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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE A.R. LAKSHMANAN
Neyveli Lignite Corporation - Appellant
Versus
Vinay Engineering and Another - Respondents
Applications Nos. 6004 and 6005 of 1991 in O.P. No. 547 of 1991
Decided On : 24 March 1992
ARBITRATION - JURISDICTION - CONTRACTUAL CLAUSE RESTRICTING JURISDICTION TO ONE COURT - VALIDITY - INTERPRETATION - SECTION 31(4) OF THE ARBITRATION ACT, 1940.
Fact of the Case:
Neyveli Lignite Corporation Limited (NLC) entered into a contract with Vinay Engineering for the manufacture and supply of equipment and components for a steam generator installation at Neyveli. The contract contained an arbitration clause and a clause (Clause 18.2) stating that the Civil Court having ordinary civil jurisdiction over Neyveli shall have jurisdiction over all matters concerning the contract. A dispute arose between the parties and was referred to arbitration. The arbitrator passed an award in favor of Vinay Engineering. Vinay Engineering filed a petition under Section 14(2) of the Arbitration Act, 1940 (the Act) in the Madras High Court to enforce the award. NLC filed an application to dismiss the petition on the ground that the Madras High Court had no jurisdiction to entertain the petition as per Clause 18.2 of the contract.
Finding of the Court:
The Madras High Court held that it had jurisdiction to entertain the petition under Section 14(2) of the Act. The court interpreted Clause 18.2 of the contract as not excluding the jurisdiction of other courts, but merely providing that the Civil Court having ordinary civil jurisdiction over Neyveli shall have jurisdiction over all matters concerning the contract. The court also held that Section 31(4) of the Act, which provides that an award may be filed in a court competent to entertain it, notwithstanding anything contained elsewhere in the Act or in any other law, applied to the case and gave the Madras High Court jurisdiction to entertain the petition.
Issues: 1. Whether Clause 18.2 of the contract excluded the jurisdiction of the Madras High Court to entertain the petition under Section 14(2) of the Act? 2. Whether Section 31(4) of the Act applied to the case and gave the Madras High Court jurisdiction to entertain the petition.
Ratio Decidendi: 1. The court held that Clause 18.2 of the contract did not exclude the jurisdiction of other courts, but merely provided that the Civil Court having ordinary civil jurisdiction over Neyveli shall have jurisdiction over all matters concerning the contract. The court noted that the clause did not contain words like 'alone', 'only', or 'exclusive', which would have indicated an intention to exclude the jurisdiction of other courts. 2. The court held that Section 31(4) of the Act applied to the case and gave the Madras High Court jurisdiction to entertain the petition. The court interpreted Section 31(4) as containing a non obstante clause which carves out an exception to the general question of jurisdiction of the court in which an award may be filed elsewhere provided in the Act in respect of the proceedings referred to in sub-section (4) having an overriding effect in relation to the filing of the award if the conditions therein are satisfied, the court other than the one envisaged in Section 14(2) or Section 31(1) will be the court in which the award will have to be filed.
Final Decision: The Madras High Court dismissed the application filed by NLC and held that it had jurisdiction to entertain the petition filed by Vinay Engineering under Section 14(2) of the Act.
The Order of the Court was as follows :
Lakshmanan, J. for the Original Petition No. 547 of 1991 was filed by the first respondent herein M/s. Vinay Engineering under Section 14(2) of the Arbitration Act, hereinafter referred to as the Act to direct the second respondent (the umpire) to file the award dated 2nd April, 1991 in the Contract No. 004/2700K/HIIT/81-389, dated 21.5.1981 together with the deposition and documents etc.
2. Pursuant to the dispute that arose between Neyveli Lignite Corporation Limited hereinafter called as NLC and the first respondent Vinay Engineering as regards the Contract, the first respondent sought reference of arbitration in terms of the arbitration agreement contained in clauses 23.1 and 23.2 of the contract. The arbitration was proceeded before Mr. M. G. Balasubramanian and Mr. R. K. J. Menon as the arbitrators respectively appointed by NLC and Vinay Engineering respectively. Prior to that Mr. M. B. Balasubramanian and Mr. K. A. Ramasubramaniam were functioning as the arbitrators, but before they could deliver their award, Mr. K. A. Ramasubramaniam died and in his place Mr. P. K. J. Menon was appointed as an arbitrator by the first respondent herein. However, the said arbitrator could not agree on the award and as such delivered a notice to that effect that the second respondent as the Umpire appointed by the said arbitrators. The second respondant as the Umpire entered on the reference and after hearing the parties has made and signed his award, dt. 2nd April, 1991. A notice dated 2nd April, 1991 of the making and signing of the award was given by the second respondent (the Umpire) to NLC and Vinay Engineering and a copy of the award has been given by the second respondent on 1st May, 1991. In paragraph 7 of the main Original Petition, it is stated that the Contract, dated 21st May, 1991 made between Vinay Engineering and NLC was signed at Madras within the jurisdiction of this Court and this court has pecuniary jurisdiction on the subject matter since the value of the contract given to Vinay Engineering as originally is more than Rs. 23 crores. The cause of action for the present Original Petition arose on 2nd April, 1991, when the second respondent (Umpire) gave to Vinay Engineering and NLC a notice of making and signing of the award and thereafter on 1st May, 1991, when the copy of the Award was given by the second respondent (Umpire) as aforestated.
3. On 23.10.1991, this court ordered notice through court and also privately to both parties. After the receipt of the notice in the main original petition No. 547 of 1991, the second respondent (Umpire) has filed into this court the entire records including the original Award on 3.12.1991. I directed the main original petition to be posted along with Applications Nos. 6004 and 6005 of 1991 for enquiry. Accordingly, both the above applications were posted before me for hearing.
4. Application No. 6004 of 1991 was filed by NLC to dismiss the main original petition No. 547 of 1991 on the ground that this court has no jurisdiction to entertain the petition. Application No. 6005 of 1991 was filed by NLC to issue direction to second respondent (Umpire) not to file the Award in this court pursuant to the notice issued by this court in the above Original Petition as per orders dated 25.10.1991. The short facts are :
NLC Limited entered into a contract with Vinay Engineering hereinafter called as the Contractor for the manufacture and supply of equipments and components of Indian Original, erection and commissioning of complete equipment for 3 x 210 MW Steam Generator installation at Neyveli under the direction, control and supervision of M/s. Transelektro. The said contract was entered into on 21.5.1981 at Madras. The contract contains an Arbitration clause. The dispute arose between the parties and the matter was referred to two arbitrators to refer the matter to the Umpire Mr. Justice G. Ramanujam, the second respondent herein who passed the
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