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1997 Supreme(Del) 689
High Court Of Delhi
UNION OF INDIA - Appellant
Versus
ELECTRONIC CONTROLS AND INSTRUMENT ENGINEERS - Respondent
First Appeal (OS) 250 of 1996
Decided On : 08/22/1997
F.Hassan, R.Rajappa
Headnote:Arbitration Act 1940 — Section 20 — Appointment of "arbitrator — Territorial jurisdiction — Contract for street lighting in Patiala — Tenders — Invited — Work awarded — Executed — Supervised and payment made at Patiala — Cause of action at Patiala — Dispute — Referred to arbitrator — Respondent applied for filing of contract before court — Appellant pleaded Delhi Courts have no jurisdiction to entertain and decide application — Ld. Single judge allowed and appointed arbitrator to hold proceedings at Patiala — Appealed against — Respondent pleaded Delhi Courts have jurisdiction as UOI has its office at Delhi — This court has no jurisdiction — Appeal allowed — Impugned order set-aside.
Held:
Admittedly the work in question was to be carried out at Patiala, which was to be supervised by the Executive Engineer stationed at Patiala and the tenders were also called at Patiala, as such the entire cause of action arose at Patiala, which is not within the jurisdiction of this Court. As all matters connected with an arbitration agreement, award and regarding conduct of arbitration proceedings can be initiated only in a Court within whose territorial jurisdiction the cause of action has arisen, the decision of the learned Single Judge holding this Court also to be having jurisdiction on account of "residence of the appellant" is liable to be set aside.
( 1 ) THE appeal has arisen against an order passed on 21. 3. 1996 by learned Single Judge of this Court allowing the respondent s application under Section 20 of the Arbitration Act, 1940 (hereinafter REFERRED TO to as "the Act") and appointing Shri D. B. Chachad, Engineer, residening at A/1297,safderjung Enclave, New Delhi as an arbitrator with direction to him to enter upon reference, to hold arbitration proceedings at Patiala and make his award in accordance with law.
( 2 ) ONE of the grounds, which was raised by the appellant before the learned Single Judge and has also been raised in this appeal is the jurisdiction of the Court at Delhi to entertain and decide the application under Section 20 of the Act.
( 3 ) THE undisputed facts are that the appellants invited open tenders for the work discribed as "provision of street lightening in the D. C. W. Colony Patiala". The aforementioned tenders were invited by Deputy Chief Electrical Engineer, D. C. W. Patiala. The tenders were submitted at Patiala. Contract was also awarded to the respondent at Patiala and the same was also to be executed at Patiala. Payments were also released at Patiala. Even under the terms of the contract, work was to be carried out at Patiala and the work was to be supervised by the Executive Engineer stationed at Patiala.
( 4 ) THE appellant s objection was turned down by learned Single Judge placing reliance upon Full Bench decision of this Court in Shri Ram Rattan Bhartia v. Food Corporation of India and another, AIR 1978 Delhi 183, holding that this Court has jurisdiction to entertain the application. It was held that apart from the Court within whose jurisdiction cause of action to sue arises, the Court within the local limits of whose jurisdiction the respondent or each of the respondents at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, will also have the jurisdiction to entertain the proceedings under the Arbitration Act in terms of clauses (a) and (b) of Section 20 of Civil Procedure Code. In this case Punjab and Haryana High Court on account of cause of action taking place in its jurisdiction and this Court on account of the residence of the respondent has jurisdiction to entertain proceedings between the parties.
( 5 ) THE claim of the respondent in the application under Section 20 of the Act was that its contract was illegally terminated by the appellant without assigning any reason as such disputes had arisen between the parties for which the respondent issued notice to the appellant to refer the disputes to an arbitrator. Since respondent s request was not acceded to, application under Section 20 of the Act was filed for making reference.
( 6 ) SECTION 20 of the Act enables a party to apply to a Couprt having jurisdiction in the matter to which the agreement relates that agreement be filed in Court. Before a person applies under Section 20 of the Act, four conditions must be fulfilled:-
I) there must be an agreement between the parties. ii) the agreement with respect to the subject matter of a suit was entered into before filing of the suit; iii) the differences have arisen between the parties to the agreement; iv) the Court to which the application is made has jurisditonn in the matter to which agreement relates.
( 7 ) COURT has been defined under the Act by clause (c) of Section 2 to mean a Civil Court having jurisdiction to decide the questions forming the subject matter of the reference if the same had been the subject matter of a suit, but does not, except for the purpose of arbitration proceedings under Section 21, include a Court of Judge Small Causes. Section 31 of the Act defines the jurisdiction of the Court. The purpose of enacting Section 31 is to make one Court as venue and all the matters connected with the arbitration agreement and award and also to make applications. The intention of enacting Section 31 appears to be to mak
