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TMI Blog2001 (4) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... ction. In respect of the other contract, being Contract No. TN 1312, the appellant contended that the transformer oil was delivered after it was tested and certified in Calcutta by the representative of the Board. Such supply was completed by June, 1988. 3. But the disputes and differences arose between the parties on the Board's unauthorised invoking of the bank guarantee alleging that the oil supplied by the appellant is of defective quality. 4. So in view of the arbitration clause contained in the agreement, the appellant on 28th June, 1990 filed an application under section 20 of the Arbitration Act, 1940 (hereinafter called the Act) after obtaining leave under clause 12 and 14 of the Letters Patent. An application under section 41 of the Act was also filed on that date seeking an interim order, restraining the Board from demanding or receiving any payment under the Bank Guarantees and an interim order was passed on that date which was later on confirmed. 5. Then an application was also filed by the Board wherein the Board prayed for, inter alia, dismissal of the application filed by the appellant herein under section 20 of the Act and alternatively, made a prayer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel, apearing on behalf of the appellant submitted that this Hon'ble Court has the pecuniary and territorial jurisdiction to entertain and try both the applications filed under section 20 and section 41 of the Arbitration Act, 1940. Mr. Chatterjee submitted that in view of section 31(4) of the Arbitration Act, 1940 the Board was not entitled to any order in its favour. It was submitted on behalf of the appellant that section 31(4) of Arbitration Act, 1940 contains a non--obstante clause and if an application under section 20 is made to a Court which is competent to entertain such application, then that Court alone is entitled to exercise jurisdiction. 11. Learned counsel of the appellant further sumitted that in view of section 31(4) of the Arbitration Act, all subsequent applications shall be made to the Court where the first application had been made. According to the appellant, the statutory provisions contained in section 31(4) will over--ride any agreement between the parties. A private contract cannot override the provisions of any statute. section 31(4) of the Arbitration Act is unqualified according to the appellant and the same has not been made subject to contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds and no such ground, according to the appellant, has been made out herein. The appellant also submitted that it would be extremely inconvenient to both the parties if the matters are tried by two different Courts. 18. It was submitted by Mr. Ajay Chatterjee, learned counsel on behalf of the Board that in the present case there was no order of reference to Arbitration as the application under section 20 filed by the appellant for an order of reference has been dismissed. The learned counsel further submitted that in the present case there was no order of reference within the meaning of section 2(e) of the Act. 19. It was also submitted by the learned counsel for the respondent that mere filing of an application under section 20 of the Arbitration Act does not commence a reference to arbitration. A reference to arbitration, according to the learned counsel, can only be said to have commenced when an order under sub-section 4 of section 20 of the Arbitration Act is made and according to the learned counsel before an order of reference is made on an application under section 20 of the Arbitration Act, section 31(4) of the Act does not come into operation. 20. In suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication under section 20 filed by the appellant. The only factor which has been urged by the Board as an alleged impediment to the entertaining of the said application is the forum selection clause existing in one of the contracts. 26. It also cannot be disputed from the facts of this case that the cause of action of the appellant arising out of the two separate agreements is against the same Board. A part of cause of action has arisen within the jurisdiction of this Court as the Board has made part payment of the dues of the appellants at its registered office in Calcutta. The agreement was signed at Calcutta. Therefore, Calcutta High Court is the competent Court for the appellant in respect of one of the agreement. But since in respect of both the agreements the application under section 20 has been filed before this Court, the objection is taken by the Board. Therefore, the Court has to consider the question whether in view of the existence of forum selection clause which is an act of the parties, the provision of section 31(4) will become redundant when an application under sec1tion 20 which has been filed before Calcutta High Court. 27. Before dealing with the impact o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay as well have jurisdiction this behalf. 32. In Ram Kripal Sharma (supra) all these principles have been noted and the learned judge held in paragraph 7 of the judgment that forum selection clause which is governed by Indian Contract Act 'cannot prevail over sub-section (4) of section 31'. This Court is in respectful agreement with the said view. 33. In Kumba Mawji v. Dominion of India, , the Hon'ble Supreme Court considered all the sub-sections of section 31 of the Act and held in paragraph 13 that the 'necessity for clothing a single Court with effective and exclusive jurisdiction' is for the purpose of 'avoidance of conflict and scramble' and this is essential even if the question arises 'during the pendency of the arbitration or after the arbitration is completed or before the arbitration is commenced'. 34. This being the dominant legislative intent behind sub--section (4) of section 31 of the Act, and an application under section 20 of the Act being an application 'in the mailer of reference', and the same having been filed in Calcutta High Court, which is a Court competent to entertain it, Calcutta High Court will have an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter to reference has been filed in this Court first and having regard to the effect of section 31(4) on such filing of application. 40. This Court in unable to find anything from the ratio in the case of M/s. Gurunanak Foundation (supra) to the above effect. In Gurunanak's case the facts were that an application was made to Delhi High Court under section 20, the said proceeding ended with an order of reference to an arbitrator. Thereafter, a subsequent application was filed in Delhi High Court under section 5 read with section 11 of the Act for the removal of the arbitrator. The Delhi High Court dismissed the said application and against that an appeal was taken to the Hon'ble Supreme Court. The Hon'ble Supreme Court removed the arbitrator. After removing the arbitrator, the Hon'ble Supreme Court appointed another arbitrator and gave certain direction about the conduct of the arbitration proceedings. 41. In those facts the Hon'ble Supreme Court held that just because the Hon'ble Supreme Court disposed of the appeal by appointing another arbitrator that would not mean that the Hon'ble Supreme Court was not in seisin of the matter. The Apex Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection clause is absent in one of the agreements and the appellant has filed an application under section 2O before the Calcutta High Court after obtaining leave under Clause 12 and Clause 14 of the Letters Patent and section 31(4) has been invoked. But in the case of Balsukh Refractories (supra) the question of section 31(4) was never considered. Therefore, the said case was decided on a totally different fact situation. 45. Reliance was also placed by the learned counsel on a single Bench judgment of the Calcutta High Court in the case of Sitaram Rice Mills v. Union of India, reported in 1978 (2) CLJ page 514. The learned Judge while considering the scope of section 20 of the Act held that parties cannot confer jurisdiction on Courts not having such jurisdiction nor can they oust the jurisdiction of a competent Court, But the parties are competent to bargain that out of two Courts having jurisdiction one would be preferred to other. In this case also the principle in Hakam Singh (supra) was relied upon and there can be no dispute with the aforesaid proposition but the said proposition does not have much relevance to the facts of this case where the provision of section 31(4) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aled or declared unconstitutional by a competent Court. If the proposition laid down in Ganpatrai (supra) is followed the same will lead to disastrous consequences. Any two individuals would be allowed to contract out of a statutory liability. It is well settled that there can be no contract which could defeat the provision of any law. This is one of the important facets of section 23 of the Contract Act. So this Court, with respect to the learned Judge, holds that the interpretation given by the learned Single Judge is opposed to all cardinal principles of construction. Therefore, this Court is of the view that the decision in Ganpatrai (supra) case was not correct and it was wrongly decided and this Court is unable to follow the same. 50. Learned counsel appearing on behalf of the appellant also assailed the validity of the order passed by the learned trial Judge vacating the final order passed on the application. The learned counsel submitted that the learned Trial Judge was admittedly not exercising any appellate jurisdiction nor was entertaining the application for review or revision on any of the grounds specified in the Civil Procedure Code and as such according to the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion by the trial Judge, therefore, according to the learned counsel of the respondent Board, is not at all maintainable. 56. On the ground of appealabilty, learned counsel of the appellant, rightly submitted that there was only one application made by the respondent Board and since the learned trial Judge delivered two separate judgments on the same application, it could not mean that there existed two applications and two orders. It cannot be disputed that the order is really a single one and in any event they are so inter--connected that it is not possible to disassociate one from the other. We also find much force in the submissions of the learned counsel of the appellant on this point. 57. On the question of appealabiliry of the order passed by the learned single Judge on section 41 application, we are further of the view that the order which has been passed by the learned single Judge, after disposal of the interim application finally is not an order which the learned single Judge could have passed collaterally while dealing with an application under section 20. Since the order is otherwise bad and strictly speaking is not an order to be passed by the learned single Judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in dismissing the section 20 application and also recalling the final order passed earlier on the section 41 application. For the reasons discussed above, the arguments advanced on behalf of the respondent Board are not accepted by us.. 63. We cannot allow forum selection clause to operate inspite of the specific prohibition of section 31(4) of the Act Since appellant had already made an application before this Court which is a Court of competent jurisdiction, this Court alone is entitled to exercise Jurisdiction in the present case and all subsequent applications should be made to this Court as the first application had been made in this Court by the appellant herein. We make it clear that the statutory provision will obviously override any agreement between the parties and a private contract cannot override a statute. 64. In the result we allow the appeals and set aside the judgments and orders passed by the learned trial Judge. 65. The section 20 application filed by the appellant is therefore maintainable before this Court and the same may be placed before the appropriate Bench immediately for early disposal in the light of the observation made above. The order pas ..... 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