The bench presided by Justice Jyoti singh passed judgment in the case titled, Kalpataru Power Transmission Limited v. Bharat Petroleum Corporation Limited
Brief Facts:
The petition was filed under Section 11 of the Arbitration and Conciliation Act, 1996 seeking an appointment of a Sole Arbitrator for adjudicating disputes between the parties which had arisen on account of an Agreement entered into between the parties.
The petitioner relied upon Clause 19(h) to invoke the jurisdiction of the Court, the respondent relied on Clause 21.
The Agreement contained an Arbitration Clause. The relevant portion of the Arbitration Clause read as under:-
“19 (a). Any dispute or difference of any nature whatsoever any claim, gross-claim, or set off the Corporation against the Contractor or regarding any right, liability, act, omission or account or any of the parties hereto arising out of or in relation to this agreement shall be referred to the Sole Arbitration of the Director (Marketing) of the Corporation or to an officer of the Corporation who may be nominated by the Director (Marketing)…
19(h). The parties hereby agree that the courts in the city of …… alone shall have jurisdiction to entertain any application or other proceedings in respect of anything arising under this agreement and any award or awards made by the sole arbitrator here under shall be filed in the concerned courts in the city of …………..only.
21. Jurisdiction: This agreement shall be deemed to have been made in ………. and shall be constructed ARB.P. 622/2019 Page 3 of 11 according to the laws of India and the performance by the Contractor of and act on his part herein contained shall be considered due in.…...for the purpose of jurisdiction.”
The High Court stated that, “Reading of the Clause leaves no doubt that in respect of Arbitration proceedings only the Courts of Delhi would have jurisdiction. The use of words “alone‟ and “only‟ strengthens this position. The very fact that the parties have carefully chosen to incorporate in para 19(h) “proceedings in relation to Award or Awards made by the Sole Arbitrator”, is indicative of the intent that the parties wanted to incorporate two separate covenants, one with respect to the subject matter of a suit and the other subject matter of arbitration and in the latter case, the jurisdiction has been conferred on the Courts at Delhi.”
The Court has put reliance upon the case of Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 (Balco) wherein it is clearly held that the term “subject matter of the arbitration” cannot be confused with “subject matter of the suit”. The term “subject matter” in Section 2(1)(e) is confined to Part I. It has a reference and connection with the process of dispute resolution and the purpose is to identify the Courts with supervisory control over the arbitration proceedings.
The Supreme Court further held that this therefore, refers to a Court which would essentially be a Court of the seat of the arbitration process.
The Court resolved the conflict between two parts of the clauses by holding that where the disputes are to be adjudicated without reference to arbitration, the Courts at Delhi would have jurisdiction in terms of the exclusive jurisdiction clause. However, when disputes have to be resolved through arbitration, the specific clause of the arbitration, indicating the ‘venue’ would determine the jurisdiction.
The Court held that, “it is clear that clause 19(h) will determine the jurisdiction for deciding the matters relating to arbitration proceedings for which the jurisdiction has been conferred at Delhi ‘alone’. This Court would therefore, have the jurisdiction to decide the present petition.”
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