High Court Of Delhi
R.B.BASAKHA SINGH AND SONS - Appellant
Versus
INDIAN DRUGS AND PHARMACEUTICAL LIMITED - Respondent
Suit 54A of 1976
Decided On : 01/05/1979
ARBITRATION - APPOINTMENT OF ARBITRATOR - JURISDICTION - AGREEMENT BETWEEN PARTIES - EXCLUSION OF COURT'S JURISDICTION - REFUSAL OF MANAGING DIRECTOR TO APPOINT ARBITRATOR - COURT CANNOT APPOINT ARBITRATOR - PLEADING OF DISPUTES OR DIFFERENCES IS NECESSARY IN A PETITION U/S 20 OF THE ARBITRATION ACT.
Fact of the Case:
Petitioner filed a petition under Section 20 of the Arbitration Act, seeking to compel the respondent to file the agreement and refer the disputes to an arbitrator. The contract between the parties contained an arbitration clause providing that only a person appointed by the Chairman and Managing Director of the respondent could act as an arbitrator, and if that was not possible, the matter was not to be referred to arbitration at all.
Finding of the Court:
The court held that it did not have jurisdiction to entertain the petition as the parties had agreed that disputes would be tried in Dehradun courts. The court also held that it could not appoint an arbitrator as the Managing Director of the respondent had refused to do so, and that the agreement between the parties excluded the court's jurisdiction to appoint an arbitrator. Additionally, the court held that the petition was not maintainable as the petitioner had not pleaded the disputes or differences in the petition.
Issues: 1. Whether this court has no jurisdiction to entertain the petition? 2. Whether in view of the refusal by the Managing Director of the respondent to appoint an arbitrator, the court cannot appoint an arbitrator? 3. Whether there is any ground for refusing to file the arbitration agreement and referring the disputes to arbitration? 4. Whether the petition has been instituted by a properly authorised person.
Ratio Decidendi: 1. Parties cannot confer jurisdiction on a court that it does not otherwise possess, but they can agree that disputes will be tried in a particular court. 2. Where an agreement provides that only a person appointed by one party can act as an arbitrator, and that party refuses to appoint an arbitrator, the court cannot appoint an arbitrator. 3. A petition under Section 20 of the Arbitration Act must plead the disputes or differences between the parties.
Final Decision: The court dismissed the petition with costs.
( 1 ) THIS is a petition u/s 20 of the Arbitration Act requiring the respondent to file the agreement and to refer the disputes to an arbitrator. The respondent accepted the tender of the petitioner for the construction of 232 quarters at Antibiotics Plant Township, Rishikesh (U. P. ). and formal contract was executed on 22nd May, 1972, which contains the following arbitration clause ;-- "it is also a term of this contract that no person other than a person appointed by the Chairman and Managing Director, as aforesaid, shall act as Arbitrator, and, and, if for any reason, that is not possible, the matter is not to be referred to arbitration at all all. "
( 2 ) IT is admitted by the parties that on 7. 8. 75, a supplementary deed was executed between them, whereby it was agreed to substitute the words "managing Director" in the original agreement,
( 3 ) THE petitioner alleges that the work under the contract was completed, that it submitted several claims for Rs. 1,35,763. 81 detailed in its letter dated 22. 4. 75 to the respondent and requested the respondent to appoint an arbitrator; that the respondent by letter dated 14. 11. 75 informed the petitioner that no arbitrator could be appointed in this regard.
( 4 ) THE respondent in its written statement has submitted that this court has no jurisdiction as courts at Dehradun alone have jurisdiction to try the matter in question ; that no arbitrator can be appointed as the Managing Director of the respondent-company has refused to appoint an arbitrator; that under clause 25 of the Contract, court cannot force its own arbitrator upon the parties ; that there is no ground for filing the arbitration agreement and referring the disputes to arbitration ; and that the petition u/s 20 of the Arbitration Act has not been instituted by a duly authorised person. The petitioner filed its rejoinder and the following Issues were framed : "1 Whether this court has no jurisdiction to entertain the petition ? 2. Whether in view of the refusal by the Managing Director of the respondent to appoint an arbitrator, the court cannot appoint an arbitrator ? 3. Whether there is any ground for refusing to file the arbitration agreement and referring the disputes to arbitration ? 4. Whether the petition has been instituted by a properly authorised person.
( 5 ) IT is well settled that parties by agreement cannot confer jurisdiction on any court which it did not otherwise possess. But where two courts have jurisdiction to try a proceeding or suit the parties may agree that the disputes between them shall be tried in one of such courts. It is admitted that the courts at Dehradun have jurisdiction in the matter u/s 20 Civil Procedure Code as the construction of the building in question was done within the jurisdiction of that court. Clause 3 of the Special Conditions of. the Contract is as under: "except as provided in clause 25 of the bond, all the disputes arising out of the contract bond, Dehradun Courts alone will have the jurisdiction".
( 6 ) THE case, Hakam Singh v. M/s. Gammon (India) Ltd. , A. I R. 1971 S. C. 740, before the Supreme Court related to a petition under section 20 of the Arbitration Act; wherein the contract provided that the court of law in the city of Bombay alone shall have jurfsdiction to adjudicate upon the disputes between the parties. It was held that since courts at Bombay had jurisdiction u/s 20 Civil Procedure Code the agreement between the parties that the Courts in Bombay alone shall have jurisdiction to try the proceedings was binding between them and that such agreement does not contravene Section 28 of the Contract Act. The next contention of petitioner is that clause 3 of Special Conditions of the Contract applies to those disputes only which are not covered by Clause 25. I do not agree. Clause 3 of Special Conditions refers ,to jurisdiction of Court while clause 25 of the Contract has no reference to jurisdiction of Court. Moreover, trial of a petition u
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