Case: Petine Shipping Inc. of Monrovia Vs. The Minerals and Metals Trading Corporation of India Ltd

3) The facts leading to this Special Leave Petition are: the appellant is a Liberian Shipping Company carrying on business through their protecting agents M/s. G.A.C. Shipping India Ltd. The respondent is a government company, which by charter party dated 2.6.1989 chartered the appellants vessel M.V. Animar to carry Rock Phosphate from Togo to West Coast India. The respondent chose Mumbai as the port of delivery. The dispute resolution clause of the charter party provided that each party may appoint one arbitrator, who in the event of disagreement shall appoint an umpire, whose decision shall be final. The arbitrators and the umpire were required to be commercial men.4) When a dispute arose in 1990, the appellant vide letter dated 29.5.90 nominated Mr. A.K. Khandwala and the respondent vide telegram dated 18.6.90 appointed Justice Deshpande (Retired Chief Justice of the Delhi High Court). The appellant intimated the respondent by letter dated 9.7.90, that since their nominee was not a commercial man as required under the charter party clause; Mr. Khandwala would be the sole arbitrator. The respondent filed Arbitration Petition before the Delhi High Court, for a declaration that their nomination of Justice Deshpande as arbitrator was valid. During pendency of the said petition, Justice Deshpande expired. Vide letter dated 14.8.92, the respondent appointed Mr. K. Parthasarthi, as Arbitrator, and on 18.8.92 the petition of the respondent was dismissed as having become infructuous. The court has not passed any other order in the petition filed by respondent.5) The Arbitrators could not arrive at a unanimous decision and they appointed Mr. R. C. Cooper as the Umpire. When Mr. Cooper sought to proceed with the matter, the respondent inter alia raised objection as to the validity of the appointment of the umpire and the umpire vide letter dated 10.7.95, informed the parties that it would be prudent to approach the appropriate court for orders before proceeding further with the matter.6) The appellant moved the High Court of Bombay, inter alia with a prayer for conformation/appointment of Mr. Cooper as Umpire and to enlarge the time for making the award. The Single Judge as well as Division Bench in Arbitration Petition dismissed the appellants petition and appeal respectively, solely on the ground that in view ofSection 31(4) of the Arbitration Act, 1940 and in view of the Arbitration Petition filed by the respondent earlier before the Delhi7) High Court, which had been dismissed as having become in fructuous; the Bombay High Court cannot adjudicate upon the appellants petition. The Division Bench of Bombay High Court has observed, that, if the Delhi High Court was one of the courts having jurisdiction and if the parties have already approached that court once, all future applications should also be made to that court. Aggrieved by the said order, appellant is before us by this special leave petition.

Court's reasoning:
13) The main object of Section 31 of the Arbitration Act is to invest a single court with the exclusive jurisdiction to decide all questions relating to the matter of arbitration; this object is achieved by the combined operation of all its sub-sections. The words "application in a reference" used in sub-section (4) should therefore, be related back to sub-sections (2) and (3) and all applications regarding the conduct of arbitration proceedings or arising out of such proceedings or in which the court has to decide questions regarding the validity, effect, or existence of an award or an arbitration agreement between the parties to the agreement, should be treated as "application in athe absence of any other court having been invested with such jurisdiction by the order, the only conclusion that is possible is that such a request must be made only to the court which passed that order, namely, thisIn Bharat Coking Coal Ltd. v. Annapurna Construction, (2008) 6 SCC 732 , this court observed that a distinction must be borne in mind in a case where this Court had no control over the proceedings and the case in which control of proceedings of the arbitrator had been retained.18) Therefore, in the view taken by this Court in Bharat Cooking case, although an application was filed before the Delhi High Court, but it did not retain any control over the said proceedings of the arbitrator. Also respondent did not file any application regarding appointment of another arbitrator in the Delhi High Court. Thus, the application filed before the Delhi High Court cannot be said to a reference made under Section 31(4) of the Act.