Rajesh Dayal Khare, J.—Heard learned counsel for the petitioner and Sri Manish Goyal, learned counsel for respondent No.4 and the learned Standing Counsel for the State-respondent.
2. The present writ petition has been filed for setting aside the order dated 12.7.2016 passed by the District Judge, Gautam Budh Nagar in Arbitration Case No.19 of 2005 and the partial award dated 14.3.2015 passed by the respondent No.3 in Arbitration Case No.53 of 2014.
3. It is contended by the learned counsel for the petitioner that the matter was heard and the District Judge, Gautam Budh Nagar passed the order impugned dated 12.7.2016, whereby it has been held that the respondent No.3 did not have jurisdiction to hear the matter in as much as Section 18 of The Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as ''the Act 2006'') had conferred the jurisdiction to the Council to arbitrate the dispute which was situated beyond his jurisdiction and it was further held that all proceedings including the Venue and entire procedure of arbitration contemplated in Contract would stand obliterated by Section 18(4) of the Act 2006. It is next contended that there was a contract for supplying goods between petitioner and respondent No. 4 and copy of supply order is annexed as annexure-1 to the writ petition of which Clause 13 relates to dispute resolution, which provides that if dispute is not resolved amicably, it shall be decided by reference to arbitration by three arbitrators; each party shall appoint one arbitrator and the third arbitration shall be appointed in accordance with the provision of Indian Arbitration & Conciliation Act, 1996.
4. Learned counsel for the petitioner has drawn the attention of this Court towards paragraph No.8 of the writ petition wherein it has been stated that the supply order dated 21.6.2011 was signed and executed between the parties at NOIDA; the contract was to be performed at NOIDA; the material which was subject matter of the supply order was to be delivered at NOIDA, where the race track was situated and further petitioner is also based in NOIDA having its registered office at Gautam Budh Nagar, hence the entire subject matter of the controversy is situated at NOIDA.
5. Learned counsel for the petitioner has further drawn the attention of this Court towards paragraph Nos.21, 22 and 23 of the order impugned dated 12.7.2016, which deals with the point of jurisdiction as to whether jurisdiction which has been vested to a court as per the provisions of the Act can been cancelled. It is contended that Section 18 does not create any jurisdictional bar, which may exclude the jurisdiction of NOIDA Court. It is further contended that the jurisdiction will be at the place where the cause of action will arise and reference in this regard has been drawn to Section 20-C of CPC. It is also contended that seat of arbitration and venue of arbitration are two different things as per contract between the parties, duly signed by them and venue of arbitration was NOIDA. It is next contended that seat of arbitration can be anywhere, which cannot be too relevant for the purposes of conferment of jurisdiction. It is further contended that although Micro Small and Medium Enterprises Development Council was approached for arbitration under the Act 2006, which itself did not taken up the arbitration but referred the matter to the sole arbitrator, would also not confer the jurisdiction at Haryana Court. It is further contended that there was specific contract between the parties regarding exclusion of jurisdiction and NOIDA Court having sole jurisdiction. It is also contended that the court below has failed to examine the matter in the right perspective with regard to cause of action and dispute and not where the arbitration take place inasmuch as the court below has failed to take note of the fact that the jurisdiction of Court lies where the cause of action arose, which is not ousted by any provision contained in the Act, 2006. It is next contended that arbitration proceeding itself is without jurisdiction inasmuch as the council is not empowered to appoint sole arbitrator and has only one of the two options under Section 18(3), i.e., to either arbitrate the matter itself or to refer the parties to an Institute or Centre offering Alternative Dispute Resolution Services. It is further contended that the finding of the court below that the proceedings would have to be conducted in Haryana itself where supplier is situated, is only misreading of the provisions of the Act, therefore, the court below has failed to exercise jurisdiction vested in it. It is also contended that the provision of Section 18(4) of the Act, 2006 merely provides that the supplier may approach the council constituted under the Act, 2006 where supplier is situated, therefore, it merely gives the council the jurisdiction to act as an arbitrator but does not oust the jurisdiction of the court at NOIDA. It is further contended that as per the definition of Act, 2006 the principal court has original jurisdiction to decide the question of forum if the same is subject matter of suit. Reference has been made by the learned counsel for the petitioner to the provision contained in Section 20(6) and has stated that the entire cause of action admittedly was at Gautam Budh Nagar, therefore, District Judge, NOIDA will be principal civil court having jurisdiction. In this regard, learned counsel for the petitioner has relied upon decision of Madras High Court in the case of Norton Intee Rubbers (P) Ltd. v. Neyveli Lignite Corporation reported as in support of his contention.
6. Sri Manish Goyal, learned counsel for respondent No.4 has drawn the attention of this Court towards prayer clause at page 132 of the writ petition and has argued that prayer clause A and B as claimed by the petitioner is not maintainable. It is next contended that the Section 18 Sub Clause (3) of the Act 2006 provides that where the conciliation initiated under sub-section (2) is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer it to any institution or centre providing alternate dispute resolution services for such arbitration and the provisions the Arbitration and Conciliation Act, 1996 (26 of 1996) shall then apply to the dispute as if the arbitration was in pursuance of an arbitration and will override the provisions of Section 16 of the Act 2006. Learned counsel for the respondent has placed reliance on a decision of Punjab and Haryana High Court in the case of Welspun Corp Ltd. v. The Micro and Small, Medium Enterprises Facilitation Council, Punjab and others reported in 2012(2) PLR 195.
7. Sri Goyal, learned counsel for the respondent has argued that if there is failure of conciliation, matter can be referred for arbitration to the council and the council is empowered either to take up the arbitration itself or refer the dispute to an Institution or Centre providing alternative dispute resolution services. He has relied upon a judgment of this Court in the matter of M/s Bharat Heavy Electricals Limited v. State of U.P. and others, reported in 2014 (3) ADJ 67. It is further argued that even if there is an arbitration clause provided in the agreement for reference to arbitration under the Act, 1996 and if the matter is referred to council, same cannot be interfered with. He has relied upon a judgment of Orissa High Court in the matter of Deputy General Manager (C) H.S.M., North Eastern Electric Power Corporation Ltd. v. M/s Sigma Engineering Pvt. Ltd, reported in 2015 (119) Cut LT 412., in support of his contention. It is next contended that the proceedings initiated under Section 18(4) of the Act 2006 is perfectly just and legal, which warrants no interference by this Court in exercise of powers under Article 227 of the Constitution of India.
8. Learned counsel for the respondent has contended that even assuming that the Arbitration Act, 1996 applies in the present case, the order which has been challenged in the present petition cannot be challenged as per provision of Section 16(6) of the Act, 2006 which provides for the deposit of amount prior to challenging the award or order as stipulated in the said section, which contained the provision of pre-deposit, which is not so in the corresponding provision of Section 74 of 1996 Act. It is further contended that the civil court can only interfere at the final stage and not at interlocutory stage, therefore, the petition itself is not maintainable. It is also contended that difference between contractual arbitration and statutory arbitration is that the provisions of statutory arbitration would override the provisions of contractual arbitration. Learned counsel for the respondent has relied upon judgment of Hon''ble Apex Court reported in 1996 Vol 5 SCC 411 and 1995 Vol 6 SCC 482, in support of his contention.
9. Learned counsel for the respondent has further argued that the submissions made by the learned counsel for the petitioner with regard to the reference made by the council to the sole arbitrator was not raised at any point either before the sole arbitrator or before the council or before the court below, therefore, said question cannot be permitted to be raised for the first time in the present petition as there are no pleadings to the said effect anywhere before the authorities or before the court below. It has further been brought to the notice of the Court that the Award has already been given by the Arbitrator.
10. In reply to the contention raised by Sri Goyal, learned counsel for the respondent, learned counsel for the petitioner has contended that the conditions of pre-deposit as stipulated in Section 16 of the Act, 2006, same was fulfilled in the present case inasmuch as the petitioner had deposited the requisite amount before initiation of proceedings, therefore, it is contended that the requirement, as contemplated in Section 16(6) of the Act, 2006, has been complied with.
11. So far as the argument of the learned counsel for the respondent that argument raised on behalf on the petitioner that council could not have referred the matter to the sole arbitrator, is being raised for the first time before this Court and was not raised earlier before arbitrator or council, learned counsel for the petitioner has stated that the legal issue which goes to the root of the matter may be raised at any stage and he has relied upon a judgment of Hon''ble Apex Court in the matter of Chief Engineer, Hydel Project and others v. Ravinder Nath and others, reported in (2008) 2 SCC 350, in support of his contention. Learned counsel for the petitioner has further contended that venue of arbitration and seat of arbitration are two different things and that insofar as statutory arbitration is concerned, in which contractual arbitration was entered into between the parties, only clauses which are inconsistent as provided in law cannot be considered otherwise entire contract is to be considered which has been entered between the parties and courts at NOIDA would have exclusive jurisdiction and even if the arbitration is referred to council under the Act, 2006, which is statutory arbitration, it cannot be inferred that the court at NOIDA ceased to have jurisdiction or its jurisdiction is ousted. In the present case supplier was situated at Haryana, therefore, matter was referred to council situated at Haryana and it is argued that said reference would not in any way oust the jurisdiction of NOIDA court under any statutory provision. It is also argued that in such eventuality it can be inferred that the court at Haryana or NOIDA had concurrent jurisdiction but as cause of action arose at NOIDA, therefore, NOIDA court would have exclusive jurisdiction. Learned counsel for the petitioner has relied upon judgment of Bombay High Court in the matter of Nomula Brothers v. Ruchi Worldwide Ltd., reported in, in support of his contention.
12. After hearing the learned counsel for the parties, it is not disputed that cause of action arose at NOIDA inasmuch as the contract was signed at NOIDA, supply order was given in NOIDA, supply was made at NOIDA and petitioner was having its Head Office at Gautam Budh Nagar. However, as supplier was situated at Haryana, the matter was referred to council at Haryana. While considering the controversy, the totality of the facts are to be taken into account and in view of the fact that contract between the parties was entered into at NOIDA conferring the NOIDA court of exclusive jurisdiction in case of any dispute, it cannot be inferred that by reference to council at Haryana it would oust the jurisdiction of NOIDA court, which was mutually agreed between the parties in the arbitration clause of the agreement. Learned counsel for the respondent could not point out any statutory provision under the Act, 2006, which would oust the jurisdiction of NOIDA court in case matter is referred for conciliation/arbitration before the council at Haryana. It is not disputed that since the supplier is situated at Haryana, the matter could have referred to Haryana but only inference, which can be drawn under the present set of circumstances is that the court at Haryana would also have concurrent jurisdiction. However, taking into consideration the fact that, both the parties had entered into contract to the effect that court at NOIDA would have exclusive jurisdiction, therefore, it cannot be said that court at NOIDA ceases to have jurisdiction. Section 18 of the Act, 2006 is quoted below:
18. Reference to Micro and Small Enterprises Facilitation Council:-
(1) Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under section 17, make a reference to the Micro and Small Enterprises Facilitation Council.
(2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance of any institution or centre providing alternate dispute resolution services by making a reference to such an institution or centre, for conducting conciliation and the provisions of sections 65 to 81 of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to such a dispute as if the conciliation was initiated under Part III of that Act.
(3) Where the conciliation initiated under sub-section (2) is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer to it any institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section (1) of section 7 of that Act.
(4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India.
(5) Every reference made under this section shall be decided within a period of ninety days from the date of making such a reference.
13. In the impugned order notice has been taken with regard to Section 18 sub-section 4 of the Act, quoted above, and it has been observed that the said provision provides that conciliation and arbitration proceedings under the Micro, Small and Medium Enterprises Development Act will take place where supplier is situated notwithstanding the location of purchaser and, therefore, conclusion has been drawn that the court at NOIDA do not have jurisdiction. Undoubtedly the aforesaid provision confers specific jurisdiction for conciliation and arbitration where the supplier is situated but it does not debar the jurisdiction of the court to which the parties had mutually agreed as per contract entered into between them. Facts and circumstances of the case is to be considered in totality and then law is to be applied to the given facts of the case. The fact is that the parties had entered into contract that courts at NOIDA and High Court of Judicature at Allahabad will have jurisdiction and as entire cause of action arose at NOIDA, therefore, said contract cannot be ignored. As stated in forgoing paragraphs of the present judgment, learned counsel for the respondent could not point out any provision which creates a bar of jurisdiction if conciliation and arbitration proceedings took place at the place of supplier and if the jurisdiction, as per contract between the parties, was conferred to different court.
14. After hearing the learned counsel for the parties and after perusing the entire material on record as well as the judgments cited by the learned counsel for the parties, I am of the considered opinion that in the present set of facts and circumstances of the case, the Court at Haryana as well as Uttar Pradesh would have concurrent jurisdiction and it cannot be said that court at NOIDA do not have jurisdiction.
15. In view of the above, the aforesaid impugned orders are set aside. The petition stands allowed. No order as to cost.
