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2005 (3) TMI 722 - SC - Indian LawsWhether there is ouster of jurisdiction of other courts? Held that - In the case on hand the clause in the indent is very clear, viz., court of Bombay and no other court . The trial court on consideration of material on record held that the court at Calcutta had no jurisdiction to try the suit. The High Court in the earlier part of the judgment noted that the invoice contained clause like under jurisdiction of the court from where the goods have been dispatched and in the indent (contract) a clause like dispute under this contract shall be decided by the courts of Bombay and by no other courts . In our opinion the approach of the High Court is not correct. The plea of the jurisdiction goes to the very root of the matter. The trial court having held that it had no territorial jurisdiction to try the suit, the High Court should have gone deeper into the matter and until a clear finding was recorded that the court had territorial jurisdiction to try the suit, no injunction could have been granted in favour of the plaintiff by making rather a general remark that the plaintiff has an arguable case that he did not consciously agree to the exclusion of the jurisdiction of the court. Thus the view taken by the trial court was perfectly correct and the High Court has erred in reversing its order and granting an injunction in favour of the plaintiff. The appeal is accordingly allowed and order dated 21.5.2002 of the High Court is set aside.
Issues Involved:
1. Existence of Arbitration Agreement 2. Territorial Jurisdiction of the Court 3. Grant of Injunction to Restrain Arbitration Proceedings Detailed Analysis: 1. Existence of Arbitration Agreement: The plaintiff contended that there was no arbitration agreement between him and defendant No. 1, and thus, the arbitration proceedings initiated by defendant No. 1 were invalid. The plaintiff argued that he was not a member of defendant No. 2 (Hindustan Chambers of Commerce) and had never agreed to any arbitration clause. The defendant No. 1 countered by pointing to clauses in the indent and invoices that stipulated disputes would be referred to the Hindustan Chamber of Commerce, Mumbai, for arbitration. The City Civil Court at Calcutta ruled that arbitration proceedings had already commenced and the plaintiff had no prima facie case, thus dismissing the plaintiff's application for an injunction. The High Court, however, allowed the plaintiff's appeal, stating that the objection to the existence of the arbitration agreement could be taken either before the arbitrator or by a competent court. The Supreme Court emphasized that under Section 16 of the Arbitration and Conciliation Act, 1996, the arbitral tribunal is competent to rule on its own jurisdiction, including objections regarding the existence of the arbitration agreement. The Court noted that the plaintiff had responded to the arbitration notice and paid the arbitration fee, indicating a waiver of the right to object. Therefore, the Supreme Court found the City Civil Court's decision correct and held that the High Court erred in granting an injunction. 2. Territorial Jurisdiction of the Court: The defendant No. 1 argued that the courts at Calcutta had no territorial jurisdiction to entertain the suit, as the indent contained a clause stating that disputes would be decided by the courts at Bombay and no other courts. The City Civil Court agreed, holding that it lacked jurisdiction. The High Court, however, found that the plaintiff had an arguable case that he did not consciously agree to the exclusion of Calcutta courts' jurisdiction. The Supreme Court disagreed with the High Court's approach, emphasizing that the trial court's finding on jurisdiction should have been thoroughly examined. The Supreme Court reiterated that contractual clauses specifying jurisdiction are valid if multiple courts have jurisdiction under the Code of Civil Procedure. The clause in the indent was clear in conferring exclusive jurisdiction to Bombay courts. Thus, the Supreme Court concluded that the City Civil Court's decision on jurisdiction was correct, and the High Court erred in its judgment. 3. Grant of Injunction to Restrain Arbitration Proceedings: The plaintiff sought an injunction to restrain the arbitration proceedings initiated by defendant No. 1. The City Civil Court denied the injunction, finding no prima facie case and noting that arbitration proceedings had already commenced. The High Court, however, granted the injunction, staying the arbitration proceedings subject to the plaintiff depositing Rs. 2 lakhs. The Supreme Court emphasized the legislative intent of the Arbitration and Conciliation Act, 1996, to minimize judicial intervention in arbitration matters. The Court noted that objections to the arbitration agreement's existence should be raised before the arbitral tribunal, not the courts. The Supreme Court found that the plaintiff's response to the arbitration notice and payment of the fee indicated a waiver of the right to object. Therefore, the Supreme Court held that the City Civil Court's decision to deny the injunction was correct, and the High Court's order granting the injunction was erroneous. Conclusion: The Supreme Court allowed the appeal, setting aside the High Court's judgment and order dated 21.5.2002. The Court upheld the City Civil Court's decision that it lacked jurisdiction and that the arbitration proceedings should not be interfered with, reinforcing the principle of minimal judicial intervention in arbitration matters. The Supreme Court awarded costs to the appellant.
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