M/S Tata Power Trading Company Limited, v. M/S Jal Power Corporation Ltd.,

THE HON'BLE SRI JUSTICE SANJAY KUMAR AND THE HON'BLE SRI JUSTICE M.S.K.JAISWAL CIVIL MISCELLANEOUS APPEAL NO.934 OF 2016

J U D G M E N T

(Per Hon'ble Sri Justice Sanjay Kumar) This Civil Miscellaneous Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (for brevity, 'the Act of 1996'), arises out of the order dated 29.09.2016 passed by the learned XI Additional Chief Judge, City Civil Court, Hyderabad, in Arb.O.P.No.2211 of 2016, granting an ex parte ad interim injunction under Section 9 of the Act of 1996 restraining the 1st respondent Company therein from invoking or encashing the bank guarantees furnished by the petitioner Company. Aggrieved thereby, the 1st respondent Company preferred this appeal. Heard Sri S.Ravi, learned senior counsel representing Sri Chetluru Sreenivas, learned counsel for the appellant/1st respondent Company, and Sri T.Bala Mohan Reddy, learned counsel for the respondent/petitioner Company. Sri S.

Ravi, learned senior counsel, would assert that the Court below had no jurisdiction to entertain Arb.O.P.No.2211 of 2016 under Section 9 of the Act of 1996 as per the terms of the arbitration agreement. Reference in this regard is made by the learned senior counsel to the Power Purchase Agreement dated 03.01.2011 executed by and between the parties at New Okhla Industrial Development Authority (NOIDA), Utter Pradesh, and at Mumbai, Maharashtra, for supply of power by the respondent Company herein from its power project in Sikkim to the appellant Company for its business of power trading.

would point out that the dispute resolution mechanism contemplated under this agreement vide Article No.13.3 provided for arbitration proceedings being held at Kolkata or such other place as may be mutually agreed upon by the parties and it was clarified that for the purpose of getting relief under the Act of 1996, the 'Court' shall mean the City Civil Court, Kolkata or the High Court of Kolkata. He would assert that the Court below at Hyderabad had no jurisdiction to entertain the petition filed by the respondent Company under Section 9 of the Act of 1996. Sri T.Bala Mohan Reddy, learned counsel for the respondent Company, would contend that the only reason why the petition under Section 9 of the Act of 1996 was presented before the Court below was because the bank guarantees were furnished by a local bank at Hyderabad and as the injunction sought was in relation thereto.

The issue is whether the Court below had the jurisdiction to entertain Arb.O.P.No.2211 of 2016.

This issue is no longer res integra. In BHARAT ALUMINIUM COMPANY V/s. KAISER ALUMINIUM TECHNICAL SERVICES INC.1, the Supreme Court held that two Courts may possibly have jurisdiction in relation to proceedings under the Act of 1996 - the Court having jurisdiction over the place/seat of the arbitration proceedings and if the arbitration proceedings are held at a different location, the Court having jurisdiction over the cause of action, viz., the subject matter of the dispute falling for consideration in the arbitration. In such an event, per the Supreme 1 (2012) 9 SCC 552

Court, it is for the parties to the arbitration proceedings to choose one of the jurisdictional Courts.

Applying the aforestated edict, it is clear that the Court below had no semblance of jurisdiction to entertain Arb.O.P.No.2211 of 2016, as Hyderabad was neither the place/seat of the arbitration nor did any cause of action in relation to the Power Purchase Agreement arise within the jurisdiction of the Court below. Mere furnishing of bank guarantees by the respondent Company from a bank at Hyderabad is not sufficient to infer that part of the cause of action arose within the jurisdiction of the Court below. The Court below therefore erred in entertaining Arb.O.P.No.2211 of 2016 filed under Section 9 of the Act of 1996. The order dated 29.09.2016 passed therein is therefore equally without jurisdiction and is accordingly set aside. The Court below shall take steps in the light of the above finding. The Civil Miscellaneous Appeal is allowed.

Pending miscellaneous petitions, if any, shall stand closed in the light of this final order. No order as to costs.

____________________ SANJAY KUMAR, J.

___________________ M.S.K.JAISWAL, J 23rd DECEMBER, 2016.

PGS