In C.R.P. (PD) No.1641 of 2022-MAD HC- As per Sec.14(2) of Arbitration and Conciliation Act, controversy with regard to termination of mandate of arbitrator has to be settled by way of filing application before Court having jurisdiction and not by way of filing appeal: Madras HC
Justice R.N. Manjula [02-09-2022]

Read Order: Andal Dorairaj And Ors v. M/s. Rithwik Infor Park Pvt. Ltd And Ors 

Mansimran Kaur

Chennai, September 6, 2022:  It  is settled, under Section 42 of the Arbitration and Conciliation Act, that if parties have chosen to file an application before a particular Court then they cannot go on to file other proceedings in other Courts and cause confusion in jurisdiction, irrespective of the fact that they had reserved a particular jurisdiction by contract, the Madras High Court has held.

A Single-Judge Bench of Justice R.N. Manjula allowed the instant Civil Revision Petitions in the present case which were preferred to strike off certain petitions pertaining to the the file of the Principal District Court.  The Bench was of the view that the parties who have subjected themselves to a new jurisdiction by waiving the earlier agreement about jurisdiction can have no more diversions, in view of Section 42 of the Arbitration and Conciliation Act. 

The revision petitioners were the respondents first, second and third in the impugned Original Petitions filed by the first respondent  challenging the arbitration award passed in the Arbitration case of 2020. 

The factual matrix of the case was such that the petitioners were the owners of properties in Coimbatore Taluk.The first respondent approached the petitioners with a proposal of constructing an IT Park over the said property. The petitioners entered into a Joint Development Agreements with the second respondent. Based on the agreement, the second respondent assured to give 80,175 sq.ft of built up area in the proposed I.T. Park to the petitioners as consideration for transferring 80% of the undivided share of land in the property. In view of the Joint development agreements, the second respondent agreed to pay an advance of Rs 50, 00,000 and Rs 25, 00,000 was paid as an advance on the date of agreement. 

The first respondent agreed to complete the project within a period of twenty four months from the commencement of construction. The venue of arbitration was agreed to be Coimbatore District. So the parties, in case of dispute, shall be entitled to seek reference jointly and not individually. As per Clause 18 of the Joint Development Agreement, it was  agreed that the Courts at Coimbatore will have the jurisdiction in matters relating to the agreement.

Since misunderstanding was developed between the parties, the first petitioner filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator before this Court. The Chief Justice of Madras High Court appointed an Arbitrator to adjudicate the disputes and ordered that the arbitration proceedings shall be conducted under the aegis of the Madras High Court Arbitration Centre and the parties will be governed by the Rules of the Centre.Since the Sole Arbitrator failed to complete the proceedings within the stipulated time, his mandate got terminated. 

Hence, the respondents filed an Original Petition under Section 11 of the Act, before this Court for appointment of a new Arbitrator. A Civil Miscellaneous Appeal was filed by the respondents herein under Section 37 of the Act  and the same was dismissed by this Court. Thereafter, an award was passed by the sole Arbitrator but the said award was silent about the place of Arbitration. Challenging the same, the second respondent filed an appeal under Section 34 before the Principal District Court, Coimbatore. 

After hearing the submissions of the parties, the Court noted that if   the parties to the agreement agreed to certain terms, they have to abide by the agreement. If the parties have chosen to deviate from the terms by not making much fuss about the terms, it would only mean that the parties have waived the same. Admittedly, the parties who have not chosen to object during the earlier instances when the jurisdiction clause is waived cannot turn around and take a different route, the Court noted. 

In furtherance of the same, the Court also noted that the revision petitioners and the respondents did not comply with the requirement of Clause 18 of the Joint Development Agreement, so far it related to both place and jurisdiction and they continued to file applications and appeal before the High Court of Madras. Thus they substituted an implied new term on jurisdiction between themselves by their own conduct. The parties who have subjected themselves to a new jurisdiction by waiving the earlier agreement about jurisdiction can have no more diversions, in view of Section 42 of the Act, the Court observed. 

"As stated already, as per Section 14(2) of the Act, the controversy with regard to the termination of the mandate of the arbitrator has to be settled by way of filing an application before the Court having jurisdiction and not by way of filing any appeal. However, the respondents have filed applications twice and also an appeal one under Section 37 of the Act before the High Court of Madras and hence by their conduct they had chosen to waive the reservation made with regard to the jurisdiction of Coimbatore", the Bench said. 

It  is settled under Section 42 of the Act that if parties have chosen to file an application before a particular Court then they cannot go on to file other proceedings in other Courts and cause confusion in jurisdiction, irrespective of the fact that they had reserved a particular jurisdiction by contract. As the parties have got the liberty to deviate from the terms of jurisdiction, the number of such deviations is limited to only one. Hence, it was right for the revision petitioners to claim that the respondents who had subjected themselves to the jurisdiction of the Courts in Chennai by their own conduct, ought to have filed the present application under Section 34 of the Act only before the Court at Chennai and not at Coimbatore, the Court observed. 

The Principal District Judge, Coimbatore ought to have passed an order in the memo filed by the counsel for the revision petitioners. Since the Court at Coimbatore had entertained the applications filed under Section 34 of the Act, unmindful of the earlier proceedings initiated before the high Court of Chennai, the Original Petitions filed in O.P. Nos.28, 29 and 30 of 2022 under sec.34 of the Act were liable to be returned to the respondents to be presented before the appropriate court.

In light of the observations stated above, the revision petitions were allowed.