M/S ABM Civil Ventures Private Limited v. Triveni Engineering & Industries Limited

A.R.No.52/2018 1 # **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** **THE HONOURABLE SMT. JUSTICE P.V.ASHA** **FRIDAY ,THE 23RD DAY OF NOVEMBER 2018 / 2ND AGRAHAYANA, 1940** **AR.No. 52 of 2018** ## **PETITIONER/S:** **M/S. ABM CIVIL VENTURES PRIVATE LIMITED REPRESENTED BY ITS MANAGING DIRECTOR, M.K. ABRAHAM, ABM TOWERS, KADAVANTHRA, KOCHI-682020.** **BY ADVS. SRI.JOJO GEORGE SRI.ADARSH KUMAR SRI.BIJU VARGHESE ABRAHAM SRI.DILEEP CHANDRAN SRI.K.M.ANEESH SRI.K.SANTHOSH KUMAR (KALIYANAM) SRI.SHASHANK DEVAN** ## **RESPONDENT/S:** **TRIVENI ENGINEERING & INDUSTRIES LIMITED(TEIL) REP. BY ITS MANAGING DIRECTOR, WATER BUSINESS GROUP, A-44, HOSIERY COMPLEX, PHASE-11, UTTAR PRADESH, EXTN. NOIDA-201 305.** **BY ADVS.** **SRI.ABDURAHIMAN VAYALIL PEEDIKAYIL SRI.SHARAN SHAHIER** **THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 23.11.2018, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** A.R.No.52/2018 2 ## _**P.V.ASHA, J.**_ **--------------------------** A.R.No.52 of 2018 ------------------------------------------- _Dated this the 23[rd] day of November, 2018_ ## _**O R D E R**_ Applicant had entered into Annexure-A1 agreement with the respondent on 19.10.2013, with respect to the Raw Water Treatment Plant for Bharat Petroleum Company Ltd. There arose certain disputes between the applicant and the respondent with respect to the liquidated damages applied. Thereupon the applicant issued Annexure-A2 notice dated 20.04.2018 proposing to invoke the arbitration clause in Annexure A1 agreement, nominating one Mr.S.Ramachandran Nair, B.Sc(Engineering), MBA, Mohanalayam, Muthoor P.O, Thiruvalla-689 107 as Arbitrator. The respondent thereupon issued Annexure-A3 reply on 27.04.2018 stating that they would not like to appoint Sole Arbitrator from TEIL as provided in clause 27, in view of the amendment made in the Arbitration and Conciliation Act, 1996 ('the Act' for short) in October 2015, in order to be impartial and fair. It was stated that the applicant can invoke Section 11 of the Act for appointment of Arbitrator. However, they pointed out that the provision for arbitration is as contained in clause 27, according to which, the venue of arbitration is at Noida, Uttar Pradesh and the expense for arbitration shall be taken out by the parties who have invoked the arbitration. This arbitration request is filed thereafter. The applicant seeks appointment of an Arbitrator pointing out that the entire work order for which A.R.No.52/2018 3 agreement has been entered into relates to work to be executed within the jurisdiction of this Court; payment is to be made to the petitioner within the jurisdiction of this Court, etc. 2. The respondent filed a statement pointing out that this Court does not have any jurisdiction to entertain the request because clause 27 of Annexure-A1 agreement is specific on the point that the venue of arbitration shall be Noida. The respondent also relied on the judgment of the Apex Court **in** _**Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. & Ors.**_ **: (2017) 7SCC 678** . 3. Relying on the judgments of the Delhi High Court in _**PCP International Limited v. Lanco Infratech Limited:**_ (2015) SCC online Delhi 10428, _**Sravanthi Infratech Private Limited v. Tricolite Electrical Industries Limited:**_ (2016) SCC online Delhi 6313, the learned Counsel for the applicant argued that venue fixed in the Arbitration clause will not confer jurisdiction to the courts at Noida and that the seat of arbitration is within the jurisdiction of this Court since the work is to be executed and payment is to be made within the jurisdiction of this Court. Pointing out that venue and seat are different it was argued that Arbitrator is required to be appointed by this Court in terms of Clause 27 of the agreement. The learned Counsel also argued that the courts at Noida are fixed in a printed format as done by the respondent in all their contracts. Relying on the judgment dated 14/15 February 2018 in Commercial Suit No. 65 of 2013 of the High Court of Bombay, it was argued that there was no consensus on the venue fixed, because the applicant has signed the agreement as provided in Clause 18, which directs: “ you will sign all the pages of the A.R.No.52/2018 4 Work Order as your acceptance of the terms and conditions of the work order.” ## 4. Heard the learned Counsel on both sides. Clause 27 of Annexure-A1 ## agreement, which reads as follows: _“27. Disputes: In the event of any dispute arising out of this Contract/Work Order, the parties hereto agree that the matter shall be referred to sole Arbitrator who is an officer of TEIL (who is not connected with this Contract/Work Order) nominated by the Unit Head of TEIL water Business Group. The award of the Arbitrator so nominated shall be final conclusive and binding on all parties to the dispute. The venue of Arbitration shall be at Noida, Uttar Pradesh. All the expenses of Arbitration shall be borne by the party who has invoked the Arbitration.”_ Therefore the only question to be determined is whether this Court is having jurisdiction to entertain the application when the venue is fixed at Noida. According to the learned Counsel for the applicant, notwithstanding the venue fixed at Noida in Clause 27, the jurisdiction of the court is to be examined with reference to the place where the work is to be executed and the payment is to be made. As these parameters are satisfied, this request is to be entertained only by this Court, in the light of the definition of the 'court' in Section 2 (1)(e) of the Act and Section 42 of the Act. 5. As per Section 2(1)(e), court means Principal Civil Court of original jurisdiction in a District including High Court having 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. Section 42 begins with a non-obstante clause conferring jurisdiction on that court where any application in respect of the arbitration agreement has been made, over the arbitral proceedings and all subsequent applications arising out of the agreement and arbitral proceedings can only be made in that court. 6. In this context, as rightly pointed out by the learned Counsel for the A.R.No.52/2018 5 ## respondent, Clause 28 of the agreement is relevant which reads as follows: _“This Work Order shall be governed by and construes in accordance with the laws of India and under the jurisdiction of court of Noida, Uttar Pradesh.”_ Therefore while the venue of arbitration is fixed at Noida, clause 28 ousts the jurisdiction of any court other than those in Noida for any disputes. 7. The office of the respondent is at Noida. Therefore there is no legal impediment in fixing the venue at Noida. Though the learned Counsel for the applicant vehemently argued that there is difference between venue and seat of arbitration and venue cannot confer jurisdiction on a court in case it is not the seat of arbitration and there cannot be any agreement with respect to the seat of arbitration, those questions do not arise in this case. 8. I will also examine whether the judgments relied on by the learned Counsel for the applicant are applicable in this case. In the judgment in _**PCP International Limited**_ ( _supra_ ), the office of the petitioner was at Chandigarh and that of respondent at Gurgoan. As per clause 55.6 and 7 in general conditions of contract, all disputes were to be under the jurisdiction of courts at New Delhi. In that case the work order was addressed to the petitioner at Chandigarh; performance of the contract was not in New Delhi; it was to be carried out in Maharashtra; they did not have any case that any payment was also liable to be made in New Delhi; therefore relying on the judgment in _**M/s.Patel Roadways Limited, Bombay v. M/s.Prasad Trading Company**_ : (1991) 4 SCC 270, the learned Judge of the High court of Delhi found that the High Court of Delhi does not have territorial jurisdiction over the matter, as the contract was not executed in Delhi; the contract was not to be A.R.No.52/2018 6 performed in Delhi; payment was not to be made in Delhi and defendant/respondent did not reside or have office in Delhi. The 4 parameters for exercising jurisdiction, as held by the Apex court in _**Patel Roadways' case**_ ( _supra_ ) are (i) where the contract is executed or (ii) where the contract is to be performed, or (iii) where the payment under the contract is to be made or (iv) where the defendant/respondent resides. Even according to the learned counsel for the applicant, the Court at Noida satisfies at least one parameter; with respect to the residence of the respondent. Therefore, that judgment will not be helpful to the applicant. 9. In _**Sravanthi Infratech Private Ltd.**_ ( _supra_ ), arbitration reference was sought relying on an arbitration clause in which the courts in Gurgaon were to have exclusive jurisdiction over the disputes. The venue of arbitration was to be at Gurgaon/Delhi as per the decision of the contractor. Following _**PCP international**_ 's judgment, the request was rejected. It was found that as the courts in Delhi did not have any jurisdiction over the matter and the venue of arbitration alone cannot attract the jurisdiction over the matter unless any of the 4 parameters laid down in _**Patel Roadways'**_ ( _supra_ ) judgment was satisfied and that venue of arbitration alone cannot give territorial jurisdiction over the matter. It was found that as per the relevant clause in the contract the courts at Gurugoan alone were to have jurisdiction over the matter and therefore the High Court of Delhi did not have jurisdiction to entertain the matter. Therefore that judgment also does not help the applicant. 10. Further contention of the petitioner is that agreement was signed as directed in Clause 18 of Annexure-A1 agreement and the petitioner did not have any A.R.No.52/2018 7 option but to put the signature. But the applicant cannot have a case that he was compelled to enter into the agreement. In the judgment of the Bombay High Court the issue considered was with respect to interpretation of bank guarantees. The learned judge applied the rule of 'contra preferentium', relying on the judgment in _**Industrial Promotion & Investment Corpn. of Orissa Ltd. v. New India Assurance Co. Ltd**_ **.** : (2016) 15 SCC 315, where the Apex Court explained the principle and held that if there is any ambiguity in the clause in an insurance policy, it should be interpreted in favour of the insured. However in the case before the Apex Court no ambiguity was found. In the present case there is no ambiguity either in Clause 27 or in Clause 28 or when both are read together. 11. As rightly pointed out by the learned Counsel for the respondent, the terms venue and seat of arbitration are explained by the Apex Court in the judgment in _**Indus Mobile's case.**_ ( _supra_ ). The question considered in that case was whether, an exclusive jurisdiction clause stating that the courts at Mumbai alone would have jurisdiction in respect of disputes arising under an agreement would oust all other courts. In that case the Datawind Co. having its registered office at Amritsar in Punjab was supplying goods to the appellant at Chennai from New Delhi. As per the agreement entered into by them all disputes are to be resolved by arbitration which shall be conducted at Mumbai and all disputes arising out of the agreement shall be subject to exclusive jurisdiction over courts at Mumbai. The orders passed by the Delhi High Court in an application filed by the respondent under Section 9 of the Act and in an application under Section 11 in Delhi High Court were under challenge. A.R.No.52/2018 8 After an elaborate discussion on Subsections 1 to 3 of Section 20 and various judgments including _**Balco v. Kaiser Aluminium Technical Services Inc.:**_ (2012) 9 SCC 552. _**Enercon (India) Ltd. v. Enercon Gmbh:**_ (2014) 5 SCC 1, etc , in paragraphs 19 and 20 it was held as follows: _“19. xxxxxxxxxxUnder the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to “seat” is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction — that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Sections 16 to 21 of CPC be attracted. In arbitration law however, as has been held above, the moment “seat” is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties._ _20. It is well settled that where more than one court has jurisdiction, it is open for the parties to exclude all other courts._ 12. In the present case the courts at Noida are having jurisdiction even under the provisions of Civil procedure Code. Apart from that clause 27 and the exclusionary clause fix the venue as well as seat at Noida. The fact that the respondent did not refer to Clause 28 in the reply notice and that they referred to only to clause 27, will not in any way alter the terms in the agreement. When the respondent reminded the condition in clause 27, the condition in clause 28 was not relevant for the purpose of a reply to Annexure-A2 notice as there is no ambiguity as far as clause 27 is concerned. In the above view of the matter, the application under Section 11 cannot be entertained by this Court. I therefore reject the Arbitration Request. The applicant would be free to approach the appropriate forum. **Sd/-** _**(P.V.ASHA, JUDGE)**_ _rtr/_ A.R.No.52/2018 9 ## **A P P E N D I X** ## APPLICANT'S EXHIBITS ANNEXURE-A1: TRUE COPY OF THE WORK ORDER FOR THE RAW WATER TREATMENT PLANT (RWTP) FOR BHARATH PETROLEUM COMPANY LIMITED (BPCL) INTEGRATED REFINERY PROJECT (IREP)AT AMBALAMUGAL, KOCHI DATED 19.10.2013. ANNEXURE-A2: TRUE COPY OF THE LAWYER NOTICE DATED 20.4.2018. ANNEXURE-A3: TRUE COPY OF THE REPLY DATED 27.4.2018. ANNEXURE-A4: TRUE COPY OF DISCHARGE SUMMARY DATED 14.11.2017. ANNEXURE-A5: TRUE COPY OF DISCHARGE SUMMARY DATED 21.2.2018.