High Court
Case Details
Arb.A. 18/2012 BEFORE THE HON’BLE MR. JUSTICE B.D.AGARWAL This appeal under Section 37 (1) (a) of the Arbitration and Conciliation Act, 1996 (hereinafter, referred to as ’the Arbitration Act’, in short), read w ith Order 43 Rule 1 (a) of the Code of Civil Procedure, 1908, (briefly, ’CPC’) i s directed against the Order dated 19.06.2012, passed by the learned District Ju dge, Sonitpur, Tezpur, in Misc (Arbitration) Case No. 26 of 2012. By this impugn ed order, the learned District has declined to grant interim protection for the suit property under Section 9 of the Arbitration Act. Hence, this appeal is at t he instance of the petitioner.
Legal Reasoning
2. Heard Sri S Kejriwal, learned counsel for the petitioner as well as Sri P Sundi, learned counsel for the respondent/defendant in the Court of the learne d District Judge. Also gone through the impugned order and other documents annex ed with the memo of appeal. No counter has been filed by the respondent. 3. The gist of the case is that the petitioner has purchased a tea garden, namely. Sonajuli Tea Estate, owned by the respondent Company. The terms and cond itions of the sale and purchase of the tea garden have been set-out in the Agree ment dated 13th of October 2009. Pursuant to the agreement, the petitioner has a lready made part payment of the total consideration and has also made substantia l investment in the development and upgradation of the Tea Estate. Since the res pondent had outstanding dues to the Bank of Baroda, one of the conditions to pur chase the tea garden was that the respondent Company shall enter into (cid:28)one time settlement (cid:29) with the Bank and thereafter, the final sale deed shall be executed. According to the petitioner, the respondent failed to perform their obligations giving rise to filing of an application under Section 9 of the Arbitration Act. 4. Initially, both the parties were directed by the learned District Judge to maintain status quo of the property vide order dated 23.02.2012. However, thi s interim order has been vacated through the impugned order dated 19.06.2012. 5. The prayer for interim protection has been basically rejected on the gro und that the Court of District Judge at Sonitpur, Tezpur in Assam has no jurisdi ction to pass any order under Section 9 of the Arbitration Act in view of Clause 8.3 of the agreement. At this stage, it is necessary to mention here that the s uit property, i.e., Sonajuli Tea Estate is situated in the district of Sonitpur in Assam. At the same time, the registered office of the Company of the responde nt is situated at Kolkata and the agreement was also executed at Kolkata. Howeve r, the application for interim protection was filed in the Court of learned Dist rict Judge, Sonitpur, Tezpur, Assam, basically on the ground that the dispute is related to a tea estate, which is an immovable property, and since the tea gard en is situated in Assam only a principal civil court having original jurisdictio n in the district where the immovable property is situated has its jurisdiction to pass an order for interim protection under Section 9 of the Arbitration Act. For ready reference Clause 8.3 is reproduced below:- 6. (cid:28)8.3. Courts at Kolkata alone shall have exclusive jurisdiction to the exclusi on to all other Courts in all matters arising out of or relating to this agreeme nt. (cid:29) 7. Sri Kejriwal, learned counsel for the petitioner submitted that since So najuli Tea Estate is situated in the district of Sonitpur, Assam, only a Civil C ourt in Assam will have territorial jurisdiction over a dispute as provided unde r Section 16 CPC. According to the learned counsel, since the principal civil co urt at Kolkata cannot entertain any application under Section 9 of the Arbitrati on Act or resolve the dispute of immovable property situated in Assam Clause 8.3 of the agreement is against the public policy and it cannot be invoked for dete rmining the jurisdiction of a court. 8. The learned counsel for the petitioner further argued that had it been a case of jurisdiction of two different courts over the disputed property the mat ter could have been agitated before a competent Court at Kolkata. However, since it is a case of jurisdiction of only one court Clause 8.3 of the agreement is t o be declared as against public policy and cannot be acted upon. In support of h is submissions, the learned counsel for the petitioner cited the judgments of th e Hon’ble Supreme Court rendered in the cases of (1) Hakam Singh -Vs- M/s. Gammo n (India) Ltd.; (1971) 1 SCC 286, (2) Bhatia International -Vs- Bulk Trading SA; (2002) 4 SCC 105; Harshad Chiman Lal Modi -Vs- DLF Universal Ltd.; (2005) 7 SCC 791. 9. Per contra, Sri Sundi, learned counsel for the respondent submitted that the dispute is not the property of tea garden but the dispute is related to all eged non-performance of the terms and conditions of the agreement and, as such, Section 16 CPC will not be applicable. The learned counsel also contended that b y virtue of an agreement the parties can oust the jurisdiction of a particular C ourt and can vest the jurisdiction upon another particular Court, as in the inst ant case. According to the learned counsel, since the agreement was executed at Kolkata the jurisdiction of a competent Court at Kolkata was vested with the pow er to resolve any dispute arising out of the agreement and, as such, the learned District Judge, Sonitpur, has rightly declined to entertain the application. 10. In support of his submissions, the learned counsel for the respondent ci ted the judgment of the Apex Court rendered in the case of ABC Laminart Pvt. Ltd . -Vs- AP Agencies, Salem; (1989) 2 SCC 163. The aforesaid authority relied upon by the respondent is totally based on a different footing. In the said case, th e suit was filed for realizing certain amount of money and is not a case of pass ing any interim order to protect an immovable property. The observations made by Their Lordships in Para 16 of the judgment, which was made the basis for argume nt by the learned counsel for the respondent, are reproduced below: (cid:28)16. So long as the parties to a contract do not oust the jurisdiction of all t he courts which would otherwise have jurisdiction to decide the cause of action under the law it cannot be said that the parties have by their contract ousted t he jurisdiction of the court. If under the law several courts would have jurisdi ction and the parties have agreed to submit to one of these jurisdictions and no t to other or others of them it cannot be said that there total ouster of jurisd iction. In other words, where the parties to a contract agreed to submit the dis putes arising from it to a particular jurisdiction which would otherwise also be a proper jurisdiction under the law their agreement to the extent they agreed n ot to submit to other jurisdictions cannot be said to be void as against public policy. If on the other hand the jurisdiction they agreed to submit to would not otherwise be proper jurisdiction to decide disputes arising out of the contract it must be declared void being against public policy. Would this be the positio n in the instant case? (cid:29) 10.1 In my considered opinion, the aforesaid observations of the Apex Court n either support the theory of ousting of the jurisdiction of a particular court w here the immovable property is situated nor it is a decision under Section 16 CP C. The submission of the learned counsel for the respondent that the disput 11. e is regarding breach of the terms of the agreement and is not related to a disp ute of immovable property is totally misplaced. In my considered opinion, the pr operty of tea estate cannot be separated from the agreement and vice-versa. In o ther words, an agreement cannot exist without any property and in the present ca se the property is out and out an immovable property. In Para -41 of the applica tion under Section 9, the petitioner has elaborated the disputes and differences arising in respect of Sonajuli Tea Estate. 12. On the other hand, the authorities cited on behalf of the petitioner are exactly on the point. In the case of Hakam Singh (supra), there was a stipulati on in the contract agreement that notwithstanding the place of work only a compe tent court at Bombay shall have jurisdiction to adjudicate the disputes arising out of the contract. In this cited authority the arbitration application was fil ed at Varanasi, where the work was executed and where the cause of action had ar isen. The jurisdiction of Varanasi Court was challenged in the High Court and th e High Court held that in view of vesting of jurisdiction in a Court at Bombay i n preference to jurisdiction to Varanasi Court an application under the Arbitrat ion Act could not have been entertained by the Court at Varanasi. The view taken by the High Court was upheld by the Hon’ble Supreme Court. From this decision, it appears that if two or more Courts have jurisdiction of a particular dispute the parties can contract out the jurisdiction of a particular court and vest the jurisdiction upon a particular court. However, in the case before me, no Court at Kolkata can entertain any application either under Arbitration law or under S pecific Performance Act to resolve the dispute relating to immovable property. 12.1. In the case of Bhatia International (supra), the parties had agreed to r efer the disputes for arbitration as per the rules of International Chamber of C ommerce and the arbitration proceeding was to be held in Paris, France. However, the respondent had filed an application under Section 9 of the Arbitration Act at Indore in India. Hence, the issue of jurisdiction of a Court in India was rai sed. In this case, the Hon’ble Supreme Court has held that the agreement did not oust the jurisdiction of India and, as such, a competent Court in India had the jurisdiction to entertain an application under Section 9 of the Arbitration Act . Their Lordships further observed that the definition of a ’court’ under Sectio n 21 (3) does not provide that the courts in India will not have jurisdiction if an international commercial arbitration takes place outside India. Hence, the o uster clause of jurisdiction cannot be implied. Similarly, in the case of Harshad C L Modi (supra), the contract agreeme 12.2. nt was executed at Delhi for sale of an immovable property situated at Gurgaon i n the State of Haryana. The suit was filed at Delhi since a clause in the agreem ent stipulated that only Delhi High Court or court subordinate to it alone shall have jurisdiction in all matters arising out of the contract. However, the High Court held that the court at Delhi had no jurisdiction and the Clause in the ag reement vesting the jurisdiction upon a Court in Delhi was against public policy . This view was affirmed by the Hon’ble Supreme Court. The case before me is sim ilar in nature. 13. Under Section 28 of the Indian Contract Act, 1872, every agreement, wher eby, a party is restricted absolutely from enforcing its rights under or in resp ect of any contract by way of a legal proceeding in the ordinary court is void t o that extent. In the instant case, though the petitioner had legal right to enf orce the agreement for purchasing a tea estate in an appropriate Court at Sonitp ur, Assam, he was restrained from doing so by way of incorporating Clause 8.3 in the agreement. In this way, Clause 8.3 of the agreement is also violative of Se ction 28 of the Contract Act being against public policy.
Decision
For the foregoing reasons, the impugned order is hereby set aside. I hol 14. d that the Court of District Judge, Sonitpur, Tezpur, Assam alone will have juri sdiction to resolve the dispute. Since there is a provision for referring disput es to arbitrators the district court at Sonitpur, definitely has the jurisdictio n to pass appropriate order under Section 9 of the Arbitration Act, if the facts and circumstances so warrant. 15. With the aforesaid observations, the appeal stands allowed.