P.K Bahri, J.:— This petition has been brought under Section 33 of the Arbitration Act by the Projects & Equipment Corporation of India Limited against Onoda Engineering & Consulting Company Limited for declaring that the claims of the respondent based on various invoices submitted by the respondent to petitioner/Walchandnagar Industries Limited (hereinafter referred to as ‘WIL’) cannot form the subject-matter of any arbitration under arbitration clause existing in the bipartite agreement of the parties and in fact such claims arise out of triparite agreement dated March 20, 1986 of the parties and WIL and injunction was sought restraining the respondent from raising any such claim or demand and for proceeding with reference made to arbitration under the jurisdiction of international Chamber of Commerce.

2. The facts of the case, in brief, are that the petitioner had obtained a contract from an Indonesian company PTSP in Indonesia for setting up a cement plant. The petitioner entered an agreement with WIL to work as its associate or sub-contractor for putting up the said project on a turnkey basis and that agreement was made on April 30, 1981. By virtue of that agreement, WIL had taken up all the obligations and agreements required to be performed by petitioner by virtue of the main contract entered into with PTSP. WIL had also entered into a contract with M/s. Allias Chalmer Corporation of USA on the basis of the terms agreed upon in the main contract. WIL stated to have commenced the work in relation to the aforesaid project but their arose difficulties and could not complete the project within the stipulated period and the PTSP made complaints about the delay in completing the project and expressed its dis-satisfaction with the progress and quality of the work. The petitioner also felt on the same lines and as WIL was unable to remedy the situation, the PTSP served a notice of default on the petitioner on December 20, 1985 and WIL on being apprised of the dissatisfaction of the PTSP approached the respondent to arrange a fulfledged commissioning team of the respondent for doing the job in that project to the satisfaction of PTSP. The petitioner and WIL arrived at an understanding with regard to the procurement of services and technical assistance of the respondent. PTSP desired that WIL should not be associated in the project. So in order to satisfy PTSP a bipartite agreement was entered into between the petitioner and the respondent by virtue of which respondent agreed to provide necessary services and technical assistance for augmenting commissioning activity of the cement plant. This agreement was executed on March 20, 1986, after PTSP had given approval to the said agreement. WIL was not a party to this particular agreement but simultaneously on the same day tripartite agreement was executed between the parties and WIL under the terms of which WIL and the respondent were to carry on the work in the project and there was also a stipulation regarding the mode and manner in which respondent was to receive its payments on the basis of letter of credit to be opened by WIL on the basis of the funds to be supplied by the petitioner to WIL. It is not necessary to refer to various other facts mentioned in the petition showing as to how and in what manner the disputes arose although it is averred that respondent's work was not found upto the mark by WIL. However, respondent raised certain invoices claiming payments and as those payments were not being made by the petitioner or WIL the respondent by virtue of an arbitration clause appearing at article 5 of the bipartite agreement of March 20, 1986, invoked the jurisdiction of International Chamber of Commerce, Paris, for appointment of arbitrator and for reference of the disputes to the arbitrator.

The arbitration clause was to the following effect:

“If any dispute or difference or any matter relating to or out of this Agreement between PEC and ONODA does arise and if the same cannot and/or is not settled mutually by negotiation, it shall be referred to arbitration in Singapore, in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, Paris. The language of the Arbitration proceedings shall be English. Any award made in pursuance thereof shall be final and binding on both the parties.”3. It was also provided under article 4 of the bipartite agreement that the agreement and all rights thereunder shall be governed by the laws of India. The petitioner had approached the International Chamber of Commerce with its objections regarding the jurisdiction of the arbitrator to enter upon the reference on the basis of the aforesaid arbitration clause pleading that the disputes, in fact, arise from tripartite agreement which did not contain any arbitration clause. However, it was decided by the court of arbitration that in view of the rules governing the ICC the arbitrator is entitled to decide whether the arbitration has the jurisdiction over the disputes being referred to him for arbitration. The petitioner has thus filed the present petition seeking the relief mentioned in the opening of the order.

4. The respondent has contested the petition and has pleaded that Delhi Courts have no jurisdiction to entertain this petition as no part of cause of action has accrued within the jurisdiction of Delhi Courts. On merits, it is pleaded that the claims of the respondent arise from the bipartite agreement which contains the arbitration clause and thus, the said disputes were referable to the arbitration in accordance with the arbitration clause agreed upon between the parties in the bipartite agreement. It is to be mentioned here that respondent had filed two suits, one against the petitioner and another against WIL claiming the same amounts which are subject-matter of reference to the arbitration and those suits have been filed in Bombay. The respondent has prayed for staying of those suits under Section 34 of the Arbitration Act making it clear that those suits are being filed as a matter of abundant caution so that the claims of the respondent do not become time barred if ultimately the arbitrator was to decide that the claims put up before the arbitrator were not referable to arbitration and the respondent has given an undertaking in those suits that if the arbitrator was to decide that it has jurisdiction to decide the claim of the respondent and the arbitrator gives any finding on merits regarding the aforesaid claim of the respondent then respondent would not pursue the suits and would pursue its remedy in appeal or objection which may be required to be filed against the award to be given by the arbitrator on merits. The petitioner has also pleaded that the effect of filing of those suits is that Section 35 of the Arbitration Act comes into play and thus, the arbitration cannot proceed. The following issues were framed:

1. Whether the Courts in India have jurisdiction to entertain this petition?………OPP

2. Whether there is no arbitration agreement between the parties with reference to the disputes subject matter of impugned reference? It so, to what effect?….OPP

3. Whether under Article 8.3 of the Rules of the International Chamber of Commerce the arbitrators have jurisdiction to decide whether or not the disputes referred by the respondents fall within the ambit of the arbitration clause in the tripartite agreement? If so, to what effect?…..OPP.

4. What is the effect of the suits stated to have been filed by the respondent in respect of their alleged claims against the petitioner and the Walchandnagar Industries Ltd. in the Bombay High Court?…OPP

5. Relief

Issue No. 1.

The Petitioner in para 45A of the petition has pleaded that Delhi Courts have jurisdiction inasmuch as the agreement between the petitioner and WIL dated April 30, 1981, was executed at New Delhi and the payments in respect of the bipartite and tripartite agreements were to be made by the petitioner to WIL by opening letter of credit through the State Bank of India, Parliament Street, New Delhi and the disputes/discussions between the parties arose/took place at New Delhi and the material part of the cause of action in respect of the alleged subject-matter of respondent's claims and in respect of this petition had arisen at New Delhi. It is indeed not in dispute that the bipartite as well as tripartite agreements were executed between the parties at Indonesia and the work regarding the contract subject-matter of the said agreements was to be performed in Indonesia and the payments were to be made to respondent in Japan on the basis of letter of credit to be opened by WIL. Mere fact that an agreement had been made between the petitioner and WIL on April 30, 1981, at New Delhi, to which respondent was not a party and respondent was not even in picture, it cannot be said that any part of cause of action in respect of the disputes and claims of the respondent arising out of either bipartite agreement dated March 20, 1986 or tripartite agreement of the same date had arisen within jurisdiction of Delhi Courts. The cause of action in respect of the disputes arising out of the contract would arise at a place where the contract is made or where the contract is to be performed or where the payments in respect of that contract are to be made. In the present case, admittedly the contract between the parties were executed in Indonesia and the contract was to be performed exclusively in Indonesia and the payments were to be also made to the respondent in Japan. Thus, it cannot be said that any part of cause of action in respect of the claims of the respondent had arisen within the territorial jurisdiction of Delhi Courts. Mere fact that some negotiations between the parties prior to entering into the contracts took place in Delhi would not mean that any part of cause of action in respect of the disputes arising from the contracts had taken place at New Delhi. It appears that after the disputes have arisen and respondent had put up his claim, there took place certain discussions between the respondent and the petitioner at New Delhi but those discussions also cannot be treated as part of cause of action with regard to the said disputes and claims arising from the contract. Hence, it has to be held that no part of cause of action in respect of the claims of the respondent has arisen within the territorial jurisdiction of this Court.

6. Counsel for the respondent has been contended that as parties had agreed that the laws of India would be applicable in regard to the aforesaid contracts, thus, Delhi Courts have jurisdiction to try this petition. There is a fallacy in this contention. A petition under Section 33 of the Arbitration Act can be filed in the court which is defined in Section 2(c) of the Arbitration Act which means a civil court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit. So, mere fact that laws of India govern the contracts in question would not mean that the petition could be filed in any court in India. In order to give jurisdiction to a court the petitioner is bound to show that Delhi Courts have jurisdiction to decide the question forming the subject-matter of the reference. “Reference” has been defined to mean in Section 2(e) “reference to arbitration”.

7. In the National Thermal Power Corporation Ltd. v. The Singer Company & Others, 1990(3) Delhi Lawyer 26(1), it was held by a Single Judge of this Court that where the parties expressly agreed that their right under the contract would be determined under the Indian laws, the same would not imply that they also agreed that the law governing the arbitration procedure would also be Indian law. At any rate, in order to hold that Delhi Courts have jurisdiction to try the matter in question the petitioner was bound to show that this court has jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of the suit.

8. Counsel for the petitioner has vehemently argued that in case respondent was to file a suit in respect of the claims which are subject-matter of reference to arbitration then such a suit could have been filed at Delhi because the petitioner is carrying on business at Delhi and petitioner would have been a defendant in that case and in view of Section 20(a) of the Code of Civil Procedure the suit would have been entertainable in Delhi.

9. The learned counsel for the respondent has, on the other hand, contended that the interpretation being put by counsel for the petitioner to the provisions of Section 2(c) is not correct. He has contended that if the petitioner was to file a suit with regard to the subject-matter of reference, then obviously the suit could not have been instituted in Delhi Courts because no provisions of Section 20 of the Code of Civil Procedure would be applicable because neither the respondent, who could have been the defendant in such a suit, is residing or carrying on business at Delhi and he has placed reliance on a Division Bench judgment of the Calcutta High Court in M/s. B C. Paul & Sons (P) Ltd. v. Union of India, AIR 1978 Calcutta 423(2). The facts, in brief, in the said case were that a contract had been entered into by the Union of India on the basis of tenders and Union of India claimed certain damages on account of non-performance of the terms of the contract by the other party. The petitioner against whom the claim was raised by the Union of India filed a petition under Section 33 challenging the existence and validity of the arbitration agreement taking the plea that in fact, no concluded contract came into force between the parties. The petition was filed before the Subordinate Judge, First Court, Alipore. The Union of India raised the objection that the said court had no territorial jurisdiction to try the matter. The objection of the Union of India was accepted the matter came up before the High Court. The Division Bench held that the petition under Section 33 has to be filed in a court as defined in Section 2(c) of the Arbitration Act. The Court held that question forming the subject-matter of reference in the said case would be as follows: (i) whether there was a concluded contract; and (ii) if so, whether opposite party is entitled to recover damages. The division Bench held that in such a suit the Union of India would be the defendant and as Union of India admittedly was neither residing nor carrying on business in the State of West Bengal no part of cause of action having arisen in the State of West Bengal, thus, no court in the State of West Bengal would have jurisdiction to try such a suit. This judgement applies on all fours to the facts of the present case. The matter has not to be determined on the hypothetical basis of respondent bringing a suit but it is to be decided on the basis if petitioner was to file a suit on subject-matter of reference when it is to be seen as to in which court such a suit could be brought. The language of Section 2(c) was not so clear as to support the ratio laid down by the Division Bench of the Calcutta High Court. The interpretation being put to the language used in Section 2(c) by the learned counsel for the petitioner also appears to be somewhat reasonable because Section 2(c) only speaks of a court having jurisdiction to decide the subject-matter of reference to the arbitration. The subject-matter of reference to the arbitration at a first glance would appear to be the claim filed by the respondent and not merely the defence being raised by the petitioner in opposition to the aforesaid claims. I have come across a Division Bench judgment of this Court which, in my opinion, lays down the same ratio of law as laid down by the Division Bench of the Calcutta High Court and the same is binding on me sitting singly. That judgment is in the case of N.D Sud… v. Union Of India…, 1973 Rajdhani Law Reporter 472(3). In the said case also, N. D. Sud had filed a petition under sections 32 & 33 of the arbitration act pleading that no valid and binding contract had come into existence between the parties by issuance of the alleged acceptance of tender letter.

No part of cause of action had accrued within the jurisdiction of Delhi Courts. Two questions of law were referred to the Division Bench for decision and one was to the following effect:

“Whether the residence or carrying on business of a party which (apart from place of accrual of cause of action) gives territorial jurisdiction to the court under Section 20 of the Civil Procedure Code will also give jurisdiction in arbitration cases in view of Section 31 of the Arbitration Act.”

10. The second question of law decided by the Division Bench is not relevant for the purpose of deciding the present issue. The Division Bench expressed the view that Section 20 of the Code of Civil Procedure is applicable in order to decide whether a particular court has jurisdiction to entertain a petition under Section 33 of the Arbitration Act. The Division Bench had referred to certain observations given in the case of M. Venkatasamiappa v. Srinidhi Ltd. (1950) 1 M.L.J 709 (4) to the effect that both the parties in arbitration proceedings simultaneously feel the role of plaintiff and defendant. However, the Division Bench did not subscribe to this view, and after referring to Section 20(2) of the Arbitration Act and Rule 5 of the Rules framed under Section 44 of the Act and also to Section 14(2) of the Act, it held that a party moving the court for a relief under the Arbitration Act can normally be called a “plaintiff” while the party opposing the relief would normally be the “defendant”. It was held that the terms “plaintiff” and “defendant” are not the exclusive nomenclatures of the Code of Civil Procedure. It held that they are convenient modes of expressing the status of parties to a lis before the court. The Division Bench then referred to the judgment of the Supreme Court in Hukam Singh v. M/s. Gammon (India) Ltd., AIR 1971 SC 740 (5). The contention which was raised before the Supreme Court was to the effect that merely because the “respondent” carried on business in Bombay the Courts at Bombay were not invested with jurisdiction to entertain any suit or petition for filling an arbitration agreement. The said objection was repelled by the court and the Division Bench quoted the law laid down by the Supreme Court to the following effect:—

“Plainly by the terms of Section 20(a) read with Explanation II, the respondent Company was liable to be sued at Bombay where it had its principal place of business…..”.

“Since an application for filing an award in respect of a dispute arising out of the terms of the agreement could be filed in the Courts in the City of Bombay, both because of the terms of Clause 13 of the agreement and because the respondents had their Head Office where they carry on business at Bombay, the agreement between the parties that the Courts in Bombay alone shall have jurisdiction to try the proceedings relating to arbitration was binding between them.”

11. So, it was observed by the Division Bench that the Supreme Court, thus, treated the respondent in the case as defendant and referred to Section 20 of the Code of Civil Procedure for determining the “court” competent to entertain the application. The Division Bench held that the residence of the respondent is relevant if it is related to the subject matter of the dispute or the reference for purposes of determining the jurisdiction of the court. A contention was raised before the Division Bench that as Union of India cannot be said to reside in Delhi or carrying on business at Delhi, thus, Delhi Courts have no jurisdiction. The Division Bench left this question open for decision by the Single Bench. So, according to the ratio which can be called out from this judgment it is clear in same terms as the ratio laid down by the Calcutta High Court. Section 20 of the Code of Civil Procedure obviously can be invoked in order to decide as to which court would have the jurisdiction to try the subject matter of reference but to invoke Section 20(a) of the Code of Civil Procedure it has to be shown that the respondent who is to be treated as a defendant for purposes of the said provision is either residing or carrying on business or personally working for gain within the territorial jurisdiction of a particular court only then the said court would have jurisdiction to entertain any petition under the Arbitration Act. It is evident that if interpretation of Section 2(c) of the Act is to be given as suggested by the learned counsel for the petitioner then the case before the Division Bench would have been decided in a different way and the court would have clearly said that the Single Judge is also to look into the matter if the Union of India was to bring a suit whether the Delhi Courts would have jurisdiction or not keeping in view the fact that the petitioner in that case was residing in Delhi. That was not the question left open for decision by the Single Judge when the legal question was answered by the Division Bench clearly on the finding that it is the residence of the respondent. Who is to be deemed as a defendant, as if the suit had been brought against the defendant to see whether defendant resides at Delhi or carries on business at Delhi. The ratio of law laid down by the Division Bench is quite clear and squarely applies to the facts of the present case. This judgment of the Division bench was cited with approval in a Full Bench case in Ram Rattan Bhartia v. Food Corporation of India and another, AIR 1978 Delhi 183(6). The full Bench had, of course, laid down the law that provisions of section 20(a) & (b) of the code of civil procedure can be resorted to to give territorial jurisdiction to a court in respect of arbitration matters.

12. There is no dispute that in case respondent in the present petition was residing or carrying on business at Delhi, the Delhi Courts would have jurisdiction to try the matter but unfortunately for the petitioner such is not the case here. So, for deciding as to which court has territorial jurisdiction as contemplated by Section 2(c) of the Arbitration Act the petitioner is to be treated as a plaintiff and the respondent is to be treated as a defendant in the matter brought before the court and then it is to be seen that if the suit had been brought by the petitioner as plaintiff which court would have territorial jurisdiction to decide the subject-matter of reference to the arbitration and so, Section 20(a) or (b) of the Code of Civil Procedure could be invoked only if respondent (defendant) is shown to be residing or carrying on business within the territorial jurisdiction of a particular court only then that court would have jurisdiction to try the petition filed under Section 33 of the Arbitration Act apart from the Court where cause of action wholly or partly arises because the provision of Section 20(c) of the Code of Civil Procedure is independent of earlier provisions. So, I hold that Delhi Courts have no jurisdiction to entertain this petition. Issue is decided against the petitioner.

13. As this Court has no jurisdiction to try the petition it would not be proper for this Court to give findings on other issues.

14. I, hence, direct that the petition be returned for being filed in any other competent court. The stay of the arbitration proceedings granted vide order dated September 20, 1989, is, hereby, vacated. Petition and the applications are disposed of.

September 12, 1990.

I. K. Petition Dismissed.