Back
High Court of Judicature at Madras
THE HONOURABLE CHIEF JUSTICE MR. M.Y. EQBAL
Nortan Intee Rubbers (P) Ltd.,
Versus
Neyveli Lignite Corporation & Another
C.R.P. (PD) No.4224 of 2011 & M.P.No.1 of 2011
Decided On : 30-03-2012
Territorial Jurisdiction - Arbitration - MSMED Act, 2006 - Section 34 of the Arbitration and Conciliation Act, 1996 - [Section 2(1)(e) of the Arbitration and Conciliation Act, 1996] - [Summary of Acts and Sections: The judgment discusses the territorial jurisdiction of the District Court at Cuddalore to entertain an Arbitration Original Petition under the MSMED Act, 2006 and Section 34 of the Arbitration and Conciliation Act, 1996. It highlights the interpretation of Section 2(1)(e) of the Arbitration and Conciliation Act, 1996 and emphasizes the principle that the Court with territorial jurisdiction is where the contract was entered into and executed, regardless of the place of arbitration and award. The judgment also refers to G.O. Ms. No.63, Small Industries Department, dated 8.12.2006, and its impact on the jurisdiction of the MSE Facilitation Councils.]
Fact of the Case:
The Petitioner, a company, failed to supply materials as per a purchase order issued by the 1st Respondent, resulting in cancellation of the order and extra expenditure incurred by the 1st Respondent. The Petitioner later filed a Claim Petition under the MSMED Act, 2006, and the 1st Respondent filed an Arbitration Original Petition challenging the award before the District Court at Cuddalore, raising a preliminary issue regarding territorial jurisdiction.
Finding of the Court:
The District Judge held that the Court at Cuddalore had territorial jurisdiction to entertain the Petition, emphasizing that the place of contract execution determines the Court's jurisdiction, and the provisions of the MSMED Act, 2006 did not limit the jurisdiction of the Principal District Court at Cuddalore.
Issues: The main issue was whether the District Court at Cuddalore had the jurisdiction to entertain the Arbitration Original Petition under the MSMED Act, 2006 and Section 34 of the Arbitration and Conciliation Act, 1996.
Ratio Decidendi: The Court's territorial jurisdiction is determined by the place where the contract was entered into and executed, as per Section 2(1)(e) of the Arbitration and Conciliation Act, 1996. The provisions of the MSMED Act, 2006 did not limit the jurisdiction of the Principal District Court at Cuddalore.
Final Decision: The Civil Revision Petition was dismissed, upholding the District Judge's finding that the Court at Cuddalore had territorial jurisdiction to entertain the Arbitration Original Petition.
1. The Petitioner has moved the present Revision Petition with a prayer to set aside the order dated 23.08.2011 made in Memo in Arbitration O.P.No.87 of 2010 on the file of the Principal District Judge, Cuddalore, whereby the learned Principal District Judge dismissed the Memo filed by the Petitioner herein holding that there is neither any bar nor any prohibition in respect of territorial jurisdiction for the District Court at Cuddalore to proceed with the pending Arbitration Original Petition.
2. The short facts, which are relevant and necessary for the disposal of this Revision Petition is quoted herein below:
It is stated that the 1st Respondent – Neyveli Lignite Corporation, which is a Public Sector Undertaking, floated a ‘limited tender’ for the procurement of different sizes of Butyle Tubes during the year 1998. The Petitioner-Company, which is engaged in the business of production and supply of components involved in the manufacture of type tubes, was the successful bidder for two contracts. Accordingly, two purchase orders containing agreed terms and conditions of the contract were issued to the Petitioner-Company. The first Purchase Order was dated 21.09.1998, and it was for the supply of 1600 Nos. of 9.00 x 20 butyle tubes. The total value was for Rs.7.60 lakhs. The delivery schedule was for “bulk supply” to be effected on or before 31.10.1998. The second Purchase Order was dated 29.09.1998 and it was for the supply of 290 Nos. of 6.00 x 16 butyle tubes for a total value of Rs.43,500/-. The price agreed is firm till the entire supply is effected. As far as the second Purchase Order is concerned the Petitioner had effected the supplies within time. However, regarding the first Purchase Order dated 21.09.1998 the Petitioner failed to effect supply in time and sought for time and upward revision in the price, for which the 1st Respondent herein did not agree, but in turn the 1st Respondent by its letter dated 20.10.1998 impressed upon the Petitioner-Company about the urgent need of the materials and required it to complete the supplies within the stipulated time. There was no response from the Petitioner-Company. Hence, by another communication dated 10.12.1998 the 1st Respondent intimated the Petitioner-Company to complete the supplies on or before 24.12.1998 and it was also made clear in that letter that failure to supply the materials in time would result in cancellation of the first Purchase Order at the risk and cost of the Petitioner-Company. Even thereafter, the Petitioner-Company did not take any steps to supply the materials. In view of the urgency, the 1st Purchase Order was cancelled and the materials were procured through other agencies invoking the risk purchase clause. An extra expenditure of Rs.1,83,989.60 was incurred by the 1st Respondent on account of this. A demand to remit the extra expenditure was also made to the Petitioner-Company, but it remained silent. Thereafter, by communication dated 02.11.1999 the Petitioner-Company was informed that an amount of Rs.43,500/- payable under the 2nd purchase order to it, has been set off, as against the amount of Rs.1,83,989.60 due to the 1st respondent, and the Petitioner-Company was required to remit the balance amount of Rs.1,40,489.60 immediately. The Petitioner-Company did not oppose or object to the setting off of the sum of Rs.43,500/-, nor did it remit the balance amount of Rs.1,40,489/-. It did not initiate any legal action for the recovery of the said amount of Rs.43,500/-. While being so, suddenly in the year 2009 i.e., after the lapse of nearly 10 years the Petitioner-Company filed a Claim Petition before the 2nd Respondent – Council under the provisions of Micro, Small and Medium Enterprises Development Act, 2006 (in short MSMED Act) claiming the said amount of Rs.43,500/-with interest. The 2nd Respondent – Council allowed the Claim Petition, as prayed for, by its Award dated 08.03.2010. Being aggrieved by the said Award the 1st respo
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
