TMI Blog2004 (3) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... designing, implementing and operating Cogeneration Power Projects. Sri Hiranyakeshi Sahakari Sakkare Karkhane Niyamit, Sankeshwar Taluka, Hukkeri, Belgaum District, which is registered under the Bombay Cooperative Societies Act, 1925 and having its registered Sugar Factory at Sankeshwar, Hukkeri Taluk, Belgaum District, Karnataka, which is the respondent in this appeal, is engaged in the business of sugarcane crushing and manufacturing of sugar. ( ii )The Respondent was desirous of implementing a bagasse fired co-generation facility of about 45 MW capacity at its Sugar Mill Complex located at Sankeshwar, Distt. Belgaum, Karnataka State with the Appellant as Project Developer on an exclusive BOOT (Build Own Operate and Transfer) basis. Accordingly by a Deed of Project Development Agreement (hereinafter referred to as "PDA") executed between the Appellant and the Respondent on 18th October, 2000 the Appellant agreed and undertook to develop electric generating facility, i.e., Co-generation Power Project, to be located at the Respondent s Sugar Mill at Sankeshwar, Belgaum against which the Respondent agreed to procure power and steam for such facility for captive purposes. Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect from 14-10-2002 as per the instructions of the Respondent. ( vi )After the stoppage of the work in the Sugar Mill premises of the Respondent, the Appellant had number of meetings with the officials of the Respondent for allowing the Appellant to carry out the remaining work of Phase-I and commence the work of Phase-II of Mill Modernisation and Cogeneration project work. The Appellant also addressed number of letters to the Respondent in that regard. Instead of allowing the Appellant to perform their obligations under the PDA, the Respondent in bad faith, made false allegations of non-completion of work and further, in the meeting dated 14th February, 2003, the Respondent made an unlawful demand, outside the scope of the PDA, for an amount of Rs. 6.00 crores to be deposited by the Appellant as a security. Later on, vide their letter dated 5-5-2003 the Respondent while repeating their demand for Rs. 6 crores deposit, alleged that the PDA has already lapsed. ( vii )The Appellant has reason to believe that the Respondent is attempting to enter into agreements with 3rd parties and are likely to dispossess the Appellant from the land which is in their lawful possession. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judication of all disputes arising out of the agreement, the Court below committed an error of law in not upholding such intent of the parties. 6. Sri Srinivas Raghavan, learned counsel for the respondent, per contra , would support the impugned order of the Court below. Sri Srinivas Raghavan would contend that under section 9 of the Act, the party may apply to a Court for the interim reliefs, but that Court should be a Court as defined under section 2(1)( e ) of the Act. He would contend that the questions raised by the appellant in the petition filed under section 9 of the Act are undeniably the questions forming the subject-matter of the Project Development Agreement and, therefore, Bangalore Court does not have jurisdiction to entertain the petition and only the Court of Principal District Judge, Belgaum district which has territorial jurisdiction over the area in which the immovable property of the respondent is situate has jurisdiction to entertain the application of the appellant filed under section 9 of the Act. Sri Srinivas Raghavan would point out that the parties to the Project Development Agreement are not in Bangalore; contract was not entered into between the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was interpreted to mean that the Court could grant interim relief if the arbitration proceedings were pending before the arbitrator or before the Court. Pendency of any proceedings in the Court in relation to the arbitration was a precondition for the exercise of power by the Court to grant interim relief under section 41( b ) of the Arbitration Act, 1940. Under section 9 of the new Act, the Court may, on application by a party, grant interim relief "before or during arbitral proceedings or at any time after making of the arbitral award but before it is enforced". Thus, under section 9 of the Act, a party can make application for grant of interim reliefs of protection as provided therein not only during the arbitral proceedings but even before commencement of arbitral proceedings, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it. 10. Under section 9 of the new Act, a party has to make an application to a Court for grant of interim reliefs. The word "Court" is not defined in the Code of Civil Procedure, 1908, for short, the CPC , not even in the General Clauses Act. The word "Court" is, howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any civil suit, i.e., under sections 15 to 20 of CPC. The word "Court" within the meaning of the definition under section 2(1)( e ) means the Court which is competent under the law to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit as under sections 15 to 20 of CPC in case of law suits, but, the Court for purpose of Arbitration Act would not include a Court inferior to principal civil Court in a district. 14. The definition of the word "Court" in section 2(1)( e ) of the Arbitration Act, 1996 is narrower than the definition contained in section 2(1)( c ) of the Arbitration Act, 1940. As per the definition under the Arbitration Act, 1940, the word "Court" meant any Civil Court except the Court of Small Causes whereas as per the definition under section 2(1)( e ) of Arbitration Act, 1996, "Court" means 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 subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 9 of the Act for interim reliefs, in order to decide the question whether the petition filed by the appellant herein under section 9 of the Act before the Bangalore Court is maintainable or not and whether the Bangalore Court has jurisdiction to entertain that petition or not, it becomes necessary for the Court to first decide whether the Bangalore Court is having jurisdiction to decide the questions forming the subject-matter of the arbitration, if the same had arisen in a suit. This question need not detain the Court for long. The dispute brought before the Bangalore Court relates to and arises out of an arbitration agreement entered into between the parties. It needs to be noticed that in the present case, the parties to the agreement are not in Bangalore; contract was not made in Bangalore; lease deed was not executed in Bangalore; the property in respect of which interim relief is sought under section 9 of the Act is not situated in Bangalore and even the work under the contract is required to be performed not in Bangalore. If these are admitted facts, the simple question for the Court to decide is whether the Bangalore Court would have jurisdiction to entertain a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have to decide whether the Bangalore Court has jurisdiction to entertain the application filed by the appellant under section 9 of the Act or only the principal civil Court of original jurisdiction in Belgaum district, that is to say, principal District and Session Judge, Belgaum district, has the jurisdiction to entertain that application. 20. Sections 16 to 29 CPC deal with jurisdiction of civil Court to entertain suits envisaged under section 9 CPC. Section 16 requires that a suit has to be instituted where the subject-matter of the suit is situate. In the application filed by the appellant under section 9 of the Act, what arises for determination is right and interest of the parties in the immovable property situated in Sankeshwar in Belgaum district. Section 16, among other things, provides that subject to the pecuniary or other limitations prescribed by any law, suits for determination of any other right or interest in immovable property shall be instituted in the Court within the local limits of whose jurisdiction the property is situate. Appointment of Receiver and injunction sought in the application filed under section 9 of the Act before the Bangalore Court are w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Madras High Court and the circumstances were that but for the execution of agreement at Madras all other activities, i.e., the subject-matter in respect of which arbitration was called for were within the jurisdiction of the Calcutta High Court. The subject-matter of dispute under reference was applicant s claim for return of steel supplied to respondents at Calcutta for fabrication purposes or in the alternative for compensation thereof. The applicant s contention that execution of agreement being part of the subject-matter, the Madras High Court had jurisdiction to entertain the application, was rejected by the Madras High Court by observing that ". . . the place of execution of agreement was inconsequential and the proper test was that of the subject-matter of arbitration which did not fall within the jurisdiction of Madras High Court. . . ." (p. 261) 23. In Sushil Ansal v. Union of India AIR 1980 Delhi 43, the petitioner therein entered into contract with the Union of India at Lucknow for carrying out flooring in certain buildings at Kanpur. Certain disputes arose between the parties and a Sole Arbitrator was appointed to adjudicate upon the various disputes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property is situate, and though section 2, Arbitration Act, does not expressly refer to this provision of the law, the implication is obvious when it states where the suit could be instituted. The immovable property which was involved in the award was admittedly situated at Sialkot and any suit enforcing any encumbrance against it could only be instituted in Sialkot and not anywhere else. Consequently by section 2, Arbitration Act, the Court of the District Judge at Amritsar had no jurisdiction to make an order filing the award, inasmuch as if the subject-matter submitted to arbitration were the subject of a suit, the suit could not be instituted at Amritsar. There was thus a lack of inherent jurisdiction in the Court ordering the filing of the award as the award was incompetent under the Arbitration Act and was altogether void. . . ." (p. 227) 25. In Firm Assandas Pursumal v. Aildas Madhavdas AIR 1934 Sind 183(2) where, on 6th June, 1932, Mr. Chandiram, an Advocate of Sind High Court, filed an award made by him on a reference under the Indian Arbitration Act, 1899 executed in his favour by Respondents 1 and 2 therein. In the Award, Respondent No. 2 had to pay Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Court of Principal City Civil and Session Judge, Bangalore, has no jurisdiction to entertain the application filed by the appellant under section 9 of the Act inasmuch as the disputes raised in the said application involve the determination of rights of the parties to the agreement with regard to their right to or interest in immovable properties situated within the exclusive territorial jurisdiction of the principal District and Session Judge, Belgaum. In other words, the application filed by the appellant under section 9 of the Arbitration Act does not involve determination of any right to or interest in any immovable property situate within the territorial jurisdiction of Bangalore Court. 28. Sri D.L.N. Rao, learned counsel for the appellant, would, however, submit that having regard to the fact that the Act permits the parties to resolve the disputes between them by way of arbitration at a chosen place with minimal intervention of the Courts and since the parties in this case have agreed to settle the disputes between them in Bangalore, we should interpret the provisions of section 2(1)( e ) in such a way as to hold that the Bangalore Court has jurisdiction to ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondly, even assuming that the parties to the PDA by using the above phrase intended to confer jurisdiction on the Bangalore Court, the Bangalore Court will not acquire jurisdiction to entertain the application filed under section 9 of the Act if it does not satisfy the definition of "Court" under section 2(1)( e ) of the Act. 33. It is a well-recognized principle of interpretation of statutes that if the language used in a statute is capable of bearing more than one construction, in selecting the true meaning regard must be had to the consequences resulting from adopting the alternative construction. A construction that results in hardship, serious inconvenience, injustice, absurdity or anomaly or which leads to inconsistency or uncertainty and friction in the system which the statute purports to regulate has to be rejected and preference should be given to that construction which avoids such results. However, this rule has no application when the words are susceptible to only one meaning and no alternative construction is reasonably open. When the material words in a statute are capable of bearing two or more constructions, the rule laid down in Heyden s case (1584) 3 Co. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion filed under section 9 of the Act. The question whether a particular Court established under a statute has jurisdiction or not to entertain a dispute is of vital importance and fundamental consideration for the State as well as its citizens in the domain of administration of justice, and, therefore, where that question has been settled by the lawmaker by exercising the power invested in it by the Constitution by enacting a law, the parties who are governed by that law cannot confer jurisdiction on an incompetent Court contrary to or in breach of such enacted law to decide the disputes between them by their consent or agreement. It is well settled that the parties by consent cannot confer jurisdiction on a court to decide disputes if such court has no jurisdiction to entertain such disputes in terms of law. 36. In Vissamseth Chandra Narasimham v. Ramdayal Rameswaralal AIR 1966 AP. 134, the Andhra Prdesh High Court, while dealing with filing of an Award under the Arbitration Act, 1940, held that award can be filed only in a Court in which suit would lie with regard to the subject-matter of reference and that an agreement between the parties to file it in a different Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to submit to the exclusive or non-exclusive jurisdiction of a foreign Court; indeed in such cases the English Courts to permit invoking their jurisdiction. Thus, it is clear that the parties to a contract may agree to have their disputes resolved by a foreign Court termed as a neutral Court or Court of choice creating exclusive or non-exclusive jurisdiction in it." (p. 1183) 38. In the light of the case-law noticed above, it is quite clear that if a Court of law does not have jurisdiction to entertain a suit or an application or a petition within the framework of law prescribed under the Statute, neither such Court can assume jurisdiction nor the parties to the dispute can confer jurisdiction on such Court to entertain such suit or application or petition by agreement or consent. Therefore, the submission made by Sri D.L.N. Rao, learned counsel for the appellant does not merit our acceptance. 39. In conclusion, we hold that the Court of Principal City Civil and the Session Judge, Bangalore, has no jurisdiction to entertain the appellant s application filed under section 9 of the Act and that the impugned order made by that Court is in accordance with law. 40. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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