IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD DATE. 24-02-2011. PRESENT THE HON'BLE SRI JUSTICE G. KRISHNA MOHAN REDDY CIVIL MISCELLANEOUS APPEAL No.265 OF 2006 Between: M/s. Kamal Wineries, A Registered Partnership Firm, (Regd. No.7225/70), having its office at No.1, Abids Shopping Complex, I Floor, Chirag Ali Lane, Abids, Hyderabad, Rep. by its C.E.O. Mr. Niranjan Agarwal. --- Appellant/ Plaintiff. AND M/s. Simbholi Sugar Mills Limited, (/Distillery; Division, 12-A, Tilak Marg, New Delhi, Rep. by its Managing Director. --- Respondent/ Respondent. The Court made the following: HONOURABLE SRI JUSTICE G.KRISHNA MOHAN REDDY CIVIL MISCELLANEOUS APPEAL No.265 OF 2006 JUDGMENT: The Civil Miscellaneous Appeal filed under Order 43 Rule 1 (a) of C.P.C. is directed against the judgment and decree dated 06-12- 2005 passed in O.S. No.144 of 2002 on the file of the Court of the VIII Additional Senior Civil Judge, (F.T.C.) City Civil Court, Hyderabad, directing to return the plaint on the ground of territorial jurisdiction. 2. The appellant herein is the plaintiff and the respondent herein is the defendant in the suit. For the sake of convenience, I refer the parties as arrayed in the Suit. 3. The plaintiff filed the suit to recover Rs.5,76,000/- being royalty amount with subsequent interest at 18% p.a., and costs on the ground that the defendant entered into an agreement with it on 24-08-2000 at Hyderabad for marketing O.K. Whisky, a product of the plaintiff which is to be blended and bottled at the defendant’s distillery at Ghaziabad for sale at New Delhi and the defendant agreed to pay Rs.18/- per case as royalty for the financial year 2000-2001 with minimum guarantee of 4000 cases, but, the defendant committed default in payment of the said royalty in spite of demands and further the cause of action to file the suit arose at Hyderabad by virtue of the agreement. 4. The defendant filed written statement in which it is contended that the agreement dated 24-08-2000 was entered into at Delhi only and by virtue of clause 15 of it, any dispute arises between them should be referred to arbitration at Delhi and pleaded to dismiss the suit. 5. On the strength of the pleadings, the Court below framed the following issues for trial : 1. Whether the plaintiff is entitled for recovery of an amount of Rs.5,76,000/- with interest at the rate of 18% per annum? 2. Whether the court has no jurisdiction to try the suit? 3. To what relief? 6. On behalf of the plaintiff, he got himself examined as P.W.1 and got marked Exs.A.1 and A.26. On behalf of the respondent, D.W.1 was examined and Exs.B.1 to B.9 were marked. 7. On the basis of material available on record, the trial Court directed to return the suit file on the ground that the lower Court got no territorial jurisdiction to try the matter without examining the other issue. Hence, aggrieved by the same, the present appeal has been preferred. 8. Therefore, it is to be mainly considered as to whether the trial Court was quite right in holding that it got no territorial jurisdiction to entertain the matter? 9. It is the contention of learned counsel for the plaintiff that after full trial, the trial court ought to have considered all the issues with reference to the entire evidence recorded that the written statement filed by the defendant provides one way that the cause of action took place at Hyderabad whereas there is also a question about the territorial jurisdiction of the Court in view of the Arbitration Clause and that even though the agreement provides that it was executed at Hydeabad by mistake it was typed that it was executed at Delhi. It is his further contention that D.W.1 representative of the defendant deposed in his cross-examination that the agreement was executed at Delhi whereas it was prepared at Hyderabad. Further, it is his contention that even supposing that the document was executed at Delhi, it is to be considered at what place, the amount is to be repaid and the debtor has to approach the creditor wherever the creditor lives for the purpose of repaying the amount and hence, the place of the plaintiff is to be taken into consideration for the purpose of fixing the jurisdiction of the Court. It is his further contention that under Section 20 C.P.C., bundle of facts of the case are to be taken into consideration for the purpose of fixing territorial jurisdiction. In support of his contention he has relied upon a decision of this Court reported in National Insurance Company Limited, Ongole V. Padma Tobacco Company, Palatipadu, Jarugumalli Mandalam[1] wherein it is observed in this context with reference to Section 8 of the Act : “It is to be further noticed that when the defendant did not ask the Court to stay all further proceedings of the suit, the said act not only amounts to waiving of the right of the defendant to question the maintainability of the suit but also amounts to admitting the jurisdiction of the civil Court.” Another decision of this Court reported in A.P. State Civil Supplies Corporation Ltd., Cuddapah V. Simhadripuram Co- operative Mrketing Society, Pulivendla Taluq, Cuddapah and others[2] it is observed under the old Act : “22. Countering the argument of the learned counsel Sri N. Subba Reddy appearing for the Corporation brought to my notice Section 34 of the Arbitration Act, 1940. Under Section 34 of the Act, if any party commences any legal proceedings without first approaching Arbitrator, the other side before filing the written statement has to raise an objection that the Court cannot proceed with the hearing of the suit in the light of the arbitration clause contained in the agreement and if the Court is satisfied, it can say the proceedings until arbitration proceedings are completed. 23. Admittedly, in this case the respondent did not raise this objection either before filing the written statement or after filing o the written statement. On the other hand, he actively participated in the suit before the trial Court and as such it is too late in the day to contend that the suit is not maintainable in law. Accordingly, this contention is rejected.” 10. On the other hand, it is the contention of learned counsel for the defendant that when there is arbitration clause and the corresponding issue it is right to consider the question of jurisdiction as preliminary issue and dispose of the matter. 11. Therefore, it is to be mainly examined as to : 1) Whether the judgement passed by the lower Court is valid in view of the provisions of Section 8 of the Arbitration and Conciliation Act, 1996 and recording evidence completely? 2) Whether the lower Court got no jurisdiction to entertain the matter? 12. If the first point is answered in favour of the plaintiff, the question of deciding the other point does not arise and the matter is to be remanded to the lower Court for disposal taking into consideration the overall circumstances of the case. 13. Section 8 of the Arbitration and Conciliation Act provides : “8. Power to refer parties to arbitration where there is an arbitration agreement ---- (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made”. Therefore, it mandates that the defendant should have filed application within the time stipulated to send the matter for arbitration. The observations made in the decisions cited hold good to the facts and circumstances of the case because the defendant did not take any plea under section 8 of the new Act before filing his written statement whereas simply he took a plea in the written statement that the lower Court got no jurisdiction to entertain the matter in view of the arbitration clause and the agreement was executed at Delhi and on the other hand he actively participated in the proceedings till the end whereas ultimately, the lower Court directed to return the matter for presentation before appropriate court ignoring the question of deciding the issues framed there under. Therefore, the return of the plaint is not tenable. Further, the lower Court is directed to dispose of the matter on the basis of issues framed and the evidence adduced leaving apart the question of arbitration clause. Filing of his written statement taking the plea that the Court got no jurisdiction to entertain the matter, in view of the Arbitration Clause and framing of the corresponding issues are not suffice. 14. Further, when once the parties were allowed to complete the trial, the trial Court should have disposed of the matter examining all the issues and giving findings there under. Hence, the judgment and decree are not tenable and they are to be accordingly set aside. In the result, the Civil Miscellaneous Appeal is allowed without costs in the circumstances of the case subject to the observations made above. However, as the matter has become very old, the learned VIII Additional Senior Civil Judge, City Civil Court, Hyderabad, is directed to dispose of the matter within a period of three (3) months from the date of receipt of a copy of this order. __________________________ G. KRISHNA MOHAN REDDY, J. Date: 24-02- 2011. DSH/DVS. [1] 2004 (3) ALD 13 [2] 2004 (4) ALD 220