Case Note & Summary
The applicant, VHB Life Sciences Limited, filed an application under section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator for disputes arising from a supply agreement dated 26th August 2002 and a supplemental agreement dated 29th March 2005 with the respondent, Orchid Chemicals & Pharmaceuticals Limited. The agreements involved sale and delivery of pharmaceutical products. Disputes arose regarding certain consignments, including seizure by the Food and Drugs Administration in various parts of the country. The applicant alleged the respondent's fault, while the respondent denied liability. The respondent raised an invoice for about Rs.1,80,00,000/- but the applicant paid only Rs.98,49,388. The key legal issue was whether the Bombay High Court had jurisdiction to entertain the section 11 application without the applicant obtaining leave under clause 12 of the Letters Patent, given that a material part of the cause of action arose in Mumbai. The court held that a section 11 application is not a suit, and therefore clause 12 leave is not required. The court has jurisdiction if a material part of the cause of action arises within its territorial limits. The court allowed the application and appointed a sole arbitrator to adjudicate the disputes.
Headnote
A) Arbitration Law - Jurisdiction - Section 11 Arbitration and Conciliation Act, 1996 - Clause 12 Letters Patent - The court considered whether leave under clause 12 of the Letters Patent is required for a section 11 application when cause of action arises in Mumbai. Held that a section 11 application is not a suit and therefore clause 12 leave is not necessary; the court has jurisdiction if a material part of the cause of action arises within its territorial limits. (Paras 2, 6-7)
Issue of Consideration
Whether, in a case where a material part of the cause of action arises in Mumbai, this court would have jurisdiction to entertain and try an application under section 11 of the Arbitration and Conciliation Act, 1996, without the Applicant obtaining leave under clause 12 of the Letters Patent.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties.
Law Points
- Section 11 application is not a suit
- Clause 12 Letters Patent not applicable
- Cause of action in Mumbai confers jurisdiction
- Arbitration and Conciliation Act 1996
Case Details
2010 LawText (BOM) (10) 70
ARBITRATION APPLICATION NO. 227 OF 2008
Ms. Nayana Rane with Ms. Manasi Karandikar i/b Mr. Vinod Juwale for the Applicant, Mr. Amit Vyas with Ms. Nikita Ajwani i/b M/s. Rajani Associates for the Respondent, Mr. M.S. Doctor with Mr. Nimay Dave – Amicus Curiae
VHB Life Sciences Limited, formerly known as V.H. Bhagat & Co. and VHB Life Sciences Inc Through its authorised representative Mr. Devdutt Dhikle
Orchid Chemicals & Pharmaceuticals Limited
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Nature of Litigation
Application under section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator.
Remedy Sought
Appointment of an arbitrator to adjudicate disputes arising from a supply agreement.
Filing Reason
Disputes arose regarding consignments of pharmaceutical products sold and delivered under the agreement; the applicant sought arbitration.
Issues
Whether the Bombay High Court has jurisdiction to entertain a section 11 application without leave under clause 12 of the Letters Patent when a material part of the cause of action arises in Mumbai.
Submissions/Arguments
The applicant argued that a material part of the cause of action arose in Mumbai, thus the court has jurisdiction.
The respondent likely argued that leave under clause 12 of the Letters Patent was required (inferred from the issue).
Ratio Decidendi
A section 11 application under the Arbitration and Conciliation Act, 1996 is not a suit, and therefore leave under clause 12 of the Letters Patent is not required. The court has jurisdiction to entertain such an application if a material part of the cause of action arises within its territorial limits.
Judgment Excerpts
The question that arises for consideration in this application is whether, in a case where a material part of the cause of action arises in Mumbai, this court would have jurisdiction to entertain and try an application under section 11 of the said Act, without the Applicant obtaining leave under clause 12 of the Letters Patent.
Procedural History
The applicant filed an application under section 11 of the Arbitration and Conciliation Act, 1996 in the Bombay High Court. The respondent raised an objection regarding jurisdiction, contending that leave under clause 12 of the Letters Patent was required. The court heard the matter and delivered judgment on 20th October 2010.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 11
- Letters Patent (Bombay): Clause 12
