2015 (3) TMI 22 - SC - Indian Laws

Jurisdiction of Court - Application under Section 34 of the Arbitration and Conciliation Act, 1996 - Held that - Indisputably, the Arbitration proceeding has been conducted within the jurisdiction of Raichur court, which has jurisdiction as per Section 20 of the Code of Civil Procedure and is subordinate to the High Court of Karnataka which entertained Section 11 Application. Hence, the Award cannot be challenged before a Court subordinate to the High Court of Bombay. Exercise of jurisdiction by such court shall be against the provision of Section 42 of the Act. We, after giving our anxious consideration to the matter, are of the view that the District Court at Latur and High Court of Bombay have committed error of law in entertaining the application under Section 34 of the Act and dismissing the revision petition. We, therefore, allow this appeal and set aside the order passed by the High Court. - Decided in favour of appellant.

Summary

Issues:
Jurisdiction of a Court to entertain application under Section 34 of the Arbitration and Conciliation Act, 1996.

Analysis:
The case involved a dispute between an Appellant Company running a small scale industry in Karnataka and a Respondent running a cotton spinning mill in Maharashtra. The Appellant filed an application under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, and later a petition under Section 11 of the Arbitration and Conciliation Act, 1996, for appointing an arbitrator. The Industrial Facilitation Council passed an Award directing the Respondent to pay a sum with interest. The Respondent challenged the Award under Section 34 of the Act in the District Court at Latur, Maharashtra, while the Appellant claimed jurisdiction of the District Court at Raichur. The Bombay High Court dismissed the revision holding that Latur Court had jurisdiction based on the place of delivery and residence of the Respondent.

The Supreme Court analyzed the jurisdiction issue and referred to a previous judgment regarding the applicability of Section 42 in cases of lack of jurisdiction. It was held that the Arbitration proceeding was conducted within the jurisdiction of Raichur court, subordinate to the High Court of Karnataka that entertained the Section 11 Application. Therefore, challenging the Award before a Court subordinate to the High Court of Bombay violated Section 42 of the Act. The Court concluded that both the District Court at Latur and the High Court of Bombay erred in entertaining the Section 34 application and dismissed the revision petition. The appeal was allowed, setting aside the High Court's order, with no order as to costs.