Delhi High Court
Cars24 Services Pvt. Ltd. vs Cyber Approach Workspace Llp on 17 November, 2020
$~12 (original side)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 17th November, 2020
+ ARB.P. 328/2020
CARS24 SERVICES PVT. LTD. ..... Petitioner
Through: Mr. Yash Srivastava, Adv.
versus
CYBER APPROACH WORKSPACE LLP ..... Respondent
Through: Mr. Praveen Kumar Sharma,
Adv. with Mr. Sahil Nagpal,
Advs.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
J U D G M E N T (ORAL)
% (Video-Conferencing)
1. I am faced, here, with a peculiar and, quite frankly, somewhat
unenviable, situation in which, though learned counsel for both the
parties submit that this Court has jurisdiction to entertain the present
petition, I am unable to convince myself to agree.
2. In view of the limited controversy involved, it is not necessary
to dwell deep into the disputes between the petitioner and the
respondent. A brief recital would suffice.
3. The respondent has its registered office in Gurgaon, Haryana.
On 27th December, 2018, a lease deed was executed, whereby the
respondent leased the premises, admeasuring 10,000 square feet, for
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running an office. Interest free refundable security deposit of ₹
52,80,000/- was paid, by the petitioner, to the respondent, and the
₹ 7,30,000/
monthly lease rental, as per the lease deed, was -.
Additionally, the petitioner was required to pay maintenance charges
of ₹ 1,50,000/-, apart from electricity and water charges.
4. It is asserted, in the petition, that the petitioner was meeting all
these liabilities, without default.
5. Owing to the intervention of the COVID-2019 pandemic, the
petitioner claims that it had to suspend its operations, completely, with
effect from 23rd March, 2020. This, according to the petitioner,
constituted force majeure, for which there was a separate dispensation
in the lease deed.
6. The petitioner, on 23rd March, 2020, wrote to the respondent,
informing the respondent that it was not in a position to continue
operating from the premises and requesting the respondent, therefore,
to switch off the power supply.
7. Vide notice dated 23rd May, 2020, addressed to the respondent,
the petitioner purported to terminate the lease deed, invoking Clause
13.2 thereof (which dealt with force majeure). Correspondingly, the
petitioner requested the respondent to refund the interest free
refundable security deposit of ₹ 52,80,000/- paid by it
8. The respondent replied, on 27th May, 2020, denying any
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liability towards the petitioner.
9. A dispute having thus arisen between the petitioner and the
respondent, the petitioner issued a separate notice, dated 8th June,
2020, invoking arbitration, for the resolution of the dispute, in
accordance with Clauses 25.2 to 25.4 of the lease deed, which reads
thus:
"25.2 That if any disputes controversies or difference arise
between the Parties, regarding the construction or
interpretation of any of the terms and conditions herein
contained or touching these presents or determination of any
liability or breach thereof (Dispute), the Parties shall try and
resolve the same amicably, failing which the Disputes shall be
referred to Arbitration.
25.3 That if the Parties fail to resolve such dispute then,
either Party may serve a notice to the other Party of its
intention to commence arbitration. All such disputes shall
then be finally settled through arbitration in accordance with
the provisions of this Clause.
25.4 Parties have agreed that all the Disputes arising out of
this Deed shall be referred to a Sole Arbitrator who shall be
mutually appointed by the parties, failing which either Party
may approach a court of competent jurisdiction at Haryana
for appointment of the Sole Arbitrator in terms of the
Arbitration and Conciliation Act, 1996 (Act) as amended from
time to time. The arbitration proceedings shall be conducted
in terms of the Act. The award of the Sole Arbitrator shall be
reasoned and in written, which shall be final and binding upon
the Parties. It has been further agreed between the Parties that
Arbitration proceedings shall be conducted in English
Language and the seat of Arbitration will be at New Delhi,
India."
(Emphasis supplied)
The communication also suggested the name of an advocate, as the
sole arbitrator to adjudicate on the aforesaid disputes.
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10. Vide response dated 27th June, 2020, the respondent again
denied any liability towards the petitioner and also rejected the
suggestion, of the petitioner, to appoint the advocate, whose name was
suggested by the petitioner, to act as the sole arbitrator. The
respondent, instead, recommended the name of Hon'ble Mr. Justice
Badar Durrez Ahmed, former Chief Justice of the High Court of
Jammu & Kashmir and an eminent retired Judge of this Court, as the
sole arbitrator to arbitrate on the aforesaid disputes.
11. There being no consensus, ad idem, regarding the identity of the
arbitrator to arbitrate on the disputes between the parties, the petitioner
has approached this Court, by means of the present petition, preferred
under Section 11(5) of the Arbitration and Conciliation Act, 1996
(hereinafter referred to as "the 1996 Act").
12. A reading of Clause 25.4 of the lease deed reveals that the
jurisdiction, for appointment of the sole arbitrator in terms of the 1996
Act, has been specifically conferred, by agreement between the
parties, on "a court of competent jurisdiction at Haryana ... in terms of
the Arbitration and Conciliation Act, 1996".
13. I have queried, of learned counsel, as to how, in view thereof,
this Court could exercise jurisdiction to appoint the arbitrator under
Section 11.
14. The submission, of both the learned counsel, has been that, as
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the seat of arbitration has been fixed as New Delhi, this Court has
exclusive jurisdiction to appoint the sole arbitrator. It is emphatically
submitted, at the Bar, that there is a long line of authorities, of the
Supreme Court, underscoring the position that a clause fixing the seat
of arbitration is akin to an exclusive jurisdiction clause and that, once
such a clause exists, the court having jurisdiction over the seat thus
fixed, would, ex facie, also have jurisdiction in all matters relating to
the arbitral proceedings, including Sections 9, 11 and 34 of the 1996
Act.
15. Mr. Yash Srivastava, learned counsel for the petitioner, has
placed especial reliance, in this context, on the judgment of the
Supreme Court in Bhandari Udyog Limited v. Industrial Facilitation
Council 1 and of this Court in Devyani International Ltd v.
Siddhivinayak Builders and Developers 2, N.J. Construction v.
Ayursundra Healthcare Pvt. Ltd. 3 and Aarka Sports Management
Pvt. Ltd. v. Kalsi Buildcon Pvt. Ltd 4.
16. Mr. Praveen Kumar Sharma, learned counsel for the respondent,
supporting the stand of the petitioner, has cited a judgment of a
coordinate Single Bench of this Court in Ramandeep Singh Taneja v.
Crown Realtech Pvt. Ltd 5.
17. Before proceeding to examine the controversy, two factors, in
(2015) 14 SCC 515
(2017 )SCC OnLine Del 11156
(2018) SCC OnLine Del 7009
(2020) III AD(Delhi) 486
(2017) SCC OnLine Del 11966
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my opinion, are required to be noticed at the outset.
18. Firstly, while it is true that the Supreme Court has, in various
decisions commencing from the judgment of the Constitution Bench
in BALCO v. Kaiser Aluminium Technical Services 6, held that a
clause fixing the seat of arbitration is akin to an exclusive jurisdiction
clause and that, therefore, courts having jurisdiction over the seat so
fixed, would possess jurisdiction over the arbitral proceedings in their
entirety, none of the said decisions pertain to a situation in which the
contract contained a separate exclusive jurisdiction clause, conferring
jurisdiction on a court in another territorial location.
19. Secondly, there is no decision, either of the Supreme Court, or
of this Court, to which my attention has been invited, or on which I
have been able to lay my hands, in which the arbitration agreement
specifically confers the jurisdiction to appoint the arbitrator, i.e.
Section 11 jurisdiction, on courts in a particular territorial location.
This, factor, in my view, makes a world of difference to the present
case, and its outcome.
20. Learned counsel for the parties are correct in their submission
that there is a long line of decisions of the Supreme Court, which have
examined the aspect of territorial jurisdiction, qua the proceedings
under Section 9, 11 and 34 of the 1996 Act. These decisions have
dealt with the scope of the "seat of arbitration clause" as well as of the
"exclusive jurisdiction clause", and the effect of Section 2(1)(e) of the
1996 Act, juxtaposed therewith.
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21. In fact, the three factors, the interplay of which would fall for
consideration in all such cases, are (i) the seat of arbitration clause, if
any, (ii) the exclusive jurisdiction clause, if any and (iii) Section
2(1)(e) of the 1996 Act.
22. One may, profitably, commence a glance at these authorities,
from the decision in BALCO6.
23. BALCO6, a decision of the Constitution Bench, did not involve
any exclusive jurisdiction clause. It involved an international
commercial arbitration and the Supreme Court was principally
concerned, in the said case, with Section 2(2) of the 1996 Act, and its
effect on the controversy before it. The Supreme Court observed that
Section 2(2) operated to make Part I of the 1996 Act applicable only
to arbitrations which took place in India. It was further held, in the
said decision, that, the "seat of arbitration" as contractually
determined, was the centre of gravity of the arbitral proceedings.
Section 2(1)(e), the Constitution Bench held, was not relevant to the
issue of whether Part I of the 1996 Act applied to arbitrations which
took place outside India.
24. In any case, as already noted, this decision involved an
international commercial arbitration, and the contract forming the
subject matter of consideration therein did not contain any exclusive
jurisdiction clause.
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(2012) 9 SCC 552
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25. The next decision of consequence, rendered by three Hon'ble
Judges of the Supreme Court, is Swastik Gases Pvt. Ltd. v. Indian Oil
Corporation Ltd.7.
26. Here, the contract between the parties did not fix the seat of
arbitration at any particular location. It did, however, contain an
exclusive jurisdiction clause, subjecting the contract to the jurisdiction
of courts at Kolkata. In view of the existence of such an exclusive
jurisdiction clause, the Supreme Court held that, though the cause of
action arose entirely within Rajasthan, as courts at Kolkata had been
conferred exclusive jurisdiction, by the contract between the parties,
the jurisdiction to deal with all the matters pertaining to the arbitration
agreement would vest with the courts at Kolkata and the jurisdiction
of courts in Rajasthan would be completely excluded.
27. Though Mr. Srivastava has chosen to dispute the applicability
of this decision, on the ground that there was, in that case, no
contractual covenant fixing the seat of arbitration, I deem it
appropriate, nevertheless, to reproduce para 22 of the report, thus:
"22. In Rajasthan State Electricity Board8, two clauses
under consideration were clause 30 of the general conditions
of the contract and clause 7 of the bank guarantee. Clause 30
of the general conditions of the contract stipulated, "the
contract shall for all purposes be construed according to the
laws of India and subject to jurisdiction only at Jaipur in
Rajasthan courts only......" and clause 7 of the bank
guarantee read, "all disputes arising in the said bank guarantee
between the Bank and the Board or between the supplier or
the Board pertaining to this guarantee shall be subject to the
courts only at Jaipur in Rajasthan". In light of the above
(2013) 9 SCC 32
(2009) 3 SCC 107
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clauses, the question under consideration before this Court
was whether Calcutta High Court where an application
under Section 20 of the Arbitration Act, 1940 was made had
territorial jurisdiction to entertain the petition or not.
Following Hakam Singh9, A.B.C. Laminart10 and Hanil Era
Textiles11 , this Court in paragraphs 27 and 28 (pgs. 114-115)
of the Report held as under:
"27. The aforesaid legal proposition settled by this
Court in respect of territorial jurisdiction and
applicability of Section 20 of the Code to
the Arbitration Act is clear, unambiguous and explicit.
The said position is binding on both the parties who
were contesting the present proceeding. Both the
parties with their open eyes entered into the aforesaid
purchase order and agreements thereon which
categorically provide that all disputes arising between
the parties out of the agreements would be adjudicated
upon and decided through the process of arbitration
and that no court other than the court at Jaipur shall
have jurisdiction to entertain or try the same. In both
the agreements in Clause 30 of the general conditions
of the contract it was specifically mentioned that the
contract shall for all purposes be construed according
to the laws of India and subject to jurisdiction only at
Jaipur in Rajasthan courts only and in addition in one
of the purchase order the expression used was that the
court at Jaipur only would have jurisdiction to entertain
or try the same.
28. In the light of the aforesaid facts of the present
case, the ratio of all the aforesaid decisions which are
referred to hereinbefore would squarely govern and
apply to the present case also. There is indeed an
ouster clause used in the aforesaid stipulations stating
that the courts at Jaipur alone would have jurisdiction
to try and decide the said proceedings which could be
initiated for adjudication and deciding the disputes
arising between the parties with or in relation to the
aforesaid agreements through the process of
arbitration. In other words, even though otherwise the
(1971) 1 SCC 286
(1989) 2 SCC 163
(2004) 4 SCC 671
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courts at Calcutta would have territorial jurisdiction to
try and decide such disputes, but in view of the ouster
clause it is only the courts at Jaipur which would have
jurisdiction to entertain such proceeding."
(Emphasis supplied)
28. Yet another decision, which dealt with a contract involving an
exclusive jurisdiction clause with no other clause fixing seat of
arbitration elsewhere, was B. E. Simoes Von Staraburg Niedenthal v.
Chhattisgarh Investment Ltd12. The agreement between the parties, in
the said case, for raising mines located in Goa, expressly stipulated
that "the courts at Goa shall have exclusive jurisdiction". A Section 9
petition was filed, by the respondent (before the Supreme Court) in the
court of the District Judge, Raipur. Relying on the afore-extracted
passages from Swastik Gases7, the Supreme Court held that Clause 13
of the agreement (which contained the afore-extracted exclusive
jurisdiction dispensation) operated to oust the jurisdiction of the
District Judge, Raipur, and conferred exclusive jurisdiction, to
entertain all petitions relating to the arbitration, as on courts at Goa.
29. Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations
Pvt. Ltd13 dealt with a situation in which there was a clause fixing the
seat of arbitration as well as a clause conferring exclusive jurisdiction,
but the courts conferred jurisdiction, under either clause, were the
courts in Bombay. The agreement stipulated that the arbitration would
be conducted at Bombay, which, according to the Supreme Court,
fixed Bombay as the "seat of arbitration" and conferred exclusive
jurisdiction, qua disputes under the agreement, on courts in Bombay.
(2015)12 SCC 225
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The jurisdiction of courts at Bombay to entertain the petition was,
nevertheless, sought to be questioned by placing reliance on Section
2(1)(e) of the 1996 Act, as the cause of action had arisen outside the
jurisdiction of courts at Bombay. The Supreme Court held that, once
the agreement fixed the seat of arbitration at Bombay, the place where
the cause of action arose, and Section 2(1)(e)of the 1996 Act, lost their
relevance altogether.
30. In this case, however, it merits reiteration that there was no
conflict between the seat of arbitration clause and the clause fixing the
exclusive jurisdiction, as both conferred jurisdiction on courts at
Bombay.
31. The next decision, in the precedential queue, is Brahmani River
Pellets Ltd. v. Kamachi Industries Ltd14. In this case, the cause of
action, pertaining to the disputes between the parties, arose partly at
Bhubaneswar and partly at Chennai. The agreement between the
parties, however, provided for Bhubaneswar as the venue of
arbitration. The Supreme Court held that though the agreement used
the word "venue", a proper reading of the agreement indicated that
Bhubaneswar was the seat of arbitration. In view thereof, it was held
that the jurisdiction of Chennai courts, to entertain the petition, stood
ousted and that courts at Bhubaneswar alone had jurisdiction to deal
with the matter. Here, again, there was no exclusive jurisdiction
clause, in the agreement between the parties.
(2017) 7 SCC 678
2019 SCC OnLine SC 929
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32. We proceed, next, to BGS SGS Soma JV v. NHPC Ltd 15.
33. This case dealt with a project, located in the State of Assam and
Arunachal Pradesh. The agreement provided for reference of any
dispute, to arbitration to be held at New Delhi/Faridabad. The arbitral
proceedings took place at New Delhi, and the award was also
delivered at New Delhi.
34. The award was sought to be challenged under Section 34 of the
1996 Act, before the learned District and Sessions Judge, Faridabad,
from whom it was later transferred to the Special Commercial Court,
Gurugram. The Gurugram court returned the application to the
petitioner for presentation before the appropriate court having
jurisdiction in New Delhi.
35. NHPC, i.e. the respondent before the Supreme Court,
challenged the decision by way of an appeal under Section 34 of the
1996 Act, before the High Court of Punjab and Haryana. The High
Court held that Delhi was only a convenient venue, for holding of the
arbitral proceedings and could not be regarded as the "seat" of the
arbitration. Part of the cause of action having, therefore, arisen in
Faridabad, the High Court invoked Section 2(1)(e) of the 1996 Act, to
hold that the District Judge at Faridabad possessed jurisdiction to
decide the petition of NHPC.
36. BGS SGS Soma appealed to the Supreme Court. Relying on its
earlier decisions, the Supreme Court held that, as the arbitral
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(2020) 4 SCC 234
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proceedings, per contract, were conducted at New Delhi and
Faridabad, both New Delhi and Faridabad constituted "seats" of
arbitration. Nevertheless, it was held, towards the conclusion of the
judgment that, as the proceedings had been held at New Delhi and the
award had also been thus signed at New Delhi, the parties had
consciously chosen New Delhi as the "seat" of arbitration under
Section 20(1) of the 1996 Act. In view thereof, it was held that courts
at New Delhi alone would have exclusive jurisdiction to deal with the
challenge to the award and, consequently, the Section 34 petition was
directed to be presented before the competent courts at New Delhi.
37. A detailed analysis of all the above decisions is to be found in
the recent judgment of this Court in Big Charter Pvt. Ltd. v. Ezen
Aviation Pty. Ltd16.
38. A reading of the aforesaid decisions, no doubt, reveals that pre-
eminence has been accorded by the Supreme Court to the
contractually determined "seat of arbitration", while deciding the issue
of the court which would be possessed of territorial jurisdiction to deal
with petitions relating to the arbitral proceedings, whether preferred
under Section 9, 11 or 34. As already noticed hereinabove, however,
none of these decisions involved a case in which the contract
contained an exclusive jurisdiction clause and a separate seat of
arbitration clause, and the two clauses conferred jurisdiction on courts
located at different territorial locations.
MANU/DE/1916/2020
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39. In the present case, the situation is more involved , as the
exclusive jurisdiction clause specifically confers Section 11
jurisdiction on courts of competent jurisdiction at Haryana, as per the
1996 Act - which, therefore, would mean the High Court of Punjab
and Haryana.
40. Mr. Yash Srivastava, learned Counsel for the petitioner, besides
emphasising the fact that pre-eminence has been accorded by the
Supreme Court, to the seat of arbitration, as fixed by the contract
between the parties, and on Courts having territorial jurisdiction over
such seat, also places particular reliance on Section 42 of the 1996
Act, which reads as under :
"42. Jurisdiction. - Notwithstanding anything contained
elsewhere in this Part or in any other law for the time being in
force, where with respect to an arbitration agreement any
application under this Part has been made in a Court, that
Court alone shall have jurisdiction over the arbitral
proceedings and all subsequent applications arising out of that
agreement and the arbitral proceedings shall be made in that
Court and in no other Court."
Mr. Srivastava devises, from this provision, an involved argument.
He contends that, in view of Section 42, all proceedings, relating to
the arbitration agreement, would have to be preferred before one
Court. If Section 11 jurisdiction, in the present case, is to be conferred
on the High Court of Punjab and Haryana, he submits a peculiar and
anomalous situation would result, as Section 42 would then come into
play, and require all subsequent proceedings, relating to the
arbitration, to be preferred before the competent Courts at Haryana.
This, then, he submits would directly be in conflict with the fixation of
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the seat of arbitration, by the present contract, at New Delhi. As such,
he submits there is an apparent conflict between the exclusive
jurisdiction clause and the seat of arbitration clause, in the present
case. This conflict according to Mr. Srivastava, has to be reconciled
by harmonising the two clauses keeping in view Section 42 of the
1996 Act. The only way of doing this, he submits, would be to confer
Section 11 jurisdiction on this Court. Conferment of such jurisdiction,
he points out, would result in Section 34 jurisdiction also vesting with
this Court (by operation of Section 42), which would be entirely in
accord with the fixing of the seat of arbitration at New Delhi.
41. I may, immediately, deal with this argument, before proceeding
further. The argument, though undoubtedly attractive at first blush,
fails, on a deeper analysis, to pass muster. The submission of Mr.
Srivastava proceeds on the premise that, were an arbitral award to be
passed, and were such award to be challenged, that challenge would
also have to be preferred before the Courts at Haryana, in view of
Section 42 of the 1996 Act - if Section 11 jurisdiction is to be
conferred, by this Court, on the High Court of Punjab and Haryana.
According to Mr. Srivastava, this would conflict with the seat of
arbitration clause in the agreement.
42. In the first place, it would be premature for me to enter into
such a controversy, seized, as I am, with the issue of fixation of
determining the situs of the Court which could exercise Section 11
jurisdiction and appoint the arbitrator. Stricto sensu, therefore, I am
not required to consider which Court would have jurisdiction to
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entertain a Section 34 challenge, assuming an arbitral award is passed,
with which one, or the other, party is aggrieved.
43. Be that as it may, the submission, of Mr. Srivastava, that, if
Section 34 jurisdiction is to be conferred on Courts at Haryana (which,
according to him would be the inevitable consequence of granting
Section 11 jurisdiction to courts at Haryana, in view of the mandate of
Section 42), an anomalous situation would arise, in view of the
fixation of the seat of arbitration at New Delhi, may not be entirely
correct. As already noted hereinabove, the decisions of the Supreme
Court, conferring jurisdiction over the arbitral proceedings, on courts
having territorial jurisdiction over the contractually fixed seat of
arbitration, do not deal with situations in which there was a separate
exclusive jurisdiction clause, conferring jurisdiction on courts located
elsewhere. Even if Section 34 jurisdiction were, therefore, to be
conferred on courts at Haryana, that may not necessarily conflict with
the legal position as enunciated in the decisions cited hereinabove.
Hypothetically, it may be possible to argue that, as Section 11
jurisdiction has been conferred on the High Court of Punjab and
Haryana, the mandate of Section 42 would necessarily require any
challenge to the award, under Section 34, to be also preferred before
Courts at Haryana.
44. The submission, of Mr. Srivastava, that this would conflict with
the seat of arbitration dispensation in the lease deed, may not be
correct, in view of the separate exclusive jurisdiction clause,
conferring jurisdiction on Courts located elsewhere than at the seat of
arbitration.
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45. At the cost of reiteration, it may be mentioned that none of the
decisions cited hereinabove, deal with the situation in which the seat
of arbitration is fixed at place A, and courts at place B are conferred
exclusive jurisdiction to deal with disputes under the contract. The
view that the "seat of arbitration clause" has to be treated as akin to an
exclusive jurisdiction clause, has been expressed, by the Supreme
Court, in cases in which there is no separate exclusive jurisdiction
clause, conferring exclusive jurisdiction on courts located elsewhere.
Where such a separate exclusive jurisdiction clause, conferring
exclusive jurisdiction on courts other than the court having jurisdiction
over the contractual seat of arbitration, exists, it may not be proper, in
my view, to grant pride of place, to the seat of arbitration clause, over
the exclusive jurisdiction clause. None of the decisions of the
Supreme Court, cited hereinabove and to which my attention was
invited, so directs. This position would stand underscored in a
situation, such as the present - which appears to be sui generis - in
which the exclusive jurisdiction clause is not generally worded, qua all
disputes under the agreement, but is specific with respect to
appointment of the arbitrator, i.e. specific with respect to Section 11
jurisdiction. Adhering to the said contractual dispensation would not,
therefore, in my view, militate against the opinion expressed by the
Supreme Court in the aforesaid decisions, as was sought to be
suggested by Mr. Srivastava.
46. Having so observed, I hasten to clarify that I am not proposing
to venture any final opinion on the appropriate forum, before which
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any challenge, to the arbitral award that would come to be passed,
under Section 34 of the 1996 Act, would have to be laid. This aspect,
strictly speaking, does not arise for consideration before me and would
have to be examined by the courts which is seized with the Section 34
challenge, if and when such a challenge is laid.
47. There is, however, one decision of the Supreme Court, in which
the seat of arbitration was fixed at one location, and exclusive
jurisdiction was conferred on courts at another, which did not have
territorial jurisdiction over the seat of arbitration. This decision,
properly read, in my view, does throw some light on the approach to
be adopted in a case such as the present. The decision in question is
Mankastu Impex Pvt. Ltd. v. Airvisual Ltd17.
48. In Mankastu Impex Pvt. Ltd.17, the place of arbitration, was
contractually fixed at Hong Kong. In that case, Clause 17 of the
Memorandum of Understanding (MOU) between the parties which
provided for arbitration for resolution of the disputes between them,
read thus :
"17. Governing law and dispute resolution
17.1 This MoU is governed by the laws of India, without
regard to its conflicts of laws provisions, and courts at New
Delhi shall have the jurisdiction.
17.2 Any dispute, controversy, difference or claim arising
out of or relating to this MoU, including the existence,
validity, interpretation, performance, breach or termination
thereof or any dispute regarding non-contractual obligations
arising out of or relating to it shall be referred to and finally
resolved by arbitration administered in Hong Kong.
2020 SCC OnLine SC 301
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The place of arbitration shall be Hong Kong.
The number of arbitrators shall be one. The arbitration
proceedings shall be conducted in English language.
17.3 It is agreed that a party may seek provisional, injunctive
or equitable remedies, including but not limited to preliminary
injunctive relief, from a court having jurisdiction, before,
during or after the pendency of any arbitration proceeding."
49. The issue before the Supreme Court was with respect to the
courts having jurisdiction to entertain a Section 11 petition, as in the
present case. The Supreme Court held that the fixing of Hong Kong
as the "place of arbitration" resulted ipso facto in Hong Kong
becoming the "seat of arbitration". On the attention of the Supreme
Court being invited to Clause 17.1, which conferred jurisdiction on
courts at New Delhi, in respect of the MOU, the Supreme Court
observed, in paras 25 and 27 of the report, thus :
"25. Clause 17.1 of MoU stipulates that MoU is governed
by the laws of India and the courts at New Delhi shall have
jurisdiction. The interpretation to Clause 17.1 shows that the
substantive law governing the substantive contract are the
laws of India. The words in Clause 17.1, "without regard to
its conflicts of laws provisions and courts at New Delhi shall
have the jurisdiction" has to be read along with Clause 17.3 of
the agreement. As per Clause 17.3, the parties have agreed
that the party may seek provisional, injunctive or equitable
remedies from a court having jurisdiction before, during or
after the pendency of any arbitral proceedings. In
BALCO v. Kaiser Aluminium Technical Services Inc., (2012)
9 SCC 552 : (2012) 4 SCC (Civ) 810, this Court held that :
(SCC p. 636, para 157)
"157. ... on a logical and schematic construction of the
Arbitration Act, 1996, the Indian courts do not have the
power to grant interim measures when the seat of
arbitration is outside India."
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If the arbitration agreement is found to have seat of arbitration
outside India, then the Indian courts cannot exercise
supervisory jurisdiction over the award or pass interim orders.
It would have, therefore, been necessary for the parties to
incorporate Clause 17.3 that parties have agreed that a party
may seek interim relief for which the Delhi courts would have
jurisdiction.
*****
27. The words in Clause 17.1, "without regard to its
conflicts of laws provisions and courts at New Delhi shall
have the jurisdiction" do not take away or dilute the intention
of the parties in Clause 17.2 that the arbitration be
administered in Hong Kong. The words in Clause 17.1 do not
suggest that the seat of arbitration is in New Delhi. Since Part
I is not applicable to "international commercial arbitrations",
in order to enable the parties to avail the interim relief,
Clause 17.3 appears to have been added. The words, "without
regard to its conflicts of laws provisions and courts at New
Delhi shall have the jurisdiction" in Clause 17.1 is to be read
in conjunction with Clause 17.3. Since the arbitration is seated
at Hong Kong, the petition filed by the petitioner under
Section 11(6) of the Act is not maintainable and the petition is
liable to be dismissed."
50. As such, the Supreme Court held that once the seat of
arbitration has been fixed as Hong Kong, if exclusive jurisdiction, for
obtaining interim relief, was required to be vested in courts at New
Delhi, the agreement had necessarily to specifically so state. It was
for this reason, opined the Supreme Court, that Clause 7.3 had been
particularly inserted in the agreement which, apart from the exclusive
jurisdiction clause i.e. Clause 7.1, specifically provided for recourse to
courts at New Delhi, for obtaining interim relief. That clause,
according to the Supreme Court, however, could be of no assistance in
determining the controversy before it, as the Supreme Court was
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concerned not with an application under Section 9, but with an
application for appointment of an arbitrator under Section 11.
Exclusive jurisdiction to seek recourse to courts at New Delhi having
been contractually restricted to applications for obtaining interim
relief, the Supreme Court held that the locus of the court possessing
Section 11 jurisdiction would have to be determined on the basis of the
contractually fixed seat of arbitration i.e. Hong Kong.
51. Extrapolating this reasoning to the facts of the present case, the
agreement between the parties has contractually conferred jurisdiction,
for appointment of the arbitrator, on competent courts in the State of
Haryana. In other words, Section 11 jurisdiction has, contractually
been specifically conferred on the High Court of Punjab and Haryana.
Once such a specific conferral takes place, by the exclusive
jurisdiction clause framed by the parties themselves, in my view the
principles enunciated in Mankastu Impex Pvt. Ltd.12 would operate to
vest such exclusive jurisdiction, to that extent, only on such courts and
on no other. In other words, once exclusive jurisdiction, qua
appointment of arbitrator under Section 11 has been vested in courts at
Haryana, by agreement between the parties, that clause has to be
accorded due respect, and this court would not, therefore, be entitled
to exercise Section 11 jurisdiction in the matter.
52. In view thereof, I specifically queried, learned Counsel for the
parties, as to whether acceptance of the stand pleaded by them would
not result in this Court effectively nullifying the exclusive jurisdiction
clause contained in the lease deed, and arriving at a decision contrary
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to such clause. Learned Counsel candidly accepted that this may be
the result, if their arguments were accepted, but submitted that there
was no option but to so hold, in view of the fixation of the seat of
arbitration at New Delhi, read with Section 42 of the 1996 Act.
53. As already observed hereinabove, I am not inclined to agree
with this submission. Once the agreement between the parties
specifically confers Section 11 jurisdiction, for appointment of an
arbitrator, on courts at Haryana, this Court, in my view, would be
doing violence to the contractual covenant, if it were to exercise such
jurisdiction. There is no judgment of the Supreme Court, to which my
attention has been invited, which permits a Court to exercise
jurisdiction contrary to the exclusive jurisdiction clause in the
agreement between the parties. Rather, the decisions in Swastik Gases
Pvt. Ltd.7 and Brahmani River Pellets Ltd.14 - both of which have
been approvingly cited in BGS SGS Soma JV15 - emphasised the
need to adhere to the exclusive jurisdiction clause. At the cost of
repetition yet again, all decisions, which decide the question of
territorial jurisdiction on the basis of the seat of arbitration as
delineated in the agreement, deal with contracts in which there is no
separate exclusive jurisdiction clause, fixing jurisdiction elsewhere.
Where such a clause exists, and, especially, where such a clause fixes
Section 11 jurisdiction with courts located elsewhere, I am not
inclined to hold that this Court can, contrary to the explicit words and
intent of said clause, exercise Section 11 jurisdiction and appoint an
arbitrator.
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54. In this context, the judgment which was cited by Mr. Sharma,
i.e. Ramandeep Singh Taneja5, is useful. The arbitration agreement
between the parties, in that case, read thus:
"In the event of any dispute/differences between the Company
and/or the intending Allottee(s)/ buyer in ARB.P.No.444/2017
Page 1 respect of any of the terms and or interpretation
thereof or otherwise the same shall be referred to for
adjudication to the sole arbitrator to be appointed by the
Company. The said arbitrator shall decide the issue(s) as per
the Arbitration and Conciliation Act, 1996 or any
amendments thereto. The venue of the arbitration for the
convenience shall be the office of the Company. The decision
of the Arbitrator shall be final and binding on the parties to
the arbitration. The jurisdiction of all disputes will be Delhi
only. The venue for arbitration proceedings will be at
Faridabad, Haryana."
Mr. Sharma invited my attention to para 9 of the judgment, which
reads as under:
"9. In the present case we are faced with the situation
where one part of the agreement provides for exclusive
jurisdiction to Courts of Delhi, while the other, due to the
venue of arbitral proceedings, vests exclusive jurisdiction in
Courts in Faridabad, State of Haryana. As was held by the
Supreme Court in the judgment of Bharat Aluminium
Company (Supra), a distinction is to be drawn between
"Subject-Matter of the Arbitration" and "Subject-Matter of the
Suit". For the purposes of identifying the Court, which shall
have supervisory control over the arbitral proceedings, it
would be the Court where the 'Subject-Matter of Arbitration'
is situated that would have precedence over the Court where
the "Subject-Matter of the Suit" is situated. In this case,
therefore, the exclusive jurisdiction conferred due to venue of
arbitration would take precedence over the exclusive
jurisdiction vested over the Subject-Matter of the suit in the
Courts at Delhi. There are various provisions in the Act where
the Court has to exercise supervisory jurisdiction over the
arbitration proceedings. These include not only Section 11 of
the Act but also Sections 14, 27, 29A, 34 and 37 of the Act. It
is, therefore, evident that the Court having jurisdiction over
the arbitration proceedings would have precedence over the
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Court which has jurisdiction over the Subject-Matter of the
suit or where the cause of action has arisen. The purported
conflict between the two parts of Clause 24 quoted above can
be resolved by holding that where the disputes are to be
adjudicated without reference to the arbitration, Courts at
Delhi would have exclusive jurisdiction, however, where they
have to be resolved through arbitration, venue being at
Faridabad, Haryana, the Courts at Faridabad, State of
Haryana, would have exclusive jurisdiction."
(Italics and underscoring supplied)
55. Where, therefore, the seat of arbitration is at place X, and
exclusive jurisdiction over the subject matter of the suit is conferred
on courts at place Y, a petition under Section 11 would unquestionably
lie before the courts at place X. The present case, however, is
different, as the exclusive jurisdiction conferred by the arbitration
agreement is not in respect of the subject matter of the suit but
specifically for appointment of an arbitrator. It would be doing
violence to the said clause, therefore, if this Court were to treat the
exclusive jurisdiction clause as limited to the subject matter of the suit,
and exercise Section 11 jurisdiction contrary to the mandate thereof.
56. It is trite that a court cannot re-write a contract between the
parties. Where the contract between the parties, as in the present case,
confers exclusive jurisdiction, for appointment of an arbitrator, on
courts at Haryana, any petition, under Section 11, would have to be
preferred before the High Court of Punjab and Haryana, and not
before this Court. There is no decision, to which my attention has
been invited, which persuades me to take a different view.
57. Mr. Srivastava points out that the judgements of this Court
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namely Devyani International Ltd.2 and N.J. Construction3 (rendered
by a learned Single Judge in each case), however, did deal with
situations in which exclusive jurisdiction was vested with Courts
situated elsewhere than the contractually fixed seat of arbitration.
However, the wording of the exclusive jurisdiction clause, in these
cases, was conspicuously different from that in the present case. In
Devyani International Ltd2 it was ordained, in the contract that
"Courts at Mumbai shall have the exclusive jurisdiction to entertain
the dispute or suit arising out of or in relation to this agreement."
Similarly, in N.J. Construction3, it was stipulated, in the arbitration
agreement, that "a question or dispute arising out of or in anyway
connected with this agreement and contract shall be deemed to have
arisen in Guwahati and only the Guwahati courts shall have the
jurisdiction to determine the same". As such, neither of these cases
dealt with a situation in which the contract specifically conferred
jurisdiction, for appointment of the arbitrator, on courts at a particular
location, as in the present case. Further, N.J. Construction3, in fact,
created a legal fiction, by deeming disputes to have arisen at Guwahati
and, as a result thereof, conferring jurisdiction on Courts at Guwahati,
to deal therewith. These decisions, cannot, therefore, be of assistance
in the present case.
58. Aarka Sports Management Pvt. Ltd4 - on which, too, Mr.
Srivastava relied - did not deal with any conflict between the
exclusive jurisdiction clause and the seat of arbitration clause, for the
simple reason that there was no seat of arbitration clause. The
contract, however, stipulated that the jurisdiction of the agreement
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would be exclusively "in the Courts of New Delhi, India". In this
background, this Court held that, as Delhi was not the seat of
arbitration, and no cause of action arose at Delhi, this Court would not
have jurisdiction to deal with the matter. Though Mr. Srivastava
places reliance on the general principle, enunciated in para 24 of the
report in the said case, to the effect that "once the seat is determined,
the Court of that place shall have exclusive jurisdiction to deal with all
matters relating to the arbitration agreement between the parties", that
principle, in my view, would necessarily be required to be applied
with caution in a case such as the present, where exclusive
jurisdiction, qua a particular relief - specifically, appointment of the
arbitrator - available under the 1996 Act, is contractually conferred
on courts located elsewhere than at the seat of arbitration.
59. This is the position which, according to me, emanates from
Mankastu Impex Pvt. Ltd.12 and which, necessarily, must follow in
the present case as well. Once the contract between the parties has
fixed Courts at Haryana, as having jurisdiction to appoint the
arbitrator, any such application under Section 11 of the 1996 Act, has
necessarily to be preferred before the High Court of Punjab and
Haryana and not before this Court. In view of such a particular and
specific contractual dispensation, which reflects the intent of the
parties and which the court cannot rewrite18, I am of the opinion that
the stipulation, in the Lease Deed, that the place of arbitration is New
Delhi, cannot confer Section 11 jurisdiction on this Court.
Fir st Flight Cour ier Ltd v. Indian Expr ess Newspaper s (Bombay) Ltd, MANU/MH/0594/2001
authored by Dr D.Y. Chandr achud, J . (as he then was)
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60. Mr. Srivastava seeks to distinguish the decision in Mankastu
Impex Pvt. Ltd.12 on the ground that it dealt with international
commercial arbitration, and proceeded on the basis that the curial law
governing the arbitration, would be the law applicable in India. I have
relied on the decision in Mankastu Impex Pvt. Ltd.12 only for the
proposition that, if jurisdiction, qua any particular provision or relief
available under the 1996 Act, is to be exercised by Courts located
elsewhere than at the seat of arbitration, such jurisdiction has to be
specifically contractually conferred. The Supreme Court noticed, in
that case, that para 7.3 of the contract between the parties conferred
specific jurisdiction, for obtaining interim relief, on courts at New
Delhi. Notably, the Supreme Court did not find this stipulation to be
illegal, or conflicting with Section 42 of the 1996 Act. Neither did
the Supreme Court find this contractual dispensation 2 conflict with
the seat of arbitration clause, fixing the seat of arbitration at Hong
Kong. Rather, the Supreme Court held that, as jurisdiction of Courts at
New Delhi was specifically conferred only with respect to obtaining of
interim relief, it would not extend to a petition under Section 11 for
appointment of an arbitrator. In the present case, however, the
exclusive jurisdiction clause is specifically with respect to
appointment of an arbitrator and relates therefore, directly to Section
11 of the 1996 Act. As such, the fact that Mankastu Impex Pvt. Ltd.12
may have been dealing with an international commercial arbitration,
or that the curial law, in that case was the law applicable in India,
cannot affect the applicability of the said decision to the controversy
in issue before me.
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61. In view thereof, I am constrained to express my disagreement
with the submission, advanced by both learned Counsel at the Bar,
that this Court would be possessed of territorial jurisdiction to
entertain the present petition.
62. I am conscious of the fact that Clause 25.4 of the lease deed, in
the present case, stipulates that "either Party may approach a court of
competent jurisdiction at Haryana for appointment of the Sole
Arbitrator". The use of the word "may", in my view, cannot, however,
confer the discretion, on the petitioner, to choose the court, before
which to file the Section 11 petition. Conferment of such discretion
would, clearly, reduce the contractual stipulation to a redundancy, and
render it otiose. One may also refer, usefully, in this context, to the
expressio unius est exclusio alterius principle as, once "courts and
Haryana" were conferred, contractually, with the jurisdiction to decide
the petitions for appointment of the arbitrator, the jurisdiction of
courts, elsewhere, stood excluded by implication. For an instance of
the application of this principle, one need look no further than the
judgement of the Constitution bench in BALCO6, and the manner in
which the said decision interpreted Section 2(2) of the 1996 Act. It
was sought to be contended, before the Supreme Court, in that case,
that, as Section 2(2) merely stated that Part I of the 1996 Act would
apply to arbitration is held in India, without using the word "only",
before the word "held", it did not exclude the applicability of Part I to
foreign arbitrations. This argument was negatived, by the Supreme
Court, applying the expressio unius est exclusio alterius principle, and
holding, consequently, that the absence of the word "only", in Section
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2(2) would make no difference. It was held that, once it was
stipulated that Part I applied to arbitrations held in India, by
implication, the applicability of the said Part stood excluded, in the
case of foreign arbitrations. By analogy, once Clause 25.4 permitted
the parties, to the lease deed, to approach courts of competent
jurisdiction, in Haryana, to appoint the arbitrator, the discretion, to
approach courts outside Haryana, for the said purpose, stood excluded
by implication. The present petition, having been filed before this
Court, for the said purpose is, therefore, in my view, incompetent.
63. For want of territorial jurisdiction, and without entering into the
merits of the relief sought in the petition, this petition is, therefore,
dismissed. Needless to say, this order would not prevent the petitioner
from moving the appropriate court, for appointment of an arbitrator, as
this Court has not expressed any opinion on the merits of the petition.
64. At this stage, Mr. Sharma, for the respondent, submits that he
has instructions to refute the claims of the petitioner, and to contend
that termination of the lease, by the petitioner, was illegal. As I am
not entering into the merits of the petition, this submission is merely
recorded and no finding is returned thereon.
65. There shall be no orders as to costs.
C. HARI SHANKAR, J.
NOVEMBER 17, 2020
dsn/kr
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