2008(4) ALL MR 875
IN THE HIGH COURT OF JUDICATURE AT BOMBAY

S. RADHAKRISHNAN AND A.V. MOHTA, JJ.

Petine Shipping Inc. Of Monrovia Vs.The Minerals And Metals Trading Corporation Of India Ltd.

Appeal No. 132 of 2000,Arbitration Petition No. 313 of 1999

7th January, 2008

Petitioner Counsel: Mr.V. K. RAMABHADRAN
Respondent Counsel: Ms. SHEEJA H. JOHN,Mr. M. P. Savla & Co.

Arbitration Act (1940) S.31(4) - Reference - Jurisdiction of Court over arbitration proceedings - Application for appointment of Arbitrator made to High Court Delhi - Disposed off as infructuous - Subsequent application challenging appointment of umpire - Where in any reference, any application under Arbitration Act has been made in a court competent to entertain it, held, that Court alone has jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference - This position applies even when such application before Competent Court was disposed off as infructuous. (2001)10 SCC 532 - Rel. on. (Para 17)

Cases Cited:
M/s. Guru Nanak Foundation Vs. M/s.Rattan Singh & sons, AIR 1981 SC 2075 [Para 13,14]
Union of India Vs. Surjeet Singh Atwal, 1969 (2) SCC 211 [Para 15]
F.C.I. Represented by Managing Director Vs. A. M. Ahmed & Co. through MD, (2001)10 SCC 532 [Para 16]


JUDGMENT

ANOOP V. MOHTA, J. :- The present Appeal is against the impugned judgment/order dated 3.12.1999 passed by the learned Single Judge of this Court in Arbitration Petition No.313/1999 whereby, the Appellants (original petitioners) application under Section 28 of the Arbitration Act, 1940 (for short, "Act of 1940) for extension of time for making the Award by the Umpire was dismissed on the preliminary objection as raised to the maintainability of the petition in view of the specific provision of Section 31(4) of the Act of 1940. Hence this Appeal.

2. The Appellants are a shipping company incorporated under the laws of Liberia and carry on business at Bombay through their protecting agents M/s.GAC Shipping India Ltd. at Bombay. The Appellants are inter alia owners of a vessel m.v. ANIMAR (the said vessel). The Respondents are a Government company incorporated under the Companies Act, 1956 and carry on business at the address mentioned in the cause title.

3. By a Charter Party dated 2nd June, 1989, the Respondents chartered the said vessel to carry Rock Phosphate in bulk from KPEME (Togo) to one or two safe berth/ one or two safe ports in the West Coast, India. The Respondents had nominated the Port of Bombay as the discharge port and the vessel which carried Rock Phosphate in bulk, discharged the same at the Port of Bombay. Clause 55 of the said charter party reads as under:

"All disputes arising under this Charter shall be settled in India in accordance with the provisions of the Arbitration Act, 1940 in India, each party appointing an Arbitrator from out of the panel of Arbitrators maintained by the Indian Council of Arbitration New Delhi and the two Arbitrators appointing an Umpire whose decision, in the event of disagreement between the Arbitrators shall be final and binding upon both parties hereto. The Arbitrators and the Umpire shall be commercial men".

4. As dispute arose, on 29.5.1990 Appellants appointed their Arbitrator. On 18.6.1990 the Respondents appointed Justice Deshpande as their Arbitrator. On 9.7.1990, Advocate for the Appellants by his letter pointed out that the arbitration clause required appointment of a Commercial man to be Arbitrator and that Mr.Justice Deshpande (Retd.) did not fulfill the aid requirement and hence Mr.Khandwala would be the sole arbitrator.

5. On 18.7.1991 Appellants filed their statement of claim. In January, 1991 the Respondents filed Petition being Petition No.145/1991 in the Delhi High Court seeking declaration that appointment of Mr.Justice Deshpande as arbitrator is valid. During the pendency of the Petition Mr. Justice Deshpande died.

6. On 14.8.1992 the Respondents appointed Mr. K. Parthasarathy as its Arbitrator. On 18.8.1992 Petition filed by the Respondents before the Delhi High Court dismissed as infructuous.

7. On 1-5-1993 Mr.Parthasarathy one of the members of the Tribunal informed the Respondents that despite several extension of time there was no response from them regarding filing of reply and Tribunal will not be granting any further time and that no oral hearing in the matter. On 15.5.1993 Mr. Khandwala informed parties that Tribunal would proceed to publish the Award. On 26-8-1993 the Solicitors representing Respondents forwarded to the Tribunal a copy of their reply duly signed by Rashtria Chemicals & Fertilizers (RCF) and not MMTC.

8. On 10.3.1994 Mr. Khandwala informed both the parties that Arbitral Tribunal had come to a final decision and appointed Mr. R. S. Cooper as Umpire. On 1.9.1994 the Advocate representing the Appellants requested the Umpire to issue directions. On 21.9.1994 the Advocate representing the Appellants intimated that time for publishing the Award has expired. On 11.10.1994 the Advocate for the Respondents intimated the Tribunal that he would be appearing for the meeting on 12.10.1994 without prejudice to their right and contentions. On 12.10.1994 the Umpire informed the Respondents that he will be willing to take reply of the Respondents in record and Respondents, Advocate confirmed that he would revert with his client's decision on or before 7.11.1994. On 22.12.1994 Advocate for the Appellants intimated the Umpire that Appellants are prepared to wait until 31st December, 1994 and in the meanwhile requested him to pass suitable directions.

9. On 17.6.1995 the Umpire recorded that the solicitors despite their assurances failed to revert, and that he was proceeding to hold the hearing on 7.7.1995. On 3.7.1995 Solicitors for the Respondents alleged that the Umpire's appointment was irregular and not in accordance with the law and they would not be attending the hearing on 7.7.1995. On 10.7.1995 the Umpire directed the parties to obtain suitable directions from the Court.

10. On 3.12.1999 the learned trial Judge dismissed the petition on the ground that the application seeking extension of time under Section 28 of the Act of 1940 had to be filed before the High Court of Delhi. The Court further held that the MMTC having filed an application before the High Court of Delhi, that Court alone has jurisdiction to entertain any further application under the Arbitration Act, 1940, notwithstanding the fact that the application of the MMTC was dismissed by the High Court of Delhi as infructuous and notwithstanding the fact that a reference to the arbitration was not through any order passed by the High Court of Delhi.

11. The relevant Section 31(4) of the Act of 1940 is reproduced as under:

"(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference any application under this Act has been made in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference, and the arbitration proceedings shall be made in that Court and in no other Court."

12. There is no dispute that in pursuance to the Arbitration Agreement between the parties, the Delhi High Court has jurisdiction to entertain and/or decide the dispute between the parties on reference to the matter for arbitration. Admittedly, an application bearing no.145/1991 was made by the Respondents in the Delhi High Court some time in January, 1991 seeking declaration that appointment of Mr. Justice Deshpande (now expired) as an Arbitrator is valid. Pending the said application Mr. Justice Deshpande expired. The Appellants, therefore, by letter dated 20th July, 1992 invited the attention based upon the Arbitration Agreement of Respondents to take steps to appoint another appointment. The Appellants have also appointed their Arbitrator one Mr. A. K. Khandwala. The Respondents, by letter dated 14.8.1992 nominated Mr. K. Parthasarathy as their Arbitrator. In view of all these developments by order dated 18.8.1992 the Delhi High Court dismissed the O.M.Petition No.145/1991 as infructuous. Therefore, admittedly, in pursuance to the Agreement between the parties in the pending arbitration proceedings, the application was filed by the respondents in the Delhi High Court seeking declaration in support of appointment of earlier Arbitrator which was later on dismissed as rendered infructuous as noted above. There was no objection of any kind raised at any point of time by the Appellants with regard to the maintainability of such petition at Delhi High Court. As noted, there is no dispute that Delhi High Court has also concurrent jurisdiction to decide and deal with the subject matter of dispute between the parties at Delhi and the parties have conceded to the said jurisdiction.

13. The learned counsel appearing for the Appellants has strongly relied on apart from various judgments M/s. Guru Nanak Foundation Vs. M/s. Rattan Singh & sons, AIR 1981 SC 2075, to support his submission that on the date of the filing of the present petition in this Court above application was already disposed of as infructuous as the Respondents, had appointed new Arbitrator. Therefore, such application at Delhi High Court cannot be treated as an application or a subsequent application arising out of the reference or an arbitration proceedings as contemplated under Section 31(4) of the Act of 1940. The application as filed was therefore maintainable.

14. We are unable to accept this submission in view of the reasoning given by the Apex Court in the following Judgments in reference to Section 31(4) of the Act of 1940. The paragraphs 15 and 17 of M/s.Guru Nanak Foundation (supra) which are reproduced below:

"15. ........ Thus, sub-section (4) not only confers exclusive jurisdiction on the court to which an application is made in any reference but simultaneously ousts the jurisdiction of any other court which may as well have jurisdiction in this behalf. To illustrate the point, if an award was required to be filed under S.14(2) read with Section 31(1) in any particular court as being the court in which a suit touching the subject-matter of award would have been required to be filed, but if any application in the reference under the Act has been filed in some other court which was competent to entertain that application, then to the exclusion of the first mentioned court the latter court alone, n view of the overriding effect of the provision contained in S.31 (4), will have jurisdiction to entertain the award and the award will have to be filed in that court lone and no other court will have jurisdiction to entertain the same.

17.On a pure grammatical construction as well as taking harmonious and overall view of the various provisions contained in the Act it is crystal clear that ordinarily that court will have jurisdiction to deal with the questions arising under the Act, except the one in Chapter IV, in which a suit with regard to the dispute involved in the arbitration would be required to be filed under the provisions of the Civil P.C. However, where an application is made in any reference to a court competent to entertain it, that court alone will have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall have to be made in that court alone and in no other court."

15. In Union of India Vs. Surjeet Singh Atwal, 1969(2) SCC 211, the Apex Court has further elaborated Section 31(4) as under:

"5.Two conditions must be fulfilled in order to give a Court exclusive jurisdiction under Section 31(4) of the Act. In the first place an application under the Arbitration Act must be made to the Court competent to entertain it. In the second place, the application must be made "in any reference". .............

"It was, therefore held that the expression "in any reference" in Section 31(4) should be construed as "in the course of a reference"

...... "These are clearly applications anterior to the reference but they lead to a reference. Such applications are undoubtedly applications "in the matter of a reference" and may fall within the purview of Section 31(4) of the Act even though these applications are made before any reference has taken place.".

16. In F.C.I. Represented by Managing Director & Anr. Vs. A. M. Ahmed & Co. through MD and Anr., (2001) 10 SCC 532, the Apex Court in para 6 in reference to Section 31(4) of the Act of 1940 has observed as under:

"6. Under Section 31 of the Arbitration Act, 1940, an award may be filed in any Court having jurisdiction in the matter to which the reference relates. Under sub-section (4) of Section 31, where in any reference any; application under the Arbitration Act has been made in a court competent to entertain it, that court alone has jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference."

17. In view of the above clear position of law and the facts and circumstances of the case, the following reasons as reflected in the impugned judgment which is reproduced below need no interference. It is within the frame work of law and the law.

"2.Now perusal of the judgment of the Division Bench in the case of Union of India referred to above shows that it is not necessary that the Court where the application has been made should have made any order in those proceedings in relation to arbitration proceedings. If an application was admittedly made before a Court, then the Court where subsequent proceedings are brought has to see whether the Court where previously proceedings were instituted had the jurisdiction to entertain the proceedings and if it is found that court had the jurisdiction to entertain he proceedings, then the parties have to approach the same court. It is further to be seen here that the proceedings before the Delhi High Court were not withdrawn by the Respondent, but were dismissed by that court as infructuous. It is common ground before me that the Delhi High Court had jurisdiction to entertain the application and therefore, in my opinion, if the Delhi High Court was one of the courts having the jurisdiction and if the parties have already approached that court once, all future applications should also be made to that Court. In my opinion, that will be more in consonance with the spirit of the provisions of sub-section 4 of Section 31 of the Act. Perusal of sub-section 4 of Section 31 shows that what is relevant or the purpose of that section is making of an application in any reference. In the present case in the reference an application was admittedly made to the Delhi High Court and therefore in my opinion, it would not only be in accordance with law, but will also be proper for the parties to approach the same Court. The preliminary objection raised by the learned Counsel for the Respondent is therefore upheld and the petition is rejected."

18. In view of the above, the present Appeal is dismissed without expressing anything on the merits of the matter.

19. No order as to costs.

Appeal dismissed