Allahabad High Court says Section 6 of Commercial Courts Act does not override arguments made by parties


The Allahabad High Court while dismissing an appeal held that Section 6 of Commercial Courts Act, 2015 is an enabling provision and does not override agreements made between parties regarding jurisdiction.

The Division Bench of Chief Justice Arun Bhansali and Justice Vikas Budhwar passed this order while hearing an appeal filed by North Eastern Railway.

The appeal is directed against order dated 20.10.2023 passed by Commercial Court, Gorakhpur, whereby, the application filed by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996 has been ordered to be returned for being presented before the Court of competent jurisdiction.

The appellant, aggrieved of the award dated 17.01.2022, filed the application under Section 34 of the Act before the Commercial Court, Gorakhpur. An application was filed by the respondent, inter alia, questioning the territorial jurisdiction of the Court in entertaining the said application under Section 34 of the Act. Submissions were made that on 06.12.2007, the Railway Board had issued a tender for manufacture and supply of Prestressed Monoblock Concrete Sleepers. The tender documents were issued by the Railway Board, New Delhi. The tender was submitted by various suppliers including the respondent, which bid was accepted by the Railway Board, New Delhi.

On 12/15.09.2008, the Railway Board, New Delhi issued detailed letter of acceptance and clause 23 and 24 of the letter of acceptance, deals with the laws governing the contract and jurisdiction, whereby it was specifically provided that the Courts of place from where the tender documents and acceptance of the tender were issued, shall alone have jurisdiction to decide any disputes arising out of or in respect of the order and as the tender documents were issued and acceptance of tender was made from New Delhi, only the Courts at New Delhi had the jurisdiction in respect of the application and therefore, the application deserves to be dismissed for lack of territorial jurisdiction.

The Court noted that,

The objection was contested by the appellant, inter alia, on the grounds that the main party to the dispute was North-Eastern Railways, whose headquarter is at Gorakhpur, the payment for the contract was made at Gorakhpur and the parties are situated at Gorakhpur and therefore, the Court at Gorakhpur had the jurisdiction.

Further, submissions have been made that in terms of provisions of Section 6 of the Commercial Courts Act, 2015 also the Court at Gorakhpur had the jurisdiction.

The Commercial Court, after hearing the parties, came to the conclusion that the tenders were invited at New Delhi and from there only, the acceptance was issued and therefore, the part cause of action arose at New Delhi and as the parties had agreed for excluding the jurisdiction of other Courts, even if a part cause of action had arisen at Gorakhpur, on account of such exclusion, Courts at New Delhi only had the territorial jurisdiction and consequently, passed the order impugned.

Counsel for the appellant made submissions that the Commercial Court failed to consider the fact that part cause of action had arisen at Gorakhpur and therefore, the jurisdiction before the said Court does lie. However, only on account of the fact that clause 24 provided for jurisdiction of Courts and that also did not specify the place, the exclusion of jurisdiction of the Courts at Gorakhpur is not justified.

Counsel for the respondent supported the order impugned. Submissions were made that the law on the aspect is well settled wherein though the jurisdiction cannot be conferred on any Court, however, if more than one Courts have jurisdiction pertaining to the subject matter of the dispute, the jurisdiction of the other Courts except one can be excluded.

The Court observed that,

It is not in dispute that the tender documents were issued from New Delhi and acceptance of tender has also been issued from New Delhi. The admitted clause 24 of the letter of acceptance, inter alia, reads as under:

"24. Jurisdiction of Courts- The Courts of the place from where the tender documents and acceptance of tender has been issued shall alone have jurisdiction to decide any disputes arising out of or in respect of the order."

A perusal of the above clause would reveal that the Courts of the place from where the tender documents and acceptance of tender have been issued shall alone have jurisdiction to decide any disputes arising out of or in respect of the order.

The use of the phrase 'shall alone' in the said clause clearly reflects the intention of the parties in excluding the jurisdiction of other Courts except the place from where the tender documents and acceptance of tender documents have been issued, which, admittedly, in the case, is New Delhi only.

"So far as reliance placed on Section 6 of the Act of 2015 is concerned, the said Section deals with the jurisdiction of the Commercial Courts, whereby, the Commercial Courts have been empowered to try all suits and applications relating to a commercial dispute of a Specified Value arising out of the entire territory of the State over which it has been vested territorial jurisdiction. The explanation provides that a commercial dispute shall be considered to arise out of the entire territory of the State over which a Commercial Court has been vested jurisdiction, if the suit or application relating to such commercial dispute has been instituted as per the provisions of Sections 16 to 20 of the CPC. The said provision is only enabling provision and it cannot be said that on account of the said provision, irrespective of the inter se agreement between the parties excluding the jurisdiction of Court, based on their territorial situs, the Court at Gorakhpur would have jurisdiction.

In view of the above discussion and the settled law, no case for interference in the order passed by the Commercial Court is made out", the Court further observed while dismissing the appeal.