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Judgment
Rajan Roy, J
Heard Shri Vivek Raj Singh, learned counsel for the applicant and Shri Agendra Sinha, learned counsel for the opposite party.
This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator.
The Arbitration Clause in the agreement/contract, a copy of which is annexed as Aannexure No. 1, reads as under:-
"23. Arbitration: In the event of any difference or dispute arising out of or in connection with this purchase order, the same shall be first amicably settled by mutual dialogue. If the parties fall to settle their difference or dispute arising out of or in connection with this work order (including interpretation of the terms thereof), the same shall be referred to arbitration. The Arbitration proceedings shall be conducted by a single Arbitrator appointed by the Company Secretary of Simplex Infrastructures Ltd., and the award/decision of such arbitrator shall be final and binding upon both the parties. The venue of the arbitration shall be Kolkata. However, the work shall not be stopped during the pendency of the proceedings and it shall be ensured that such work is proceeded uninterruptedly.
All transactions subject to jurisdiction of KOLKATA COURT."
A preliminary objection has been raised by Shri Agendra Sinha, learned counsel for the opposite party as to the maintainability of application under Section 11(6) specially before the Allahabad High Court at Lucknow as according to him, firstly, no attempt was made by the applicant for amicable settlement. Secondly, the applicant did not approach the Company Secretary of the opposite party for appointment of the sole Arbitrator. Thirdly, all transactions under the agreement were made subject to jurisdiction of Kolkata Court and the venue of the Arbitrators was also Kolkata.
On being confronted the learned counsel for the applicant could not give a satisfactory reply except that a notice dated 22.08.2018 has been sent by the applicant to the opposite party for appointment of an Arbitrator suggesting the name of three retired Judges considering the amendments in the Act, 1996.
Having heard the learned counsel for the parties and perused the records, the Court finds that as per the Arbitration clause agreed upon by the parties, first of all, an attempt ought to have been made for amicable settlement by mutual dialogue, but, there is nothing on record to show that any such attempt was made. It is only on failure of such attempt at amicable settlement by mutual dialogue that either of the parties could approach the Company Secretary of the opposite party for referring the matter to Arbitration by a single Arbitrator. Apart from the fact that no attempt was made for mutual settlement even the second limb of the Arbitration clause was not satisfied by the applicant, as, is evident from the notice dated 28.02.2018, which is not for appointment of an Arbitrator by the Company Secretary of the opposite party as was agreed upon by the parties, but, it is a notice for appointment of any of the eminent judicial personalities referred therein as sole Arbitrator considering the amendment to the Act, 1996. The language used in Section 11(6) which has already been referred hereinabove requires the adherence first of all to the procedure agreed upon and also provides that a party may request the High Court etc. to take the necessary measure under the said provision, unless the agreement on the appointment procedure provides other means of securing the appointment. Now, as per the arbitration clause firstly an attempt has to made at mutual settlement and on its failure the means provided in the Arbitration Clause is to approach the Company Secretary of the opposite party for appointment of a single Arbitrator which has not be done. Even after the amendment to the Act, 1996 the legal position is that the provisions of the Act, 1996 including the amendments therein come into play only when an application is filed under Section 11 for appointment of an Arbitrator and the said eventuality arises when any of the party fails to act as required under the procedure agreed upon by the parties for appointment of an Arbitrator as is evident from Sub-section 6 of Section 11 of the Act, 1996. The said provision clearly provides that it is attracted only in any of the three eventualities mentioned in Clause (a), (b) or (c) are satisfied. It is only then that a party may request the Supreme Court or as the case may be, the High Court or any person or institution designated by such Court to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.
In this view of the matter, the first two prerequisites for appointment of the Arbitrator under Section 11(6) in terms of the Arbitration Clause that is, an effort at mutual settlement and on its failure an application to the Company Secretary of the opposite party for appointment of single Arbitrator are not satisfied and as the procedure for appointment of an Arbitrator agreed upon by the parties has not been adhered, therefore, an application under Section 11(6) is not maintainable.
This is not a case attracting the provisions of Section 12(5) of the Act, 1996 as amended in 2015.
This apart there is also the question of jurisdiction i.e. whether such an application would lie before Allahabad High Court at Lucknow or it would lie before the Kolkata High Court at Kolkata. As per the Arbitration clause the venue of Arbitration shall be Kolkata. Even if a distinction is made between the ''seat' of Arbitration and ''venue' of Arbitration, Clause 24 of the agreement/contract at hand also mentions- ''All transactions subject to jurisdiction of Kolkata Court.' This is in the nature of exclusive jurisdiction clause, therefore, even if, the term ''venue' used in the Arbitration clause may refer to the place at which the Arbitration proceeding is to be held, which may be distinct from seat, the fact is that the intent of the parties appears to be to exclude the jurisdiction of all Courts other than those situated at Kolkata who may have territorial jurisdiction in addition to the Kolkata Courts. In taking this view this Court is supported by the recent decision of the Supreme Court dated 19.04.2017 rendered in Special Appeal Nos. 5070-5371 of 2017; Indus Mobile Distribution Private Ltd. Vs. Datawind Innovations Private Ltd and Ors., wherein, as per the arbitration clause applicable to the said case arbitration was to be conducted at Mumbai and there was an exclusive jurisdiction clause in conferring exclusive jurisdiction on Courts at Mumbai accordingly it was held as under:-
"20. A conspectus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. On the facts of the present case, it is clear that the seat of arbitration is Mumbai and Clause 19 further makes it clear that jurisdiction exclusively vests in the Mumbai courts. Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to "seat" is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction - that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Section 16 to 21 of the CPC be attracted. In arbitration law however, as has been held above, the moment "seat" is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties.
It is well settled that where more than one court has jurisdiction, it is open for parties to exclude all other courts. For an exhaustive analysis of the case law, see Swastik Gases Private Limited v. Indian Oil Corporation Limited, (2013) 9 SCC 32. This was followed in a recent judgment in B.E. Simoese Von Staraburg Niedenthal and Another v. Chhattisgarh Investment Limited, (2015) 12 SCC 225. Having regard to the above, it is clear that Mumbai courts alone have jurisdiction to the exclusion of all other courts in the country, as the juridical seat of arbitration is at Mumbai. This being the case, the impugned judgment is set aside. The injunction confirmed by the impugned judgment will continue for a period of four weeks from the date of pronouncement of this judgment, so that the respondents may take necessary steps under Section 9 in the Mumbai Court. Appeals are disposed of accordingly."
Moreover, the Court finds that the purchase order/contract itself appear to have been issued/arrived at Kolkata as appears from Annexure No. 1 and the works in respect thereof had to be carried out at Indore, Madhya Pradesh.
In view of the above, considering the exclusive jurisdiction clause contained in the agreement/contract, which, even though, is separately mentioned as Clause 24 after the Arbitration clause contained in Clause 23. the language used therein is very wide and encompasses ''all transactions', which would include Arbitration and the procedure contained in Clause 23, as, it is also a transaction relating to the contract/agreement'. This application under Section 11(6) before this Court at Lucknow is not maintainable. The same is accordingly rejected.