- Bookmark
- Share
- CaseIQ
Food Corporation Of India v. Evdomen Corporation .
Factual and Procedural Background
The appellant, Food Corporation of India (FCI), entered into a charter-party agreement with the respondent on 30-09-1988 at Delhi for the transport of rice from Bangkok to Paradeep Port in Orissa. After the cargo was discharged at Paradeep, disputes arose over freight and demurrage charges. Pursuant to an arbitration clause in the charter party, the disputes were referred to arbitration, which was conducted in Bombay. The arbitrators made their award on 29-11-1994 and filed it in the Bombay High Court.
FCI objected to the Bombay High Court’s jurisdiction to take the award on file. The High Court rejected the objection, holding that jurisdiction existed because FCI carries on business in Bombay. FCI then filed Civil Misc. Case No. 13 of 1995 before the Civil Judge (Senior Division), Jagatsinghpur, seeking transfer of the award from Bombay and leave to file objections. That application was dismissed, and the present appeal challenges only the Bombay High Court’s assumption of jurisdiction.
Legal Issues Presented
- Whether, under the Arbitration Act, 1940 read with the Code of Civil Procedure, 1908 and clause 12 of the Bombay High Court Letters Patent, the Bombay High Court had jurisdiction to take the arbitral award on file and issue process.
Arguments of the Parties
Appellant’s Arguments (Food Corporation of India)
- The Bombay High Court lacked jurisdiction because no part of the cause of action arose within its territorial limits.
- Under Section 20 of the Code of Civil Procedure (CPC) read with the Explanation concerning corporations, jurisdiction lies only where the cause of action arose or where the corporation’s principal office is situated; hence Bombay was excluded.
The opinion does not detail the respondent’s specific arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Hakam Singh v. Gammon (India) Ltd., (1971) 1 SCC 286; (1971) 3 SCR 314 | The Code of Civil Procedure applies in its entirety to arbitration proceedings by virtue of Section 41 of the Arbitration Act, 1940. | Used to affirm that the question of which “court” may entertain matters connected with an arbitration is governed by CPC provisions unless excluded. |
Court's Reasoning and Analysis
1. The Court first examined Section 2(c) of the Arbitration Act, 1940 and Section 31(1), which permit an award to be filed in any “court” having jurisdiction if the dispute had been the subject of a suit.
2. It then considered Section 20 CPC. Reading Section 20(a) with its Explanation, the Court observed that a corporation is deemed to carry on business at its principal office and, for a cause of action arising elsewhere, also at its subordinate office. Because no part of the cause of action arose in Bombay, Section 20 CPC did not independently confer jurisdiction on the Bombay High Court.
3. Turning to Section 120 CPC, the Court noted that Sections 16, 17, and 20 CPC do not apply to High Courts exercising original civil jurisdiction.
4. Consequently, jurisdiction had to be tested under clause 12 of the Bombay High Court Letters Patent. Clause 12 confers jurisdiction where the defendant carries on business within the jurisdiction at the commencement of the suit. The Court held that FCI does carry on business in Bombay; therefore, the Bombay High Court possesses original civil jurisdiction over the dispute.
5. The Court also recorded that FCI had filed proceedings in Jagatsinghpur seeking transfer of the award but those proceedings were dismissed, and Section 31(4) of the Arbitration Act (exclusive jurisdiction upon first‐seized court) had not been invoked before either the High Court or the Supreme Court.
6. On the above reasoning, the Court concluded that the Bombay High Court validly entertained the award.
Holding and Implications
Holding: The appeal is dismissed; the judgment of the Bombay High Court upholding its jurisdiction stands affirmed. No order as to costs.
Implications: The decision clarifies that when a High Court exercises ordinary original civil jurisdiction, its authority is derived from its Letters Patent, not Section 20 CPC. Consequently, a corporation carrying on business within the territorial limits of the Bombay High Court is subject to that court’s jurisdiction for proceedings related to arbitration awards, even if the cause of action arose elsewhere. The ruling resolves the dispute between the parties but does not establish a new legal precedent beyond reaffirming the interplay between CPC provisions, Section 120 CPC, and Letters Patent jurisdiction.
Sujata V. Manohar, J.— Leave granted.
2. The appellant-Food Corporation of India entered into a charter party agreement with the respondent for transport of rice from Bangkok to Paradeep Port in Orissa. The charter party was signed at Delhi where the principal office of the appellant is situated, on 30-9-1988.
3. Under the charter party agreement, cargo was brought and discharged at Paradeep Port in the State of Orissa. In respect of the cargo so discharged, there were disputes and differences between the parties regarding freight and demurrage charges. Since the charter party agreement contained an arbitration clause, the parties referred the disputes to arbitration. The arbitration took place in Bombay. Arbitrators gave their award and filed it in the Bombay High Court.
4. It is contended before us by the appellant that the Bombay High Court had no jurisdiction to take the award on file or to issue any process in connection with it. The High Court in the impugned judgment has upheld the jurisdiction of the Bombay High Court on the ground that the appellant who is in the position of a defendant, has one of its places of business at Bombay.
5. Under Section 2(c) of the Arbitration Act, 1940, “court” 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. Under Section 31(1) of the Arbitration Act, 1940, an award may be filed in any court having jurisdiction in the matter to which the reference relates.
6. Ordinarily, the phrase “civil court having jurisdiction to decide” in Section 2(c) of the Arbitration Act, 1940 would refer to a court having jurisdiction under Section 20 of the Civil Procedure Code. Section 20(a) of the Civil Procedure Code provides:
“20. 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;
(c) the cause of action, wholly or in part, arises.”
In the present case, no part of the cause of action has arisen within the jurisdiction of the Bombay High Court. We have, therefore, to see whether Section 20(a) would confer jurisdiction on the Bombay High Court as has been held in the impugned judgment. Section 20(a) has to be read along with the Explanation to Section 20 which provides as follows:
“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.”
In view of this Explanation, the appellant under Section 20 is deemed to carry on business at its principal office in India. In respect of any cause of action which arises at a place where it has its subordinate office, the court at that place would also have jurisdiction. In view of this Explanation, the Bombay High Court would not have jurisdiction under Section 20 of the Civil Procedure Code.
7. In this connection, our attention was also drawn to a decision of this Court in Hakam Singh v. Gammon (India) Ltd. (1971) 1 SCC 286, (1971) 3 SCR 314 where this Court said that the Code of Civil Procedure in its entirety applies to the proceedings under the Arbitration Act by virtue of Section 41 of the Arbitration Act. The jurisdiction of the court to entertain a proceeding in connection with arbitration including taking on file an award, is accordingly governed by the provisions of the Code of Civil Procedure.
8. However, under Section 120 of the Civil Procedure Code, Sections 16, 17 and 20 of the Civil Procedure Code do not apply to a High Court in the exercise of its original civil jurisdiction. Jurisdiction of the Bombay High Court to entertain a suit under its ordinary original civil jurisdiction is determined by clause 12 of the Letters Patent of the Bombay High Court. Under clause 12 of the Letters Patent, a place where the defendant, or each of the defendants where there are more than one, at the commencement of the suit, carry on business would be a place where the court would have jurisdiction. Therefore, under clause 12 of the Letters Patent of the Bombay High Court, the Bombay High Court would have jurisdiction over the subject-matter of the dispute in the present case because the appellant does carry on business in Bombay.
9. In the present case, the arbitrators gave their award on 29-11-1994. The appellant received a notice from the arbitrators of the signing of the award on 15-12-1994. Thereafter on 13-1-1995, the appellant filed Arbitration Misc. Case No. 13 of 1995 before the Civil Judge, Senior Division, Jagatsinghpur, under Section 14(2) of the Arbitration Act, 1940 for directing the arbitrators to file the original award and all relevant records in court and to permit the appellant to file objections under Section 30 of the Arbitration Act against the said award. In the meanwhile on 1-2-1995, the award was filed in Bombay. Thereafter, the appellant amended the application in Case No. 13 of 1995 to ask for transfer of the award from Bombay to the Court at Jagatsinghpur. Application being Misc. Case No. 13 of 1995 was rejected by the Court at Jagatsinghpur. It directed the appellant to file its objections in Bombay. We do not know whether anything further is pending in connection with that application. The appellant did not rely upon Section 31(4) of the Arbitration Act either before the Bombay High Court or before us. The above facts were known to the appellant and were brought to the notice of the High Court. Perhaps, looking to the findings of the Civil Judge, Senior Division, Jagatsinghpur regarding lack of jurisdiction in his Court to decide claims for demurrage, etc., Section 31(4) has not been pressed into service.
10. We, therefore, do not find it necessary to set aside the judgment of the Bombay High Court.
11. The appeal is, therefore, dismissed with no order as to costs.
Alert