Delhi High Court
Surjit Singh And Bros vs Afcons Infrastructure Limited on 22 May, 2025
Author: Jyoti Singh
Bench: Jyoti Singh
$~10
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 22nd May, 2025
+ ARB.P. 51/2025
SURJIT SINGH AND BROS .....Petitioner
Through: Mr. Akshay Gandotra, Advocate.
versus
AFCONS INFRASTRUCTURE LIMITED .....Respondent
Through: Ms. Himangini Mehta and Mr. Raheel
Kohli, Advocates.
CORAM:
HON'BLE MS. JUSTICE JYOTI SINGH
JUDGEMENT
JYOTI SINGH, J. (ORAL)
1. This petition is filed by the Petitioner under Section 11(6) of the
Arbitration and Conciliation Act, 1996 ('1996 Act') for appointment of a
Sole Arbitrator.
2. Petitioner and Respondent entered into a Work Contract on
16.10.2020 for construction of Nallah Protection Works at Bridge (Br.)-85
and 87 Sangaldan. The contract contains clause 51 for settlement of disputes
and invoking the same, Petitioner sent a notice on 22.02.2024 proposing the
name of its nominee Arbitrator and calling upon the Respondent to nominate
its nominee Arbitrator but there was no response.
3. Reply is filed on behalf of the Respondent, in which preliminary
objection is taken to the maintainability of this petition on the ground that
this Court lacks territorial jurisdiction to entertain this petition. Relying on
the reply, counsel for the Respondent argues that Clause 51 is in two parts.
The first part is in nature of exclusive jurisdiction clause providing that any
party may refer a dispute to the Courts at Mumbai for appointment of three
Arbitrators, one by each party and the third by the two appointed
Arbitrators. The second part deals with the seat of arbitration being at
Mumbai and Delhi, alternatively. A holistic reading of the clause indicates
that jurisdiction for appointment of the Arbitral Tribunal has been conferred
on the Courts at Mumbai and therefore a petition under Section 11(6) of the
1996 Act seeking appointment of the Arbitral Tribunal can only be filed
before the competent Court in Mumbai irrespective of the seat of arbitration
being at Mumbai and Delhi alternatively and in support of this plea, reliance
is placed on the judgment of this Court in Cars24 Services Pvt. Ltd. v. Cyber
Approach Workspace LLP, 2020 SCC OnLine Del 1720.
4. Learned counsel for the Petitioner, on the other hand, submits that
clause 51 which is a Dispute Resolution Clause is in the nature of an
escalation clause. It refers to "disputes" between the parties having arisen
out of the contract i.e. subject-matter disputes. The said disputes are to be
first referred for direct negotiations between the parties, failing which they
are to be referred to Courts at Mumbai and it is clear from plain language of
the clause that the 'disputes' would be only those disputes which pertain to
claims notified by the Claimant to the Respondent and therefore, this part of
the clause is no more than a regular exclusive jurisdiction clause and cannot
oust the jurisdiction of this Court, when the agreed seat of arbitration is
Delhi in alternate to Mumbai. Emphasis of the Respondent on the words
'three Arbitrators- one appointed by each party and the third appointed by
the other two Arbitrators' in clause 51 is misplaced as this part of the clause
cannot imply that the parties intended to confer jurisdiction on Mumbai
Courts for the appointment of the Arbitral Tribunal.
5. It is further argued that the judgment in Cars24 (supra), is
inapplicable to the present case. In the said case, the Court had clearly
observed that the arbitration clause therein was different inasmuch as the
exclusive jurisdiction conferred by the arbitration agreement was not in
respect of the subject matter of the suit but specifically for appointment of
an Arbitrator. Even otherwise, this Court would have jurisdiction since the
jurisdiction clause does not use the expressions 'exclusive', 'alone' or
'only'. It is a settled law that seat of arbitration is akin to exclusive
jurisdiction clause for all arbitration proceedings including under Section
11(6) of the 1996 Act and once the parties agreed that Delhi will be an
alternate seat of arbitration, no objection can be taken to the jurisdiction of
this Court. Rule of harmonious construction mandates that Courts must give
effect to all parts of the contract or contractual clauses, without treating any
part to be superfluous.
6. It is further argued that in Cars24 (supra), the Court has also held the
inevitable consequence of enforcing the jurisdiction clause pertaining to
appointment of Arbitrator would be that Section 34 challenge would also
have to be preferred at the same place, which would imply that supervisory
jurisdiction over all arbitral proceedings would then be vested in the Courts
at Mumbai making the seat of arbitration a redundant concept. Courts must
adopt a pragmatic approach and not a technical approach by deciding the
jurisdiction, moreover, when parties intended to adopt Delhi as a neutral
venue and consciously added the 'seat' clause. In this light, it is prayed that
this petition be entertained as both Courts at Delhi and Mumbai have
concurrent jurisdiction. Reliance is placed on the judgment of another Co-
ordinate Bench of this Court in Arjun Sethi v. All About Outdoor Pvt. Ltd.,
2021 SCC OnLine Del 5343 and Manmohan Kapani v. Kapani Resorts
Pvt. Ltd. and Others, 2023 SCC OnLine Del 1618.
7. Heard learned counsels for the parties and examined their rival
submissions.
8. The short issue that arises for consideration is whether this Court
lacks the jurisdiction to entertain this petition and consequently appoint an
Arbitrator to adjudicate the disputes between the parties arising out of a
Work Order dated 16.10.2020. Before proceeding further, Clause 51, which
is the bone of contention between the parties, is extracted hereunder, for
ready reference:-
"51.0 SETTLEMENT OF DISPUTES:
This Subcontract shall be governed by and is construed in accordance
with the laws of India.
In the event that any Dispute arises between the Parties, the Parties shall
first use their reasonable efforts to reach an amicable solution of any
Dispute by means of direct negotiation within fifteen (15) days from the
date that a Party notifies the Dispute, failing which any Party may refer
such Dispute to the Courts of Mumbai Jurisdiction (three arbitrators-one
appointed by each party and the third appointed by the other two
arbitrators). The seat of the arbitration shall be Mumbai & Delhi
alternatively and the language shall be English. Each party shall bear its
own cost of arbitration."
9. Broadly understood, contention of the Petitioner is that the seat of
arbitration being alternatively at Delhi and Mumbai, the same will take
precedence over the general exclusive jurisdiction part of Clause 51 and this
Court will have jurisdiction, while Respondent contends that the exclusive
jurisdiction part of Clause 51 is not a general clause but is a specific clause
conferring Section 11(6) jurisdiction on Courts at Mumbai and will take pre-
eminence over the seat. A similar situation came for consideration before
this Court in Cars24 (supra), where the seat of arbitration was Delhi but
parties by the same clause had agreed to approach the Court of competent
jurisdiction at Haryana for appointment of the Sole Arbitrator.
10. Conscious of the fact that the Supreme Court in various judgments
including the judgment of the Constitution Bench in Bharat Aluminium
Company v. Kaiser Aluminium Technical Services Inc, (2012) 9 SCC 552,
has held that a clause fixing the seat of arbitration is akin to an exclusive
jurisdiction clause and Courts having the jurisdiction over the seat by
agreement between the parties would possess the jurisdiction over the
arbitral proceedings in entirety, the Court went on to deal with the
arbitration clause which was peculiar in nature. It was observed that no
decision either of the Supreme Court or of this Court was brought to the
notice of the Court in which arbitration agreement specifically conferred the
jurisdiction to appoint the Arbitrator i.e. Section 11 jurisdiction, on Courts in
a particular territorial location and the seat in a different territory. Deciding
the interplay between the seat Court on one hand and specifically a Section
11 Court on the other hand, the Court held as follows:-
"34. We proceed, next, to BGS SGS Soma JV v. NHPC Ltd.
35. 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.
36. 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.
37. 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.
38. BGS SGS Soma appealed to the Supreme Court. Relying on its earlier
decisions, the Supreme Court held that, as the arbitral 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.
39. 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. Ltd.
40. A reading of the aforesaid decisions, no doubt, reveals that
preeminence 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.
41. 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.
xxx xxx xxx
47. 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.
48. 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.
xxx xxx xxx
56. 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. and Brahmani River Pellets Ltd.18 -
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.
xxx xxx xxx
59. 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.
60. 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."
11. In fact, it is pertinent to note that in Cars24 (supra), counsel for the
Petitioner besides emphasising on the pre-eminence accorded to the seat of
the arbitration, as fixed by the contract between the parties, placed particular
reliance on Section 42 raising an apprehension that in view of the said
provision, jurisdiction in respect of all proceedings relating to arbitration
agreement would then be conferred on the High Court of Punjab and
Haryana, once a petition under Section 11 was entertained there. This,
according to the counsel, was directly in conflict with the concept of 'seat'
in arbitration. Recording this contention, the Court observed as under:-
"42. 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."
43. 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 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.
44. 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.
45. 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 entertain a Section 34 challenge,
assuming an arbitral award is passed, with which one, or the other, party
is aggrieved.
46. 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.
47. 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.
xxx xxx xxx
49. Having so observed, I hasten to clarify that I am not proposing to
venture any final opinion on the appropriate forum, before which 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."
12. In this context, I may also refer to an earlier decision of the same
Court in Hunch Circle Private Limited v. Futuretimes Technology India
Pvt. Ltd., 2022 SCC OnLine Del 361, where a same view was taken to
decide an interplay between a specific clause as a part of the arbitration
clause conferring Section 11 jurisdiction on one Court and the seat of
arbitration being in the territorial jurisdiction of another Court. A reading of
clause 51 in the present case leaves no doubt that parties intended that for
appointment of an Arbitrator the Courts at Mumbai will have jurisdiction
under Section 11(6). The words 'three Arbitrators- one appointed by each
party and the third appointed by the other two Arbitrators' qualifying
reference of dispute to the Courts at Mumbai are not without any meaning
and show the intent of the parties. There can be no dispute on the settled law
that in the arbitration law regime, pre-eminence has always been given to the
seat of arbitration for the purpose of territorial jurisdiction of the Court,
however, as noted in Cars24 (supra), in the present case, the exclusive
jurisdiction clause is not generally worded but is specific to appointment of
the Arbitrator i.e. specific with respect to Section 11 jurisdiction. The
judgment relied upon by counsel for the Petitioner in the case of Arjun Sethi
(supra) is of no avail as in fact it decides contrary to the submission made
by the Petitioner. This is evident from a plain reading of paragraph 9 of the
judgment where the Court held that when parties agreed upon venue of
arbitration to be Gurugram but at the same time specifically conferred
jurisdiction for appointment of the Sole Arbitrator to the High Court at
Delhi, the Court at Delhi will have jurisdiction to entertain the petition. In
light of the fact that in terms of the agreement between the parties, the
jurisdiction to appoint an Arbitrator lies with the Court at Mumbai, this
Court lacks the territorial jurisdiction to entertain this petition.
13. Accordingly, this petition is dismissed noting that Court has not
entered into the merits of the case. Needless to state that this order will not
prevent the Petitioner from moving the appropriate Court for appointment of
an Arbitrator.
JYOTI SINGH, J
MAY 22, 2025/RW/Shivam
