Reva Khetrapal, J.
1. The question of maintainability of the above suit in this Court and the jurisdiction of this Court to entertain the same has arisen. The prayer of the plaintiff is for a decree of permanent injunction in favor of the plaintiff and against the defendants thereby restraining the defendants from running or in any manner using the three Cryogenic Air Separation Plants of the capacity of 2x200 Cum/hr and 600 Cum/hr along with compressors, storage vessels and other equipment of the plaintiff. The plaintiff further prays for a decree of mandatory injunction against the defendant thereby directing the defendant to allow access and entry to the representatives of the plaintiff into the premises of the defendant at Ispat Nagar, Ghaziabad (U.P.) for ensuring security and maintenance of the aforementioned equipment and in cooperating in dismantling and removal of the said three Cryogenic Air Separation Plants leased to the defendant by the plaintiff.
2. The defendant having filed a caveat, counsel for defendant appeared at the first hearing of the suit to contest the maintainability of the same on the ground that this Court lacks territorial jurisdiction to entertain the same, the suit property being immovable property, erected and installed in the premises of the defendant.
3. The plaintiff is a company duly incorporated under the Companies Act, 1956 and having its registered office at Nariman Point, Mumbai. The plaintiff company is engaged in the business of manufacturing Air Separation Plants and running/operating and maintaining such plants on site as Cryogenic Air Separation Plants for production of Oxygen and Nitrogen required during manufacture of steel and other industrial products. The defendant company is also a company incorporated under the Companies Act, 1956 having its registered office at Delhi and it has its works at Ispat Nagar, Ghaziabad (U.P.). The defendant company for its requirements of Oxygen and Nitrogen, required during manufacture of steel, approached the plaintiff for taking on lease Cryogenic Air Separation Plant along with its accessories and pipelines, etc. fully capable of production of gases for its exclusive use at its unit at Ghaziabad. The terms of the agreement were negotiated and the plaintiff agreed to give on lease two Cryogenic Air Separation Plants (2x 200 Cum/hr each) to be installed in the premises of the defendant on the terms & conditions as mentioned in the Plant and Equipment Lease Agreement dated 17.12.2003. Subsequently, the plaintiff gave on lease another Cryogenic Air Separation Plant of 600 Cum/hr capacity and equipment to the defendant vide Plant and Equipment Lease Agreement dated 16.05.2005 for a period of ten years. Simultaneously, the parties entered into an Operation & Maintenance Agreement in respect of the aforesaid Plant & Equipment leased out, which was co-terminus with the lease agreement executed between the parties.
4. The plaintiff has alleged that the defendant despite repeated requests and reminders has failed to clear the outstanding dues of the plaintiff on the ground of faulty meter readings, and in the circumstances, the plaintiff company was constrained to send letter dated 19.08.2006, thereby notifying the defendant that they shall be forced to suspend the operation and maintenance of the plant. The defendant still not having cleared the outstanding dues, the plaintiff was left with no other alternative but to suspend the operation and maintenance activities on 22.08.2006. Thereupon, the defendant vide their letter dated 29.08.2006 called upon the plaintiff to lift their plant and equipment immediately. The plaintiff retorted by sending a reply dated 31.08.2006 notifying to the defendant the schedule for dismantling and removal of the plant and equipment installed in the premises of the defendant at Ispat Nagar, Ghaziabad (U.P.). Eventually, the plaintiff terminated the agreements dated 17.12.2003 & 7.9.2006 and thereafter filed the present suit for permanent and mandatory injunction against the defendant.
5. Contention of learned Counsel for the defendant is that in view of the judgment of the Apex Court in Harshad Chiman Lal Modi v. DLF Universal and Anr. : AIR2005SC4446 , the present suit falls in the category of suits covered by Section 16 of the Code of Civil Procedure and hence can only be instituted in a court within whose jurisdiction the property is situate. A Court within whose territorial jurisdiction the property is not situate has no power to deal with and decide the rights and interests in such property or order for recovery of such property. As it is only the U.P. Court which can entertain the suit, the present plaint is liable to be returned to the plaintiff.
6. Contention of learned Counsel for the defendant, on the other hand, is that the suit property was not immovable property and Section 16 of the Code of Civil Procedure was, thereforee, inapplicable to the suit property, which in fact, was covered by the residuary provisions of Section 20 of the Code of Civil Procedure. In the alternative, it was contended that the present suit be treated as a petition under Section 9 of the Arbitration & Conciliation Act, 1996 for seeking interim relief in terms of the prayer clause in the plaint and the relief prayed for be accordingly granted to the plaintiff. It was pointed out that a similar plea had been made in paragraph-21 of the plaint.
7. A perusal of paragraph-21 of the plaint, however, shows that the plaintiff's submission in the said paragraph is that the disputes/controversies arising in the suit proceedings are not covered by the arbitration agreement between the parties and that the plaintiff is entitled to the relief prayed for by way of the present suit. The alternative submission is that the present suit be treated as a petition under Section 9 of the Arbitration & Conciliation Act, 1996 for seeking interim relief in terms of the prayer clause.
8. It is proposed to deal first with the submission of the counsel for the plaintiff that the suit property is a movable asset consisting of Air Compressors, Cold Boxes, Molecular Sieves and Inter Connecting Pipe work as per details in Schedule-I to the Agreement and that the same is used by the plaintiff at various sites in normal course of business for manufacture and supply of gases to its customers. The decision of the Apex Court in Harshad Chiman Lal Modi's case (supra) was also sought to be distinguished on the ground that the suit in the said case was filed in Delhi though it related to a flat buyers agreement in respect of immovable property situate at Gurgaon (Haryana). The case of the plaintiff, on the contrary, pertained to movable property and as such provisions of Section 16 of the Code of Civil Procedure were not applicable.
9. The relevant Sections are Sections 16 & 20 of the Code of Civil Procedure, which read as follows:
16. Suit to be instituted where subject matter situate-subject to the pecuniary or other limitations prescribed by any law, suits-
(a) for the recovery of immovable property with or without rent or profits,
(b) for the partition of immovable property,
(c) for foreclosure, sale or redemption in the case of a mortgage of or charge upon immovable property,
(d) for the determination of any other right to or interest in immovable property,
(e) for compensation for wrong to immovable property,
(f) for the recovery of movable property actually under distraint or attachment, shall be instituted in the court within the local limits of whose jurisdiction the property is situate;
Provided that a suit to obtain relief respecting, or compensation for wrong to, immovable property held by or on behalf of the defendant may, where the relief sought can be entirely obtained through his personal obedience, be instituted either in the court within the local limits of whose jurisdiction the property is situate, or in the court within the local limits of whose jurisdiction the defendant actually and voluntarily resides, or carries on business, or personally works for gain.20. Other suits to be instituted where defendants reside or cause of action arises,- Subject to the limitations aforesaid, every suit shall be instituted in a court within the local limits of whose jurisdiction-
(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises.
10. In Harshad Chiman Lal Modi's case (supra), the Apex Court painstakingly discussed the scope and ambit of the aforesaid Sections in respect of immovable property in the context of the question as to the court in which the suit for specific performance of an agreement relating to immovable property would lie. At pages 800-801 of the Report in Paragraphs 15 to 19, the Apex Court laid down the following dicta:
15. Now, Sections 15 to 20 of the Code contain detailed provisions relating to jurisdiction of courts. They regulate forum for institution of suits. They deal with the matters of domestic concern and provide for the multitude of suits which can be brought in different courts. Section 15 requires the suitor to institute a suit in the court of the lowest grade competent to try it. Section 16 enacts that the suits for recovery of immovable property, or for partition of immovable property, or for foreclosure, sale or redemption of mortgage property, or for determination of any other right or interest in mortgage property, or for determination of any other right or interest in immovable property, or for compensation for wrong to immovable property shall be instituted in the court within the local limits of whose jurisdiction the property is situate. The proviso to Section 16 declares that where the relief sought can be obtained through the personal obedience of the defendant, the suit can be instituted either in the court within whose jurisdiction the property is situate or in the court where the defendant actually or voluntarily resides, or carries on business, or personally works for gain. Section 17 supplements Section 16 and is virtually another proviso to that section. It deals with those cases where immovable property is situate within the jurisdiction of different courts are uncertain. Section 19 is a special provision and applies to suits for compensation for wrongs to a person or to movable property. Section 20 is a residuary section and covers all those cases not dealt with or covered by Sections 15 to 19.
16. Section 16 thus recognizes a well-established principle that actions against rest or property should be brought in the forum where such rest is situate. A court within whose territorial jurisdiction the property is not situate has no power to deal with and decide the rights or interests in such property. In other words, a court has no jurisdiction over a dispute in which it cannot give an effective judgment. The proviso to Section 16, no doubt, states that though the court cannot, in case of immovable property situate beyond jurisdiction, grant a relief in rem still it can entertain a suit where relief sought can be obtained through the personal obedience of the defendant. The proviso is based on a well-known maxim 'equity acts in personam', recognized by the Chancery Courts in England. The Equity Courts had jurisdiction to entertain suits respecting immovable properties situated abroad through personal obedience of the defendant. The principle on which the maxim was based was that the courts could grant relief in suits respecting immovable property situated abroad by enforcing their judgments by process in personam i.e. by arrest of the defendant or by attachment of his property.
17. In Ewing v. Ewing Lord Selborne observed:
The Courts of Equity in England are, and always have been, courts of conscience operating in personam and not in rem; and in the exercise of this personal jurisdiction they have always been accustomed to compel the performance of contracts in trusts as to subjects which were not either locally or ratione domicile within their jurisdiction. They have done so, as to lands, in Scotland, in Ireland, in the colonies, in foreign countries.18. The proviso is thus an exception to the main part of the section which in our considered opinion cannot be interpreted or construed to enlarge the scope of the principal provision. It would apply only if the suit falls within one of the categories specified in the main part of the section and the relief sought could entirely be obtained by personal obedience of the defendant.
19. In the instant case, the proviso has no application. The relief sought by the plaintiff is for specific performance of agreement respecting immovable property by directing Defendant 1 to execute the sale deed in favor of the plaintiff and to deliver possession to him. The trial court was, thereforee, right in holding that the suit was covered by Clause (d) of Section 16 of the Code and the proviso had no application.
11. The Apex Court in paragraph-21 of the judgment categorically laid down that a plain reading of Section 20 of the Code leaves no room for doubt that it is a residuary provision and covers those cases not falling within the limitation of Sections 15 to 19. The opening words of the Section 'Subject to the limitations aforesaid' are significant and make it abundantly clear that the section takes within its sweep all personal actions. In respect of actions relating to immovable property and covered by the main part of Section 16 of the Code of Civil Procedure, it was specifically ruled by the Apex Court, that neither the proviso to Section 16 would get attracted nor Section 20 (residuary provisions) would apply. Thus, suits such as suits for recovery of immovable property or for partition of immovable property or for foreclosure, sale or redemption of immovable property, or for compensation for wrong to immovable property shall be instituted in the court within the local limits of whose jurisdiction the property is situate.
12. Adverting to the question whether the suit property in the instant case constitutes immovable property, the definition of immovable property as set out in Section 3(26) of the General Clauses Act, 1897 is significant and reads as follows:
3(26). Immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth.
The definition of 'attached to the earth' is set out in Section 3 of the Transfer of Property Act, 1882 as follows:
3. Interpretation Clause - In this Act, unless there is something repugnant in the subject or context, -
attached to the earth' means-
(a) rooted in the earth, as in the case of trees and shrubs;
(b) embedded in the earth, as in the case of walls or buildings; or
(c) attached to what is so embedded for the permanent beneficial enjoyment of that to which it is attached.
13. At this juncture, it would also be pertinent to refer to Clause-5 of the agreement between the parties dated 17.12.2004, which reads as follows:
5...Supply/erection of Plant and Date of Commissioning
5.1 The Lesser shall manufacture, procure, transport, erect and commission the said plant at the appropriate place as per drawing attached....
5.2 The LESSEE will provide civil and structural works viz. foundation, piling, structural support and pipe support for installation of the plant at its own costs and expenses in accordance with the instructions, along with Equipment Load Data along with Equipment Layout received in this respect from the Lesser at the site marked in the enclosed site plan.
14. Clause-27.4 of the agreement is also relevant and is accordingly reproduced hereunder:
27.4. Upon termination of this agreement, the Lesser will dismantle, detach and remove the plant from the premises of the LESSEE at its own risk, costs and expenses without causing any damage, loss to the property and/or premises of the LESSEE after providing LESSEE with an advance notice of one month in writing of its intention to dismantle, detach and remove the plant.
15. A bare reading of the aforesaid clauses of the agreement makes it abundantly clear that the plant was to be erected by the Lesser after the lessee provided Civil and Structural Works, Equipment Load Data along with Equipment Layout at the site marked in the enclosed site plan. Likewise, upon termination of the agreement, the Lesser was to dismantle, detach and remove the plant from the premises of the lessee at its own risk and costs, without causing any damage or loss to the premises of the lessee.
16. Thus, quite clearly, the plant and machinery in the instant case constitutes immovable property attached to the earth or permanently fastened to anything to the earth and falls squarely within the definition of immovable property as set out in Section 3(26) of the General Clauses Act, 1897 read with Section 3(c) of the Transfer of Property Act, 1882.
17. The Apex Court in the case of T.T.G Industries Limited v. Collector of Central Excise, Raipur : 2004(167)ELT501(SC) has held in the context of hydraulic mudguns and tap hole-drilling machines that as the volume and weight of machines rendered them incapable of being shifted to another site without dismantling and re-erecting, such hydraulic mudguns and tap hole-drilling machines were not goods but immovable property.
18. In the case of Municipal Corporation of Greater Bombay v. Indian Oil Corporation Ltd. : AIR1991SC686 , twin tests have been laid down by the Supreme Court to determine whether assembly/erection of chattel would result in immovable property or not. The law laid down by the Supreme Court is that if the chattel is movable to another place as such for use, it is movable, but if it has to be dismantled and re-assembled or re-erected at another place for such use, such chattel would be immovable.
19. In Quality Steel Tubes (P) Ltd. v. Collector of Central Excise, U.P. : 1995ECR209(SC) , it was held that goods which are attached to the earth and thus become immovable, and do not satisfy the test of being goods within the meaning of the Excise Act nor can be said to be capable of being brought to the market for being bought or sold, fall within the definition of immovable. thereforee, the plant of tube mill and welding head erected by the appellant and installed as a part of expansion programme must be regarded as immovable.
20. In Duncan Industries Ltd. v. State of U.P. (2001) 1 SCC 633, the Apex Court, however, held that the question whether the machinery which is embedded in the earth is movable property or an immovable property, depends upon the facts & circumstances of each case including the intention of the parties to the agreement.
21. A careful perusal of the lease agreements in the instant case, which shows the nature of machineries installed and the purpose and manner of installation, being through the medium of the plaintiff himself, and by the defendant rendering the necessary help and providing the infrastructure, in my view, leave no manner of doubt that the machineries which have been embedded in the earth, to constitute Cryogenic Air Separation Plants for the production of oxygen and nitrogen to be used in the production of steel, is immovable in nature. As evidenced by the lease deed, the machinery was erected by the plaintiff with the defendant providing civil and structural works, viz., foundation, piling, structural support and pipe support, etc. for installation of the plant, and the same could not be shifted without first dismantling it and then re-erecting it at another site. On erection, the machinery, in my view, ceased to be movable property. It certainly cannot answer the description of 'goods' or 'movable property', which by its very nature envisage mobility and marketability on an 'as it is, where it is basis'. No doubt, the plant and machinery after dismantling could have been sold as scrap in the market, but so can the steel recovered from the rubble of an edifice.
22. Apparently also, counsel for the plaintiff was well aware of the position that the chattel did not admit of the definition of immovable property, and hence it was stated in paragraph-21 of the plaint that if for any reason the suit cannot be entertained as such, it may be treated as a petition under Section 9 of the Arbitration & Conciliation Act, 1996 for seeking interim relief in view of there being an arbitration Clause (Clause 28), which provided for the arbitration proceedings to be held at New Delhi. It was also urged that the defendant has its office and bank account at Delhi, negotiations were held at Delhi, payments were made and received at Delhi and thus part of the cause of action has arisen at Delhi. As such, under Section 2(e) of the Arbitration & Conciliation Act, 1996, this Court has jurisdiction to decide the disputes and grant interim relief under Section 9 of the Act. Reliance was placed in this regard upon the decision of the Hon'ble Supreme Court in Sameer Barar and Ors. v. Ratan Bhushan Jain and Ors. (2006) 1 S.C.C 419.
23. Dealing with the aforesaid alternative prayer of the plaintiff, it is deemed expedient to refer at the outset to Section 2(e) of the Arbitration and Conciliation Act, 1996. Section 2(e) which gives the definition of 'Court' explicitly states that 'Court' means a court which has jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been subject matter of a suit, and reads as follows:
2(1) (e). Court means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes.
24. In Sameer Barar (supra), it was held by the Apex Court that even if civil court feels that because of the arbitration clause a suit is not maintainable, it can treat the application to be one under Section 9 of the Act. On the strength of this judgment, counsel for the plaintiff urges that the present suit be treated as a petition under Section 9 of the Act. I am afraid that the judgment in Sameer Barar (supra) cannot come to the aid of the plaintiff as the head note of the judgment itself suggests that it was a case where civil jurisdiction was held to be excluded by the special statute. It was held that the proper course to be followed by the court on a party invoking civil jurisdiction, though its cause was maintainable under the special statute, was not to reject the suit but to treat the same as one under the special statute. This was on account of the fact that the civil court had rejected the suit of the plaintiff due to the presence of an arbitration clause. In the instant case, this question does not arise. The defendant has not set up an arbitration agreement as a ground for rejection of the suit but, on the contrary, has pleaded lack of territorial jurisdiction in this Court to entertain the subject matter of the suit.
25. Faced with this situation, counsel for the plaintiff sought to urge that the venue of the arbitration proceedings referred to in the arbitration agreement was at New Delhi, and hence this Court has jurisdiction to treat the suit as a petition under Section 9 of the Arbitration & Conciliation Act, 1996. Counsel for the defendant, on the contrary, seeks to urge that the situs of arbitration is wholly irrelevant for the purpose of deciding whether the jurisdiction to entertain even a petition under Section 9 of the Act vests in this Court. The place of arbitration, he urges, will not confer jurisdiction as would be clear from a reading of Section 2(1)(e) of the Act.
26. Reliance was placed, in the above context, by counsel for the defendant on several judgments of this Court. Thus, the question as to whether situs of arbitration confers jurisdiction on the court was considered by a learned Single Judge of this Court in Sushil Ansal v. State AIR 1980 Delhi 43. In the said case, the contract was entered into at Lucknow in respect of the works executed at Kanpur and disputes arose which were referred to decision by a sole arbitrator, who made his award. The petition was filed in this Court under Section 14 & 17 of the Arbitration Act, for filing of the award and making the same as rule of the court, claiming that this Court had jurisdiction on the ground that the arbitrator was appointed at Delhi and that he had made the award at Delhi. This Court after examining the provisions of Sections 41, 31 & 2(c) of the Arbitration Act, 1940, held:
Thus one has to ascertain what are the questions forming the subject matter of the reference to arbitration which resulted in the award. Suppose those question arise in a suit then find out which would be the competent Court to decide such suit. The Court competent to decide such questions in the suit would be the Court having jurisdiction to decide the present petition under the Arbitration Act for making the award a rule of the Court.
The Court held further that:
The matters, as alleged by the petitioner, relating to appointment of arbitrator at New Delhi, making of award by him at New Delhi and the Union of India having its headquarters at New Delhi are not the questions forming the subject matter of reference and thereforee do not confer jurisdiction upon this Court.
27. The decision in the case of Sushil Ansal (supra) was followed by another Single Judge of this Court in case of Gulati Construction Company, Jhansi v. Betwa River Board and Anr. : AIR1984Delhi299 , wherein it was observed as under:.Merely because the arbitrator chooses to hold the proceedings in a place, where admittedly no suit could be instituted, and chooses to make and publish an award at that place it would not give the Courts of that place territorial jurisdiction to decide the matters arising under the Arbitration Act.
28. In Interstate Equipment (India) Private Ltd. v. Bharat Alluminium Company Ltd. 110 (2004) DLT 316, yet another learned Single Judge of this Court (Hon'ble Dr. Justice Mukundkam Sharma) held that a clause in the arbitration agreement providing for the venue of the arbitration proceedings neither vests nor conclusively determines the territorial jurisdiction of the court.
29. To the same effect is the decision of this Court in Apparel Export Promotion Council v. Prabhati Patni, Proprietor Comfort Furnishers and Anr. : 125(2005)DLT511 , wherein it was reiterated that to determine the jurisdiction of a court for the purposes of Arbitration & Conciliation Act, 1996, one has to look at the subject matter of the arbitration, and not at the situs of arbitration because that is wholly irrelevant. The situs of arbitration or the fact that the award was made at a particular place, would not be relevant for conferring jurisdiction. It is only the subject matter of the arbitration construed in a manner as if the arbitration proceeding was a suit that would be determinative of a court having jurisdiction to entertain and hear a petition under the Arbitration & Conciliation Act, 1996.
30. In Ge Countrywide Consumer Financial Services Ltd. v. Mr. Surjit Singh Bhatia 2006 4 AD(Delhi) 485, the same learned Single Judge of this Court (Hon'ble Mr. Justice Badar Durrez Ahmed) reiterated that this Court would have no territorial jurisdiction nor could territorial jurisdiction be conferred upon it merely because of the agreed venue of the arbitration and that it was vital to consider the competency of the court for deciding the subject matter of the dispute had a suit been filed instead of invocation of arbitration clause.
31. Having regard to the above settled position of law, I have no hesitation in holding that notwithstanding the fact that there is an arbitration agreement, providing for the conduct of arbitration proceedings in Delhi, this Court has no jurisdiction to entertain a petition under Section 9 of the Arbitration & Conciliation Act, 1996 or for that matter any other petition under the said Act, in view of the fact that this Court lacks inherent jurisdiction to decide the subject matter of the dispute.
32. Thus, in view of the fact that the subject matter of the suit constitutes immovable property within the meaning of Section 3(26) of the General Clauses Act, 1897 read with Section 3 of the Transfer of Property Act, 1882 and is covered by Section 16(a) & (d) of the Code of Civil Procedure, the suit can only be instituted in a court within the local limits of whose jurisdiction the property is situate. In the instant case, the property is situate at Ispat Nagar, within the jurisdiction of the court at Ghaziabad (U.P.), where prior to the filing of the present suit caveats are stated to have been filed by both the parties, presumably in anticipation of the filing of a suit in the said court.
33. The inevitable result is that the plaint must be returned to the plaintiff and is ordered to be returned to the plaintiff for being presented to the court having territorial jurisdiction to entertain the same. Needless to state, that if the plaintiff chooses to invoke the provisions of Order VII Rule 10A by filing an application there under, this Court in order to expedite the matter will issue the necessary directions thereon immediately on receipt of the application.
34. The suit stands disposed of accordingly. There will be no order as to costs.