Back
2019 Supreme(Ori) 403
IN THE HIGH COURT OF ORISSA, CUTTACK
K.S. JHAVERI, J.
M/s. Ridhi Sidhi - Appellant
Versus
M/s. Levis Strauss (India) Pvt. Ltd. And Another - Respondent
Arbitration Petition No. 6 of 2012
Decided On : 11-01-2019
Advocate Appeared:
P.K. Pattnaik, Adv., S.N. Senapati, Adv., A.K. Dwibedi, Adv., M.R. Sarangi, Adv., S.K. Pattnaik, Adv., M.K. Mishra, Adv., G.M. Rath, Adv., S.S. Padhi, Adv., Aditya N. Das, Adv., N. Sarkar, Adv., E.A. Das, Adv., Rajjeet Roy, Adv., S.K. Singh, Adv., A. Pradhan, Adv., S. Sourav, Adv., H. Deora, Adv., G. Paharia, Adv., N. Nawab, Adv.
The main legal point established in the judgment is that the jurisdiction for appointing an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 is determined by the place where the cause of action primarily arises.
Headnote:
Arbitration - Jurisdiction - Arbitration and Conciliation Act of 1996 - Section 11
Fact of the Case:
The petitioner approached the court for arbitration under Section 11 of the Arbitration and Conciliation Act, 1996. The opposite party raised a question of jurisdiction, arguing that the place of arbitration was Bangalore and, therefore, the Karnataka High Court had exclusive jurisdiction.
Finding of the Court:
The court found that the cause of action primarily arose in Cuttack, Odisha, and therefore, the Orissa High Court had jurisdiction. The court appointed the learned Government Advocate of Karnataka High Court as the arbitrator to resolve the dispute between the parties.
Issues: The main issue was the jurisdiction of the court in appointing an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
Ratio Decidendi: The court held that the cause of action primarily arose in Cuttack, Odisha, and therefore, the Orissa High Court had jurisdiction. The court also emphasized that the arbitration clause providing for arbitration proceedings in Bangalore should not oust the jurisdiction of the Orissa High Court.
Final Decision: The court appointed the learned Government Advocate of Karnataka High Court as the arbitrator and directed that the arbitration proceedings should be conducted in Bangalore, Karnataka.
JUDGMENT :
K.S.JHAVERI, J.
1. By way of this arbitration proceeding under Section 11 of the Arbitration and Conciliation Act, 1996; a poor petitioner, in terms of justice, has approached this Court on 03.02.2012 and notice was issued by this Court on 12.09.2014.
2. Time and again the matter was adjourned. The opposite parties appeared before this Court and filed counter affidavit only on 02.02.2018 after lapse of four years. Thereafter the matter was taken up by this Court on 21.12.2018 and the same is heard today.
3. Shri S.S. Padhy, learned counsel for the petitioner has pointed out that the dispute can be resolved between the parties in view of the arbitration clause, which reads as under:
"28.11.2 Any controversy or claim arising out of, or relating to, this Agreement or the breach of this Agreement shall be referred to arbitration under the Arbitration and Conciliation Act of 1996, by a sole arbitrator mutually acceptable to Franchisee and LS failing which by three (3) arbitrators i.e. one each appointed by Franchisee and LS and the third appointed by the two (2) arbitrators so appointed by Franchisee and LS. The arbitrator shall be a person of professional repute who is not directly or indirectly connected with any of the Parties to this Agreement. The place of arbitration shall be Bangalore, India. The language to be used in the arbitration proceedings shall be English. The award of the arbitration proceedings will be final and binding on the Parties to the Agreement."
4. Pursuant to the above arbitration clause, the opposite party No.1 was given an undated notice under Annexure-4 regarding settlement of the dispute through Arbitration, under Clause 28.11.2. of the Franchise Agreement dated 11.02.2011. Thereafter by notice on 09.09.2011, the said undated notice was replied and dispute was raised by the opposite party in paragraph-3,4 and 5, which reads as under:
"3. Please be notified that R.S. being in constant default of the Franchise Agreement and failing to act prudently and diligently as required in a business of such nature had caused considerable concern to our client. In the circumstances and with the intention of mitigating further damage, our client considered it appropriate that the relationship of the parties under the Franchise Agreement be terminated in due course. Our client's internal email communication dated May 31,2011 merely indicates such intention. It goes without saying that the Franchise Agreement was not specifically terminated by our client vide email communication dated May 31,2011. This e-mail was forwarded to R.S. by an employee of our client with the intention of communicating our client's concerns and thought processes with regard to the matter. R.S. vide email communication dated June 01, 2011, immediately suggested that in the interest of both parties the Franchise Agreement ought to be terminated and specifically instructed one Mr. Satya to abstain from placing orders with our client for further stocks. The tenor of the said e-mail, subsequent correspondence between the parties and the subsequent conduct of the parties clearly go to show that the parties had indeed mutually consented for the termination of the Franchise Agreement. Therefore, the Franchise Agreement has been terminated by mutual consent of the parties. R.S. is therefore estopped from contending otherwise.
4. In the above circumstances there cannot be a dispute as to whether our client terminated the Agreement illegally or not. Therefore, a reference to arbitration citing such a nonexistent dispute is not maintainable in law. Please note that this reply is issued without prejudice to our client's right to seek and claim all its dues either by way of recoveries or damages against R.S. with regard to all defaults and breaches committed by R.S.
5. Without prejudice to the above, please note that our client does not accept your nomination of Mr. Anup Narayan Mohanty, Advocate, as the Sole Arbitrator. Despite the above, in the event yo
