Page 1 “REPORTABLE”

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 673 OF 2014

(Arising out of SLP (C) No.18980 of 2013)

Executive Engineer, Road Development

Division No.III, Panvel & Anr. … Appellants

Versus

Atlanta Limited … Respondent

J U D G M E N T

Jagdish Singh Khehar, J.

1.State of Maharashtra, through its Public Works Department, awarded a

contract dated 12.7.2000 to the respondent-Atlanta Limited (a public limited

company) for the construction of the Mumbra byepass. On 11.5.2005, a

supplementary agreement for additional work was executed between the parties.

It would be relevant to mention, that the Mumbra byepass falls on National

highway no. 4. The construction envisaged in the contract awarded to the

respondent-Atlanta Limited was, from kilometer 133/800 to kilometer 138/200.

The contract under reference envisaged, settlement of disputes between the

parties, through arbitration. Atlanta Limited raised some disputes through a

communication dated 1.10.2009. It also invoked the arbitration clause for

resolution of the said disputes. The State of Maharashtra as also Atlanta Limited

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nominated their respective arbitrators, who in turn, appointed the presiding

arbitrator. On the culmination of proceedings before the arbitral tribunal, an

award was rendered on 12.5.2012. Almost all the claims raised by Atlanta

Limited were granted. In sum and substance, Atlanta Limited was awarded a

sum of Rs.58,59,31,595/- along with the contracted rate of interest (of 20 per cent

per annum), with effect from 1.10.2009. Atlanta Limited was also awarded a sum

of Rs.41,00,000/- towards costs. All the counter claims raised by the State of

Maharashtra, before the arbitral tribunal, were simultaneously rejected.

2.On 7.8.2012, the State of Maharashtra moved Miscellaneous Application

no. 229 of 2012 and Miscellaneous Application no. 230 of 2012 under Section 34

of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the

‘Arbitration Act’) before the District Judge, Thane. The State of Maharashtra

through the aforesaid Miscellaneous Applications sought quashing and setting

aside of the arbitral award dated 12.5.2012.

3.On the same day, i.e., 7.8.2012, Atlanta Limited filed Arbitration Petition

no.1158 of 2012 before the High Court of Judicature at Bombay (hereinafter

referred to as the ‘High Court’), for the setting aside of some of the directions

issued by the arbitral tribunal (in its award dated 12.5.2012). Atlanta Limited also

claimed further compensation, which according to the respondent, had wrongfully

not been considered by the arbitral tribunal.

4.A perusal of the averments made in the foregoing two paragraphs reveal,

that on the same day i.e., on 7.8.2012, the State of Maharashtra as also Atlanta

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Limited questioned the award of the arbitral tribunal dated 12.5.2012. Whilst the

State of Maharashtra questioned the same before the District Judge, Thane;

Atlanta Limited raised its challenge before the High Court. Since the same award

dated 12.5.2012 was subject matter of challenge before two different courts,

Atlanta Limited preferred Miscellaneous Civil Application no. 162 of 2012 under

Section 24 of the Code of Civil Procedure, 1908 praying for transfer of

Miscellaneous Application no. 229 of 2012, as also, Miscellaneous Application

No.230 of 2012 (both filed by the State of Maharashtra) before the District Court,

Thane, to the original side of the High Court, for being heard along with

Arbitration Petition No.1158 of 2012. The aforestated Miscellaneous Civil

Application No.162 of 2012 was allowed by the High Court on 15.3.2013. The

operative part of the order passed by the High Court is being extracted

hereunder:

“32. In the light of the above conclusion, the argument that this Court can

only direct consolidation of both Petitions without passing any order with

regard to their transfer, need not be considered in this case. Apart

therefrom, once I find that the Respondents have no objection to

consolidation of the proceedings so as to avoid conflicting decisions or

simultaneous trial/hearing, then, all the more, the powers to transfer needs

to be exercised in this case. It is undisputed that the parties are common

to both matters. In both matters the same Award is under scrutiny. In such

circumstances, the argument that both Petitions need to be consolidated

but before the District Court at Thane cannot be accepted. That would

mean two Courts render decisions and more or less on the same issue and

may be at the same time. The arbitration petition filed by the Petitioners in

this Court is already placed before the Single Judge of this Court and is

now adjourned. It would be proper if the proceedings before the District

Court, Thane are brought and are heard along with the Petition filed by the

Petitioners in this Court.

33. As a result of the above discussion, this application succeeds. It is

made absolute in terms of prayer clause (a) with no order as to costs.”

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The above determination by the High Court, vide its order dated 15.3.2013, is the

subject matter of challenge through Special leave Petition (C) No.18980 of 2013.

5.Leave granted.

6.The contention advanced at the hands of the learned counsel for the State

of Maharashtra, while assailing the impugned order of the High Court dated

15.3.2013 was, that it was improper for the High Court to transfer the proceedings

initiated by the appellant through Miscellaneous Application No.229 of 2012 and

Miscellaneous Application No.230 of 2012 under Section 34 of the Arbitration Act

before the Court of the District Judge, Thane to the High Court. In this behalf, the

pointed submission of the learned counsel for the appellant was, that only the

District Judge, Thane, had the jurisdiction to determine the controversy emerging

out of the award of the arbitral tribunal dated 12.5.2012. It was also submitted,

that the proceedings initiated by Atlanta Limited through Arbitration Petition no.

1158 of 2012, ought to have been transferred from the High Court to the District

Judge, Thane. In order to make good the aforesaid submission, learned counsel

for the appellant placed reliance on the definition of the term “Court” expressed in

Section 2(1)(e) of the Arbitration Act. Section 2(1)(e) aforementioned is being

reproduced hereunder :

“2 – Definitions— (1) In this Part, unless the context otherwise requires,—

(e) "Court" means the principal Civil Court of original jurisdiction in a

district, and includes the High Court in exercise of its ordinary

original civil jurisdiction, having jurisdiction to decide the questions

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forming the subject-matter of the arbitration if the same had been the

subject-matter of a suit, but does not include any civil court of a

grade inferior to such principal Civil Court, or any Court of Small

Causes.”

Drawing the court’s pointed attention to the definition of the term “Court”, it was

the vehement contention of the learned counsel for the appellant, that to

determine which court would have jurisdiction to decide the subject matter of an

arbitral dispute, it was essential to find out the particular court which would have

had jurisdiction in the matter, had the dispute been agitated through a civil suit.

According to learned counsel, the latter determination, would answer the

jurisdictional avenue of the arbitral dispute, in terms of Section 2(1)(e) extracted

above. In this behalf it was submitted, that in the absence of any express

exclusion clause between the parties, on the subject matter under reference, in

order to settle the dispute inter-parties, it would have been imperative for the

parties to raise their respective challenges only before the District Judge, Thane.

7.For the above submission, learned counsel also placed reliance on Section

16 of the Code of Civil Procedure. Section 16, according to learned counsel,

would be relevant to determine the jurisdictional court, if the dispute had been

agitated through a civil suit. Section 16 aforementioned is being extracted

hereunder:

“16. Suits to be instituted where subject-matter situate.—Subject to the

pecuniary or other limitations prescribed by any law, suits,--

(a) for the recovery of immovable property with or without rent or

profits,

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(b) for the partition of immovable property,

(c) for foreclosure, sale or redemption in the case of a mortgage of

or charge upon immovable property,

(d) for the determination of any other right to or interest in

immovable property,

(e) for compensation for wrong to immovable property,

(f) for the recovery of movable property actually under distraint or

attachment,

shall be instituted in the Court within the local limits of whose jurisdiction

the property is situate:

Provided that a suit to obtain relief respecting, or compensation for wrong

to, immovable properly held by or on behalf of the defendant may, where

the relief sought can be entirely obtained through hi s personal obedience,

be instituted either in the Court within the local limits of whose jurisdiction

the property is situate, or in the Court within the local limits of whose

jurisdiction the defendant actually and voluntarily resides, or carries on

business, or personally works for gain.

Explanation .--In this section "property" means property situate in India.”

Relying on Section 16 extracted above, it was asserted by learned counsel, that

the original agreement between the parties dated 12.7.2000, and the

supplementary agreement dated 11.5.2005, related to the construction of the

Mumbra byepass. The said construction is from Kilometer 133/800 to Kilometer

138/200. The aforesaid location of construction, according to the undisputed

position between the parties, is within Thane District, and as such, within the

territorial jurisdiction of the Sessions Division, Thane. Therefore, according to

learned counsel for the appellant, only the “principal civil court of original

jurisdiction” in District Thane i.e., the District Judge, Thane, would have

jurisdiction in the matter. It was also the submission of the learned counsel for

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the appellant, that the toll stations for collecting toll constructed by the

respondent-Atlanta Limited, are also located at the venue of the Mumbra

byepass. Thus viewed, according to the learned counsel for the appellant, the

collection of toll (which inter alia constitutes the subject of dispute, between the

parties) is also carried on by the respondents within District Thane, i.e., within the

territorial jurisdiction of the District Judge, Thane. Based on Section 16 of the

Code of Civil Procedure, and more particularly of clause (d) thereof, it was the

pointed submission of the learned counsel for the appellant, that only the District

Judge, Thane has the jurisdiction to entertain an arbitral dispute, arising between

the rival parties to the present appeal.

8.In order to further support his contention, that the District Judge, Thane

alone would have jurisdiction in the matter, learned counsel for the appellant, also

placed emphatic reliance on Section 20 of the Code of Civil Procedure which is

being reproduced hereunder:

“20.Other suits to be instituted where defendants reside or cause of

action arises.—Subject to the limitations aforesaid, every suit shall be

instituted in a Court within the local limits of whose jurisdiction --

(a) the defendant, or each of the defendants where there are more

than one, at the time of the commencement of the suit, actually

and voluntarily resides, or carries on business, or personally

works for gain; or

(b) any of the defendants, where there are more than one, at the

time of the commencement of the suit, actually and voluntarily

resides, or carries on business, or personally works for gain,

provided that in such case either the leave of the Court is given,

or the defendants who do not reside, or carry or business, or

personally work for gain, as aforesaid, acquiesce in such

institution ; or

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(c) the cause of action, wholly or in part, arises.

Explanation .--A corporation shall be deemed to carry on business at its

sole or principal office in India or, in respect of any cause of action arising

at any place where it has also a subordinate office, at such place.

Illustrations

(a) A is a tradesman in Calcutta, B carries on business in Delhi. B , by

his agent in Calcutta, buys goods of A and requests A to deliver them to the

East Indian Railway Company. A delivers the goods accordingly in

Calcutta. A may sue B for the price of the goods either in Calcutta, where

the cause of action has arisen or in Delhi, where B carries on business.

(b) A resides at Simla, B at Calcutta and C at Delhi, A, B and C being

together at Benaras, B and C make a joint promissory note payable on

demand, and deliver it to A. A may sue B and C at Benaras, where the

cause of action arose. He may also sue them at Calcutta, where B resides,

or at Delhi, where C resides; but in each of these cases, if the non-resident

defendant objects, the suit cannot proceed without the leave of the Court.”

Relying on the above provision, it was asserted, that a reading of Section 20 of

the Code of Civil Procedure shows, that a preference has been postulated for

certain provisions including Section 16 of the Code of Civil Procedure, which was

evident from the opening words of Section 20 of the Code of Civil Procedure,

which clearly denoted, that the issue of jurisdiction expressed in Section 20 of the

Code of Civil Procedure, would be subject to the overriding effect in the matter of

jurisdiction, expressed in the provisions preceding Section 20 (i.e. including

Section 16).

9.Learned counsel for the respondent-Atlanta Limited, however, strongly

opposed the submissions advanced at the hands of the learned counsel for the

appellant, on the issue of jurisdiction. In this behalf, learned counsel for the

respondent invited our attention to the reply affidavit filed on behalf of the State of

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Maharashtra, to Miscellaneous Civil Application No.162 of 2012 (filed by Atlanta

Limited before the High Court), para 8 of the reply affidavit which was pointedly

brought to our notice is being extracted hereunder :

“8. In fact it is an admitted position and common ground that both; this

Hon’ble Court and the District Court at Thane have jurisdiction in respect of

the subject-matter in issue. Peculiarly this Hon’ble Court falls within the

definition of the term “Court” under Section 2(e) of the Arbitration Act by

virtue of being a High Court in the Mumbai District having Original

Jurisdiction, and on the other hand the District Court at Thane being the

Principal Civil Court of original jurisdiction in the Thane District also falls

within the same definition.”

(emphasis is ours)

In view of the stand adopted in writing by the appellants, in response

Miscellaneous Civil Application no. 162 of 2012, it was sought to be asserted,

that the appellants had no right to raise the issue of jurisdiction before this Court.

10.Despite the objection noticed in the aforegoing paragraphs, it was the

vehement contention of the learned counsel for the respondent, that the High

Court and not the District Judge, Thane, had the jurisdiction to adjudicate the

controversy raised by the rival parties with reference to the award of the arbitral

tribunal dated 12.5.2012. In order to make good the aforesaid submission, it was

asserted, that the contractual agreement dated 12.7.2000, as also, the

supplementary agreement dated 11.5.2005, were executed at Mumbai.

Additionally, it was submitted that the parties had mutually agreed, that the seat

of arbitration in case of any disputes arising between the parties, would be at

Mumbai. Relying on the aforesaid undisputed factual position, learned counsel

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for the respondent invited our attention to the determination rendered by this

Court in Bharat Aluminium Company & Ors. vs. Kaiser Aluminium Technical

Services Inc & Ors. (2012) 9 SCC 559, and made pointed reliance to the

following observations recorded therein:

“96.xxx xxx xxx xxx

We are of the opinion, the term "subject matter of the arbitration" cannot be

confused with "subject matter of the suit". The term "subject matter" in

Section 2(1)(e) is confined to Part I. It has a reference and connection with

the process of dispute resolution. Its purpose is to identify the courts having

supervisory control over the arbitration proceedings. Hence, it refers to a

court which would essentially be a court of the seat of the arbitration

process. In our opinion, the provision in Section 2(1)(e) has to be construed

keeping in view the provisions in Section 20 which give recognition to party

autonomy. Accepting the narrow construction as projected by the Learned

Counsel for the Appellants would, in fact, render Section 20 nugatory. In

our view, the legislature has intentionally given jurisdiction to two courts i.e.

the court which would have jurisdiction where the cause of action is located

and the courts where the arbitration takes place. This was necessary as on

many occasions the agreement may provide for a seat of arbitration at a

place which would be neutral to both the parties. Therefore, the courts

where the arbitration takes place would be required to exercise supervisory

control over the arbitral process. For example, if the arbitration is held in

Delhi, where neither of the parties are from Delhi, (Delhi having been

chosen as a neutral place as between a party from Mumbai and the other

from Kolkata) and the tribunal sitting in Delhi passes an interim order Under

Section 17 of the Arbitration Act, 1996, the appeal against such an interim

order under Section 37 must lie to the Courts of Delhi being the Courts

having supervisory jurisdiction over the arbitration proceedings and the

tribunal. This would be irrespective of the fact that the obligations to be

performed under the contract were to be performed either at Mumbai or at

Kolkata, and only arbitration is to take place in Delhi. In such

circumstances, both the Courts would have jurisdiction, i.e., the Court

within whose jurisdiction the subject matter of the suit is situated and the

courts within the jurisdiction of which the dispute resolution, i.e., arbitration

is located.

97. The definition of Section 2(1)(e) includes "subject matter of the

arbitration" to give jurisdiction to the courts where the arbitration takes

place, which otherwise would not exist. On the other hand, Section 47

which is in Part II of the Arbitration Act, 1996 dealing with enforcement of

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certain foreign awards has defined the term "court" as a court having

jurisdiction over the subject-matter of the award. This has a clear reference

to a court within whose jurisdiction the asset/person is located, against

which/whom the enforcement of the international arbitral award is sought.

The provisions contained in Section 2(1)(e) being purely jurisdictional in

nature can have no relevance to the question whether Part I applies to

arbitrations which take place outside India.

98. We now come to Section 20, which is as under:

“20. Place of arbitration—(1) The parties are free to agree on the

place of arbitration.

(2) Failing any agreement referred to in Sub-section (1), the place of

arbitration shall be determined by the arbitral tribunal having regard

to the circumstances of the case, including the convenience of the

parties.

(3) Notwithstanding Sub-section (1) or Sub-section (2), the arbitral

tribunal may, unless otherwise agreed by the parties, meet at any

place it considers appropriate for consultation among its members,

for hearing witnesses, experts or the parties, or for inspection of

documents, good or other property."

A plain reading of Section 20 leaves no room for doubt that where the

place of arbitration is in India, the parties are free to agree to any "place" or

"seat" within India, be it Delhi, Mumbai etc. In the absence of the parties'

agreement thereto, Section 20(2) authorizes the tribunal to determine the

place/seat of such arbitration. Section 20(3) enables the tribunal to meet at

any place for conducting hearings at a place of convenience in matters

such as consultations among its members for hearing witnesses, experts or

the parties.”

(emphasis is ours)

11.We have heard learned counsel for the parties.

12.We have recorded hereinabove the foundation, on the basis whereof, the

present controversy was adjudicated before the High Court. As noticed above,

the challenge to the impugned order passed by the High Court, is based on the

question of jurisdiction. While the learned counsel for the appellants has placed

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reliance on Section 2(1)(e) of the Arbitration Act read with the provisions of Code

of Civil Procedure to contend, that the District Judge, Thane, alone would have

the jurisdiction in the matter; the contention raised on behalf of the respondent is,

that the High Court alone in exercise of its “ordinary original civil jurisdiction”, has

the jurisdiction to determine the controversy arising out of the impugned award

dated 12.5.2012.

13.In our view, it is not open to the appellants to advance such submission

before this Court. Firstly, because the appellants had in paragraph 8 of the reply

affidavit filed before the High Court, clearly acknowledged the legal position, that

both the High Court as also the District Judge, Thane, in so far as the present

controversy is concerned, fall within the definition of the term “Court” under

Section 2(1)(e) of the Arbitration Act. And secondly, because the impugned order

passed by the High Court expressly notices in paragraph 10, that it was admitted

by the rival parties before the High Court, that the High Court on the original side,

as also the District Judge, Thane, had the jurisdiction in respect of the subject

matter. Relevant part of para 10 of the impugned judgment of the High Court is

being extracted hereunder:-

“10.Mr. Vashi, learned counsel appearing on behalf of the

Petitioner submitted that in the Affidavit-in-Reply which has been

filed in this petition, it is admitted by the Respondents that the place

of arbitration in terms of the arbitration clause in the contract was

Mumbai. It is also admitted that both, this Court on the Original Side

and the District Court at Thane have jurisdiction in respect of the

subject matter in issue.”

(emphasis is ours)

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It was therefore not open to the appellants to canvass before this Court that the

High Court of Bombay in exercise of its “ordinary original civil jurisdiction” could

not adjudicate upon the present controversy, on account of lack of jurisdiction.

We shall therefore proceed in the first instance, on the premise that both the

courts referred to above had jurisdiction in the matter. We shall independently

record our reasons for the same, while dealing with the submissions advanced

before us. We have chosen to do so, because we are of the view, that an

important jurisdictional issue has been raised, which needs to be settled, one way

or the other. We shall therefore, decide the controversy on merits, irrespective of

the position expressed by the appellant, on the issue of jurisdiction.

14.During the course of hearing before us, learned counsel for the appellant

had highlighted for our consideration, the factual/legal controversy which was

agitated by the rival parties before the High Court. In this behalf it was further

pointed out, firstly, that the respondent’s case before the High Court was, that

since the arbitral tribunal had its seat at Mumbai, and the works contract was

executed at Mumbai, the original side of the High Court of Bombay was

competent to entertain the controversy. On the other hand, the appellants before

the High Court had pointed out, that since the works contract relating to the

construction and maintenance of the Mumbra byepass on the Mumbai-Pune road

(located on national highway no. 4), and the toll collection site were situated

within Thane District, the District Judge, Thane, was the “more suitable” court for

determining the controversies raised by the rival parties. Secondly, it was

pointed out, that before the High Court an application under Section 24 of the

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Code of Civil Procedure was filed in the matter pending before the High Court, for

transfer of proceedings filed by the respondents. It was submitted, that through

the above application, it was not open to the High Court to have transferred the

proceedings pending before the District Judge, Thane. It was further pointed out,

that before the High Court the appellants had orally submitted, that if the High

Court was inclined to invoke its jurisdiction under Section 24 of the Code of Civil

Procedure, the proceedings filed by the respondent before the High Court should

have been transferred to the District Judge, Thane, and not the other way around.

According to the learned counsel, the instant submission has been duly noticed in

the impugned judgment. Lastly, it was contended, that Section 24 of the Code of

Civil Procedure could not be invoked in a petition filed under Section 34 of the

Arbitration Act, and therefore, Section 24 of the Code of Civil Procedure ought not

to have been relied upon by the High Court for transferring the proceedings from

the Court of District Judge, Thane, to the High Court of Bombay.

15.The following submissions were advanced before us. Firstly, considering

clause (c) of the operative part of the award, according to learned counsel it was

clear, that enforcement of such a clause in the award was site-specific, since

Mumbra byepass is located on the Mumbai-Pune road (on national highway no.

4) and falls in Thane District, the District Judge, Thane, ought to be “natural

choice” for consideration of the issues advanced by the appellants, as also the

respondent. Secondly, according to the learned counsel for the appellants, the

definition of the term “Court” expressed in Section 2(1)(e) of the Arbitration Act

uses the expression “subject matter” and not “cause of action”. While “cause of

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action” can be referable to places where the works contract is executed, or where

arbitration proceedings were conducted; the term “subject matter” used in Section

2(1)(e) of the Arbitration Act is only referable to the subject matter of the works

contract, with respect to which the dispute is raised (with respect to which, there

was a direction for extension of the concession period, under the award).

Accordingly it was submitted, that although the High Court may also have

jurisdiction, the District Court Thane is “more natural”, “more suitable” and “more

appropriate” for the adjudication of the claims, raised by the rival parties. Thirdly

it was contended, that the original side of the High Court of Bombay, vis-à-vis, the

District Judge, Thane, is a “superior” Court. According to the learned counsel for

the appellants, even if it is acknowledged that the “ordinary original civil side” of

the High Court of Bombay as also the “principal Civil Court of original jurisdiction”

for the District Thane i.e., the District Judge, Thane, both have jurisdiction in the

matter, there were many attributes on the basis of which it could be clearly

established, that the original side of the High Court of Bombay, is superior to the

Court of the District Judge, Thane. In this behalf it was sought to be pointed out,

that the High Court could take cognizance of contempt of its own orders, and

furthermore, a judgment delivered by the original side of a High Court operated

as a binding precedent. It was submitted, that the District Court, Thane, does not

have any such attributes. In the above view of the matter it was submitted, that

reliance could be placed on Section 15 of the Code of Civil Procedure, to

determine which of the two courts should adjudicate upon the matter. Section 15

is being extracted hereunder:-

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“15.Court in which suits to be instituted-

Every suit shall be instituted in the Court of the lowest grade

competent to try it.”

Based on Section 15 extracted above it was submitted, that in case jurisdiction

could be exercised by two Courts, it was imperative to choose the Court of the

lowest grade competent to try the suit. Accordingly, it was contended, that from

amongst the original side of the High Court of Bombay and the District Court,

Thane, in terms of the mandate of Section 15 of the Code of Civil Procedure, the

District Court, Thane, being the Court lower in grade than the original side of the

High Court of Bombay, ought to have been chosen to adjudicate upon the

matters. It was also pointed out, that the choice of District Court, Thane, would

even otherwise be beneficial to the rival parties on account of the fact, that the

determination by the said Court, would be open for re-examination before the

High Court of Bombay, which exercises supervisory jurisdiction over it.

16.Additionally, it was contended, that the choice would fall in favour of the

District Judge, Thane, even on account of the likely expeditious disposal of the

matter by the District Judge, Thane, in comparison with the “original side of the

High Court of Bombay”. In this behalf it was submitted, that there were only 42

petitions filed under Section 34 of the Arbitration Act before the District Judge,

Thane, during the entire year 2012, whereas, there were 1317 petitions filed

under Section 34 before the High Court of Bombay, under its “ordinary original

civil jurisdiction”, during the year 2012. Referring to the preceding three years,

namely, 2009, 2010 and 2011 it was submitted, whereas a very few petitions

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were filed under Section 34 of the Arbitration Act before the District Judge,

Thane, as many as, 1033, 1443 and 1081 petitions respectively (were filed under

Section 34 of the Arbitration Act) were filed during the three years before the High

Court of Bombay. Based on the above factual position it was submitted, that it

could be expected that the District Judge, Thane, would dispose of the matters

under reference within a short period of about five years, whereas it was likely

that the disposal of the said matters will take more than two decades if the

matters are required to be adjudicated by the original side of the High Court of

Bombay. On the instant aspect of the matter also, referring to available data it

was submitted, that it takes more than 20 years for a suit to be heard and decided

by the High Court of Bombay under its “ordinary original civil jurisdiction”,

whereas, it does not take more than 5 years for a suit filed before the District

Judge, Thane, to be disposed of. Accordingly it was contended, that keeping in

view the burden of litigation, the “natural choice” for adjudication of the matters

under reference ought to be the District Judge, Thane, rather than the High Court

of Bombay.

17.Besides the above submissions, no other contention was advanced before

us.

18.We shall first endeavour to address the submissions advanced at the

hands of the learned counsel for the appellants, with reference to Section 15 of

the Code of Civil Procedure. In terms of the mandate of Section 15 of the Code

of Civil Procedure, the initiation of action within the jurisdiction of Greater Mumbai

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had to be “in the Court of lowest grade competent to try it”. We are, however,

satisfied, that within the area of jurisdiction of Principal District Judge, Greater

Mumbai, only the High Court of Bombay was exclusively the competent Court

(under its “ordinary original civil jurisdiction”) to adjudicate upon the matter. The

above conclusion is imperative from the definition of the term “Court” in Section

2(1)(e) of the Arbitration Act. Firstly, the very inclusion of the High Court “in

exercise of its ordinary original civil jurisdiction, within the definition of the term

“Court”, will be rendered nugatory, if the above conclusion was not to be

accepted. Because, the “principal Civil Court of original jurisdiction in a district”

namely the District Judge concerned, being a court lower in grade than the High

Court, the District Judge concerned would always exclude the High Court from

adjudicating upon the matter. The submission advanced by the learned counsel

for the appellant cannot therefore be accepted, also to ensure the inclusion of “the

High Court in exercise of its ordinary original civil jurisdiction” is given its due

meaning. Accordingly, the principle enshrined in Section 15 of the Code of Civil

Procedure cannot be invoked whilst interpreting Section 2(1)(e) of the Arbitration

Act. Secondly, the provisions of the Arbitration Act, leave no room for any doubt,

that it is the superior most court exercising original civil jurisdiction, which had

been chosen to adjudicate disputes arising out of arbitration agreements, arbitral

proceedings and arbitral awards. Undoubtedly, a “principal Civil Court of original

jurisdiction in a district”, is the superior most court exercising original civil

jurisdiction in the district over which its jurisdiction extends. It is clear, that

Section 2(1)(e) of the Arbitration Act having vested jurisdiction in the “principal

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Civil Court of original jurisdiction in a district”, did not rest the choice of

jurisdiction on courts subordinate to that of the District Judge. Likewise, “the High

Court in exercise of its ordinary original jurisdiction”, is the superior most court

exercising original civil jurisdiction, within the ambit of its original civil jurisdiction.

On the same analogy and for the same reasons, the choice of jurisdiction, will

clearly fall in the realm of the High Court, wherever a High Court exercises

“ordinary original civil jurisdiction”. Under the Arbitration Act, therefore, the

legislature has clearly expressed a legislative intent, different from the one

expressed in Section 15 of the Code of Civil Procedure. The respondent had

chosen to initiate proceedings within the area of Greater Mumbai, it could have

done so only before the High Court of Bombay. There was no other court within

the jurisdiction of Greater Mumbai, where the respondent could have raised their

challenge. Consequently, we have no hesitation in concluding, that the

respondent by initiating proceedings under Section 34 of the Arbitration Act,

before the original side of the High Court of Bombay, had not violated the

mandate of Section 2(1)(e) of the Arbitration Act. Thus viewed, we find the

submission advanced at the hands of the learned counsel for the appellants, by

placing reliance on Section 15 of the Code of Civil Procedure, wholly irrelevant.

19.Reliance placed on Section 16 of the Code of Civil Procedure, by the

learned counsel for the appellants, for the ouster the jurisdiction of the High Court

of Bombay is equally misplaced. All that needs to be stated while dealing with

the aforesaid contention is, that the controversy between the parties does not

pertain to recovery of immoveable property, partition of immoveable property,

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foreclosure sale or redemption of immoveable property, determination of any

other right to immoveable property, for determination of compensation for wrong

to immoveable property and/or for the recovery of moveable property under

distraint or attachment. It is only in the aforesaid exigencies that Section 16 of

the Code of Civil Procedure could have been invoked. The construction of the

Mumbra byepass, would only entitle Atlanta Limited to payments contemplated

under the contract dated 12.7.2007, and no more. A brief description of the

reliefs sought by the rival parties, in the separate proceedings initiated by them,

does not indicate that either of the parties were claiming any right to or interest in

any immovable property. Since none of the above exigencies contemplated in

Section 16 prevail in the dispute between the rival parties, reliance on Section 16

of the Code of Civil Procedure is clearly misplaced.

20.Insofar as the jurisdiction within the District Thane, is concerned, the

“principal Civil Court of original jurisdiction” is the court of the District Judge,

Thane. Consequently, within the territorial jurisdiction of District Thane, in terms

of Section 2(1)(e) of the Arbitration Act, the challenge could have only been

raised before the “principal Civil Court of original jurisdiction” of the district,

namely, before the District Judge, Thane. There was no other court within the

jurisdiction of District Thane, wherein the instant matters could have been

agitated. Therefore, the appellants having chosen to initiate the proceedings

before the District Judge, Thane, i.e., in respect of a cause of action falling in the

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territorial jurisdiction of the District Thane, they too must be deemed to have

chosen the rightful court i.e., the District Judge, Thane.

21.Shorn of the aforesaid determination, our only understanding of the

submission advanced at the hands of the learned counsel for the appellants

would be, that as a matter of “natural choice”, as a matter of “suitable choice”, as

also, as a matter of “more appropriate choice”, the controversies raised by the

rival parties ought to be collectively determined by the District Court, Thane, and

not by the High Court of Bombay (in exercise of its “ordinary original civil

jurisdiction”). In order to supplement the aforesaid contention, learned counsel

for the appellant had depicted the quantum of filing of similar petitions before the

High Court, as also, before the District Court Thane, and the time likely to be

taken for the disposal of such matters by the Courts under reference. There is no

statutory provision to our knowledge, wherein the determination of jurisdiction, is

based on such considerations. No such provision was brought to our notice by

learned counsel. The question of jurisdiction, is a pure question of law, and

needs to be adjudicated only on the basis of statutory provisions. In view of the

deliberations recorded hereinabove, it may not be wrong to observe, that the

submissions advanced at the behest of the learned counsel for the appellants on

the issue of jurisdiction, are submissions without reference to any principles

known to law. To the credit of the learned counsel for the appellants, it may

however be observed, that the above considerations may constitute a relevant

basis for transfer of proceedings from one court to the other. Before the above

considerations can be examined, there would be one pre-condition, namely, that

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the above considerations could be applied for transfer of a case, where statutory

provisions (express or implied) do not provide for the exercise of a definite

choice. As a matter of expressing ourselves clearly, it may be stated, that

inference of legislative intent from statutory provisions, would exclude from the

realm of consideration, submissions of the nature relied upon by the learned

counsel for the appellant.

22.The first issue which needs to be examined is, whether a challenge to an

arbitration award (or arbitral agreement, or arbitral proceeding), wherein

jurisdiction lies with more than one court, can be permitted to proceed

simultaneously in two different courts. For the above determination, it is

necessary to make a reference to Section 42 of the Arbitration Act. The aforesaid

provision accordingly is being extracted hereunder:

“42.Jurisdiction - Notwithstanding anything contained elsewhere

in this Part or in any other law for the time being in force, where with

respect to an arbitration agreement any application under this Part

has been made in a Court, that Court alone shall have jurisdiction

over the arbitral proceedings and all subsequent applications arising

out of that agreement and the arbitral proceedings shall be made in

that Court and in no other Court.”

A perusal of Section 42 of Arbitration Act reveals a clear acknowledgment by the

legislature, that the jurisdiction for raising a challenge to the same arbitration

agreement, arbitral proceeding or arbitral award, could most definitely arise in

more than one court simultaneously. To remedy such a situation Section 42 of

the Arbitration Act mandates, that the court wherein the first application arising

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out of such a challenge is filed, shall alone have the jurisdiction to adjudicate

upon the dispute(s), which are filed later in point of time. The above legislative

intent must also be understood as mandating, that disputes arising out of the

same arbitration agreement, arbitral proceeding or arbitral award, would not be

adjudicated upon by more than one court, even though jurisdiction to raise such

disputes may legitimately lie before two or more courts.

23.Ordinarily Section 42 of the Arbitration Act would be sufficient to resolve

such a controversy. For the determination of the present controversy, however,

reliance cannot be placed on Section 42 of the Arbitration Act, because the State

of Maharashtra had moved Miscellaneous Civil Application No. 229 and

Miscellaneous Civil Application No 230 of 2012 under Section 34 of the

Arbitration Act before the District Judge, Thane, on the same day as Atlanta

Limited had filed Arbitration Petition No. 1158 of 2012 before the High Court. In

this behalf it may be mentioned, that both the parties had approached the courts

referred to hereinabove on 7.8.2012. The answer to the jurisdictional question,

arising out in the facts and circumstances of this case, will therefore not emerge

from Section 42 of the Arbitration Act. All the same it is imperative for us to give

effect to the legislative intent recorded under Section 42 aforementioned, namely,

that all disputes arising out of a common arbitration agreement, arbitral

proceeding or arbitral award, would lie only before one court.

24.The very fact that the appellants before this Court, have chosen to initiate

proceedings against the arbitral award before “principal Civil Court of original

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jurisdiction in a district” i.e., before the District Judge, Thane, and the respondent

before this Court, has raised a challenge to the same arbitral award before the

“ordinary original civil side” of the High Court of Bombay, clearly demonstrates,

that the underlying principle contained in Section 42 of the Arbitration Act would

stand breached, if two different courts would adjudicate upon disputes arising out

of the same arbitral award. There can be no doubt, that adjudication of a

controversy by different courts, can easily give rise to different conclusions and

determinations. Therefore, logic and common sense also require, the

determination of all such matters, by one jurisdictional court alone. In the present

case, the complication in the matter has arisen only because, the proceedings

initiated by the appellants before the District Judge, Thane, and proceedings

initiated by the respondent on the “ordinary original civil side” of the High Court of

Bombay, were filed on the same day (i.e. on 7.8.2012). Therefore, Section 42 of

the Arbitration Act, cannot be of any assistance in the matter in hand.

25.All the same, it is imperative for us to determine, which of the above two

courts which have been approached by the rival parties, should be the one, to

adjudicate upon the disputes raised. For an answer to the controversy in hand,

recourse ought to be made first of all to the provisions of the Arbitration Act. On

the failure to reach a positive conclusion, other principles of law, may have to be

relied upon. Having given out thoughtful consideration to the issue in hand, we

are of the view, that the rightful answer can be determined from Section 2(1)(e) of

the Arbitration Act, which defines the term “Court”. We shall endeavour to

determine this issue, by examining how litigation is divided between a High Court

Page 25 25

exercising “ordinary original civil jurisdiction”, and the “principal civil court of

original jurisdiction” in a district. What needs to be kept in mind is, that the High

Court of Bombay is vested with “ordinary original civil jurisdiction” over the same

area, over which jurisdiction is also exercised by the “principal Civil Court of

original jurisdiction” for the District of Greater Mumbai (i.e. the Principal District

Judge, Greater Mumbai). Jurisdiction of the above two courts on the “ordinary

original civil side” is over the area of Greater Mumbai. Whilst examining the

submissions advanced by the learned counsel for the appellant under Section 15

of the Code of Civil Procedure, we have already concluded, that in the above

situation, jurisdiction will vest with the High Court and not with the District Judge.

The aforesaid choice of jurisdiction has been expressed in Section 2(1)(e) of the

Arbitration Act, without any fetters whatsoever. It is not the case of the appellants

before us, that because of pecuniary dimensions, and/or any other

consideration(s), jurisdiction in the two alternatives mentioned above, would lie

with the Principal District Judge, Greater Mumbai. Under the scheme of the

provisions of the Arbitration Act therefore, if the choice is between the High Court

(in exercise of its “ordinary original civil jurisdiction”) on the one hand, and the

“principal civil court of original jurisdiction” in the District i.e. the District Judge on

the other; Section 2(1)(e) of the Arbitration Act has made the choice in favour of

the High Court. This in fact impliedly discloses a legislative intent. To our mind

therefore, it makes no difference, if the “principal civil court of original

jurisdiction”, is in the same district over which the High Court exercises original

jurisdiction, or some other district. In case an option is to be exercised between a

Page 26 26

High Court (under its “ordinary original civil jurisdiction”) on the one hand, and a

District Court (as “principal Civil Court of original jurisdiction”) on the other, the

choice under the Arbitration Act has to be exercised in favour of the High Court.

26.In the present controversy also, we must choose the jurisdiction of one of

two courts i.e. either the “ordinary original civil jurisdiction” of the High Court of

Bombay; or the “principal civil court of original jurisdiction” in District Thane i.e.

the District Judge, Thane. In view of the inferences drawn by us, based on the

legislative intent emerging out of Section 2(1)(e) of the Arbitration Act, we are of

the considered view, that legislative choice is clearly in favour of the High Court.

We are, therefore of the view, that the matters in hand would have to be

adjudicated upon by the High Court of Bombay alone.

27.In view of the conclusions drawn by us above, we uphold the order passed

by the High Court requiring the matters to be adjudicated on the “ordinary original

civil side” by the High Court of Bombay. The reasons recorded by the High

Court, for the above conclusion, were different. The reasons for our consideration

have already been notice above. In view of the above, we dispose of the instant

appeal, with a direction that Arbitration Petition No. 1158 of 2012 filed by the

Atlanta Limited (the respondent herein) before the High Court of Judicature at

Bombay, and Miscellaneous Application No. 229 of 2012 and Miscellaneous

Application No. 230 of 2012 filed by the appellants before the District Judge,

Thane, shall be heard and disposed of by the High Court of Bombay. We

accordingly hereby direct the District Judge, Thane, to transfer the files of

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Miscellaneous Application No. 229 of 2012 and Miscellaneous Application No.

230 of 2012 to the High Court, for disposal in accordance with law.

…..…………………………….J.

(A.K. Patnaik)

…..…………………………….J.

(Jagdish Singh Khehar)

New Delhi;

January 16, 2014.