1999 JTR(SC) 214
1999 AIR(SC) 2352 ; 1999 AIR(SCW) 2454 ; 1999 35 AllLR 569 ; 1999 2 ArbLR 220 ; 1999 3 BomCR(SC) 94 ; 1999 2 BomLR 356 ; 1999 2 CLT(SC) 30 ; 1999 1 JT 506 ; 1999 2 RAJ 108 ; 1999 1 Scale 503 ; 1999 2 SCC 446 ; 1999 2 UJ 899 ; 1999 KHC 1007 ; 1999 2 Supreme 121
1999(2) Supreme 121
Supreme Court of India
(From Bombay High Court)
Mrs. Sujata V. Manohar & R.C. Lahoti, JJ.
Food Corporation of India -Appellant
versus
M/s. Evdomen Corporation -Respondent
Civil Appeal No. 897 of 1999
(Arising out of S.L.P. (C) No. 16346 of 1997)
Decided on 17-2-1999
Counsel for the Parties :
For the Appellant : Dr. A. Francis Julian, Advocate for M/s. Arputham, Aruna & Co.
Act
Referred
:ARBITRATION ACT : S.31, S.31(1), S.2(c), S.14(2)
CIVIL PROCEDURE CODE : S.120, S.17, S.16, S.20
(A) The Arbitration Act, 1940 (Sections 2(c), 31(1), 14(2)) and the Civil Procedure Code (Sections 120, 17, 16, 20) govern the jurisdiction to enforce an arbitral award. Section 2(c) defines Court as a Civil Court having jurisdiction over the subject matter if it were a suit, while Section 31(1) permits filing an award in any court with jurisdiction relating to the matter. Section 20 of the Code determines the suits proper forum based on defendants residence, business, or cause of action, with an Explanation deeming a corporation to carry on business at its principal office. However, under Section 120, these Code provisions do not apply to a High Court in original civil jurisdiction, which exercises jurisdiction per its Letters Patent. Where the defendant corporation carries on business within the High Courts territorial jurisdiction, the High Court has authority under both the Arbitration Act and the Code to entertain an award filing. Section 41 of the Act integrates Code provisions into arbitration proceedings, but jurisdictional analysis must prioritize the Letters Patent of the High Court.
(B) Key principles include: (i) an award is enforceable in a court with jurisdiction over the subject matter; (ii) a corporation is deemed to transact business at its principal office, affecting forum under Section 20; (iii) High Court jurisdiction in arbitration matters is determined by its original civil jurisdiction under Letters Patent, not solely by Section 20; (iv) Sections 16, 17, and 20 of the Code do not restrict a High Courts original jurisdiction under Section 120; (v) filing and objections to awards are governed by the Arbitration Act read with the Code; (vi) jurisdiction depends on the defendants business presence at the time of suit institution.
Facts of the case:
The Food Corporation of India (appellant) entered a charter party with a respondent for rice transport from Bangkok to Paradeep Port, Orissa, signed at its Delhi office on 30.9.1988. Disputes over freight and demurrage led to arbitration in Bombay, where the award was filed in the Bombay High Court. The appellant challenged the High Courts jurisdiction, arguing no cause of action arose there, but the courts jurisdiction was upheld on the ground that the appellant carried on business in Bombay. A subsequent application to transfer the award to Jagatsinghpur was rejected.
Findings of Court:
The Bombay High Court correctly held jurisdiction under Clause 12 of the Letters Patent because the appellant carried on business in Bombay at the time. The Supreme Court found no error in this determination and noted that Sections 20 and 31(1) of the Arbitration Act, read with the Code, did not oust the High Courts original jurisdiction. The court also observed that the appellant had not invoked Section 31(4) of the Act, and the filing and objections process had been properly handled.
Issues:
(i) Whether a High Court has jurisdiction to take on file an arbitral award and issue process where the defendant corporation has a place of business within its territorial jurisdiction. (ii) Whether Section 20 of the Civil Procedure Code or the Explanation applies to defeat such jurisdiction in the context of arbitration. (iii) Whether the forum agreed in the charter party or the location of the principal office governs the filing of the award.
Ratio Decidendi:
The courts ratio is that a High Courts jurisdiction under Clause 12 of its Letters Patent is not excluded by Sections 20, 16, or 17 of the Code when the defendant carries on business within its jurisdiction. The Arbitration Act, read with the Code, permits filing an award in such a court, and the Explanation to Section 20 deems a corporation to transact business at its principal office, but this does not limit the High Courts original jurisdiction. Thus, the Bombay High Court had jurisdiction to entertain the award filing.
Result:
The appeal is dismissed with no order as to costs, upholding the Bombay High Courts jurisdiction and its order refusing transfer of the award.
(A) The Arbitration Act, 1940 (Sections 2(c), 31(1), 14(2)) and the Civil Procedure Code (Sections 120, 17, 16, 20) govern the jurisdiction to enforce an arbitral award. Section 2(c) defines Court as a Civil Court having jurisdiction over the subject matter if it were a suit, while Section 31(1) permits filing an award in any court with jurisdiction relating to the matter. Section 20 of the Code determines the suits proper forum based on defendants residence, business, or cause of action, with an Explanation deeming a corporation to carry on business at its principal office. However, under Section 120, these Code provisions do not apply to a High Court in original civil jurisdiction, which exercises jurisdiction per its Letters Patent. Where the defendant corporation carries on business within the High Courts territorial jurisdiction, the High Court has authority under both the Arbitration Act and the Code to entertain an award filing. Section 41 of the Act integrates Code provisions into arbitration proceedings, but jurisdictional analysis must prioritize the Letters Patent of the High Court.
(B) Key principles include: (i) an award is enforceable in a court with jurisdiction over the subject matter; (ii) a corporation is deemed to transact business at its principal office, affecting forum under Section 20; (iii) High Court jurisdiction in arbitration matters is determined by its original civil jurisdiction under Letters Patent, not solely by Section 20; (iv) Sections 16, 17, and 20 of the Code do not restrict a High Courts original jurisdiction under Section 120; (v) filing and objections to awards are governed by the Arbitration Act read with the Code; (vi) jurisdiction depends on the defendants business presence at the time of suit institution.
Facts of the case:
The Food Corporation of India (appellant) entered a charter party with a respondent for rice transport from Bangkok to Paradeep Port, Orissa, signed at its Delhi office on 30.9.1988. Disputes over freight and demurrage led to arbitration in Bombay, where the award was filed in the Bombay High Court. The appellant challenged the High Courts jurisdiction, arguing no cause of action arose there, but the courts jurisdiction was upheld on the ground that the appellant carried on business in Bombay. A subsequent application to transfer the award to Jagatsinghpur was rejected.
Findings of Court:
The Bombay High Court correctly held jurisdiction under Clause 12 of the Letters Patent because the appellant carried on business in Bombay at the time. The Supreme Court found no error in this determination and noted that Sections 20 and 31(1) of the Arbitration Act, read with the Code, did not oust the High Courts original jurisdiction. The court also observed that the appellant had not invoked Section 31(4) of the Act, and the filing and objections process had been properly handled.
Issues:
(i) Whether a High Court has jurisdiction to take on file an arbitral award and issue process where the defendant corporation has a place of business within its territorial jurisdiction. (ii) Whether Section 20 of the Civil Procedure Code or the Explanation applies to defeat such jurisdiction in the context of arbitration. (iii) Whether the forum agreed in the charter party or the location of the principal office governs the filing of the award.
Ratio Decidendi:
The courts ratio is that a High Courts jurisdiction under Clause 12 of its Letters Patent is not excluded by Sections 20, 16, or 17 of the Code when the defendant carries on business within its jurisdiction. The Arbitration Act, read with the Code, permits filing an award in such a court, and the Explanation to Section 20 deems a corporation to transact business at its principal office, but this does not limit the High Courts original jurisdiction. Thus, the Bombay High Court had jurisdiction to entertain the award filing.
Result:
The appeal is dismissed with no order as to costs, upholding the Bombay High Courts jurisdiction and its order refusing transfer of the award.
Judgment
Mrs. Sujata V. Manohar, J.-Leave granted.
2. The appellant-Food Corporation of India entered into a charter party agreement with the respondent for transport of rice from Bangkok to Paradeep Port in Orissa. The charter party was signed at Delhi where the principal office of the appellant is situated, on 30.9.1988.
3. Under the charter party agreement cargo was brought and discharged at Paradeep Port in the State of Orissa. In respect of the cargo so discharged there were disputes and differences between the parties regarding freight and demurrage charges. Since the charter party agreement contained an arbitration clause, the parties referred the disputes to arbitration. The arbitration took place in Bombay. Arbitrators gave their award and filed it in the Bombay High Court.
4. It is contended before us by the appellant that the Bombay High Court had no jurisdiction to take the award on file or to issue any process in connection with it. The High Court in the impugned judgment, has upheld the jurisdiction of the Bombay High Court on the ground that the appellant who is in the position of a defendant, has one of its place of business at Bombay.
5. Under Section 2(c) of the Arbitration Act, 1940, “Court” means a Civil Court having jurisdiction to decide the questions forming the subject matter of the reference if the same had been the subject matter of a suit. Under Section 31(1) of the Arbitration Act, 1940 an award may be filed in any court having jurisdiction in the matter to which the reference relates.
6. Ordinarily, the phrase “Civil Court having jurisdiction to decide” in Section 2(c) of the Arbitration Act, 1940 would refer to a court having jurisdiction under Section 20 of the Civil Procedure Code. Section 20(a) of the Civil Procedure Code provides, “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.....(c) the cause of action wholly or in part arises.” In the present case no part of the cause of action has arisen within the jurisdiction of the Bombay High Court. We have, therefore, to see whether Section 20(a) would confer jurisdiction on Bombay High Court as has been held in the impugned judgment. Section 20(a) has to be read along with the explanation to Section 20 which provides as follows:-
“Explanation: A Corporation shall be deemed to carry on business at its sole or principal office in India or in respect of any cause of action arisen at any place where it has also a subordinate office at such place.”
In view of this Explanation the appellant under Section 20 is deemed to carry on business at its principal office in India. In respect of any cause of action which arises at a place where it has its subordinate office, the court at that place would also have jurisdiction. In view of this Explanation, the Bombay High Court would not have jurisdiction under Section 20 of the Civil Procedure Code.
7. In this connection our attention was also drawn to a decision of this Court in Hakam Singh v. M/s. Gammon (India) Ltd.1, where this Court said that the Code of Civil Procedure in its entirety applies to the proceedings under the Arbitration Act by virtue of Section 41 of the Arbitration Act. The jurisdiction of the court to entertain a proceeding in connection with arbitration including taking on file an award, is accordingly governed by the provisions of the Code of Civil Procedure.
8. However, under Section 120 of the Civil Procedure Code, Sections 16, 17 and 20 of the Civil Procedure Code do not apply to a High Court in the exercise of its original civil jurisdiction. Jurisdiction of the Bombay High Court to entertain a suit under its ordinary original civil jurisdiction is determined by Clause 12 of the Letters Patent of the Bombay High Court. Under Clause 12 of the Letters Patent a place where the defendant, or each of the defendants were there are more than one, at the commencement of the suit, carry on business would be a place where the court would have jurisdiction. Therefore, under Clause 12 of the Letters Patent of the Bombay High Court, the Bombay High Court would have jurisdiction over the subject matter of the dispute in the present case because the appellant does carry on business in Bombay.
9. In the present case the Arbitrators gave their award on 29.11.1994. The appellant received a notice from the Arbitrators of the signing of the award on 15.12.1994. Thereafter on 13.1.1995 the appellant filed Arbitration Misc. Case No. 13 of 1995 before the Civil Judge, Senior Division, Jagatsinghpur, under Section 14(2) of the Arbitration Act, 1940 for directing the Arbitrators to file the original award and all relevant records in court and to permit the appellant to file objections under Section 30 of the Arbitration Act against the said award. In the meanwhile on 1.2.1995 the award was filed in Bombay. Thereafter the appellant amended the application in Case No. 13/95 to ask for transfer of the award from Bombay to the court at Jagatsinghpur. Application being Misc. Case 13/95 was rejected by the Court at Jagatsinghpur. It directed the appellant to file its objections in Bombay. We do not know whether anything further is pending in connection with that application. The appellant did not rely upon Section 31(4) of the Arbitration Act either before the Bombay High Court or before us. The above facts were known to the appellant and were brought to the notice of the High Court. Perhaps, looking to the findings of the Civil Judge, Senior Division, Jagatsinghpur, regarding lack of jurisdiction in his court to decide claims for demurrage etc., Section 31(4) has not been pressed into service.
10. We, therefore, do not find it necessary to set aside the judgment of the Bombay High Court.
11. The appeal is, therefore, dismissed with no order as to costs.
(C.R.) Appeal dismissed.
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Parallel Citations of other Journals :
Food Corporation of India v. M/s. Evdomen Corporation, 1999(2) Supreme 121 : (1999) 2 SCC 446 : 1999(1) CCC 163 : 1999(1) JT 506 : 1999(2) UJ 899 : AIR 1999 SC 2352
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