SITARAM RICE MILLS Vs. UNION OF INDIA

JUDGEMENT

(1.) This is an application under Sec. 20 of the Arbitration Act, 1940. The arbitration clause is contained in Clause 24 of the contract of the tender. The said clause has been set out in extenso in paragraph 9 of the petition. It is of the widest amplitude and it covers any questions, disputes or differences arising under those conditions or the special conditions of contract or in connection with the contract except certain specially exempted matters. Clause 20(3) of the conditions of contract reads as follows :

(2.) On behalf of the petitioner, it was contended that there was no averment that the Delhi High Court or the Delhi Court has jurisdiction to entertain this dispute and there was no averment that any part of the cause of action has arisen within the jurisdiction of the Delhi Court. I am, however, unable to accept this contention because paragraph 31 of the affidavit-in-opposition clearly alleges that the acceptance of the tender was issued from New Delhi which is outside the jurisdiction of this Court. Therefore, the position appears to be that a part of cause of action in respect of this contract had arisen both at Calcutta and as well as at Delhi. The question is, what is the effect of the aforesaid clause, viz. Clause 20(3) of the Arbitration agreement set out hereinbefore. Under Sec. 20 of the Arbitration Act, 1940, before an arbitration agreement can be directed to be filed, the Court must come to a conclusion that the dispute has arisen to which the agreement relates. Therefore, there must be an adjudication or a finding that disputes or differences to which the agreement relates have arisen. That is a condition precedent under subsection (1) of Sec. 20 of the Arbitration Act, 1940 before directing the filing of the arbitration agreement. This clause, viz. Clause 20 (3) binds the party to go to the forum of that court, that is to say, the place from where the acceptance of tender has been issued.

(3.) On behalf of the petitioner, it was, however, argued that the choice was only in respect of any dispute arising out of or in respect of the contract. It was submitted that a dispute as to whether a contract should be filed under Sec. 20 of the Arbitration Act, 1940 is not a dispute arising out of or in respect of the contract. I am unable to accept this position because, as I have mentioned before, the first condition required to be fulfilled under Sec. 20 is that there is a dispute arising out of or in respect of the agreement. Therefore, that will be a decision on the question whether there is a dispute arising out of or in respect of the contract. If the parties have chosen to go to a Court having jurisdiction to decide whether a dispute has arisen out of or in respect of the contract then in the absence of any special circumstances, the parties must be made to abide by the said bargain. The principles are well settled. The parties cannot confer jurisdiction on Courts not having such jurisdiction nor the parties can oust the jurisdiction of a competent Court. But the parties are competent to bargain that out of Courts having jurisdiction one would be preferred to the others. If such is the bargain then the Court would normally hold the parties to that bargain.