# JINDAL VIJA Y ANAGAR STEEL (JSW STEEL LTD.) v. JINDAL PRAXAIR OXYGEN COMPANY LTD

- **Citation:** [2006] Supp. 5 S.C.R. 579
- **Court:** Supreme Court of India
- **Decided:** 2006-08-29
- **Case number:** Civil Appeal No. 3773 of2006
- **Bench:** Dr. Ar. Lakshmanan, Lokeshwar Singh Pant A
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/jindal-vija-y-anagar-steel-jsw-steel-ltd-v-jindal-praxair-oxygen-company-ltd-21690
- **Pages:** 32

## Headnote

B
Arbitration and Conciliation Act, 1996, Sections 9, 2(e)-Arbitration
petition-Jurisdiction of Bombay High Court to entertain-Held: Bombay
High Court has Original Jurisdiction to entertain Arbitration petition even C
if no cause of action arose within its jurisdiction, provided the party has its
principal office at Bombay-On this question, Rules in Section 20, CPC are
not applicable-Letters Patent (Bombay)-Clause 12-Code of Civil
Procedure, 1908-Sections 16, 17, 20, 120-Arbitration Act, 1940-Section
2(c).
Letters Patent and CPC-Scope of-Distinction between.
Principle ofincurium-Judgment of Supreme Court-Held: Cannot be
referred for_ reconsideration by a subsequent coordinate Bench merely because
the subsequent Bench may have arrived at a different conclusion had there
D
not been an earlier judgment.
E
The appellant was in the process of setting up a steel plant in Bellary
Distt., Karnataka. It entered into agreements with the respondent company,
which was incorporated in Karnataka. Respondent-company was to set up an
Air Separation Plant in the same complex in Bellary, Karnataka for the
purpose of supplying the appellant with the required quantities of industrial F
gases. It entered into a Pipeline Supply Agreement with appellant for supply
of industrial gases. This agreement contained arbitration clause. The
agreement clearly stated that arbitration was to be conducted in Bombay.
Dispute arose between the parties. A meeting was held at Bombay between
the representatives of the parties. However, resp,ondent filed a petition under G
Section 9 of the Arbitration and Conciliation Act, 1996 in Bombay High Court. ·
Respondent issued notice of arbitration in Bellary, Karnataka which was served
upon appellant in Bellary and Bangalore in Karnataka. The appellant wrote a
letter to respondent resenting the action taken by respondent.
579
H
580
SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.
A
Appellant filed arbitration petition before Principal District Judge,
Bellary seeking orders to restrain the respondent from breach of Pipeline
Supply Agreement. Respondent filed an application to dismiss the arbitration
petition filed by appellant at Bcllary. Principal District Judge dismissed the
application and held that as the entire action had arisen at Bellary, the Bellary
Court had jurisdiction to decide the matter. Respondent preferred an appeal
B which was allowed and the Court directed that the issue of jurisdiction would
have to be decided by Bombay High Court in respondent's arbitration petition.
By the impugned order, Bombay High Court held that it had the jurisdiction
to entertain arbitration petition. Hence the present appeal.
C
The appellant contended that High Court erred in holding that by virtue
of clause 12 of the Letters Patent Act, Bombay High Court has jurisdiction
to entertain the petition filed by respondent in Bombay High Court; that the
High Court failed to appreciate that as per Section 2(l)(e), only a Court having
jurisdiction to decide the questions forming the subject matter of the
arbitration, if the same had been the subject matter of the suit, would have
D jurisdiction under the Act; that the High Court failed to appreciate that being
a special enactment for arbitration, the provisions of the Act would prevail
over the provisions of the Letters Patent when determining question under
the Act including questions as to jurisdiction; that the High Court erred in
ignoring the settled law that it is the situs of cause of action and not the place
E of business which is deciding factor in determining the jurisdiction. Appellant
further contended that the Division Bench decision of this Court in Food
Corporation of India* has, without reference to the binding precedent in the
Patel Roadways Limited** wrongly held that despite the disjunctive term 'or'
used in the explanation to Section 20 CPC, a Corporation would be deemed to
be carrying on business at its principal office and also at the .subordinate
F office situated at the

## Text

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JINDAL VIJA Y ANAGAR STEEL (JSW STEEL LTD.)
A
v.
JINDAL PRAXAIR OXYGEN COMPANY LTD.
AUGUST 29, 2006
[DR. AR. LAKSHMANAN AND LOKESHWAR SINGH PANT A, JJ.]
B
Arbitration and Conciliation Act, 1996, Sections 9, 2(e)-Arbitration
petition-Jurisdiction of Bombay High Court to entertain-Held: Bombay
High Court has Original Jurisdiction to entertain Arbitration petition even C
if no cause of action arose within its jurisdiction, provided the party has its
principal office at Bombay-On this question, Rules in Section 20, CPC are
not applicable-Letters Patent (Bombay)-Clause 12-Code of Civil
Procedure, 1908-Sections 16, 17, 20, 120-Arbitration Act, 1940-Section
2(c).
Letters Patent and CPC-Scope of-Distinction between.
Principle ofincurium-Judgment of Supreme Court-Held: Cannot be
referred for_ reconsideration by a subsequent coordinate Bench merely because
the subsequent Bench may have arrived at a different conclusion had there
D
not been an earlier judgment.
E
The appellant was in the process of setting up a steel plant in Bellary
Distt., Karnataka. It entered into agreements with the respondent company,
which was incorporated in Karnataka. Respondent-company was to set up an
Air Separation Plant in the same complex in Bellary, Karnataka for the
purpose of supplying the appellant with the required quantities of industrial F
gases. It entered into a Pipeline Supply Agreement with appellant for supply
of industrial gases. This agreement contained arbitration clause. The
agreement clearly stated that arbitration was to be conducted in Bombay.
Dispute arose between the parties. A meeting was held at Bombay between
the representatives of the parties. However, resp,ondent filed a petition under G
Section 9 of the Arbitration and Conciliation Act, 1996 in Bombay High Court. ·
Respondent issued notice of arbitration in Bellary, Karnataka which was served
upon appellant in Bellary and Bangalore in Karnataka. The appellant wrote a
letter to respondent resenting the action taken by respondent.
579
H
580
SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.
A
Appellant filed arbitration petition before Principal District Judge,
Bellary seeking orders to restrain the respondent from breach of Pipeline
Supply Agreement. Respondent filed an application to dismiss the arbitration
petition filed by appellant at Bcllary. Principal District Judge dismissed the
application and held that as the entire action had arisen at Bellary, the Bellary
Court had jurisdiction to decide the matter. Respondent preferred an appeal
B which was allowed and the Court directed that the issue of jurisdiction would
have to be decided by Bombay High Court in respondent's arbitration petition.
By the impugned order, Bombay High Court held that it had the jurisdiction
to entertain arbitration petition. Hence the present appeal.
C
The appellant contended that High Court erred in holding that by virtue
of clause 12 of the Letters Patent Act, Bombay High Court has jurisdiction
to entertain the petition filed by respondent in Bombay High Court; that the
High Court failed to appreciate that as per Section 2(l)(e), only a Court having
jurisdiction to decide the questions forming the subject matter of the
arbitration, if the same had been the subject matter of the suit, would have
D jurisdiction under the Act; that the High Court failed to appreciate that being
a special enactment for arbitration, the provisions of the Act would prevail
over the provisions of the Letters Patent when determining question under
the Act including questions as to jurisdiction; that the High Court erred in
ignoring the settled law that it is the situs of cause of action and not the place
E of business which is deciding factor in determining the jurisdiction. Appellant
further contended that the Division Bench decision of this Court in Food
Corporation of India* has, without reference to the binding precedent in the
Patel Roadways Limited** wrongly held that despite the disjunctive term 'or'
used in the explanation to Section 20 CPC, a Corporation would be deemed to
be carrying on business at its principal office and also at the .subordinate
F office situated at the place in which the cause of action arose. He submitted
that the said Division Bench decision is per incuriam the decision of this Court
in Patel Roadways Limited case*"' hence requires re~<msideration and should
be referred to a larger bench of this court. App~a4t further contended that
a "Uniformity Rule" on jurisdiction should be applied to all courts in the
G country since the 1996 Act is a central statute.
Dismissing the appeal, the Court
HELD: 1. The Bombay High Court has jurisdiction to entertain petition
filed under Section 9 of the Arbitration and Conciliation Act, 1996. [588-Cl
H
2.1. An arbitration petition is required to be filed in a Court having
JINDAL vlJAYANAGAR STEEL (JSW STEEL LTD.)"· JINDAL PRAXAIR OXYGEN CO LTD.
58 J
jurisdiction. On a plain reading of the definition of "Court" under section A
2(e) of the 1996 Act, it is evident that the Arbitration Petition can be filed
before (i) a principal Civil Court of original jurisdiction in district, (ii) a High
Court in exercise of its 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. 1593-H; 594-E, Fl
2.2. There are only three Chartered High Courts in India which exercise
jurisdiction under their respective Letters Patent which continue to apply in
full force and effect which Letters Patent are inter alia protected by Article
225 of the Constitution. 1594-G I
B
2.3. The Bombay High Court is a Chartered High Court under the C
Letters Patent exercising Original Civil Jurisdiction. For the purpose of
determining the Original Civil Jurisdiction of the Bombay High Court, Section
20 of the CPC 1908 has been specifically excluded and has no application.
Only the provisions of clause 12 of the Letters Patent are required to be
considered to determine the jurisdiction of the Bombay High Court. Under D
Clause 12 of the Letters Patent, the Bombay High Court would have
jurisdiction to entertain and try an Arbitration Petition even if no cause of
action has arisen within its jurisdiction, provided the Respondent has an office
at Bombay. [594-F; 596-B, Cl
3.1. It is ex facie clear from Section 20 CPC that a suit can be filed
where a part of the cause of action arises or where the principal office is E
located. The principles of Section 20 cannot be made applicable to clause 12
of the Letters Patent since the CPC itself by section 120 specifically excludes
the applicability of Section 20 of the CPC to Chartered High Courts.
[597-F; 599-CI
3.2. In Food Corporation's case, this Court pointed out that as per
Section 20, a suit can be filed where cause of action arises or where the
principal office is situate. The statement of the Food Corporation case was
purely obiter qua the issue to be decided and the reason behind it therein and
can never be the basis for a subsequent Bench to refer the same for
F
reconsideration. [597-G; 598-DI
G
4.1. The Letters Patent, is a special charter conferring jurisdiction on
Chartered High Courts. When there is a special enactment such as the
Letters Patent, which expressly lays down the criteria on the jurisdiction of
the Chartered High Court, it is totally unnecessary and in fact futile to refer
to another legislation such as the CPC (which is not applicable) to determine H
582
SUPREME COURT REPORTS [2006) SUPP. 5 S.C.R.
A the jurisdiction of the Chartered High Court. 1599-FI
Sargilja Transport Service v. State Transport Appel/a/le Tribunal, MP.
Gwalior and Ors .. (198711SCC5, held inapplicable.
4.2. Neither the CPC nor its principles can be made applicable to the
B Letters Patent qua sections 16, 17 and 20 of ere. It is therefore not only
impermissible but also unnecessary to apply the ere or import the principles
of section 20 of the CPC into the Letters Patent. (600-DI
4.3. The Letters Patent and CPC operate in separate fields i.e. the
Letters Patent specifically conferring jurisdiction on Chartered High Courts
C and the CPC conferring jurisdiction on all other courts. There is clearly a
difference between the scope of the Letters Patent and the CPC, the difference
being evident upon a plain reading of section 120 of the CPC. (600-F-G)
P.S. Sathappan (dead) by LRs. v. Andhra Bank Ltd and Ors., (2004111
D sec 672, referred to.
5. This Court in Food Corporation of India case* followed the provision
of law i.e. Clause 12 of Letters Patent and Section 120 CPC which itself made
the provisions - Sections 16, 17 and 20 CPC inapplicable. The judgment of
this Court will not be referred for reconsideration by a subsequent coordinate
E Bench merely because the subsequent Bench may have arrived at a different
conclusion had there not been an earlier judgment. That law is the principle
of stare decisis adopted and followed in the Indian Courts. None of the
conditions necessary for reconsidering an earlier direct precedent has arisen
in the instant case. 1593-C-D)
F
Food Corporation of India v. Evdomen Corporation,* [1999) 2 SCC
446 and Patel Roadways Limited, Bombay v. Prasad Trading Corporation**
11991) 4 sec 270, referred to.
6. There is no question of uniformity rules applying since section 2(e)
of the 1996 Act expressly recognizes that not only district courts but also
G High Courts exercising original civil jurisdiction would have jurisdiction
under the 1996 Act. The Act thus recognizes that Chartered High Courts
exercising Original Civil Jurisdiction would exercise jurisdiction. It is
submitted that apart from the 3 Chartered High Courts who are governed by
the Letters Patent only two other High Courts in the country (De(hi and
H Jammu & Kashmir under their respective High Courts Acts) exercise
JINDAL VIJAYANAGAR STEEL(JSW STEEL LID) .c JINDAL PRAXAIR OXYGEN CO. L m [LAKSHMANAN.l) 583
original civil jurisdiction. This issue is therefore not question of all India A
application as it does not affect jurisdiction of most High Courts. There is
therefore no question of a "uniformity rule" being required to be applied.
There cannot be a rule of uniformity applied between unlikes. The appellant
seeks to apply such uniformity rule between the subordinate Courts (governed
by the CPC) and the High Courts (governed by the Letters Patent).1601-C-EI
Globe Cogeneralion Power Ltd v. Sri. Hiranyakeshi, AIR (2005) Kar
94 and Kamal Pushp Enterprises v. Chairman Cum Managing Director, Gas
Authority of India Ltd., (Vol. 31DRJ651), held inapplicable.
B
Rameshwar and Ors. v. Jot Ram and Anr., 1197611 SCC 194 and Shri
Kishan v. Manojkumar, (199812 SCC 710, distinguished.
C
Dayanand Prasad Sinha v. Hindustan Steel Works Construction Ltd.,
AIR (2001) CAL 71; Khaleel Ahnmedv. Hatti Gold Mines Co. Ltd., 1200013
SCC 755; Mayur (H.K.) Ltd. & Ors. v. Owners & Parties, Vessel M V. Fortune
Express & Ors., 120061 3 SCC 100; Sudhir G. Angur & Orsv. M Sanjeev & D
Ors., 1200611SCC141 and Fazlehussein v. Yusufully, AIR (1955) Born 55,
referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3773 of2006.
From the Final Order dated 2.3 .2006 of the High Court of Judicature at E
Bombay in Arbitration Petition No. 459/2004.
R.F. Nariman, T.K. Cooper, Mannu Nair, Margaret D Souza and Mark D
Souza (for Mis. Suresh A. Shroff & Co.) for the Appellant.
C.A. Sundaram, R.K. Krishnamurthi, Rahul Narichania, C. Muralidhara, F
Syed Naqvi, Smieetaa Inna, Asha Gopalan Nair and Rohini Musa for the
Respondent.
The Judgment of the Court was delivered by
DR. AR. LAKSHMANAN, J. Leave granted.
G
The above appeal was filed by the appellant seeking special leave to
appeal against the final order dated 02.03 .2006 passed by the High Court of
Bombay in Arbitration Petition No. 459 of 2004. By the said order, the High
Court, according to the appellant, has wrongly assumed jurisdiction to entertain
petitions under Section 9 of the Arbitration and Conciliation Act, 1996 H
584
SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.
A (hereinafter referred to as 'the Act') despite holding that the entire cause of
action has arisen outside its territorial jurisdiction.
In other words, the appellant seek to impugn the judgment dated
02.03.2006 whereby the High Court has held that jurisdiction of the Court
under the provisions of the Arbitration Act may be assumed by a Court
B exercising jurisdiction in a place where no part of the cause of action has
arisen, if the respondent being a Company has a Corporate Office at the place
where the Court is moved.
The facts leading to the filing of the above appeal are as follows:
C
The appellant was in the process of setting up an integrated steel plant
having the capacity of 1.25 million tonnes of the manufacture of iron and steel
in Bellary District, Karnataka. For its manufacturing operations, the appellant
required large quantities of industrial gases, namely, oxygen, nitrogen and
argon for such production. To this end, the appellant, in conjunction with
D M/s Praxair Pacific Limited decided to enter into agreements to incorporate the
respondent-Company in Karnataka. The respondent-Company was to set up
an Air Separation Plant (ASP) in the same complex in Bellary, Karnataka for
the purpose of supplying the appellant with the required quantities of industrial
gases.
E
The respondent-Company was incorporated in Bangalore with a 50:50%
share holding between the appellant and the Praxair Pacific Limited, which
was subsequently changed to 26:74%. On 19.02.1996, Pipeline Supply
Agreement (PSA) was entered into between the appellant and the respondent
at Bangalore wherein the respondent would supply to the appellant its
requirement of industrial gases, namely, gaseous oxygen, gaseous nitrogen
F and the gaseous argon. Product Supply Agreement was entered into between
the respondent and Praxair India Private Limited (PIPL), a wholly-owned
subsidiary of Praxair Pacific Limited at Bangalore for supply ofliquid oxygen,
nitrogen and argon to PIPL. This agreement was entered into on 01.06.1996.
As several disputes/issues of technical and commercial nature in relation to
G the implementation of the PSA and the performance of the ASPs had arisen
between the parties, the representatives of the appellant, respondent, Praxair
Pacific Limited, Praxair Inc. and PIPL made in Singapore to resolve the issues.
On 23 .06.2002, an agreement was arrived at between the parties
(Settlement Agreement). The Settlement Agreement was approved by the
H Board of Directors of both the parties in Bangalore. The interpretation of the
I
JINDAL \lJA Y ANAGAR STEEL (JSW STEEL LTD.)''· JINDAL PRAXAIR OXYGEN CO. LTD. [LAKSHMANAN. J] 585
obligations of parties under various provisions of the Settlement Agreement A
including the above provisions and the PSA is presently in dispute in
arbitration invoked by the respondent against the appellant.
Accordingly, the respondent implemented those provisions of the
Settlement Agreement which were favourable to it, whilst delaying the
implementation of terms favourable to the appellant. As a result thereof in B
various issues/disputes including all power nonns, reimbursement of excise
duty and income-tax claims, maintenance of adequate quantities of suppliable
liquids in the storage tanks of the respondent etc. arose between the parties.
To settle the disputes, the respondent invoked dispute resolution
process pursuant to Article 17 of the PSA by issuing a notice from Bellary, C
Karnataka to the appellant in Bellary Karnataka.
Article 17 of the Dispute Resolution reads as follows:
"17.1. In the event that a party to this Agreement has reasonable
grounds to believe that the other party hereto has failed to fulfill any D
obligations hereunder or, that its expectation of receiving due
performance under this Agreement may be impaired, such party will
promptly notify the other party in writing of the substance of its
belief. The party receiving such notice must respond in writing within
thirty (30) days of receipt of such notice and either provide evidence E
of cure of the condition specified, or provide an explanation of why
is that its performance is in accordance with the terms and conditions
of this Agreement, and also specify three (3) dates, all of which must
be within thirty (30) days from the date of its response, for a meeting
to resolve the dispute. The claiming party will then select one (I) of
the three (3) dates, and a dispute resolution meeting will be held at F
the place specified by the responding party. Each party shall have the
right to require that individuals representing Buyer and Seller who
have the authority to execute this Agreement or amendments thereto,
be in attendance at the dispute resolution meeting. If the parties
cannot, in good faith discussions, resolve their dispute, they shall G
submit the dispute to arbitration in the manner set forth below in
Article 17 .2
17.2. Any dispute, controversy, or claim arising out of or relating to
this Agreement, or the breach, termination, non-performance,
interpretation of the respective rights and liabilities of the parties H
A
B
c
D
E
F
G
H
586
SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.
under the Agreement; or invalidity thereof which cannot be fully and
satisfactorily resolved or settled by the parties hereto pursuant to
Section 17.1 shall, at the request of either party, be submitted to, and
be settled by arbitration, which shall, except to the extent provided
herein, be held in accordance with the Rules of the U.N. Commission
of International Trade Law (UNCITRAL) ("Rules") in effect on the
date of this Agreement except as modified by this Article 17.2. This
Article 17.2 shall supercede any Conflicting provision of the Rules.
(i) The number of arbitrators shall be two (2), one (I) each appointed
by the respective parties. The two arbitrators shall within 30 days of
the appointment of the second arbitrator appoint an Umpire. If the two
arbitrators are unable to agree upon the appointment of the Umpire
within the aforesaid period, then either party may ask the Secretary
General of the Permanent Court of Arbitration at the Hague to appoint
the Umpire. The arbitrators and the Umpire shall have expertise in the
area of corporate law and shall be disinterested persons of either
Indian, English or United States nationality except that the Umpire
shall be of British or Swiss nationality and shall have had no previous
dealing or relationship, direct or indirect, with either of the parties.
The arbitration shall be conducted in Bombay, India. Any decision or
resolution of the dispute shall be based on Indian law (except that
British law shall apply to procedural matters such as appeals), shall
be a unanimous decision of the arbitrators or the Umpire if the
arbitrators cannot agree, and shall be set forth in a reasoned written
opinion, based on applicable law, stating the reasons with legal basis
for the decision. The proceedings shall be conducted in English in
facilities, arranged for by the arbitrators and Umpire held at such time,
as the arbitrators and Umpire shall direct.
(ii) The arbitration proceeding shall be initiated by a Party lending an
arbitration demand to the other party. The demand shall be sent in
accordance with Article 17 .2 of this Agreement. The demand shall be
sent to the Party at the address and to the individual specified in
Article 17.2.
(iii) ·······
(iv) ..... .
(v) ....... "
-
-..
JINDAL l'UAY ANAGAR STEEL (JSW STEEL LTD.)" JINDAL PRAXAIR O:\"iGEN CO.LTD. (LAKSHMANAN,l] 587
A meeting was held at Mumbai between the representatives of the A
parties on 04. I 0.2004. However, the respondent filed a petition under Section
9 of the Act in the Bombay High Court being Arbitration Petition No. 459 of
2004. The respondent, on 14.10.2004, issued notice of arbitration pursuant to
Article 17 .2 of the PSA. The notice of arbitration was issued by the respondent
in Bellary, Karnataka and served upon the appellant in Bellary and Bangalore, B
Karnataka. The appellant wrote a letter pointing out that unilateral action
threatened by the respondent was contrary to the letter and spirit of the PSA
read with the Settlement Agreement, as the respondent was under the obligation
to first meet the product requirements of the appellant. The appellant, in view
of the urgent need to protect its i11terests, filed Arbitration Petition No. 9 of
2005 before the Principal District Judge, Bellary on 06.02.2005 seeking C
appropriate orders to restrain the respondent from breaching the PSA read
with the Settlement Agreement. On 07.02.2005, an interim order was passed
by the Principal District Judge, Bellary restraining the respondent from insisting
upon an artificial ceiling of 40 TPD of LAR. The respondent filed an I.A. No.4
in the said arbitration petition under Section 151 of the CPC read with Section D
42 of the Arbitration Act to dismiss the arbitration petition filed by the
appellant at Bellary. On 05.03.2005, the Principal District Judge, Bellary dismissed
I.A. No. 4 in arbitration petition and held that as the entire cause of action
had arisen in Bellary, the Bellary Court had jurisdiction to decide the matter.
An appeal was preferred by the respondent against the order passed by the
Principal District Judge, High Court of Karnataka which allowed the appeal E
filed by the respondent and directed that the issue of jurisdiction would have
to be decided by the Bombay High Court in respondent's Arbitration Petition
No. 459 of2004. By the impugned order dated 02.03.2006, the Bombay High
Court held that it had the jurisdiction to entertain Arbitration Petition No. 459
of 2004. Hence the present appeal.
F
The High Court, in para I 6 of its order, has held as under:-
"16. Under the circumstances, by virtue of clause 12 of the Letters
· Patent, this Court has jurisdiction to entertain this Petition as the
respondent is having corporate office in Mumbai from where it was G
carrying on its business. Moreover, since during the pendency of this
petition the registered office of the respondent has also been shifted
to Mumbai, it is needless to say that the respondent is carrying on
business in Mumbai. Therefore, this Court has jurisdiction to entertain
the petition. I, therefore, reject the contention raised on behaif of the H
588
SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.
A
respondent that this Court has no jurisdiction to entertain the petition
filed under Section 9 of the Arbitration & Conciliation Act, I 996."
We heard Mr. R.F. Nariman, learned senior counsel for the appellant and
Mr. C.A. Sundaram, learned senior counsel for the respondent. Mr. R.F. Nariman
subrn itted that:
B
(a)
the High Court erred in rejecting the contention of the appellant
that the Bombay High Court had no jurisdiction to entertain the
petition filed by the respondent in the Bombay High Court under
Section 9 of the Act;
-
c
(b) the High Court erred in holding that by virtue of Clause 12 of the
Letters Patent Act, the Bombay High Court has jurisdiction to
entertain the petition filed by the respondent in the Bombay High
Court;
(c)
the High Court failed to appreciate that as per Section 2(1 )( e) of
D
the Act, only a court having jurisdiction to decide the questions
forming the subject-matter of the arbitration ifthe same had been
the subject-matter of a suit, would have jurisdiction under the
Act;
(d) the High Court failed to appreciate that being a special enactment
E
for arbitration, the provisions of the Act would prevail over the
provisions of the Letters Patent when determining questions
under the Act, including questions as to jurisdiction;
(e)
the High Court ought to have appreciated that for a court to
exercise jurisdiction under section 9 of the Act, the court must
F
be a "Court" as defined under S.:ction 2(1 )( e) of the Act and
where the cause of action has arisen;
(f)
the High Court, after observing in paragraph 7 of the Impugned
Order that no part of the cause of action had arisen at Mumbai
G
failed to appreciate that it was only the Bellary Courts, which had
the jurisdiction to entertain disputes arising from the PSA and
the Settlement Agreement since the entire cause of action had
arisen in Mumbai;
-.:-
(g) the High Court erred in ignoring the settled law that it is the situs
H
of cause of action and not the place of business, which is the
~
JINDAL VUAYANAGARSTEEL(JSWSTEEL LID.)". JINDAL PRAXAIR OXYGEN CO. LTD. [LAKSHMANAN,J.] 589
deciding factor in determining jurisdiction under Section 2(1)(e) A
of the Act;
(h) the High Court failed to appreciate that the mere venue of
arbitration, and situs of the corporate office of the respondent
does not vest jurisdiction in a court under Section 2(l)(e) of the
Act.·
B
It is also contended that the judgment of this Court in Food Corporation
of India v. Evdomen Corporation, [1999] 2 SCC 446 is per incuriam.
It is the contention of Mr. Nariman that the High Court has failed to
notice and appreciate that the cause of action as set out hereunder arose in C
Bellary:
(a)
the disputes raised by both ·the parties emanate from the
maintenance of product levels stored/supplied from the plants of
both the parties, which are situated in Bellary, Karnataka;
(b)
at the relevant time, the registered office of the appellant was D
situated in Bellary, Karnataka;
(c)
the registered office of the respondent is situated in Bellary,
Kamataka;
(d) the action threatened by the respondent to limit the supply of E
Liquid Argon ("LAR") up to 40 Tonnes per day ("TPD") was
proposed to be made in Bellary, Karnataka;
(e)
the consequences of such actions would also have an effect on
the plant of the appellant and the ancillary units in the same
situated in Bellary;
(t)
the entire chain of events leading to the unilateral threat issued
by the respondent to restrict the supply of Liquid Argon occurred
in Bellary.
F
The High Court also is not correct in holding that since during the
pendency of the petition filed by the respondent before it, the Registered G
Office of the appellant had shifted to Mumbai, the appellant was carrying on
business in Mumbai, and that this would vest jurisdiction in the Bombay High
Court under Section 9 of the Act, in relation to disputes which had arisen prior
to the shifting of the Registered Office.
H
590
SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.
A
According to learned senior counsel, the subsequent events do not
retrospectively confer jurisdiction upon Courts to entertain pending cases,
where there was no jurisdiction to entertain them at inception and that the
sole intention of the respondent in filing a petition under Section 9 of the Act
before the Bombay High Court was to oust the jurisdiction of the competent
Court under Section 2(I)(e) of the Act and that the High Court by claiming
B jurisdiction rendered the petition filed in the Bellary Court by the appellant
nugatory and ineffective.
Mr. Nariman also submitted that the test under Section 2(e) of the Act
applies uniformly across India and that the principle in the explanation to
C Section 20 CPC should be applied to Clause 20 of the Bombay Letters Patent.
Concluding his argument, Mr. Nariman submitted that the High Court in
passing the impugned order has mis-int~rpreted the provisions of the Act and
Clause 12 of the Letters Patent and the net effect of the impugned order is
that it renders nugatory the competency of the Courts having jurisdiction
where admittedly the entire cause of action has arisen. Further it affords
D jurisdiction to courts on the basis of an enactment, namely, the Letters Patent
which would not apply since in arbitration matters, jurisdiction must be solely
determined by Section 2(1 )( e) of the Act.
Mr. C.A. Sundaram, learned senior counsel appearing for the respondent
submitted that an order holding that the Court has no jurisdiction to entertain,
E try and dispose off an arbitration petition under Section 9 of the Act would
necessarily imply or entail a refusal to grant relief under Section 9 of the Act
and that such an order would, therefore, be an order under Section 9 of the
Act and would, therefore, be appealable. In other words, where a Court holds
that it has jurisdiction to entertain, try and dispose off a petition under
p
Section 9 of the Act, such determination of an issue would be one in aid of
determination of an issue under Section 9 and would, therefore, also be a
decision under Section 9 of the Act. It is, therefore, submitted that an order
on the issue of jurisdiction to entertain, try and dispose off an arbitration
petition under Section 9 of the Act is clearly an appealable order under
Section 37(l)(a) of the Act.
G
H
Since the matter was argued on merits, we do not propose to consider
the submission on the maintainability of the appeal in this Court and we
proceed to consider the rival claims on merits as advanced by the respective
senior counsel appearing on either side.
HNDAL VIJAYAN AGAR STEEL (JSW STEEL LTD.)'•. nNDAL PRAXAIR OXYGEN CO. LTD (LAKSHMANAN. J.] 591
According to Mr. Sundaram, the Bombay High Court has jurisdiction to A
entertain, try and dispose off the said arbitration petition for the following
reasons:
(a)
The High Court of Bombay is a Chartered Court under the Letters
Patent;
(b) Clause XII of Letters Patent prescribes the jurisdiction of a B
Chartered Court;
Clause XII of the Letters Patent reads as under:-
"Original jurisdictions as to suits.- And We .do further ordain that the
said High Court of Judicature at Bombay, in the exercise of its ordinary C
original civil jurisdiction, shall be empowered to receive, try, and
determine suits of every description, if, in the case of suits for land
or other immovable property such land or property shall be situated,
or in all other cases if the cause of action shall have arisen, either
wholly, or, in case the leave of the Court shall have been first obtained, D
in part, within the local limits of the ordinary original jurisdiction of
the said High CoYrt, or if the defendant at the time of the commencement
of the suit shall dwell or carry on business, or personally work for
gain, within such limits; except that the said High Court shall not have
such original jurisdiction in cases falling within the jurisdiction of the
Small Cause Court at Bombay, or the Bombay City Civil Court."
E
According to learned senior counsel, the Bombay High Court would
have jurisdiction under Clause XII of the Letters Patent; if a defendant dwells
or carries on business or works for gain within the limits of Mumbai. Where
the cause of action has accrued wholly or in part within or without the limits
of the said jurisdiction is wholly irrelevant in the circumstances. Explaining F
further, Mr. Sundaram submitted that, in the present case, at the time of filing
of Section 9 petition, the appellant had its Corporate Office at Mumbai and
was, therefore, carrying on business within the local limits of the Oridinary
Original Jurisdiction of the Bombay High Court. During the pendency of the
said Section 9 petition, the Registered Office of the appellant was transferred G
to Mumbai. At the time when the issue of jurisdiction was argued before the
learned Single Judge, the Registered Office of the appellant had already been
transferred to and was situated in Mumbai within the local limits of the
Ordinary Original Jurisdiction of the Bombay High Court.
It is submitted that by Section 120 of the CPC, various sections of the H
592
SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.
A Code including Section 20 thereof, are made inapplicable to Chartered High
Courts like the Bombay High Court. Therefore, it is submitted that for
determining the question of jurisdiction of the Bombay High Court as a
Chartered Court, the provisions of Section 20 of the CPC are inapplicable and
that only the provisions of Clause XII of the Letters Patent are applicable. Mr.
B Sundaram submitted further that the jurisdiction of a Court under Section
2(l)(e) of the 1996 Act is not in any manner restricted to the situs of the cause
of action and that it is inconceivable that the legislature could have intended
to restrict or circumscribe the scope and ambit of the jurisdiction of the Court
under Section 2 (i) (e) of the 1996 Act and make it inferior to the jurisdiction
of the Court prescribed under the Code of CPC or Letters Patent.
c
We have given our careful consideration to the rival submissions made
by the learned senior counsel appearing for the parties. We shall now consider
the arguments advanced by both the learned senior counsel.
This case deals with the original civil jurisdiction of the Bombay High
D Court which is governed by its Letters Patent Clause XII whereof founds its
jurisdiction. By virtue of Section 120 CPC Sections 16, 17 and 20 CPC are
expressly made inapplicable to the Bombay High Court. Mr. Nariman submitted
that the Division Bench decision of this Court in Food Corporation of India
v. Evdomen Corporation (supra) has, without reference to the squarely
E applicable and binding precedent in the Patel Roadways Limited, Bombay v.
Prasad Trading Company, [1991] 4 SCC 270, wrongly held that despite the
disjunctive term 'or' used in the explanation to Section 20 CPC, a Corporation
would be deemed to be carrying on business at its principal office and also
at the subordinate office situated at the place in which the cause of action
arose. He submitted that the said Division Bench decision is per incuriam the
F decision of this Court in Patel Roadways Limited case (supra) and, therefore,
cannot be said to have laid down the correct law in this regard. He would
further submit that the Division Bench of this Court in Food Corporation of
India case (supra) also erred in failing to consider the crucial question of
whether the provisions of Letters Patent should be interpreted in the light of
the principles enshrined in the pari materia provisions of the CPC. He would
G further submit that a three-Judge Ben\:h of this Court in the case of Patel
Roadways Limited (supra) held that the explanation to Section 20 is purely
clarificatory and does not extend the principle enunciated in Section 20.
Further, it has held that in view of the term 'or' used in the explanation to
Section 20 CPC a Corporation would be deemed to be carrying on business
H only at the place at which the cause of action arose, provided that it had a
..
TINDAL VUAY ANAGAR STEEL(JSW STEEL LID.)>·. JINDAL PRAXAIR OXYGEN CO.LTD. [LAKSHMANAN,l] 593
subordinate office at that place, failing which, it would be deemed to be A
carrying on business only at the place at which it maintained its principal
office. It is; therefore, submitted that the same principle in Section 20 including
the clarification made by the explanation, should be read in Clause 12 of the
Letters Patent. In our opinion, no good reason has been made out in
reconsideration of the judgment in Food Corporation of India case (supra).
The reasons are as under:
In our view, a judgment of this Court will not be reconsidered unless
B
a subsequent Bench believes it has laid down wrong principles of law by
ignoring a provision of law or otherwise not following a direct binding
precedent. Jn the instant case, this Court in Food Corporation of India case C
(supra) followed the provision of law i.e. Clause 12 of Letters Patent and
Section 120 CPC which itself made the provisions Section 16, 17 and 20 CPC
inapplicable. The judgment of this Court will not be referred for reconsideration
by a subsequent coordinate Bench merely because the subsequent Bench
may have arrived at a different conclusion had there not been an earlier
judgment. That law is the principle of stare decisis adopted and followed in D
the Indian Courts. None of the conditions necessary for reconsidering an
earlier direct precedent has arisen in the instant case. Hence, the submission
made by Mr. Nariman in this context has no force.
JURISDICTION OF THE COURT:
Mr. Nariman submitted that the test under Section 2( e) of the Act
applies uniformly across India. The Arbitration and Conciliation Act, 1996 is
the Central Act and lays down a single, uniform law in respect of arbitration
and conciliation for the whole of India and, therefore, submitted that it must
E
be read to lay down principles that apply uniformly across the country.
F
It is submitted that Section 2(e) of the 1996 Act defines the term 'court'
and in doing so, it lays down the test to determine which the court has the
jurisdiction to supplement and complement arbitration proceedings. It is
submitted that Section 2( e) must be read to lay down one uniform test to
determine the 'court' of competent jurisdiction for application across the G
country, regardless of whether the principal Civil Court of ordinary jurisdiction
referred to in the said test is a High Court or a District Court.
In our view, an ~rbitration petition is required to be filed in a Court
having jurisdiction. The definition of the "Court" under the 1996 Act is as
follows:-
H
594
A
B
SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.
"Sec.2(e): "Court" means the principal Civil Court of original jurisdiction
in a district, and includes the High Court in exercise of its original
civil jurisdiction, having jurisdiction to decide the questions forming
the subject-matter of the arbitration if the same had been the subjectmatter of a suit, but does not include any Civil Court of a grade
inferior to such principal Civil Court, or any Court of Small Causes;"
(emphasis supplied)
"Court" has been defined in the Arbitration Act, 1940 as follows:-
"Sec. 2(c): "Court" means a Civil Court having jurisdiction to decide
C
the questions forming the subject-matter of the reference if the same
had been the subject-matter of a suit, but does not except for the
purpose of arbitration proceedings under section 21 include a Small
Cause Court;"
The definition of "Court" in the two sections is, therefore, pari materia
D except that under the 1996 Act, the definition restricts Subordinate Courts
competent to hear such matters to the Principal Civil Court and expressly
includes High Courts in exercise of their original civil jurisdiction.
E
F
On a plain reading of the definition of"Court" under section 2(e) of the
1996 Act, it is evident that the Arbitration Petition can be filed before:-
(i)
a principal Civil Court of original jurisdiction in district.
(ii)
a High Court in exercise of its original civil jurisdictionhaving
jurisdiction to decide the questions forming the subject matter of
the arbitration if the same had been the subject matter of a suit.
For the purpose of the present Petition under Section 9 of the 1996 Act,
we are concerned with the jurisdiction of the Bombay High Court which is
a Chartered High Court under the Letters Patent exercising Original Civil
Jurisdiction. It is relevant that there are only three Chartered High Courts in
India which exercise jurisdiction under their respectiv~ Letters Patent which
G continue to apply in full force and effect which Letters Patent are inter alia
protected by Article 225 of the Constitution.
Mr. Nariman submitted that the principle in the explanation to Section
20 CPC should be applied to Clause 12 of the Bombay Letters Patent. It is
submitted that although admittedly, Section 20 of the CPC does not, in terms,
H apply to the High Court in exercise of its original civil jurisdiction, it is settled
' #.
nNDAL l'IJAYANAGAR STEEL(JSW STEEL LTD.)"· JINDAL PRAXAIR OXYGEN CO. LTD [LAKSHMANAN. J.) 595
law that the principles of the CPC should nevertheless be applied, as far as. A
possible, to proceedings of a civil nature, even where the application of the
CPC has been barred. This Court has, in the case of Sarguja Transport
Service v. State Transport Appellate Tribunal, MP.