Arbitration and conciliation Act - Jurisdiction - Tirupathi or Bombay - share subscription and Shareholders Agreement, pledge Agreement and Share Purchase Agreement, dated 5-6-2008 - Bomaby mentioned as sitting place - District court at Tirupathi has no jurisdiction - injunction granted was kept in operation for four weeks pending presenting the case at Bombay =
though a request was made for
appointment of an Arbitrator, for resolution of the disputes, there was no
positive response. With this and other contentions, respondents 1 and 2 wanted
the trial Court
(a) to stay the operation of the termination letter, dated 15.01.2010, issued by
the appellant herein; and
(b) to grant injunction restraining the appellant from taking any further
action under the share subscription and Shareholders Agreement, pledge Agreement
and Share Purchase Agreement, dated 5-6-2008, and to direct the 4th respondent
herein not to release the amount of Rs.66,69,862/- lying with them till the
dispute is resolved by an Arbitrator appointed in terms of the agreement.
On receiving the notices in the A.O.P., the appellant filed counter, raising an
objection as to the jurisdiction,
'share purchase agreement'.
While clause 13(1) provided for
arbitration, clause 13(2) indicated the venue and procedure. The relevant
clauses read,
13.1. Number of Arbitrators. If any dispute or difference arises between the
Parties with respect to this Agreement, such dispute shall be referred to
arbitration. The Parties shall mutually appoint a sole arbitrator to resolve
the dispute or differences. In the event the Parties are unable to agree upon a
sole arbitrator, the dispute or the difference shall be referred to a panel of
three arbitrators, one arbitrator to be nominated by each Party (the Seller on
the one hand and the Purchasers on the other hand) and the third arbitrator to
be appointed by the two arbitrators.
13.2. Venue and Procedure. The place of arbitration shall be Mumbai and the
language of arbitration shall be English. The arbitration proceedings shall be
governed by the (Indian) Arbitration and Conciliation Act, 1996. The
arbitrator's award shall be substantiated in writing. The arbitrators shall
also decide on the costs of the arbitration procedure. The Parties shall submit
to the arbitrator's award and the same shall be enforceable in any competent
court of law.
Similar clauses are incorporated in the escrow agreement dated 10-09-2009, under
Clauses 12(1) and 12(2).=
Hence, the C.M.A is allowed, and the order under appeal is set aside. It is
left open to the respondents 1 and 2 to institute proceedings in a Court of
competent jurisdiction at Mumbai.
We direct that the arrangement that has been directed by the trial Court shall
remain in force for a period of four weeks from the date of receipt of a copy of
this order, and thereafter, the matter shall be governed by the orders, that my
be passed by the Court at Mumbai.
2013 ( March. Part ) http://judis.nic.in/judis_andhra/filename=9828
THE HON'BLE SRI JUSTICE L. NARASIMHA REDDY AND THE HON'BLE SRI JUSTICE K.G.K.G. SHANKAR
C.M.A.No.918 of 2012
22-03-2013
Indian Industrial Growth Fund Limited,Rep. by its Authorised Signatory, Atim
Kabra
Mrs. Anitha Nesanuru and others
Counsel for the appellant: Sri S. Ravi, Sr. Counsel
Counsel for the Respondent : Sri P. Veera Reddy, for RRs 1 and 2
<GIST:
>HEAD NOTE:
? Cases referred
2011 (3) ALD 795 (DB)
JUDGMENT : (Per the Hon'ble Sri Justice L. Narasimha Reddy)
Respondents 1 and 2 filed A.O.P.No.38 of 2010 in the Court of the IV Additional
District Judge, Tirupathi under Section 9 (II) (b) (d) and (e) of the
Arbitration and Conciliation Act, 1996 (for short 'the Act'), for interim
measures. It was pleaded that there existed three agreements between them and
the appellant, on the one hand, and the appellant and respondents 3 and 4, on
the other,
in relation to business transaction, and that though a request was made for
appointment of an Arbitrator, for resolution of the disputes, there was no
positive response. With this and other contentions, respondents 1 and 2 wanted
the trial Court
(a) to stay the operation of the termination letter, dated 15.01.2010, issued by
the appellant herein; and
(b) to grant injunction restraining the appellant from taking any further
action under the share subscription and Shareholders Agreement, pledge Agreement
and Share Purchase Agreement, dated 5-6-2008, and to direct the 4th respondent
herein not to release the amount of Rs.66,69,862/- lying with them till the
dispute is resolved by an Arbitrator appointed in terms of the agreement.
On receiving the notices in the A.O.P., the appellant filed counter, raising an
objection as to the jurisdiction, apart from opposing the case on merits.
According to it, the agreements provided for the arbitration, and that the place
of arbitration is agreed to be at Mumbai, and in that view of the matter, the
trial Court does not have jurisdiction. Through an order, dated
04-06-2012, the trial Court allowed the A.O.P. Hence, this appeal.
Heard learned counsel for the appellant and the learned counsel for respondents
1 and 2.
Heard Sri S. Ravi, learned Senior Counsel for the appellant and Sri P. Veera
Reddy, learned counsel for the respondents
1 and 2.
The A.O.P filed by the respondents 1 and 2 was, for grant of interim measures
and protection, under Section 9 of the Act. There is no dispute that the
relationship between the parties is governed by a set of agreements. As a
matter of fact, the very basis for filing the AOP was the existence of an
arbitration clause.
The appellant did not strongly dispute the existence of agreement, or the right
of the respondents 1 and 2, to seek interim measures. Its principal objection
was as to the territorial jurisdiction of the Court. The trial Court framed
only one point for its consideration, viz., whether the respondents 1 and 2 are
entitled for interim orders as prayed for, including the one of preserving the
escrow amount, lying with the 3rd respondent. No oral evidence was adduced by
the parties. The respondents 1 and 2 filed Exs.P-1 to P-10. The trial Court
ordered the A.O.P., as prayed for.
The agreement, which contains the clause for arbitration is the one, dated 10-
09-2009, titled as, 'share purchase agreement'. While clause 13(1) provided for
arbitration, clause 13(2) indicated the venue and procedure. The relevant
clauses read,
13.1. Number of Arbitrators. If any dispute or difference arises between the
Parties with respect to this Agreement, such dispute shall be referred to
arbitration. The Parties shall mutually appoint a sole arbitrator to resolve
the dispute or differences. In the event the Parties are unable to agree upon a
sole arbitrator, the dispute or the difference shall be referred to a panel of
three arbitrators, one arbitrator to be nominated by each Party (the Seller on
the one hand and the Purchasers on the other hand) and the third arbitrator to
be appointed by the two arbitrators.
13.2. Venue and Procedure. The place of arbitration shall be Mumbai and the
language of arbitration shall be English. The arbitration proceedings shall be
governed by the (Indian) Arbitration and Conciliation Act, 1996. The
arbitrator's award shall be substantiated in writing. The arbitrators shall
also decide on the costs of the arbitration procedure. The Parties shall submit
to the arbitrator's award and the same shall be enforceable in any competent
court of law.
Similar clauses are incorporated in the escrow agreement dated 10-09-2009, under
Clauses 12(1) and 12(2).
The factors, that determine the territorial jurisdiction of a Court, are
mentioned in the C.P.C. By and large, the residence of the parties and the
steps at which, the subject-matter of the proceedings is situated, assume
significance. Law permits the parties to an agreement, what is known as
"contract, to agree" upon the place at which, the proceedings are to be
initiated,
in the event of any disputes. The only difference is that, if a suit can be
validly instituted in more Courts than one, and the parties agree upon
institution of proceedings in one such Court,
the agreement to that extent is binding on both the parties.
If, on the other hand, if the parties agree for institution of proceedings in a
Court, which otherwise does not have the jurisdiction, such clause shall not be
binding.
In the instant case, substantial number of parties are in Mumbai, and the
agreements are said to have been entered into at that place. When all of them
have agreed for arbitration to take place at Mumbai, it is but natural that any
proceedings before Courts of law, in relation to arbitration, must be at that
place. In JYOTHI TURBO POWER SERVICES PVT. LTD., HYDERABAD v. SHENZHEN SHANDONG
NUCLEAR POWER CONSTRUCTION CO. LTD., RAIPUR1, a Division Bench of this Court has
taken similar view.
Apart from the question of legality, from the point of view of convenience also,
it is better that the proceedings are instituted in a Court, within whose
territorial jurisdiction the arbitrator functions.
On behalf of the respondents 1 and 2, it is pleaded that the appellant carried
the matter to the Supreme Court, raising objection as to the territorial
jurisdiction of the trial Court, and once the Supreme Court dismissed the
Special Leave Petition,
the jurisdiction of the trial Court gets affirmed. This does not appear to be
correct. The appellant, no doubt, filed S.L.P before the Supreme Court, almost
in the form of a Transfer C.M.P, seeking transfer of the AOP from the Court of
Tirupati to the one,
at Mumbai. The S.L.P was dismissed in limini. It is represented that the
appellant was permitted to raise the question of jurisdiction before the trial
Court. It hardly needs any mention that the parameters for transfer of
proceedings from one Court to another are substantially different from those,
that are relevant for determination of the territorial jurisdiction of a Court.
Hence, the C.M.A is allowed, and the order under appeal is set aside. It is
left open to the respondents 1 and 2 to institute proceedings in a Court of
competent jurisdiction at Mumbai.
We direct that the arrangement that has been directed by the trial Court shall
remain in force for a period of four weeks from the date of receipt of a copy of
this order, and thereafter, the matter shall be governed by the orders, that my
be passed by the Court at Mumbai.
The miscellaneous petition filed in this appeal shall also stand disposed
of. There shall be no order as to costs.
________________________
L. NARASIMHA REDDY, J.
_______________________
K.G. SHANKAR, J.
though a request was made for
appointment of an Arbitrator, for resolution of the disputes, there was no
positive response. With this and other contentions, respondents 1 and 2 wanted
the trial Court
(a) to stay the operation of the termination letter, dated 15.01.2010, issued by
the appellant herein; and
(b) to grant injunction restraining the appellant from taking any further
action under the share subscription and Shareholders Agreement, pledge Agreement
and Share Purchase Agreement, dated 5-6-2008, and to direct the 4th respondent
herein not to release the amount of Rs.66,69,862/- lying with them till the
dispute is resolved by an Arbitrator appointed in terms of the agreement.
On receiving the notices in the A.O.P., the appellant filed counter, raising an
objection as to the jurisdiction,
'share purchase agreement'.
While clause 13(1) provided for
arbitration, clause 13(2) indicated the venue and procedure. The relevant
clauses read,
13.1. Number of Arbitrators. If any dispute or difference arises between the
Parties with respect to this Agreement, such dispute shall be referred to
arbitration. The Parties shall mutually appoint a sole arbitrator to resolve
the dispute or differences. In the event the Parties are unable to agree upon a
sole arbitrator, the dispute or the difference shall be referred to a panel of
three arbitrators, one arbitrator to be nominated by each Party (the Seller on
the one hand and the Purchasers on the other hand) and the third arbitrator to
be appointed by the two arbitrators.
13.2. Venue and Procedure. The place of arbitration shall be Mumbai and the
language of arbitration shall be English. The arbitration proceedings shall be
governed by the (Indian) Arbitration and Conciliation Act, 1996. The
arbitrator's award shall be substantiated in writing. The arbitrators shall
also decide on the costs of the arbitration procedure. The Parties shall submit
to the arbitrator's award and the same shall be enforceable in any competent
court of law.
Similar clauses are incorporated in the escrow agreement dated 10-09-2009, under
Clauses 12(1) and 12(2).=
Hence, the C.M.A is allowed, and the order under appeal is set aside. It is
left open to the respondents 1 and 2 to institute proceedings in a Court of
competent jurisdiction at Mumbai.
We direct that the arrangement that has been directed by the trial Court shall
remain in force for a period of four weeks from the date of receipt of a copy of
this order, and thereafter, the matter shall be governed by the orders, that my
be passed by the Court at Mumbai.
2013 ( March. Part ) http://judis.nic.in/judis_andhra/filename=9828
THE HON'BLE SRI JUSTICE L. NARASIMHA REDDY AND THE HON'BLE SRI JUSTICE K.G.K.G. SHANKAR
C.M.A.No.918 of 2012
22-03-2013
Indian Industrial Growth Fund Limited,Rep. by its Authorised Signatory, Atim
Kabra
Mrs. Anitha Nesanuru and others
Counsel for the appellant: Sri S. Ravi, Sr. Counsel
Counsel for the Respondent : Sri P. Veera Reddy, for RRs 1 and 2
<GIST:
>HEAD NOTE:
? Cases referred
2011 (3) ALD 795 (DB)
JUDGMENT : (Per the Hon'ble Sri Justice L. Narasimha Reddy)
Respondents 1 and 2 filed A.O.P.No.38 of 2010 in the Court of the IV Additional
District Judge, Tirupathi under Section 9 (II) (b) (d) and (e) of the
Arbitration and Conciliation Act, 1996 (for short 'the Act'), for interim
measures. It was pleaded that there existed three agreements between them and
the appellant, on the one hand, and the appellant and respondents 3 and 4, on
the other,
in relation to business transaction, and that though a request was made for
appointment of an Arbitrator, for resolution of the disputes, there was no
positive response. With this and other contentions, respondents 1 and 2 wanted
the trial Court
(a) to stay the operation of the termination letter, dated 15.01.2010, issued by
the appellant herein; and
(b) to grant injunction restraining the appellant from taking any further
action under the share subscription and Shareholders Agreement, pledge Agreement
and Share Purchase Agreement, dated 5-6-2008, and to direct the 4th respondent
herein not to release the amount of Rs.66,69,862/- lying with them till the
dispute is resolved by an Arbitrator appointed in terms of the agreement.
On receiving the notices in the A.O.P., the appellant filed counter, raising an
objection as to the jurisdiction, apart from opposing the case on merits.
According to it, the agreements provided for the arbitration, and that the place
of arbitration is agreed to be at Mumbai, and in that view of the matter, the
trial Court does not have jurisdiction. Through an order, dated
04-06-2012, the trial Court allowed the A.O.P. Hence, this appeal.
Heard learned counsel for the appellant and the learned counsel for respondents
1 and 2.
Heard Sri S. Ravi, learned Senior Counsel for the appellant and Sri P. Veera
Reddy, learned counsel for the respondents
1 and 2.
The A.O.P filed by the respondents 1 and 2 was, for grant of interim measures
and protection, under Section 9 of the Act. There is no dispute that the
relationship between the parties is governed by a set of agreements. As a
matter of fact, the very basis for filing the AOP was the existence of an
arbitration clause.
The appellant did not strongly dispute the existence of agreement, or the right
of the respondents 1 and 2, to seek interim measures. Its principal objection
was as to the territorial jurisdiction of the Court. The trial Court framed
only one point for its consideration, viz., whether the respondents 1 and 2 are
entitled for interim orders as prayed for, including the one of preserving the
escrow amount, lying with the 3rd respondent. No oral evidence was adduced by
the parties. The respondents 1 and 2 filed Exs.P-1 to P-10. The trial Court
ordered the A.O.P., as prayed for.
The agreement, which contains the clause for arbitration is the one, dated 10-
09-2009, titled as, 'share purchase agreement'. While clause 13(1) provided for
arbitration, clause 13(2) indicated the venue and procedure. The relevant
clauses read,
13.1. Number of Arbitrators. If any dispute or difference arises between the
Parties with respect to this Agreement, such dispute shall be referred to
arbitration. The Parties shall mutually appoint a sole arbitrator to resolve
the dispute or differences. In the event the Parties are unable to agree upon a
sole arbitrator, the dispute or the difference shall be referred to a panel of
three arbitrators, one arbitrator to be nominated by each Party (the Seller on
the one hand and the Purchasers on the other hand) and the third arbitrator to
be appointed by the two arbitrators.
13.2. Venue and Procedure. The place of arbitration shall be Mumbai and the
language of arbitration shall be English. The arbitration proceedings shall be
governed by the (Indian) Arbitration and Conciliation Act, 1996. The
arbitrator's award shall be substantiated in writing. The arbitrators shall
also decide on the costs of the arbitration procedure. The Parties shall submit
to the arbitrator's award and the same shall be enforceable in any competent
court of law.
Similar clauses are incorporated in the escrow agreement dated 10-09-2009, under
Clauses 12(1) and 12(2).
The factors, that determine the territorial jurisdiction of a Court, are
mentioned in the C.P.C. By and large, the residence of the parties and the
steps at which, the subject-matter of the proceedings is situated, assume
significance. Law permits the parties to an agreement, what is known as
"contract, to agree" upon the place at which, the proceedings are to be
initiated,
in the event of any disputes. The only difference is that, if a suit can be
validly instituted in more Courts than one, and the parties agree upon
institution of proceedings in one such Court,
the agreement to that extent is binding on both the parties.
If, on the other hand, if the parties agree for institution of proceedings in a
Court, which otherwise does not have the jurisdiction, such clause shall not be
binding.
In the instant case, substantial number of parties are in Mumbai, and the
agreements are said to have been entered into at that place. When all of them
have agreed for arbitration to take place at Mumbai, it is but natural that any
proceedings before Courts of law, in relation to arbitration, must be at that
place. In JYOTHI TURBO POWER SERVICES PVT. LTD., HYDERABAD v. SHENZHEN SHANDONG
NUCLEAR POWER CONSTRUCTION CO. LTD., RAIPUR1, a Division Bench of this Court has
taken similar view.
Apart from the question of legality, from the point of view of convenience also,
it is better that the proceedings are instituted in a Court, within whose
territorial jurisdiction the arbitrator functions.
On behalf of the respondents 1 and 2, it is pleaded that the appellant carried
the matter to the Supreme Court, raising objection as to the territorial
jurisdiction of the trial Court, and once the Supreme Court dismissed the
Special Leave Petition,
the jurisdiction of the trial Court gets affirmed. This does not appear to be
correct. The appellant, no doubt, filed S.L.P before the Supreme Court, almost
in the form of a Transfer C.M.P, seeking transfer of the AOP from the Court of
Tirupati to the one,
at Mumbai. The S.L.P was dismissed in limini. It is represented that the
appellant was permitted to raise the question of jurisdiction before the trial
Court. It hardly needs any mention that the parameters for transfer of
proceedings from one Court to another are substantially different from those,
that are relevant for determination of the territorial jurisdiction of a Court.
Hence, the C.M.A is allowed, and the order under appeal is set aside. It is
left open to the respondents 1 and 2 to institute proceedings in a Court of
competent jurisdiction at Mumbai.
We direct that the arrangement that has been directed by the trial Court shall
remain in force for a period of four weeks from the date of receipt of a copy of
this order, and thereafter, the matter shall be governed by the orders, that my
be passed by the Court at Mumbai.
The miscellaneous petition filed in this appeal shall also stand disposed
of. There shall be no order as to costs.
________________________
L. NARASIMHA REDDY, J.
_______________________
K.G. SHANKAR, J.
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