Recently, the Allahabad High Court held that where an arbitration agreement refers to only one location, even if termed as the 'venue', such a reference would be treated as the 'seat' of arbitration in the absence of any contrary indicia. The Court made this observation while dismissing a petition seeking appointment of a sole arbitrator in a dispute arising out of a franchisee agreement. It found that the mention of Mumbai as the venue, coupled with an exclusive jurisdiction clause, clearly pointed to Mumbai being the seat of arbitration.
The petitioner approached the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator to adjudicate disputes under a franchisee agreement. The agreement, executed in Noida, related to a petrol pump dealership located in Amethi district, Uttar Pradesh.
Opposing the petition, the respondent raised a preliminary objection on jurisdiction. Counsel submitted that the agreement explicitly stated that arbitration proceedings would be conducted in Mumbai and that clause 22 vested exclusive jurisdiction with the Courts at Mumbai, thereby ousting the jurisdiction of all other courts including those in Uttar Pradesh.
To support this contention, the respondent relied on Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd., where the Supreme Court had held that exclusive jurisdiction coupled with arbitration at a particular place would signify the seat of arbitration.
On the other hand, the petitioner argued that the agreement merely mentions Mumbai as the 'venue' and not as the 'seat' of arbitration. Counsel contended that the absence of express designation of a 'seat' leaves open the jurisdiction of courts where the cause of action arose, including Uttar Pradesh.
Judgments such as State of West Bengal v. Associated Contractors, Aarka Sports Management Pvt. Ltd. v. Kalsi Buildcon Pvt. Ltd., and Faith Constructions v. N.W.G.E.L. Church were cited to assert that in the absence of a designated seat, courts with territorial nexus retain jurisdiction.
Examining the arbitration clause, the Court noted that the agreement provided for mutual resolution of disputes and, failing that, resolution by a sole arbitrator. It specifically stated, “the arbitration proceedings shall be held in Mumbai and shall be conducted in English language.” Citing B.G.S. S.G.S. Soma JV v. NHPC Ltd. and Arif Azeem Company Ltd. v. Micromax Informatics FZE, the Court held that when an arbitration agreement mentions only one place, described even as a 'venue', that place would be construed as the ‘seat’ unless otherwise indicated.
It observed that both the arbitration clause and Clause 22 vested proceedings and jurisdiction in Mumbai, with no counter-indications suggesting concurrent jurisdiction elsewhere. The Court concluded, "When the agreement confers exclusive jurisdiction to the courts at Mumbai and provides for arbitration proceedings to be held there, the unavoidable inference is that the parties have designated Mumbai as the seat of arbitration."
In view of the findings, the Court held that it lacked jurisdiction to entertain the petition under Section 11(6) of the Act. The petition was accordingly dismissed, with liberty to the petitioner to approach the appropriate court in Mumbai.
Case Title: Devi Prasad Mishra V. M/S Nayara Energy Limited (Earlier Essar Oil Limited) Thru Auth. Signatory/ Managing Director
Coram: Justice Jaspreet Singh
Case No.: Civil Misc. Arbitration Application No. 02 of 2024
Advocates for the Applicant: Adv. Girish Chandra Sinha, Dhirendra Singh, Manish Mehrotra, Mayank Sinha
Advocate for the Opposite Party: Adv. Kumar Ayush
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