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TMI Blog2005 (3) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. - C. A. 7653 OF 2004 - - - Dated:- 29-3-2005 - D.M. Dharmadhikari G.P. Mathur, JJ. JUDGMENT This appeal by special leave has been preferred against the judgment and order dated 21.5.2002 of Calcutta High Court by which the application moved by the first respondent under Order 39 Rule 1 and 2 and Section 151 CPC was allowed and Hindustan Chambers of Commerce, Mumbai (second respondent) was restrained from proceeding in Arbitration Case Nos. A/186 and A/187 subject to deposit of Rs.2 lakhs by the first respondent with the Registrar General within two days of receipt of the certified copy of the order. The first respondent Chand Mal Baradia filed Title Suit No. 993 of 1999 in the City Civil Court at Calcutta for permanent injunction restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by sending a letter to defendant No. 2 on 18.5.1999 that he had never placed any order in the name of Arihant Textiles at any point of time and, therefore, the case be dropped. The plaintiff filed an application under Order 39 Rule 1 and 2 and Section 151 CPC for restraining the defendants from proceeding with the arbitration cases. The appellant Shree Subhlaxmi Fabrics Pvt. Ltd. (defendant No. 1) opposed the prayer for grant of injunction and also filed an application under Section 20 read with Section 151 CPC on the ground inter alia that the defendant No. 1 is a cloth merchant, which is carrying on business all over India; that M/s. Naresh Enterprises having its office at Calcutta had been engaged as a middleman by the appellant, who procured a buyer namely Chand Mal Prakash Chand Co. represented by Chand Mal Baradia and others at Calcutta; that M/s. Naresh Enterprises contacted defendant No. 1 at Mumbai for supply of cloth upon which the defendant No. 1 sent their indents through the said middleman to the said M/s. Chand Mal Prakash Chand Co. (plaintiff), which was duly accepted by them; that the defendant No. 1 supplied cloth valued at approximately Rs.20 lakhs in 1996 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The City Civil Court at Calcutta, after a detailed consideration of the matter, held that the said court had no jurisdiction to try the suit and further that the arbitration proceedings having already commenced, the civil court should not interfere with the functioning of the arbitrator (defendant No. 2). It was accordingly held that the plaintiff had no prima facie case to go for trial and the balance of convenience lies in favour of the defendants. It was further held that the plaintiff will not suffer any irreparable injury in the event of refusal of injunction. The application was accordingly dismissed by the order dated 22.2.2000. Feeling aggrieved by the order of City Civil Court the plaintiff preferred an appeal before the Calcutta High Court under Order 43 Rule 1 (r) CPC. The High Court held that an objection as to the existence of the arbitration agreement can be taken either before the arbitrator or by way of a suit in a competent court, the initial choice being of the aggrieved party. If the court is approached, it is a matter of discretion of the court even at the final hearing, whether to decide the suit or to refer the matter to the arbitrator, allowing a decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings before the arbitrators. Shri V.A. Mohta, learned senior counsel for the respondent No. 1 (plaintiff), on the other hand, submitted that there was no arbitration agreement between the parties as contemplated by Section 7 of the Act and, therefore, the reference made to the arbitrator by the appellant is wholly invalid and the defendant No. 2 has no jurisdiction to proceed with the arbitration. He has further submitted that a part of cause of action had accrued at Calcutta and the plaintiff had never consciously agreed to any condition that any dispute arising between the parties shall be decided by the courts at Bombay and by no other courts and, therefore, the court at Calcutta had the jurisdiction to try the suit. Before examining the contentions raised by the learned counsel for the parties it will be convenient to take note of certain provisions of the Act. Sections 4, 5, 7 and 16 of the Act read as under: - "4. Waiver of right to object. A party who knows that (a) any provision of this part from which the parties may derogate, or (b) any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. (4) The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified. (5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award. (6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34." Section 5 of the Act provides that notwithstanding anything contained in any other law for the time being in force, in matters governed by Part I (Sections 2 to 43), no judicial authority shall intervene except where so provided in the said part. This clearly indicates the legislative intent to minimize supervisory role of courts to ensure that the intervention of the court is minimal. Section 4 is a deeming provision, which lays down that where a party proceeds with the arbitration witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Arbitral Tribunal to rule on its own as well as on objections with respect to the existence or validity of the arbitration agreement. Conferment of such power on the arbitrator under the 1996 Act indicates the intention of the legislature and its anxiety to see that the arbitral process is set in motion. This being the legislative intent, it would be proper for the Chief Justice or his nominee just to appoint an arbitrator without wasting any time or without entertaining any contentious issues at that stage, by a party objecting to the appointment of an arbitrator. If this approach is adhered to, then there would be no grievance of any party and in the arbitral proceeding, it would be open to raise any objection, as provided under the Act." Similar view has been taken in State of Orissa and others vs. Gokulananda Jena 2003 (6) SCC 465, where this Court held as under:- "However, we must notice that in view of Section 16 read with Sections 12 and 13 of the Act, as interpreted by the Constitution Bench of this Court in Konkan Rly. Corpn. Ltd. v. Rani Construction (P) Ltd. [(2002) 2 SCC 388] almost all disputes which could be presently contemplated can be raised and agitated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant the indent (contract) contained a clause that the dispute under the contract shall be decided by the court at Bombay and by no other court. That apart it was defendant No. 1, which had commenced arbitration proceedings before defendant No. 2 and both are situate in Bombay. The plaintiff wants that the Hindustan Chamber of Commerce (defendant No. 2) may be restrained from proceeding with arbitration of the dispute, which has been raised by the appellant Shree Subhlaxmi Fabrics Pvt. Ltd. (defendant No. 1). Both defendant No. 1 and defendant No. 2 have their offices at Bombay. Insofar as commencement of proceedings before defendant No. 2 by defendant No. 1 is concerned, no part of cause of action has accrued in Calcutta. In Hakam Singh vs. Gammon (India) Ltd. 1971 (1) SCC 286, it has been held that it is not open to the parties to confer by their agreement jurisdiction on a court which it does not possess under the Code. But where two courts or more have under the Code of Civil Procedure jurisdiction to try a suit or a proceeding, an agreement between the parties that the disputes between them shall be tried in one of such courts is not contrary to public policy and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has no doubt an arguable case that he did not consciously agree to the exclusion of the jurisdiction of the courts of its business. Its case that "from where the goods has been dispatched", is not sufficiently specific as to exclude a court s jurisdiction, is no doubt an arguable case." 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. On overall consideration of the matter, we are clearly of the opinion that on the facts and circumstances of the case 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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