2013 (1) TMI 103 - HC - Companies Law

Injunction restraining respondents 1 and 2 from presenting total number of thirty three cheques for collection/encashment pending disposal of the arbitiral proceedings - agreement styled as Build, Own and Operate basis - maintainability of the original application in this court contending that the application is barred under section 42 of the Arbitration and Conciliation Act, 1996. Held that - Though notice was taken in the petition filed by the first respondent herein before the Delhi High Court, namely Original Miscellaneous Petition No.236/2012, without even raising objection regarding the jurisdiction, the application seems to have been resisted on merits. Hence the contention of the the first respondent that the applicant herein having failed to raise objection regarding the jurisdiction of Delhi court to entertain the said Original Miscellaneous Petition, is not entitled to question the jurisdiction of the said court in the present original application filed in this court has got to be countenanced. Furthermore, the comity of courts will require this court not to venture to go into the question whether the Delhi High Court has got jurisdiction to entertain the original miscellaneous petition No.236/2012 pending on its file. If this court ventures to do so, it will amount to usurping the powers of the Delhi High Court to decide on its jurisdiction. Admittedly, the said Original Miscellaneous Petition, which was filed earlier in point of time regarding the dispute forming the subject-matter of arbitration is pending on the file of the Delhi High Court. Unless and until the Delhi High Court rejects the petition holding that it does not have jurisdiction to entertain that petition, the bar provided under section 42 of the Arbitration and Conciliation Act, 1996 shall stand attracted. This court comes to the conclusion that the present original application filed by the applicant under section 9 of the Arbitration and Conciliation Act, 1996 cannot be maintained in view of the fact that similar petition O.M.P.No.236 of 2012 filed earlier on the file of the Delhi High Court by the first respondent herein is pending. Section 42 of the Arbitration and Conciliation Act, 1996 provides a bar for entertaining such an application by any other court. Hence the present original application is liable to be dismissed holding that it is not maintainable & dismissed In case the petition filed before the Delhi High Court is dismissed at a later point of time on the ground of want of jurisdiction, then this order shall not be an impediment for the applicant to file a fresh petition. There shall be no order as to cost.

Issues Involved:
1. Injunction against presenting post-dated cheques
2. Bar under Section 42 of the Arbitration and Conciliation Act, 1996
3. Jurisdiction of the Delhi High Court

Issue-wise Detailed Analysis:

1. Injunction against presenting post-dated cheques:
The applicant sought an injunction to restrain the respondents from presenting 33 post-dated cheques for collection/encashment pending the disposal of arbitral proceedings. The applicant contended that the cheques were given as security and not for immediate encashment. Due to various breaches and delays by the first respondent, the applicant had to incur additional costs and faced production losses. The applicant also highlighted a force majeure situation due to a Supreme Court order banning iron ore mining, which led to the shutdown of its plant. The applicant argued that there was no liability to make payments during the shutdown period and that the cheques should not be presented.

2. Bar under Section 42 of the Arbitration and Conciliation Act, 1996:
The respondents argued that the application was barred under Section 42 of the Arbitration and Conciliation Act, 1996, as a previous application under Section 9 of the same Act was already entertained by the Delhi High Court regarding the same subject matter. The applicant acknowledged the previous application but contended that the Delhi High Court lacked jurisdiction, making the bar under Section 42 inapplicable. The court had to determine whether the present application was maintainable in light of the previous application pending before the Delhi High Court.

3. Jurisdiction of the Delhi High Court:
The applicant argued that the Delhi High Court lacked jurisdiction as the agreement was executed in Chennai, and the plant was located in Andhra Pradesh. The respondents countered that part of the cause of action arose in New Delhi, where the first respondent's registered office was located, and payments were to be made into an escrow account maintained in New Delhi. The court examined whether the Delhi High Court had jurisdiction based on the agreement and the location of the parties and the escrow account.

Judgment Analysis:

Preliminary Objection on Maintainability:
The court first addressed the preliminary objection regarding the maintainability of the application under Section 42 of the Arbitration and Conciliation Act, 1996. The court noted that the affidavit filed by the applicant mentioned a previous application under Section 9 of the Act pending before the Delhi High Court. The court observed that the applicant had entered an appearance in the Delhi High Court without raising any jurisdictional objections, thereby acknowledging the jurisdiction of the Delhi High Court.

Jurisdictional Analysis:
The court examined the definition of "court" under Section 2(1)(e) of the Arbitration and Conciliation Act, 1996, and relevant provisions of the Civil Procedure Code. The court noted that the Delhi High Court had jurisdiction as the first respondent's registered office was in New Delhi, and part of the cause of action, including the maintenance of the escrow account, arose in New Delhi. The court also referred to Clause 9.5 of the Escrow Account Agreement, which granted exclusive jurisdiction to the courts in New Delhi.

Conclusion on Maintainability:
The court concluded that the present application was barred under Section 42 of the Arbitration and Conciliation Act, 1996, as the Delhi High Court was already seized of an earlier application regarding the same subject matter. The court held that unless the Delhi High Court rejected the petition on the ground of lack of jurisdiction, the bar under Section 42 would stand. Therefore, the court dismissed the present application as not maintainable.

Final Order:
The original application was dismissed as not maintainable. The court observed that if the Delhi High Court later dismissed the petition on jurisdictional grounds, the applicant could file a fresh petition. No order as to costs was made.

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