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2022 Supreme(Mad) 3518

IN THE HIGH COURT OF JUDICATURE AT MADRAS
R.N. MANJULA, J.
Andal Dorairaj & Others - Appellant
Versus
M/S. Rithwik Infor Park Pvt. Ltd., Represented by its Authorised Signatory, Priya Rajasekar, Chennai & Others - Respondent
C.R.P. (PD) Nos. 1641, 1647 & 1648 of 2022 & C.M.P. Nos. 8183, 8220 & 8208 of 2022
Decided On : 02-09-2022

Advocates appeared:
For the Petitioner:M.S. Krishnan, Senior Advocate for K.S. Karthik Raja, Ar.L. Sundaresan, Senior Advocate for Sundara Kadeswaran, K.S. Karthik Raja, Advocates. For the Respondents:N. Sridhar for R. Bharath Kumar, Advocates.

The main legal point established in the judgment is that parties can waive the jurisdiction clause agreed upon in an arbitration agreement through their conduct, such as filing applications and appeals before a different court, thereby affecting the jurisdiction of the designated court.

Headnote:

Jurisdiction - Arbitration Agreement - Sections 11, 34, 37 of the Arbitration and Conciliation Act, 1996 - Coimbatore - Chennai

Fact of the Case:

The petitioners owned properties in Coimbatore and entered into Joint Development Agreements with the first respondent for an IT Park project. Disputes arose, leading to multiple applications and appeals filed before the High Court of Madras and the District Court of Coimbatore.

Finding of the Court:

The Court found that the respondents' actions, including filing applications and appeals before the High Court of Madras, constituted a waiver of the jurisdiction clause agreed upon in the Joint Development Agreements. As a result, the Original Petitions filed in the District Court of Coimbatore were ordered to be returned to the respondents to be presented before the appropriate Court.

Issues: The main issue was whether the respondents' actions constituted a waiver of the jurisdiction clause agreed upon in the Joint Development Agreements, thereby affecting the jurisdiction of the District Court of Coimbatore.

Ratio Decidendi: The Court held that the respondents' conduct, including filing applications and appeals before the High Court of Madras, amounted to a waiver of the jurisdiction clause. As a result, the District Court of Coimbatore lost its jurisdiction, and the Original Petitions were ordered to be returned to the respondents.

Final Decision: The Civil Revision Petitions were allowed, and the Original Petitions in O.P. Nos.28, 29, and 30 of 2022 on the file of the Principal District Court, Coimbatore, were ordered to be returned to the respondents to be presented before the appropriate Court within two weeks.

JUDGMENT

Common Order:

1. These Civil Revision Petitions have been preferred to strike off the petitions in O.P. Nos.28, 29 & 30 of 2022 on the file of the Principal District Court, Coimbatore.

2. The revision petitioners are the respondents 1,2 & 3 in the impugned Original Petitions filed by the first respondent herein in A.O.P. Nos. 28, 29 & 30 of 2022, challenging the arbitration award dated 27.10.2021 passed in Arbitration case No.9 of 2020.

3. Before adverting into the merits of the revision petitions, it is essential to have the bird's eye view on the facts of the case.

(i) The petitioners are the owners of properties measuring 2 acres 51 cents and 333 Sq.ft., in Savuripalayam Village, Coimbatore Taluk,. The first respondent approached the petitioners with a proposal of constructing an IT Park over the said property. The petitioners entered into a Joint Development Agreements dated 24.03.2006 & 06.07.2006 respectively and also a supplemental Memorandum of Agreement on 13.09.2007 with the second respondent. Based on the agreement, the second respondent assured to give 80,175 sq.ft of built up area in the proposed I.T. Park to the petitioners as consideration for transferring 80% of the undivided share of land in the property. In view of the Joint development agreements, the second respondent agreed to pay an advance of Rs.50,00,000/- and Rs.25,00,000/- was paid as an advance on the date of agreement. The first respondent agreed to complete the project within a period of twenty four months from the commencement of construction.

(ii) As per Clause 17 of the Joint Development Agreement, it was agreed between the parties that in the event of any dispute or difference arising between them with regard to the agreement or the development of the subject property, they shall endeavour to settle the same by mutual negotiation / discussion. In the event of failure to arrive at an understanding, the matter shall be referred to arbitration. The Arbitrator shall be appointed by the parties and the decision of the Arbitrator shall be final and binding on both the parties. The venue of arbitration was agreed to be Coimbatore District. So the parties, in case of dispute, shall be entitled to seek reference jointly and not individually. As per Clause 18 of the Joint Development Agreement, it is agreed that the Courts at Coimbatore will have the jurisdiction in matters relating to the agreement.

(iii) Since misunderstanding has been developed between the parties, the first petitioner has filed a petition in A.O.P. No.808 & 824 of 2012 under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') for appointment of an Arbitrator before this Court. The Hon'ble Chief Justice of Madras High Court, by an order dated 19.02.2016, has appointed an Arbitrator Mr.V.Sivasubramanian, a retired District Judge, as the Sole Arbitrator to enter upon reference and adjudicate the disputes inter se the parties and ordered that the arbitration proceedings shall be conducted under the aegis of the Madras High Court Arbitration Centre and the parties will be governed by the Rules of the Centre.

(iv) Since the Sole Arbitrator failed to complete the proceedings within the stipulated time, his mandate got terminated. Hence, the respondents filed an Original Petition under Section 11 of the Act, in O.P. No.362 of 2017 before this Court for appointment of a new Arbitrator. This Court, by an order dated 29.01.2019, appointed a Sole Arbitrator by name Mr.S.A.Sriramalu, retired District Judge. The arbitration proceedings were held at Madras High Court Arbitration Centre in view of the earlier order passed by this Court in O.P. Nos.808 & 824 of 2012.

(v) Both the parties agreed the arbitral proceedings to be conducted at Chennai. Subsequently, the respondents have filed an another Original Petition in O.P. No.694 of 2019 before this Court to terminate the mandate of Mr.S.A.Sriramalu and to appoint a new Arbitrator. Th

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