Case Note & Summary
The petitioner, M/s Bhandari Udyog Limited, a company based in Raichur, Karnataka, entered into a contract with the second respondent, Indira Sahakari Sut Girani Ltd., based in Latur, Maharashtra, for the supply of yarn. Disputes arose, and the matter was referred to arbitration. The arbitration was conducted in Bangalore, and the arbitral award was passed in Bangalore. The second respondent (award-holder) filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 before the District Court, Latur, seeking to set aside the award. The petitioner raised an objection regarding the territorial jurisdiction of the District Court, Latur, contending that the court lacked jurisdiction as the arbitration was conducted in Bangalore and the subject matter of the arbitration was in Karnataka. The District Court, Latur, by order dated 18th January 2013, dismissed the petitioner's objection, holding that since the award-holder (second respondent) resides and carries on business within the territorial limits of Latur, the court had jurisdiction. Aggrieved, the petitioner filed a Civil Revision Application before the High Court of Bombay at Aurangabad. The High Court examined the definition of 'Court' under Section 2(1)(e) of the Act, which provides that 'Court' means the principal civil court of original jurisdiction in a district having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit. The court noted that the subject matter of the arbitration was a contract for supply of yarn, which was performed in Karnataka, and the arbitration was conducted in Bangalore. The court held that the mere fact that the award-holder resides or carries on business in Latur does not confer jurisdiction on the District Court, Latur. The court further observed that Section 42 of the Act provides that where one application has been made in a court, that court alone shall have jurisdiction over subsequent applications, but that does not apply here as no prior application was made. The High Court allowed the revision application, set aside the order of the District Court, Latur, and held that the District Court, Latur had no territorial jurisdiction to entertain the Section 34 application. The court directed that the Section 34 application be returned to the second respondent for presentation before the proper court.
Headnote
A) Arbitration - Territorial Jurisdiction - Section 34 Application - Section 2(1)(e) and Section 42 of the Arbitration and Conciliation Act, 1996 - The court having jurisdiction to entertain an application under Section 34 is the court which would have jurisdiction over the subject matter of the arbitration if it were a suit, as defined in Section 2(1)(e). The mere fact that the award-holder resides or carries on business within the territorial limits of a court does not confer jurisdiction on that court to entertain a Section 34 application. In this case, the arbitration was conducted in Bangalore, the award was passed in Bangalore, and the subject matter of the arbitration (a contract for supply of yarn) was performed in Karnataka. Therefore, the District Court, Latur had no jurisdiction. Held that the District Court, Latur erred in assuming jurisdiction and the order dismissing the application for lack of jurisdiction was set aside. (Paras 1-10) B) Arbitration - Section 34 - Maintainability - Court of Competent Jurisdiction - The expression 'Court' in Section 34 must be interpreted in light of Section 2(1)(e) of the Act, which defines 'Court' as the principal civil court of original jurisdiction in a district having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit. The place of arbitration or the residence of the award-holder is not the sole determinant. Held that the District Court, Latur lacked territorial jurisdiction to entertain the Section 34 application. (Paras 5-9)
Issue of Consideration
Whether the District Court, Latur had territorial jurisdiction to entertain an application under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside an arbitral award, when the arbitration was conducted in Bangalore and the award was passed in Bangalore, and the respondent (award-holder) is based in Latur.
Final Decision
The High Court allowed the Civil Revision Application, set aside the order of the District Court, Latur dated 18th January 2013, and held that the District Court, Latur had no territorial jurisdiction to entertain the application under Section 34 of the Arbitration and Conciliation Act, 1996. The court directed that the Section 34 application be returned to the second respondent for presentation before the proper court.
Law Points
- Territorial jurisdiction for Section 34 application under Arbitration and Conciliation Act
- 1996 is determined by the court which would have jurisdiction over the subject matter of the arbitration
- not the place of business of the award-holder
- Section 2(1)(e) of the Act defines 'Court' as the principal civil court of original jurisdiction in a district 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 of the Act provides that where one application has been made in a court
- that court alone shall have jurisdiction over subsequent applications
