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2024 Supreme(Ker) 231
IN THE HIGH COURT OF KERALA AT ERNAKULAM
T.R.RAVI, J.
I.D.A. Malappuram – Appellant
Versus
The Indian Dental Association – Respondents
AR No. 211 of 2022
Decided on : 07-03-2024
Advocate Appeared:
For the Appellant : G.SREEKUMAR (CHELUR)
For the Respondent: SHYAM PADMAN, C.M.ANDREWS(K/000070/1989), BOBY M.SEKHAR(K/422/2008), LAYA MARY JOSEPH(K/000725/2016), HARISH ABRAHAM(K/764/2007), ASHWATHI SHYAM(K/1451/2020)
IMPORTANT POINT
The main legal point established in the judgment is that the agreement specifying the place for arbitration proceedings and the intention of the parties to exclude all other courts will determine the jurisdiction of the court to entertain an arbitration request.
Headnote:
Arbitration - Appointment of Arbitrator - Arbitration and Conciliation Act, 1996 - Section 11 - Clause 6 of Annexure A1 - Brahmani River Pellets Limited V. Kamachi Industries Limited - BBR (India) Private Limited V S.P. Singla Constructions Private Ltd. - Ravi Ranjan Developers Pvt. Ltd. V. Aditya Kumar Chatterjee - The Kerala Minerals and Metals Ltd. V. GMM Pfaudler Ltd. - Homevista Decor and Furnishing Pvt. Ltd. and Ors. V. Connect Residuary Private Limited - Inox Renewables Ltd. V. Jayesh Electricals Ltd. - BSG SGS Soma JV V. NHPC Limited
Fact of the Case:
The petitioner, a branch of the 2nd respondent, sought the appointment of an Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, due to a dispute arising from the decision to start a branch at Tirur, within the Malappuram District, contending it would bifurcate the petitioner branch into two.
Finding of the Court:
The Court held that it did not have jurisdiction to consider the arbitration request, as the agreement specified that arbitration proceedings shall be held only at the place where the Honorary Secretary General of IDA resides and practices, and parties intended to exclude all other courts.
Issues: Jurisdiction of the Court to entertain the arbitration request, compliance with pre-arbitral steps, and arbitrability of the alleged dispute.
Ratio Decidendi: The Court relied on Clause 6 of Annexure A1 and various judgments, including Brahmani River Pellets Limited V. Kamachi Industries Limited, BBR (India) Private Limited V S.P. Singla Constructions Private Ltd., Ravi Ranjan Developers Pvt. Ltd. V. Aditya Kumar Chatterjee, The Kerala Minerals and Metals Ltd. V. GMM Pfaudler Ltd., Homevista Decor and Furnishing Pvt. Ltd. and Ors. V. Connect Residuary Private Limited, Inox Renewables Ltd. V. Jayesh Electricals Ltd., and BSG SGS Soma JV V. NHPC Limited, to conclude that the Court did not have jurisdiction to entertain the arbitration request.
Final Decision: The arbitration request was dismissed without prejudice to the right of the petitioner to move the appropriate forum.
JUDGMENT :
The application has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator by this Court. The petitioner is a branch of the 2nd respondent and is aggrieved by the decision to start a branch at Tirur, which is within the Malappuram District. According to the petitioner, it will be bifurcation of the petitioner branch into two. It is contended that a dispute has arisen between the branch office and the central council and hence the matter needs to be referred to arbitration, going by Annexure A1 Constitution of the 3rd respondent.
2. Respondents 2, 3 & 5 have filed a counter affidavit opposing the application. The Constitution which has been produced as Annexure A1 deals with disputes and arbitration. The disputes that are contemplated in Annexure A1 includes disputes between a branch office and a head office also. A contention is raised that the head office is not the same as the central council and hence reference made to the different kinds of disputes in Clause 1 under the Chapter Disputes and Arbitration does not say about a dispute between the branch and the central council. The petitioner submits that in case of disputes between the branch and the central council, there is no pre-arbitral steps contemplated in the Constitution and the matter has to be directly referred to arbitration. It is also submitted that the petitioner cannot approach the civil court since such a remedy is barred by the clause relating to exclusion of jurisdiction of the civil court contained in Annexure A1.
3. The primary contention of the counsel for the respondents is that this Court has no jurisdiction to entertain the arbitration request. It is submitted that going by clause 6 under the chapter Disputes and Arbitration in the Constitution, the petitioner will have to approach a Court at the place where the Honorary Secretary General of the Association resides and practises at the time the cause arises and not anywhere else. As the Honorary Secretary General is admittedly residing at Mumbai, it is contended that action should be initiated at the seat of arbitration at Mumbai. It is submitted that in case this Court is of the opinion that the Court has territorial jurisdiction to consider the request for reference to arbitration, even then the petitioner would not be entitled to approach the Court at this stage since the petitioner has not gone through the pre-arbitral procedure which has been contemplated in Annexure A1. It is hence submitted that the clause relating to reference to arbitration can be invoked only after completing the pre-arbitral steps and the application at this stage cannot be entertained. Reference is made to several decisions which will be dealt with later. Annexure R5(a) produced along with the counter affidavit of the respondents is a copy of the Rules of the Association with regard to Arbitration. Reference is made to clauses 2, 4, 5 and 17 to submit that there is no ambiguity regarding place of arbitration as per the Rules and no proceedings can be initiated in this Court.
4. Clause 6 in chapter “Disputes and Arbitration” in Annexure A1 reads thus:
6. Exclusion of Jurisdiction of Civil Court
A. All dispute/s, Arbitration and legal proceeding can be initiated/commenced by the member/s; Branches/es and outsider concerning functioning/business of IDA and/or byelaws; rule and regulations and any mater relating to constitution of IDA only at the place where the Honorary Secretary General of IDA resides and practices at the time of cause of arises and not any where else.
B. in view of the arbitration clause for all disputes and grievances by a member/s or a State/Local/Defence Branch, the remedy to approach for a decree in Civil Court is barred. All such disputes and grievance shall be decided only by Arbitration. If any member or State or Local Branch of Association persist to file any suit, which can be questioned as to its jurisdiction and maintainability, it shall be
