1 IN THE HIGH COURT OF BOMBAY AT GOA WRIT PETITION NO. 469 OF 2005 Union of India, represented by Chief Engineer (Navy), Mumbai 26, Aesaye Building, Colaba, Mumbai – 400 005. ) ) ) ) ... Petitioner Versus M/s. Diplomat Engineers, 4/5 Gupta Market, Lajpat Nagar – IV, New Delhi – 110 024. ) ) ) … Respondent Mr. C.A. Ferreira, Assistant Solicitor General for the petitioner. Mr. G. Kudchadkar for the respondent. CORAM : SMT. RANJANA P. DESAI, J. DATED : 30TH JUNE 2006. ORAL JUDGMENT : 1. Rule. By consent of the parties, taken up for hearing forthwith. 2. The petitioner has challenged in this writ petition order dated 4/10/2005 passed by the 1st 2 Additional District Judge, South Goa at Margao, whereby the application filed by the petitioner under section 34 of the Arbitration & Conciliation Act, 1996 (for short, “the said Act”) for setting aside the Award dated 30/10/2004 made by the Sole Arbitrator was set aside. 3. Few facts, which are necessary for the disposal of this petition may be shortly, stated : It appears that the respondent secured contract for construction of provision of Air Conditioning to Technical and OTM Accommodation for on-shore structure at Goa. Agreement dated 30/9/1997 was executed between the petitioner and the respondent. Clause 71 of the General Condition of the contract is of some relevance and may be quoted : “71. Court jurisdiction : Irrespective of the place of issue of tenders, the place of acceptance of tenders, the place execution of contract or the place of payment under the 3 contract, the contract shall be deemed to have been made at the place from where the acceptance of tenders has been issued and the work is executed/executable. The Courts of the place from where the acceptance of the tender has been issued or the place where the work is executed/under execution shall alone have jurisdiction to decide any dispute arising out of or in respect of the contract”. 4. As there were disputes between the petitioner and the respondent, the respondent approached the Additional District Judge at Tis Hizari Court, New Delhi, for appointment of arbitrator. On 21/1/2004, by consent of the parties, the arbitrator was appointed by Additional District Judge, Tis Hizari Court, New Delhi. The arbitrator entered upon the reference. The arbitration proceedings were conducted in New Delhi and the Award was made on 30/10/2004. Being aggrieved by the Award, the petitioner preferred objections under section 34 of the said Act before the District Court, South Goa, Margao. The learned judge 4 rejected the said application holding that he had no jurisdiction to entertain the application. While taking such a view, the learned judge relied on section 42 of the said Act, and held that the respondent had approached Addl. District Judge, Tis Hizari Court at New Delhi for appointment of arbitrator under section 8(1) of the said Act. By consent of the parties, arbitrator was appointed and, therefore, in terms of section 42 of the said Act, only the Additional District Judge, Tis Hizari Court at New Delhi has jurisdiction to entertain the application under section 34 of the said Act. This order is assailed in the present petition. 6. I have heard Mr. Ferreira, the learned counsel appearing for the petitioner and Mr. Kudchadkar, the learned counsel appearing for the respondent. 7. Mr. Ferreira, the learned counsel for the petitioner submitted that the learned judge has totally misconstrued the provisions of sections 8, 34 and 42 of the said Act. He contended that the Tis Hizari Court at New 5 Delhi had no jurisdiction to entertain the application filed by the respondent under section 8 of the said Act. He submitted that it is true that the arbitrator was appointed by consent of the parties but, by consent of the parties, the parties cannot confer jurisdiction on a court. In this connection, he relied on the judgment of the Supreme Court in Chiranjilal Shrilal Goenka v. Jasjit Singh and others, (1993) 2 SCC 507. 8. The learned counsel pointed out that as per clause 71 of the General Condition of contract, the court of the place from where the acceptance of the tender had been issued or the place where the work is executed/under execution shall alone have jurisdiction to decide any dispute arising out of or in respect of the said contract. He submitted that the tender was accepted in Cochin and the execution of the contract was at Vasco da Gama, South Goa and, therefore, only the court at Cochin or Vasco da Gama, South Goa could have jurisdiction to decide any dispute arising out of the contract. The respondent, 6 therefore, could not have approached the Addl. District Judge, at Tis Hizari Court, New Delhi for appointment of arbitrator and the consent given by the petitioner in these circumstances is immaterial. The learned counsel submitted that apart from that under section 11(6) of the said Act, the arbitrator has to be appointed by the Chief Justice or his nominee and not by the District Court. He submitted that this is well settled by the judgment of the Supreme Court in M/s. S.B.P. & Co. v. M/s. Patel Engineering Ltd. & Anr., JT 2005(9) SC 219 and, therefore, on this count, the Addl. District Judge, at Tis Hizari Court, New Delhi could not have entertained the application. He submitted that therefore, the learned judge ought to have entertained the application under section 34 of the said Act. Since the District Court at Tis Hazari had no jurisdiction to entertain the application, bar under section 42 will not come in the way of the application filed by the petitioner in the District Court at Goa. He submitted that, therefore, the impugned order must be set aside. 7 9. Mr. Kudchadkar, the learned counsel appearing for the respondent, on the other hand, contended that in view of the fact that now the execution application has been transferred to Goa, he has no objection if the application filed under section 34 of the said Act is entertained by the District Court at South Goa. 10. As held by the Supreme Court in Chiranjilal Shrilal Goenka’s case (supra), the defect of jurisdiction strikes at the very authority of the court to pass decree which cannot be cured by consent or waiver of the party. 11. Under the said Act `Court’ is defined in Section 2(e), which reads thus : “ `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 8 such principal Civil Court, or any Court of Small Causes:” 12. It is also necessary to have a look at Section 34 of the said Act. So far as it is relevant, Section 34 reads as under : “ 34. Application for setting aside arbitral award : (1) “Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3)”. (2) ……… ” 13. Section 42 of the said Act reads as under :- “Jurisdiction – Notwithstanding anything contained elsewhere in this part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that court and in no other Court”. 9 14. As per clause 71 of the agreement, jurisdiction is confined to Goa which is a place of execution of contract or Kerala where tender was accepted. No part of cause of action or even a part of cause of action had arisen in New Delhi. Therefore, for the purpose of Section 34 and Section 42 of the said Act the Court would be either a Court at Goa or a Court at Kerala. The parties, therefore, could not have approached the Additional District Judge, Tis Hazari Court at New Delhi. 15. The fact that arbitration proceedings were held in Delhi will also not confer jurisdiction on the Court in Delhi. In Apparel Export Promotion Council v. Prabhati Patni and anr., 125 (2005) Delhi Law Times 511 while dealing with this question the Delhi High Court has held that 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 Section 34 of the said Act. 10 16. Besides, the application could have been properly filed under Section 11(6) of the said Act and under Section 11(6) of the said Act, it is only the Chief Justice or his nominee could have appointed the arbitrator. Therefore, in my opinion, the Additional District Judge, Tis Hazari Court at New Delhi lacked inherent jurisdiction and the parties could not have conferred the jurisdiction on him by agreement. The reliance placed by the learned counsel for the petitioner on the judgment of the Supreme Court in M/s. S.B.P. & Co.’s case (supra) is apt. 17. In this connection, I may usefully refer to the judgment of the Delhi High Court in Sarovar Park Plaza Hotels & Resorts Pvt. Ltd. v. World Park Hotels (India) Ltd. And anr., 2005 (Suppl.) Arb. L.R. 231, (Delhi) on which the learned Counsel for the petitioner has placed reliance. In that case, the petitioner company had entered into an agreement with the respondents dated 9/6/1998. Certain disputes arose between the parties. The petitioner filed a petition under section 9 of the said Act before the Delhi High Court praying for interim directions. The 11 petitioner then filed a petition under section 11(5) of the said Act for appointment of arbitrator and for reference of the dispute raised in the petition to such arbitrator, as the respondents had failed to act despite the service of notice. The respondents filed an application under section 42 of the said Act, praying that the petition filed by the petitioner under section 11 of the said Act be returned to the petitioner to file it in the court of Principal District Judge, Madurai. The respondents filed another application praying that the petition under section 11 of the said Act be returned to the petitioner to file the same before the Madras High Court. It was contended that the respondents had filed the petition under section 9(ii) read with section 11 of the said Act before the Principal District Judge, Madurai, which was dismissed by that court on 13/4/2005 holding that the Madras High Court would have the jurisdiction for appointing an arbitrator. That petition was filed by the respondents on 17/2/2005 and the petition before the Delhi High Court was filed by the petitioner under section 11 of the said Act on 28/5/2005. 12 According to the respondents, therefore, in terms of section 42 of the said Act, the petition ought to have been filed in the courts at Madurai or at Madras as the case may be. 18. The Delhi High Court referred to the order passed by the District Judge, Madurai by which the petition filed by the respondents under sections 9(ii) and 11 of the said Act was dismissed. On facts, the Delhi High Court found that the very presentation of the petition under section 11 of the said Act before the Madurai court was defective. It was presented before the court which had no jurisdiction to entertain and decide that petition in the eye of law. It was further observed that the institution of the petition before the court which had no jurisdiction would, thus, be inconsequential and cannot be equated to presentation of the petition before a court of jurisdiction. The petition under section 11 of the said Act filed by the petitioner before the court at Madurai was not entertained and decided on merits but related to lack of inherent jurisdiction in the court. It was further observed that it is 13 only when the basic ingredients for filing arbitration proceedings before a court of competent jurisdiction is satisfied that the bar contemplated under section 42 of the said Act can be enforced against the maintainability of a petition before another court. For these reasons, objections filed by the respondents under section 42 of the said Act were not entertained. 19. In the instant case, as discussed hereinabove, the initial petition was filed in a Court which lacked inherent jurisdiction to entertain it. Therefore, bar contemplated under section 42 of the said Act cannot be enforced against the maintainability of the application in the Court of 1st Additional District Judge, South Goa, Margao. 20. I have already recorded the statement of the learned counsel for the respondent that the respondent has no objection if the application is entertained in the Court at Goa. I must also record the statement of the learned 14 Counsel for the petitioner that he has instructions to state that he will continue his challenge to the said Award on the grounds taken in the application under section 34 of the said Act and since the arbitrator was appointed by consent, he shall not raise any objection regarding the lack of jurisdiction of the Tis Hazari Court at New Delhi and the Award being void on that count. 21. Hence, the following order : The impugned order dated 4.10.2005 passed in Arbitration Application No.1 of 2005 is quashed and set aside. The First Additional District Judge, South Goa, Margao is directed to entertain and decide the Arbitration Application No.1 of 2005 filed by the petitioner. The petition is disposed of in the aforesaid terms. SMT. RANJANA P. DESAI, J. ssm.