Case Note & Summary
The appellants, M/s. Nivaran Solutions and its partners, filed an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, against an order dated 29.10.2014 passed by the Principal District Judge, Panaji, Goa, refusing to entertain their application under Section 9 of the Act on the ground of lack of territorial jurisdiction. The appellants had entered into two franchise agreements dated 31.10.2012 with the respondents, M/s. Aura Thia Spa Services Pvt. Ltd. and its director, whereby the respondents were appointed as Master Franchisee for the State of Goa. The agreements were executed in Mumbai and provided for arbitration in Mumbai. Disputes arose, and the appellants filed a Section 9 application in Goa seeking interim relief. The District Judge held that since the arbitration agreement was executed in Mumbai and the arbitration was to be conducted there, only courts in Mumbai had jurisdiction. The High Court reversed this decision, holding that part of the cause of action arose in Goa because the franchise was to be performed in Goa, and therefore the Goa court had jurisdiction under Section 9 read with Section 20 CPC. The court also clarified that Section 42 of the Act does not oust jurisdiction where part cause of action arises. The appeal was allowed, the impugned order was set aside, and the matter was remanded to the District Judge for hearing on merits.
Headnote
A) Arbitration - Territorial Jurisdiction - Section 9, Arbitration and Conciliation Act, 1996 - Part of Cause of Action - The court held that for an application under Section 9, the court having jurisdiction is the court which would have jurisdiction over the subject matter of the arbitration if the same had been the subject matter of a suit. Since part of the cause of action (performance of franchise agreement in Goa) arose within the territorial limits of the Goa court, the court had jurisdiction to entertain the Section 9 application. (Paras 1-10)
B) Arbitration - Section 42, Arbitration and Conciliation Act, 1996 - Exclusive Jurisdiction - Section 42 does not oust the jurisdiction of a court where part of the cause of action arises, merely because the arbitration agreement designates a different seat. The section applies only when a court has already exercised jurisdiction in a matter; it does not confer exclusive jurisdiction on a court that has no connection with the cause of action. (Paras 11-15)
C) Civil Procedure Code - Section 20 CPC - Cause of Action - The principles of Section 20 CPC apply to determine jurisdiction under Section 9 of the Arbitration Act. A court within whose jurisdiction a part of the cause of action arises has jurisdiction, even if the arbitration agreement specifies a different seat. (Paras 16-20)
Issue of Consideration
Whether the Principal District Judge, Panaji, Goa had territorial jurisdiction to entertain an application under Section 9 of the Arbitration and Conciliation Act, 1996, when the arbitration agreement was executed in Mumbai and the arbitration is to be conducted in Mumbai, but part of the cause of action arose in Goa.
Final Decision
The appeal is allowed. The impugned order dated 29.10.2014 passed by the Principal District Judge, Panaji, Goa is set aside. The matter is remanded to the Principal District Judge, Panaji, Goa for hearing the Section 9 application on merits in accordance with law. No order as to costs.
Law Points
- Territorial jurisdiction under Section 9 of Arbitration and Conciliation Act
- 1996
- Cause of action for interim measures
- Part of cause of action arising within court's jurisdiction
- Section 20 CPC analogy
- Section 42 of Arbitration Act not ousting jurisdiction if part cause of action arises
Case Details
2016 LawText (BOM) (05) 45
Appeal Under Arbitration Act No.2 of 2015
Shri Rohit Bras De SA for Appellants, Shri P.A. Kholkar for Respondents
M/s. Nivaran Solutions, Mr. Roonie Fernandez, Mrs. Hema Sheela Antoneta Cruz Fernandez
M/s. Aura Thia Spa Services Pvt. Ltd., Mr. Malik Kashiff Khan
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Nature of Litigation
Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against an order refusing to entertain a Section 9 application on ground of lack of territorial jurisdiction.
Remedy Sought
The appellants sought setting aside of the impugned order and direction to the District Judge to hear the Section 9 application on merits.
Filing Reason
The Principal District Judge, Panaji, Goa refused to entertain the appellants' Section 9 application for interim relief on the ground that the court had no territorial jurisdiction as the arbitration agreement was executed in Mumbai and arbitration was to be conducted in Mumbai.
Previous Decisions
The Principal District Judge, Panaji, Goa passed order dated 29.10.2014 refusing to exercise jurisdiction under Section 9 of the Arbitration Act.
Issues
Whether the Principal District Judge, Panaji, Goa had territorial jurisdiction to entertain an application under Section 9 of the Arbitration and Conciliation Act, 1996, when the arbitration agreement was executed in Mumbai and the arbitration is to be conducted in Mumbai, but part of the cause of action arose in Goa.
Submissions/Arguments
Appellants argued that part of the cause of action arose in Goa as the franchise was to be performed in Goa, and therefore the Goa court had jurisdiction under Section 9 read with Section 20 CPC.
Respondents argued that since the arbitration agreement was executed in Mumbai and the arbitration was to be conducted in Mumbai, only courts in Mumbai had jurisdiction, and Section 42 of the Act ousted the jurisdiction of other courts.
Ratio Decidendi
For the purpose of Section 9 of the Arbitration and Conciliation Act, 1996, the court having jurisdiction is the court which would have jurisdiction over the subject matter of the arbitration if the same had been the subject matter of a suit. Since part of the cause of action (performance of the franchise agreement in Goa) arose within the territorial limits of the Goa court, the Goa court had jurisdiction to entertain the Section 9 application. Section 42 of the Act does not oust the jurisdiction of a court where part of the cause of action arises merely because the arbitration agreement designates a different seat.
Judgment Excerpts
This appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 arises from an order dated 29.10.2014 passed on Section 9 Arbitration Act application by the Principal District Judge, Panji, Goa refusing to exercise his authority under Section 9 on the ground that the Court has no territorial jurisdiction in the matter.
The appellant No.1 being interested in marketing Spa and Saloon services in the State of Goa, executed two agreements with the respondent No.1, both dated 31st October, 2012.
For the purpose of Section 9 of the Arbitration and Conciliation Act, 1996, the court having jurisdiction is the court which would have jurisdiction over the subject matter of the arbitration if the same had been the subject matter of a suit.
Procedural History
The appellants filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the Principal District Judge, Panaji, Goa seeking interim relief. The District Judge by order dated 29.10.2014 refused to entertain the application on the ground of lack of territorial jurisdiction. The appellants then filed the present appeal under Section 37 of the Act before the High Court of Bombay at Goa.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 9, Section 37, Section 42
- Code of Civil Procedure, 1908: Section 20
