Holding

The Faridabad court had jurisdiction to entertain the Section 14 application and the ex‑parte award was not automatically void; however, the ex‑parte order making the award the rule of the court was set aside and the case was remitted to the trial court for merits‑based determination.

Summary

The appellant Jatinder Nath entered into a development agreement with Chopra Land Developers for construction of a housing complex in Delhi, agreeing that any dispute would be arbitrated by a sole arbitrator in Faridabad and that the Faridabad courts alone would have jurisdiction. When a dispute arose, the arbitrator entered upon the reference in August 1992 but gave an ex parte award on 29 March 1994, well beyond the statutory four‑month period, after the appellant had filed a Section 20 petition in the Delhi High Court. The developer then applied under Section 14 of the Arbitration Act, 1940, before the Additional Civil Judge, Faridabad, to make the award the rule of the court, which the appellant contested on grounds of lack of territorial jurisdiction and the award’s alleged non‑est status. The Supreme Court held that the parties’ agreement conferring exclusive jurisdiction to the Faridabad court was effective, that the court had jurisdiction under Section 31(1) to entertain the Section 14 application, and that an award made after the four‑month period is not automatically void and may be validated under Section 28. Consequently, the ex‑parte order making the award the rule of the court was set aside and the matter was restored to the trial court for a merits‑based determination, while the appeal was dismissed.

Issues considered

The Additional Civil Judge, Faridabad's territorial jurisdiction to entertain a Section 14 application despite the subject property being in Delhi.
Whether the ex‑parte award dated 29‑Mar‑1994 is non‑est because the arbitrator exceeded the four‑month period and became functus officio.
The validity and effect of clause 21 of the development agreement conferring exclusive jurisdiction to the Faridabad courts.
The applicability of Section 31(4) of the Arbitration Act, 1940 in the present circumstances.
The power of the court under Section 28 to extend the time for making an award and give it legal effect.

Legislation cited

Arbitration Act, 1940s. 14, s. 16(3), s. 20, s. 28, s. 30, s. 31(1), s. 31(2), s. 31(4), s. 33, s. 8
Civil Procedure Code (CPC)s. 16, s. 20, s. 31

Subjects

ArbitrationTerritorial jurisdictionEx parte awardFunctus officioSection 14 Arbitration ActSection 31 Arbitration ActSection 28 Arbitration ActDevelopment agreementCourt jurisdictionAward rule of court

Judgment

- >--<,
JATINDER NATH
v.
MIS. CHOPRA LAND DEV. P. LTD. AND ANR.
A

MARCH 2, 2007

[S.H. KAPADIA AND B. SUDERS HAN REDDY, JJ.] B

Arbitration Act, 1940:
)'
ss. 8, 14. 16(3), 20, 28, 31(2)-Agreement-Regarding construction on
a plot located at Delhi-Terms of agreement specifYing the Court at Faridabad c
to have jurisdiction-Dispute-Reference to Arbitrator with concurrence of
the parties-On the first date of hearing Arbitrator was absent-Suit under
Section 20 of the Act-After fourteen months of the reference, ex-parte award
by Arbitrator-Application before trial court at Faridabad for making the
award rule of the Court-Territorial jurisdiction of the court objected to and
award also challenged as non-est as the Arbitrator became fimctus officio
D
after four months from the date of reference-Trial Court upheld the objection
to territorial jurisdiction-In Revision High Court held that the trial court
had the territorial jurisdiction-In view of High Court judgment, award made
rule of the Court-On appeal, held: In view of the terms of the agreement,
court at Faridabad had territorial jurisdiction to adjudicate upon the award- E
The award cannot be said to be vitiated only on the ground that it was
passed beyond four months from the date of reference-Parties may proceed
up to the stage of delivery of award, without the intervention of court-Court
has power to extend the time and give life to the vitiated award by exercising
judicial discretion under Section 28-However, in view of the facts of the
case, the ex-parte order making the award rule of the court is set aside. F
~

\.. ss. 8 and 20-Difference between-Discussed.

Jurisdiction-Territorial jurisdiction-Jn Arbitration cases-
Determining factors-Held: Residence apart from a accrual of cause of action
is relevant for determining the territorial jurisdiction of the court in G
arbitration cases.

..
"- Respondent-Developer entered into an agreement with the appellant for
construction of a housing complex at New Delhi. At that time appellant used
to reside at Faridabad. As per the terms of the agreement, in case of any
545 H
546 SUPREME COURT REPORTS (2007) 3 S.C.R.

A dispute regarding the agreement, courts at Faridabad alone had the
jurisdiction. When the dispute arose, appellant requested for reference to ---(

named Arbitrator. The Arbitrator entered upon the reference on 24.8.1992.
Respondent-developer had also flied a suit for permanent injunction in Delhi
High Court. On the date when the first hearing was fixed neither the
B Arbitrator nor the respondent reached. It was only the appellant who reached
the venue. Appellant thereafter moved a suit under Section 20 of Arbitration
Act, 1940. After fourteen months of referei:ce, the Arbitrator fixed the matter
for hearing. Appellant requested the Arbitrator not to proceed in view of the
pendency of the matter before High Court. But the Arbitrator gave the award I
I'
ex parte. Developer-respondent filed an application under Section 14 of the
C Act before the trial court at Faridabad. The appellant inter alia objected to
the territorial jurisdiction of the trial court. Trial court held that it had no
territorial jurisdiction to pass decree in terms of the award as the suit property
was located in Delhi. Appellant moved High Court against the order of trial
court. High Court allowed the Revision holding that in view of terms of the
agreement exclusive jurisdiction lied with Faridabad court, and not the court
D at Delhi; that Section 31(4) of the Act was not applicable; that there was no
waiver on the part of the developer by filing suit for permanent injunction at
Delhi as the suit had no co-relation with the arbitration matter; that under
circumstances of the case Section 20 was not applicable. Pursuant to the order
of High Court, award was made rule of the Court by the trial court. Hence the
E present appeal.

Dismissing the appeal, the Court

HELD: I.I. By Clauses 11, 20, and 21 of the agreement, the parties
agreed that in case of dispute between the parties the same shall be referred
F for arbitration to the sole arbitrator at Faridabad and his decision shall be
binding on both the parties. Under clause 21, the parties agreed that the
Faridabad court alone shall have the jurisdiction in case of any dispute between
the parties. [Para 151 [557-GI

1.2. On the facts of this case, therefore, it cannot be said that the trial
G court at Faridabad had no jurisdiction to make the Award the rule of the court
under section 14 of Arbitration Act, 1940. Section 31 (1) of the Act provides
that an Award may be filed in any court having jurisdiction in the matter to
which the reference relates. Under that section, the Award can be tiled in the
court within whose jurisdiction the property in dispute lies. Parties cannot
H give jurisdiction to a court under Section 14 by consent if that court does not
JATINDER NATH v. CHOPRA LAND DEV. P. LTD. 547
have jurisdiction. If an award refers to an immovable property, the court having A
......., jurisdiction in respect of the same will entertain an application under Section
14. In order to decide as to which court has jurisdiction to entertain a petition
under Section 14, reference has to be made to Section 2(c) read with Section
31(1) of the Act. Merely because the arbitrator chooses to hold the proceedings
in a place where no suit could be instituted, and chooses to make an award at
that place, it would not give the court of that place territorial jurisdiction to B
decide the matter unrler the Act. Section 30 refers to ground for setting aside
an award. Section 30 is to be read with Section 33. (Para 15) (558-C-Fj
\ 1.3. The award can be filed only in the court which would have
jurisdiction in respect of the subject matter of the dispute. In order to decide
the jurisdiction of the court, it is necessary to decide whether the court would
c
have jurisdiction to try a regular suit between the parties in which the relief
is claimed. Section 33 does not prescribe the court before which an application

-
under this section may be filed, but section 31 makes such provision. Section
31(2) provides that all questions regarding the validity, effect or existence of
an award or an arbitration agreement shall be decided by the court in which D
the award has been filed or may be filed. Section 2(c) lays down the forum.
The application has to be moved in the court within whose jurisdiction the
opposite party resides or carries on business or within whose jurisdiction
any part of the cause of action arises. Residence or carrying on business of
a party, apart from the place of accrual of a cause of action is relevant for
E
determining the territorial jurisdiction of the court in arbitration cases, if
the question so arises in connection with the subject matter of the dispute.
(Para 15) (559-A-D)

1.4. At the relevant time the appellant resided at Faridabad. Under the
contract, the parties agreed to refer all disputes to the Faridabad court. Apart F
from the residence, the place of accrual of the cause of action is concerned.

- "'
}
In the circumstances of the case, it cannot be said that this case is similar to
a suit for land. A housing complex has to be constructed at the site. When
dispute arises, it will not be confined only to immovable property. Such disputes
also require accounts to be maintained. The disputes also involve rendition of
accounts. In the circumstances, Section 20 CPC alone is attracted. Therefore, G
•,
the High Court was right in holding that the Faridabad court had jurisdiction
- 'l. to make the Award the rule of the court. (Para 16) (559-D-E; G-H; 560-A)

2.1. It cannot be said that ex parte Award was non est since it was made
beyond four months from the date when the arbitrator entered upon the
H
548 SUPREME COURT REPORTS [2007] 3 S.C.R.

A reference. Chapter II of the Arbitration Act covers references, in which the
parties may proceed, if nothing goes wrong, up to the stage of delivery of the ,
,.,....
award, without the intervention of the court. This does not mean that the court
has no authority to intervene at an early stage, should it become necessary.
In the present case, the arbitrator entered upon a reference pursuant to the
notice ~iven by the appellant. Therefore, Section 8 of the Act has no
B application. (Para 17] (560-8-C]

2.2. Section 8 applies only where the parties do not concur in the
appointment. Section 8 and Section 20 operate in different provinces. Section
20 confers power on the court to order the agreement to be filed and to make ,,.' •
c an order of reference to the arbitrator appointed by the parties or where they
do not agree, the court can appoint any other person of its choice as an
arbitrator. This difference between Section 8 and Section 20 shows that the
reference flows from an agreement between the parties in the cases falling

-
under Section 8. The reference flows from the agreement in cases falling
under Chapter II of the Arbitration Act and as long as the agreement stands,
D the reference remains valid unless it is superseded by an order of the court
under Section 19. Under that Section, where award becomes void under Section
16(3) or where an award is set aside, the court may by an order supersede
the reference and shall thereupon order that the arbitration agreement shall
')-
cease.te; have effect. On the other hand, in cases falling under Section 20 of
the Act, power is conferred on the court to make an order of reference to the
E
arbitrator. That power is conferred on the court which orders the agreement
to be filed before it. In a proceeding under Section 8, disputes are presented
by the parties before the arbitrator. Whereas in proceedings under Section
20, the disputes are referred by the court. It is for this reason that it has
been repeatedly held that merely because an arbitrator does not make an award
F within the specified period of four months, the court has the power to extend
the period. The award given by an arbitrator after four months is not binding
on the parties. Such an award is vitiated as the arbitrator has no power to J
make an award after four months. However, a bare failure of an arbitrator lo ""':'.
make an award within the time allowed by law will not involve the consequences
of it being set aside only on that ground. The court has ample powers in a
G given case to extend the time and give life to the vitiated award by exercising
judicial discretion under Section 28 of the Act. An application to have the
/

award set aside on the ground that it was made beyond time prescribed has to
be moved under the Act. No separate suit would lie for that purpose.
~ -
(Para 17] (560-D-H; 561-A-B]
H
JATINDERNATHv. CHOPRA LAND DEV. P. LTD. [KAPADIA, J.) 549
2.3. Section 28 is not limited only to references to arbitration made in A
...... a suit pending before the c,ourt. Further, the power given to the court under
Section 28 is so wide that lt can extend the time even if the award is made
beyond four months from the date of the arbitrator entering upon the reference.
The only restriction is that it must be exercised with judicial discretion.
(Para 17! (561-CI
B
3.1. In the present case, the Developer moved an application for making
the award the rule of the court. The appellant chose not to appear before the
trial court. In the circumstances, an ex parte decree came to be passed on.
...
\
The objections filed by the appellant were dismissed as he chose to remain
absent. In view of the facts that the arbitrator entered upon the reference on c
24.8.1992; he fixed the date of hearing on 5.9.1992; on 5.9.1992 the appellant
appeared before him; the arbitrator was absent; the Award has been given
almost after fourteen months and that too after 14.10.1993 when the appellant
moved an application under Section 20 of the Act for appointment of a new
-• arbitrator, ex parte Order passed by the trial court at Faridabad making Award
D
the rule of the court is set aside. Consequently restoration of the matter to
the file of the Court of Additional Civil Judge (Senior Division), Faridabad is
directed. Trial court will proceed on the basis that it has territorial jurisdiction
to decide the application made by the Developer under sections 14to17 of the
Act. The said application will be decided on merits alone in accordance with
law. (Para 17) [561-C, D, F; 562-AI E

3.2. The trial court will have to decide whether to extend the period for
making the Award or not, whether to supercede the reference or not. The
trial court will proceed in accordance with law. (Para l 7] (562-B(

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1134 of2007. F

.... From the Final Judgment and Order dated 19.4.2006 of the High Court
\. of Punjab and Haryana at Chandigarh, in C.R. No. 4877/1996.
--r-
Sunil Gupta, Jatin Zaveri for the Appellant.
G
R. Venkataramani, Nikilesh Ramachandran and Ashok Panigrahi for the
Respondents.
, '\ The Judgment of the Court was delivered by

KAPADIA, J. I. Leave granted. H
550 SUPREME COURT REPORTS (2007] 3 S.C.R.

A 2. This civil appeal arises from the final order dated 19.4.2006 passed
by the High Court of Punjab and Haryana at Chandigarh allowing Civil ~
Revision No. 4877/96.

3. The short question which arises for determination in this civil appeal
is whether the Additional Civil Judge (Senior Division), Faridabad was right
B in dismissing the application filed under section 14 of the Arbitration Act,
1940 (for short "the Act") filed by Mis Chopra LanJl Developers Pvt. Ltd.
("the Developer") on the basis of Award dated 29.3.1994 given by the Arbitrator
in the above court for want of jurisdiction.
;
C 4. The Developer is a private limited company having its registered
office at Saket, New Delhi. On 16.3.1990 an Agreement was entered into by
the Dev.eloper with one Jatinder Nath (appellant herein). At that time, the
appellant was residing at Faridabad. Under the above agreement, the Developer
agreed to construct a housing complex on a plot bearing No. G-13, Saket, New

D
Delhi. Under the said Agreement, the Developer agreed to finance the
construction from its own resources. Clauses 11, 20 and 21 of the said
agreement read as follows:
-
"11. In case of any dispute arising between the parties in this respect,
the matter shall be referred to the Sole Arbitrator for his valuable
decision and his decision shall be final and binding on both the
E
parties.
20. That in case of any dispute arising betw~en the parties in respect
of these presents, the same shall be referred for arbitration to the
sole Arbitrator. Shri Damodar Sharma, 5-N/35, NIT Faridabad
shall be the sole Arbitrator and the decision shall be binding on
F
both the parties.
21. The agreement has been entered into between the parties at
)
Faridabad and the Faridabad Courts only shall have the jurisdiction
~
in case of any dispute between the parties to the said agreement."
G 5. In terms of the said agreement, when the dispute arose between the
parties, the appellant herein requested for a reference to the named Arbitrator.
This was vide letter dated 20.8.1992. The Arbitrator entered upon the reference
on 24.8.1992. He fixed the hearing on 5.9.1992 on which date the appellant
remained present at the venue of arbitration. However, neither the arbitrator
H nor the Developer was present. Suddenly after fourteen months, the arbitrator
JATINDER NATH v. CHOPRA LAND DEV. P. LTD. [KAPADIA, J.] 551
purported to act. He fixed the matter for hearing on 20.2.1994. Since the entire A
,. --,....,:
matter was pending before the Delhi High Court which was moved by the
appellant herein under section 20, the arbitrator was requested not to proceed.
Despite the request, the arbitrator proceeded to give his Award (ex parte).
This was on 29.3.1994.

6. To complete the chronology of events, it may be pointed out that the B
Developer (first respondent herein) filed an application under section 14 of
the Act for filing the Award in the court of Additional Civil Judge (Sr. Div.),
\, Faridabad (for short "the trial court"). Notice of the said application was also
given to the appellant herein. The appellant herein appeared and filed his
; objections. He objected to the jurisdiction of the trial court. According to the c
appellant, the suit land stood located in Saket, New Delhi and, therefore, the
trial court had no jurisdiction to pass the decree in terms of the said Award.
This was the basic objection raised by the appellant before us. Apart from
his objection on territorial jurisdiction, the appellant also submitted before the
. trial court that the Arbitrator had issued notice dated 24.8.1992 fixing the date
D
of hearing on 5.9.1992. However, when his advocate reached the residence of
the Arbitrator on the date fixed, neither the Arbitrator nor the Developer had
turned up. The appellant also contended before the trial court that the Award
was not made within the period of four months from entering upon the
reference and, therefore, the Arbitrator had become functus officio. He further
pointed out to the trial court that an application under section 20 of the Act E
has also been filed in the High Court by him for filing the arbitration agreement
in court. The appellant submitted that despite raising the above objections
before the Artbitrator, the Arbitrator proceeded to pass an ex parte Award
dated 29.3.1994. The appellant further pointed out that the Developer had filed
a suit for permanent injunction in the Court of Senior Sub-Judge, Delhi and F
that the Developer had sought intervention of the civil court for adjudication
of the dispute and, in the circumstances, the Arbitrator could not have made
' .. \ an ex parte Award dated 29.3.1994. According to the appellant, the said ex
parte Award passed by the Arbitrator was in violation of the provisions of
the Act; that it was non est, and, therefore, the same could not be made rule
of the Court.
G

• "·
' 7. The trial court on the basis of the above pleadings framed several
issues. Two of the six issues were, whether Award dated 29.3.1994 was non
est as the Arbitrator had become functus officio and whether the trial court
had no territorial jurisdiction to entertain the matter since the suit lands are H
552 SUPREME COURT REPORTS [2007] 3 S.C.R.

A located in Saket, New Delhi. .,_,
8. By impugned judgment dated 24.9.1996, the trial court held that in
view of section 31 (4) of the Act, since the land in question stood located in
Sake!, New Delhi and since the appellant herein is the resident of Delhi and
. .,_
since the Developer was carrying on business in Delhi the trial court had no
B territorial jurisdiction to pass the decree in terms of the Award. The trial court
rejected the contention of the Developer that the subject matter of the reference
was the contract between the parties; that under the contract, the dispute, if
any, was to be referred for arbitration in Faridabad; that under the contract, )
the dispute was referable to the sole arbitrator whose decision was to bind
c both the parties. The trial court also rejected the contention of the Developer '
that the agreement was entered into between the parties at Faridabad and that
the Faridabad court alone had the jurisdiction to decide the above dispute.
The trial court also rejected the contention of the Developer that on the date
of execution of the agreement, the appellant herein was residing in Faridabad.
On the merits of the case, the trial court found that the appellant herein had
D
moved a petition under section 20 of the Act on 14.10.1993 in the Delhi High
Court which was registered as Suit No. 2482/93 wherein it was prayed that
an independent arbitrator be appointed and the matter be referred for
arbitration. On 14.10.1993 the Arbitrator had not made the award. On 14. I0.1993
the period of four months had expired. The trial court found that after the
E institution of petition under section 20 of the Act on 14. I0.1993, the arbitrator,
suddenly, after a lapse of almost fourteen months from the date of his entering
upon the reference, made an ex parte Award against the appellant on 29.3.1994.
According to the trial court, though the agreement (Ex. P-1) stood executed
at Faridabad, the validity of that agreement and the dispute arising therefrom
F have to be decided in the civil court at Delhi since the property in question
stood located in Sake!, New Delhi. According to the trial court, the Developer
had moved an application under section 14 of the Act on 12.4.1994, by that
application, the Developer sought a decree from the trial court at Faridabad /
in terms of the ex parte Award. On 12.4.1994, according to the trial court, the ·-
appellant herein was residing in Delhi, he was served with the summons at
G his residential address in Delhi coupled with the fact that the suit property
was in Delhi and, therefore, the trial court at Faridabad had no territorial
jurisdiction to entertain and try the Developer's application under section 14
of the Act. According to the trial court, there was one more reason for saying •
,. -

that it had no territorial jurisdiction. According to the trial court the agreement
H (Ex. P-1 ), pertained to immovable property at Saket and when a dispute arose
JATlNDER NATH v. CHOPRA LAND DEV. P. LTD. [KAPADIA, l.] 553
...
between the parties, the appellant herein had moved the Delhi High Court A
,I
• under section 20 of the Act in which the address of the appellant was shown
as G-13, Saket, New Delhi. The trial court also look into account one more
circumstance, namely, that the Developer had instituted Civil Suit No. 945/92

-- against the appellant herein. In that suit, the Developer had asked for a decree
for permanent injunction. In that suit the appellant herein was the defendant.
In that suit, the address of the appellant as defendant was also shown as G-
B
13, Saket, New Delhi. In the circumstances, the trial court held that the
Developer had invoked the territorial jurisdiction of the Delhi High Court
\., much prior to his application under section 14 of the Act to the trial court
herein on 12.4.1994. In the circumstances, the trial court held that the proviso
,.. to section 16 CPC was not applicable and that the application filed by the c
Developer under section 14 of the Act dated 12.4.1994 should have been
instituted in the Delhi Court within the local limits of whose jurisdiction the
suit property stood located. In the circumstances, it was held by the trial court
that clause 21 of the agreement conferring jurisdiction to the Faridabad court
cannot be implemented. The trial court observed that since the appellant had
moved the Delhi High Court under section 20 of the Act for appointment of D
a new arbitrator in the year 1993 and since that application was prior to
12.4.1994 and since that applicatior was anterior to the reference, the
appellant's application under section 20 of the Act fell within the purview of
section 31 (4) of the Act. According to the trial court, since a petition under
section 20 of the Act was pending prior to 12.4.1994 in the Delhi High Court, E
the Developer should have moved his application under section 14 also
before the Delhi High Court. In this connection reliance was placed on the
judgment of this court in the case of Union of India v. Surjeet Singh Atwal,
reported in AIR (1970) SC 189. Aggrieved by decision of the trial court dated
24.9.1996, the Developer moved the Delhi High Court by way of the CRA. In
the CRA the Developer contended that under the agreement (Ex. P-1) vi de F
').. clause 21 it was agreed between the parties that the Faridabad courts alone
' \
-.- ...
shall have the jurisdiction in case of any dispute between the parties and,
therefore, the trial court had territorial jurisdiction to entertain and try
application dated 12.4.1994 under section 14 of the Act. It was contended, in
the alternative, that where two courts have concurrent jurisdiction, the parties G
by agreement can choose the jurisdiction of one of them and such a choice

-" ...
was not against the public policy. It was contended that an agreement whereby
jurisdiction of the court stood specified was not contrary to section 28 of the
Contract Act and to the public policy. It was further contended that where
two courts had territorial jurisdiction to try a case, it is open to the parties
H
554 SUPREME COURT REPORTS [2007] 3 S.C.R.

A to enter into an agreement whereby jurisdiction of the court stood specified.
On behalf of the Developer it was further contended that, at the time of
execution of the agreement (Ex. P-1) the appellant herein resided at Faridabad
• '
and his subsequent change of address cannot change clause 21 of the
agreement. It was further urged on behalf of the Developer that an application
under section 20 of the Act was filed by the appellant herein in the Delhi High
-......
B Court and it had no relevance with clause 21 of Ex. P-1. According to the
Developer, filing of such suit under section 20 of the Act before the Delhi
High Court cannot alter the terms of Ex. P-1. It was further urged on behalf
of the Developer that it had instituted the above suit for permanent injunction )
in the Delhi High Court. That suit was Suit No. 945/92 for permanent injunction
c which was for a relief which had no correlation with the arbitration matter. ..
Moreover, that suit was for permanent injunction. Such a suit could have
been filed in Delhi courts alone as in that suit it was alleged that the appellant
herein was attempting to interfere with the Developer's possession. Such a
suit did not constitute a waiver. On behalf of the Developer, it was further
urged that the trial court had erred in coming to the conclusion that Ex. P-
D 1 cannot be given effect as the suit property was located at Sake!, NewDelhi
and that the parties were residing at Delhi.

9. On behalf of the appellant herein, it was sought to be argued before t-
the High Court that although Ex. P-1 was executed at Faridabad and although
at the relevant time the appellant resided in Faridabad, the dispute was in
E
connection with recovery of possession and, therefore, the civil court at
Faridabad had no jurisdiction to entertain, tr; and dispose of the Developer's
application under section 14 of the Act. It was also urged that subsequently
the appellant had shifted his residence from Faridabad to Saket in New Delhi ~
and, therefore, the trial court was right in refusing to entertain the Developer's
F application dated 12.4.1994 under section 14 of the Act. Accordingly, on
behalf of the appellant herein it was urged that no interference is called for
in the CRA. ) Jc

....
10. By the impugned judgment, the High Court held that Delhi High
Court was not a competent court as the parties had chosen to confer exclusive
G jurisdiction upon the Faridabad court. In the circumstances, section 31 (4) of
the Act was not applicable. The High Court further held that there was no
waiver on the part of the Developer by invocation of the jurisdiction of the ,,._
•
Delhi court when the respondent instituted Suit No. 945/92 for permanent
injunction. The High Court held that Suit No. 945/92 had no correlation with
H the arbitration matter. The High Court further held, that on the facts and
JA TINDER NATH v. CHOPRA LAND DEV. P. LTD. [KAPADIA, J.] 555

,0
circumstances of the present case, section 20 CPC was applicable; that section
CPC refers to institution of suits other than those covered by section 16
c;:rc on the basis of residence of defendant or cause of action. In the
A

1
circumstances, the High Court allowed the Revision Petition holding, that the
I trial court at Faridabad had jurisdiction to entertain and try application dated
. ; 12.4.1994 under section 14 of the Act; that section 31(4) of the Act was not B
attracted; that the arbitrator had entered upon reference on the application of
appellant herein and, therefore, there was no occasion for the appellant
moving the Delhi High Court under section 20 CPC seeking reference. Hence
this civil appeal.

C
..
\
11. As stated above, the short point which arises for determination in
this civil appeal is whether application dated 12.4.1994 filed by the Developer
in the trial court at Faridabad was maintainable.
)
12. At this stage, it may be mentioned that the trial court at Faridabad
following the impugned judgment of the High Court had dismissed the
I objections of the appellant herein and it has made said Award dated 29.3.1994 D
the rule of the court. This was on 31.5.2006. On 23.1.2007 the Developer's Suit
No. 945/92 for permanent injunction stood dismissed in default.

13. The basic point which needs to be decided by us is whether clause
21 of Agreement dated 16.3 .1990 (Ex. P-1) conferring jurisdiction on the E
Faridabad court was ineffective and whether the appellant is right in his
contention that the application made by the Developer under section 14 of
the Act was not maintainable in the Faridabad court on the ground of lack
of territorial jurisdiction.

14. Mr. Sun ii Gupta, learned senior counsel appearing on behalf of the F
appellant submitted that the Award made by the arbitrator dated 29.3.1994
being an ex parte Award was non est as it was passed after expiry of four
months from the date when the arbitrator entered upon the reference. He
contended that on 20.8.1992 the appellant had referred the dispute to the
arbitrator. On 24.8.1992 the arbitrator entered upon the reference and fixed the
date of hearing on 5.9.1992 on which date the appellant was present. On that G
date neither the arbitrator nor the Developer was present. On that date, the
appellant herein sought the next date of hearing. Despite the telegram seeking
the next date of hearing, the arbitrator did not respond. During the period
October, 1992 and November, 1992 disputes arose when the MCD had issued
notices directing the appellant herein to show cause why the building plan H
556 SUPREME COURT REPORTS (2007] 3 S.C.R.

A submitted by the Developer should not be revoked. Learned counsel pointed
out that on 15.10.1992 the Developer had in fact instituted Suit No. 945192 ilf"
the civil court at Delhi for permanent injunction. In that suit, vide para 16, the
Developer had invoked jurisdiction of the Delhi court. In the circumstances,
M
-
it was not open to the Developer to move the trial court at Faridabad on
12.4.1994 under section 14 of the Act. Learned counsel urged that both the
parties were aware that the dispute was in respect of the suit property located ~
B
at Saket in New Delhi. The dispute, according to the learned counsel, was for
possession of the suit property. The appellant herein had sought possession
of the suit property even before the arbitrator. The Award of the arbitrator,
according to the learned counsel, itself indicates that the arbitrator has given )
c relief in favour of the Developer concerning immovable property and, therefore,
the trial court was right in corning to the conclusion that the application made
on 12.4.1994 under section 14 by the Developer was not maintainable on the
(
.
ground of territorial jurisdiction in view of section 31(4) of the Act. The
second contention advanced on behalf of the appellant before us was that
the impugned Award dated 29.3.1994 was non est. According to the learned
D \
counsel, four months time available to the arbitrator under clause 3 of Schedule
I read with section 3 of the Act expired on 24.12.1992.After that date the
arbitrator became functus officio. In the circumstances, the appellant herein
filed an application under section 20 of the Act on 14.10.1993 before the Delhi
High Court for appointment of an arbitrator for adjudication of the dispute
E with the Developer. This application was converted into Suit No. 2482/93. It
is only thereafter that the arbitrator suddenly purported to act as an arbitrator
by fixing the date of hearing on 20.2.1994 when the appellant herein requested
the arbitrator in the light of the above facts not to proceed with the arbitration
~ --
proceedings since the entire matter was before Delhi High Court in Suit No.
2482/93. Despite the request made by the appellant, the arbitrator proceeded
F
to make an Award dated 29.3.1994 being an ex parte Award. Learned counsel
further pointed out that in fact prior to his application under section 20,
M.C.D. had revoked the sanction for construction of the complex and it was -1
l
the appellant herein who had filed a writ petition in the Delhi High Court being
W:rit Petition No. 5038/93 against the revocation by M.C.D .. "'-
G
15. On the first question on the la~k of territorial jurisdiction, we do not
find any merit in the contentions advanced on behalf of the appellant. We
have examined Ex. P-1 between the appellant and the builder (Developer)
;.
....
~

dated 16.3.1990. The agreement describes the appellant as the owner. It
describes Mis Chopra Land Developrnent"Pvt. Ltd. as the builder. Under the
H
JATINDER NA TH v. CHOPRA LAND DEV. P. LTD. [KAPADIA. J.] 557

<i!!fseement, the appellant remains the owner. Under the agreement, the appellant A
anplies to D.D.A. for time to construct a housing complex on a plot of land
a! Saket owned by the appellant. Under the agreement, the Developer agrees
to construct a housing complex on the plot bearing No. G-13, Saket, New
'Delhi. Under the agreement, the entire construction cost is financed by the
""r-Developer. Under the agreement, the housing complex consisted of basement, B
ground floor, mezzanine first floor, second floor and third floor. Under the
agreement, the Developer agreed to construct the housing complex without
prejudice to the owner's right. Under the agreement, the owner was required
to give permission to the builder to construct the housing complex. Under the
agreement, the entire cost of construction was to be borne by the Developer.
,. Under the agreement, the building plan, the completion certificate etc. were C
'\ to be signed by the appellant-owner. Under the agreement, vide clause 15, the
/ Developer agreed to pay to the appellant-owner a sum of Rs. 5 lacs in
consideration of his seeking permission to construct the housing complex.
/
This was in addition to the construction cost to be incurred by the Developer.
Clause 16 of the agreement stated that in consideration of the Developer's D
services to construct the housing complex, the appellant agrees to allow the
ownership of the basement, ground floor and mezzanine along with
proportionate interest in the land to be transferred in the name of the Developer.
At this stage, it may be noted that under the ex parte Award dated 29.3 .1994
the arbitrator has passed his Award in terms of para 16 and, therefore, it was E
contended before us on behalf of the appellant that the dispute related to
possession of the property; that the dispute was comparable to a suit for land
and that the submission was made specifically in view of the Award being
passed in terms of para 16 of the agreement (Ex. P-1 ). It was urged that since
the arbitrator has passed the Award directing the appellant to transfer the
ownership of basement, ground floor, mezzanine along with the proportionate F
interest in the land in favour of the Developer, the present dispute related to
recovery of possession and since the lands were located in Saket the trial
court had no jurisdiction to make the Award rufe of the court under section
14 of the Act. As stated above, we do not find merit in the contention
advanced on behalf of the appellant. We have examined Ex. P-1 in entirety. G
Apart from the above clauses of Ex. P-1, we have already quoted clauses 11,
20, and 21 by which the parties agreed that in case of dispute between the
parties the same shall be referred for arbitration to the sole arbitrator at
Faridabad and his decision shall be binding on both the parties. Under clause
21, the parties agreed that the Faridabad court alone shall have the jurisdiction
in case of any dispute between the parties. On our examining the terms and H
558 SUPREME COURT REPORTS [2007] 3 S.C.R.

A conditions of Ex. P-1 along with the surrounding circumstances thereto, we "'
are of the view that Ex. P-1 was a pure Development Agreement. The agreemenr ~

is merely an agreement whereby a party agrees to develop certain property
for a certain consideration. Under the agreement, the appellant herein continues
to remain the owner. He has to apply for permission to construct the building ,
B to the D.D.A .. The Developer agrees to construct on the land. The Developer -'!*
agrees to finance the entire construction cost and in lieu of the Developer's
services in the matter of construction of housing complex the owner (appellant
-
herein) agrees to permit transfer of the ownership a part of the complex to the
Developer. It is for this reason, as indicated by the events enumerated above, ,
J ~

that M.C.D. had issued notice to the appellant on 21.9.1992 to show cause
c why the building plan submitted should not be revoked. It is for the above
reasons, that M.C.D. ultimately revoked the sanction for the construction of
....
the housing complex on 18.5.1993 and it is the appellant herein as owner who
had sought to challenge the revocation vide Writ Petition No. 5038/93. On the
facts of this case, therefore, it cannot be said that the trial court at Faridabad
D had no jurisdiction to make the Award the rule of the court under section 14 )

of the Act. Section 31 (I) of the Act provides that an Award may be filed in
any court having jurisdiction in the matter to which the reference relates.
Under that section, the Award can be filed in the court within whose
jurisdiction the property in dispute lies. Parties cannot give jurisdiction to a
E court under section 14 by consent if that court does not has jurisdiction. If
an award refers to an immovable property, the court having jurisdiction in
respect of the same will entertain an application under section 14. In order to
decide as to which court has jurisdiction to entertain a petition under section
14, reference has to be made to section 2(c) read with section 31 (I) of the Act.
.,...:..
Merely because the arbitrator chooses to hold the proceedings in a place
F where no suit could be instituted, and chooses to make an award at that place,
it would not give the court of that place territorial jurisdiction to decide the
matter under the Act. Section 30 refers to ground for setting aside an award. -\

-
)-
Section 30 is to be read with section 33. The idea behind the entire scheme
of the Arbitration Act appears to be that an application by a party challenging
G the validity of correctness of the award on whatever ground has to be made
under section 33. Section 33 is the only section under which a party is given
the right to apply to the court to challenge either the agreement or the award.
Under the Act, therefore, after the Award has been filed a party is permitted
to make an application under section 33 to bring all kinds of defects to the ..,. ...
H notice of the court and the court will give reliefs either under section 15 or
JATINDERNATHv. CHOPRA LAND DEV. P. LTD. (KAPADIA,J.] 559
~tion 16 or even under section 30 of the Act. In an arbitration without the A
intervention of the court, an award can be filed in any court having jurisdiction
ii/the matter to which the reference relates. The award can be filed only in the
c;ourt which would have jurisdiction in respect of the subject matter of the
dispute. In order to decide the jurisdiction of the court, it is necessary to decide
....,;. whether the court would have jurisdiction to try a regular suit between the B
parties in which the relief is claimed. Section 33 does not prescribe the court
before which an application und~r this section may be filed, but section 31
makes such provision. Section 31 (2) provides that all questions regarding th:!
validity, effect or existence of an award or an arbitration agreement shall be
decided by the court in which the award has been filed or may be filed. Section
,, 2(c) lays down the forum. The application has to be moved in the court within C
1 whose jurisdiction the opposite party resides or carries on business or within
/ whose jurisdiction any part of the cause of action arises. Residence or carrying
on business of a party, apart from the place of accrual of a cause of action is
relevant for determining the territorial jurisdiction of the court in arbitration
cases, if the question so arises in connection with the subject matter of the D
dispute.

16. Applying the above tests to the facts of the present case, we are of
r the view that at the relevant time the appellant resided at Faridabad. He resided
at Faridabad when the contract was made. Under the contract, the parties
agreed to refer all disputes to the Faridabad court. Apart from the residence, E
we are also concerned with the place of accrual of the cause of action. In the
present case, a bare reading of the agreement indicates that it is an agreement
to develop. The appellant remains the owner, the Developer remains the
contractor. The Developer is the financer. The appellant is the owner of an
asset. The contractor/ Developer agrees to exploit that asset on behalf of the p
owner. The Developer funds the scheme. The building plans remained in the
name of the owner. The D.D.A. informs the owner regarding revocation of the
building plan. The owner files the writ petition challenging the revocation. The
contractor is paid consideration in terms of a part of the property. In the
circumstances, it cannot be said that this case is similar to a suit for land. One G
cannot look at para 16 alone in isolation. On the other hand, with open eyes,
the parties had entered into the contract, they had agreed to refer all disputes
to an arbitrator at Faridabad and they had agreed that the Faridabad court
alone shall have jurisdiction. In a matter of this kind, it cannot be said that the
claim is similar to a suit for land. A housing complex has to be constructed at
the site. When dispute arises, it will not be confined only to immovable H
560 SUPREME COURT REPORTS (2007] 3 S.C.R.

A property. Such disputes also require accounts to be maintained. The disput~
also involve rendition of accounts. In the circumstances, in our view, section
20 CPC alone is attracted. Therefore, in our view, the High Court was right
in holding that the Faridabad court had jurisdiction to make the Award the
rule of the court.

B 17. As stated above, one of the points raised on behalf of the appellant -
nerein is that ex parte Award dated 29.3.1994 was non est since it was made
beyond four months from the date when the arbitrator entered upon the
reference. We do not find any merit in this contention. Chapter II of the
Arbitration Act covers references, in which the parties may proceed, if nothing
C goes wrong, up to the stage of delivery of the award, without the intervention
of the court. This does not mean that the court has no authority to intervene
at an early stage, should it become necessary. In the present case, as stated
above, the arbitrator entered upon a reference pursuant to the notice given
by the appellant on 24.g.1992. The notice was given on 20.8.1992. Therefore,
D section 8 of the Act has no application. Section 8 applies only where the
parties do not concur in the appointment. Section 8 and section 20 operate
in different provinces. Section 20 confers power on the court to order the
agreement to be filed and to make an order of reference to the arbitrator
appointed by the parties or where they do not agree, the court can appoint
any other person of its choice as an arbitrator. This discussion is important.
E This difference between section 8 and section 20 shows that the reference
flows from an agreement between the parties in the cases falling under section
8. The reference flows from the agreement in cases falling under Chapter II
of the Arbitration Act and as long as the agreement stands, the reference
remains valid unless it is superseded by an order of the court under section
p 19. Under that section, where award becomes void under section 16(3) or
where an award is set aside, the court may by an order supersede the
reference and shall thereupon order that the arbitration agreement shall cease
to have effect. Therefore, till such time as the order is passed by the court
,.
f
under section 19 superseding the reference, the same shall remain valid till the
G agreement is superseded. This is the scope of section 8 read with section 19
of the Act. On the other hand, in cases falling under section 20 of the Act,
potver is conferred on the court to make an order of reference to.the arbitrator.
That power is conferred on the court which orders the agreement to be filed
before it. In a proceeding under section 8, disputes are presented by the -;
,.
parties before the arbitrator. Whereas in proceedings under section 20, the
H disputes are referred by the court. It is for this reason that it has been
JATINDER NATH v. CHOPRA LAND DEV. P. LTD. [KAPADIA, J.] 561

'""\epeatedly held that merely because an arbitrator does not make an award A
1Yithin the specified period of four months the court has the power to extend
~he period. The award given by an arbitrator after four months is not binding
1
f on the parties. Such an award is vitiated as the arbitrator has no power to
/ make an award after four months. However, a bare failure of an arbitrator to
make an award within the time allowed by law will not involve the consequences B
of it being set aside only on that ground. The court has ample powers in a
given case to extend the time and give life to the vitiated award by exercising
judicial discretion under section 28 of the Act. An application to have the
award set aside on the ground that it was made beyond time prescribed has
to be moved under the Act. No separate suit would lie for that purpose.
Section 28 is not limited only to references to arbitration made in a suit C
pending before the court. Further, the power given to the court under section
28 is so wide that it can extend the time even if the award is made beyond
four months from the date of the arbitrator entering upon the reference. The
only restriction is that it must be exercised with judicial discretion. In the
present case, as state above, the Developer moved an application for making D
the award the rule of the court on 12.4.1994. Unfortunately, the appellant
chose not to appear before the trial court. In the circumstances, an ex parte
decree came to be passed on 31.5.2006. We have used the word unfortunately
because the appellant herein had filed his objections before the trial court.
Those objections were dismissed as he chose to remain absent. The appellant
chose to ;·emain absent as he had moved or decided to move this Court in E
special leave petition against the impugned judgment of the High Court on
the point of territorial jurisdiction. The judgment of the High Court is dated
19.4.2006. The Award is made the rule of the court by the trial court on
31.5.2006 in view of the impugned judgment of the High Court. We have also
gone through the Award. We do not wish to express any opinion on the F
merits, however, the fact remains that the arbitrator entered upon the reference
r\ on 24.8.1992. He fixed the date of hearing on 5.9.1992. On 5.9.1992 the appellant
appeared before him. The arbitrator was absent. The Award has been given
almost after fourteen months and that too after 14.10.1993 when the appellant
herein moved an application under section 20 of the Act for appointment of
a new arbitrator. Taking into account the above circumstances, we set aside G
the ex parte Order dated 31.5 .2006 passed by the trial court at Faridabad
making Award dated 29.3.1994 the rule of the court. Consequently, we direct
restoration of the matter to the file of the Court of Additional Civil Judge
(Senior Division), Faridabad in Case No. 7 instituted on 12.4.1994 titled Mis
Chopra Land Developers Pvt. Ltd. v. Jatinder Nath and Anr. We may clarify H
562 SUPREME COURT REPORTS [2007) 3 S. C.R.

A that the trial court will proceed on the basis that it has territorial jurisdictioar
to decide the application made by the Developer under sections 14 to 17 \)f
the Act. The said application will be decided on merits alone in accordane{'
with law. In other words, the trial court will re-examine the question on merits,

B
as to whether the Award given by the arbitrator on 29.3.1994 should or should
not be made the rule of the court. The trial court will have to decide whether
to extend the period for making the Award or not, whether to supercede the
-
reference or not. The trial court will proceed in accordance with law. Any
observation on the merits of the case mentioned hereinabove shall not be
treated as opinion of this Court. Further, the trial court will proceed on the
basis that it has territorial jurisdiction to decide the above matter.
c 18. Subject to above, the civil appeal is dismissed with no order as to
costs.

K.K.T. Appeal dismissed.

I
,
~.
)

;
r ..