Holding

When parties have agreed to a specific arbitration procedure under Section 11(2) of the Arbitration and Conciliation Act, 1996, recourse to the Chief Justice or a designated authority for appointment of an arbitrator is not permissible unless the contingencies of Section 11(6) arise; therefore the respondent's application was not maintainable and the appointment order was void.

Summary

The Indian Iron and Steel Co. Ltd. entered into a contract with Mis. Tiwari Road Lines for transport of steel, which contained an arbitration clause mandating that all disputes be resolved under the Rules of Arbitration of the Indian Council of Arbitration. When the appellant invoked a bank guarantee, the respondent filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 before the City Civil Court, Hyderabad, seeking appointment of an arbitrator, bypassing the agreed ICA procedure. The City Civil Court appointed a retired judicial officer, a decision the appellant challenged on grounds of lack of jurisdiction and non‑maintainability. The Supreme Court held that because the parties had agreed on an arbitration procedure under Section 11(2), recourse to the Chief Justice or a designated authority is permissible only if the contingencies of Section 11(6) arise, which they had not. Consequently, the application was not maintainable, the Court had no jurisdiction, and the appointment order was set aside. The parties must now resolve the dispute through arbitration under the ICA Rules.

Issues considered

Whether an application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator is maintainable when the contract contains an arbitration clause specifying the Rules of the Indian Council of Arbitration.
Whether the City Civil Court, Hyderabad, had jurisdiction to entertain the application under Section 11.
Whether the arbitration clause in the contract overrides the court's power to appoint an arbitrator.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(2), s. 11(3), s. 11(4), s. 11(5), s. 11(6), s. 11(7), s. 11(8)

Subjects

ArbitrationAppointment of arbitratorSection 11JurisdictionArbitration clauseIndian Council of Arbitration RulesContract disputeSupreme Court

Judgment

----
A THE IRON AND STEEL CO. LTD.
v. ' ,..
MIS. TIWARI ROAD LTh.'ES

MAY 8, 2007

B [G.P. MA THUR AND LOKESHWARSINGH PANTA, JJ.]

C
Arbitration and Conciliation Act, 1996-s. 1 I-Appointment of
arbitrator-Ifparties have agreed on a procedure for appointment ofarbitrator
as contemplated by sub-section (2) of s.11, then dispute between them has
)
-
to be decided in accordance with the said procedure and recourse to the
Chief Justice or his designate cannot be taken straightaway-A party can
approach the Chief Justice or his designate only if the parties have not
agreed on a procedure for appointment of arbitrator as contemplated by sub-
section (2) of s. 1I or various contingencies provided for in sub-section (6)
D have arisen-On facts, since the parties had agreed on a procedure for
appointing an arbitrator for settling disputes as contemplated by sub-section
(2) and there is no a/legation that anyone of the contingencies enumerated
in clauses (a) or (b) or (c) of sub-section (6) had arisen, application moved
by Respondent for appointment of arbitrator before the City Civil Court, the
E designated authority under the scheme framed by the High Court, was clearly
not maintainable and the said Court had no jurisdiction to entertain such
an application and pass any order-Respondent should have initiated
proceedings for settlement of disputes by arbitration in accordance with the
Rules of Arbitration of the Indian Council of Arbitration as provided in the
agreement entered between the parties.
F
Under the terms of the agreement entered into between the parties, any
dispute arising between them had to be resolved in accordance with the Rules
of Arbitration of the Indian Council of Arbitration. However, when certain
disputes arose between the parties, Respondent without taking recourse to
the said Rules, filed an application before the City Civil Court, the designated
G authority under Section 11 of the Arbitration and Conciliation Act, 1996
under the scheme framed by the State High Court, for appointment of an
arbitrator to decide the dispute. The City Civil Court allowed the application ·'
and appointed a retired Judicial Officer as arbitrator.

H 156
IRON AND STEEL CO.LTD. v. TIWARI ROAD LINES 157
-., · The question which arose for consideration in the present appeal is A
whether in view of the agreement between the parties that any dispute between
them shall be decided in accordance with the Rules of Arbitration of the Indian
Council of Arbitration, Respondent should have initiated proceedings for
settlement of disputes by arbitration in accordance with the said Rules and
consequently the application moved by it before the City Civil Court for B
appointment of an arbitrator was not maintainable.

Allowing the appeal, the Court
'\ HELD: 1.1. A combined reading of the various sub-sections of Section
II of the Act would show that the request to the Cltief Justice for appointment C
of an arbitrator can be made under sub-sections (4) and (5) of Section 11 where
parties have not agreed on a procedure for appointing the arbitrator as
contemplated by sub-section (2) of Section 11. A request to the Chief Justice
for appointment of an arbitrator can also be made under sub-section (6) where
parties have agreed on a procedure for appointment of an arbitrator as
contemplated in sub-section (2) but certain consequential measures which are D
required to be taken as enumerated in clause (a) or (b) or (c) of sub-section
(6) are not taken or performed. [Para 6) [163-C, DJ

1.2. In the present case the agreement executed between the parties
contains an arbitration clause and clause 13.1 clearly provides that all
disputes and differences whatsoever arising between the parties out of or E
relating to the construction, meaning and operation or effect of the contract
or the breach thereof shall be settled by arbitration in accordance with the
Rules of Arbitration of the Indian Council of Arbitration and the award made
in pursuance thereof shall be binding on the parties. This clause is in
accordance with sub-section (2) of Section 11 of the Act There being an agreed F
procedure for resolution of disputes by arbitration in accordance with the
Rules of Arbitration of the Indian Council of Arbitration, sub-sections (3),
(4) and (5) of Section 11 can have no application. The stage for invoking sub-
section (6) of Section 11 had also not arrived. In these circumstances, the
application moved by the respondent before the City Civil Court, Hyderabad,
which was a designated authority in accordance with the scheme framed by G
the Chief Justice of the Andhra Pradesh High Court, was not maintainable at
all and the City Civil Court had no jurisdiction or authority to appoint an
arbitrator. Thus the order passed by the Chief Judge, City Civil Courts,
Hyderabad, appointing a retired juridical officer as arbitrator is clearly
without jurisdiction and has to be set aside. [Para 7) [163-E-H; 164-AJ
H
158 SUPREME COURT REPORTS [2007] 6 S.C.R.

A 1.3. The legislative scheme of Section 11 is very clear. If the parties -~
have agreed on a procedure for appointing the arbitrator or arbitrators as
contemplated by sub-section (2) thereof, then the dispute between the parties
has to be decided in accordance with the said procedure and recourse to the
Chief Justice or his designate cannot be taken straightaway. A party can
approach the Chief Justice or his designate only if the parties have not agreed
B on a procedure for appointing the arbitrator as contemplated by sub-section
(2) of Section 11 of the Act or the various contingencies provided for in sub-
section (6) have arisen. Since the parties here had agreed on a procedure for
appointing an arbitrator for settling the dispute by arbitration as contemplated .,
I
by sub-section (2) and there is no allegation that anyone of the contingencies
c enumerated in clause (a) or (b) or (c) of sub-section (6) had arisen, the
application moved by the respondent herein to the City Civil Court, Hyderabad,
was clearly not maintainable and the said court had no jurisdiction to entertain
such an application and pass any order. (Para 8] (164-A, B, C]

1.4. In the matter of settlement of dispute by arbitration, the agreement
D executed by the parties has to be given great importance and an agreed
procedure for appointing the arbitrators has been placed on high pedestal and
has to be given preference to any other mode for securing appointment of an
~
arbitrator. It is for this reason that in clause (a) of sub-section (8) of Section
11 of the Act it is specifically provided that the Chief Justice or the person or '
institution designated by him, in appointing an arbitrator, shall have due regard
E
to any q{;alilications required of the arbitrator by the agreement of the parties.
(Para 9) (164-D, E)

1.5. Normally the clause in the agreement providing for settling the
dispute by arbitration by arbitrators having certain qualifications or in certain
F agreed manner should be adhered to and should not be departed with unless
there are strong grounds for doing so. (Para 10) (164-F)

1.6. The respondent should have initiated proceedings for settlement of
disputes by arbitration in accordance with the Rules of Arbitration of the
Indian Council of Arbitration as provided in clause 13.1 of the agreement
G and the application moved by it to the City Civil Court, Hyderabad, for
appointment of an arbitrator was not maintainable. Consequently, the order
passed by the City Civil Court, Hyderabad is wholly illegal and without
jurisdiction and is liable to be set aside. It will be open to the parties to get
the dispute decided by arbitration in accordance with the Rules of Arbitration. /--

H
of the Indian Council of Arbitration. (Paras 11 and 13) (166-F, G; 167-F) ..-
IRON AND STEEL CO. LTD. v. TIWARI ROAD LINES [G.P. MATHUR, J.] 159

J~ Government ofA.P. v. K. Mastan Rao, [19951Supp.4 SCC 528 and Rite A
Approach Group Ltd. v. Rosoboronexport, [200611 SCC 206, relied on.

S. Rajan v. State of Kera/a, [19921 3 SCC 608 and South East Asia
Shipping Co. Ltd. v. Nav Bharat Enterprises Pvt. Ltd., (1Q96] 3 SCC 443,
referred to.
B
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2386 of2007.

From the Final Judgment and Order dated 09.09.2005 of the High Court
of Judicature of Andhra Pradesh at Hyderabad in Writ Petition No. 5409 of
2005.
c
Sunil Kumar Jain for the Appellant.

Navin R. Nath, Lalit Mohini Bhat, Anitha Shenoy, Hetu Arora and Naijal
Kumar for the Respondent.

The Judgment of the Court was delivered by D
G.P. MATHUR, J. I. Leave granted.

2. This appeal, by special leave, has been filed against the judgment and
order dated 9.9 .2005 of a Division Bench of Andhra Pradesh High Court by
which the writ petition filed by the appellant herein The Indian Iron and Steel E
Co. Ltd. was dismissed. The writ petition was filed assailing the order dated
27.12.2004 of Chief Judge, City Civil Courts, Hyderabad (designated authority)
by which the petition filed by the respondent Mis. Tiwari Road Lines was
allowed and a retired judicial officer was appointed as sole arbitrator to decide
the dispute between the parties.
F
3. The appellant The Indian Iron and Steel Co. Ltd., having its registered
office at Kolkata, invited tenders on 17 .2.2003 for transportation of pig iron
and steel material from Bumpur/Kolkata stockyard to different customer
locations in various parts of the country. The tender submitted by the
respondent Mis. Tiwari Road Lines was accepted and a letter was issued on G
14.5.2003 awarding the contract to the respondent to transport the material
with effect from 17.5.2003 for a period of two years. The tender was submitted
by the respondent at the Head Office of the company at Kolkata and the
_._, agreement was also signed between the parties at Kolkata. In terms of the
agreement the respondent furnished a bank guarantee for Rs.5,00,000/-.
According to the appellant there was failure on the part of the respondent H
160 SUPREME COURT REPORTS [2007] 6 S.C.R.

A to comply with the tenns of the agreement and accordingly the appellant ·-\
invoked the bank guarantee on 16.9.2003. Feeling aggrieved by the encashment
of the bank guarantee, the respondent filed an application before the Chief
Judge, City Civil Courts, Hyderabad, who was the designated authority under
Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred
B to as 'the Act') under the scheme framed by the Andhra Pradesh High Court,
for appointment of an arbitrator to decide the dispute between the parties.
The appellant contested the application on two grounds, viz., that the City
Civil Court at Hyderabad had no territorial jurisdiction to entertain the
application and, secondly, under the tenns of the agreement between the
parties the dispute had to be resolved in accordance with the Rules of
C Arbitration of the Indian Council of Arbitration and the application filed under
Section 11 of the Act was not maintainable. The Chief Judge, City Civil
Courts, Hyderabad allowed the application by order dated 31.3 .2004 and
appointed a retired judicial officer as arbitrator to decide the dispute. The said
order was challenged by the appellant by filing a civil revision petition before
the Andhra Pradesh High Court. The revision petition was allowed and the
D matter was remanded to the City Civil Court, Hyderabad to consider the
question of jurisdiction. The City Civil Court again allowed the application
filed by the respondent by order dated 27.12.2004 and appointed a retired
judicial officer as arbitrator to decide the dispute between the parties. This
order was challenged by the appellant by filing a writ petition in the High
E Court on the ground, inter alia, that the application under Section 11 of the
Act was not maintainable as the agreement between the parties contained a
clause that any dispute between the parties shall be decided in accordance
with the Rules of Arbitration of the Indian Council of Arbitration and the
respondent had not taken recourse to the said Rules. The other plea taken
in the writ petition was that the City Civil Court, Hyderabad, had no territorial
F jurisdiction to entertain the application under Section 11 of the Act. The High
Court negatived the contention raised by the appellant and dismissed the writ
petition and it is these orders which are subject-matter of challenge in the
present appeal.

4. We have heard learned counsel for the parties and have perused the
G records.
5. After the tender of the respondent Mis. Tiwari Road Lines had been
accepted, an agreement was executed between the parties which contained
General Conditions of Contract for transportation of iron/ steel materials and
H pig iron from Bumpur and Kolkata to various destinations in India. Clause 13
IRON AND STEEL CO.LTD. v. TIW ARI ROAD LINES (G.P. MATHUR, J.) 161

!- of the General Conditions of Contract reads as under: - A·
"13. ARBITRATION

13.1 All disputes or differences whatsoever arising between the parties
out of or relating to the construction, meaning and operation or
effect of this contract or the breach thereof shall be settled by
B
arbitration in accordance with the Rules of Arbitration of the
Indian Council of Arbitration and the award made in pursuance
thereof shall be binding on the parties.
I·

' 132 In all above cases, the work under the contract shall, if reasonably
possible, continue during the arbitration proceedings and no
payment due or payable to the contractor as advised by the
c
company will be withheld by the companion account of such
proceedings."

A perusal of clause 13.I will show that under the terms of the agreement all
disputes or differences whatsoever arising between the parties have to be
D
decided by arbitration in accordance with the Rules or Arbitration of the
Indian Council of Arbitration and the award made in pursuance thereof shall
... be binding on the parties .
r
6. It is not disputed that the respondent did not make any effort to have
the dispute settled by arbitration in accordance with the Rules of Arbitration E
of the Indian Council of Arbitration. On the contrary, it straightaway moved
an application under Section 11 of the Arbitration and Conciliation Act, 1996
before the City Civil Court, Hyderabad, which was the designated court, in
accordance with the scheme framed by the High Court of Andhra Pradesh.
The principal question, which requires consideration is, whether such an
application moved by the respondent was maintainable. Sub-sections (I) to F
(7) of Section 11 of the Act read as under:-

"11- Appointment of arbitrators (I) A person of any nationality may
be an arbitrator, unless otherwise agreed by the parties.

(2) Subject to sub-section (6), the parties are free to agree on a G
procedure for appointing the arbitrator or arbitrators.

(3) Failing any agreement referred to in sub-section (2), in an arbitration
-'-, with three arbitrators, each party shall appoint one arbitrator, and the
two appointed arbitrators shall appoint the third arbitrator who shall
act as the presiding arbitrator. H
162 SUPREME COURT REPORTS [2007) 6 S.C.R.

A (4) If the appointment procedure in sub-section (3) applies and-

(a) a party fails to appoint an arbitrator within thirty days from
the receipt of a request to do so from the other party; or
(b) the two appointed arbitrators fail to agree on the third arbitrator
within thirty days from the date of their appointment, the
B appointment shall be made, upon request of a party, by the Chief
Justice or any person or institution designated by him.
(5) Failing any agreement referred to in sub-section (2), in an - I
,;
arbitration with a sole arbitrator, if the parties fail to agree on the
arbitrator within thirty days from receipt of a request by one
c party from the other party to so agree the appointment shall be
made, upon request of a party, by the Chief Justice or any person
or institution designated by him.
(6) Where, under an appointment procedure agreed upon by the
parties,-
D
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach an
agreement expected of them under that procedure; or
(c) a person, including an institution, fails to perform any function
E entrusted to him or it under that procedure,
a party may request the Chief Justice or any person or institution
designated by him to take the necessary measure, unless the agreement
on the appointment procedure provides other means for securing the
appointment.
F
(7) A decision on a matter entrusted by sub-section (4) or sub-section
(5) or sub-section (6) to the Chief Justice or the person or institution
designated by him is final."

Sub-section (2) of Section 11 of the Act provides that subject to sub-section
G (6), the parties are free to agree on a procedure for appointing the arbitrator.
The opening part of sub-sections (3) and (5) of Section 11 of the Act use the
expression "failing any agreement referred to in sub-section (2)". Therefore,
sub-sections (3) and (5) will come into play only when there is no agreement
between the parties as is referred to in sub-section (2) of Section 11 of the
Act, viz., that the parties have not agreed on a procedure for appointing the
H
IRON AND STEEL CO.LTD. v. TIWARI ROAD LINES [G.P. MA THUR, J.] 163
I ..., arbitrator or arbitrators. If the parties have agreed on a procedure for appointing A
arbitrator or arbitrators, sub-sections (3) and (5) of Section 11 of the Act can
have no application. Simiiarly, under sub-section (6) of Section 11 request to
the Chief Justice or to an institution designated by him to take the necessary
measures, can be made if the conditions enumerated in clauses (a) or (b) or
(c) of this sub-section are satisfied. Therefore, recourse to sub-section (6) can
be had only where the parties have agreed on a procedure for appointment B
of an arbitrator but (a) a party fails to act as required under that procedure;
or (b) the parties, or the two appointed arbitrators, fail to reach an agreement
' expected of them under that procedure; or (c) a person, including an institution,
' fails to perform any function entrusted to him or it under that procedure.
Therefore, a combined reading of the various sub-sections of Section 11 of c
the Act would show that the request to th'! Chief Justice for appointment of
an arbitrator can be made under sub-sections (4) and (5) of Section 11 where
parties have not agreed on a procedure for appointing the arbitrator as
contemplated by sub-section (2) of Section 11. A request to the Chief Justice
for appointment of an arbitrator can also be made under sub-section (6) where
parties have agreed on a procedure for appointment of an arbitrator as D
contemplated in sub-section (2) but certain consequential measures which are
-+ required to be taken as enumerated in clauses (a) or (b) or (c) of sub-section
r (6) are not taken or performed.

7. In the present case the agreement executed between the parties
E
contains an arbitration clause and clause 13.1 clearly provides that all disputes
and differences whatsoever arising between the parties out of or relating to
the construction, meaning and operation or effect of the contract or the
breach thereof shall be settled by arbitration in accordance with the Rules of
Arbitration of the Indian Council of Arbitration and the award made in
pursuance thereof shall be binding on the parties. This clause is in accordance F
with sub-section (2) of Section 11 of the Act. There being an agreed procedure
for resolution of disputes by arbitration in accordance with the Rules of
Arbitration of the Indian Council of Arbitration sub-sections (3), (4) and (5)
of Section 11 can have no application. The stage for invoking sub-section (6)
of Section 11 had also not arrived. In these circumstances, the application
G
.. moved by the respondent before the City Civil Court, Hyderabad, which was
a designated authority in accordance with the scheme framed by the Chief
Justice of the Andhra Pradesh High Court, was not maintainable at all and
~
the City Civil Court had no jurisdiction or authority to appoint an arbitrator.
Thus the order dated 31.03.2004 passed by the Chief Judge, City Civil Courts,
Hyderabad, appointing a retired juridical officer as arbitrator is clearly without H
164 SUPREME COURT REPORTS (2007) 6 S.C.R.

A jurisdiction and has to be set aside.
8. The legislative scheme of Section 11 is very clear. If the parties have
agreed on a procedure for appointing the arbitrator or arbitrators as
contemplated by sub-section (2) thereof, then the dispute between the parties
has to be decided in accordance with the said procedure and recourse to the
B Chief Justice or his designate cannot be taken straightaway. A party can
approach the Chief Justice or his designate only ifthe parties have not agreed
on a procedure for appointing the arbitrator as contemplated by sub-section
(2) of Section 11 of the Act or the various contingencies provided for in sub-
section (6) have arisen. Since the parties here had agreed on a procedure for
C appointing an arbitrator for settling the dispute by arbitration as contemplated
by sub-section (2) and there is no allegation that anyone of the contingencies
enumerated in clauses (a) or (b) or (c) of sub-section (6) had arisen, the
application moved by the respondent herein to the City Civil Court, Hyderabad,
was clearly not maintainable and the said court had no jurisdiction to entertain
such an application and pass any order. The order dated 27 .12.2004, therefore,
D is not sustainable.

9. In the matter of settlement of dispute by arbitration, the agreement
executed by the parties has to be given great importance and an agreed
procedure for appointing the arbitrators has been placed on high pedestal and
has to be given preference to any other mode for securing appointment of
E an arbitrator. It is for this reason that in clause (a) of sub-section (8) of Section
11 of the Act it is specifically provided that the Chief Justice or the person
or institution designated by him, in appointing an arbitrator, shall have due
regard to any qualifications required of the arbitrator by the agreement of the
parties.
·F I0. The judicial pronouncements also show that normally the clause in
the agreement providing for settling the dispute by arbitration by arbitrators l
having certain qualifications or in certain agreed manner should be adhered
to and should not be departed with unless there are strong grounds for doing
so. Ins. Rajan V. State of Kerala, [1992] 3 sec 608, the Court was called upon
G to interpret sub-section (4) of Section 20 of the Arbitration Act, 1940, which
reads as under:

"20. Application to file in Court arbitration agreement. - (I) Where any
persons have entered into an arbitration agreement before the institution
of any suit with respect to the subject matter of the agreement or any
H part of it, and where a difference has arisen to which the agreement
IRON AND STEEL CO.LTD. v. TIWARI ROAD LINES [G.P. MATHUR, J.] 165

."f-
applies, they or any of them, instead of proceeding under Chapter II, A
may apply to a Court having jurisdiction in the matter to which the
agreement relates, that the agreement be filed in Court.

(2) The application shall be in writing and shall be numbered and
registered as a suit between one or more of the parties interested or
claiming to be interested as plaintiff or plaintiffs and the remainder as B
defendant or defendants, if the application has been presented by all
the parties, or, if otherwise, between the applicant as plaintiff and the
other parties as defendants.
,_
·"\
(3) On such application being made, the Court shall direct notice
thereof to be given to all parties to the agreement other than the c
applicants, requiring them to show cause within the time specified in
the notice why the agreement should not be filed.

(4) Where no sufficient cause is shown, the Court shall order the
agreement to be filed, and shall make an order of reference to the
arbitrator appointed by the parties, whether in the agreement or D
otherwise, or, where the parties cannot agree upon an arbitrator, to an

. y
arbitrator appointed by the court.

(5) Thereafter the arbitration shall proceed in accordance with, and
shall be governed by, the other provisions of this Act so far as they
can be made applicable." E

The Court considered the scope of sub-section (4) of Section 20 of the
Arbitration Act, 1940 and held as under:-

"Sub-section (4) of Section 20 says that the reference shall be to the
arbitrator appointed by the parties. Such agreed appointment may be F
contained in the agreement itself or may be expressed separately.
l
Where the agreement itself specifies and names the arbitrator, it is
obligatory upon the court, in case it is satisfied that the dispute oug~, 1 t
to be referred to the arbitrator, to refer the dispute to the arbitrator
specified in the agreement. It is not open to the Court to ignore such G
an arbitration clause of the agreement and to appoint ::nothr~r person
as an arbitrator. Only in cases where the arbitrator specified and
named in the agreement refuses or fails to act or where the agreement
does not specify the arbitrator and the parties cannot also agree upon
an arbitrator, does the court get the jurisdiction to appoint an arbitrator.
Since in the present case the agreement specified and named the H
166 SUPREME COURT REPORTS (2007) 6 S.C.R.

A arbitrator, there was no occasion or warrant for the court to call upon
the parties to submit panels of arbitrators. The court was bound to -\
refer the dispute only to the arbitrator named and specified in the
agreement."

In Government ofA.P. v. K. Mastan Rao, [1995] Supp. 4 SCC 528, the agreement
B between the parties provided for settlement of dispute by three persons
holding the post of Chief Engineer of the project, Deputy Secretary to .,.
Government, Finance Department, and the Director of Accounts of the project.
On the petition made by the contractor, the subordinate judge removed the
-j
panel of three arbitrators and appointed a retired Chief Engineer as the sole /
arbitrator to adjudicate the dispute. This Court, after taking into consideration
c the terms of the agreement, set aside the order passed by the subordinate
judge and directed that the arbitration matter should be entrusted to the
incumbents of the three posts mentioned in the agreement. In Rite Approach
Group Ltd v. Rosoboronexport, [2006] l SCC 206, it was held as under in para
20 of the Report: -
D
"20. In view of the specific provision specifying the jurisdiction of the
Court to decide the matter, this Court cannot assume the jurisdiction.
Whenever there is a specific clause conferring jurisdiction on particular
~
Court to decide the matter then it automatically ousts the jurisdiction
of the other Court. In this agreement, the jurisdiction has been conferred ""·
E on the Chamber of Commerce and Trade of the Russian Federation as
the authority before whom the dispute shall be resolved. In view of
the specific arbitration clause conferring power on the Chamber of
Commerce and Trade of the Russian Federation, it is that authority
which alone will arbitrate the matter and the finding of that arbitral
tribunal shall be final and obligatory for both the parties."
F
11. This being the settled position of law we are clearly of the opinion
that the respondent should have initiated proceedings for settlement of disputes l.
by arbitration in accordance with the Rules of Arbitration of the Indian
Council of Arbitration as provided in clause 13.1 of the agreement and the
G application moved by it to the City Civil Court, Hyderabad, for appointment
of an arbitrator was not maintainable. Consequently, the order passed by the
City Civil Col\rt, Hyderabad dated 27.12.2004 is wholly illegal and without
jurisdiction and is liable to be set aside.

12. Learned counsel for the appellant has also submitted that City Civil /·
H Court, Hyderabad had no jurisdiction to entertain the application moved by
IRON AND STEEL CO. LTD. v. TIWARI ROADLINES[G.P. MATHUR,J.) 167
I ..,_ the respondent as no part of cause of action had accrued there. In this A
connection, he has referred to clause (b) of sub-section (12) of Section 11 and
clause (e) of sub-section (I) of Section 2 of the Act which will govern the
question of jurisdiction as to Chief Justice of which High Court has to be
approached for moving an application under Section 11 of the Act. Learned
counsel has submitted that the tenders were floated at Kolkata, the respondent
submitted the tender at Kolkata, the agreement was executed at Kolkata and, B
therefore, the court at Hyderabad had no jurisdiction to entertain the
application. Learned counsel has also submitted that the view taken by the
~
High Court that as the bank guarantee was furnished at Hyderabad and was
' encashed at Hyderabad, the court at Hyderabad has jurisdiction is erroneous
in law inasmuch as the agreement did not contain any clause regarding the c
place from where the bank guarantee had to be furnished. Learned counsel
has submitted that there was only a requirement for furnishing the bank
guarantee and that it could be furnished from anywhere in India and since
in the present case the bank guarantee was furnished by the respondent from
a bank at Hyderabad it was encashed there and, therefore, the said fact was
wholly irrelevant for deciding the plea of jurisdiction. He has also relied upon D
a decision of this Court in South East Asia Shipping Co. Ltd. v. Nav Bharat
-+ Enterprises Pvt. Ltd., (1996] 3 SCC 443, in support of his contention that the
,_. submission of the bank guarantee from Hyderabad or the encashment thereof
does not constitute even a part of cause of action to confer jurisdiction on
the court at Hyderabad. Though we find substance in the contention raised E
by the learned counsel for the appellant but in view of our finding recorded
on the main point, we do not consider it necessary to express any final
opinion on the second contention.

13. For the reasons discussed above, the appeal is allowed with costs
throughout. The judgment and order dated 9.9.2005 of the High Court of F ,,
Andhra Pradesh and the judgment and order dated 27.12.2004 of the City Civil
l Court, Hyderabad appointing an arbitrator are set aside. It will be open to the
parties to get the dispute decided by arbitration in accordance with the Rules
of Arbitration of the Indian Council of Arbitration.

B.B.B. Appeal allowed. G