The main legal point established in the judgment is that the territorial jurisdiction of the court under Section 11 of the Arbitration and Conciliation Act, 1996 is determined based on the place where the contract was concluded and the acceptance of the proposal, and the previous exercise of jurisdiction under Section 9 of the Act does not confer territorial jurisdiction for the present petition.

MADAN B. LOKUR, J.

( 1 ) THIS is a petition under Section 11 of the Arbitration and Conciliation act, 1996 (the Act) for the appointment of an Arbitrator.

( 2 ) IT is stated that Respondent No. 1 was desirous of certain works being executed, namely, design, construction and commissioning of dry-cum-wet intake wells of various capacities as detailed in the notice inviting tender. The work was in different localities in Bhopal and included supply, erection, installation of electrical and mechanical equipment and other allied works described as Package No. V as per scope of work of the tender.

( 3 ) THE Petitioner says that its bid was accepted at the prices quoted by the Petitioner by a letter of acceptance dated 17th January, 2000, which was communicated to the Petitioner in New Delhi. Thereafter, a formal agreement was entered into between the parties being agreement 6/99-2000 dated 31st january, 2000.

( 4 ) THE Petitioner commenced work on 5th February, 2000 and during the process of completing the work under the contract the Petitioner submitted bills for payment. Unfortunately, Respondent No. 1 made frequent changes in the drawings of the work and did not release the payment in time. One thing led to another with the result that disputes arose between the parties. According to the Petitioner a sum of Rs. 57,91,861/- was long overdue to it, but instead of making the payment Respondent No. 1 terminated the contract and expelled the petitioner from the site without releasing any payments. To make matters worse, respondent No. 1 illegally invoked the bank guarantees given by the Petitioner, with the result that the Petitioner filed a petition in this Court for an interim measure under Section 9 of the Act being Arbitration Petition No. 256/2003, in which an ex parte ad interim injunction was granted.

( 5 ) ON these broad facts, the Petitioner sought arbitration of the disputes under Clause 67 of the agreement entered into between the parties. Since respondent No. 1 did not appoint an Arbitrator, the present petition was filed.

( 6 ) IN response, the Respondents have raised two preliminary objections. The first preliminary objection is that this Court has no territorial jurisdiction to entertain the petition since no part of the cause of action arose within the territorial jurisdiction of this Court. The agreement between the parties was executed in Bhopal and it is only the Courts in Madhya Pradesh that have jurisdiction in the matter. The second preliminary objection taken was that in terms of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983, (the adhiniyam) any dispute to which the State Government or a Public Undertaking wholly or substantially owned or controlled by the State Government is a party will be referred to an Arbitral Tribunal constituted under the Adhiniyam. It is stated that Respondent No. 1 is a Public Undertaking that is either wholly or substantially owned or controlled by the State Government and, therefore, by virtue of the provisions of the Adhiniyam, arbitration has to take place under the provisions thereof.

( 7 ) THE principal contention of learned counsel for the Petitioner for invoking the territorial jurisdiction of this Court is based on the letter of acceptance dated 17th January, 2000. It is contended that since this letter was received in Delhi, a part of the cause of action arose in Delhi and, therefore, this Court has territorial jurisdiction to entertain the present petition.

( 8 ) LEARNED counsel for the Petitioner cited several decisions in support of her contention that the cause of action would arise where the letter of acceptance is received. In particular she referred to Bhagwandas Goverdhandas kedia vs M/s Girdhar Lal Parshottam Das and Co. and Ors. AIR 1966 SC 543, M/s matanhella Brothers and Ors. vs. M/s Shri Mahabir Industries Pvt. Ltd. AIR 1970 patna 91 and State of Maharashtra and Ors. Vs. M/s Ranjeet Construction AIR 1986 bombay 76.

( 9 ) IN Bhagwandas Goverdhandas Kedia

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