Homevista Decor And Furnishing ... vs Connect Residuary Private ...
2023 Latest Caselaw 1300 Cal/2

                                                                 AP No. 358 of 2020
                                                                  REPORTABLE


                  IN THE HIGH COURT AT CALCUTTA
                ORDINARY ORIGINAL CIVIL JURISDICTION
                           ORIGINAL SIDE


Present:

The Hon'ble Justice Shekhar B. Saraf

                           A.P. No. 358 of 2020

           HOMEVISTA DECOR AND FURNISHING PVT. LTD. & ANR.

                                     VS

                 CONNECT RESIDUARY PRIVATE LIMITED

For the Petitioners                  :      Mr. Krishnaraj Thaker, Adv

                                            Ms. Saptarshi Banerjee, Adv.

                                            Ms. Namrata Basu, Adv.

                                            Ms. Sreenita Ghosh Thaker, Adv.




For the Respondent:                  :      Mr. Sanjay Kumar Baid, Adv.

                                            Mr. Rishab Karnani, Adv.


Last heard on: May 3, 2023
Judgement on: June 8, 2023


Shekhar B. Saraf J:



1.   The instant application, being A.P. No. 358 of 2020, has been filed by

     the petitioner no. 1 under Section 11 of the Arbitration and Conciliation

     Act, 1996 (hereinafter referred to as 'the Act') for appointment of an

     arbitrator to resolve the disputes that have arisen between the parties.


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                                                                  AP No. 358 of 2020
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Relevant Facts

2. The pertinent facts are mentioned below :-

a) The petitioner no. 1 is an online portal operating under the trade

name and style of www.homelane.com and is carrying on the

business of providing home owners with customised and efficient

home designs. It has its registered office at 728, Grace Platina, 1st-

3rd Floor, CMH Road, Indiranagar Bengaluru-560038.

b) The petitioner no. 2 sells pre-designed modular kitchens and

wardrobes online for projects in India. It has its registered office at

728, Grace Platina, 1st Floor, CMH Road, Indiranagar Bengaluru-

560038. The petitioner no. 2 entered into a scheme of demerger and

amalgamation wherein the said company was demerged and

amalgamated into the petitioner no. 1.

c) The respondent is a company providing office equipment and

furniture on rental to corporates. It has its office at 103, B Wing,

Satellite Gazebo, Andheri - Ghatkopar Link Road, Andheri East,

Mumbai, Mumbai City, MH 400093 and 506, Inizio, Cardinal

Gracious Road, Chakala, Andheri (East), Mumbai 400099.

d) The petitioner no. 2 had entered into a master rental agreement

dated June 30, 2016 [hereinafter referred to as 'the MRA'] to take

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office equipment and furniture on rent from the respondent. The

petitioner no. 1, pursuant to the scheme of demerger and

amalgamation continued to honour the Agreement. The petitioner

no. 2 also issued a bank guarantee for a sum of Rs. 74,00,000 to the

respondent through HDFC bank.

e) The respondent assigned the rents under the MRA to SREI and

instructed the petitioner no. 2 to remit the rental amounts in part to

SREI as specified in the invoices.

f) SREI requested HDFC to reduce the bank guarantee from Rs.

74,00,000 to Rs. 64,68,938, which was done by HDFC. Thereafter,

the petitioner no. 1 requested the respondent and SREI to reduce

the bank guarantee amount from Rs. 64,68,938 to Rs. 44,00,000.

Accordingly, SREI issued a letter to HDFC, requesting them to

reduce the bank guarantee amount from Rs. 64,68,938 to Rs.

44,00,000, but this was not ultimately executed.

g) The respondent invoked the bank guarantee to the tune of Rs.

64,68,938 despite requests from the petitioner to not encash the

said bank guarantee and to reduce the same.

h) The petitioners sent a legal notice dated July 17, 2020 to the

respondent which invoked the arbitration clause in the MRA. The

respondent rebutted the petitioners' claim and refused to refer the

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dispute to arbitration. The petitioner sent another notice dated

September 10, 2020 re-iterating the arbitration clause. This time,

the respondent did not respond. Thereafter, the petitioners have

filed the instant application under Section 11 of the Act.

Rival Submissions

3. Mr. Krishnaraj Thaker, counsel appearing on behalf of the petitioners

made the following submissions in seriatim :-

a) Exhibit 2 of the MRA provides a mechanism for settlement of

disputes through arbitration. The said clause is reproduced below -

"Arbitration : Any question disputes or differences that arises between

the parties hereto in relation to/concerning the Rental Schedule no.__

of the Master Rental Agreement (MRA) dated __ and/or the

assignment of any rights there under or as to the rights, duties,

liabilities of parties thereto, or any of them, either during the

continuance of the agreement or after termination or purported

termination hereof shall be referred to arbitration of a sole arbitrator

to be appointed by mutual consent of the Renter and the Assignee.

The arbitration shall be conducted in accordance with the Arbitration

and Conciliation Act, 1996, and the venue of such arbitration shall be

in Kolkata'.

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Ergo, the MRA between the parties has Kolkata as the venue of

arbitration, the intention of the parties was to exclude all other

courts, as far as arbitration and all proceedings related to

arbitration is concerned. Reliance was placed on the Apex Court's

judgement in Hindustan Construction Company Limited v. NHPC

Limited and Another reported in [2020] 4 SCC 310 for the above

argument.

b) Mr. Thaker emphasised and placed reliance on paragraph 82 of the

Apex Court's judgement in BGS SGS SOMA v. NHPC Limited

reported in[2020] 4 SCC 234 to drive home the point that unless

there is 'contrary indicia', 'venue' of arbitration should be considered

as the 'seat'. According to him, the Specific Forum Selection Clause,

that gives exclusive jurisdiction to courts in Mumbai, being Clause

25 cannot be considered as 'contrary indicia'. Therefore, Kolkata

must be read to be seat of the arbitration in the instant case. Once

seat is designated, Kolkata has jurisdiction over arbitration and

related proceedings and the Section 11 application would lie therein.

Reliance was also placed on the Apex Court's judgements in

Brahmani River Pellets Limited v. Kamachi Industries Limited

reported in [2020] 5 CC 462 and Indus Mobile Distribution Pvt.

Ltd. v. Data Wind Innovations Pvt. Ltd. reported in [2017] 7 SCC

678 to buttress the above submission.

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c) Mr. Thaker further submitted that there is a difference between

having jurisdiction over subject matter of the agreement and subject

matter of arbitration. In this case, while courts in Mumbai may have

jurisdiction over subject matter of the agreement, Kolkata has

jurisdiction over the arbitration proceedings. The judgements of the

Calcutta High Court in M/S Height Insurance Services Limited v.

Reliance Nippon Life Insurance Company Limited (Dated

20.04.2023 in A.P. No. 173 of 2023), the Madras High Court in

Balapreetham Guest House Pvt. Ltd. v. My Preferred

Transformation and Hospitality Pvt. Ltd. reported in [2021] 3

Mad LJ 181, the Bombay High Court in Mukta Agriculture Ltd. v.

Radhegovinda Developers Pvt. Ltd reported in 2021 SCC OnLine

Bom 12035, the Bombay High Court in Aniket SA Investments

LLC v. Janapriya Engineers Syndicate Private Limited & Ors.

reported in 2021 SCC OnLine Bom 919, the Delhi High Court in

My Preferred Transformation and Hospitality Pvt Lt v.

Sumithra Inn reported in 2021 SCC OnLine Del 1536 were placed

to substantiate the above argument.

d) The issue of wrongful invocation of bank guarantee falls under the

scope of disputes referable to arbitration.

4. Mr. Sanjay Kumar Baid, counsel appearing on behalf of the respondent

made the following submissions :-

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a) This Hon'ble Court does not have jurisdiction to entertain and

decide the instant application in view of the Specific Forum Selection

Clause being Clause 25 contained in the MRA which confers

exclusive jurisdiction on the courts in Mumbai in respect of any and

all disputes arising out of the agreement.

b) In case of contradiction between two clauses in a contract wherein it

is not possible to give effect to all the said clauses, the rule of

construction suggests that the earlier clause must override the

latter. Therefore, the Specific Forum Selection Clause being Clause

25 overrides the arbitration clause. Reliance was placed on the Apex

Court's judgement in Radha Sundar Dutta v. Mohd. Jahadur

Rahim & Ors. reported in AIR 1959 SC 24 for the above

proposition.

c) If the parties have chosen a specified court, which court would

otherwise have jurisdiction over the subject matter of arbitration,

then notwithstanding a seat of arbitration being prescribed, which is

different to the forum selection clause, the courts selected by the

parties would have jurisdiction in the case of domestic arbitration.

The judgement of the Calcutta High Court in Commercial Division

Bowlopedia Restaurant India Limited v. Debyani International

Limited reported in 2021[1] CLT 138, was placed to bolster the

said argument.

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d) Clause 25 contained in the MRA which confers exclusive jurisdiction

on the courts in Mumbai in respect of any and all disputes arising

out of the agreement is a 'contrary indicia' that clearly prevents

Kolkata being elevated from being merely a venue of arbitration to

seat of arbitration. He reiterated as per the judgement in BGS SGS

SOMA v. NHPC Limited (supra), 'venue' can be elevated to seat,

unless there is contrary indicia, which does exist in this case.

Reliance was further placed on the Delhi High Court's judgement in

Kushraj Bhatia v. DLF Powers & Services Limited reported in

2022 SCC Online Delhi 3309 to lend credence to the said

proposition.

e) The 'venue of arbitration' cannot be used interchangeably with the

'seat of arbitration'. The intention of the parties must be gauged

from other clauses in the agreement and conduct of the parties,

which in this case, owing to clause 25, indicates that Kolkata was

merely a seat. Reliance was placed on paragraph 20 of the Apex

Court's judgement in Mankastu Impex Private Limited v.

Airvisual Limited reported in [2020] 5 SCC 399 to emphasise on

the above argument.

f) The parties had merely chosen Kolkata to be a venue for arbitration.

This, combined with the fact that no part of the cause of action has

arisen within the territorial jurisdiction of this Hon'ble High Court,

validates the argument that an application under Section 11 of the

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Act cannot be entertained by this court. Reliance was placed on the

Apex Court's judgement in Ravi Ranjan Developers Private

Limited v. Aditya Kumar Chatterjee reported in 2022 SCC

Online SC 568 to lend weight to this contention.

g) The disputes are in relation to non-reduction of the purported bank

guarantee issued by the petitioner to secure the respondent's

interest and the subsequent invocation of bank guarantee. The said

dispute is beyond the purview of the arbitration clause. The MRA

does not contemplate issuance of any guarantee by the petitioners

and the contract of guarantee is an independent contract having no

arbitration clause therein.

Analysis

5. As is evident from the arguments placed before this court from both the

parties, the issue in dispute is the jurisdiction of the court to entertain

the application under Section 11 of the Act. I, therefore, shall decide on

the preliminary issue as to the jurisdiction of this court to entertain the

application under Section 11 of the Act, before delving into the aspect

of whether the invocation of bank guarantee is within the purview of

the arbitration clause.

6. The law on 'seat' versus 'venue' is a conundrum that has and still

confounds courts to this very day. There is no crystal clear precedent

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point of view that shifts away the clouds of uncertainty that mystify

this issue. However, various courts have attempted to give clarity in the

said arena that I too shall dive into to demystify the same.

7. The Apex court in Indus Mobile (supra) was deciding upon a situation

wherein the arbitration was to be conducted at Mumbai and the courts

of Mumbai were to have exclusive jurisdiction over disputes and

differences that may arise between parties. The relevant extract is

produced herein below :-

'19. A conspectus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. On the facts of the present case, it is clear that the seat of arbitration is Mumbai and Clause 19 further makes it clear that jurisdiction exclusively vests in the Mumbai courts. Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to "seat" is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction -- that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Sections 16 to 21 of CPC be attracted. In arbitration law however, as has been held above, the moment "seat" is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties.'

It would be noteworthy to underline the fact that in Indus Mobile

(supra), there was no contradiction wherein one clause provided for a

venue at one location and the exclusive jurisdiction of courts in a

completely different location, as exists in the present case.

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8. The Apex Court in BGS SGS SOMA (supra) was dealing with a

situation wherein it was provided that arbitration proceedings shall be

held at New Delhi/Faridabad. However, the arbitration sittings were

eventually held and the award was passed in New Delhi. It was argued

that since part of cause of action arose in Faridabad, a section 34

application under the Act would lie in the court having jurisdiction in

Haryana and not Delhi. However, the Apex Court rejected such

contentions and held Delhi to be the seat of arbitration. The Apex Court

exhaustively dealt with the law relating to seat and venue of arbitration.

A principle was laid down to determine the 'seat of arbitration'. The

relevant extract is reproduced below :-

'82. On a conspectus of the aforesaid judgments, it may be concluded that whenever there is the designation of a place of arbitration in an arbitration clause as being the "venue" of the arbitration proceedings, the expression "arbitration proceedings" would make it clear that the "venue" is really the "seat" of the arbitral proceedings, as the aforesaid expression does not include just one or more individual or particular hearing, but the arbitration proceedings as a whole, including the making of an award at that place. This language has to be contrasted with language such as "tribunals are to meet or have witnesses, experts or the parties" where only hearings are to take place in the "venue", which may lead to the conclusion, other things being equal, that the venue so stated is not the "seat" of arbitral proceedings, but only a convenient place of meeting. Further, the fact that the arbitral proceedings "shall be held" at a particular venue would also indicate that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby, that that place is the seat of the arbitral proceedings. This, coupled with there being no other significant contrary indicia that the stated venue is merely a "venue" and not the "seat" of the arbitral proceedings, would then conclusively show that such a clause designates a "seat" of the arbitral proceedings. In an international context, if a supranational body of rules is to govern the arbitration, this would further be an indicia that "the venue", so stated, would be the seat of the arbitral proceedings. In a national

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context, this would be replaced by the Arbitration Act, 1996 as applying to the "stated venue", which then becomes the "seat" for the purposes of arbitration.'

Emphasis Added

9. In Mankastu Impex (supra), the Apex Court was deciding upon the

seat in an international commercial arbitration. In this case, the MoU

provided that the courts at New Delhi shall have jurisdiction. But, it

also provided that in case of disputes arising out or relating to the MoU,

the dispute shall be referred to and finally resolved by arbitration

administered in Hong Kong. The Apex Court found Hong Kong to be the

'seat' of arbitration. The principle underlying the reasoning of the

judgement is extracted below :-

'20. It is well settled that "seat of arbitration" and "venue of arbitration" cannot be used interchangeably. It has also been established that mere expression "place of arbitration" cannot be the basis to determine the intention of the parties that they have intended that place as the "seat" of arbitration. The intention of the parties as to the "seat" should be determined from other clauses in the agreement and the conduct of the parties.'

Emphasis Added

10. In BGS SGS SOMA (supra), the Apex was deciding upon a clause

wherein two places were mentioned as the 'venue' of arbitration and the

arbitration actually took place in one of those two places. In Mankastu

Impex (supra), the Apex Court was dealing with an international

commercial arbitration, wherein clause 17.1 gave exclusive jurisdiction

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to courts in New Delhi, whereas clause 17.2 specifically stated

arbitration to be finally resolved and administered in Hong Kong. The

Apex Court read clause 17.1 to have been inserted for the purpose of

enabling injunctive relief and held Hong Kong to be the 'seat'.

Admittedly, the facts in both these cases were different from the instant

application before us. However, the law that can be gathered from a

reading of the above judgements renders an inference that a clause

cannot be observed in isolation. If there is a standalone clause which

states that 'arbitration' or 'arbitration proceedings' are to be held in a

particular place, that place would be the seat of the arbitration. The

seat would then have supervisory jurisdiction over arbitral proceedings

and related applications. However, other clauses of the agreement are

to be analysed to ascertain the intention of the parties. Furthermore,

the idea of 'contrary indicia' is of particular import. A holistic

understanding must be gathered by taking into consideration other

clauses, if any, which may have a bearing on deciding the seat of

arbitration. To put it simply, other clauses must be read to ascertain

whether the 'venue' is actually the seat, or simpliciter a place of

arbitration owing to there being 'contrary indicia' in the form of other

clauses or conduct of parties.

11. In Hindustan Construction (supra) the facts before the Apex Court

were such that learned Additional District Judge-cum-Presiding Judge,

Special Commercial Court at Gurugram had arrived at the conclusion

that Delhi was the seat. This aspect was not contested. However, the

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said Judge held that since both the courts in Faridabad and Delhi had

jurisdiction and a prior Section 9 application was filed at Faridabad,

Section 42 would apply and the Section 34 application would lie at the

Special Commercial Court at Gurugram. The Apex Court set aside the

Special Commercial Court at Gurugram's order after ruling that once

seat is designated, prior applications under the Act made before other

courts would be without jurisdiction and the bar under Section 42 of

the Act would not apply. Ultimately, the Section 34 application was

transferred to the Delhi High Court. In Brahmani River Pellets

Limited (supra), Bhubaneswar was chosen as the venue of arbitration.

The appeal was against a Madras High Court judgement which had

stated that mere designation of 'seat' does not oust jurisdiction of other

courts where cause of action may have arisen. The Apex Court set aside

the order and observed that opting of Bhubaneswar as the 'venue' by

itself excludes jurisdiction of all other courts. It is to be noted that in

both these cases the facts were different and there were no contrary

indicia which could indicate that the intention of the parties was

otherwise. In the instant case, the primal factor to be determined is

where lies the seat of the arbitration.

12. In Commercial Division Bowlopedia Restaurant India Limited

(supra), a co-ordinate bench of this court decided upon the jurisdiction

of the court to entertain an application under Section 11 of the Act in a

situation wherein the parties had specifically selected a 'seat' which

was in conflict with the court selected under the forum selection clause.

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In the case before us, a seat has not been clearly designated. Therefore,

this case is distinguishable on facts and does not assist this court in

any manner. Similarly, in Aniket SA Investments LLC (supra), an

earlier clause designated Mumbai as the 'seat' of arbitration and the

courts of Hyderabad were selected as having jurisdiction to try and

entertain disputes arising out of the agreement. The Bombay High

Court held Mumbai to be the seat and have jurisdiction over the

proceedings, also because of the reason that the exclusive jurisdiction

clause was made subject to the clause designating Mumbai as the seat.

This case is also accordingly distinguishable on facts.

13. In My Preferred Transformation and Hospitality Pvt. Ltd. (supra),

the Delhi High Court had before itself two different clauses, one stating

that place of arbitration shall be New Delhi and another opting courts

at Bengaluru to have exclusive jurisdiction in the matter. The court

placed reliance upon the Apex Court's judgement in Mankastu Impex

(supra) to hold that the seat was Delhi and it had jurisdiction over the

arbitral proceedings. With great humility, I would disagree with the

ratio laid down in this judgement. Firstly, it did not examine whether

the clause opting courts at Bengaluru to have exclusive jurisdiction can

be seen as a 'contrary indicia'. Secondly, the reliance on Apex Court's

judgement in Mankastu Impex (supra) was misplaced as in Mankastu

Impex (supra), the Apex Court was dealing with an international

commercial arbitration wherein the courts at New Delhi were stated to

have jurisdiction, but disputes were to be resolved by arbitration

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administered in Hong Kong. There was an additional clause which

provided that a party may seek injunctive relief from a court having

jurisdiction. The Apex Court held that since it was a foreign seated

arbitration, the inclusion of clause giving courts at New Delhi

jurisdiction was only for the purpose of enabling injunctive relief and

reading the contract in a wholesome manner would indicate that the

seat was actually Hong Kong. Such is not the case in a domestic seated

arbitration. Therefore, a clause designating another court to have

exclusive jurisdiction has to be considered while appreciating if there is

a 'contrary indicia'.

14. In Balapreetham Guest House (supra), the Madras High Court was

dealing with a situation wherein the place of arbitration was stated to

be New Delhi and courts at Chennai were selected to have exclusive

jurisdiction. Relevant portions of the judgement are extracted below :-

'30. Considering the apparent conflict in respect of these 2 clauses the two have to be harmoniously constructed to give meaning to both. The rule of harmonious construction is to harmonise and not to destroy and while interpreting the clauses Courts have to presume that the parties had inserted every clause thereof for a purpose and therefore attempt to give effect to both. A reading of the 2 clauses would indicate that the parties had agreed that in case of a cause of action arising from out of the agreement then the Courts at Chennai alone will have jurisdiction, if parties abandon their right to arbitrate the dispute and file a civil suit.

31. However, the latter clause viz; 10.2 and 10.3 relates to disputes between the parties arising out of or in connection with the agreement and parties have agreed to resolve their disputes through Arbitration and have agreed that the seat of such Arbitral

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proceedings will be New Delhi. Therefore, the two clauses can be harmoniously constructed without one doing violence to the other.

32. Even if we were to assume that the two clauses are in conflict with each other the same can be resolved by considering the law laid down by the Supreme Court. The Hon'ble Supreme Court has in the judgements referred above placed importance on the juridical seat to confer jurisdiction on Courts in the case of Arbitration Proceedings. In the Judgement in BGS Soma the learned Judges had held that the very fact that parties have chosen a place to be the seat necessarily implies that both parties have agreed that the Courts at the seat would have jurisdiction over the entire arbitral process. Therefore, on account of a conspectus of the above judgements of the Hon'ble Supreme Court, wherein emphasis and importance has been given to the juridical seat, in the instant case the Court having supervisory jurisdiction is the Courts where parties have agreed would be the place of arbitration.'

In my respectful view, the above contractual interpretation runs afoul

of the law which mandates that intention of the parties is to be gauged

from a holistic understanding of the various clauses in an agreement. It

imposes an understanding that the parties themselves may not have

agreed to. The clause designating a venue, namely clause 10.3, which

states New Delhi to be the place of arbitration is seen in isolation to

suggest that the intention was to give it the status of a seat, when there

is clearly a different court (courts in Chennai) which has been granted

exclusive jurisdiction, in clause 10.1. The latter is a clear 'contrary

indicia' that should prevent the term 'venue' to be exalted to the

position of 'seat'.

15. In Mukta Agriculture (supra), the Bombay High Court was deciding

upon a case where the arbitration was to be held at Mumbai whereas

another clause conferred exclusive jurisdiction on the courts at

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Chittorgarh. The court, relying upon BGS SGS SOMA (supra) held that

the expression 'shall be referred to arbitration to be held at Mumbai'

does not include just one or more individual hearings, but the

arbitration proceedings as a whole. Therefore, Mumbai was not merely

the venue, but the seat and had jurisdiction over the arbitration

proceedings. The court held that the clause conferring exclusive

jurisdiction on the courts at Chittorgarh was not a 'contrary indicia'.

However, the Bombay High Court failed to elaborate upon why the

clause conferring exclusive jurisdiction on the courts at Chittorgarh

cannot be seen as 'contrary indicia'. I am unable to agree with the said

view. Such a clause cannot be ignored and considered irrelevant for the

purposes of ascertaining the intention of the parties.

16. In Kushraj Bhatia (supra), the facts before the Delhi High Court were

that the arbitration proceedings were to be held in New Delhi whereas

the civil courts at Gurgaon and High Court at Chandigarh alone were to

have jurisdiction. Upon a careful perusal of the precedents in the cases

of Isgec Heavy Engineering. Ltd. v. Indian Oil Corporation

Ltd. (Dated 21.10.2021 in Arbitration Petition 164/2001) and

Cravants Media Pvt. Ltd. v. Jharkhand State Cooperative Milk

Food Federation Pvt. Ltd. (Dated 06.12.2021 in Arbitration

Petition 915/2021) of the Delhi High Court, the Court came to the

following conclusion :-

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'28. Having discussed the distinct concepts of 'Seat' and 'Venue', it may be examined how these two concepts have been interpreted and applied in various situations. In Isgec Heavy Engineering. Ltd. v. Indian Oil Corporation Ltd. Arbitration Petition No. 164/2001 decided on 21.10.2021 by the Coordinate Bench of this Court, similar Clause came up for interpretation. The parties have agreed for venue of arbitration to be New Delhi, but in the other Clause, they had agreed that all actions and proceedings arising out of/related to the Contract shall lie in the Courts of competent jurisdiction at Guwahati. The Court held that since the Clauses of the Agreement expressly provided that the Courts at Guwahati would have exclusive jurisdiction, it was a contrary indicator coming within the exception as held by the Supreme Court in the case of DSG SGS Souma (supra).

* * *

29. Similarly, in Cravants Media Pvt. Ltd. v. Jharkhand State Cooperative Milk Food Federation Pvt. Ltd. Arbitration petition 915/2021 decided on 06.12.2021 by the Coordinate Bench, the Dispute Resolution Clause provided that the venue of arbitration shall be Ranchi, but any disputes arising out of this agreement shall be subject to the sole and exclusive jurisdiction of Courts in Delhi. It was held that the intention of the parties was clear that the seat would be in New Delhi and the Court at New Delhi was held to have the jurisdiction.

* * *

31. It is quite evident that there is a contraindication in the registered Agreement that while the venue of arbitration may be New Delhi, but the seat of arbitration shall be Gurgaon and High Court at Chandigarh. In the circumstances, it has to be held that this Court has no jurisdiction and it is the Courts at Gurgaon/High Court of Chandigarh which have the exclusive jurisdiction for entertaining the disputes arising out of the registered Lease Agreement.'

Emphasis Added

I find myself in consonance with the above view. In circumstances

where a place is designated merely as a 'venue' and courts of another

place have been granted the exclusive jurisdiction, the latter is a clear

'contrary indicia'. It can be inferred from a comprehensive reading of

such clauses, that the 'venue' is a convenient place of arbitration and

not the seat.

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17. The Calcutta High Court's judgement in M/S Height Insurance

Services Limited (supra) has been stayed by the same judge who

passed the judgement and is therefore not required to be dealt by me.

Conclusion

18. Contractual interpretation necessitates taking into consideration all

clauses and relevant factors to propound the proper intention between

the parties. The rule of harmonious construction must be applied so

that a panoramic meaning can be given to any agreement. The law with

respect to arbitration clauses, as laid down in BGS SGS SOMA (supra)

and Mankastu Impex (supra), is not alien to such interpretive

principles. In light of the Apex Court's decisions in these two

judgements, other clauses have to be scrutinized, when a location has

been mentioned as 'venue' or 'place', to fathom if such a location can be

dignified with the status of 'seat'. In my opinion, a clause opting a place

as 'venue' or 'place' read with another clause which mentions courts of

another location to have jurisdiction over disputes that may arise,

inhibits the promotion of such 'venue' to 'seat'. The intention that

emerges from an aggregate understanding of such clauses is that the

'venue' or 'place' was to be a convenient location for holding of

arbitration seatings. The courts of the place selected as having

exclusive jurisdiction over disputes should be considered as 'seat' and

having jurisdiction to entertain applications under the Act.

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19. In the facts of this case, Exhibit 2 of the MRA mentions that the

arbitration shall be conducted in accordance with the Arbitration and

Conciliation Act, 1996, and the venue of such arbitration shall be in

Kolkata. However, it cannot be analysed in seclusion of the other

clauses. Due regard must be paid to other clauses, if any, which may

act as a 'contrary indicia' to suggest that the parties intended the venue

to not be seat of the arbitral proceedings. It is clear that Clause 25

contained in the MRA which confers exclusive jurisdiction on the courts

in Mumbai in respect of any and all disputes arising out of the

agreement, is a 'contrary indicia' and shall proscribe the upgradation of

'Kolkata' from being a mere 'venue' to that of 'seat'. The courts at

Mumbai, in my opinion, possess the jurisdiction to entertain the

instant petition and other applications under the Act. Correspondingly,

this court does not have jurisdiction to entertain the instant petition.

20. Since I have held that this court does not have jurisdiction, it is not

required to go into the issue as to whether the invocation of bank

guarantee is within the purview of the arbitration clause. This question

must be gone into by the court having jurisdiction.

21. Accordingly, A.P. No. 358 of 2020 is dismissed without costs.

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22. Urgent Photostat certified copy of this order, if applied for, should be

made available to the parties upon compliance with the requisite

formalities.

(Shekhar B. Saraf, J.)