[Cites 19, Cited by 0]
Delhi High Court
Sp Singla Constructions Pvt Ltd vs State Of Jharkhand & Anr on 1 April, 2026
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 12.03.2026
Judgment pronounced on: 01.04.2026
+ O.M.P.(MISC.)(COMM.) 384/2024, I.A. 10888/2024 (Ex.) &
I.A. 38745/2024 (Stay)
SP SINGLA CONSTRUCTIONS PVT LTD .....Petitioner
Through: Mr. Anirudh Wadhwa, Mr.
Kartik Gupta and Mr. Vibhu
Pahuja, Advocates.
versus
STATE OF JHARKHAND & ANR. .....Respondents
Through: Mr. Sachin Kumar, Additional
Advocate General, Mr. Kumar
Anurag Singh and Mr. Zain A.
Khan, Advocates, for
Respondent No. 1.
Ms. Astha Sharma and Mr.
Nikhil Anand, Advocates, for
Respondent No. 2.
CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
JUDGMENT
HARISH VAIDYANATHAN SHANKAR, J.
1. The present Petition has been instituted under Sub-sections (4)
and (5) of Section 29A of the Arbitration and Conciliation Act,
19961, inter alia, seeking the regularisation of the period commencing
from 03.12.2023 and the grant of a further extension of twelve
A&C Act
months, or such period as this Court may deem fit and appropriate, for
the continuation of the mandate of the learned Arbitral Tribunal.
2. At the outset, it is noted that Respondent No. 1 has raised a
preliminary objection with respect to the jurisdiction of this Court,
which has been duly contested by the Petitioner. It is evident that,
should the objection as to jurisdiction be sustained in the present
adjudication, the Petition itself would not survive for consideration,
and consequently, the reliefs sought by the Petitioner herein would not
be liable to be granted.
BRIEF FACTS:
3. Shorn of unnecessary details, the material facts germane to the
institution of the present Petition are set out hereunder:
(a). The parties entered into an Agreement dated 25.05.20192 for
the „Construction of a 4-Lane Elevated Corridor with Cable-
Stayed Bridge and Approach Road for Anna Chowk-Gobindpur
Bypass Road at Jamshedpur, having a total length of 1540
metres, on EPC mode‟.
(b). Alleging certain breaches on the part of the counterparty, the
Agreement came to be terminated vide Termination Notice
dated 22.10.2020. Consequently, the Petitioner issued a Notice
dated 14.01.2021 under Section 21 of the A&C Act, invoking
arbitration and seeking reference of the disputes to an Arbitral
Tribunal.
(c). In the interregnum, it is the Petitioner‟s case that Respondent
No. 1 failed to release the performance security furnished under
the Agreement. The Petitioner was, therefore, constrained to
Agreement
seek interim protection by filing a Petition under Section 9 of
the A&C Act. Vide Order dated 27.01.2021, this Court issued
notice in the said Petition and directed maintenance of status
quo, till the next date of hearing, i.e., 04.03.2021, in respect of
the Performance Bank Guarantee furnished by the Petitioner for
an amount of Rs. 6,93,85,000/-.
(d). On the next date of hearing, i.e., 04.03.2021, the said Section 9
Petition came to be withdrawn by the Petitioner on instructions.
(e). Thereafter, vide letter dated 03.06.2022, the Society for
Affordable Redressal of Disputes3 constituted the learned
Arbitral Tribunal and appointed Mr. Justice Vidya Bhushan
Gupta (Retd.) as the learned Sole Arbitrator to adjudicate the
disputes between the parties.
(f). Pursuant thereto, the Petitioner filed its Statement of Claim
before the learned Arbitrator on 30.09.2022.
(g). In the meantime, Respondent No. 1 instituted Writ Petition No.
3609/2022 before the Jharkhand High Court, challenging the
constitution of the learned Arbitral Tribunal. The said writ
petition came to be dismissed as not maintainable vide Order
dated 03.01.2023. The Jharkhand High Court, however,
observed that such a challenge could appropriately be raised
before the learned Arbitral Tribunal by way of an application
under Section 16 of the A&C Act.
(h). In light of the aforesaid, Respondent No. 1 filed an application
under Section 16 of the A&C Act on 05.01.2023, which came to
be dismissed by the learned Arbitral Tribunal vide Order dated
08.08.2023.
SAROD
(i). Thereafter, Respondent No. 1 filed its Statement of Defence and
also preferred counterclaims. The said counterclaims were,
however, dismissed by the learned Arbitrator vide Order dated
05.10.2023 on account of non-payment of fee.
(j). The Petitioner thereafter filed its Rejoinder along with the
Affidavit of Admission and Denial, which were taken on record
on 30.11.2023.
(k). Respondent No. 1, in turn, filed its Affidavit of Admission and
Denial on 07.02.2024.
(l). On the same date, i.e., 07.02.2024, the learned Arbitral Tribunal
sought the consent of the parties for extension of its mandate by
a further period of six months with effect from 03.12.2023.
However, the learned counsel for Respondent No. 1 submitted
that he would need to seek instructions in this regard.
(m). On the subsequent date of hearing, i.e., 05.03.2024, the learned
Arbitral Tribunal directed the Petitioner to file an appropriate
application seeking extension of the Tribunal‟s mandate, in
view of Respondent No. 1‟s continued stand of requiring
instructions.
(n). Upon such application being filed, Respondent No. 1 declined
to accord its consent for extension of the mandate of the learned
Arbitral Tribunal, inter alia, on the ground that once the
mandate had lapsed, the same could not be extended by mutual
consent of the parties.
4. In these circumstances, the Petitioner has preferred this Petition
under Section 29A of the A&C Act seeking appropriate orders from
this Court.
SUBMISSIONS BY THE PARTIES:
5. Learned Additional Advocate General4 appearing for
Respondent No. 1-State would raise a preliminary objection as to the
maintainability of the present Petition, contending that the same is not
maintainable before this Court for want of jurisdiction. In support of
this contention, reliance would be placed upon Article/Clause 27 of
the Agreement, being the jurisdiction clause, which unequivocally
stipulates that the courts at Ranchi shall have exclusive jurisdiction in
respect of all matters arising out of or relating to the Agreement.
6. It would be further submitted that Clause 26 of the Agreement,
which governs dispute resolution, and in particular Clause 26.3(ii)(d)
thereof, provides that the venue of arbitration shall be at Ranchi.
According to the learned AAG, a conjoint reading of the aforesaid
clauses clearly establishes that the courts at Ranchi alone would have
territorial jurisdiction to entertain disputes arising between the parties,
thereby excluding the jurisdiction of the courts at Delhi.
7. In order to buttress the aforesaid submissions, learned counsel
for Respondent No. 1 would place reliance upon the judgment of the
Hon‟ble Supreme Court in BGS SGS SOMA JV v. NHPC5.
8. Per Contra, learned counsel appearing for the Petitioner would
submit that the present Petition is maintainable before this Court and
that this Court possesses the requisite territorial jurisdiction to
entertain the same.
9. It would be contended that this Court had, on an earlier
occasion, entertained and adjudicated upon a Petition filed by the
Petitioner under Section 9 of the A&C Act, and in view thereof, it
AAG
(2020) 4 SCC 234
would be urged that the objection raised by Respondent No. 1 is
barred by virtue of Section 42 of the A&C Act, which mandates that
once a Court has been approached in relation to an arbitration
agreement, all subsequent applications arising out of the same
agreement must be made before that very Court.
10. It would be further submitted that the reliance placed by the
learned AAG on the exclusive jurisdiction clause, i.e., Clause 27 of
the Agreement, is misplaced. Attention would be drawn by Petitioner
to the Dispute Resolution Clause, particularly Clause 26.3(i), which
provides that disputes not resolved amicably through conciliation shall
be referred to arbitration „in accordance with the Rules of the Society
for Affordable Redressal of Disputes (SAROD)‟.
11. Learned counsel for the Petitioner would then place reliance
upon Rule 23.1 of the SAROD Rules to contend that the seat of
arbitration is designated as New Delhi. It would thus be argued that,
since the parties have expressly agreed to be governed by the SAROD
Rules, the seat of arbitration as stipulated therein would prevail,
thereby conferring jurisdiction upon the courts at New Delhi.
12. Learned counsel for the Petitioner would further submit that it
is a well-settled principle of law that, in the event of a conflict
between a broad or general exclusive jurisdiction clause and a clause
designating the seat of arbitration, primacy must be accorded to the
latter, and this is for the reason that the designation of the seat of
arbitration carries with it the legal consequence of conferring
exclusive supervisory jurisdiction upon the courts of the seat.
13. In support of this proposition, reliance, by the learned counsel
for the Petitioner, would be placed upon the judgment of the Madras
High Court in Balapreetham Guest House (P) Ltd. v. Mypreferred
Transformation and Hospitality (P) Ltd.6, as well as the decisions of
the Coordinate Benches of this Court Manmohan Kapani v. Kapani
Resorts (P) Ltd.7 and Devyani International Ltd. v. Siddhivinayak
Builders and Developers8.
14. Learned counsel for the Petitioner, in conclusion, would submit
that in light of the material placed on record, this Court is duly vested
with the jurisdiction to entertain the present Petition, and, therefore,
would pray that the present Petition be allowed and the mandate of the
learned Arbitral Tribunal be extended in terms of the reliefs sought
herein.
15. In rebuttal, learned AAG for Respondent No. 1 would submit,
on the aspect of the earlier Section 9 Petition relied upon by the
Petitioner, that no adjudication on merits was ever undertaken by this
Court in the said proceedings. It would be contended that the order
passed on the first date of hearing was purely ex parte, rendered in the
absence of and without participation by Respondent No. 1, and
furthermore, the said Petition itself came to be withdrawn on the very
next date of hearing by the Petitioner.
16. In such circumstances, it would be urged by the learned AAG
that there was no adjudication on merits under Section 9 of the A&C
Act. It would further be submitted that a petition which is withdrawn
without adjudication, particularly in the context of arbitration
proceedings, ceases to exist in the eyes of the law and, therefore,
cannot be relied upon to anchor jurisdiction before this Court under
Section 42 of the A&C Act.
(2021) 1 HCC (Mad) 515
2023 SCC OnLine Del 1618
2017 SCC OnLine Del 11156
17. Learned AAG would further submit that the Agreement
executed between the parties does not expressly designate any "seat"
of arbitration. According to him, the Agreement merely stipulates that
disputes, once referred to arbitration, shall be governed by the Rules
of the SAROD, which, in itself, does not ipso facto imply that the seat
indicated in the SAROD Arbitration Rules would automatically
become the juridical seat of arbitration.
18. It would further be contended that there exists a catena of
judicial precedents to the effect that, in the absence of an express
designation of the "seat" in the agreement, the "venue" of arbitration
may, depending on the facts and intention of the parties, be construed
as the seat.
19. Expanding upon the aforesaid submissions, learned AAG would
argue that the Agreement, as consciously executed between the
parties, makes a dual reference to "Ranchi", first, as the venue of
arbitration, and second, as the place whose courts shall have exclusive
jurisdiction. It would thus be contended that the intention of the
parties is manifest and unequivocal, namely, to vest exclusive
jurisdiction in the courts at Ranchi.
ANALYSIS:
20. This Court has heard learned counsel for the parties at
considerable length. With the able assistance rendered by them, the
Court has also carefully perused the material placed on record,
including the pleadings, documents, and the judicial precedents relied
upon during the course of arguments.
21. Upon hearing learned counsel for the parties on the preliminary
issue of jurisdiction, which arises at the very outset for consideration,
this Court is of the view that the following broad questions fall for
determination:
I. Whether the Petition under Section 9 of the A&C Act, filed by
the Petitioner before this Court in January 2021, prior to the
constitution of the learned Arbitral Tribunal, in the facts and
circumstances of the present case, would operate so as to vest or
seize jurisdiction in the courts at New Delhi in terms of Section
42 of the A&C Act; and
II. If the aforesaid question is answered in the negative, whether
the juridical seat of arbitration, as contemplated under the
SAROD Arbitration Rules, would prevail over the other clauses
in the Agreement designating the "venue" of arbitration and
conferring "exclusive jurisdiction", for the purpose of
determining the court vested with supervisory jurisdiction over
the arbitral proceedings.
22. Turning first to the submission regarding the filing of the
petition under Section 9 before this Court, it is apposite, for the sake
of clarity and convenience, to extract Section 42 of the A&C Act,
which reads as follows:
"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."
23. Section 42 of the A&C Act essentially stipulates that once an
application concerning an arbitration agreement is made before a
"Court" of competent jurisdiction, that Court alone shall exercise
jurisdiction over the arbitral proceedings and all subsequent
applications arising out of the arbitration agreement and the arbitral
process.
24. However, within the scheme of the A&C Act, Section 42 is not
intended to vest exclusive jurisdiction in a court merely by virtue of
the fortuitous, premature, or tactical filing of an application under Part
I. The underlying legislative intent is to prevent multiplicity of
proceedings and to ensure procedural certainty and consistency, but
only after a court of competent jurisdiction has validly and lawfully
assumed seisin of the matter. Consequently, the jurisdiction
contemplated under Section 42 of the A&C Act must be real,
effective, and legally sustainable, and cannot be founded upon a
jurisdictional assumption that is illusory, contrived, or inherently
lacking in competence.
25. The expression "has been made in a Court" occurring in
Section 42 assumes considerable significance, as it necessarily
requires a determination of what qualifies as a "Court" for the
purposes of the A&C Act. This determination is not left to general
notions of jurisdiction, but is specifically governed by Section 2(1)(e)
of the Act, which provides an exhaustive and determinative definition
of the term "Court" as under:
"2. Definitions. - (1) In this Part, unless the context otherwise
requires, -
(e) "Court" means -
(i) in the case of an arbitration other than international commercial
arbitration, the principal Civil Court of original jurisdiction in a
district, and includes the High Court in exercise of its ordinary
original civil jurisdiction, having jurisdiction to decide the
questions forming the subject-matter of the arbitration if the same
had been the subject-matter of a suit, but does not include any Civil
Court of a grade inferior to such principal Civil Court, or any Court
of Small Causes;
(ii) in the case of international commercial arbitration, the High
Court in exercise of its ordinary original civil jurisdiction, having
jurisdiction to decide the questions forming the subject-matter of
the arbitration if the same had been the subject-matter of a suit, and
in other cases, a High Court having jurisdiction to hear appeals
from decrees of courts subordinate to that High Court;"
(emphasis supplied)
26. A plain and contextual reading of the said definition makes it
manifest that the term "Court" refers to the principal civil court of
original jurisdiction in a district, or, where applicable, a High Court
exercising ordinary original civil jurisdiction, provided such court is
competent to adjudicate the subject-matter of the arbitration as if it
were a civil suit. The provision expressly excludes courts subordinate
to such principal civil court, as well as Courts of Small Causes.
27. The determinative test, therefore, is whether the forum in
question possesses the requisite subject-matter, territorial, and
pecuniary jurisdiction to entertain and decide the dispute forming the
subject-matter of the arbitration. In the context of domestic arbitration,
this would ordinarily denote the principal civil court at the district
level; however, in jurisdictions such as Delhi, Mumbai, Kolkata,
Chennai, and Himachal Pradesh, where High Courts exercise ordinary
original civil jurisdiction, such High Courts would also qualify as the
"Court" within the meaning of the A&C Act, subject to the applicable
pecuniary thresholds. Thus, the expression "Court" for the purposes of
Section 42 must be understood as the forum which is otherwise
competent to entertain the dispute in terms of Section 2(1)(e) of the
Act.
28. The phrase "having jurisdiction to decide the questions forming
the subject-matter of the arbitration" further reinforces that only a
court vested with complete and lawful jurisdiction, encompassing
subject-matter, territorial, and pecuniary competence, can validly
assume supervisory authority over arbitral proceedings under the
A&C Act. In the present case, the principal controversy between the
parties centres around the territorial jurisdiction of this Court to
entertain the present proceedings.
29. Consequently, for the bar under Section 42 of the A&C Act to
be attracted, it is not sufficient that the initial application is one
referable to Part I of the Act; it must, in addition, be instituted before
and entertained by a court that satisfies the statutory definition under
Section 2(1)(e). This legal position stands authoritatively settled by a
three-Judge Bench of the Hon‟ble Supreme Court in State of W.B. v.
Associated Contractors9, wherein it was held that the exclusivity
contemplated under Section 42 is triggered only when the first
application is made to a court of competent jurisdiction. Applications
instituted before forums lacking jurisdiction, or before authorities that
do not qualify as a "Court" within the meaning of the Act, fall outside
the ambit of Section 42 and, therefore, do not operate as a bar to
subsequent proceedings being instituted before a duly competent
forum. The relevant portion of the said judgment reads as under:
"24. If an application were to be preferred to a court which is not a
Principal Civil Court of original jurisdiction in a district or a High
Court exercising original jurisdiction to decide questions forming
the subject matter of an arbitration if the same had been the subject
matter of a suit, then obviously such application would be outside
the four corners of Section 42. If, for example, an application were
to be filed in a court inferior to a Principal Civil Court, or to a High
Court which has no original jurisdiction, or if an application were
to be made to a court which has no subject-matter jurisdiction,
such application would be outside Section 42 and would not debar
subsequent applications from being filed in a court other than such
court.
25. Our conclusions therefore on Section 2(1)(e) and Section 42 of
the Arbitration Act, 1996 are as follows:
(2015) 1 SCC 32
(a) Section 2(1)(e) contains an exhaustive definition marking out
only the Principal Civil Court of Original Jurisdiction in a
district or a High Court having original civil jurisdiction in the
State, and no other court as "court" for the purpose of Part I of
the Arbitration Act, 1996.
(b) The expression "with respect to an arbitration agreement"
makes it clear that Section 42 will apply to all applications made
whether before or during arbitral proceedings or after an award
is pronounced under Part I of the 1996 Act.
(c) However, Section 42 only applies to applications made under
Part I if they are made to a court as defined. Since applications
made under Section 8 are made to judicial authorities and since
applications under Section 11 are made to the Chief Justice or
his designate, the judicial authority and the Chief Justice or his
designate not being court as defined, such applications would be
outside Section 42.
(d) Section 9 applications being applications made to a court and
Section 34 applications to set aside arbitral awards are
applications which are within Section 42.
(e) In no circumstances can the Supreme Court be "court" for the
purposes of Section 2(1)(e), and whether the Supreme Court
does or does not retain seisin after appointing an arbitrator,
applications will follow the first application made before either a
High Court having original jurisdiction in the State or a
Principal Civil Court having original jurisdiction in the district,
as the case may be.
(f) Section 42 will apply to applications made after the arbitral
proceedings have come to an end provided they are made under
Part I.
(g) If a first application is made to a court which is neither a
Principal Court of Original Jurisdiction in a district or a High
Court exercising original jurisdiction in a State, such application
not being to a court as defined would be outside Section 42.
Also, an application made to a court without subject-matter
jurisdiction would be outside Section 42.
The reference is answered accordingly."
30. In the present case, although a petition under Section 9 of the
A&C Act was initially instituted before this Court, there is no
consideration, either express or implied, that this Court possessed the
requisite jurisdiction to entertain the same. This aspect assumes
particular significance in light of the sequence of events that unfolded.
The initial order dated 27.01.2021, directing Respondent No. 1 to
maintain the status quo, came to be passed in its absence, as
Respondent No. 1 had not yet entered an appearance. On the very next
date of hearing, upon Respondent No. 1 entering an appearance before
this Court, the Petitioner chose, of its own volition, to withdraw the
said petition. As a direct consequence of such withdrawal at a nascent
stage, the question of jurisdiction, whether territorial, pecuniary, or
with respect to subject-matter, was neither adjudicated upon nor even
substantively examined by this Court.
31. In this backdrop, it becomes evident that Respondent No. 1 was
effectively deprived of any meaningful and substantive opportunity to
raise objections as to the jurisdiction of this Court. Jurisdictional
objections, particularly those going to the root of the matter, are
required to be raised and determined at the threshold, so as to ensure
that proceedings are not conducted before a forum lacking
competence in law. Had the proceedings under Section 9 been pursued
and contested, Respondent No. 1 would have been fully entitled to
challenge the maintainability of the petition on jurisdictional grounds,
and this Court would have been called upon to render a considered
finding on such objections. However, in the absence of any such
opportunity or adjudication, no presumption can be drawn that this
Court had validly assumed jurisdiction over the dispute.
32. In these circumstances, it would be wholly untenable to suggest
that Respondent No. 1 stands precluded, by operation of Section 42 of
the A&C Act, from questioning the jurisdiction of this Court in the
present proceedings. Section 42 cannot be construed in a manner that
forecloses a party‟s right to raise a fundamental jurisdictional
objection, particularly when such objection could never be raised or
was never adjudicated upon at any prior stage. Indeed, if this Court
otherwise lacks jurisdiction in accordance with the settled principles
of law, the mere prior filing of a petition under Section 9 or any other
petition of application under the A&C Act, without any determination
thereon, cannot operate as a binding factor so as to confer jurisdiction
by default or estoppel. It is a settled principle of law that jurisdiction
cannot be conferred by acquiescence, waiver, or mere procedural
happenstance; it must inherently exist in law and be demonstrable in
accordance with established legal principles.
33. In such circumstances, to hold that the mere filing of a petition
under Section 9, followed by its immediate withdrawal, or the
institution of any application under Part I of the Act without any
judicial scrutiny on the issue of jurisdiction, would irrevocably vest
exclusive jurisdiction in that court under Section 42 of the A&C Act,
would amount to a manifest distortion and misuse of the statutory
framework. Section 42 of the A&C Act, as noticed hereinabove, is
intended to ensure consistency and avoid multiplicity of proceedings
by conferring exclusive jurisdiction upon a court that has validly
assumed seisin of the arbitral process. However, such an assumption
of jurisdiction must be real, effective, and judicially sustainable.
34. Where proceedings are terminated at the threshold without any
adjudication, and where the opposing party is not even afforded a fair
and effective opportunity to contest the competence of the forum, the
foundational requirement for the application of Section 42 of the A&C
Act remains unfulfilled. To permit the invocation of Section 42 of the
A&C Act in such a scenario would enable parties to engage in forum
shopping by filing proceedings in a court of their choice, obtaining ad
interim orders in the absence of the opposite party, and thereafter
withdrawing such proceedings so as to create an artificial basis for
invoking exclusivity. Such an interpretation would not only defeat the
legislative intent underlying Section 42 of the A&C Act but would
also undermine the principles of fairness, procedural propriety, and
jurisdictional discipline that form the bedrock of the arbitral
framework.
35. Accordingly, Section 42 of the A&C Act cannot be invoked to
legitimise or sanctify proceedings instituted before a forum whose
competence remains uncertain, untested, or unadjudicated, particularly
where such proceedings are not carried to their logical or legal
conclusion. The provision cannot be employed as a tool to create
jurisdiction where none exists, nor can it be used to preclude a
legitimate challenge to jurisdiction in subsequent proceedings.
36. This Court is, therefore, unable to accept the proposition that a
unilateral and transient invocation of jurisdiction, by way of filing an
application under Part I of the Act before a potentially incompetent
forum, can bind the parties for all subsequent proceedings arising out
of the arbitration agreement. The exclusivity envisaged under Section
42 A&C Act is neither automatic nor mechanical; rather, it is
conditional upon the initial application having been made before a
court of competent jurisdiction which has validly and effectively
assumed seisin of the arbitral process.
37. The concept of "seisin" in this context necessarily implies a
conscious and lawful assumption of jurisdiction by the court, coupled
with an opportunity to the parties to contest such jurisdiction and a
corresponding judicial determination, whether express or implicit. In
the absence of such elements, the mere filing of an application cannot
be elevated to the status of a jurisdiction-conferring event. To hold
otherwise would be to reduce the statutory safeguards embedded in
the A&C Act to a matter of form rather than substance.
38. In view of the foregoing analysis, and having regard to the facts
and circumstances of the present case, this Court is of the considered
view that the reliance placed by the Petitioner on Section 42 of the
A&C Act, to sustain the jurisdiction of this Court, is wholly
misconceived and untenable in law. The invocation of Section 42 of
the A&C Act, in the absence of any prior adjudication or lawful
assumption of jurisdiction, cannot operate as a bar to the present
proceedings, nor can it confer jurisdiction where none otherwise
exists.
39. The determinative question that thus arises for consideration is
whether this Court independently possesses the requisite jurisdiction,
within the meaning of the A&C Act and in accordance with settled
principles governing territorial competence, which constitutes the
central issue in the present adjudication, to entertain the petition
arising out of the arbitration agreement and the arbitral proceedings in
question. It is only upon a proper and conclusive determination of this
foundational issue that the maintainability of the present proceedings
can be finally determined.
40. The Court now turns to the next aspect for consideration,
namely, the interpretation and effect of the relevant clauses of the
agreement executed between the parties, in particular the Dispute
Resolution Clauses and the Exclusive Jurisdiction Clause contained
therein, which are extracted herein below for ready reference:
"....
Article 26
Dispute Resolution
26.1 Dispute Resolution
(i) Any dispute, difference or controversy of whatever nature
howsoever arising under or out of or in relation to this Agreement
(including its interpretation) between the Parties, and so notified in
writing by either Party to the other party (the ''Dispute") shall, in
the first instance, be attempted to be resolved amicably in
accordance with the conciliation procedure set forth in Clause 26.2.
(ii) The Parties agree to use their best efforts for resolving all
Disputes arising under or in respect of this Agreement promptly,
equitably and in good faith, and further agree to provide each other
with reasonable access during normal business hours to all non-
privileged records, information and data pertaining to any Dispute.
26.2 Conciliation
****
26.3. Arbitration
(i) Any Dispute which is not resolved amicably by conciliation, as
provided in Clause 26.2, shall be finally settled by arbitration in
accordance with the rules of arbitration of the Society for
Affordable Redressal of Disputes (SAROD).
(ii). The parties expressly agree as under in case of arbitration of
disputes:
(a) There shall be no arbitration for a dispute involving a claim
value upto INR 50 Lakh (IN fifty lakh). The Authority's
Engineer shall give a reasoned decision in case of such dispute
and the same shall be binding on both the parties.
(b) In case of a dispute involving claim value of above INR
50Lakh (INR fifty lakh), but upto INR 50 Crore (INR fifty
crore), the same shall be referred to a Sole Arbitrator within 30
days propose names of 5 (five) Arbitrators from the list of
Arbitrators maintained by SAROD (Society for Affordable
Redressal of Disputes) and the Contractor shall within 30
(thirty) days select one name from the list of five and the name
so selected by the Contractor shall be the Sole Arbitrator for
the matter in dispute. In case Authority delays in providing the
list of 5 (five) names, President, SAROD will provide 5 names
within 30 (thirty) days of receipt of reference from aggrieved
party in this regard In case the Contractor fails in selecting one
from the list of five, President, SAROD shall select one from
the list of five provided by Authority within 30 (thirty)days of
receipt of reference from aggrieved party in this regard
(c) In case of a dispute involving a claim value of more than IN
50 Crore (INR Fifty crore), the same shall be referred to an
Arbitral Tribunal comprising 3 (three) Arbitrators. The Dispute
shall be settled in accordance with the rules of Arbitration of
the Society for Affordable Redressal of Disputes (SAROD)
(d) The venue of arbitration shall be Ranchi, and the language if
arbitration proceedings shall be in English.
****
26.4 Adjudication by Regulatory Authority, Tribunal or
Commission
*****
Article 27
Miscellaneous
27.1 Governing law and jurisdiction
This Agreement shall be construed and interpreted in accordance
with and governed by laws of India, and the courts at [Ranchi]
shall have exclusive jurisdiction over matters arising out of or
relating to this Agreement."
*****
...."
(emphasis supplied)
41. It is also necessary to advert to Rule 23 of the SAROD
Arbitration Rules, upon which considerable reliance has been placed
by the Petitioner in support of the contention that the juridical seat of
arbitration ought to be New Delhi. The said Rule 23 reads as follows:
"Rule 23 - Judicial Seat of Arbitration
23.1 Unless otherwise agreed by the Parties, the judicial seat of
arbitration shall be New Delhi. The venue for the Arbitration
meeting shall be organized by the SAROD Secretariat.
23.1 Notwithstanding Rule 22 and 23.1, the Tribunal may, unless
otherwise agreed by the Parties, hold hearings and meetings
anywhere convenient, subject to the provisions of Rule 28.2."
(emphasis supplied)
42. A holistic and purposive reading of Clauses 26 and 27 of the
agreement, however, reveals that the intention of the parties with
respect to jurisdiction and the arbitral framework must be discerned
from the agreement as a whole, and not from isolated provisions read
in abstraction. The contractual scheme indicates a carefully structured
dispute resolution mechanism, beginning with amicable resolution and
conciliation, followed by arbitration under SAROD Rules, and
culminating in a clear stipulation regarding governing law and
exclusive jurisdiction.
43. The principal controversy between the parties, therefore, centres
on the determination of the juridical seat of arbitration. While
Respondent No. 1 relies upon Clause 26.3(ii)(d), which designates
Ranchi as the venue of arbitration, read conjointly with Clause 27.1,
which confers exclusive jurisdiction upon courts at Ranchi, to contend
that Ranchi is the seat of arbitration, the Petitioner, on the other hand,
relies upon the incorporation of SAROD Arbitration Rules through
Clause 26.3(i), and then read with Rule 23 of the SAROD Arbitration
Rules, to assert that New Delhi must be treated as the juridical seat.
44. This Court is unable to accept the submissions advanced on
behalf of the Petitioner. The contention that the seat of arbitration is
New Delhi, solely by virtue of the incorporation of SAROD Rules,
overlooks the fundamental principle that party autonomy must be
gathered from the express terms of the contract, and that a clear and
specific stipulation in the agreement cannot be overridden by a general
provision contained in a set of institutional rules.
45. The determination of the juridical seat in the present case,
therefore, necessitates a careful reconciliation of three competing
contractual indicators, first, the designation of Ranchi as the venue of
arbitration; second, the conferment of exclusive jurisdiction upon
courts at Ranchi; and third, the incorporation of SAROD Rules, which
provide that, in the absence of agreement to the contrary, the seat shall
be New Delhi. The resolution of this apparent divergence must be
guided by settled principles of arbitral jurisprudence, particularly
those relating to party autonomy, contractual interpretation, and the
distinction among "seat", "venue", "exclusive jurisdiction", and
"institutional rules".
46. It is well settled that the "seat" of arbitration constitutes the
juridical centre of gravity of the arbitral process. It determines the
curial law governing the arbitration and identifies the court that
exercises supervisory jurisdiction over the arbitral proceedings. The
Hon‟ble Supreme Court, in a catena of decisions including Indus
Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd.10 and
BGS SGS Soma JV (supra), has authoritatively held that the
designation of a seat is akin to an exclusive jurisdiction clause,
conferring supervisory authority upon the courts of that seat to the
exclusion of all others. However, these principles operate on the
foundational premise that the seat has been clearly and consciously
designated by the parties.
47. In the present case, the agreement does not contain any explicit
stipulation designating New Delhi as the seat of arbitration. The
Petitioner‟s contention seeks to derive such designation indirectly, on
account of the adoption of SAROD Rules. This distinction between an
express designation and a derivative or implied attribution is of
critical importance. The juridical seat must emanate from the
conscious and deliberate choice of the parties, and not from a default
provision contained in institutional rules, particularly where the
contract itself contains indications to the contrary.
48. In contrast, the agreement contains two clear and unequivocal
stipulations pointing towards Ranchi. First, Clause 26.3(ii)(d)
designates Ranchi as the venue of arbitration. Second, and more
significantly, Clause 27.1 confers exclusive jurisdiction upon courts at
Ranchi in respect of all matters arising out of or relating to the
agreement. These provisions are explicit, deliberate, and leave little
(2017) 7 SCC 678
room for ambiguity. The exclusive jurisdiction clause, in particular, is
a strong indicator of the parties‟ intention to localise all legal
proceedings in Ranchi.
49. While it is true that the designation of a "venue" does not, in
every case, amount to the designation of a "seat", the legal position is
equally clear that where the designation of a venue is accompanied by
other significant indicia, such as an exclusive jurisdiction clause, the
venue may, in fact, assume the character of the seat. The combined
effect of specifying Ranchi as the venue and conferring exclusive
jurisdiction upon Ranchi courts strongly suggests that the parties
intended Ranchi to be the juridical seat of arbitration.
50. This position finds support in the decisions of the Hon‟ble
Supreme Court in Brahmani River Pellets Ltd. v. Kamachi Industries
Ltd.11 and BGS SGS Soma JV (supra), wherein it has been held that
where an agreement specifies a particular place for arbitration and also
evinces an intention to exclude other courts, such place may be
construed as the seat of arbitration. The rationale underlying this
principle is that the combination of a specified location and an
exclusionary jurisdiction clause reflects a conscious and deliberate
localisation of the arbitral process. The relevant extract of BGS SGS
Soma JV (supra) is reproduced below:
"59. Equally incorrect is the finding in Antrix Corpn.
Ltd. v. Devas Multimedia (P) Ltd., 2018 SCC OnLine Del 9338,
that Section 42 of the Arbitration Act, 1996 would be rendered
ineffective and useless. Section 42 is meant to avoid conflicts in
jurisdiction of courts by placing the supervisory jurisdiction over
all arbitral proceedings in connection with the arbitration in one
court exclusively. This is why the section begins with a non
obstante clause, and then goes on to state "...where with respect to
an arbitration agreement any application under this part has been
made in a court..." It is obvious that the application made under
(2020) 5 SCC 462
this part to a court must be a court which has jurisdiction to decide
such application. The subsequent holdings of this court, that where
a seat is designated in an agreement, the courts of the seat alone
have jurisdiction, would require that all applications under Part I be
made only in the court where the seat is located, and that court
alone then has jurisdiction over the arbitral proceedings and all
subsequent applications arising out of the arbitral agreement. So
read, Section 42 is not rendered ineffective or useless. Also, where
it is found on the facts of a particular case that either no "seat" is
designated by agreement, or the so-called "seat" is only a
convenient "venue", then there may be several courts where a part
of the cause of action arises that may have jurisdiction. Again, an
application under Section 9 of the Arbitration Act, 1996 may be
preferred before a court in which part of the cause of action arises
in a case where parties have not agreed on the "seat" of arbitration,
and before such "seat" may have been determined, on the facts of a
particular case, by the Arbitral Tribunal under Section 20(2) of the
Arbitration Act, 1996. In both these situations, the earliest
application having been made to a court in which a part of the
cause of action arises would then be the exclusive court under
Section 42, which would have control over the arbitral
proceedings. For all these reasons, the law stated by the Bombay
and Delhi High Courts in this regard is incorrect and is overruled.
****
Tests for determination of "seat"
60. The judgments of the English courts have examined the
concept of the "juridical seat" of the arbitral proceedings, and have
laid down several important tests in order to determine whether the
"seat" of the arbitral proceedings has, in fact, been indicated in the
agreement between the parties. The judgment of Cooke, J.,
in Shashoua v. Sharma, 2009 EWHC 957 (Comm): (2009) 2
Lloyd's Law Rep 376, states:
"34. London arbitration is a well-known phenomenon
which is often chosen by foreign nationals with a different
law, such as the law of New York, governing the
substantive rights of the parties. This is because of the
legislative framework and supervisory powers of the
courts here which many parties are keen to adopt. When
therefore there is an express designation of the arbitration
venue as London and no designation of any alternative
place as the seat, combined with a supranational body of
rules governing the arbitration and no other significant
contrary indicia, the inexorable conclusion is, to my mind,
that London is the juridical seat and English Law the
curial law. In my judgment it is clear that either London
has been designated by the parties to the arbitration
agreement as the seat of the arbitration, or, having regard
to the parties' agreement and all the relevant
circumstances, it is the seat to be determined in
accordance with the final fall back provision of Section 3
of the Arbitration Act."
61. It will thus be seen that wherever there is an express
designation of a "venue", and no designation of any alternative
place as the "seat", combined with a supranational body of rules
governing the arbitration, and no other significant contrary indicia,
the inexorable conclusion is that the stated venue is actually the
juridical seat of the arbitral proceeding."
(emphasis supplied)
51. Applying the aforesaid principles to the facts of the present
case, this Court is of the considered view that Ranchi cannot be
regarded as a mere geographical venue chosen for convenience.
Rather, it emerges as the juridical focal point intended by the parties.
The presence of an exclusive jurisdiction clause in favour of Ranchi
courts removes any residual ambiguity and reinforces the conclusion
that the parties intended Ranchi to be the seat of arbitration.
52. On the contrary, the reliance placed by the Petitioner on the
SAROD Arbitration Rules to contend that New Delhi constitutes the
juridical seat of arbitration must be examined in the proper contractual
and legal context. It is a well-settled canon of contractual
interpretation that terms incorporated by reference, whether expressly
or by necessary implication, cannot override or supplant clear and
specific stipulations contained in the principal agreement between the
parties. Institutional arbitration rules are, by their very nature,
designed to provide a procedural framework for the conduct of arbitral
proceedings. While such rules may supplement the agreement by
filling gaps or providing default mechanisms in the absence of
contrary stipulations, they cannot be construed in a manner that
displaces or nullifies an express contractual arrangement regarding
jurisdiction, venue, or forum.
53. To accept the Petitioner‟s contention that New Delhi becomes the
seat of arbitration solely by virtue of the applicability of the SAROD
Arbitration Rules would effectively elevate a derivative procedural
provision above the express and negotiated terms of the agreement.
Such an approach would not only undermine the fundamental
principle of party autonomy but would also invert the established
hierarchy between the primary contractual terms and secondary
incorporated rules. The correct interpretative approach, therefore, is to
treat institutional rules as subordinate to, and operating within, the
framework delineated by the agreement, rather than as instruments
capable of overriding it.
54. Furthermore, the argument advanced by the Petitioner, if
accepted, would lead to uncertainty and inconsistency in the
interpretation of arbitration agreements. The Petitioner seeks to isolate
Clause 26.3(i), which provides that disputes shall be resolved in
accordance with the SAROD Arbitration Rules, and to read it
independently so as to import the default seat provision contained in
Rule 23.1. Such a piecemeal and fragmented reading of the dispute
resolution clause cannot be countenanced. It is trite that contractual
provisions must be construed holistically, with due regard to the
agreement as a whole. A conjoint reading of Clause 26 (dealing with
dispute resolution) and Clause 27 (dealing with governing law and
jurisdiction) makes it abundantly clear that the parties intended to
anchor the arbitral process in Ranchi.
55. This Court also cannot be oblivious to the internal structure and
scheme of the relevant clauses. Clause 26 constitutes the
comprehensive dispute resolution mechanism, within which Clause
26.3 specifically addresses arbitration, including the applicable
procedural rules, the venue, and the language of proceedings. Clause
27.1, on the other hand, is a distinct and explicit provision dealing
with governing law and jurisdiction, wherein it is categorically
stipulated that the courts at Ranchi shall have exclusive jurisdiction
over all matters arising out of or relating to the agreement. The intent
of the parties, as reflected in these provisions, is both clear and
unequivocal. A harmonious construction of the designation of Ranchi
as the venue, read together with the conferment of exclusive
jurisdiction upon Ranchi courts, leads to the inescapable conclusion
that Ranchi was intended to be the juridical centre of the arbitral
process. The mere absence of the express term "seat" in the agreement
does not detract from, or dilute, the significance of these provisions in
determining the parties‟ intention as to the seat of arbitration.
56. It is also a settled principle that contractual provisions must be
interpreted in a manner that gives effect to all parts of the agreement,
and avoids any construction that renders a clause redundant, otiose, or
devoid of meaning. If New Delhi were to be treated as the seat of
arbitration, the express conferment of exclusive jurisdiction upon the
courts at Ranchi would be rendered nugatory. Such an interpretation
would effectively deprive Clause 27.1 of its substantive content and
reduce it to a mere surplusage, which is impermissible in law. If the
parties had indeed intended to designate Ranchi as the venue and to
confer exclusive jurisdiction upon its courts, while simultaneously
treating New Delhi as the seat of arbitration, such an arrangement
would have been explicitly provided for in the agreement. It cannot be
inferred indirectly by placing reliance on a default provision contained
in institutional rules. Acceptance of the Petitioner‟s construction
would, in effect, result in a situation where, in most institutional
arbitrations, the default provisions of arbitral rules would override
contractual stipulations unless the term "seat" is expressly used, an
outcome that is both anomalous and contrary to established principles
of contractual interpretation.
57. It is further pertinent to note that Rule 23.1 of the SAROD
Arbitration Rules itself is prefaced with the qualifying expression
"unless otherwise agreed by the Parties". This phrase is of critical
importance, as it clearly indicates that the default designation of New
Delhi as the seat is subject to any contrary agreement between the
parties. In the present case, the agreement, when read as a whole,
clearly manifests such a contrary intention by designating Ranchi as
the venue and conferring exclusive jurisdiction upon its courts.
Accordingly, the default rule contained in Rule 23.1 stands displaced
by the express and implied terms of the agreement. In any event, at the
cost of repetition, institutional rules cannot, as a matter of principle,
override the express or necessarily implied contractual stipulations
agreed upon between the parties.
58. As regards the various judicial precedents relied upon by the
Petitioner, this Court is of the considered view that none of them
advance the Petitioner‟s case in the factual matrix at hand. In none of
the cited decisions has it been held that a default provision contained
in the rules of an arbitral institution can override a clear designation of
venue coupled with an exclusive jurisdiction clause in determining the
seat of arbitration. The factual and contractual context in the present
case is materially distinct, and the principles laid down in those
decisions do not support the proposition canvassed by the Petitioner.
59. Lastly, this Court is of the considered view that treating Ranchi
as the juridical seat of arbitration enables a harmonious and consistent
construction of the arbitration agreement in its entirety. Under this
interpretation, Ranchi serves both as the designated venue and the
juridical seat of arbitration; consequently, the courts at Ranchi alone
would exercise exclusive supervisory jurisdiction over the arbitral
proceedings. At the same time, the SAROD Arbitration Rules operate
purely as the procedural framework governing the conduct of the
arbitration and do not, in any manner, displace or dilute the parties‟
express choice of seat. Such a construction preserves the coherence,
efficacy, and internal consistency of the contractual arrangement,
while giving due primacy to the clearly manifested intention of the
parties.
60. Further, this Court cannot lose sight of the fact that it is
nobody‟s case before this Court that any part of the contract was
performed in Delhi. On the contrary, the cause of action between the
parties has arisen in Ranchi. This undisputed factual matrix lends
further support to the conclusion that Ranchi constitutes the
appropriate juridical seat of arbitration.
61. It is also pertinent to emphasise that the doctrine of the arbitral
seat is ultimately a means to give effect to party autonomy, and not to
defeat it. Where the agreement discloses a clear and discernible
preference for a particular forum, courts must lean in favour of
upholding that choice, unless there exists an equally clear and
competing designation of seat. In the present case, no such competing
express designation exists. The invocation of New Delhi as the seat
rests solely on an indirect and inferential basis, which is insufficient to
override the clear contractual indicators pointing towards Ranchi.
62. In view of the foregoing discussion, this Court is of the
considered opinion that the only tenable conclusion is that the parties,
by expressly designating Ranchi as the venue of arbitration and by
conferring exclusive jurisdiction upon the courts at Ranchi, have
consciously and unequivocally chosen Ranchi as the juridical seat of
arbitration. The incorporation of the SAROD Arbitration Rules does
not evince any contrary intention sufficient to displace this conclusion
and must be understood as procedural in character.
63. Accordingly, the reliance placed by the Petitioner on Clause
26.3(i) read with Rule 23.1 of the SAROD Arbitration Rules to
contend that New Delhi is the seat of arbitration is misconceived and
untenable, and is therefore rejected.
CONCLUSION:
64. In view of the foregoing analyses, this Court is of the
considered opinion that it lacks territorial jurisdiction to entertain the
present petition. The competent court, having regard to the contractual
stipulations and the juridical seat of arbitration, is the court at Ranchi
alone.
65. Accordingly, the present petition is held to be not maintainable
and is, therefore, dismissed.
66. The present Petition, along with pending application(s), if any,
stands disposed of in the above terms.
67. No orders as to cost.
HARISH VAIDYANATHAN SHANKAR, J.
APRIL 01, 2026/sm/va
