Full Judgment Text
2009:BHC-OS:20320
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.191 OF 2009
Kotak Mahindra Bank Ltd.,
a banking Company incorporated within
the meaning of the Banking Regulation
Act, 1949 having its registered office
at 3638A, Nariman Bhavan, 227, Nariman
Point, Mumbai400 021 and branch offices
nd
at 2 Floor, Dani Corporate Park,
158, CST Road, Kalina, SantacruzEast,
Mumbai400 098 and Vinay Bhavya Complex,
th
5 Floor, 159A, C.S.T. Road,
Kalina, SantacruzEast,
Mumbai. ...Petitioner.
Vs.
1 Sharma Crane Service,
Proprietor Mr. R.K. Sharma
Co. Haryan Road,
Carriers Sharma Complex,
Bhanpuri, Billaspur Road,
Raipur492 028.
2 Shree Transport Service,
Proprietor Sarita Sharma,
Bhanpuri,
Raipur 493 222. ...Respondents.
AND
ARBITRATION PETITION NO.193 OF 2009
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Kotak Mahindra Bank Ltd.,
a banking Company incorporated within
the meaning of the Banking Regulation
Act, 1949 having its registered office
at 3638A, Nariman Bhavan, 227, Nariman
Point, Mumbai400 021 and branch offices
nd
at 2 Floor, Dani Corporate Park,
158, CST Road, Kalina, SantacruzEast,
Mumbai400 098 and Vinay Bhavya Complex,
th
5 Floor, 159A, C.S.T. Road,
Kalina, SantacruzEast,
Mumbai. ...Petitioner.
Vs.
1 Sharma Crane Service,
Proprietor Mr. R.K. Sharma
Co. Haryan Road,
Carriers Sharma Complex,
Bhanpuri, Billaspur Road,
Raipur492 028.
2 Shree Transport Service,
Proprietor Sarita Sharma,
Bhanpuri,
Raipur 493 221. ...Respondents.
AND
ARBITRATION PETITION (LODGING) NO.393 OF 2009
Kotak Mahindra Bank Ltd.,
a banking Company incorporated within
the meaning of the Banking Regulation
Act, 1949 having its registered office
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at 3638A, Nariman Bhavan, 227, Nariman
Point, Mumbai400 021 ...Petitioner.
Vs.
1 Sarita Sharma,
Proprietor of M/s. Shree Transport Services
Dhanlaxmi Nagar,
Bhanpuri,
Raipur493 221. ...Respondent.
AND
ARBITRATION PETITION (LODGING) NO.394 OF 2009
Kotak Mahindra Bank Ltd.,
a banking Company incorporated within
the meaning of the Banking Regulation
Act, 1949 having its registered office
at 3638A, Nariman Bhavan, 227, Nariman
Point, Mumbai400 021 and branch offices
nd
at 2 Floor, Dani Corporate Park,
158, CST Road, Kalina, SantacruzEast,
Mumbai400 098 and Vinay Bhavya Complex,
th
5 Floor, 159A, C.S.T. Road,
Kalina, SantacruzEast,
Mumbai. ...Petitioner.
Vs.
1 Rajkumar Sharma,
Proprietor of M/s. Haryana Road Carriers,
Dhanlaxmi Nagar,
Bhanpuri,
Raipur493 221. ...Respondent.
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Mr.Rahul Mehta with Mr. Nikhil Mehta i/by Ms. Disha Karmbar for the
Petitioner.
Ms. Kashmira Bharucha i/by M/s. Arpan M. Rajput & Co. for the
Respondents.
DATE OF RESERVING THE JUDGMENT : 21ST OCTOBER, 2009.
DATE OF PRONOUNCING THE JUDGMENT: 26TH NOVEMBER,2009
JUDGMENT
1 Heard finally, by consent of the parties.
2 The Petitioner has invoked Section 9 of the Arbitration and
Conciliation Act, 1996 (for short, the Arbitration Act) as Respondents
defaulted in making timely installments though agreed and that events of
defaults are the basic cause of action for these Petitions.
3 The Petitioner is common party to all these petitions and as
Respondents are also common and interlinked, though they entered into
four separate agreements. RespondentRajkumar Sharma, is the sole
proprietor of Haryan Road Carriers and Mrs. Sarita Sharma is a proprietor
of Shree Transport Service for whom Rajkumar Sharma holds the power of
attorney. Therefore, this common judgment/order.
4 The Petitioner is in the business of providing financial facilities such
as Personal Loan, Home loan, Commercial Vehicle Loan etc.. Some time in
the year 2005 and 2006, the Respondents approached the Petitioner for
loan to purchase the vehicles. The Petitioner agreed to lend loan and
accordingly Respondents submitted separate application for the same. The
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relevant documents have been signed accordingly at Nagpur.
5 The Respondents resisted the Petition, basically on the ground of
jurisdiction.
6 The relevant clause of jurisdiction as relied by the parties are as
under.
“10.16 Unless the same falls within the jurisdiction of the
Debts Recovery Tribunal established under the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993, any and all
claims and disputes arising out of or in connection with this
Agreement or its performanc e shall be settled by arbitration by
a single Arbitrator to be appointed by the Bank. The
arbitration shall be held, either in Mumbai or New Delhi or
Chennai or Kolkata or in the place of execution of this
Agreement, sole discretion to be exercised by the Bank at the
time such arbitration is to commence, in accordance with the
provisions of the Arbitration and Conciliation Act, 1996.
10.17. In the event that the claim or dispute does not fall
within the jurisdiction of the Debts Recovery Tribunal
established under the Recovery of Debts Due To Banks and
Financial Institutions Act, 1993, for the purposes of arbitration
mentioned in clause (10.16), the Courts aforesaid shall, subject
to the provisions of law, have exclusive jurisdiction, if any law
does not permit the same, the Courts of the city in which the
concerned branch is situated, shall subject to the provisions of
law have exclusive jurisdiction in relation to this Agreement, the
arbitration and all matters arising in connection herewith and
therewith.”
7 In Arbitration Petition No. 193 of 2009, the principal outstanding
loan/claim amount is Rs.2,05,608/.
8 In Arbitration Petition No. 191 of 2009, the principal outstanding
loan/claim amount is Rs.2,38,263/.
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9 In Arbitration Petition (L) No. 393 of 2009, the principal outstanding
loan/claim amount is Rs.4,34,362.47/.
10 In Arbitration Petition (L) No. 394 of 2009, the principal outstanding
loan/claim amount is Rs.13,07,196.67/.
11 The basic preliminary submission in view of Section 1(4) read with
Section 34 of the Recovery of Debts Due to Banks and Financial Institutions
Act 1993, (for short, the Act) provides that the peculiar jurisdiction of the
Debts Recovery Tribunal (for short, the DRT) is more than 10 lacks.
12 The Petitioner is admittedly a financial institution/bank. Therefore,
any claim and/or debt recovery for the amount more than Rs.10 lacs, the
DRT has exclusive jurisdiction. If the amount is less than Rs.10 lacs, the
said tribunal has no jurisdiction to entertain such dispute/claims. This
submission/contention/issue is not in much dispute. Both the learned
counsel consider this position in view of clear provision of law. Their notes
of arguments also supports the same.
13 The point is, the agreed arbitration clause were permitted the
petitioner to file such petition under Section 9 of the Arbitration Act in the
jurisdiction of this Court at Mumbai and/or jurisdiction is elsewhere.
14 In view of above, it is clear that the Petitioner can invoke Section 9 of
the Arbitration Act only if, the amount so claimed or dispute is less than
Rs.10 lacs. Therefore, if the amount is more than Rs.10 lacs as per the
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clause itself, the DRT has only jurisdiction to entertain and consider the
dispute of the position of the Petition. Therefore, there is no need to discuss
further in view of specific agreement between the parties that such Act
should prevail in case of conflict. In my view there is no conflict in view of
above agreed clause itself.
15 Out of these 4 matters, the claim in 3 matters is less than Rs.10 lacs.
The submission that the total amount in all these 4 matters are above Rs.10
lacs and as the Respondents are same and are interconnected though 4
different agreements have been signed, yet 4 separate Petitions under
Section 9 of Arbitration Act, are filed and, therefore, not maintainable in
this Court at Mumbai, is unacceptable. The authorities so relied by the
learned counsel appearing for the Respondents are distinct on the facts and
circumstances. There was no such agreed arbitration clause in these
matters. There is no dispute that the parties have entered into 4 different
agreements/contracts and singed accordingly for different vehicles/
properties. Therefore, for all the purposes there are 4 different agreements
and as there are defaults committed by the Respondents, and as different
cause of action arose and therefore, such 4 petitions as filed are
maintainable. Such petitions cannot be clubbed together only to remove
from the jurisdiction of this Court and specially under Section 9 of the
Arbitration Act. The submission of clubbing together all these matters and
treating the same having valuation of more than 10 lacs and therefore falls
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within the ambit/ jurisdiction of DRT is unsustainable. In all these matters,
Respondents are different and they signed these agreements in their
respective capacity separately. Accordingly, separate vehicles/ machineries
have been provided by the Petitioner to the Respondents.
16 The Petitioner, therefore, in view of the agreed clause and as there
are defaults, in my view, all the Arbitration clauses under the Arbitration
Act separated by issuing/ serving separate notices. Therefore, submissions
that this amount to a single cause of action and/or consolidated application
ought to have been filed before the DRT for the alleged claims, have no
force.
17 Admittedly, the agreements took place at Raipur. The Respondents
are residing and doing their business at Raipur, the Vehicles/ Equipments
are also lying in the area. The prayers are for injunction and appointment
of Court Receiver. The Respondents have no branch office at Mumbai. The
Petitioners main office/ registered office is in Mumbai. The termination
notice though sent through Mumbai office, that itself cannot be the reason
to invoke and file Section 9 Petition in the Court of Mumbai. Clause 10.16
provides discretion to be exercised by the Petitioner to invoke/commence
the Arbitration Proceedings under the Act. It may either in Mumbai or
Delhi or Chennai or Kolkata or in the place of execution of agreement. In
the cases, where the amount so claimed is less than 10 lacs, the Petitioner
can file such proceedings in the appropriate Court. Clause 10.17 provides
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9
that the Courts above shall, subject to the provisions of law, have exclusive
jurisdiction, unless the law does not permit the same. The Court of the
city in which the concerned branch is situated shall subject to the
provisions of law, have exclusive jurisdiction in relation to this agreement
including the arbitration and all matters arising in connection there with.
In my view, there is no exclusive jurisdiction of this Court at Mumbai as
sought to be contended of any court, referred above. It is the discretion of
the Petitioner which has to be taken note of. In view of above clauses,
10.16 and 10.17, I am inclined to observe that the general provisions of
Code of Civil Procedure (C.P.C.), need to be considered to give full
opportunity to both the parties and basically to the Respondents. I am of
the view, in absence of clear exclusive jurisdiction clause of courts and as
peculiar clauses which provides sole discretion to be exercised by the Bank
and as agreement so executed at Raipur and as the Respondents office and
place of business is at Raipur and as the concerned branch of the Petitioner
is also situated at Raipur, the Court of city of the concerned branch at
Raipur shall have jurisdiction for seeking such interim relief/ protection
under Section 9 of the Arbitration Act and not in the Court of Mumbai as
done in the present case.
18 Therefore, all the Petitions, as filed under Section 9 of the Arbitration
Act, in this Court at Mumbai, are not maintainable, except before the
court/tribunal, as per the agreed clause itself.
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19 The Apex Court recently in Shree Baidyanath Ayurved Bhawan
Private Limited Vs. Praveen Bhatia & Ors., (2009) 8 S.C.C. 779 and
prior to that in Rajasthan State Electricity Board Vs. Universal Petrol
Chemicals Ltd. (2009) 3 S.C.C. 107 , considering the various facets of such
submission referring to Arbitration Act, 1996, has observed that such
agreement/ arbitration clauses need to be respected.
20 In view of above, the Petition in which the claim amount is below
Rs.10 lacs, is dismissed for want of jurisdiction. However, the liberty is
granted to the Petitioner to file or initiate proceedings before the
appropriate forum/Court.
21 All the Petitions are therefore, dismissed with exemplary costs of
Rs.10,000/ (Rupees ten thousand only) to be paid to the Respondents.
22 Rule discharged. All the interim orders, granted earlier, also stand
vacated.
(ANOOP V. MOHTA, J.)
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.191 OF 2009
Kotak Mahindra Bank Ltd.,
a banking Company incorporated within
the meaning of the Banking Regulation
Act, 1949 having its registered office
at 3638A, Nariman Bhavan, 227, Nariman
Point, Mumbai400 021 and branch offices
nd
at 2 Floor, Dani Corporate Park,
158, CST Road, Kalina, SantacruzEast,
Mumbai400 098 and Vinay Bhavya Complex,
th
5 Floor, 159A, C.S.T. Road,
Kalina, SantacruzEast,
Mumbai. ...Petitioner.
Vs.
1 Sharma Crane Service,
Proprietor Mr. R.K. Sharma
Co. Haryan Road,
Carriers Sharma Complex,
Bhanpuri, Billaspur Road,
Raipur492 028.
2 Shree Transport Service,
Proprietor Sarita Sharma,
Bhanpuri,
Raipur 493 222. ...Respondents.
AND
ARBITRATION PETITION NO.193 OF 2009
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Kotak Mahindra Bank Ltd.,
a banking Company incorporated within
the meaning of the Banking Regulation
Act, 1949 having its registered office
at 3638A, Nariman Bhavan, 227, Nariman
Point, Mumbai400 021 and branch offices
nd
at 2 Floor, Dani Corporate Park,
158, CST Road, Kalina, SantacruzEast,
Mumbai400 098 and Vinay Bhavya Complex,
th
5 Floor, 159A, C.S.T. Road,
Kalina, SantacruzEast,
Mumbai. ...Petitioner.
Vs.
1 Sharma Crane Service,
Proprietor Mr. R.K. Sharma
Co. Haryan Road,
Carriers Sharma Complex,
Bhanpuri, Billaspur Road,
Raipur492 028.
2 Shree Transport Service,
Proprietor Sarita Sharma,
Bhanpuri,
Raipur 493 221. ...Respondents.
AND
ARBITRATION PETITION (LODGING) NO.393 OF 2009
Kotak Mahindra Bank Ltd.,
a banking Company incorporated within
the meaning of the Banking Regulation
Act, 1949 having its registered office
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at 3638A, Nariman Bhavan, 227, Nariman
Point, Mumbai400 021 ...Petitioner.
Vs.
1 Sarita Sharma,
Proprietor of M/s. Shree Transport Services
Dhanlaxmi Nagar,
Bhanpuri,
Raipur493 221. ...Respondent.
AND
ARBITRATION PETITION (LODGING) NO.394 OF 2009
Kotak Mahindra Bank Ltd.,
a banking Company incorporated within
the meaning of the Banking Regulation
Act, 1949 having its registered office
at 3638A, Nariman Bhavan, 227, Nariman
Point, Mumbai400 021 and branch offices
nd
at 2 Floor, Dani Corporate Park,
158, CST Road, Kalina, SantacruzEast,
Mumbai400 098 and Vinay Bhavya Complex,
th
5 Floor, 159A, C.S.T. Road,
Kalina, SantacruzEast,
Mumbai. ...Petitioner.
Vs.
1 Rajkumar Sharma,
Proprietor of M/s. Haryana Road Carriers,
Dhanlaxmi Nagar,
Bhanpuri,
Raipur493 221. ...Respondent.
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4
Mr.Rahul Mehta with Mr. Nikhil Mehta i/by Ms. Disha Karmbar for the
Petitioner.
Ms. Kashmira Bharucha i/by M/s. Arpan M. Rajput & Co. for the
Respondents.
DATE OF RESERVING THE JUDGMENT : 21ST OCTOBER, 2009.
DATE OF PRONOUNCING THE JUDGMENT: 26TH NOVEMBER,2009
JUDGMENT
1 Heard finally, by consent of the parties.
2 The Petitioner has invoked Section 9 of the Arbitration and
Conciliation Act, 1996 (for short, the Arbitration Act) as Respondents
defaulted in making timely installments though agreed and that events of
defaults are the basic cause of action for these Petitions.
3 The Petitioner is common party to all these petitions and as
Respondents are also common and interlinked, though they entered into
four separate agreements. RespondentRajkumar Sharma, is the sole
proprietor of Haryan Road Carriers and Mrs. Sarita Sharma is a proprietor
of Shree Transport Service for whom Rajkumar Sharma holds the power of
attorney. Therefore, this common judgment/order.
4 The Petitioner is in the business of providing financial facilities such
as Personal Loan, Home loan, Commercial Vehicle Loan etc.. Some time in
the year 2005 and 2006, the Respondents approached the Petitioner for
loan to purchase the vehicles. The Petitioner agreed to lend loan and
accordingly Respondents submitted separate application for the same. The
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5
relevant documents have been signed accordingly at Nagpur.
5 The Respondents resisted the Petition, basically on the ground of
jurisdiction.
6 The relevant clause of jurisdiction as relied by the parties are as
under.
“10.16 Unless the same falls within the jurisdiction of the
Debts Recovery Tribunal established under the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993, any and all
claims and disputes arising out of or in connection with this
Agreement or its performanc e shall be settled by arbitration by
a single Arbitrator to be appointed by the Bank. The
arbitration shall be held, either in Mumbai or New Delhi or
Chennai or Kolkata or in the place of execution of this
Agreement, sole discretion to be exercised by the Bank at the
time such arbitration is to commence, in accordance with the
provisions of the Arbitration and Conciliation Act, 1996.
10.17. In the event that the claim or dispute does not fall
within the jurisdiction of the Debts Recovery Tribunal
established under the Recovery of Debts Due To Banks and
Financial Institutions Act, 1993, for the purposes of arbitration
mentioned in clause (10.16), the Courts aforesaid shall, subject
to the provisions of law, have exclusive jurisdiction, if any law
does not permit the same, the Courts of the city in which the
concerned branch is situated, shall subject to the provisions of
law have exclusive jurisdiction in relation to this Agreement, the
arbitration and all matters arising in connection herewith and
therewith.”
7 In Arbitration Petition No. 193 of 2009, the principal outstanding
loan/claim amount is Rs.2,05,608/.
8 In Arbitration Petition No. 191 of 2009, the principal outstanding
loan/claim amount is Rs.2,38,263/.
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9 In Arbitration Petition (L) No. 393 of 2009, the principal outstanding
loan/claim amount is Rs.4,34,362.47/.
10 In Arbitration Petition (L) No. 394 of 2009, the principal outstanding
loan/claim amount is Rs.13,07,196.67/.
11 The basic preliminary submission in view of Section 1(4) read with
Section 34 of the Recovery of Debts Due to Banks and Financial Institutions
Act 1993, (for short, the Act) provides that the peculiar jurisdiction of the
Debts Recovery Tribunal (for short, the DRT) is more than 10 lacks.
12 The Petitioner is admittedly a financial institution/bank. Therefore,
any claim and/or debt recovery for the amount more than Rs.10 lacs, the
DRT has exclusive jurisdiction. If the amount is less than Rs.10 lacs, the
said tribunal has no jurisdiction to entertain such dispute/claims. This
submission/contention/issue is not in much dispute. Both the learned
counsel consider this position in view of clear provision of law. Their notes
of arguments also supports the same.
13 The point is, the agreed arbitration clause were permitted the
petitioner to file such petition under Section 9 of the Arbitration Act in the
jurisdiction of this Court at Mumbai and/or jurisdiction is elsewhere.
14 In view of above, it is clear that the Petitioner can invoke Section 9 of
the Arbitration Act only if, the amount so claimed or dispute is less than
Rs.10 lacs. Therefore, if the amount is more than Rs.10 lacs as per the
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7
clause itself, the DRT has only jurisdiction to entertain and consider the
dispute of the position of the Petition. Therefore, there is no need to discuss
further in view of specific agreement between the parties that such Act
should prevail in case of conflict. In my view there is no conflict in view of
above agreed clause itself.
15 Out of these 4 matters, the claim in 3 matters is less than Rs.10 lacs.
The submission that the total amount in all these 4 matters are above Rs.10
lacs and as the Respondents are same and are interconnected though 4
different agreements have been signed, yet 4 separate Petitions under
Section 9 of Arbitration Act, are filed and, therefore, not maintainable in
this Court at Mumbai, is unacceptable. The authorities so relied by the
learned counsel appearing for the Respondents are distinct on the facts and
circumstances. There was no such agreed arbitration clause in these
matters. There is no dispute that the parties have entered into 4 different
agreements/contracts and singed accordingly for different vehicles/
properties. Therefore, for all the purposes there are 4 different agreements
and as there are defaults committed by the Respondents, and as different
cause of action arose and therefore, such 4 petitions as filed are
maintainable. Such petitions cannot be clubbed together only to remove
from the jurisdiction of this Court and specially under Section 9 of the
Arbitration Act. The submission of clubbing together all these matters and
treating the same having valuation of more than 10 lacs and therefore falls
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8
within the ambit/ jurisdiction of DRT is unsustainable. In all these matters,
Respondents are different and they signed these agreements in their
respective capacity separately. Accordingly, separate vehicles/ machineries
have been provided by the Petitioner to the Respondents.
16 The Petitioner, therefore, in view of the agreed clause and as there
are defaults, in my view, all the Arbitration clauses under the Arbitration
Act separated by issuing/ serving separate notices. Therefore, submissions
that this amount to a single cause of action and/or consolidated application
ought to have been filed before the DRT for the alleged claims, have no
force.
17 Admittedly, the agreements took place at Raipur. The Respondents
are residing and doing their business at Raipur, the Vehicles/ Equipments
are also lying in the area. The prayers are for injunction and appointment
of Court Receiver. The Respondents have no branch office at Mumbai. The
Petitioners main office/ registered office is in Mumbai. The termination
notice though sent through Mumbai office, that itself cannot be the reason
to invoke and file Section 9 Petition in the Court of Mumbai. Clause 10.16
provides discretion to be exercised by the Petitioner to invoke/commence
the Arbitration Proceedings under the Act. It may either in Mumbai or
Delhi or Chennai or Kolkata or in the place of execution of agreement. In
the cases, where the amount so claimed is less than 10 lacs, the Petitioner
can file such proceedings in the appropriate Court. Clause 10.17 provides
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9
that the Courts above shall, subject to the provisions of law, have exclusive
jurisdiction, unless the law does not permit the same. The Court of the
city in which the concerned branch is situated shall subject to the
provisions of law, have exclusive jurisdiction in relation to this agreement
including the arbitration and all matters arising in connection there with.
In my view, there is no exclusive jurisdiction of this Court at Mumbai as
sought to be contended of any court, referred above. It is the discretion of
the Petitioner which has to be taken note of. In view of above clauses,
10.16 and 10.17, I am inclined to observe that the general provisions of
Code of Civil Procedure (C.P.C.), need to be considered to give full
opportunity to both the parties and basically to the Respondents. I am of
the view, in absence of clear exclusive jurisdiction clause of courts and as
peculiar clauses which provides sole discretion to be exercised by the Bank
and as agreement so executed at Raipur and as the Respondents office and
place of business is at Raipur and as the concerned branch of the Petitioner
is also situated at Raipur, the Court of city of the concerned branch at
Raipur shall have jurisdiction for seeking such interim relief/ protection
under Section 9 of the Arbitration Act and not in the Court of Mumbai as
done in the present case.
18 Therefore, all the Petitions, as filed under Section 9 of the Arbitration
Act, in this Court at Mumbai, are not maintainable, except before the
court/tribunal, as per the agreed clause itself.
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19 The Apex Court recently in Shree Baidyanath Ayurved Bhawan
Private Limited Vs. Praveen Bhatia & Ors., (2009) 8 S.C.C. 779 and
prior to that in Rajasthan State Electricity Board Vs. Universal Petrol
Chemicals Ltd. (2009) 3 S.C.C. 107 , considering the various facets of such
submission referring to Arbitration Act, 1996, has observed that such
agreement/ arbitration clauses need to be respected.
20 In view of above, the Petition in which the claim amount is below
Rs.10 lacs, is dismissed for want of jurisdiction. However, the liberty is
granted to the Petitioner to file or initiate proceedings before the
appropriate forum/Court.
21 All the Petitions are therefore, dismissed with exemplary costs of
Rs.10,000/ (Rupees ten thousand only) to be paid to the Respondents.
22 Rule discharged. All the interim orders, granted earlier, also stand
vacated.
(ANOOP V. MOHTA, J.)
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