Petine Shipping Inc.
of Monorovia Vs. Minerals & Metals Trading Cor. of (I) Ltd.  INSC 793
(17 April 2009)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.2627 OF 2009 (Arising out
of SLP(C) No. 10840 of 2008) Petine Shipping Inc. of Monrovia
..........Appellant Versus The Minerals and Metals ........Respondent Trading
Corporation of India Ltd.
appeal is directed against the orders passed by the High Court of Judicature at
Bombay in Appeal No. 132 of 2000 in A. P. No. 313 of 1999 dated 26.4.2007. By
the impugned judgment, the Division Bench has held that in the reference, an
application was admittedly made to 1 Delhi High Court and therefore, it would
not only be in accordance with law, but will also be proper for the parties to
approach the same court.
facts leading to this Special Leave Petition are: the appellant is a Liberian
Shipping Company carrying on business through their protecting agents M/s.
G.A.C. Shipping India Ltd. The respondent is a government company, which by
charter party dated 2.6.1989 chartered the appellants vessel M.V. Animar to
carry Rock Phosphate from Togo to West Coast India. The respondent chose Mumbai
as the port of delivery. The dispute resolution clause of the charter party
provided that each party may appoint one arbitrator, who in the event of
disagreement shall appoint an umpire, whose decision shall be final.
The arbitrators and
the umpire were required to be commercial men.
a dispute arose in 1990, the appellant vide letter dated 29.5.90 nominated Mr.
A. K. Khandwala and the respondent vide telegram dated 18.6.90 appointed
Justice Deshpande (Retired Chief Justice of the Delhi High Court). The
appellant intimated the respondent by letter dated 9.7.90, that since their
nominee was not a commercial man as required under the charter party clause; Mr.
Khandwala would be the sole arbitrator. The respondent filed Arbitration
Petition before the 2 Delhi High Court, for a declaration that their
nomination of Justice Deshpande as arbitrator was valid. During pendency of the
said petition, Justice Deshpande expired. Vide letter dated 14.8.92, the
respondent appointed Mr. K. Parthasarthi, as Arbitrator, and on 18.8.92 the
petition of the respondent was dismissed as having become infructuous. The
court has not passed any other order in the petition filed by respondent.
Arbitrators could not arrive at a unanimous decision and they appointed Mr. R.
C. Cooper as the Umpire. When Mr. Cooper sought to proceed with the matter, the
respondent inter alia raised objection as to the validity of the appointment of
the umpire and the umpire vide letter dated 10.7.95, informed the parties that
it would be prudent to approach the appropriate court for orders before
proceeding further with the matter.
appellant moved the High Court of Bombay, inter alia with a prayer for
conformation/appointment of Mr. Cooper as Umpire and to enlarge the time for
making the award. The Single Judge as well as Division Bench in Arbitration
Petition dismissed the appellant's petition and appeal respectively, solely on
the ground that in view of Section 31(4) of the arbitration act, 1940 and in
view of the Arbitration Petition filed by the respondent earlier before the
Court, which had been dismissed as having become in fructuous; the Bombay High
Court cannot adjudicate upon the appellant's petition. The Division Bench of
Bombay High Court has observed, that, if the Delhi High Court was one of the
courts having jurisdiction and if the parties have already approached that
court once, all future applications should also be made to that court.
Aggrieved by the said order, appellant is before us by this special leave
have heard learned counsel for the parties.
Learned counsel for the appellant would contend, that, the Delhi High Court had
dismissed the petition of the respondent as having become in fructuous. Merely
because an application was filed by the respondent before the Delhi High Court,
this by itself would not make the Delhi High Court the competent court as
envisaged under section 31(4) of the Act so as to exclude the Jurisdiction of
all courts. Learned Counsel would also contend that the Arbitration Petition
which has been moved by the respondent before the Delhi High Court was not an
application as envisaged under section 31(4) of the Act and thus Delhi 4 High
Court did not get conferred with the exclusive jurisdiction to entertain all
applications pertaining to the present arbitration dispute. It is further
contended that if this becomes the situation, then any party could indulge in
forum shopping by filling a superficial application before a court and
withdrawing the same merely to ensure that all subsequent applications be made
before that court. In support of his contentions, learned Counsel would draw
our attention to observations made by this Court in the case of Union of India
vs. Surjeet Singh Atwal, (1969) (2) SCC 211 and M/s Guru Nanak Foundation vs.
M/s Ratan Singh and Sons, (1981) (4) SCC 634.
Union of India v. Surjeet Singh Atwal, (1969) (2) SCC 211, this Court has held
that an application under Section 34 of the Act (for stay of suit) does not
amount to an application under Section 31(4) of the Act and it belongs to a
different category because such application does not lead to a reference to
M/s. Guru Nanak Foundation v. M/s. Ratan Singh & Sons, (1981) 4 SCC 634,
this Court has observed that even though the first Court to be approached by
the parties had been the Delhi High Court, since eventually the Supreme Court
appointed the arbitrator and gave further 5 directions regarding the
proceedings, it was the Supreme Court which was the competent Court under
only questions which needs our consideration is, whether Bombay High Court has
the jurisdiction to adjudicate upon the Arbitration Petition, where a previous
application had been filed before the Delhi High Court and subsequently
dismissed by the same Court as having become in fructuous.
main object of Section 31 of the Arbitration Act is to invest a single court
with the exclusive jurisdiction to decide all questions relating to the matter
of arbitration; this object is achieved by the combined operation of all its
sub-sections. The words "application in a reference" used in
sub-section (4) should therefore, be related back to sub-sections (2) and (3)
and all applications regarding the conduct of arbitration proceedings or arising
out of such proceedings or in which the court has to decide questions regarding
the validity, effect, or existence of an award or an arbitration agreement
between the parties to the agreement, should be treated as "application in
very foundation for the jurisdiction of the court under Section 34 is the
existence of an arbitration agreement. The applicant asserts that there is such
an agreement, while the plaintiff either disputes the 6 existence of such an
agreement or pleads that it is invalid. Section 33 gives an independent right
to a person who wishes to challenge the existence or validity of an arbitration
agreement to anticipate the other side and to initiate proceedings to have
these questions determined beforehand. Thus applications under Sections 33 and
34 both are fundamentally in the matter of arbitration proceedings and fall
within the purview of Section 31(4) of the Arbitration Act, though the former
is intended to make an arbitration agreement ineffective and the latter
effective and neither leads to a reference. [See (1971) 1 SCC (Jour) 70] 15) In
the case of State of M.P. v. Saith and Skelton (P) Ltd., (1972) 1 SCC 702, this
court has held that the expression `court' will have to be understood as
defined in Section 2(c) of the Act, only if there is nothing repugnant in the
subject or context. It is in that light that the expression `court' occurring
in Section 14(2) of the Act will have to be understood and interpreted. It was
this Court that appointed Shri V.S. Desai, on 29-1-1971 by consent of parties
as an arbitrator and to make his award. It will be seen that no further
directions were given in the said order which will indicate that this Court had
not divested itself of its jurisdiction to deal with the award or matters
arising out of the award. In fact the indications are to the contrary. The
direction in the 7 order dated 29-1-1971 is that the arbitrator is `to make
Surely the law
contemplates further steps to be taken after the award has been made, and quite
naturally the forum for taking the further action is only this Court. There was
also direction to the effect that the parties are at liberty to apply for
extension of time for making the award. In the absence of any other court
having been invested with such jurisdiction by the order, the only conclusion
that is possible is that such a request must be made only to the court which
passed that order, namely, this Court.
in the present case where an application was filed before the Delhi High Court
seeking declaration that appointment of Mr. Justice Deshpande as Arbitrator is
valid. The same application became in fructuous because of the demise of Mr.
Justice Deshpande and had to be dismissed as having become infructuous. The
Delhi High Court neither gave any directions nor did it appoint an Arbitrator
in the adjudication of the said application.
Bharat Coking Coal Ltd. v. Annapurna Construction, (2008) 6 SCC 732, this court
observed that a distinction must be borne in mind in a case where this Court
had no control over the proceedings and the case in which control of
proceedings of the arbitrator had been retained.
in the view taken by this Court in Bharat Cooking case, although an application
was filed before the Delhi High Court, but it did not retain any control over
the said proceedings of the arbitrator.
Also respondent did
not file any application regarding appointment of another arbitrator in the
Delhi High Court. Thus, the application filed before the Delhi High Court
cannot be said to a reference made under Section 31(4) of the Act.
the agreement, respondent has chosen Mumbai as the port of delivery and the
vessel carrying the Rock Phosphate was delivered at the port of Bombay.
Therefore it cannot be denied that Bombay High Court had the jurisdiction in
the Arbitration Petition filed before it, as the goods were delivered at the
Port of Bombay.
the High Court of Bombay, in our view, is not correct in rejecting the
Arbitration Petition on the ground of lack of jurisdiction.
view of the above discussion, the appeal is allowed. The impugned order passed
by the High Court is set aside. The application filed under Section 28 of the Arbitration
Act, 1940 for extension of time for making the Award is restored on the Board
of the Bombay High Court.
The court is
requested to consider the application on merits as early as possible at any
rate within an outer limit of six months from the date of receipt of the
orders. No order as to costs.
[ H.L. DATTU ]
Delhi, April 17, 2009.