Date of the Judgment: July 6, 2022
Judges: J.K. Maheshwari, J.
Can the Supreme Court transfer a case based on a challenge to the territorial jurisdiction of a lower court? The Supreme Court recently addressed this question in a transfer petition related to an international commercial arbitration. The Court clarified that it cannot decide on the territorial jurisdiction of a lower court in a transfer petition. This judgment emphasizes that such challenges must be raised in the court where the case is originally filed.
Case Background
Neilan International Co. Ltd. (the Petitioner) filed a transfer petition seeking to move Commercial Arbitration Suit No. 09/2019 from the Additional City Civil and Sessions Judge (Commercial Court) at Bengaluru, Karnataka, to the Bombay High Court or another competent court in Mumbai, Maharashtra. The case before the Bengaluru court was filed by Powerica Limited (Respondent No. 1) under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award. The Petitioner had already filed Arbitration Petition No. 416 of 2019 before the Bombay High Court under Sections 47 and 48 of the same Act, seeking enforcement of the same arbitral award, which was passed in London under the ICC Rules 2012.
Timeline
| Date | Event |
|---|---|
| September 27, 2018 | Arbitral Tribunal in London passes an award in ICC International Court of Arbitration Case No.19933/TO. |
| 2019 | Powerica Limited files Comm. A. S. No.09/2019 under Section 34 of the Arbitration and Conciliation Act, 1996 in Bengaluru. |
| 2019 | Neilan International Co. Ltd. files Arbitration Petition No.416 of 2019 before the Bombay High Court under Sections 47 and 48 of the Act. |
| August 2, 2021 | Supreme Court passes order in Naivedya Associates v. Kirti Nutrients Limited (Transfer Petition (C) 953/2021) regarding territorial jurisdiction in transfer petitions. |
| July 6, 2022 | Supreme Court dismisses the transfer petition filed by Neilan International Co. Ltd. |
Course of Proceedings
The Petitioner, Neilan International Co. Ltd., sought to transfer the case filed by the Respondent, Powerica Limited, from the Bengaluru court to the Bombay High Court. The Petitioner argued that since they had already filed a case in the Bombay High Court for the enforcement of the arbitral award, the case in Bengaluru should be transferred to avoid conflicting decisions. The Respondent opposed the transfer, stating that the issue of territorial jurisdiction should be raised in the Bengaluru court itself.
Legal Framework
The case primarily involves the interpretation of the following legal provisions:
- Section 34 of the Arbitration and Conciliation Act, 1996: This section allows a party to challenge an arbitral award before a court.
- Sections 47 and 48 of the Arbitration and Conciliation Act, 1996: These sections deal with the enforcement of foreign arbitral awards.
- Section 25 of the Code of Civil Procedure, 1908: This section empowers the Supreme Court to transfer cases from one High Court to another or from a civil court subordinate to one High Court to a civil court subordinate to another High Court.
The Supreme Court also considered its previous order in Naivedya Associates v. Kirti Nutrients Limited, which clarified the scope of Section 25 of the Code of Civil Procedure, 1908, regarding territorial jurisdiction.
Arguments
Arguments of the Petitioner (Neilan International Co. Ltd.):
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The Petitioner argued for the principle of exclusive jurisdiction, stating that the case under Section 34 of the Arbitration and Conciliation Act, 1996 should be transferred to the Bombay High Court to avoid conflicting views, since the case under Sections 47 and 48 of the same Act was already pending there. The Petitioner contended that both cases arose from the same agreement and between the same parties.
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The Petitioner submitted that no prejudice would be caused to the Respondent if the proceedings were moved to Mumbai, as its head office and promoter were based there.
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The Petitioner contended that the seat of arbitration was in London and the applicable law was that of Sudan. They argued that the parties had excluded the application of Part I of the Arbitration and Conciliation Act, 1996, and therefore, the Respondent could not file a petition under Section 34 in Bangalore.
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The Petitioner further argued that even if Indian courts had jurisdiction, the Principal City Civil Court in Bangalore would not have jurisdiction over an award passed in an international commercial arbitration. They submitted that such jurisdiction would lie with the High Court.
Arguments of the Respondent (Powerica Limited):
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The Respondent argued that the plea regarding the lack of jurisdiction of the Bengaluru court could not be taken up in a transfer petition before the Supreme Court. They cited the Supreme Court’s order in Naivedya Associates v. Kirti Nutrients Limited to support this argument.
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The Respondent contended that the scope of a petition under Section 34 of the Arbitration and Conciliation Act, 1996 and a petition under Sections 47 and 48 of the same Act are different, therefore, the argument of common issues is unfounded.
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The Respondent argued that mere convenience of a party is not a good ground for exercising the power of transfer under Section 25 of the Code of Civil Procedure, 1908.
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The Respondent maintained that the Arbitration and Conciliation Act, 1996 is a self-contained code and relief cannot be sought under the provisions of the Code of Civil Procedure, 1908, specifically under Section 25.
Submissions Table
| Main Submission | Petitioner’s Sub-Submissions | Respondent’s Sub-Submissions |
|---|---|---|
| Jurisdiction |
|
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| Transfer of Case |
|
|
Issues Framed by the Supreme Court
The primary issue before the Supreme Court was:
- Whether the plea of territorial jurisdiction or lack thereof can be entertained by the Supreme Court in its jurisdiction under Section 25 of the Code of Civil Procedure, 1908.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether the plea of territorial jurisdiction can be entertained under Section 25 of CPC? | No | The Supreme Court held that it cannot determine the question of territorial jurisdiction of a lower court in a transfer petition under Section 25 of the Code of Civil Procedure, 1908. The plea of jurisdiction should be raised before the court where the proceedings are pending. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How it was used |
|---|---|---|
| Naivedya Associates v. Kirti Nutrients Limited (Transfer Petition (C) 953/2021) | Supreme Court of India | The Supreme Court relied on its previous order to reiterate that the question of territorial jurisdiction cannot be decided in a transfer petition under Section 25 of the Code of Civil Procedure, 1908. |
Judgment
| Submission | Court’s Treatment |
|---|---|
| Petitioner’s argument for transfer based on exclusive jurisdiction and avoiding conflicting views. | Rejected. The Court held that the issue of territorial jurisdiction should be raised before the court where the proceedings are pending. |
| Petitioner’s argument that the Bangalore court lacks jurisdiction. | Rejected. The Court cannot decide on the territorial jurisdiction of the Bangalore court in this transfer petition. |
| Respondent’s argument that the issue of jurisdiction cannot be raised in a transfer petition. | Accepted. The Court agreed with the Respondent, citing its previous order in Naivedya Associates v. Kirti Nutrients Limited. |
How each authority was viewed by the Court?
- Naivedya Associates v. Kirti Nutrients Limited [CITATION]*: The Supreme Court followed this case to hold that it cannot determine the question of territorial jurisdiction in a transfer petition under Section 25 of the Code of Civil Procedure, 1908.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the principle that issues of territorial jurisdiction should be addressed by the court where the case is originally filed, and not in a transfer petition. The Court emphasized that its power under Section 25 of the Code of Civil Procedure, 1908 is limited and does not extend to determining territorial jurisdiction. The Court’s previous stance in Naivedya Associates v. Kirti Nutrients Limited also weighed heavily in its decision.
| Sentiment | Percentage |
|---|---|
| Adherence to precedent | 50% |
| Limited scope of transfer jurisdiction | 30% |
| Procedural correctness | 20% |
| Ratio | Percentage |
|---|---|
| Fact | 20% |
| Law | 80% |
Logical Reasoning
Judgment
The Supreme Court dismissed the transfer petition, holding that it could not entertain the plea of territorial jurisdiction in a transfer petition under Section 25 of the Code of Civil Procedure, 1908. The Court reasoned that the issue of jurisdiction should be raised before the court where the proceedings are pending. The Court relied on its previous order in Naivedya Associates v. Kirti Nutrients Limited, which had clarified this point.
The Court stated, “In these circumstances, I do not think there is much scope for going into the question as to whether the Court in which the suit is instituted has territorial jurisdiction to try and determine the suit or not in a petition for transfer of a suit invoking Section 25 of the Code of Civil Procedure.” This quote highlights the Court’s stance on the limited scope of its jurisdiction in transfer petitions regarding territorial matters.
The Court further noted, “Apropos, it is no longer res integra that there is limited scope vested in this Court while exercising its jurisdiction under Section 25 of CPC and the same cannot be extended to determine the question of territorial jurisdiction of the proceedings before it.” This reinforces the Court’s position that it cannot delve into the territorial jurisdiction of lower courts when considering a transfer petition.
The Court concluded, “In view of the foregoing, the main argument raised by the Petitioner is bereft of merit, however, in my considered opinion other arguments are also of no substance warranting to exercise the jurisdiction to transfer the case as prayed for. Accordingly, the transfer petition filed by the Petitioner is bereft of any merit and hence dismissed.”
Key Takeaways
- ✓ The Supreme Court will not decide on the territorial jurisdiction of a lower court in a transfer petition under Section 25 of the Code of Civil Procedure, 1908.
- ✓ Challenges to territorial jurisdiction must be raised in the court where the case was originally filed.
- ✓ This decision reinforces the limited scope of the Supreme Court’s jurisdiction in transfer petitions.
- ✓ Parties should ensure they raise jurisdictional issues in the appropriate forum.
Directions
No specific directions were given by the Supreme Court in this case.
Development of Law
The ratio decidendi of this case is that the Supreme Court cannot determine the territorial jurisdiction of a lower court in a transfer petition under Section 25 of the Code of Civil Procedure, 1908. This judgment reinforces the existing legal position as stated in Naivedya Associates v. Kirti Nutrients Limited, clarifying that such issues must be raised in the court where the proceedings are pending. There is no change in the previous position of law.
Conclusion
The Supreme Court dismissed the transfer petition filed by Neilan International Co. Ltd., reiterating that it cannot decide on the territorial jurisdiction of a lower court in a transfer petition. The Court emphasized that such challenges must be raised in the court where the case is originally filed. This judgment reinforces the procedural framework for handling jurisdictional issues in civil cases.