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The Code Of Civil Procedure (Amendment) Act, 2002
The Indian Companies (Amendment) Act, 1930
The Arbitration Act, 1940
Section 20 in The Arbitration Act, 1940
Section 28 in The Indian Contract Act, 1872
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Supreme Court of India
Hakam Singh vs M/S. Gammon (India) Ltd on 8 January, 1971
Equivalent citations: 1971 AIR 740, 1971 SCR (3) 314
Author: S C.
Bench: Shah, J.C. (Cj)
           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
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 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 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