Citifinancial Consumer Finance India Ltd v. Kannegoni Anand S/O K. Narasimha

ORDER (oral) %

01.05.2009 o. Petitioner Respondent This application has been made by the petitioner under Section of the Arbitration and Conciliation Act seeking an Injunctionagainstthe respondentthat the respondentbe restrained from selling, disposing of, alienating, transferring or creating any encumbrance on the property bearing House No.16-11-578 Old 10-35/A Plot No.28, S.No-274/1Patel Nagar, Gaddlanaram,Hyderabad. The prayer is also made that this Court should appointa receiverin respect of the property mentioned above and should grant necessary police aid to the petitionerto take possession of this property. The petitionerhas relied upon an ArbitrationClause in the Home Loan Agreement, entered Into between the parties, which providesthat the dispute shall be resolvedthrough arbitrationand the place ofthe arbitrationshall be Delhi. Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. The petitioner also relied upon Paramita Constructions Private Ltd. vs. UE Development India (P) Ltd. 2008(3) ALT 440 wlnerein Andlira Pradesh High Court observed as under:- "11. Definition of "the Court" as contained in Section 2(e) of the act can be split into three parts: main part, inclusionarypart and exclusionarypart. Main part defines"the Court" as PrincipalCourt of original jurisdiction in a District, which has jurisdiction to ^ decide subject matter of arbitration. Inclusionary part specificallyincludes High Court having original jurisdictionover subject matter. Exclusionary part excludes any Civil Court of a grade inferior to Principal Civil Court or any Court of Small Causes. Understanding Section 2(e) is very important for two reason. Any award can be set aside, on an application, only by a Principal Civil Court, i.e.. Principal District Court, and against such award appeal would lie to High Court is situated. Therefore, Principal District Court having jurisdiction over subjectmatter of a suit is alone "the Court" fort the purpose of the Act.

¶12There is no dispute or denial that parties are at liberty to agree on the place of arbitration in the V absence of which it is for arbitral tribunal to determine the place of arbitration. It is always necessaryfor the parties to agree on the place of arbitration by indicating in the agreement or can it be derived from other clauses or agreement? The place of arbitrationand subjectmatter of arbitration are not one and same. The parties to the agreement may accept arbitrationto be held at a place or at a country other than place where subject matter is situated. In such an event, it is only the Court where subjectmatter is situate,which has jurisdiction,and it is only that "the court" which exercises control over such Principal Civil Court. Visualizing such situations,Legislaturehas drafted Section 11 of the Act comprehensively. Under Section 11(2) of the Act, freedom of partiesto agree on a procedurefor appointing arbitrators and also choose place of arbitration. In case parties fail to agree to arbitrator/arbitrators, either of them can move CJ of High Courtfor appointmentof arbitrator.

¶13A reading of Section 11(11) and ll(12)(b) of the act would lead to following. If more than one application for appointment of arbitrator to CJs of different High courts or persons designated, CJ or any person designated, to who the request is made first, shall alone be competent to decide request. In its own, Section 11(11) of the Act is not conclusive regarding territorial supremacy. Reading of Section 11(11) with Section ll(12)(b) of the Act shows that 'CJ' in subsections (4), (5), (6), (7), (8) and (10) of section 11 of the Act, means CJ of High Court within whose local limits Principal Civil Court is situated. Therefore if place of arbitration is indicated in agreement. Principal Civil Court situated at agreed place of arbitrationshall be Court for the purpose of filing ofset aside or non-setaside application. If this is not adopted, in a given situation, parties would be without any remedy under Section 34 of the Act to seek setting aside award. Thus, the place of arbitration assumes significance. xxxxxxxxxxxxxx

¶15The law, therefore, is that when parties choose a particularState/City,as place of arbitration,it is an important factor in deciding "the Court" for the purpose of Section 9 and Section 34 of the Act. A reading of Section 31(4) of the Act would show that arbitrator shall state the date and place of arbitration in the award and it shall be deemed to be made at that place. Therefore, place of award is crucial in determining jurisdictionof the Curt and High Court at the pre and post arbitrationproceedings. When once the parties chose the place of arbitration, Section 11(11) ofthe Act has no applicationand only Section ll(12)(b) of the Act applies because an Award passed by an arbitratorat one place is only subject to territorialjurisdictionof PrincipalCivil Courtofthat place and not a differentCourtwhere in a given case either party to proceedings, may have place of business." With due regard to the opinion of Andhra High Court, I considerthat while entertainingan applicationunder Section 9 of the Arbitration and Conciliation Act, the Court has to go by the definitionas given underthe Act in Section2(l)(e)of Arbitrationand ConciliationAct. The law gives liberty to the parties to have an ) Arbitrator of tlieir choice and to have a place of arbitration of their choice. There is no restriction on the parties in choosing either the Arbitratoror the place of arbitration. The parties may be living in Mumbai and may like to have arbitrationin Srinagar (J &K). Nobody can stop the parties from going to Srinagarfor holding arbitration proceedings,even, if the subject matter of the arbitration lies in Bombay, Delhi, Calcutta or anywhere else. However, by consent, the partiescannotthrustjurisdictionon a Courtwhich does not have jurisdiction under CPC or under Section 2(l)(e) of the Act. I therefore consider that only that Court will have jurisdiction to entertain an applicationunder Section9 which is the principalCourt of original jurisdictionin a Districtwhich would have jurisdictionto decide the subject matter of the applicationif the applicationhad been a suit. The presentapplicationinvolvesseekinginjunctionand other directionsfrom the Court in respect of immovableproperties situated in Hyderabad. I consider only the Court at Hyderabad is the appropriateCourt to entertainthe application. This Court has therefore no territorialjurisdictionto entertain the application. The application be returned to the petitioner for filing before the appropriateCourt. / may 01, 2009 ak SHIV NARAY

i.23 * IN THE HIGH COURT OF DELHI AT NEW DELHI + O.M.P. 239/2009 CITIFINANCIAL CONSUMER FINANCE INDIA LTD Through; versus KANNEGONI ANAND S/0 K. NARASIMHA Through: CORAM: JUSTICE SHIV NARAYAN DHINGRA