Case Note & Summary
The dispute arose out of a partnership firm, M/s Kasliwal Empire, formed by the appellant and respondent on 7.3.2007 for developing housing projects. The appellant alleged that in August 2010 the respondent misappropriated Rs. Eight crores from a joint loan account and transferred it to his company, Tapadia Constructions Limited, which then purchased property at Hingoli. On 24.3.2014, the appellant filed MARJI No. 103 of 2014 under Section 9 of the Arbitration and Conciliation Act, 1996 before the District Judge, Aurangabad, seeking interim measures to restrain alienation of the Hingoli property. The respondent objected on the ground of territorial jurisdiction, contending that the property was in Hingoli and that the court at Hingoli alone could grant relief under Section 9 read with Section 2(1)(e). The District Judge upheld the objection and dismissed the application by order dated 17.4.2014. The appellant preferred Arbitration Appeal No. 3 of 2014 before the High Court of Judicature of Bombay, Aurangabad Bench, arguing that the Aurangabad court had jurisdiction because the partnership’s business and registered office were in Aurangabad, and the dispute touched the firm’s business. The respondent, besides maintaining the jurisdictional plea, also raised a preliminary objection that the order was not appealable under Section 37(1) of the Act. Both sides relied on reported and unreported precedents. The High Court heard the matter on the limited issue of territorial jurisdiction and reserved judgment on 6.5.2014. The text of the judgment provided does not include the operative part or the final decision of the High Court.
Headnote
A) Arbitration - Territorial Jurisdiction for Interim Measures - Section 9 read with Section 2(1)(e) of the Arbitration and Conciliation Act, 1996 - The principal civil court of original jurisdiction in a district, where the subject-matter of arbitration is situated, has jurisdiction to grant interim measures. The appellant argued that the Aurangabad court had jurisdiction because the partnership firm’s registered office and business were there, but the trial court held that because the property sought to be preserved was in Hingoli, the Aurangabad court lacked territorial jurisdiction. (Paras 1-9)
B) Arbitration - Appealability - Section 37(1) of the Arbitration and Conciliation Act, 1996 - The respondent raised a preliminary objection that an order of the District Court rejecting a Section 9 petition on the ground of territorial jurisdiction is not appealable under Section 37(1). This issue was argued but the High Court’s ruling on maintainability is not included in the excerpted judgment. (Paras 5(A)-(B))
Issue of Consideration
Whether the District Court, Aurangabad had territorial jurisdiction to entertain the Section 9 application when the disputed property was situated in Hingoli and owned by a non-party company
Law Points
- Section 9 read with Section 2(1)(e) of Arbitration and Conciliation Act
- 1996 defines court as principal civil court of original jurisdiction where the subject-matter of arbitration is situated
- territorial jurisdiction is determined by location of property or subject-matter
- not just registered office or business place
Case Details
2014 LawText (BOM) (05) 21
ARBITRATION APPEAL NO.3 OF 2014
Shri P.M.Shah, Sr. Advocate i/b Shri S.V.Adwant for appellant; Shri R.F.Totala for respondent
Sanjay Suganchand Kasliwal
Jugalkishor Chhaganlal Tapadia
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Nature of Litigation
Arbitration appeal against order dismissing application for interim measures due to territorial jurisdiction
Remedy Sought
Appellant sought to set aside the trial court’s order and allow the Section 9 application to restrain alienation of property
Filing Reason
Respondent allegedly misappropriated partnership funds and purchased property in Hingoli; appellant sought to preserve the property pending arbitration
Previous Decisions
District Judge, Aurangabad, in MARJI No. 103 of 2014 held that the court lacked territorial jurisdiction because the property was in Hingoli, dismissing the application
Issues
Whether the District Court, Aurangabad had territorial jurisdiction to entertain the Section 9 application when the disputed property was situated in Hingoli and owned by a non-party company
Submissions/Arguments
Appellant argued that the partnership firm’s registered office and business were in Aurangabad, the partnership deed was signed there, and the dispute touched the firm’s business; therefore, the Aurangabad court had jurisdiction despite the property being in Hingoli.
Respondent contended that under Section 2(1)(e) of the Act, the court having jurisdiction is where the subject-matter property is situated, i.e., Hingoli; the property was owned by Tapadia Constructions Limited which was not a party; the Aurangabad court consequently lacked jurisdiction.
Respondent also raised a preliminary objection that the appeal itself was not maintainable under Section 37(1) of the Arbitration and Conciliation Act, 1996.
Judgment Excerpts
The trial court has committed a grave error in delivering the impugned order and concluding that the proceedings 103/2014 are not maintainable at Aurangabad court. (Para 4(AC))
The Court has concluded that it has no jurisdiction to entertain the proceedings under Section 9 of the Act of 1996. (Para 5(B))
'Court' means the 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 the subject matter of the arbitration if the same had been the subject matter of a suit... (Para 4(Y))
Procedural History
The appellant and respondent formed a partnership firm on 7.3.2007. A dispute arose regarding alleged misappropriation of partnership funds. The appellant filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the District Judge, Aurangabad (MARJI No. 103 of 2014) seeking interim measures to restrain alienation of property purchased at Hingoli. The respondent objected that the Aurangabad court lacked territorial jurisdiction. By order dated 17.4.2014, the District Judge held that the court had no jurisdiction because the property was in Hingoli and dismissed the application. The appellant preferred Arbitration Appeal No. 3 of 2014 before the High Court of Judicature of Bombay, Aurangabad Bench.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 2(e), 9, 37(1)
- Partnership Act, 1936:
