedings and ought to have objected to the jurisdiction at that stage. 2. The court relied on Section 31(4) of the Arbitration Act, 1940, which provides that once an application pertaining to a reference has been carried to a particular civil court, if such court was competent to receive it, future applications relating to the reference have to be carried to the same court. 3. The court also noted that the petitioner had not preferred an appeal against the order for filing of the arbitration agreement in the Section 20 proceedings, and was therefore precluded from raising the ground of lack of jurisdiction at a later stage.
Final Decision: The court dismissed the petitioner's challenge to the arbitral award on the ground of lack of jurisdiction.
1. THE primary challenge to the award is on the ground that the arbitral tribunal lacked authority in taking up the reference. THE present challenge is under Sections 30 and 33 of the Arbitration Act, 1940. THE respondent is not represented even at the second call. THE petitioner has issued several notices to the respondent but it appears that the respondent firm may not be existence and it does not carry on any business at 2, Church Lane. THE petitioner will retain the notices issued to the respondent for future reference.
2. ON the merits of the award, the petitioner says that the arbitrator failed to indicate any reasons as to why the petitioner's counter-claim was dismissed. The petitioner also assails the award in favour of the contractor. ON a reading of the award, it appears that sufficient basis has been disclosed in allowing a part of the claim. The petitioner cannot now question the basis for the award by referring to the evidence that was before the arbitrator. ON the basis of the reasons given in support of the award, to the extent it has been allowed, there is no ground for the petitioner to challenge the same.
3. AS to the petitioner's challenge in the arbitrator having discredited the entirety of the counter-claim it appears that no reasons have been furnished. The 1940 Act did not mandate reasons to be given by the arbitrator. The petitioner cannot demonstrate that the agreement between the parties obliged the arbitrator to furnish reasons in support of any decision. In such view of the matter, the challenge, both on the merits of the amount awarded in favour of the respondent and on the dismissal of the counter-claim, appears to be unmeritorious.
4. THAT leaves the primary question that has been urged by the petitioner: the issue of jurisdiction. The petitioner contends that since the petitioner's registered office is in Sanctoria in the district of Burdwan and since the entirety of the work was to be performed in some coal mine thereabouts and there are no coal mines in the town of Calcutta, the respondent's petition under Section 20 of the 1940 Act could not have been filed in this Court. The petitioner says that this Court had erroneously assumed jurisdiction in the Section 20 proceedings and, consequently, the order for setting up the arbitral tribunal and all proceedings before the arbitrator should be seen as a nullity. The argument is unacceptable and the petitioner is precluded from urging such matter.
5. TO begin with, Section 31(4) of the 1940 Act, which is comparable to Section 42 of the Arbitration and Conciliation Act, 1996, provides that once an application pertaining to a reference has been carried to a particular civil court, if such court was competent to receive it, future applications relating to the reference have to be carried to the same court. The petitioner seeks to suggest that since the question of competence is left open in Section 31(4) of the 1940 Act, unless it is found that the court which first received an application pertaining to a reference was competent, the provision would not come into play. TO an extent the petitioner is right. However, since the petitioner was a party to the Section 20 proceedings and ought to have objected to the jurisdiction of the court to entertain it, the final decision having gone in favour of the respondent and against the petitioner would preclude the petitioner from urging the objection at a later stage. As to whether this court was competent or not to receive the Section 20 petition ought only to have been urged in course of the Section 20 proceedings and cannot be agitated at this stage long after the conclusion of the Section 20 petition. There is a good reason therefor. First, an objection as to territorial jurisdiction does not go to the root of the matter nor is it incapable of waiver. Section 21 of the Code recognises the principle, both in course of a suit and in course of execution. Secondly, if the question of jurisdiction was