REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

TRANSFER PETITION (CIVIL) NO.61 OF 2007

Shree Baidyanath Ayurved Bhawan Pvt. Ltd. … Petitioner  

Versus

Praveen Bhatia & Ors. … Respondents

J U D G M E N T

S.B. Sinha, J.

1. Shree Baidyanath Ayurved Bhawan Pvt. Ltd. (hereinafter referred to  

as  ‘the  company’  for  the  sake  of  brevity)  is  a  company  registered  and  

incorporated  under  the  Indian  Companies  Act,  1956.   It  manufactures  

Ayurvedic  medicines.   For  the  purpose  of  distribution  of  its  products,  it  

engages Carrying and Forwarding Agents  to receive goods from it,  store  

them and sell them to stockiests.

2. The  company  appointed  M/s.  S.  Bhatia  Enterprises,  Ludhiana  

(Respondent No.5 herein) (for short, ‘the firm’) of which Praveen Bhatia,  

Ramkishan Bhatia, Ashwani Bhatia and Promila Bhatia are partners.  The  

agreement between the parties incorporating the terms of conditions of  the  

said  contract  of  carrying  and forwarding  agency  contained  an arbitration  

clause.   Allegedly,  the jurisdiction  of  the Court  to determine the dispute  

between  the  parties  was  fixed  at  Jhansi.   Respondents  are  said  to  have  

committed misappropriation of a huge amount which was pointed out in the  

audit reports of 2000 and 2001.  Furthermore, they are said to have created  

several  other  forged  and fraudulent  credits  in  favour  of  some entities  in  

which  they  had  substantial  interest  which  was  allegedly  detected  by  the  

Company’s Account Manager.   

3. Parties  hereto  invoked  the  arbitration  clause  contained  in  the  said  

agreement.  The company appointed one Shri M.P. Dixit as an Arbitrator.  

The respondents are said to have appeared before the said Arbitrator and  

filed copies of the pleadings, applications etc. and also collected a copy of  

the note-sheet but absented themselves from other and further proceedings  

before  the  Arbitrator.   Respondent,  however,  alleged  that  the  purported  

agreement dated 1.10.1999 is a forged one and, in fact, an agreement had  

been entered into by and between the company and the firm on 1.4.1999.       

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4. The firm, however, appointed one Mr. Sudesh Kukreja who is said to  

have made an award against the appellant for a sum of Rs.4,70,000/- on or  

about  23.1.2004.   The said award has been received by the Company at  

Jhansi  on  31.3.2004  whereafter  an  objection  under  Section  34  of  the  

Arbitration and Conciliation Act, 1996 (for short, ‘the Act’) is said to have  

been filed in the Court of District Judge, Jhansi.   

5. The Firm filed five applications  under Section 9 of the Act which  

were marked as Application No.68, 69, 72, 73 and 74 of 2004 through its  

partners against the company in the Court of District Judge, Ludhiana.

6. Mr. Dixit is said to have made an award in favour of the company  

awarding a sum of Rs.3,56,54,487.37 at Jhansi upon adjusting the amount of  

security amounting to Rs.20 lakh as well as the amount of commission etc.

7. One Atul Saggar on behalf of Kay Pee Agencies, Ludhiana, who is  

said  to  have  been  appointed  as  a  distributor  at  Ludhiana  on  or  about  

30.8.2004 filed a civil suit praying for a declaration that the cheque given by  

him for supply of goods to the company by M/s. Bhatia as null and void.

8. The  respondents  filed  an  application  for  setting  aside  the  award  

pronounced by Shri  Dixit  in the Court of District  Judge, Ludhiana on or  

about 23.12.2004.  The Firm also filed three Civil Suits in the Court of Civil  

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Judge,  Ludhiana  alleging  defamation  against  them.   The  appellant  filed  

objections to the Execution Petition filed by the respondents and during the  

period 2006 – 2008 appeared to have filed 14 civil suits in different courts,  

the details whereof are as under :

S.No. CASE NO. FILED  ON

COURT  AUTHORITY

SUBJECT MATTER

1. Arbt.  S.No.12

2004 Distt. Judge, Jhansi

Petition  U/s.  34  Arbitration  Act  for  setting  aside  arbitration  award  pronounced  by  Sudesh  Kukreja  in  favour  of Praveen Bhatia

2. C.S.No.227 2005 Distt. Judge, Jhansi

Petition  U/s  9  of  Arbitration  Act  for  securing  award  of  M.P.  Dixit  by  restraining  Bhatias  from  selling  his  property etc.

3. C.S.No.390 2005 - do - Suit  for  declaration/recovery  of  damages  against  opposite  parties  due  to  making  of  forged agreement dt.1.4.99 by  Bhatias.

4. C.S.No.28 2005 - do - Declaration  and recovery  suit  of  Rs.23,86,374/-  from  Praveen  Bhatia  and  Nandi  Jain.

5. C.S.No.388 2005 - do - Declaration  and recovery  suit  of Rs.23,41,870/-

6. C.S.No.386 2005 - do - Declaration  and recovery  suit  of  Rs.9,30.222/-  from  Karanveer  and  Praveen  Bhatia.

7. C.S.No.  not 2005 - do - Declaration  and recovery  suit  

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known of  Rs.13,25,748/-  from  Ravinder Singh.

8. C.S.No.387 2005 - do - Declaration and Recovery suit  of  Rs.91,410/-  against  credit  note from Praveen Bhatia

9. C.S.No.389 2005 Civil Judge (Jr.  Division) Jhansi

Suit  for  damages  for  defamation  caused  by  false  and  defamatory  notice  by  Opposite  Party  in  Punjab  Kesri.

10. C.S.No.27 2006 - do - Declaration and Recovery suit  of  Rs.11,16,847/-   from  Tarvinder and Praveen Bhatia

11. C.S.No.26 2006 - do - Declaration  and recovery  suit  of  Rs.14,68,864/-  from  Sanjeev  Tara  and  Praveen  Bhatia

12. C.S.No.25 2006 - do - Suit  for  declaration/recovery  of Rupees 1 lakh 20 thousand  as  outstanding  dues  from  Praveen  Bhatia  and  Sukhraj  Singh Gill Kharad.

13. C.S.No.116 2006 Civil Judge, Jr.  Division, Jhansi

Defamation  suit  for  damages  for  lodging false  FIR No.139  by Opposite Parties.

14. Arb.S.No.03 2006 DJ Petition  under  Section  36  of  Arbitration  Act  for  execution  of  Award given by Mr.  M.P.  Dixit.

9. The Company filed objections for release of goods wherein an order  

of attachment has been passed.  Three revision applications were also filed  

before the High Court of Punjab and Haryana which were said to have been  

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withdrawn.   The  Company  filed  a  writ  petition  under  Article  32  of  the  

Constitution of India before this Court praying, inter alia, for the following  

reliefs:

“Grant  a  writ  of  mandamus  or  any  other  appropriate writ,  a writ  for transferring the cases  mentioned in Annexure-I be transferred to Court of  Jhansi.”

10. However, the said writ petition was permitted to be converted into a  

transfer petition.

11. Mr.  Sodhi,  learned counsel  appearing for some of the respondents,  

would contend that having regard to the fact that the Company would not  

suffer any prejudice in the event the civil suits filed by the firm and/or its  

partners are permitted to be determined at different courts in the State of  

Punjab, particularly when the company has an office in Punjab and Haryana  

and, thus, the balance of convenience lies in allowing the civil proceedings  

to be tried at their original courts of filing.  It was urged that in some of the  

matters, evidences were being led.   

12. Mr.  Bhatt,  learned counsel appearing on behalf of the respondents,  

urged that the purported agreement being a forged one, the question of the  

parties being bound thereby does not arise.

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13. The parties hereto are governed by the terms of the contract.  If, in  

terms  of  the  provisions  of  the  contract,  they  by  agreement  conferred  

jurisdiction on one of the courts which would have otherwise jurisdiction to  

deal with the matter, the same should ordinarily be given effect to.   

In A.B.C. Laminart Pvt. Ltd. & Anr. v. A.P. Agencies, Salem [(1989)  

2 SCC 163], this Court held that when the Court has to decide the question  

of jurisdiction pursuant to an ouster clause, it is necessary to construe the  

same properly.   In such an event,  it  was opined that other courts  should  

avoid exercise of jurisdiction. [See also Hanil Era Textiles Ltd. v. Puromatic  

Filters (P) Ltd.  [(2004) 4 SCC 671]

Yet  again  in  Rajasthan  State  Electricity  Board v.  Universal  Petrol  

Chemicals Ltd. [(2009) 3 SCC 107], this court held:

“21. The  aforesaid  legal  proposition  settled  by  this Court in respect of territorial jurisdiction and  applicability  of  Section  20  of  the  Code  to  Arbitration Act is clear, unambiguous and explicit.  The  said  position  is  binding  on  both  the  parties  who were contesting the present proceeding. Both  the  parties  with  their  open eyes  entered into  the  aforesaid  purchase  order  and agreements  thereon  which  categorically  provide  that  all  disputes  arising between the parties out of the agreements  would  be  adjudicated  upon  and  decided  through  the process of arbitration and that no court other  than the court at Jaipur shall have jurisdiction to  entertain or try the same. In both the agreements in  

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Clause 30 of General Conditions of the Contract it  was specifically mentioned that the contract shall  for all purposes be construed according to the laws  of India and subject to jurisdiction of only at Jaipur  in Rajasthan Courts only and in addition in one of  the purchase order the expression used was that the  Court  at  Jaipur  only  would  have  jurisdiction  to  entertain or try the same.”

It was opined :

“35. The  parties  have  clearly  stipulated  and  agreed that  no other  court,  but  only the court  at  Jaipur will have jurisdiction to try and decide the  proceedings arising out of the said agreements, and  therefore,  it  is  the  Civil  Court  at  Jaipur  which  would  alone  have  jurisdiction  to  try  and  decide  such issue and that is the court which is competent  to entertain such proceedings. The said court being  competent to entertain such proceedings, the said  Court at Jaipur alone would have jurisdiction over  the  arbitration  proceedings  and  all  subsequent  applications  arising  out  of  the  reference.  The  arbitration proceedings have to be made at Jaipur  Court and in no other court.”

14. It is not in dispute that two awards have been made by two different  

arbitrators.   Objections  to  the  said  awards  have  been  filed  by  both  the  

parties.   One  of  the  questions  which,  thus,  is  required  to  be  taken  into  

consideration is as to whether the appointment of respective arbitrators by  

the parties was valid and, thus, whether the arbitrators had acted within the  

four corners of the arbitration agreement.

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15. It  is  true  that  respondent  No.6  is  not  a  party  to  the  arbitration  

agreement but he is claiming interest under the firm who had appointed him  

as its distributor pursuant to such an authority having been conferred upon  

the firm by the company.  We, therefore, are of the opinion that although  

stricto sensu respondent No.6 is not a party to the contract,  his case also  

should be transferred.   

16. The transfer petition, therefore, is allowed.  The cases mentioned in  

Anexure-I  thereto  are  directed  to  be  transferred  to  Jhansi.   The  Court  

concerned should send the records of  the respective cases to the District  

Judge,  Jhansi  who  shall  in  turn  transfer  them  to  the  courts  having  

appropriate jurisdiction in this behalf.  The transferee court therefore should  

issue  notices  to  the  parties  after  fixing date(s)  of  hearing  in  the  matters  

transferred to their courts.

..…………………………..…J.  [S.B. Sinha]

..…………………………..…J.  [Cyriac Joseph]

New Delhi; August 4, 2009

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