General Manager East Coast Railway Rail Sadan & Anr. vs Hindustan Construction Co. Ltd.

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4747 of 2022

General Manager East Coast Railway Rail Sadan & Anr. …Appellants

Versus

Hindustan Construction Co. Ltd. …Respondent

JUDGMENT

M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned

judgment and order passed by the High Court of Orissa at

Cuttack in Arbitration Petition No.10 of 2021 by which the High Signature Not Verified Digitally signed by R Natarajan Date: 2022.07.22 16:53:10 IST Reason: Court in exercise of powers under Section 11(6) of the

Arbitration and Conciliation Act, 1996 (hereinafter referred to as 2

‘the Act’) has appointed an Arbitrator to adjudicate the dispute

between the parties, the original informant – General Manager,

East Coast Railway Rail Sadan and Anr., have preferred the

present appeal.

2. As such the dispute in the present appeal is in a very

narrow compass.

3. The dispute arose between the appellant and the

respondent with respect to the contract/agreement dated

29.11.2018. That the respondent herein ­ original claimant

initiated the proceedings under Section 9 of the Arbitration Act

before the learned Additional District Judge, Visakhapatnam

seeking interim injunction against the encashment of

Performance Bank Guarantee and forfeiture of security deposit.

The said application came to be allowed by the learned

Additional District Judge vide order dated 06.11.2019

restraining the appellants herein from forfeiting security deposit

for period of six months except on the special circumstances. 3

4. That thereafter the respondent vide letter dated 01.12.2019

requested the appellant to constitute the Arbitral Tribunal

raising five claims. It appears that in terms of the Arbitration

Agreement, arbitration proceedings were initiated by the

appellants by appointing an arbitrator to adjudicate the dispute

between the parties. That the Arbitrator issued notices calling

upon the parties to submit their respective claims. The

respondent herein sought time vide letter dated 02.04.2020 for

filing the claim in view of Covid­19 Pandemic. The Arbitrator

adjourned the proceedings to 03.04.2020. Instead of submitting

the claim, vide letter dated 01.09.2020 the respondent

questioned the validity of arbitral tribunal. Thereafter the

respondent filed the Arbitration Petition No.10 of 2021 before the

High Court of Orissa at Cuttack under Section 11(6) of the Act

seeking appointment of an Arbitrator. The said application was

opposed by the appellants relying upon Section 42 of the

Arbitration Act and it was the case on behalf of the appellants

that in view of Section 42 of the Arbitration Act, the application 4

under Section 11(6) of the Act shall lie before the High Court of

Andhra Pradesh at Amaravati as the respondent itself earlier

filed Section 9 application before the Court at Vishakhapatnam.

It was also submitted on behalf of the appellants that procedure

dated 16.11.2016 upon which reliance has been placed by the

respondent was superseded by GCC issued by Railway Board in

November, 2018. Despite the above jurisdictional issue raised

and without addressing on the jurisdiction of the Orissa High

Court, by the impugned judgment and order the High Court of

Orissa at Cuttack has appointed the Arbitrator solely by

observing that since the appellant, East Coast Railways in

principle, is not opposing the appointment of an Arbitrator there

is little purpose served in relegating the respondent (original

petitioner) to the appropriate High Court as that will only delay

the adjudication of the disputes.

5. Feeling aggrieved and dissatisfied with the impugned

judgment and order passed by the High Court of Orissa at 5

Cuttack, the original respondent – General Manager – East Coast

Railway has preferred the present appeal.

6. We have heard Shri K.M. Natraj, learned ASG appearing on

behalf of the appellants and Shri Amit Dubey, learned Counsel

appearing on behalf of the respondent. We have gone through

the impugned judgment and order passed by the High Court. A

specific objection was raised by the appellant herein before the

High Court on the entertainability and/or maintainability of the

application under Section 11(6) of the Arbitration Act before the

Orissa High Court. Reliance was placed on Section 42 of the

Arbitration Act and it was submitted on behalf of the appellants

that as the respondent ­ claimant had initiated proceedings

under Section 9 of the Arbitration Act in the Court at

Vishakhapatnam, only the High Court of Andhra Pradesh at

Amaravati would have jurisdiction to entertain the application

under Section 11(6) of the Act. Without deciding the said issue

which goes to the root of the jurisdiction of the High Court of

Orissa at Cuttack, the said High Court by the impugned order 6

has entertained the application under Section 11(6) of the Act

and has appointed the sole arbitrator by observing that since the

appellants – East Coast Railway, in principle, has not opposed

the appointment of an arbitrator, there is little purpose served in

relegating the original petitioner to the concerned High Court as

that will only delay the adjudication of the disputes. The

appellants might not have opposed the appointment of an

arbitrator (though the fresh appointment of an Arbitrator was

also opposed by the appellants herein) by that itself it will not

confer the jurisdiction upon the High Court if otherwise, the

High Court had no jurisdiction.

7. Heavy reliance is/was placed on Section 42 of the

Arbitration and Conciliation Act, 1996 which reads as under:

“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 proceeding shall be made in that Court and in no other Court.” 7

7.1 It is not in dispute that before filing an application under

Section 11(6) of the Act before the High Court of Orissa at

Cuttack, the respondent – claimant moved an application before

the Court at Visakhapatnam under Section 9 of the Arbitration

Act. In that view of the matter considering Section 42 of the

Arbitration Act, the High Court of Andhra Pradesh at Hyderabad

alone would have jurisdiction to decide the subsequent

applications arising out of the Contract Agreement and the

further arbitral proceedings shall have to be made in the High

court of Andhra Pradesh at Amaravati alone and in no other

court. In that view of the matter the High Court of Orissa at

Cuttack has committed a serious error in entertaining the

application under Section 11(6) of the Act before it and

appointing the sole arbitrator.

8. In view of the above and for the reason stated above, the

present Appeal Succeeds. The impugned judgment and order

passed by the High Court of Orissa at Cuttack in Arbitration

Petition No.10 of 2021 and appointing the sole arbitrator is 8

hereby quashed and set aside solely on the ground that the High

Court of Orissa at Cuttack would have no jurisdiction to

entertain the application under Section 11(6) of the Act with

respect to the contract agreement for which the respondent

claimant earlier initiated the arbitration proceedings under

Section 9 of the Arbitration Act in the Court at Vishakhapatnam.

Present Appeal is accordingly Allowed. However, it is observed

that it will be open for the respondent claimant to submit/move

an application under Section 11(6) of the Act before the

competent High Court having jurisdiction namely the High Court

of Andhra Pradesh at Amaravati and if such an application is

made before the High Court of Andhra Pradesh at Amaravati

within a period of four weeks from today, the same be dealt with

and considered in accordance with law and on its own merits at

the earliest.

9

The Present Appeal is Allowed to the aforesaid extent.

However, in the facts and circumstances of the case, there shall

be no order as to costs.

…………………………………J. (M. R. SHAH)

…………………………………J. (B. V. NAGARATHNA) New Delhi, July 22, 2022