Case Note & Summary
The petitioner, Candid Drug Distributors, filed a suit in the competent court in Guwahati against the respondent, Wanbury Limited. The respondent challenged the territorial jurisdiction of that court under Section 21 of the Code of Civil Procedure, 1908, and also applied for reference of the dispute to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996. The Guwahati court held that it lacked territorial jurisdiction and returned the plaint to the proper court for filing. However, the suit was not refiled in any other court and remained unadjudicated. The petitioner then filed an arbitration petition under Section 11(6) of the Act before the Bombay High Court seeking appointment of an arbitrator. The respondent opposed the petition, arguing that by filing the suit, the petitioner had waived its right to arbitration. The court rejected this argument, noting that the suit was not adjudicated on merits; the plaint was merely returned for lack of jurisdiction. The court observed that the respondent itself had sought reference to arbitration under Section 8 in the Guwahati court, and the petitioner had conceded that arbitration was the appropriate forum. The court held that the filing of a suit in a court without jurisdiction does not bar a subsequent application under Section 11(6). Accordingly, the court allowed the petition and appointed an arbitrator to adjudicate the dispute between the parties.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - Effect of Prior Suit - The petitioner filed a suit in a court lacking territorial jurisdiction, which returned the plaint for lack of jurisdiction without adjudicating the dispute. The respondent opposed the appointment of an arbitrator, arguing that the petitioner had waived the right to arbitration by filing the suit. The court held that the suit was not adjudicated or decided, and the plaint was merely returned for lack of jurisdiction. Therefore, the petitioner's right to seek arbitration under Section 11(6) was not extinguished. The court allowed the petition and appointed an arbitrator. (Paras 1-4)
Issue of Consideration
Whether the petitioner, having initially filed a suit in a court without territorial jurisdiction, is entitled to seek appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, after the plaint was returned for lack of jurisdiction.
Final Decision
The court allowed the petition and appointed an arbitrator to adjudicate the dispute between the parties.
Law Points
- Filing of a suit in a court lacking territorial jurisdiction does not constitute a waiver of the right to arbitration
- Return of plaint for lack of jurisdiction does not amount to adjudication or disposal of the suit
- The right to seek arbitration under Section 11(6) of the Arbitration and Conciliation Act
- 1996 is not lost merely because the petitioner initially filed a suit in a wrong court
Case Details
2013 LawText (BOM) (10) 82
Arbitration Petition No.46 of 2012
Dushyant Purekar for the Petitioner; Venkatesh Dhond, Sr. Counsel, a/w. Visha Talsania, Sanjay Udeshi, Darshan Ashar i/b. Sanjay Udeshi & Co. for the Respondent
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Nature of Litigation
Petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator.
Remedy Sought
The petitioner sought appointment of an arbitrator to adjudicate the dispute between the parties.
Filing Reason
The petitioner initially filed a suit in the competent court in Guwahati, which was returned for lack of territorial jurisdiction. The petitioner then sought arbitration as per the arbitration agreement between the parties.
Previous Decisions
The Guwahati court held that it lacked territorial jurisdiction and returned the plaint to the proper court for filing. The suit was not refiled or adjudicated.
Issues
Whether the petitioner's filing of a suit in a court without territorial jurisdiction bars the petitioner from seeking appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.
Submissions/Arguments
The respondent argued that once the petitioner filed a suit, it was not entitled to refer the dispute to arbitration. The respondent contended that if the petitioner sued and the respondent did not challenge the judicial forum, the court would not refer the suit to arbitration under Section 8 of the Act.
The petitioner conceded that the arbitral forum is the appropriate forum and sought appointment of an arbitrator.
Ratio Decidendi
The filing of a suit in a court lacking territorial jurisdiction, which results in the return of the plaint without adjudication, does not constitute a waiver of the right to seek arbitration under Section 11(6) of the Arbitration and Conciliation Act, 1996. The right to arbitration is not lost merely because the petitioner initially approached a wrong forum.
Judgment Excerpts
The Petitioner has applied for appointment of arbitrator U/s.11(6) of the Arbitration and Conciliation Act, 1996 (the Act.).
The Respondent claims that once the Petitioner files a suit it would not be entitled to then refer the dispute to arbitration by itself.
In fact the dispute raised by the Respondent is wholly unnecessary. Arbitration would be the most appropriate and desirable forum since the parties have agreed to refer the dispute to arbitration.
Procedural History
The petitioner initially filed a suit in the competent court in Guwahati. The respondent challenged the territorial jurisdiction under Section 21 CPC and applied for reference to arbitration under Section 8 of the Act. The Guwahati court returned the plaint for lack of jurisdiction without referring the dispute to arbitration. The suit was not refiled. The petitioner then filed the present arbitration petition under Section 11(6) before the Bombay High Court.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 11(6), Section 8
- Code of Civil Procedure, 1908: Section 21
