REPORTABLE

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.  

JUDGMENT  

H.L. Dattu,J.  

       Leave granted.

2) This 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.  

3) The 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.  

4) When 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.  

5) The  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.  

6) The  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

3

Section  31(4)  of  the  Arbitration  Act,  1940  and  in  view  of  the

Arbitration Petition filed by the respondent earlier before the Delhi        

7) High 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 petition.              

8) We have heard learned counsel for the parties.  

9) The 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.  

10)In 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 arbitration.

11)In 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 Section 31(4).  

12)The 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.   

13)The 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 a reference”.

14)The 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 his  award’.

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.

16)Unlike 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.  

17)In 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.

8

18)Therefore, 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.  

19)Under 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.  

20)Therefore, the High Court of Bombay, in our view, is not correct in

rejecting the Arbitration Petition on the ground of lack of jurisdiction.  

21)In 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

9

possible at any rate within an outer limit of six months from the date of

receipt of the orders.  No order as to costs.  

                                                                                     …………………………………J.                                                                                        [TARUN CHATTERJEE]

                                                                                     …………………………………J.                                                                                        [ H.L. DATTU ]

New Delhi, April  17, 2009.

10