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PETITIONER: HAKAM SINGH

       Vs.

RESPONDENT: M/S.  GAMMON (INDIA) LTD.

DATE OF JUDGMENT08/01/1971

BENCH: SHAH, J.C. (CJ) BENCH: SHAH, J.C. (CJ) HEGDE, K.S.

CITATION:  1971 AIR  740            1971 SCR  (3) 314  1971 SCC  (1) 286  CITATOR INFO :  C          1989 SC1239  (18)  RF         1992 SC1514  (7)

ACT: Contract  Act 1872, s. 28-Code of Civil Procedure, 1908,  s. 20(a) Explanation 11-Arbitration Act 1940, s. 41-Defendant a company  registered under the Indian Companies  Act  having, its principal place of business at Bombay-Contract providing for  arbitration  of  disputes and  further  providing  that disputes  were  to  be adjudicated only  in  Bombay  Courts- Restriction whether binding or against public policy.

HEADNOTE: On  October  5,  1960 the appellant  agreed  to  do  certain construction  work  for the respondents  company  registered under  the  Indian Companies Act and  having  its  principal place of business at Bombay--On the terms and conditions  of a  written  tender.  Clause 12 of the  tender  provided  for arbitration  in  case of dispute.  Clause 13  provided  that notwithstanding the place where the work under the  contract was to be executed the contract shall be deemed to have been entered  into  by  the parties at Bombay and  the  court  in Bombay alone shall have jurisdiction to adjudicate  thereon. On  disputes  arising  between  the  parties  the  appellant submitted  a petition to the Court at Varanasi for an  order under s. 20 of the Arbitration Act, 1940 that the  agreement be filed and an order of reference be made to an  arbitrator or  arbitrators  appointed by the court.   The  respondent contended  that  in  view%  of cl.  13  of  the  arbitration agreement  only the courts at Bombay had jurisdiction.   The trial court held that the entire cause of action had  arisen at  Varanasi and the parties could not by  agreement  confer jurisdiction  on  the courts of Bombay which  they  did  not otherwise possess.  The High Court at Allahabad in exercise of  its  revisional  jurisdiction held that  the  courts  at Bombay  had  jurisdiction under the general  law  and  hence could entertain the petition.  It further held that in  view of  cl. 13 of the arbitration agreement the  petition  could not  be entertained at Varanasi.  Against the order  of  the High  Court  directing  the  petition  to  be  returned  for presentation to the proper court, the appellant appealed  to this  Court  by special leave.  The question that  fell  for

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consideration were : (i) whether the courts at Bombay  alone had jurisdiction over the dispute; (ii) whether  Explanation 11 to s. 20(a) of the Code of Civil Procedure refers only to Government  corporations  and not  to  companies  registered under the.  Indian Companies Act. HELD  :  (i)  The Code of Civil Procedure  in  its  entirety applies  to proceedings under the Arbitration Act by  virtue of s. 41 of the latter Act.  The jurisdiction of the  courts under  the  Arbitration Act to entertain  a  proceeding  for filing an award is accordingly governed by the provisions of the  Code of Civil Procedure.  By the terms of s.  20(a)  of the  Code .of Civil Procedure read with Exp.  11th  thereto, the  respondent  company which had its  principal  place  of business at Bombay, was liable to be sued at Bombay. [316 G] It  is  not  open to the par-ties  by  agreement  to  confer jurisdiction on any Court which it did not otherwise possess under the Code.  But where two courts have under the Code of Civil Procedure jurisdiction to try a suit of proceeding  an agreement between the parties that the dispute between 315 them shall be tried in one of such courts is not contrary to Public Policy Such an agreement does not contravene s. 28 of the Contract Act. [316 H] Since  in  the  present  case  the  courts  at  Bombay   had jurisdiction under the Code of Civil Procedure the agreement between-,the  parties that the courts in Bombay alone  shall have  jurisdiction  to  try  the  proceedings  relating   to arbitration was binding between them. [318 A] (ii) Order  29  of the Code of Civil  Procedure  deals  with suits  by or against a corporation and there is  nothing  in the  Code  to  support the  contention  that  a  Corporation referred  to under s. 20 means only a statutory  corporation and not a company registered under the Indian Companies Act. [317 G-H]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 646 of 1967. Appeal  by special leave from the judgment and  order  dated December  1,  1966  of the Allahabad  High  Court  in  Civil Revision No. 721 of 1964. J.   P. Goyal and G. S., Chatterjee, for the appellant. V.   S. Desai and B. R. Agarwala, for the respondent. The Judgment of the Court was delivered by Shah,  C.J.  On October 5, 1960 the appellant agreed  to  do certain  construction work for the respondent on  the  terms and  conditions of a "written tender".  Clauses 12 &  13  of the tender were :               "12.  In the event of any dispute, arising out               of this sub-contract, the parties hereto agree               that   the   matter  shall  be   referred   to               arbitration  by  two  Arbitrators  under   the               Arbitration  Act of 1940 and  such  amendments               thereto as may be enacted thereafter.               13.   Notwithstanding the place where the work               under  this contract is to be executed, it  is               mutually understood and agreed by and  between               the parties hereto that this Contract shall be               deemed  to  have  been  entered  into  by  the               parties concerned in the City of G Bombay  and               the  Court of law in the City of Bombay  alone               shall   have   jurisdiction   to    adjudicate               thereon." Disputes  arose  between  the  parties  and  the   appellant

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submitted  a petition to the Court of the Subordinate  Judge at  Varanasi  for  an  order  under  s.  20  of  the  Indian Arbitration  Act 10 of 1940 that the agreement be filed  and an  order  of  reference  be  made  to     an  Arbitrator or Arbitrators  appointed  by the Court to settle  the  dispute between  the  parties in respect of the  construction  works done by him.  The respondent contended that the Civil Courts in Bombay alone had because of the terms contained in cl. 13 316 jurisdiction  to  entertain the petition.  The  Trial  Judge rejected that contention observing that the condition in cl. 13  that "the contract shall be deemed to have been  entered into-by  the parties concerned in the city of Bombay has  no meaning unless the contract is actually entered into in  the city of Bombay", and that there was no evidence to establish that  it was entered into in the city of Bombay.  The  Trial Judge  concluded that the entire cause of action had  arisen at  Varanasi and the parties could not by  agreement  confer jurisdiction  on  the Courts at Bombay, which they  did  not otherwise possess. The  High Court of Allahabad in exercise of  its  revisional jurisdiction  set aside the order passed by the  Subordinate Judge   and   declared  that  the  Courts  in   Bombay   had jurisdiction   under  the  general  law  to  entertain   the petition, and by virtue of the covenant in the agreement the second  branch of cl. 13 was applicable and binding  between the parties and since the parties had agreed that the Courts in  Bombay  alone had jurisdiction to  adjudicate  upon  the contract,  the  petition to file the  arbitration  agreement could not be entertained by the Courts at Varanasi.  Against the  order of the High Court directing that the petition  be returned   for  presentation  to  the  proper  Court,   the, appellant has appealed to this Court with special leave. Section 41 of the Arbitration Act 1940 provides in so far as it is relevant :               "Subject to the provisions of this Act and  of               rules made thereunder               (a)   the  provisions  of the  Code  of  Civil               procedure,   1908,   shall   apply   to    all               proceedings  before  the  court,  and  to  all               appeals under this Act." The  Code  of  Civil Procedure in its  entirety  applies  to proceedings under the Arbitration Act.  The jurisdiction  of the  Courts  under  the  Arbitration  Act  to  entertain   a proceeding  for filing an award is accordingly  governed  by the provisions of the Code of Civil Procedure.  By cl. 13 of the  agreement  it  was  expressly  stipulated  between  the parties  that  the  contract shall be deemed  to  have  been entered into by the parties concerned in the City of Bombay. In any event the, respondent have their principal office  in Bombay and they were liable in respect of a cause of action- arising  under  the terms of the tender to be  sued  in  the Courts  at  Bombay.   It  is not  open  to  the  parties  by agreement  to  confer by their agreement jurisdiction  on  a Court  which it does not possess under the Code.  But  where two  courts or more have under the Code of  Civil  Procedure jurisdiction  to  try  a suit  or  proceeding  an  agreement between the parties that the dispute between them shall 317 be  tried  in one of such Courts is not contrary  to  public policy.  Such an agreement does not contravene s. 28 of  the Contract Act. Counsel for the appellant contended that merely because  the respondent  carried  on  business in Bombay  the  Courts  at Bombay were not invested with jurisdiction to entertain  any

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suit  or  a partition for filing an  arbitration  agreement. Section 20 of the Code of Civil Procedure provides :               "Subject  to the limitations aforesaid,  every               suit shall be instituted in a Court within the               local limits of whose jurisdiction-               (a,)  the defendant, or each of the defendants               where there are more than one, at the time  of               the  commencement  of the suit,  actually  and               voluntarily  resides, or carries on  business,               or personally works for gain; or               (b)..................................               (c)   the cause of action, wholly or in  part,               arises.               "Explanation II.-A corporation shall be deemed               to carry on business at its sole or  principal               office  in India, or, in respect of any  cause               of  action arising at. any place where it  has               also a subordinate office, at such place." Plainly  by the terms of s. 20(a) read with Explanation  II, the respondent Company was liable to be sued at Bombay where it had its principal place of business. The  argument of counsel for the appellant that the  expres- sion  "corporation"  in  Explanation  II  includes  only   a statutory corporation and not a company registered under the Indian Companies Act is, in our judgment, without substance. The   Code   of   Civil  Procedure   uses   the   expression "corporation"  as  meaning  a legal person  and  includes  a company registered under the Indian Companies Act.  Order 29 of  the  Code  of Civil Procedure deals  with  suits  by  or against  a corporation and there is nothing in the  Code  of Civil  Procedure that a corporation referred to under S.  20 means  only  a  statutory  corporation  and  not  a  company registered under the Indian Companies Act. Since  an  application for filing an award in respect  of  a dispute  arising out of the terms of the agreement could  be filed  in the Courts in the City of Bombay, both because  of the terms of cl. 13 318 of the, agreement and because the respondents had their Head Office where they carry on business at Bombay, the agreement between  the parties that the Courts in Bombay  alone  shall have   jurisdiction  to  try  the  proceeding  relating   to arbitration was binding between them. The appeal fails and is dismissed with costs. G.C.                       Appeal dismissed. 319