2004 (2) TMI 382 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the Court to entertain the application for appointment of an Arbitrator.
2. Appointment of an Arbitrator under sections 11(5) and (6) of the Arbitration and Conciliation Act, 1996.
3. Validity of withholding payment by the respondent.
4. Concurrent jurisdiction of multiple High Courts.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Court to entertain the application for appointment of an Arbitrator:
The applicant argued that the communication regarding the grant of Letter of Intents and Purchase Orders was received at their registered office in Secunderabad. The Tender Document required the manufacture and inspection of PIJF Cables at the applicant's premises in Secunderabad, thus establishing that a substantial part of the cause of action arose in Secunderabad. The respondent countered that as per clause 30 of the Tender Document, only the Courts at Delhi/New Delhi had jurisdiction until the issuance of authorization letters for placement of Purchase Orders. However, the Court found that the jurisdiction of Delhi/New Delhi Courts terminated after the issuance of authorization letters, and since the disputes arose post-authorization, the Andhra Pradesh High Court had jurisdiction.

2. Appointment of an Arbitrator under sections 11(5) and (6) of the Arbitration and Conciliation Act, 1996:
The applicant invoked the arbitration clause (clause 20) of the Tender Document and issued notice to the respondent to appoint an Arbitrator. The respondent failed to do so within the stipulated 30 days. The Court noted that under sections 11(5) and (6) of the Act, it becomes obligatory for the Court to appoint an Arbitrator if the parties fail to agree on the appointment within 30 days of the request. Thus, the Court appointed Dr. P.C. Rao as the Arbitrator.

3. Validity of withholding payment by the respondent:
The applicant claimed that the respondent withheld 0.3% of the invoice value due to the absence of transit insurance payment proof. The respondent argued that the entitlement to the withheld amount was pending before the High Court and should not be subject to arbitration. The Court held that such contentious issues should be resolved by the Arbitrator and not preclude the appointment of an Arbitrator.

4. Concurrent jurisdiction of multiple High Courts:
The Court analyzed section 11(11) of the Act, which states that if more than one request for appointment of an Arbitrator is made to different High Courts, the Chief Justice or his designate to whom the request was first made shall alone be competent to decide. Since the applicant first approached the Andhra Pradesh High Court, and no request was made to other High Courts, the Andhra Pradesh High Court had jurisdiction. The Court also referred to section 20(c) of the Code of Civil Procedure, 1908, which allows a suit to be instituted in a Court where the cause of action, wholly or in part, arises.

Conclusion:
The Court concluded that it had jurisdiction to entertain the application for appointment of an Arbitrator. It appointed Dr. P.C. Rao as the Arbitrator and directed the respondent to refer the disputes to the Arbitrator. The parties were given liberty to raise all contentious issues before the Arbitrator. The Court dismissed the respondent's contentions regarding jurisdiction and the pending dispute about the withheld amount.