J.S. Khehar, C.J.
1. The applicant Coastal Projects Private Limited has filed the instant application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator.
2. The applicant and the respondent M/s National Thermal Power Corporation Limited entered into a contract dated 07.09.2005. The aforesaid contractual agreement has been appended with the instant application as Annexure -1. Article 5.1 of the contractual agreement postulates the appointment of the arbitrator in case of differences or disputes between the parties. Article 5.1 is being extracted hereunder:
5.1 It is specifically agreed by and between the parties that all the differences and/or disputes arising out of the Contract or touching the subject matter of the Contract shall be decided by the process of Settlement of Disputes, Conciliation and Arbitration as specified in Clause 39.0.0 of Special Conditions of Contract (SCC) (including Amendments / Clarifications, if any) and the provisions of the Indian Arbitration and Conciliation Act, 1996 shall apply. The Delhi Courts alone shall have exclusive jurisdiction in all matters arising under this Contract. The arbitrator shall give reasoned / speaking Award.
3. Consequent upon the arising of differences/disputes between the parties, the applicant M/s Coastal Projects Pvt. Ltd. issued a notice dated 25.09.2006 listing the differences/disputes between the parties. It was pointed out in the notice, that despite strenuous efforts at the hands of the applicant, the aforesaid disputes had remained unresolved. In order to settle the same, the applicant required the respondent to nominate an arbitrator. It was also pointed out, that the notice dated 25.09.2006 be treated as a notice under Section 11 of the Arbitration and Conciliation Act, 1996. Accordingly, the respondent was called upon to appoint an arbitrator within a period of one month from the date of receipt of aforesaid communication (dated 25.09.2006). Since the respondent did not appoint any arbitrator inspite of the receipt of the aforesaid notice, the instant application under Section 11 of the Arbitration and Conciliation Act, 1996 has been filed on behalf of the applicant requiring this Court to appoint an arbitrator.
4. Although the factual position noticed in the foregoing paragraph is not disputed at the hands of the respondent, yet learned Counsel for the respondent has vehemently opposed the appointment of an arbitrator by this Court by raising a preliminary objection. It is submitted by learned Counsel, that the instant application at the hands of M/s Coastal Projects Pvt. Ltd. is not maintainable. In this behalf it is pointed out, that in terms of the arbitration clause, extracted hereinabove, this Court has no jurisdiction to entertain the controversy. A perusal of Article 5.1 of the contractual agreement, dated 07.09.2005 reveals, that '...the Delhi Courts alone shall have exclusive jurisdiction in all matters arising under this Contract....' In so far as the instant preliminary objection is concerned, learned Counsel for the respondent, in the first instance, has placed reliance on the judgment rendered in Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd. : (2004) 4 Supreme Court Cases 671. Learned Counsel has placed reliance on paragraph 7 of the aforesaid judgment, which is being extracted hereunder:
7. The effect of Clause 17 of the purchase order which mentions - any legal proceedings arising out of the order shall be subject to the jurisdiction of the courts in Mumbai, has to be examined in the aforesaid background. Under Clauses (a) and (b) of Section 20, the place of residence of the defendant or where he carries on business or works for gain is determinative of the local limits of jurisdiction of the court in which the suit is to be instituted. Clause (c) of Section 20 provides that the suit shall be instituted in a court within the local limits of jurisdiction of the court in which the suit is to be instituted. Clause (c) of Section 20 provides that the suit shall be instituted in a court within the local limits of whose jurisdiction the cause of action, wholly or in part, accrues. As shown above, in the present case, a part of cause of action had accrued in both the places, viz., Delhi and Bombay. In Hakam Singh v. Gammon (India) Ltd. : 1971 (1) SCC 286, it was held that it is not open to the parties to confer by their agreement jurisdiction on a court which it does not possess under the Code. But where two courts or more have under the Code of Civil Procedure jurisdiction to try a suit or a proceeding, an agreement between the parties that the dispute between them shall be tried in one of such courts is not contrary to public policy. It was also held that such an agreement does not contravene Section 28 of the Contract Act.
Based on the aforesaid determination of the Apex Court, it is submitted that the courts at Delhi alone have jurisdiction to deal with the controversy in hand, and as such, it is submitted that it was imperative for the applicant who is bound by the condition incorporated in Article 5.1 of the contractual agreement dated 07.09.2005 to initiate proceedings, if it is so advised, in a court of competent jurisdiction at Delhi. Learned Counsel for the respondent has also placed reliance on the observations recorded in paragraph 9 of the judgment rendered in Hanil Era Textiles Limited's case (supra). Paragraph 9 is being extracted hereunder:
9. Clause 17 says - any legal proceedings arising out of the order shall be subject to the jurisdiction of the courts in Mumbai. This clause is no doubt not qualified by the words like 'alone', 'only' or 'exclusively'. Therefore, what is to be seen is whether in the facts and circumstances of the present case, it can be inferred that the jurisdiction of all other courts except courts in Mumbai is excluded. Having regard to the fact that the order was placed by the defendant at Bombay, the said order was accepted by the branch office of the plaintiff at Bombay, the advance payment was made by the defendant at Bombay, and as per the plaintiffs' case the final payment was to be made at Bombay, there was a clear intention to confine the jurisdiction of the courts in Bombay to the exclusion of all other courts. The Court of Additional District Judge, Delhi had, therefore, no territorial jurisdiction to try the suit.
Based on the aforesaid observations recorded by the Supreme Court in paragraph 9, extracted hereinabove, it is the submission of the learned Counsel for the respondent, that even if parties can be deemed to have bound themselves inferencially to the jurisdiction of a particular court, as in Hanil Era Textiles Ltd's case (supra), it is not open to the parties to seek recourse for the redressal of their grievances before a court other than the said agreed court. In contra distinction to the matter dealt with by the Supreme Court in Hanil Era Textiles Ltd's case (supra), it is submitted that in so far as the present contract agreement dated 07.09.2005 is concerned, Article 5.1 is explicit and clear and it is not necessary to draw any distinction in the present case, inasmuch, the use of the terms 'alone', and 'exclusive jurisdiction' in conjunction with Delhi High Court, leaves no room for any doubt, that the parties to the agreement dated 07.09.2005 agreed, that the Delhi Courts 'alone' would have 'exclusive jurisdiction' in respect of matters, where differences/disputes arise between them. Thus viewed, it is submitted, that there can be no doubt, whatsoever, that the jurisdiction to entertain the instant application, would lie with an appropriate court at Delhi itself.
5. In order to supplement the submission advanced by the learned Counsel for the respondent, as has been noticed hereinabove, reliance has also been placed on the judgment rendered in Shree Baidyanath Ayurved Bhawan Private Limited v. Praveen Bhatia and Ors. : (2009) 8 Supreme Court Cases 779, wherein the Apex Court inter alia has observed as under:
13. The parties hereto are governed by the terms of the contract. If, in terms of the provisions of the contract, they by agreement conferred jurisdiction on one of the courts which would have otherwise jurisdiction to deal with the matter, the same should ordinarily be given effect to. In A.B.C. Laminart (P) Ltd. v. A.P. Agencies : (1989) 2 SCC 163 this Court held that when the court has to decide the question of jurisdiction pursuant to an ouster clause, it is necessary to construe the same properly. In such an event, it was opined that other courts should avoid exercise of jurisdiction.[See also Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd. : (2004) 4 SCC 671]
14. Yet again, in Rajasthan SEB v. Universal Petrol Chemicals Ltd. : (2009) 3 SCC 107 this Court held:27. The aforesaid legal proposition settled by this Court in respect of territorial jurisdiction and applicability of Section 20 of the Code to the Arbitration Act is clear, unambiguous and explicit. The said position is binding on both the parties who were contesting the present proceeding. Both the parties with their open eyes entered into the aforesaid purchase order and agreements thereon which categorically provide that all disputes arising between the parties out of the agreements would be adjudicated upon and decided through the process of arbitration and that no court other than the court at Jaipur shall have jurisdiction to entertain or try the same. In both the agreements in Clause 30 of the general conditions of the contract it was specifically mentioned that the contract shall for all purposes be construed according to the law of India and subject to jurisdiction only at Jaipur in Rajasthan courts only and in addition in one of the purchase orders the expression used was that the court at Jaipur only would have jurisdiction to entertain or try the same.
It was opined:
35. The parties have clearly stipulated and agreed that no other court, but only the court at Jaipur will have jurisdiction to try and decide the proceedings arising out of the said agreements, and therefore, it is the Civil Court at Jaipur which would alone have jurisdiction to try and decide such issue and that is the court which is competent to entertain such proceedings. The said court being competent to entertain such proceedings, the said court at Jaipur alone would have jurisdiction over the arbitration proceedings and all subsequent applications arising out of the reference. The arbitration proceedings have to be made at Jaipur Court and in no other court.
The legal position expressed in Hanil Era Textiles Ltd's case (supra) has obviously been reiterated by the Apex Court in Shree Baidyanath Ayurved Bhawan (P) Ltd's case (supra). Thus viewed, there remains hardly any doubt, that in so far as any difference/dispute arising between the parties herein, under the contractual agreement dated 07.09.2005, the same can only be settled by a court of competent jurisdiction at Delhi.
6. In order to repudiate the contention advanced by the learned Counsel for the respondent, learned Counsel for the applicant has placed reliance on the judgment rendered in Patel Roadways Limited, Bombay v. Prasad Trading Company : (1991) 4 Supreme Court Cases 270. Although during the course of hearing, the learned Counsel for the applicant invited this Court's attention to the observations recorded by the Apex Court in paragraphs 8 to 12, yet the observations recorded in paragraph 8 alone would suffice to deal with the submission advanced on behalf of the learned Counsel for the applicant. Accordingly, paragraphs 8 is being extracted hereunder:
8. Reliance has been placed by learned Counsel for the appellant on these two decisions and if it can be held that the courts at Bombay also had jurisdiction in the two suits referred to above the judgments appealed against will have to be set aside on the basis of these decisions. The question, however, is as to whether in any of these two suits the courts at Bombay also had jurisdiction apart from the courts within whose jurisdiction the goods were entrusted to the appellant for purposes of transport. Having given our anxious consideration to the matter we are of the opinion that the courts at Bombay in these two cases did not at all have jurisdiction and consequently the agreement between the parties conferring exclusive jurisdiction on courts at Bombay is of no avail.
7. Although the parties to the contractual agreement in Patel Roadways Limited, Bombay's case (supra) had agreed, that the courts at Bombay alone would have jurisdiction in the matter, yet the Apex Court arrived at the conclusion, that the parties could not insist that the courts at Bombay alone would have jurisdiction to entertain the controversy arising out of the contractual agreement between the parties. In so far as the instant conclusion in Patel Roadways Limited, Bombay's case (supra) is concerned, it is clear that the aforesaid conclusion was recorded because under the provisions of the Code of Civil Procedure, the courts at Bombay had no jurisdiction in the matter. It was held that, by a mutual agreement between private parties, jurisdiction cannot be vested/created in a particular court. In view of the above the controversy settled by the Apex Court in Patel Roadways Limited, Bombay's case (supra) was clearly separate and distinct from the one which is subject matter of consideration in this case. Accordingly, reliance can not be placed on the said judgment to record any finding inn the present case. In so far as the present controversy is concerned, it is not a matter of dispute, that the courts at Delhi have jurisdiction in the matter, and as such, the judgment rendered in Patel Roadways Limited, Bombay's case (supra) is inapplicable to the facts and circumstances of this case.
8. Having given my thoughtful consideration to the submissions advanced by the learned Counsel for the rival parties there can be no doubt, that in view of the judgments rendered by the Supreme Court in Hanil Era Textiles Limited's case (supra) and Shree Baidhanath Ayurved Bhawan Private Limited's case (supra), this Court does not have the jurisdiction to dispose of the present application filed by the applicant for appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. On account of their agreement, the rival parties had mutually agreed, that in case of disagreement/dispute arising between the parties, the Delhi Courts 'alone' would have 'exclusive jurisdiction' in the matter. The applicant herein must therefore seek redress from a court of competent jurisdiction at Delhi.
9. In view of the above, the instant application cannot be entertained by this Court on account of lack of jurisdiction. The same is accordingly, hereby dismissed. It will be open to the applicant to move a similar application, if it is so advised, before a court of competent jurisdiction at Delhi in term of Article 5.1 of the contractual agreement dated 07.09.2005.
10. The instant application is accordingly disposed of in the aforesaid terms.