I have heard both sides.

Introduction:

2. This is an application under Section 11 (4) of the Arbitration & Conciliation Act, 1996 (hereinafter referred as the Act). It seeks appointment of an Arbitrator by the Chief Justice pursuant to Clause 36 of the "Dealer Agreement" dated 4th April, 2004 entered into between the parties hereto. A copy of the said Agreement has been filed by the applicant as Annexure-3.

3. There is no dispute that Clause 36 of the said Agreement is an arbitration Clause.

4. The objection by the respondent is to the territorial jurisdiction of this Court to entertain this application under Section 11. The objection is based upon Clause 37 of the same Dealer Agreement dated 4th April, 2004 which is being relied upon by the applicant also.

5. For ready reference the said Clause 37 is quoted below:

"37. JURISDICTION

This Agreement has been signed in Mumbai and any legal proceedings arising out of this Agreement or relating thereto or in any manner connected with the dealership granted under this Agreement, shall be instituted in Mumbai Courts only, to the exclusion of other Courts." (emphasis supplied)

The Law:

6. Before dealing with the factual aspect of the matter, it would be desirable to spell out the law.

7. Sub-sections (4), (5), (6), (7), (8) and (10) of Section 11 of the Act use the word "Chief Justice". Clause (b) of subsection (12) of Section 11 elaborates the meaning of the word "Chief Justice" as used in sub-sections (4), (5), (6), (7), (8) and (10) of Section 11.

8. For ready reference, Clause (b) of sub-section (12) of Section 11 is quoted below:

"Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to "Chief Justice" in those sub-sections shall be construed as a reference to the Chief Justice of the High Court within whose local limits the principal civil court referred to in clause (e) of sub-section (1) of Section 2 is situate and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that High Court."

9. Thus, Section 2(1)(e) of the Act becomes relevant and is quoted below for ready reference:-

"Court" means the principal civil court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal civil Court, or any court of small causes."

10. From reading of these provisions, it would appear that the Chief Justice under sub-sections (4), (5), (6), (7), (8) and (10) of Section 11 of the Act would mean the Chief Justice of the High Court within the local limits of which that 'Civil Court' is situated, which Civil Court would have (in absence of the arbitration provision) the territorial jurisdiction to decide a suit involving the questions forming the subject-matter of the arbitration.

11. The territorial jurisdiction of civil courts is determined by Section 20 of the Code of Civil Procedure, 1908 which in substance provides that a suit can be instituted either where the defendant resides or where the cause of action has arisen.

12. Therefore, initially it will have to be examined, with reference to the facts of this case, where any part of the cause of action has arisen.

The Facts of this case:

13. It has been contended on part of the applicant that the 'entire' cause of action has arisen within the territory of Jharkhand State.

14. This contention is misconceived. From Clause 37 of the Agreement quoted hereinabove, it is clear that the Agreement has been signed in Mumbai. The execution of the Agreement is an integral part of the cause of action for seeking the reliefs by way of arbitration because without such Agreement neither the disputes would not have arisen nor arbitration would be possible.

15. An argument has been advan