Petine Shipping Inc.Of Monorovia vs Minerals & Metals Trading Cor.Of (I)Ltd

Petine Shipping Inc. of Monrovia ..........Appellant

Versus

The Minerals and Metals ........Respondent Trading Corporation of India Ltd.

JUDGMENT

H.L. Dattu,J.

Leave granted.

2) This appeal is directed against the orders passed by the High Court of

Judicature at Bombay in Appeal No. 132 of 2000 in A. P. No. 313 of

1999 dated 26.4.2007. By the impugned judgment, the Division Bench

has held that in the reference, an application was admittedly made to

1 Delhi High Court and therefore, it would not only be in accordance

with law, but will also be proper for the parties to approach the same

court.

3) The facts leading to this Special Leave Petition are: the appellant is a

Liberian Shipping Company carrying on business through their

protecting agents M/s. G.A.C. Shipping India Ltd. The respondent is a

government company, which by charter party dated 2.6.1989 chartered

the appellants vessel M.V. Animar to carry Rock Phosphate from Togo

to West Coast India. The respondent chose Mumbai as the port of

delivery. The dispute resolution clause of the charter party provided

that each party may appoint one arbitrator, who in the event of

disagreement shall appoint an umpire, whose decision shall be final.

The arbitrators and the umpire were required to be commercial men.

4) When a dispute arose in 1990, the appellant vide letter dated 29.5.90

nominated Mr. A. K. Khandwala and the respondent vide telegram

dated 18.6.90 appointed Justice Deshpande (Retired Chief Justice of

the Delhi High Court). The appellant intimated the respondent by letter

dated 9.7.90, that since their nominee was not a commercial man as

required under the charter party clause; Mr. Khandwala would be the

sole arbitrator. The respondent filed Arbitration Petition before the

2 Delhi High Court, for a declaration that their nomination of Justice

Deshpande as arbitrator was valid. During pendency of the said

petition, Justice Deshpande expired. Vide letter dated 14.8.92, the

respondent appointed Mr. K. Parthasarthi, as Arbitrator, and on 18.8.92

the petition of the respondent was dismissed as having become

infructuous. The court has not passed any other order in the petition

filed by respondent.

5) The Arbitrators could not arrive at a unanimous decision and they

appointed Mr. R. C. Cooper as the Umpire. When Mr. Cooper sought

to proceed with the matter, the respondent inter alia raised objection as

to the validity of the appointment of the umpire and the umpire vide

letter dated 10.7.95, informed the parties that it would be prudent to

approach the appropriate court for orders before proceeding further

with the matter.

6) The appellant moved the High Court of Bombay, inter alia with a

prayer for conformation/appointment of Mr. Cooper as Umpire and to

enlarge the time for making the award. The Single Judge as well as

Division Bench in Arbitration Petition dismissed the appellant's

petition and appeal respectively, solely on the ground that in view of

3 Section 31(4) of the Arbitration Act, 1940 and in view of the

Arbitration Petition filed by the respondent earlier before the Delhi

7) High Court, which had been dismissed as having become in fructuous;

the Bombay High Court cannot adjudicate upon the appellant's

petition. The Division Bench of Bombay High Court has observed,

that, if the Delhi High Court was one of the courts having jurisdiction

and if the parties have already approached that court once, all future

applications should also be made to that court. Aggrieved by the said

order, appellant is before us by this special leave petition.

8) We have heard learned counsel for the parties.

9) The Learned counsel for the appellant would contend, that, the Delhi

High Court had dismissed the petition of the respondent as having

become in fructuous. Merely because an application was filed by the

respondent before the Delhi High Court, this by itself would not make

the Delhi High Court the competent court as envisaged under section

31(4) of the Act so as to exclude the Jurisdiction of all courts. Learned

Counsel would also contend that the Arbitration Petition which has

been moved by the respondent before the Delhi High Court was not an

application as envisaged under section 31(4) of the Act and thus Delhi

4 High Court did not get conferred with the exclusive jurisdiction to

entertain all applications pertaining to the present arbitration dispute. It

is further contended that if this becomes the situation, then any party

could indulge in forum shopping by filling a superficial application

before a court and withdrawing the same merely to ensure that all

subsequent applications be made before that court. In support of his

contentions, learned Counsel would draw our attention to observations

made by this Court in the case of Union of India vs. Surjeet Singh

Atwal, (1969) (2) SCC 211 and M/s Guru Nanak Foundation vs. M/s

Ratan Singh and Sons, (1981) (4) SCC 634.

10)In Union of India v. Surjeet Singh Atwal, (1969) (2) SCC 211, this

Court has held that an application under Section 34 of the Act (for stay

of suit) does not amount to an application under Section 31(4) of the

Act and it belongs to a different category because such application

does not lead to a reference to arbitration.

11)In M/s. Guru Nanak Foundation v. M/s. Ratan Singh & Sons, (1981) 4

SCC 634, this Court has observed that even though the first Court to be

approached by the parties had been the Delhi High Court, since

eventually the Supreme Court appointed the arbitrator and gave further

5 directions regarding the proceedings, it was the Supreme Court which

was the competent Court under Section 31(4).

12)The only questions which needs our consideration is, whether Bombay

High Court has the jurisdiction to adjudicate upon the Arbitration

Petition, where a previous application had been filed before the Delhi

High Court and subsequently dismissed by the same Court as having

become in fructuous.

13)The main object of Section 31 of the Arbitration Act is to invest a

single court with the exclusive jurisdiction to decide all questions

relating to the matter of arbitration; this object is achieved by the

combined operation of all its sub-sections. The words "application in a

reference" used in sub-section (4) should therefore, be related back to

sub-sections (2) and (3) and all applications regarding the conduct of

arbitration proceedings or arising out of such proceedings or in which

the court has to decide questions regarding the validity, effect, or

existence of an award or an arbitration agreement between the parties

to the agreement, should be treated as "application in a reference".

14)The very foundation for the jurisdiction of the court under Section 34

is the existence of an arbitration agreement. The applicant asserts that

there is such an agreement, while the plaintiff either disputes the

6 existence of such an agreement or pleads that it is invalid. Section 33

gives an independent right to a person who wishes to challenge the

existence or validity of an arbitration agreement to anticipate the other

side and to initiate proceedings to have these questions determined

beforehand. Thus applications under Sections 33 and 34 both are

fundamentally in the matter of arbitration proceedings and fall within

the purview of Section 31(4) of the Arbitration Act, though the former

is intended to make an arbitration agreement ineffective and the latter

effective and neither leads to a reference. [See (1971) 1 SCC (Jour) 70]

15) In the case of State of M.P. v. Saith and Skelton (P) Ltd., (1972) 1 SCC

702, this court has held that the expression `court' will have to be

understood as defined in Section 2(c) of the Act, only if there is

nothing repugnant in the subject or context. It is in that light that the

expression `court' occurring in Section 14(2) of the Act will have to be

understood and interpreted. It was this Court that appointed Shri V.S.

Desai, on 29-1-1971 by consent of parties as an arbitrator and to make

his award. It will be seen that no further directions were given in the

said order which will indicate that this Court had not divested itself of

its jurisdiction to deal with the award or matters arising out of the

award. In fact the indications are to the contrary. The direction in the

7 order dated 29-1-1971 is that the arbitrator is `to make his award'.

Surely the law contemplates further steps to be taken after the award

has been made, and quite naturally the forum for taking the further

action is only this Court. There was also direction to the effect that the

parties are at liberty to apply for extension of time for making the

award. In the absence of any other court having been invested with

such jurisdiction by the order, the only conclusion that is possible is

that such a request must be made only to the court which passed that

order, namely, this Court.

16)Unlike in the present case where an application was filed before the

Delhi High Court seeking declaration that appointment of Mr. Justice

Deshpande as Arbitrator is valid. The same application became in

fructuous because of the demise of Mr. Justice Deshpande and had to

be dismissed as having become infructuous. The Delhi High Court

neither gave any directions nor did it appoint an Arbitrator in the

adjudication of the said application.

17)In Bharat Coking Coal Ltd. v. Annapurna Construction, (2008) 6 SCC

732, this court observed that a distinction must be borne in mind in a

case where this Court had no control over the proceedings and the case

in which control of proceedings of the arbitrator had been retained. 8

18)Therefore, in the view taken by this Court in Bharat Cooking case,

although an application was filed before the Delhi High Court, but it

did not retain any control over the said proceedings of the arbitrator.

Also respondent did not file any application regarding appointment of

another arbitrator in the Delhi High Court. Thus, the application filed

before the Delhi High Court cannot be said to a reference made under

Section 31(4) of the Act.

19)Under the agreement, respondent has chosen Mumbai as the port of

delivery and the vessel carrying the Rock Phosphate was delivered at

the port of Bombay. Therefore it cannot be denied that Bombay High

Court had the jurisdiction in the Arbitration Petition filed before it, as

the goods were delivered at the Port of Bombay.

20)Therefore, the High Court of Bombay, in our view, is not correct in

rejecting the Arbitration Petition on the ground of lack of jurisdiction.

21)In view of the above discussion, the appeal is allowed. The impugned

order passed by the High Court is set aside. The application filed under

Section 28 of the Arbitration Act, 1940 for extension of time for

making the Award is restored on the Board of the Bombay High Court.

The court is requested to consider the application on merits as early as

9 possible at any rate within an outer limit of six months from the date of

receipt of the orders. No order as to costs.

.......................................J. [TARUN CHATTERJEE]

.......................................J. [ H.L. DATTU ] New Delhi, April 17, 2009.

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