2022 Supreme(SC) 265

SUPREME COURT OF INDIA
Indira Banerjee, A.S. Bopanna, JJ.
M/s Ravi Ranjan Developers Pvt. Ltd. – Appellant
Versus
Aditya Kumar Chatterjee – Respondent
Civil Appeal No. 2394 & 2395 of 2022 (Arising out of SLP (C) No. 17397-17398 of 2021)
Decided On : 24-03-2022

IMPORTANT POINT
(1) A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of subject matter of action, strikes at very authority of Court to pass any decree, and such a defect cannot be cured even by consent of parties.
(2) Parties cannot, by consent, confer jurisdiction on a Court which inherently lacked jurisdiction.
(3) A judgment is a precedent for issue of law that is raised and decided – Judgment has to be construed in backdrop of facts and circumstances in which judgment has been rendered.

Headnote:

(A) Civil Procedure Code, 1908 – Section 20 – Pecuniary and territorial jurisdiction of Court – Subject to pecuniary or other limitations prescribed by any law, suits for recovery of immovable property or determination of any other right to or interest in an immovable property or compensation for wrong to immovable property, is to be instituted in Court within local limits of whose jurisdiction, property is situated – Certain specific suits relating to immovable property can be instituted either in Court within the limits of whose jurisdiction property is situated, or in Court within local limits of whose jurisdiction Defendant actually or voluntarily resides or carries on business – All other suits are to be instituted in a Court, within local limits of whose jurisdiction Defendant voluntarily resides or carries on business – Where there is more than one Defendant, a suit may be instituted in Court within whose jurisdiction any of Defendants voluntarily resides or carries on business – A suit may also be instituted in a Court within whose jurisdiction cause of action arises either wholly or in part. (Paras 23 and 24)

(B) Arbitration and Conciliation Act, 1996 – Sections 11(6) and 42 – Appointment of Arbitrator – Dispute arising from termination of Development Agreement – Minutes of proceedings before Arbitrator appointed by Calcutta High Court does not indicate that Appellant willingly submitted to arbitration by Arbitrator – Appellant only agreed to fees of Arbitrator appointed by High Court – This Court cannot be oblivious to practical realities, such as embarrassment of Counsel to oppose fees of an Arbitrator who happens to be a former Judge of High Court – An order without jurisdiction can be questioned at any time at any stage irrespective of any consent that may have been given by Counsel, which Appellant asserts, was without instructions of Appellant – Development Agreement was admittedly executed and registered outside jurisdiction of High Court of Calcutta – Appellant who would be in position of Defendant in a suit, neither resides nor carries on any business within jurisdiction of Calcutta High Court – Application under Section 11(6) of A&C Act for appointment of an Arbitrator/Arbitral Tribunal cannot be moved in any High Court in India, irrespective of its territorial jurisdiction – Parties to arbitration agreement only agreed that sittings of Arbitral Tribunal would be in Kolkata – Kolkata was venue for holding sittings of Arbitral Tribunal – When two or more Courts have jurisdiction to adjudicate disputes arising out of an arbitration agreement, parties might, by agreement, decide to refer all disputes to any one Court to exclusion of all other Courts, which might otherwise have had jurisdiction to decide the disputes – Parties cannot, by consent, confer jurisdiction on a Court which inherently lacked jurisdiction – Calcutta High Court inherently lacks jurisdiction to entertain application of Respondent under Section 11(6) of Arbitration Act – Impugned orders of appointment of Arbitrator and dismissal of review application set aside – Appointment of Arbitrator set aside on the ground that order of his appointment is without jurisdiction – Former Chief Justice of High Court of Gujarat appointed as Sole Arbitrator, to decide disputes between parties. (Paras 17, 18, 20, 25, 27, 43, 47, 48, 49 and 50)

(C) Precedent – A judgment is a precedent for issue of law that is raised and decided – Judgment has to be construed in backdrop of facts and circumstances in which judgment has been rendered – Words, phrases and sentences in a judgment, cannot be read out of context – Nor is a judgment to be read and interpreted in the manner of a statute – It is only law as interpreted by in an earlier judgment which constitutes a binding precedent and not everything that Judges say. (Para 41)

Facts of the case:

Present appeals are against an order dated 13th August 2021 passed by Calcutta High Court, allowing the Arbitration Petition No. 46/2021 filed by the Respondent under Section 11(6) of Arbitration and Conciliation Act, 1996 , for appointment of an Arbitrator and also an order dated 4th October 2021 passed by the High Court, rejecting an application made by the Appellant for review of the said order dated 13th August 2021. The question before this Court is, whether the Calcutta High Court at all had jurisdiction to entertain the application filed by the Respondent and appoint an Arbitrator.

Findings of Court:

The status quo with regard to the property in question shall be maintained for a period of 15 days from today to enable the respective parties to approach Arbitrator under Section 17 of A&C Act, for interim relief in accordance with law.

Result : Appeals allowed.