Case Note & Summary
The appellants, M/s. Nivaran Solutions (a partnership firm) 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 agreements dated 31.10.2012 with the respondents, M/s. Aura Thia Spa Services Pvt. Ltd. and its director, whereby the respondents appointed the appellants as Master Franchisee for the entire State of Goa to market spa and salon services. The agreements were executed in Mumbai, but the franchisee was to perform its obligations in Goa. Disputes arose, and the appellants filed a Section 9 application before the Goa court seeking interim relief. The Principal District Judge held that since the agreements were executed in Mumbai and the arbitration clause provided for arbitration in Mumbai, the Goa court had no jurisdiction. The High Court examined the issue of territorial jurisdiction under Section 9 read with Section 20 of the Code of Civil Procedure, 1908. It held that for the purpose of Section 9, the court having jurisdiction is the court which would have jurisdiction over the subject matter of the arbitration if it were a suit. Applying Section 20 CPC, the court within whose jurisdiction the cause of action arises has jurisdiction. Since the agreements were to be performed in Goa (the franchisee was to market services in Goa), part of the cause of action arose in Goa. The fact that the agreements were executed in Mumbai or that the arbitration was to be held in Mumbai did not oust the jurisdiction of the Goa court. The Court allowed the appeal, set aside the impugned order, and directed the Principal District Judge to hear the Section 9 application on merits.
Headnote
A) Arbitration Law - Territorial Jurisdiction - Section 9, Section 37, Arbitration and Conciliation Act, 1996 - Section 20 Code of Civil Procedure, 1908 - The issue was whether the District Court at Goa had jurisdiction to entertain a Section 9 application when the agreements were executed in Mumbai but the franchisee was to perform services in Goa. The Court held that since the agreements were to be performed in Goa, part of the cause of action arose in Goa, and therefore the Goa court had jurisdiction. The order of the Principal District Judge refusing jurisdiction was set aside. (Paras 1-27) B) Arbitration Law - Cause of Action - Section 9, Arbitration and Conciliation Act, 1996 - The Court held that for the purpose of 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. Applying Section 20 CPC, the court within whose jurisdiction the cause of action arises has jurisdiction. Since the franchisee was to operate in Goa, part of the cause of action arose in Goa. (Paras 10-20) C) Arbitration Law - Agreement Performance - Section 9, Arbitration and Conciliation Act, 1996 - The Court noted that the agreements appointed the appellant as Master Franchisee for the entire State of Goa, and the franchisee was to market products and services in Goa. Therefore, the obligation to perform the agreements was in Goa, giving rise to jurisdiction in Goa. (Paras 5-9)
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 agreements were executed in Mumbai but were to be performed 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 Principal District Judge is directed to hear the Section 9 application on merits and dispose it of in accordance with law.
Law Points
- Territorial jurisdiction under Section 9 of Arbitration and Conciliation Act
- 1996
- Cause of action partly arises where agreement is to be performed
- Section 20 CPC applies to arbitration proceedings
- Agreement executed in Mumbai but performance in Goa confers jurisdiction on Goa courts
