GENERAL MANAGER EAST COAST RAILWAY RAIL SADAN & ANR. versus HINDUSTAN CONSTRUCTION CO. LTD.
[2022] 6 S.C.R. 785, Supreme Court of India, 2022
Outcome: Appeal(s) allowed (Granted)
Segment: Issues
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785
GENERAL MANAGER EAST COAST RAILWAY RAIL SADAN
& ANR.
v.
HINDUSTAN CONSTRUCTION CO. LTD.
(Civil Appeal No. 4747 of 2022)
JULY 22, 2022
[M. R. SHAH AND B. V. NAGARATHNA, JJ.]
Arbitration and Conciliation Act, 1996 – ss.42 and 11(6) –
Jurisdiction over arbitral proceedings – Competent High Court –
Dispute between appellant and respondent – Respondent filed
application before High Court of Orissa u/s.11(6) seeking
appointment of arbitrator – Specific objection raised by appellant
on entertainability and/or maintainability of the application
u/s.11(6) – Placing reliance on s.42, the appellant submitted that as
respondent-claimant had initiated proceedings u/s.9 in the Court at
Vishakhapatnam, only the High Court of Andhra Pradesh at
Amaravati would have jurisdiction to entertain the application
u/s.11(6) – Without deciding the said issue which went to the root of
the jurisdiction of the High Court of Orissa, the said High Court
entertained the application u/s.11(6) and appointed an arbitrator
observing that since the appellants, in principle, had not opposed
the appointment of an arbitrator, little purpose would be served in
relegating the respondent to the concerned High Court as that will
only delay the adjudication of the disputes – Held: The appellants
might not have opposed the appointment of an arbitrator (though
the fresh appointment of an Arbitrator was also opposed by the
appellants) by that itself it will not confer the jurisdiction upon the
High
Court if otherwise, the High Court had no jurisdiction – Before
filing an application u/s.11(6) before the High Court of Orissa, the
respondent had moved an application before the Court at
Visakhapatnam u/s.9 – In that view of the matter, the High Court of
Orissa committed a serious error in entertaining application u/s.11(6)
and appointing arbitrator – However, respondent-claimant may
submit/move an application u/s.11(6) before the competent High
Court having jurisdiction namely the High Court of Andhra Pradesh
at Amaravati.
[2022] 6 S.C.R. 785
785
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SUPREME COURT REPORTS
[2022] 6 S.C.R.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4747
of 2022.
From the Judgment and Order dated 03.12.2021 of the High Court
of Orissa at Cuttack in Arbitration Petition No.10 of 2021.
K. M. Nataraj, ASG, Vivek Gupta, Ms. Kanu Agrawal, Shailesh
Madiyal, Ms. Deepabali Dutta, Anuj Srinivas Udupa, Amrish Kumar,
Advs. for the Appellants.
Amit Dubey, Adv. for the Respondent.
The Judgment of the Court was delivered by
M. R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment
and order passed by the High Court of Orissa at Cuttack in Arbitration
Petition No.10 of 2021 by which the High Court in exercise of powers
under Section 11(6) of the Arbitration and Conciliation Act, 1996
(hereinafter referred to as ‘the Act’) has appointed an Arbitrator to
adjudicate the dispute between the parties, the original informant –
General Manager, East Coast Railway Rail Sadan and Anr., have
preferred the present appeal.
2. As such the dispute in the present appeal is in a very narrow
compass.
3. The dispute arose between the appellant and the respondent
with respect to the contract/agreement dated 29.11.2018. That the
respondent herein - original claimant initiated the proceedings under
Section 9 of the Arbitration Act before the learned Additional District
Judge, Visakhapatnam seeking interim injunction against the encashment
of Performance Bank Guarantee and forfeiture of security deposit. The
said application came to
be allowed by the learned Additional District
Judge vide order dated 06.11.2019 restraining the appellants herein from
forfeiting security deposit for period of six months except on the special
circumstances.
4. That thereafter the respondent vide letter dated 01.12.2019
requested the appellant to constitute the Arbitral Tribunal raising five
claims. It appears that in terms of the Arbitration Agreement, arbitration
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proceedings were initiated by the appellants by appointing an arbitrator
to adjudicate the dispute between the parties. That the Arbitrator issued
notices calling upon the parties to submit their respective claims. The
respondent herein sought time vide letter dated 02.04.2020 for filing the
claim in view of Covid-19 Pandemic. The Arbitrator adjourned the
proceedings to 03.04.2020. Instead of submitting the claim, vide letter
dated 01.09.2020 the respondent questioned the validity of arbitral tribunal.
Thereafter the respondent filed the Arbitration Petition No.10 of 2021
before the High Court of Orissa at Cuttack under Section 11(6) of the
Act seeking appointment of an Arbitrator. The said application was
opposed by the appellants relying upon Section 42 of the Arbitration Act
and it was the case on behalf of the appellants that in view of Section 42
of the Arbitration Act, the application under Section 11(6) of the Act
shall lie before the High Court of Andhra Pradesh at Amaravati as the
respondent itself earlier filed Section 9 application before the Court at
Vishakhapatnam. It was also submitted on behalf of the appellants that
procedure dated 16.11.2016 upon which reliance has been placed by the
respondent was superseded by GCC issued by Railway Board in
November, 2018. Despite the above jurisdictional issue raised and without
addressing on the jurisdiction of the Orissa High Court, by the impugned
judgment and order the High Court of Orissa at
Cuttack has appointed
the Arbitrator solely by observing that since the appellant, East Coast
Railways in principle, is not opposing the appointment of an Arbitrator
there is little purpose served in relegating the respondent (original
petitioner) to the appropriate High Court as that will only delay the
adjudication of the disputes.
5. Feeling aggrieved and dissatisfied with the impugned judgment
and order passed by the High Court of Orissa at Cuttack, the original
respondent – General Manager – East Coast Railway has preferred the
present appeal.
6. We have heard Shri K.M. Natraj, learned ASG appearing on
behalf of the appellants and Shri Amit Dubey, learned Counsel appearing
on behalf of the respondent. We have gone through the impugned
judgment and order passed by the High Court. A specific objection was
raised by the appellant herein before the High Court on the entertainability
and/or maintainability of the application under Section 11(6) of the
GENERAL MANAGER EAST COAST RAILWAY RAIL SADAN  v.
HINDUSTAN CONSTRUCTION CO. LTD.
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SUPREME COURT REPORTS
[2022] 6 S.C.R.
Arbitration Act before the Orissa High Court. Reliance was placed on
Section 42 of the Arbitration Act and it was submitted on behalf of the
appellants that as the respondent - claimant had initiated proceedings
under Section 9 of the Arbitration Act in the Court at Vishakhapatnam,
only the High Court of Andhra Pradesh at Amaravati would have
jurisdiction to entertain the application under Section 11(6) of the Act.
Without deciding the said issue which goes to the root of the jurisdiction
of the High Court of Orissa at Cuttack, the said High Court by the
impugned order has entertained the application under Section 11(6) of
the Act and has appointed the sole arbitrator by observing that since the
appellants – East Coast Railway, in principle, has not opposed the
appointment of an arbitrator, there is little purpose served in relegating
the original petitioner to the concerned High Court as that will only delay
the adjudication of the disputes. The appellants might not have opposed
the appointment of an arbitrator (though the fresh appointment of an
Arbitrator was also opposed by the appellants herein) by that itself it will
not confer the jurisdiction upon the High Court if otherwise, the High
Court had no jurisdiction.
7. Heavy reliance is/was placed on Section 42 of the Arbitration
and Conciliation Act, 1996 which reads as under:
“42. 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
proceeding shall be made in that Court and in no other Court.”
7.1 It is not in dispute that before filing an application under Section
11(6) of the Act before the High Court of Orissa at Cuttack, the
respondent – claimant moved an application before the Court at
Visakhapatnam under Section 9 of the Arbitration Act. In that view of
the matter considering Section 42 of the Arbitration Act, the High Court
of Andhra Pradesh at Amravati alone would have jurisdiction to decide
the subsequent applications arising out of the Contract Agreement and
the further arbitral proceedings shall have to be made in the High court
of Andhra Pradesh at Amaravati alone and in no other court. In that
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view of the matter the High Court of Orissa at Cuttack has committed a
serious error in entertaining the application under Section 11(6) of the
Act before it and appointing the sole arbitrator.
8. In view of the above and for the reason stated above, the present
Appeal Succeeds. The impugned judgment and order passed by the High
Court of Orissa at Cuttack in Arbitration Petition No.10 of 2021 and
appointing the sole arbitrator is hereby quashed and set aside solely on
the ground that the High Court of Orissa at Cuttack would have no
jurisdiction to entertain the application under Section 11(6) of the Act
with respect to the contract agreement for which the respondent claimant
earlier initiated the arbitration proceedings under Section 9 of the
Arbitration Act in the Court at Vishakhapatnam. Present Appeal is
accordingly Allowed. However, it is observed that it will be open for the
respondent claimant to submit/move an application under Section 11(6)
of the Act before the competent High Court having jurisdiction namely
the High Court of Andhra Pradesh at Amaravati and if such an application
is made before the High Court of Andhra Pradesh at Amaravati within a
period of four weeks from today, the same be dealt with and considered
in accordance with law and on its own merits at the earliest.
The Present Appeal is Allowed to the aforesaid extent. However,
in the facts and circumstances of the case, there shall be no order as to
costs.
Bibhuti Bhushan Bose
Appeal allowed.
GENERAL MANAGER EAST COAST RAILWAY RAIL SADAN  v.
HINDUSTAN CONSTRUCTION CO. LTD. [M.R. SHAH, J.]