GENERAL MANAGER EAST COAST RAILWAY RAIL SADAN & ANR. versus HINDUSTAN CONSTRUCTION CO. LTD. on 22 July 2022

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the High Court of Orissa at Cuttack in ArbitrationPetition No.10 of 2021 by which the High Court in exercise of powersDunder Section 11(6) of the Arbitration and Conciliation Act, 1996(hereinafter referred to as ‘the Act’) has appointed an Arbitrator toadjudicate the dispute between the parties, the original informant –General Manager, East Coast Railway Rail Sadan and Anr., havepreferred the present appeal.

E2. As such the dispute in the present appeal is in a very narrowcompass.

3. The dispute arose between the appellant and the respondentwith respect to the contract/agreement dated 29.11.2018. That therespondent herein - original claimant initiated the proceedings underFSection 9 of the Arbitration Act before the learned Additional DistrictJudge, Visakhapatnam seeking interim injunction against the encashmentof Performance Bank Guarantee and forfeiture of security deposit. Thesaid application came to be allowed by the learned Additional DistrictJudge vide order dated 06.11.2019 restraining the appellants herein fromGforfeiting security deposit for period of six months except on the specialcircumstances.

4. That thereafter the respondent vide letter dated 01.12.2019requested the appellant to constitute the Arbitral Tribunal raising fiveclaims. It appears that in terms of the Arbitration Agreement, arbitration H

proceedings were initiated by the appellants by appointing an arbitratorto adjudicate the dispute between the parties. That the Arbitrator issuednotices calling upon the parties to submit their respective claims. Therespondent herein sought time vide letter dated 02.04.2020 for filing theclaim in view of Covid-19 Pandemic. The Arbitrator adjourned theproceedings to 03.04.2020. Instead of submitting the claim, vide letterdated 01.09.2020 the respondent questioned the validity of arbitral tribunal.Thereafter the respondent filed the Arbitration Petition No.10 of 2021before the High Court of Orissa at Cuttack under Section 11(6) of theAct seeking appointment of an Arbitrator. The said application wasopposed by the appellants relying upon Section 42 of the Arbitration Actand it was the case on behalf of the appellants that in view of Section 42of the Arbitration Act, the application under Section 11(6) of the Actshall lie before the High Court of Andhra Pradesh at Amaravati as therespondent itself earlier filed Section 9 application before the Court atVishakhapatnam. It was also submitted on behalf of the appellants thatprocedure dated 16.11.2016 upon which reliance has been placed by therespondent was superseded by GCC issued by Railway Board inNovember, 2018. Despite the above jurisdictional issue raised and withoutaddressing on the jurisdiction of the Orissa High Court, by the impugnedjudgment and order the High Court of Orissa at Cuttack has appointedthe Arbitrator solely by observing that since the appellant, East CoastRailways in principle, is not opposing the appointment of an Arbitratorthere is little purpose served in relegating the respondent (originalpetitioner) to the appropriate High Court as that will only delay theadjudication of the disputes.

5. Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the High Court of Orissa at Cuttack, the originalrespondent – General Manager – East Coast Railway has preferred thepresent appeal.

6. We have heard Shri K.M. Natraj, learned ASG appearing onbehalf of the appellants and Shri Amit Dubey, learned Counsel appearingon behalf of the respondent. We have gone through the impugnedjudgment and order passed by the High Court. A specific objection wasraised by the appellant herein before the High Court on the entertainabilityand/or maintainability of the application under Section 11(6) of the A

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AArbitration Act before the Orissa High Court. Reliance was placed onSection 42 of the Arbitration Act and it was submitted on behalf of theappellants that as the respondent - claimant had initiated proceedingsunder Section 9 of the Arbitration Act in the Court at Vishakhapatnam,only the High Court of Andhra Pradesh at Amaravati would haveBjurisdiction to entertain the application under Section 11(6) of the Act.Without deciding the said issue which goes to the root of the jurisdictionof the High Court of Orissa at Cuttack, the said High Court by theimpugned order has entertained the application under Section 11(6) ofthe Act and has appointed the sole arbitrator by observing that since the appellants – East Coast Railway, in principle, has not opposed theCappointment of an arbitrator, there is little purpose served in relegatingthe original petitioner to the concerned High Court as that will only delaythe adjudication of the disputes. The appellants might not have opposedthe appointment of an arbitrator (though the fresh appointment of anArbitrator was also opposed by the appellants herein) by that itself it willDnot confer the jurisdiction upon the High Court if otherwise, the HighCourt had no jurisdiction.

7. Heavy reliance is/was placed on Section 42 of the Arbitrationand Conciliation Act, 1996 which reads as under:

E“42. Jurisdiction. - Notwithstanding anything contained elsewherein this Part or in any other law for the time being in force, wherewith respect to an arbitration agreement any application underthis Part has been made in a Court, that Court alone shall havejurisdiction over the arbitral proceedings and all subsequentapplications arising out of that, agreement and the arbitralFproceeding shall be made in that Court and in no other Court.”

7.1 It is not in dispute that before filing an application under Section11(6) of the Act before the High Court of Orissa at Cuttack, therespondent – claimant moved an application before the Court atGVisakhapatnam under Section 9 of the Arbitration Act. In that view ofthe matter considering Section 42 of the Arbitration Act, the High Courtof Andhra Pradesh at Amravati alone would have jurisdiction to decidethe subsequent applications arising out of the Contract Agreement andthe further arbitral proceedings shall have to be made in the High courtof Andhra Pradesh at Amaravati alone and in no other court. In thatH

view of the matter the High Court of Orissa at Cuttack has committed aserious error in entertaining the application under Section 11(6) of theAct before it and appointing the sole arbitrator.

8. In view of the above and for the reason stated above, the presentAppeal Succeeds. The impugned judgment and order passed by the HighCourt of Orissa at Cuttack in Arbitration Petition No.10 of 2021 andappointing the sole arbitrator is hereby quashed and set aside solely onthe ground that the High Court of Orissa at Cuttack would have nojurisdiction to entertain the application under Section 11(6) of the Actwith respect to the contract agreement for which the respondent claimantearlier initiated the arbitration proceedings under Section 9 of theArbitration Act in the Court at Vishakhapatnam. Present Appeal isaccordingly Allowed. However, it is observed that it will be open for therespondent claimant to submit/move an application under Section 11(6)of the Act before the competent High Court having jurisdiction namelythe High Court of Andhra Pradesh at Amaravati and if such an applicationis made before the High Court of Andhra Pradesh at Amaravati within aperiod of four weeks from today, the same be dealt with and consideredin accordance with law and on its own merits at the earliest.

The Present Appeal is Allowed to the aforesaid extent. However,in the facts and circumstances of the case, there shall be no order as tocosts.

Bibhuti Bhushan Bose

Appeal allowed.

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