Madrasdated High Court · 2008

4. Gordon Woodrroffe Limited, Now known as GWL Properties Limited, A company incorporated and existing in accordance with the laws of India, with its registered office at No.36, Rajaji Salai, Chennai - 600 001. ..Respondents in all the appeals. PRAYER: Appeals filed under Order XXXVI Rule 9 of the O.S.Rules read with Clause 15 of the Letters Patent against thecommon order of the learned single Judge passed in O.A.Nos.452to 454 of 2006 & A.Nos.2329 to 2332 of 2006. For Appellant:: Mr.Vinod Bobde, Senior Counsel & Mr.P.S.Raman, Senior Counsel for Mr.Satish ParasaranFor Respondent - 1to 3 :: Mr.A.L.Somayaji, Senior Counsel for Mr.R.SubramanianFor Respondents - 4 :: Mr.T.R.Rajagopalan, SeniorCounsel for Mr.M.Venkatachalam J U D G M E N T(Judgment of the Court was delivered by The Hon'ble The Chief Justice) These are appeals from an order passed by S.Rajeswaran, J.The question at issue is whether leave under Clause 12 of theLetters Patent was at all necessary for filing an applicationbefore this Court under Section 9 of the Arbitration andConciliation Act, 1996, hereinafter for brevity's sake referredas to as the "Act", where a part of the cause of action hasarisen within the jurisdiction of this Court, but the rest hasarisen outside.2. The facts are that respondents 1 to 3 are the majorityshareholders of the fourth respondent-M/s. Gordon WoodrroffeLimited. The fourth respondent is the absolute owner of severalimmovable properties including the properties situate atChennai. The fourth respondent, of which respondents 1 to 3 are https://hcservices.ecourts.gov.in/hcservices/ the majority shareholders, being desirous of disposing of itsimmovable properties, floated a proposal in the form of anInformation Memorandum in September, 2005 wherein the modalityadopted for such disposal was by way of sale of shareholding ofrespondents 1 to 3 who held 93.47% shares in the fourthrespondent. The appellant-M/s.Dynasty Developers Private Limitedagreed to purchase the shares of the fourth respondent and theterms of the agreement were reduced into writing under a SharePurchase Agreement dated 21.12.2005. As per the Share PurchaseAgreement, the total consideration to be paid was a sum ofRs.238.05 crores. The appellant paid an advance of Rs.34 croreswhich includes a sum of Rs.9 crores for the non-competing clauseexecuted by the second respondent. The agreement contains anarbitration clause that the disputes between the appellant andrespondents 1 to 3 arising out of the contract would be decidedby arbitration. Disputes arose between the parties and areference has been made to the arbitral tribunal in accordancewith the agreement. 3. Apprehending that the respondents would act contrary to theShare Purchase Agreement and either deal with or alienate sharesand/or properties of the fourth respondent, the appellantpreferred three separate applications being O.A. Nos. 452, 453 &454 of 2006 under Section 9 of the Act for various interiminjunctions. The appellant has invoked the jurisdiction of thisCourt on the ground that the fourth respondent is registeredwithin the jurisdiction of this Court and the shares of thefourth respondent having situs within the jurisdiction of thisCourt. In short, the appellant alleged that the contract was tobe concluded within the jurisdiction of this Court and as such,part of cause of action arose within the local limits of thisCourt. The respondents 1 to 3 raised a two fold objection tothe jurisdiction of this Court. First, on the ground that noneof the respondents has a place of business within the locallimits of this Court and since the agreement itself was enteredinto at Bangalore no cause of action arose in Chennai, andtherefore, this Court has no jurisdiction to entertain theapplications filed against them. Secondly, it was contended thatthe jurisdiction of this Court has been invoked on the groundthat part of cause of action has arisen within the jurisdictionof this Court and the rest has arisen outside. Therefore, theseapplications could not have made in this Court without obtainingthe leave under Clause 12 of the Letters Patent and as such, https://hcservices.ecourts.gov.in/hcservices/ these applications must be rejected in limine. The fourthrespondent, who challenged the maintainability of theapplications on the ground that it was not a party to thearbitration clause also raised a preliminary objection ofabsence of leave under Clause-12 of the Letters Patent. 4. The applications under Section 9 of the Act were decided byS.Rajeswaran, J, and he agreed with the appellant that a part ofthe cause of action arose within the jurisdiction of this Court.But he proceeded to hold that in order to maintain theapplications, it was a pre-condition that leave under Clause-12of the Letters Patent should have been obtained. As it had notbeen obtained, the learned Judge held that he had nojurisdiction to entertain the applications and accordinglydismissed them. Briefly speaking, the reasoning of the learnedJudge was that an application for interim relief under Section 9of the Act could only be made in a Court, which would havejurisdiction if the arbitration proceedings were to beconsidered as a suit and if such a suit lay in the Court. Thelearned Judge held that the jurisdiction to file such a suitcould only be obtained in this High Court, if leave underClause-12 of the Letters Patent was given. According to thelearned Judge, no relief could be granted in an applicationunder Section 9 of the Act, unless such prior leave has beenobtained. 5. The point that arises for our consideration is of someimportance. Leave under Clause-12 of the Letters Patent can onlybe given in the case of a suit. The Madras High Court OriginalSide rules prescribe the procedure for filing of application andobtaining of leave to institute a suit vide Order III Rule 1,the rules governing the proceedings under the Arbitration Actnamely, Order XLIII does not require filing of any applicationfor leave, but only an affidavit inter alia showing that thisCourt has jurisdiction to try the application. In so far as thepractice of this Court is concerned, leave under Clause-12 ofthe Letters Patent was never insisted upon for application underthe Arbitration Act, 1940, and thereafter, under the Arbitrationand Conciliation Act, 1996. This position stood reaffirmed bythe fact that the applications filed by the appellant seekingleave under Clause-12 of the Letters Patent to move freshapplications under Section 9 of the Act were returned by theRegistry with an endorsement to the effect that Clause-12 was https://hcservices.ecourts.gov.in/hcservices/ inapplicable to the said applications. Therefore, it requirescareful consideration as to whether such leave need be grantedat all in the case of an application, where no suit has in factbeen filed. 6. It is necessary to set out the following provisions of theAct in order to deal with this issue. Section 2(1)(e) of the Actwhich defines the term 'Court' runs as follows: "Sec - 2(1)(e) - 'Court' means the principalcivil Court of original jurisdiction in a district,and includes the High Court in exercise of itsordinary original civil jurisdiction, havingjurisdiction to decide the questions forming thesubject-matter of the arbitration if the same hadbeen the subject-matter of a suit, but does notinclude any civil Court of a grade inferior to suchprincipal civil Court, or any Court of SmallCauses."Section 42 of the Act reads as follows: -"Notwithstanding anything contained elsewherein this Part or in any other law for the time beingin force, where with respect to an arbitrationagreement any application under this Part has beenmade in a Court, that Court alone shall havejurisdiction over the arbitral proceedings and allsubsequent application arising out of thatagreement and the arbitral proceedings shall bemade in that Court and in no other Court."7. Clause 12 of the Letters Patent deals expressly with thejurisdiction of the High Court in its ordinary OriginalJurisdiction or Original Side to receive, try and determinesuits and suits only, for it states inter alia: -"12. Original Jurisdiction as to Suits - ....that the said High Court of Judicature at Madras,in exercise of its ordinary original civiljurisdiction, shall be empowered to receive, try,and determine suits of every description if, in thecase of suits for land or other immovable property, https://hcservices.ecourts.gov.in/hcservices/ such land or property shall be situated, or, in allother cases, if the cause of action shall havearisen, either wholly, or, in case the leave of theCourt shall have been first obtained, in part,within the local limits of the ordinary originaljurisdiction of the said High Court: or if thedefendant at the time of the commencement of thesuit shall....."8. Section 2(1)(e) of the Act defines court to mean theprincipal civil court of original jurisdiction in a district.The definition is both inclusive and exclusive. It specificallyincludes the High Court in exercise of its ordinary originalcivil jurisdiction within the ambit of the definition of "court"and excludes "civil courts of a grade inferior to such principalcivil court" and Court of Small Causes. This definition includesHigh Court wherever the High Court exercises originaljurisdiction. The definition of court has thus been narroweddown to mean and include the district court and the High Courtin exercise of its ordinary original civil jurisdiction. Theonly condition is that it should have jurisdiction to decide thequestions forming the subject matter of the arbitration if thesame would have been the subject matter of a suit. Further, on aconjoint reading of Section 2(1)(e) and 42 of the Act, it isseen that the Parliament intended to make only one court - theprincipal civil court of original jurisdiction, or as the casemay be, the High Court in exercise of its ordinary originaljurisdiction, whichever court is approached earlier, as thevenue for all matters connected with an arbitration agreementand award and all arbitral proceedings. Admittedly, theprincipal civil court of original jurisdiction for Chennai isthe High Court of Judicature at Madras and not the City CivilCourt. Undoubtedly, obtaining of leave under Clause 12 of theLetters Patent is a condition precedent to the entertaining bythis Court of a suit in which the cause of action has arisen, inpart, outside the jurisdiction of this Court. The question iswhether the condition of obtaining of leave which is applicableto a suit will also apply to an application under theArbitration Act. The submission of Mr.Vinod Bobde andMr.P.S.Raman, learned Senior Counsel appearing for the appellantis that the analogy of a 'suit' given under Section 2(1)(e) ofthe Act is only for a limited purpose to find out the rightcourt. According to them, the procedure for obtaining leave https://hcservices.ecourts.gov.in/hcservices/ would apply only to a suit and not to an application under theArbitration Act. On the other hand Mr.A.L.Somayaji andMr.T.R.Rajagopalan, learned counsel appearing for therespondents would contend that the condition of obtaining ofleave under Clause 12 of the Letters Patent is a conditionprecedent going to the root of the jurisdiction of the court andnot a mere matter of procedure, and if the leave is notobtained, this Court cannot assume jurisdiction where a part ofcause of action has arisen outside its local limits, andtherefore, the condition would also govern an application underthe Arbitration Act. Both sides referred to a large number ofreported decisions. 9. Learned counsel appearing for the appellant placedstrong reliance on a Division Bench decision of the CalcuttaHigh Court in Rebati Ranjan Chakravarti Vs. SuranjanChakravarti, AIR 1963 Calcutta 642. In that case two questionsarose before the Division Bench, namely., one relating to themaintainability of the appeal and the other relating to thequestion whether leave under clause 12 of the Letters Patent wasat all necessary for filing an application before the Courtunder Section 20 of the Arbitration Act, 1940. Of the twolearned Judges constituting the Bench D.N.Sinha, J. (as he thenwas) held that, as the impugned order was not one as enumeratedin Section 39(1) of the Arbitration Act, 1940, no appeal layunder clause 15 of the Letters Patent. In that view of thematter D.N.Sinha, J. did not decide the other question as towhether leave under clause - 12 was at all necessary or not.S.Datta, J., the other learned Judge, while agreeing with theconclusion arrived at by D.N.Sinha, J., decided the otherquestion. It was observed by S.Datta, J. as follows - "21. Section 2(c) of the Arbitration Act pointsout the Court which can have jurisdiction over thesubject matter of a reference. It is that Courtwhich could entertain a suit if the subject matterof reference was the subject matter of a suit.Section 31 lays down the conditions requisite forentertaining an Award and/or an application. Inother words, Clause 12 of the Letters Patent doesnot determine the jurisdiction of the Court butSection 2(c) read with Section 31 does it and in sodoing Section 2(c) indirectly incorporates the https://hcservices.ecourts.gov.in/hcservices/ provisions of the Letters Patent. To put itdifferently, Clause 12 of the Letters Patent cannotdetermine the jurisdiction but for Section 2(c) readwith Section 3. Hence jurisdiction of the Court toentertain an application including an applicationfor appointment of Receiver and/or an Award does notflow from the Letters Patent but springs fromSection 31 read with Section 2(c) which by referenceattracts Clause 12 of the Letters Patent.22. Hence the determination of the existence ornon-existence of jurisdiction of a Court toentertain an application under the Arbitration Actis conditioned by Section 2(c) and Section 31 of theArbitration Act and is consequently 'under thisAct', and therefore attracts Section 39(1) of theArbitration Act." 23. In this view of the matter, it isimmaterial to consider whether it is necessary inorder to found jurisdiction in the High Court that apart of the cause of action should arise within thelocal limits of jurisdiction and further in such acase leave should be taken before filing the plaintor it is sufficient if a part of the cause of actiononly arises within the local limits of thejurisdiction."10. Our attention was also drawn by the learned counsel forthe appellant to a decision in S.P.C.Engineering Co. Vs. Unionof India, AIR 1966 Calcutta 259, in which P.C.Mallick, J.rejected the argument that application under Section 20 of theIndian Arbitration Act, 1940 is a 'suit' within the meaning ofClause 12 of the Letters Patent and unless the whole of thecause of action arises within the jurisdiction of the Court, theCourt is not competent to entertain a suit unless leave ispreviously obtained. Learned Judge at paragraph -12 of thejudgment observed as follows: "There is substance in the contention of Mr.Sen thatthe two kinds of suits referred to above should alsobe considered as suit even though it is notinitiated by the presentation of the plaint. But the https://hcservices.ecourts.gov.in/hcservices/ question is not whether the proceeding under Section20 is or is not a suit, but the question is whetherit is a suit within the meaning of clause 12 of theLetters Patent. In my judgment the test to beapplied for determining whether a proceeding is asuit within the meaning of clause 12 of the LettersPatent is not whether it is initiated bypresentation of plaint, or by summons or by notice.The test is whether the proceeding is intended toterminate in a final adjudication of the rights ofthe parties by a decree in that proceeding. An orderpassed by a Judge in an originating summons suit isrequired to be drawn up under Chapter XIII, Rule 20as 'a decree of the Court' apparently because therights of the parties are finally adjudicated by thejudgment or order. Because of this O.S. suits aretreated as suits within the meaning of clause 12 ofthe Letters Patent. In the case of an applicationunder Section 20, however, all that the court isrequired to do is to pass an order filing theagreement and making an order of reference. Theproceedings comes to an end by the passing of thesaid order. The wording of Section 20(2) is the'application shall be numbered and registered as asuit', does suggest that it is not a suit in thefullest sense of the term. It seems to me thatbecause of this that an application under Section 20of the Arbitration Act has never been treated as asuit within the meaning of clause 12 of the LettersPatent."11. The above decision of P.C.Mallick, J was followed bythe Bombay High Court in Standard Batteries Limited v. Casings(India) Pvt.Ltd., 1979 (81) Bom.L.R.33. In that case, Bharucha,J (as His Lordship then was) while dealing with this very issueheld that the phraseology of Section 20 of the Arbitration Act,1940 makes it clear that an application for filing of anarbitration agreement in Court is required to be numbered andregistered as a suit, not that such application is a suit oreven that is to be by way of a suit. The requirements that suchapplication should be numbered and registered as a suit isprocedural. Therefore, the application or "suit" under Section20 of the Arbitration Act, 1940 is not a suit within the meaning https://hcservices.ecourts.gov.in/hcservices/ of Clause 12 of the Letters Patent. Consequently, leave underClause-12 cannot be granted in an application or "suit" filedunder Section 20of the Arbitration Act, 1940. 12. Same was the view taken by another single Judge of theBombay High Court namely, S.M.Jhunjhunuwala, J in HarishankarSinghania v. Dr.Gaur Hari Singhania, 1997 (1) M.H.L.J. 9. 13. Learned counsel appearing for the respondents, however,contended that the view taken by the Division Bench of theCalcutta High Court in AIR 1963 Calcutta 642 and that ofP.C.Mallick, J. in AIR 1966 Calcutta 259 is no longer good lawin view of a subsequent Division Bench judgment of the CalcuttaHigh Court in Tobu Enterprises Pvt. Ltd. Vs. Camco IndustriesLtd., AIR 1984 Cal 24. The facts of that case were that thelearned single Judge granted leave under Clause 12 of theLetters Patent to the respondents to make an application underSection 20 of the Arbitration Act, 1940. The said applicationwas registered as Special Suit No.3A of 1983. Tobu Enterprisespreferred an appeal against the order granting leave underClause-12 of the Letters Patent. The respondent in the appealraised an objection that the appeal was not maintainable underSection 39(1) of the Arbitration Act, 1940, as the ordergranting leave under Clause-12 of the Letters Patent must betreated as an order passed under the Arbitration Act on accountof the provisions of Section 2(c) and 31(2) of the Act. TheBench rejected the contention of the respondent that the orderwas passed under the Arbitration Act and held that so long asthe leave is not granted there is no proceeding before the Courtunder the Arbitration Act and as such there can be no orderunder the Arbitration Act. It was, further, argued on behalf ofthe respondents in that case that the jurisdiction of the HighCourt to entertain an application under the Arbitration Actdepended wholly on the provisions of Section 2(c) and Section 31(1) and (2) of the Arbitration Act and not on Clause 12 of theLetters Patent and as such no leave is necessary to make anapplication under the Arbitration Act on the ground that only apart of the cause of action arose within the jurisdiction. Insupport of this contention, the respondents' counsel relied uponthe observation of Dutta, J in Rebati Ranjan Chakravarti Vs.Suranjan Chakravarti (supra). Dealing with Dutta, J'sobservations the Bench observed in para 12 as follows: https://hcservices.ecourts.gov.in/hcservices/ "While it is true that Section 2(c) read withSection 31 of the Arbitration Act determines thejurisdiction of the Court, most respectfully we begto differ with the observation of the learned Judgethat Section 2(c) indirectly incorporates theprovisions of the Letters Patent or that itattracts Clause 12 of the Letters Patent.Consequently, we are unable to subscribe to theview of the learned Judge that it is immaterialwhether a part of the cause of action should arisewithin the jurisdiction of this Court or leaveunder Clause 12 should be taken or not ."14. The Division Bench also gave its reasons for differingwith the view taken by Dutta, J by analyzing the scope andeffect of Sections 2 (c) and 31 (1) and (2) of the ArbitrationAct in the manner stated in para 13 of the report. Thereasonings are as follows: -"13. Let us consider the observations of Datta, J.that Section 2(c) indirectly incorporates theprovisions of the Letters Patent and attractsClause 12 thereof. Section 2(c) defines Court,inter alia, as mentioning a civil court havingjurisdiction to decide the questions forming thesubject-matter of a reference if the same had beenthe subject-matter of the suit. So, under Section 2(c), a court for the purpose of the Arbitration Actis a civil court having jurisdiction to decide thequestions forming the subject-matter of areference. The word 'questions' in Section 2(c) issignificant to be noticed. Section 2(c) enjoinsthat the civil court should have jurisdiction todecide the 'questions', that is to say, all thequestions forming the subject-matter of areference. It, therefore, follows that if, in agiven case, the civil court has not thejurisdiction to decide all the questions, but onlyone or some of the questions forming the subject-matter of a reference, that particular civil courtwill not have jurisdiction in terms of Section 2(c). Similarly, under sub-sections (1) and (2) of https://hcservices.ecourts.gov.in/hcservices/ Section 31 of the Arbitration Act, a Court nothaving jurisdiction in the matter to which thereference relates in a particular case, will haveno jurisdiction to decide the questions referred toin sub-section (2). Here also the word 'matter' insub-section (1) refers to the entire matter and notpart of it. In view, however, of the provisions ofSections 17, 19 and 20 of the Civil Procedure Code,such a situation creates no difficulty in filing asuit in a civil court. Under Section 17, suits forimmovable property situate within the jurisdictionof different courts may be instituted in any courtwithin the local limits of whose jurisdiction anyportion of the property is situate. Section 19relates to suits for compensation for wrong done toperson or movables. Such a suit may be institutedin the court within the local limits of whosejurisdiction the wrong was done or the defendantresides, or carries on business, or personallyworks for gain. Section 20 deals with other suitsand it provides, inter alia, the filing of such asuit in a court within the local limits of whosejurisdiction the defendant or if there are morethan one, any of the defendants reside, or carrieson business, etc., or the cause of action, whollyor in part, arises. Thus, a suit may be filed in acivil court where such court has jurisdiction inrespect of a part and not the whole of the subjectmatter. Further, no leave is required to be takenfor the institution of such a suit. The civilcourt, in such a case, will be competent to dealwith the entire subject-matter of the suit and,consequently, it will be a court within the meaningof Section 2(c) of Section 31 of the ArbitrationAct having jurisdiction in the matter to which thereference relates. ............15. .... Any suit involving the subject matter ofthe instant case cannot be filed in this Courtunless leave under Clause 12 is first obtained.Therefore, so long as such leave is not obtained,this Court will have no jurisdiction to entertainor try the suit and, consequently, in terms of https://hcservices.ecourts.gov.in/hcservices/ Section 2 (c) read with Section 31 of theArbitration Act also an application under Section20 of the Arbitration Act. Neither Section 2(c) norSection 31 dispenses with the obtaining of leaveunder Clause 12 of the Letters Patent. Indeed, noreference has been made to Clause 12 of the LettersPatent in either of the said Sections 2 (c) andSection 31......"15. We hasten to add that in a later judgment in Hindustan SteelWorks Construction Ltd. Vs. N.V.Chowdhury, AIR 1986 Calcutta 338a learned single Judge of the Calcutta High Court (PratibhaBannerjea, J.) has held that the Division Bench judgment in TobuEnterprises Pvt. Ltd. Vs. Camco Industries Ltd., AIR 1984 Cal 24is per incuriam in as much as the provisions of Section 31(4) ofthe Arbitration Act, 1940 were not noticed by the DivisionBench. The learned Judge held - "The phrase 'no other court' in Section 31(4)contemplates a situation where two or more courtshave jurisdiction in respect of an application andwhen the application is made in any of such courtsfirst in order of time, then that court will haveexclusive jurisdiction and all other courts will bedivested of their jurisdiction in the matter.Section 31(4) also provides that an application canbe made in a court which has jurisdiction over partof the cause of action in the matter and such courtis described as 'competent court'. When theArbitration Act, itself has made provisionsregarding jurisdiction of civil courts for tryingapplications under the Act, with overriding effectover all other laws in force, then there is nooccasion for taking recourse to the provisions ofthe Civil Procedure Code or Clause 12 of theLetters Patent. The Calcutta High Court as a CivilCourt having jurisdiction over part of cause ofaction in an application under the Act will beentitled to entertain such an application withouttaking recourse to Clause 12 of the Letters Patentbecause Clause 12 is subject to the provisions ofSection 31(4) of the Act. Assuming that leave under Clause 12 is necessary inArbitration applications then once the High Courtgrants leave it will have exclusive jurisdiction https://hcservices.ecourts.gov.in/hcservices/ under Section 31(4) and all other courts, havingjurisdiction will lose the same. In such a case,even if the ex parte leave causes injustice to therespondent it will have no remedy as Section 31(4)does not provide that on revocation of the leave,the jurisdiction of the other courts will berevived. Moreover, the legal incidents andconsequence of leave under Clause 12 of the LettersPatent and the provisions of Section 31(4) are soconflicting and contradictory to each other thatboth cannot be made applicable to the same case." 16. The learned counsel for the respondents next referredto a decision of Rebello, J. of the Bombay High Court in TataInternational Ltd., Mumbai Vs. Trisuns Chemical Industry Ltd.,Kutch, (2002) 2 Bom. CR 88. The question before the learnedJudge was whether leave under Clause 12 of the Letters Patent isrequired to maintain a petition under Section 47 of theArbitration and Conciliation Act, 1996, to enforce a foreignaward. The learned Judge held that under Section 120 of the Codeof Civil Procedure, provisions of Sections 16, 17 and 20 shallnot apply to the High Court in exercise of its original civiljurisdiction. Therefore, in respect of suits for immovableproperty such as land, the whole of the cause of action musthave arisen within the jurisdiction of the Court and if a partof cause of action has arisen, then the suit would bemaintainable provided leave of the Court is first obtained underClause 12 of the Letters Patent. He observed, "Once Clause isattracted, I see no reason why power conferred on this Courtunder Clause 12 to grant leave should not be available also inproceedings in Arbitration whether it be Part I or Part II inabsence of any express exclusion clause". It is seen from thejudgment that the decision of Bharucha, J. was not taken note ofby the learned Judge.17. Learned counsel appearing for the respondents alsoreferred to the decisions of the Supreme Court in FoodCorporation of India Vs. Evdomen Corporation, (1999) 2 SCC 446)and Jindal Vijaynagar Steel (JSW Steel Ltd) Vs. Jindal PraxairOxygen Co. Ltd., (2006) 11 SCC 521 in support of theircontention that the provisions of Clause 12 of the LettersPatent alone are required to be considered to determine thejurisdiction of the Madras High Court and the provisions ofSections 16 to 20 of the Code of Civil Procedure have no https://hcservices.ecourts.gov.in/hcservices/ application. In the first decision in Food Corporation of IndiaVs. Evdomen Corporation (supra) the contention of the appellantwas that the Bombay High Court has no jurisdiction to take theaward on file or to issue any process in connection with it.That was a case under the Arbitration Act, 1940. The High Courtin its impugned judgment has upheld the jurisdiction of theBombay High Court on the ground that the appellant, who is inthe position of a defendant, has one of its places of businessat Bombay. The submission of the appellant relying upon theexplanation to Section 20(a) of the CPC was that in respect ofany cause of action arising at any place where it has also asubordinate office at such place, the Court at that place alsogot jurisdiction. Reliance was placed on the decision of theSupreme Court in Hakam Singh Vs. Gammon (India) Ltd., (1971) 1SCC 286, where the Court observed that the Code of CivilProcedure in its entirety applies to the proceedings under theArbitration Act by virtue of Section 41 of the Arbitration Act.The jurisdiction of the Court to entertain a proceeding inconnection with arbitration including taking on file an award isaccordingly governed by the provisions of the Code of CivilProcedure. Repelling this submission of the appellant the Benchheld that under Section 120 of the Civil Procedure Code,Sections 16, 17 and 20 of the Civil Procedure Code do not applyto a High Court in the exercise of its original civiljurisdiction. Jurisdiction of the Bombay High Court to entertaina suit under its ordinary original civil jurisdiction isdetermined by Clause 12 of the Letters Patent of the Bombay HighCourt. Under Clause 12 of the Letters Patent, a place where thedefendant, or each of the defendants where there are more thanone, at the commencement of the suit, carry on business would bea place where the Court has jurisdiction. Therefore, it was heldthat under Clause 12 of the Letters Patent of the Bombay HighCourt, the Bombay High Court would have jurisdiction over thesubject matter of the dispute in that case because the appellantdid carry on business in Bombay. In the second case, namely.,Jindal Vijaynagar Steel (JSW Steel Ltd.) Vs. Jindal PraxairOxygen Co. Ltd. (supra) the appellant sought reconsideration ofthe decision made in Food Corporation of India (supra) on theground that it was erroneous and contrary to the decision of athree Judge Bench in Patel Roadways Ltd. Vs. Prasad Trading Co.(1991) 4 SCC 270. Dismissing the appeal the Supreme Court heldthat for the purpose of determining the original civiljurisdiction of the Bombay High Court, the provisions of Section https://hcservices.ecourts.gov.in/hcservices/ 20 of the CPC have been specifically excluded and have noapplication. Only the provisions of Clause 12 of the LettersPatent are required to be considered to determine thejurisdiction of the Bombay High Court. Under Clause 12 of theLetters Patent, the Bombay High Court would have jurisdiction toentertain and try an arbitration petition even if no cause ofaction has arisen within its jurisdiction, provided therespondent has an office at Bombay. It is clearly seen that thequestion as to whether Clause 12 leave was necessary for filingan application under the Arbitration Act was not considered ineither of these cases. 18. Lastly, learned counsel appearing for the respondentsdrew our attention to the judgment of a Division Bench of theBombay High Court in Devidatt Vs. Shriram, AIR 1932 Bom.291where the Bench held that obtaining of leave under Clause 12 isa condition precedent to the entertainment by Bombay High Courtof a suit in which the cause of action arises in part outsidethe original jurisdiction and that the condition is not onewhich it is competent for a Court to ignore or for the partiesto waive. It was further held that the words "empowered toreceive" in Clause 12 mean that the Court on the ordinaryoriginal civil jurisdiction has no jurisdiction even to receivea plaint where a part of the cause of action only shall havearisen within the local limits of its jurisdiction unless leaveof the Court shall have been first obtained. 19. We have given our anxious thought to the submissionsmade at the Bar and the decisions cited before us. We are unableto agree with the view taken by the learned Judge that in orderto maintain an application under the Act, it is a preconditionthat the leave under Clause 12 of the Letters Patent should havebeen obtained. Learned Judge has followed the Division Benchjudgment of the Calcutta High Court in AIR 1984 Calcutta 24 andthe judgment of Rebello, J. in (2002) 2 Bom. CR 88. Theattention of the learned Judge was not drawn to the laterdecision of the Calcutta High Court in AIR 1986 Calcutta 338.Moreover, the learned Judge was much concerned and swayed by thewords 'if the same had been the subject matter of the suit'appearing in Section 2(1)(e) of the Act. According to thelearned Judge the leave would be necessary in case this Courthas jurisdiction over the part of the cause of action only andas no suit could be filed without leave, no application under https://hcservices.ecourts.gov.in/hcservices/ the Act under the similar circumstances could be entertainedwithout leave under Clause 12 of the Letters Patent. The analogyof 'suit' given in Section 2(1)(e) of the Act only gives usguideline to find out the right court. The word 'suit' acts asan indicator and points out which court will be competent courtto entertain the application under the Act. Section 2(1)(e) doesnot treat an 'application' under the Act as a 'suit' and theapplication under the Act remains an application. As a matter offact, if a civil suit is filed covering the subject matter of anarbitration agreement, the Act makes it obligatory for the Courtto refer the parties to arbitration in terms of the arbitrationagreement. Therefore, it cannot be contended that the Actintended that an application under the Act and the civil suitshould be treated on the same footing. It has been consistentlyheld that the applications under the Arbitration Act cannot beequated with civil suit. (See Bhagwat Singh Vs. State ofRajasthan, AIR 1964 SC 444, Usmanali Khan Vs. Sagarmal, AIR 1965SC 1798, Firm Ashok Traders Vs. Gurumukh Das Saluja, (2004) 3SCC 155). The procedure for obtaining leave is applicable onlyto a suit and not to an application under the Arbitration Act.In our opinion, if a part of the cause action has arisen withinthe jurisdiction of this Court, the application under theArbitration Act can be instituted in this Court and in thatevent leave under Clause 12 of the Letters Patent is notnecessary. 20. The Division Bench in AIR 1984 Calcutta 24 came to theconclusion that unless leave under Clause 12 of the LettersPatent is obtained first as is done in case of a suit where thecourt had jurisdiction over a part of the cause of action only,an application under the Arbitration Act would not bemaintainable without leave if the same would be filed in thatcourt on the basis that a part of the cause of action arosewithin its local limits. It is no doubt true that leave is acondition precedent to the entertainment of a suit in which thecause of action arises in part outside the original jurisdictionand the court will not receive a plaint where only a part of thecause of action has arisen within the local limits of itsjurisdiction unless leave of the court has been first obtained.In our opinion, however, leave cannot be the foundation ofjurisdiction. Unless this Court has inherent jurisdiction overpart of the cause of action in the suit, this Court cannot grantleave under Clause 12 of the Letters Patent. Therefore, https://hcservices.ecourts.gov.in/hcservices/ existence of inherent jurisdiction of the Court over the suitmust be admitted before leave is obtained. Certainly, it cannotbe contended that this Court by granting leave confers upon itthe jurisdiction to try the suit and again by divesting itselfof this jurisdiction by revoking the leave. In our opinion, bygranting the leave the Court only exercises its discretion totake up the whole suit. That does not mean that the Court has noinherent jurisdiction to try the proceedings under theArbitration Act, where a part of the cause of action has arisenoutside its local jurisdiction. We are in respectful agreementwith the view taken by P.C.Mallick, J. in AIR 1966 Calcutta 259that a leave under Clause 12 of the Letters Patent is notnecessary for filing an application under the Arbitration Actand this view was also followed by the Bombay High Court in 1979(81) Bom.L.R.33 and 1997 (1) MHLJ 9. Similar is the view takenby the Calcutta Division Bench in AIR 1963 Calcutta 642 and alearned Judge of the Calcutta High Court in AIR 1986 Calcutta338. We, therefore, hold that obtaining of leave under Clause 12of the Letters Patent is not a condition precedent for filing anapplication under Section 9 of the Act. 21. Learned counsel appearing for the respondents contendedthat the agreement was entered into at Bangalore and therefore,no cause of action arose in Chennai. According to the learnedcounsel the finding of the learned single Judge that a part ofthe cause of action has arisen within the local limits of thisCourt is erroneous and cannot be sustained. We find absolutelyno merit in the said submission of the learned counsel. Clause3.2 of the Share Purchase Agreement entered into between theparties reads as follows:- "3.2 - The Closing shall take place on the ClosingDate in Chennai at a time to be mutually agreed tobetween the Parties." It is thus seen that the agreement itself contemplated that ithas to be performed at Chennai at a time mutually agreeable tothe parties. In A.B.C. Laminart Pvt. Ltd. Vs. A.P.Agencies,Salem, (1989) 2 SCC 163 the Supreme Court has categorically heldthat the performance of a contract is part of cause of actionand a suit in respect of the breach can always be filed at theplace where the contract should have been performed or itsperformance completed. Therefore, there is no doubt that a part https://hcservices.ecourts.gov.in/hcservices/ of cause of action arose within the jurisdiction of this Court. 22. In the result, the appeals are allowed. The impugnedorder of the learned single Judge is set aside and the matter isremitted back to the learned single Judge for deciding theapplications under Section 9 of the Act on merits. The interiminjunction granted by this Court to continue till the disposalof the applications. No costs. Consequently, connectedmiscellaneous petitions are closed.sm/pv Sd/Asst. Registrar/true copy/Sub Asst.RegistrarTo1. The Sub Assistant Registrar,Original Side, Madras.104.•Three CCs to Mr. Sathis Parasaran, Advocte SR 1462•Three Ccs to Mr. M. Venkatachalam, Advocate SR 1592•Three Ccs t Mr. R. Subramanian Associates SR 1593VRK (co)sg 25/01/08 O.S.A.Nos.356 to 358 of 2006 10..01..2008.