Bombay High Court
Gea Westfalia Separator India Private ... vs Svs Aqua Technologies Llp on 10 September, 2025
2025:BHC-OS:14802
F-J- 917-IAL-8157-2025+.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L) NO. 8157 OF 2025
IN
ARBITRATION PETITION (L) NO. 7358 OF 2025
GEA Westfalia Separator India Private Limited ...Applicant/
Petitioner
Versus
SVS Aqua Technologies LLP ...Respondent
WITH
INTERIM APPLICATION (L) NO. 8161 OF 2025
IN
ARBITRATION PETITION (L) NO. 7677 OF 2025
WITH
INTERIM APPLICATION (L) NO. 8426 OF 2025
IN
COMM. ARBITRATION PETITION (L) NO. 7654 OF 2025
WITH
INTERIM APPLICATION (L) NO. 10843 OF 2025
IN
ARBITRATION PETITION (L) NO. 10275 OF 2025
Mr. Karl Tamboly a/w Mr. Bhavin Shah, Ms. Amrita Dubey, Mr.
Yash Pitroda, Ms. Amrita Nataranjan, Mr. Sandeep Rebari, Mr.
Samiron Borkataky and Mr. Ikshvaaku Marwah i/b Kochhar &
Co. for the Applicant/Petitioner.
Mr. Yuvraj P. Narvankar (through VC), a/w Raufa Shaikh for
Respondent.
CORAM : SOMASEKHAR SUNDARESAN, J.
RESERVED ON: APRIL 21, 2025
Digitally
PRONOUNCED ON: SEPTEMBER 10, 2025
signed by
ASHWINI
ASHWINI JANARDAN
JANARDAN VALLAKATI
VALLAKATI Date:
2025.09.10
12:29:42
+0530
Page 1 of 20
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JUDGEMENT:
Context and Factual Background:
1. These petitions have been filed under Section 34 of the
Arbitration and Conciliation Act, 1996 (" Arbitration Act") impugning
arbitral awards dated November 18, 2024 (collectively, " Impugned
Award") passed by the Micro and Small Enterprises Facilitation Council,
Pune ("Facilitation Council"). For purposes of base reference to dates
and events, Arbitration Petition (L) 7677 of 2025 is adopted by consent
of the parties.
2. The Petitioner, GEA Westfalia Separator India Private Limited
("GEA") has been directed to pay the Respondent, SVS Aqua
Technologies LLP ("SVS Aqua") a awarded sums along with interest in
connection with resolution of disputes and differences emanating from
a Manufacturing and Supply Agreement dated November 13, 2019
("Agreement").
3. At the threshold, SVS Aqua has objected to the territorial
jurisdiction of this Court. SVS Aqua's contention is that the Facilitation
Council conducted the arbitration in Pune and therefore, as a matter of
territorial jurisdiction, a challenge under Section 34 of the Arbitration
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Act ought to be before the Civil Courts in Pune. GEA's contention is that
this Court has jurisdiction in view of Clause 23 in the Agreement, which
is an explicit arbitration clause. The Agreement does not have any
clause recording confirmation of the parties about exclusive or non-
exclusive jurisdiction of any Court.
4. This is the specific issue that lies at the threshold of these
Petitions. Only if this issue is answered in favour of this Court having
jurisdiction, can these Petitions be considered under Section 34 of the
Arbitration Act. Therefore, this was framed as a preliminary issue.
5. Since the relevance of Clause 23 lies at the heart of the
jurisdictional analysis, it has been extracted below:
23. Governing Law and Jurisdiction
This agreement and any Purchase order shall be governed exclusively
by the laws of India.
Any dispute arising out of or in connection with this Contract ,
including any question regarding its ˝existence, validity or termination,
shall exclusively be referred to and finally resolved by arbitration in
Mumbai in accordance with the International Center for Alternative
Dispute Resolution (ICADR) Arbitration Rules, 1996 for the time being
in force, which rules are deemed to be incorporated by reference in
this Article. The Tribunal shall consist of three (3) arbitrators wherein
each party shall appoint one arbitrator and the two appointed
arbitrators, shall appoint the third arbitrator. The language of the
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arbitration shall be in English."
[Emphasis Supplied]
6. A plain reading of this provision would indicate that the parties
envisaged resolving their disputes by "arbitration in Mumbai".
GEA's Contentions:
7. GEA would contend that the arbitration clause extracted above
has reduced to writing the intention of the parties to conduct arbitration
in Mumbai and therefore, the "seat" of arbitration even for purposes of
the Impugned Award is Mumbai. GEA would contend that the parties
executed an addendum on January 20, 2020, which also replicates this
clause. Since the seat is claimed to be Mumbai, GEA could contend,
this Court has jurisdiction for purposes of Section 34 of the Arbitration
Act. According to GEA, since the seat is Mumbai, the arbitration
conducted by the Facilitation Council in Pune only means that the
convenient venue was Pune. On the premise that the seat is in Mumbai,
GEA would next contend, the parties must be held to have necessarily
agreed that the courts in Mumbai would have exclusive jurisdiction.
Therefore, according to GEA, this Court has jurisdiction under Section
34 of the Act.
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SVS Aqua's Contentions:
8. SVS Aqua would contend that the arbitration has been conducted
pursuant to the special provisions of Section 18 of the Micro, Small and
Medium Enterprises Development Act, 2006 (" MSMED Act"). SVS
Aqua would contend that Section 24 of the MSMED Act explicitly
provides that Sections 15 to 23 of the MSMED Act would have an
overriding effect notwithstanding anything inconsistent with any other
law in force. Section 18 of the MSMED Act, therefore SVS Aqua would
contend, overrides the Arbitration Act and therefore the arbitration
agreement executed between the parties is irrelevant for all purposes.
The Facilitation Council conducted the proceedings in Pune as a matter
of statutory territorial jurisdiction, SVS Aqua would contend, resulting
in courts in Pune having jurisdiction under Section 34 in the matter.
Analysis and Findings:
9. I have heard at length, Mr. Karl Tamboly, Learned Counsel on
behalf of GEA and Mr. Yuvraj Narvankar, Learned Counsel on behalf of
SVS Aqua. I have examined the record with their assistance and with
the benefit of their submissions, both verbal and written in the matter.
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10. At the outset, it is a matter of record that the parties indeed had
executed an arbitration agreement - the clause extracted above. That
provision does not use the term "seat" or "venue". It provides that
disputes shall be referred to and be resolved by " arbitration in Mumbai".
However, most pertinently, the arbitration proceedings actually held
between the parties did not take place pursuant to invocation of this
arbitration agreement. The arbitral proceedings that led to the
Impugned Award took place under Section 18 of the MSMED Act, which
provides for a statutory arbitration agreement coming into existence in
the eyes of law.
11. Under Section 18 of the MSMED Act, a statutorily created
arbitration agreement comes into existence once conciliation fails. The
provisions of the Arbitration Act then apply " as if" the arbitration
proceedings are to be conducted pursuant to an agreement under
Section 7 of the Arbitration Act. That statutory arbitration under the
statutorily-created arbitration agreement was conducted entirely at the
Facilitation Council in Pune since that is the Facilitation Council in
whose jurisdiction, SVS Aqua is located. The Impugned Award is a
product of the arbitration conducted pursuant to the arbitration
agreement statutorily created under Section 18 of the Act.
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12. For perspective, the provisions of Section 18 of the MSMED Act
are extracted below:-
(1) Notwithstanding anything contained in any other law for the time
being in force, any party to a dispute may, with regard to any amount
due under section 17, make a reference to the Micro and Small
Enterprises Facilitation Council.
(2) On receipt of a reference under sub-section (1), the Council shall
either itself conduct conciliation in the matter or seek the assistance of
any institution or centre providing alternate dispute resolution services
by making a reference to such an institution or centre, for conducting
conciliation and the provisions of sections 65 to 81 of the Arbitration
and Conciliation Act, 1996 (26 of 1996) shall apply to such a dispute
as if the conciliation was initiated under Part III of that Act.
(3) Where the conciliation initiated under sub-section (2) is not
successful and stands terminated without any settlement between the
parties, the Council shall either itself take up the dispute for
arbitration or refer it to any institution or centre providing alternate
dispute resolution services for such arbitration and the provisions of
the Arbitration and Conciliation Act, 1996 (26 of 1996) shall then
apply to the dispute as if the arbitration was in pursuance of an
arbitration agreement referred to in sub-section(1) of section 7 of that
Act.
(4) Notwithstanding anything contained in any other law for the time
being in force, the Micro and Small Enterprises Facilitation Council
or the centre providing alternate dispute resolution services shall have
jurisdiction to act as an Arbitrator or Conciliator under this section in
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a dispute between the supplier located within its jurisdiction and a
buyer located anywhere in India.
(5) Every reference made under this section shall be decided within a
period of ninety days from the date of making such a reference.
[Emphasis Supplied]
13. Having examined the record closely, it is apparent that GEA's
entire reliance is on the arbitration clause contractually executed by it,
but then no arbitration proceedings were conducted pursuant to such
arbitration clause. The Impugned Award has nothing to do with the
conduct of arbitration under that provision.
14. There are also material differences between such arbitration
clause and the arbitration actually conducted. Under the contracted
provision, arbitration was to be conducted by a three-member arbitral
tribunal in Mumbai and in accordance with the rules of the
International Center for Alternative Dispute Resolution (" ICADR").
Each party was to nominate one arbitrator and the two arbitrators
would appoint the third. Nothing in this arbitration agreement was
acted upon.
15. It is evident that the entire reference to the arbitration clause is a
red herring inasmuch as the proceedings have been conducted squarely
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in terms of the MSMED Act (not ICADR Rules), in Pune (not in
Mumbai), and by the Facilitation Council (not by a tribunal appointed
in the manner provided in the clause). The Facilitation Council
exercised its statutory arbitral jurisdiction. The arbitral jurisdiction
envisaged by contract was not at all put into play.
16. Far more pertinently, the Agreement does not at all contain any
provision recording the agreement of the parties conferring exclusive
(or even non-exclusive) jurisdiction designating any particular Court
having potential jurisdiction in the matter. The jurisdiction of this
Court under Section 34 of the Arbitration Act is a statutory jurisdiction.
Section 34 of the Arbitration Act provides for applications to challenge
arbitral awards to be filed in the "Court", which is a term defined in
Section 2(1)(e) of the Arbitration Act, which reads thus:
(e) "Court" means -
(i) in the case of an arbitration other than international commercial
arbitration, the principal Civil Court of original jurisdiction in a
district, and includes the High Court in exercise of its ordinary
original civil jurisdiction, having jurisdiction to decide the questions
forming the subject-matter of the arbitration if the same had been the
subject-matter of a suit, but does not include any Civil Court of a
grade inferior to such principal Civil Court, or any Court of Small
Causes;
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(ii) in the case of international commercial arbitration, the High Court
in exercise of its ordinary original civil jurisdiction, having
jurisdiction to decide the questions forming the subject-matter of the
arbitration if the same had been the subject-matter of a suit, and in
other cases, a High Court having jurisdiction to hear appeals from
decrees of courts subordinate to that High Court;
[Emphasis Supplied]
17. Even a plain reading of the foregoing would show that the test to
determine which court is the "Court" for purposes of Section 34 read
with Section 2(1)(e) of the Arbitration Act would entail examining if the
Court had jurisdiction, should the dispute been subject matter of a suit.
18. GEA is based in Vadodara in Gujarat. SVS Aqua is in Pune and
has manufactured and supplied under its agreement with GEA, from
Pune. Since SVS Aqua is located in Pune, it was the Facilitation Council
in Pune that statutorily had territorial jurisdiction for the arbitration
that was actually conducted between the parties. The Impugned Award
is a product of such arbitration. The principal court with original
jurisdiction would be such court in Pune. Other than the reliance on
Clause 23 of the Agreement, there is nothing to show in GEA's
submissions, that this Court could be the forum in which a suit could
have been filed in relation to the disputes under the Agreement. The
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sole reliance by GEA to approach this Court is on Clause 23, which is an
arbitration agreement executed by the parties provided for " arbitration
in Mumbai". But the reality is that this provision was never acted upon
and has been irrelevant to the arbitration proceedings that led to the
Impugned Award.
19. GEA would make a leap using Clause 23 of the Agreement as the
springboard, to treat Mumbai as the "seat"; and from such premise of
Mumbai being the seat, GEA would make a further leap to read the
arbitration clause as a clause providing for exclusive jurisdiction on
courts in Mumbai. In my opinion, such a line of reasoning is totally
untenable. The Impugned Award is not at all connected to the
arbitration agreement executed between the parties. For all purposes,
substantive and practical, the arbitration clause has had no relevance
and has played no role in the run up to the Impugned Award.
20. The arbitration proceedings in question were conducted as if
there was another arbitration agreement in terms of Section 18, which
entailed the arbitral tribunal i.e. the Facilitation Council in Pune having
territorial jurisdiction. Such statutory territorial jurisdiction is a strong
indication of the seat for purposes of this case being Pune. There is no
indicia in the Agreement about consent of the parties to designate a
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Court having competing jurisdiction with other Courts, as a court with
exclusive or even non-exclusive jurisdiction. Therefore, in the absence
of any connecting factor that would otherwise confer jurisdiction on this
Court (other than Clause 23 of the Agreement, which was not acted
upon), a challenge to the Impugned Award must necessarily lie in the
principal civil court with original jurisdiction in Pune, where the
arbitration proceedings were conducted.
21. Indeed, the MSMED Act would have an overriding effect over
other laws, but that would be another distraction from what is a rather
simple and straightforward question - namely, whether this Court in
Mumbai would have jurisdiction under Section 34 of the Act to consider
a challenge to the Impugned Award, which has nothing to do with the
arbitration clause that GEA seeks to rely upon, and instead has
everything to do with the statutory arbitration agreement under Section
18 of the MSMED Act. The answer has to be in the negative.
22. The arbitration proceedings were conducted as a matter of
statutory requirement in Pune. The statutory seat of arbitration is
therefore Pune. In the facts of this case, it is fallacious and
disingenuous to contend that Pune was merely a convenient venue
without the chosen seat being disturbed from Mumbai. This is not a
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case of the ICADR arbitration being conducted in Pune for convenience
despite the parties having agreed to a seat in Mumbai that is discernible
not only from the place at which the arbitration was to be conducted but
also from an exclusive jurisdiction clause in the Agreement. To begin
with, in the facts of this case, the parties - one from Vadodara and
another from Pune - participated and conducted their dispute
resolution by arbitration under the MSMED Act, before the Facilitation
Council in Pune. These proceedings were totally divorced from the
arbitration clause and there is no exclusive jurisdiction clause to bind
the parties back to Mumbai. One would need to assume that somehow
the arbitration clause that was not even acted upon, would transform
into and double up as an exclusive jurisdiction clause, which clause
admittedly does not exist.
23. GEA has placed copious reliance on case law to buttress different
facets of its contentions to make Clause 23 of the Agreement, its sheet
anchor for claiming jurisdiction in this Court. In view of the arbitration
clause not being the arbitration agreement underlying the Impugned
Award and in the absence of an exclusive or non-exclusive jurisdiction
clause, it is not felt necessary to deal with the standard case law about
how courts having jurisdiction over the seat would have jurisdiction for
purposes of Section 34 of the Arbitration Act. Suffice it to say that the
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principle sought to be emphasised by GEA from such case law is that in
the absence of any contrary indicia, or alternative designation of a seat
or any supra-national body of rules governing the arbitration , the choice
of seat expressed by the parties would lead to the principal civil court
having original territorial jurisdiction over the seat, having jurisdiction.
24. One cannot quarrel with the aforesaid proposition of law, but it is
evident that this principle would simply not apply to this case. There is
loud and clear contrary indicia in the matter at hand - a legislative one
at that - to indicate that the arbitration was conducted in the territorial
jurisdiction of the Facilitation Council in Pune under the MSMED Act,
since SVS Aqua is located in Pune. This is a matter of the sheer
operation of a national legislation and a special one at that, namely, the
MSMED Act, to bring into existence an arbitration agreement that
entails arbitration to be conducted in jurisdiction of the Facilitation
Council where the supplier i.e. SVS Aqua, is located.
25. The arbitration proceedings that led to the Impugned Award is
governed by such statutory arbitration agreement. Therefore, clearly, in
the facts of this case, there are contrary indicia writ large on the face of
the record, which statutorily seats the arbitration in Pune, and
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therefore, renders irrelevant the contractual arbitration agreement
executed between the parties.
26. GEA relies upon a judgement by a Division Bench of this Court in
Gammon Engineers1 and that too answering a reference on the subject
of conflict between location of arbitration under the MSMED Act and
the contractual provisions, to indicate that the MSMED Act has no
relevance whatsoever to determining the Court for purposes of Section
34 of the Act. Such a presentation of Gammon Engineers, I am afraid is
not consistent with what that judgement has actually considered and
ruled on. At the threshold, it should be noted that in that case, the
provisions examined in Gammon Engineers would show that the parties
had explicitly contracted that the Courts in Mumbai would have
exclusive jurisdiction over all matters. Such a clause coupled with an
arbitration clause indicating location of the arbitration, came up for
consideration in the backdrop of an MSMED arbitration. In that matrix
of facts and contractual provisions, the Division Bench held that the
term "jurisdiction" used in Section 18 of the MSMED Act would not
obliterate the binding contractual provision by which the parties had
agreed to that the Courts in Mumbai would have exclusive jurisdiction.
1 Gammon Engineers and Contractors Pvt. Ltd. Vs. Rohit Sood - (2024) SCC OnLine
Bom 3304
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27. It is trite law that a judgement has to be construed in the
backdrop of the facts and circumstances in which the judgement has
been rendered. At this juncture, the following extracts from Ravi
Ranjan2would be appropriate to cite:
41. It is well settled that a judgment is a precedent for the issue of law
that is raised and decided. The judgment has to be construed in the
backdrop of the facts and circumstances in which the judgment has
been rendered. Words, phrases and sentences in a judgment, cannot be
read out of context. Nor is a judgment to be read and interpreted in the
manner of a statute. It is only the law as interpreted by in an earlier
judgment, which constitutes a binding precedent, and not everything
that the Judges say.
[Emphasis Supplied]
28. A close reading of Gammon Engineers would show that the
judgement copiously deals with the inter-play and conflict between the
situs of the conduct of arbitration by the Facilitation Council and the
contractual provision recording the parties' agreement that courts in
Mumbai would have exclusive jurisdiction. In that context, it was held
that the contractual commitment to approach the Courts in Mumbai
with exclusive jurisdiction could not be obliterated.
2 Ravi Ranjan Developers Pvt. Ltd. Vs. Aditya Kumar Chatterjee - 2022 SCC OnLine
SC 568
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29. In the facts of the instant case, there is no exclusive jurisdiction
clause at all. The arbitration agreement only states that the arbitration
would be conducted in Mumbai and that too under the ICADR Rules,
leaving it open to interpretation as to whether Mumbai would be the
venue or the seat, owing to a lack of jurisdiction chosen by party
autonomy. In cases dealing with contracts that had an exclusive
jurisdiction clause, Courts have held that even if the arbitration were to
be conducted in a location different from the location of exclusive
jurisdiction, then such other location would be the venue and not the
seat. None of these parameters are even attracted in the case at hand
inasmuch as there is no provision whatsoever stipulating exclusive
jurisdiction.
30. Therefore, in the matter at hand, there is no question of a conflict
between the situs of the arbitration proceedings conducted under the
MSMED Act and the situs of a forum that otherwise has jurisdiction
(among other forums), which the parties commit by contract as the
forum with exclusive jurisdiction.
Summary of Conclusions:
31. Therefore, to summarise:-
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a. The parties in the instant case do not have any contractual
commitment in the Agreement that the Courts in Mumbai
would have exclusive (or even non-exclusive) jurisdiction in
relation to their disputes;
b. Had there been such a provision by which the parties
agreed on a specific forum having jurisdiction, the
principles from the case law cited by GEA could have
potentially had relevance;
c. In the absence of such a provision, this is not a case where
one can wish away that every activity in the arbitration
proceedings gravitated to Pune since Section 18 of the
MSMED Act statutorily conferred territorial jurisdiction on
the Facilitation Council in Pune for purposes of conducting
arbitration. That is a strong pointer to the seat of these
arbitration proceedings being Pune;
d. In the absence of a binding and committed provision on
exclusive jurisdiction in the Agreement, the conflict is
between the arbitration by ICADR Rules that could have
potentially been conducted in Mumbai; and the arbitration
in terms of the MSMED Act that was actually conducted in
Pune;
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e. In the factual matrix obtaining in the instant case, not only
is the discussion in Gammon Engineers totally
distinguishable owing to the absence of a clause recording
consent to a forum having jurisdiction, but also as a matter
of fact and law, nothing in the conduct of the arbitration
proceedings that led to the Impugned Award had any
connection or gravitation towards the contractual
arbitration clause;
f. Neither was the substance nor the procedure of the
arbitration clause in the contract applicable and therefore,
in the facts of this case, the actual arbitration agreement
that ran its intended course was the statutory arbitration
agreement deemed to have been executed within the
meaning of Section 7 of the Arbitration Act, but in terms of
Section 18 of the MSMED Act;
g. Without any clause on jurisdiction - not even a non-
exclusive jurisdiction clause - in the Agreement, there is no
connecting factor at all to lead to jurisdiction in this Court
being attracted for purposes of Section 34 read with Section
2(1)(e) of the Arbitration Act. Nothing has taken place in
Mumbai - GEA operated in Vadodara, SVS Aqua operated
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in Pune, the only activity envisaged for Mumbai
(arbitration) did not take place;
h. In this light, the supplanting of the contractual arbitration
provisions by the statutory arbitration provisions flowing
from Section 18 of the MSMED Act, would lead to an
inexorable consequence that it would be the Court that
would be responsive to Section 34 read with Section 2(1)(e)
of the Arbitration Act that would have jurisdiction. Such
Court would therefore, necessarily be the relevant court in
Pune.
32. In these premises, it is held that this Court does not have
jurisdiction in the matter and these petitions cannot be entertained. All
the captioned Petitions and the attendant Interim Applications are
dismissed for want of jurisdiction.
33. All actions required to be taken pursuant to this order shall be
taken upon receipt of a downloaded copy as available on this Court's
website.
[SOMASEKHAR SUNDARESAN, J.]
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