RAJASTHAN STATE ELECTRICITY BOARD versus M/S. UNIVERSAL PETROL CHEMICALS LTD.

Citation: [2009] 1 S.C.R. 138 · Decided: 12-01-2009 · Supreme Court of India · Bench: TARUN CHATTERJEE · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
B 
c 
(2009] 1 S.C.R. 138 
RAJASTHAN ST ATE ELECTRICITY BOARD 
v. 
M/S. UNIVERSAL PETROL CHEMICALS LTD. 
(Civil Appeal Nos. 5430-31 of 2002) 
JANUARY 12, 2009 
[TARUN CHATTERJEE AND DR. MUKUNDAKAM 
SHARMA, JJ.] 
ARBITRATION AND CONCILIATION ACT, 1996: 
ss. 20, 31(4) and 41(1) - Agreement containing 
arbitration clause as also an ouster clause confining to 
jurisdiction of court at Jaipur - Petition uls 20 of the Act filed 
in Calcutta High Court - HELD: It is only the court at Jaipur 
0 which will have jurisdiction to try and decide arbitration 
proceedings between the parties and also entertain a petition 
u/s 20 of the Act - Code of Civil Procedure, 1908 - ss. 2(c) 
and 20 - Jurisdiction of court. 
The appellant Electricity Board having its base and 
E operation at Jaipur placed two orders for supply of 
transformer oil with the respondent, a company, having 
its registered office and manufacturing unit at Calcutta. 
The purchase orders were followed by two agreements. 
The general conditions of contract contained an 
F arbitration clause as also an ouster clause confining to 
the jurisdiction of the court at Jaipur only. Disputes arose 
between the parties. The respondent filed a petition uls.20 
of the Arbitration Act, 1940 in the nature of a suit before 
the Calcutta High Court. The suit was dismissed by order 
G dated 6.3.1991. However, ultimately, the appeals of the 
respondent were allowed by the Division Bench of the 
High Court holding that the forum selection clause as 
appearing in the agreements would not operate in view 
of the specific prohibition uls.31(4) of the Act. It was also 
H 
138 
RAJASTHAN STATE ELECTRICITY BOARD v. 
139 
UNIVERSAL PETROL CHEMICALS LTD. 
held that the respondent having made an application 
A 
before the Calcutta High Court, which was a Court of 
competent jurisdiction to try and decide the proceedings, 
that Court would be entitled to exercise the jurisdiction 
and all subsequent applications would be made to the 
said Court only. 
B 
In the instant appeals filed by the Board, the question 
... 
for consideration before the Court was: whether the 
ouster clause in the agreement between the parties would 
also be applicable in ascertaining the competent court for c 
making an application for reference u/s 20 of the 
Arbitration Act, 1940. 
Allowing the appeals, the Court 
HELD: 1.1. The Division Bench of the Calcutta High 
D 
~. 
Court misread and misinterpreted the provisions of sub-
Sections (3) and (4) of s.31 of the Arbitration and 
Conciliation Act, 1996, and thereby arrived at a wrong 
finding to the effect that by virtue of the provisions of 
s.31(4) the Calcutta High Cc.urt would have jurisdiction 
E 
in the matter. An analytical look at the provisions of sub-
sections (3) and (4) of Section 31 of the Act will make it 
explicitly clear that any application in any reference, 
.,; 
meaning thereby even an application u/s 20 of the Act, 
/ 
could or should be filed in a court competent to entertain 
F 
such proceeding and having jurisdiction to decide the 
subject of the reference. Such jurisdiction would or could 
be restricted by the agreements entered into by and 
between the parties. [Para 27 and 28] (155-A-B-E] 
1.2. As per Section 41 (1) of the Arbitration Act, 1940, 
G 
"' 
the provisions of the Code of Civil Procedure, 1908 shall 
apply to all proceedings before the court, and to all 
appeals, under the Act. Thus, jurisdiction of the court 
under the Act to entertain the proceeding for filing an 
award was governed by the provisions of the Code and, 
H 
140 
SUPREME COURT REPORTS 
[2009] 1 S.C.R. 
A therefore, s. 20 of the Code will apply in respect of 
deciding the issue with regard to territorial jurisdiction of 
a court as defined in s.2(c) of the Code, in respect of a 
matter relating to arbitration also. [Para 16 and 25] [148-
F-G] 
B 
1.3. There are number of decisions of this Court 
wherein it was held that where there may be two or more 
\.. 
competent courts which can entertain a suit consequent 
upon a part of the cause of action having arisen therein, 
c if the parties to the contract agree to vest jurisdiction in 
one such court to try the dispute which might arise as 
between themselves, such agreement would be valid and 
binding.The legal proposition settled by this Court in 
respect of territorial jurisdiction and applicability of s.20 
of the Code to Arbitration Act is clear, unambiguous and 
D explicit. The said position is binding on both the 

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