Tantia Constructions v. Union Of India Through General Manager, North Central Railway, Madhya Pradesh High Court, Judgment, Law, casemine.com

Factual and Procedural Background

North Central Railway, Allahabad invited tenders for construction and related works for a rail bridge project (Tender No. CAO(C)/47 of 2002). The petitioner company submitted a tender which was accepted by the respondent by letter dated 12/8/2003. The parties were unable to settle formal contract terms; exchange of letters followed and the contract was ultimately terminated on 19/1/2005. The petitioner sought administrative review of the termination; when that request was not acceded to, the petitioner sought arbitration. An Arbitral Tribunal issued an award dated 12/11/2008 at Jaipur. The respondent (unspecified in the summary but reflected as the party challenging the award) filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the Award before the Court at Gwalior. The petitioner raised a preliminary objection to the territorial jurisdiction of the Gwalior Court. The XI Additional District Judge (Fast Track Court), Gwalior rejected that preliminary objection by order dated 29/7/2010 (Annexure P/1). The petitioner filed the present petition under Article 227 of the Constitution of India challenging the legality and propriety of that order.

Legal Issues Presented

Whether the Court at Gwalior had territorial jurisdiction to entertain the application under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the Arbitral Award.

Whether provisions of the Code of Civil Procedure (CPC), specifically the rule permitting institution of a suit where the cause of action wholly or in part arose (referred to in the opinion as section 20(c) of the CPC), are applicable to determine territorial jurisdiction in the absence of an arbitration agreement on record.

Arguments of the Parties

Petitioner's Arguments

The Gwalior Court lacked territorial jurisdiction to entertain the Section 34 application because the tender was accepted at Allahabad, the place of work (Etawah) is in Uttar Pradesh, the contract was given by the Chief Engineer whose office is at Allahabad, and arbitration proceedings were conducted in Allahabad while the Award was passed at Jaipur.

Reliance was placed on Section 2(e)(i) of the Arbitration Act (definition of "Court") to argue that jurisdiction should lie at Bhind or the Courts at Allahabad/Jaipur and not at Gwalior.

Counsel relied on several Supreme Court decisions (Garhwal Mandal Vikas Nigam Ltd. v. Krishna Travel Agency; State of West Bengal v. Associated Contractors; State of Maharashtra v. Atlanta Limited) to support the contention that the Gwalior Court did not have jurisdiction.

Respondent's Arguments (as placed on record)

An affidavit of the Deputy Chief Engineer (Construction), NCR, Gwalior and the reply filed before the Court below asserted that the work under the Award was carried out on the Bhind–Etawah section and the project was supervised and administered by the Gwalior office.

All measurement books were maintained by the Gwalior Office and the petitioner had made claims in arbitration against the Union of India through the Deputy Chief Engineer, Gwalior.

Non-performance of the contract by the respondent was raised and pursued by the Gwalior Office and many letters originated from Gwalior; thus, part of the cause of action arose in Gwalior and the Gwalior Court had territorial jurisdiction.

Accordingly, the reply argued that the objection to jurisdiction was rightly rejected and the petition should be dismissed.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Garhwal Mandal Vikas Nigam Ltd. v. Krishna Travel Agency (2008) 6 SCC 741	Cited by petitioner's counsel to support the contention that the Gwalior Court did not have territorial jurisdiction.	The Court found the decisions relied upon by the petitioner distinguishable on facts and held that the element of part cause of action relied upon in the present case is not palpable in those authorities.
State of West Bengal v. Associated Contractors ((2015) 1 SCC 32)	Cited by petitioner's counsel to contest the territorial jurisdiction of Gwalior Court.	The Court treated this precedent as factually distinguishable for the purposes of the jurisdictional question in the present matter.
State of Maharashtra through Executive Engineer, Road Development, Division No. 111, Panvel v. Atlanta Limited ((2014) 11 SCC 619)	Relied upon by petitioner's counsel to buttress the submission regarding jurisdictional limits.	The Court observed that the cited decision was distinguishable on its facts and that the element of part cause of action present in the instant record was not evident in that case.
Iti Ltd. v. Siemens Public Communications Network Ltd. ((2002) 5 SCC 510 : AIR 2002 SC 2308)	Quoted for the principle that the jurisdiction of civil courts is not ousted by a statute unless exclusion is explicit; supports applicability of CPC unless expressly excluded by the Act.	The Court relied on this authority to support the proposition that CPC provisions (section referred to as section 20(c) of CPC in the opinion) can be applied to determine territorial jurisdiction in the absence of an arbitration agreement on record.
Bhatia International v. Bulk Trading S.A. (C.A. No. 6527/2001 — 13.3.2002)	Referred to (via Iti Ltd.) for the proposition that jurisdiction may not be ousted unless explicitly or by necessary inference the statute indicates exclusion.	The Court cited this as the settled principle underpinning the application of CPC provisions where the Act does not explicitly exclude them.

Precedent

Rule or Principle Cited For

Application by the Court

Garhwal Mandal Vikas Nigam Ltd. v. Krishna Travel Agency (2008) 6 SCC 741

Cited by petitioner's counsel to support the contention that the Gwalior Court did not have territorial jurisdiction.

The Court found the decisions relied upon by the petitioner distinguishable on facts and held that the element of part cause of action relied upon in the present case is not palpable in those authorities.

State of West Bengal v. Associated Contractors ((2015) 1 SCC 32)

Cited by petitioner's counsel to contest the territorial jurisdiction of Gwalior Court.

The Court treated this precedent as factually distinguishable for the purposes of the jurisdictional question in the present matter.

State of Maharashtra through Executive Engineer, Road Development, Division No. 111, Panvel v. Atlanta Limited ((2014) 11 SCC 619)

Relied upon by petitioner's counsel to buttress the submission regarding jurisdictional limits.

The Court observed that the cited decision was distinguishable on its facts and that the element of part cause of action present in the instant record was not evident in that case.

Iti Ltd. v. Siemens Public Communications Network Ltd. ((2002) 5 SCC 510 : AIR 2002 SC 2308)

Quoted for the principle that the jurisdiction of civil courts is not ousted by a statute unless exclusion is explicit; supports applicability of CPC unless expressly excluded by the Act.

The Court relied on this authority to support the proposition that CPC provisions (section referred to as section 20(c) of CPC in the opinion) can be applied to determine territorial jurisdiction in the absence of an arbitration agreement on record.

Bhatia International v. Bulk Trading S.A. (C.A. No. 6527/2001 — 13.3.2002)

Referred to (via Iti Ltd.) for the proposition that jurisdiction may not be ousted unless explicitly or by necessary inference the statute indicates exclusion.

The Court cited this as the settled principle underpinning the application of CPC provisions where the Act does not explicitly exclude them.

Court's Reasoning and Analysis

The Court's analysis proceeded by examining the documentary record and the legal framework:

Absence of arbitration agreement on record: The Court noted that neither party produced the formal arbitration agreement, although the tender acceptance letter dated 12/8/2003 (Annexure P/2) was on record.

Contents of the tender acceptance and related documents: Clause (2) of the acceptance letter provided that until a formal agreement was prepared and executed, the acceptance letter would constitute a binding contract. Clause (6) called upon the petitioner to sign the contract agreement and to report to the Deputy Chief Engineer (Construction), North Central Railway, Gwalior for further instructions.

Documentary indicia of Gwalior's role: The guarantee bond indicated the place of work as Guna–Etawah and Bhind Broad Gauge. A letter dated 19/1/2005 (Annexure P/4E) instructed the petitioner to enter into contract with and report to the Deputy Chief Engineer, Gwalior. The record showed that the work was supervised by the Dy. Chief Engineer (Construction), Gwalior and that measurement books were maintained by the Gwalior office.

Conclusion on part cause of action: Based on these facts, the Court concluded that part of the cause of action arose in Gwalior (i.e., contractual obligations to be performed or supervised there and administrative acts emanating from that office).

Application of legal principles on jurisdiction: The Court relied on the principle (as stated in Iti Ltd. and Bhatia International) that jurisdiction of civil courts is not to be treated as ousted unless the statute expressly or by necessary implication excludes it. In the absence of an arbitration agreement, the Court held that Section 20(2) of the Arbitration Act (place of arbitration determined by the Arbitral Tribunal when parties have not agreed) and the definition of "Court" in Section 2(1)(e) of the Act must be read with the CPC rule permitting suits where the cause of action wholly or in part arose (referred to in the opinion as section 20(c) of the CPC).

Distinguishing petitioner’s authorities: The Court found the precedents relied upon by the petitioner to be distinguishable on facts because those decisions did not present a palpable element of part cause of action in the forum relied upon (Gwalior) as exists in the present record.

Conclusion on jurisdictional objection: On the combined factual and legal matrix, the Court held there was no illegality or perversity in the lower court's rejection of the territorial jurisdiction objection.

Holding and Implications

DISMISSED.

The Court dismissed the petition under Article 227, holding that the XI Additional District Judge at Gwalior did not err in rejecting the petitioner's preliminary objection to territorial jurisdiction. The direct consequence is that the Gwalior Court retains jurisdiction to entertain the application under Section 34 of the Arbitration and Conciliation Act, 1996 in respect of the Award challenged in the underlying proceedings.

The opinion does not state that it establishes any novel legal precedent beyond applying settled principles regarding territorial jurisdiction and the applicability of CPC provisions in the absence of an arbitration agreement; the decision's effect is limited to the parties and the instant proceedings.

Tantia Constructions v. Union Of India Through General Manager, North Central Railway

S.A. Dharmadhikari, J.:— In this petition, under Article 227 of the Constitution of India, petitioner has called in question the legality, validity and propriety of the order dated 29/7/2010 (Annexure P/1) passed in Case No. 44/2010 (MJC) by XI Additional District Judge (Fast Track Court), Gwalior, whereby the preliminary objection regarding territorial jurisdiction of the Court at Gwalior entertaining application under section 34 of the Arbitration and Conciliation Act, 1996 (for short “the Act”), has been rejected.

2. Brief facts leading to filing of this case are that North Central Railway, Allahabad invited tenders for procurement, fabrication assembling, erection and launching of 10 × 61.00m Open Wen Girder Spans including fabrication and fixing of steel channel sleeper for Yamuna bridge between Bhind-Etawah section of Guna-Etawah New B.G. Rail Line, vide Tender Notice No. CAO(C)/47 of 2002. The petitioner-Company filed its tender and the same was accepted by the respondent vide letter dated 12/8/2003 (Annexure P/2). Since the terms and conditions for carrying out work could not be settled, there were exchange of letters between the parties and ultimately the contract was terminated on 19/1/2005. Petitioner-Company requested the respondents to review the decision for termination of contract vide letter dated 31/1/2005. The same was not acceded to, which gave cause of action to the petitioner to approach the Arbitration Tribunal for seeking resolution of dispute. The petitioner requested the respondents to refer the matter for arbitration. The Arbitral Tribunal passed the Award dated 12/11/2008 at Jaipur. Being aggrieved by the Award, the respondent preferred an application under section 34 of the Act for setting aside the Award before the Court at Gwalior. The petitioner raised preliminary objection as to territorial jurisdiction of the Court at Gwalior on the grounds that the place of work is Etawah which is situated in Uttar Pradesh; the contract was given by Chief Engineer, North Central Railway whose Office is situated in Allahabad and the arbitration proceedings have been carried out in Allahabad. The said application has been rejected by the order impugned, aggrieved whereof, this petition has been filed.

3. Learned counsel for the petitioner submitted that the Court below at Gwalior has no jurisdiction to entertain the application under section 34 of the Act, inasmuch as the tender was accepted at Allahabad; the place of work is Bhind-Etawah Section of Guna-Etawah, New Broad Guage Line and Etawah falls in Uttar Pradesh; the arbitration proceedings were carried out in Allahabad and the Award was passed at Jaipur. In this regard, attention of this Court was invited to section 2(e)(i) of the Act, which reads thus:—

“Court” means— (i) in the case of an arbitration other than international commercial arbitration, 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 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;

4. It is submitted that in view of the aforesaid, either Bhind Court or, the Courts at Allahabad/Jaipur will have the jurisdiction to entertain the suit and, certainly, not the Court at Gwalior. The learned Court below has committed grave error of law while rejecting the objection of the petitioner in this regard. It is further submitted that any correspondence emanating from Gwalior will not be sufficient to over-ride the statutory provision as enunciated above. To buttress his contentions, learned counsel has placed reliance on decisions in the cases of Garhwal Mandal Vikas Nigam Ltd. v. Krishna Travel Agency (2008) 6 SCC 741, State of West Bengal v. Associated Contractors ((2015) 1 SCC 32), State of Maharashtra through Executive Engineer, Road Development, Division No. 111, Panvel v. Atlanta Limited ((2014) 11 SCC 619)s.

5. Although return has not been filed, yet learned counsel for the respondent has brought on record an affidavit of Dy. Chief Engineer (Construction) NCR, Gwalior along with the reply submitted by the Railways before the Court below and it is urged that the said reply may be treated as counter affidavit to this petition. It is stated in the affidavit that the work under the Award is carried out at Bhind-Etawah section and the said project is supervised and administered by Dy. Chief Engineer (Construction), Gwalior. All measurement books are maintained by the Gwalior Office. Petitioner himself in arbitral proceedings has made his claim against Union of India through Dy. Chief Engineer, Gwalior. It is further stated that non performance of contract on the part of respondent was agitated and initialized by the Gwalior Office and bundles of letters were issued in this regard. Accordingly, it is submitted that the cause of action has arisen in part within the territorial jurisdiction of Gwalior as well. As such, no error has been committed by the Court below while rejecting the objection of the petitioner as to territorial jurisdiction of the Court at Gwalior. The petition sans merit and is liable to be dismissed.

6. Heard, learned counsel for the parties.

7. It is worthwhile to mention here that arbitration agreement has not been brought on record by either of the parties, though tender acceptance letter dated 12/8/2003 is available on record as Annexure P/2. Clause (2) of the said letter specifies that until a formal agreement was prepared and and executed, the acceptance letter would constitute a binding contract. Further by way of clause (6), petitioner was called upon to sign the contract agreement and in the meantime was requested to report to Deputy Chief Engineer (Construction), North Central Railway, Gwalior immediately for further instructions. Besides, the other facts which are ex facie discernible from the record are that as per guarantee bond furnished by the petitioner, the place of work is Guna-Etawah and Bhind Broad Gauge and on 19/1/2005, a letter (Annexure P/4E) had been issued to the petitioner asking him to enter into contract with Dy. Chief Engineer, Gwalior and to report before him. The same is couched in the following words:—

“You have been instructed time and again by Dy.CE/NCR/GWL as well as this office letters including letters No. even dated 13.07.2004 and letters dated 19.10.2004 and 2.11.2004 as referred above to immediately report to Dy.CE/C/GWL for signing the contract and to take up work but you have failed to sign the contract and take up work at site. There has been no action initiated for physical commencement of work from your side even after constant chasing by this office as well as by DyCE/C/GWL.”

8. From the aforesaid, it is clear that the contract was to be signed by the petitioner before Dy.CE./C/Gwalior. The work is supervised by Dy. Chief Engineer (Construction), Gwalior and all measurement books were maintained by the Gwalior Office. As such, part cause of action certainly arose in Gwalior.

9. So far as the applicability of the provisions of CPC are concerned, the Apex Court in the case of Iti Ltd./ v. Siemens Public Communications Network Ltd.. ((2002) 5 SCC 510 : AIR 2002 SC 2308) has held as under:—

“11. It has been held by this Court in more than one case that the jurisdiction of the civil court to which a right to decide a lis between the parties has been conferred can only be taken by a statute in specific terms and such exclusion of right cannot be easily inferred because there is always a strong presumption that the civil courts have the jurisdiction to decide all questions of civil nature, therefore, if at all there has to be an inference the same should be in favour of the jurisdiction of the court rather than the exclusion of such jurisdiction and there being no such exclusion of the Code in specific terms except to the extent stated in Section 37(2), we cannot draw an inference that merely because the Act has not provided the CPC to be applicable, by inference it should be held that the Code is inapplicable. This general principle apart, this issue is now settled by the judgment of a 3-Judge Bench of this Court in the case of Bhatia International v. Bulk Trading S.A. in C.A. No. 6527/2001 -- decided on 13.3.2002 where in while dealing with a similar argument arising out of the present Act, this Court held: “While examining a particular provision of a statute to find out whether the jurisdiction of a Court is ousted or not, the principle of universal application is that ordinarily the jurisdiction may not be ousted unless the very statutory provision explicitly indicates or even by inferential conclusion the Court arrives at the same when such a conclusion is the only conclusion.”

10. Before dilating further, it is worth reiterating that there is no arbitration agreement on record. Section 20(2) of the Act provides that failing any agreement between the parties as to place of arbitration, the same shall be determined by the Arbitral Tribunal having regard to circumstances of the case, including the convenience of the parties. In the present case, the arbitral proceedings have been held in Allahabad. On a plain reading of the definition of ‘court’ under section 2(1)(e) of the Act, it is evident that arbitration petition can be filed before:—

(i) A principal civil court of original jurisdiction in district;

(ii) A High Court in exercise of its original civil jurisdiction having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of the suit.

11. In view of the above, section 20(c) of the CPC which provides for institution of suit at a place where cause of action wholly or in part arose, is aptly attracted to the fact situation in hand, moreso when the arbitration agreement is not on record. Further, the decisions cited by learned counsel for the petitioner are distinguishable on facts, inasmuch element of part cause of action is not palpable therein.

12. Accordingly, this Court does not find that any illegality or perversity has been committed by the Court below in rejecting the objection as to territorial jurisdiction raised by the petitioner.

13. The petition fails and is, accordingly, dismissed.

W.P. No. 4578/2010

Tantia Constructions v. Union Of India Through General Manager, North Central Railway

Judgment Summary — S.A. Dharmadhikari, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments

Respondent's Arguments (as placed on record)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Tantia Constructions v. Union Of India Through General Manager, North Central Railway

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