Jinofer Kawasji Bhujwala vs Bahadur Sanjana
2023 Latest Caselaw 7412 Guj

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    C/SCA/2024/2023                                CAV JUDGMENT DATED: 07/10/2023

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              IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                R/SPECIAL CIVIL APPLICATION NO. 2024 of 2023


FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE BHARGAV D. KARIA

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1 Whether Reporters of Local Papers may be allowed Yes to see the judgment ?

2 To be referred to the Reporter or not ? Yes

3 Whether their Lordships wish to see the fair copy No of the judgment ?

4 Whether this case involves a substantial question No of law as to the interpretation of the Constitution of India or any order made thereunder ?

========================================================== JINOFER KAWASJI BHUJWALA Versus BAHADUR SANJANA ========================================================== Appearance:

ADITYA A GUPTA(7875) for the Petitioner(s) No. 1 MOHIT A GUPTA(8967) for the Petitioner(s) No. 1 for the Respondent(s) No. 2,3 MR. KM ANTANI(6547) for the Respondent(s) No. 1,4 MS GARIMA MALHOTRA(11392) for the Respondent(s) No. 1,4 ==========================================================

CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA

Date : 07/10/2023 CAV JUDGMENT

1. Heard learned Senior Advocate

Mr. Mehul Shah assisted by learned

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advocate Mr. Aditya Gupta for the

petitioners and learned advocate Ms.

Garima Malhotra for respondent Nos. 1 and

4.

2. Rule returnable forthwith. Learned

advocate Ms. Malhotra for the respondent

waives service of notice of rule on behalf

of the respondent Nos. 1 and 4. Respondent

Nos. 2 and 3 being formal parties are not

required to be served.

3. By this petition under Article 227 of

the Constitution of India, the petitioner

has challenged the Judgement and Order

dated 08.12.2022 passed by the 6th

Additional District and Sessions Judge, at

Mirzapur, Ahmedabad (Rural) whereby, Civil

Misc. Application No. 79 of 2020 filed

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under section 34 of the Arbitration and

Conciliation Act, 1996 [for short 'the

Arbitration Act'] was dismissed on the

ground of lack of territorial

jurisdiction.

4. The petitioner and the respondents

were partners of M/s. Electronic Lab, a

partnership firm-respondent No.4 herein.

5. The petitioner filed Civil Suit No.

1262 of 2007 before the High Court of

Judicature at Bombay on account of the

dispute between the partners. The said

suit was disposed of by consent

decree/order dated 15.10.2009 entered into

between the petitioner and the

respondents. As per the consent terms,

Hon'ble Mr. Justice C.K.Thakkar (Former

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Judge of the Hon'ble Supreme Court of

India) was appointed as the Sole

Arbitrator to adjudicate the disputes

between the parties.

6. As per Clause 3 of the consent terms,

it was agreed that the arbitration

proceeding will be held at Ahmedabad only.

Thus, the Seat of Arbitration was at

Ahmedabad as per the consent terms between

the parties which was made part of the

consent decree dated 15.10.2009 passed by

the Bombay High Court in Suit No. 1262 of

2007.

7. The arbitration proceeding between the

petitioner and the respondents proceeded

as per the consent terms of the order

dated 15.10.2009 passed by the Bombay High

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Court. The learned Arbitrator passed a

preliminary award dated 16.01.2020 in the

arbitration proceedings holding that the

petitioner was an agent of the respondents

and not a partner, as claimed by the

respondents.

8. Being aggrieved, the petitioner

challenged the said preliminary award

under section 34 of the Arbitration Act

before the District Court at Mirzapur,

Ahmedabad (Rural) by filing Civil Misc.

Application No. 79 of 2020.

9. The respondents filed an application

under Order 7 Rule 10 and Rule 11 of the

Code of Civil Procedure [for short the

'Code'] read with section 42 of the

Arbitration Act claiming that the District

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Court, Ahmedabad (Rural) has no

territorial jurisdiction as the

territorial jurisdiction was with the

Courts at Mumbai.

10. It was contended by the respondents

that during the course of the arbitration

proceedings, the application under section

27 of the Arbitration Act was filed by the

respondents before the Arbitral Tribunal

seeking its approval to apply to the Court

for assistance in taking the evidence and

after hearing such application, the

Arbitral Tribunal granted approval vide

order dated 30.12.2016. It was further

contended that pursuant to the order dated

30.12.2016, respondent Nos. 1 to 4 filed

an application under section 27 of the

Arbitration Act before the Bombay High

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Court for seeking assistance in taking the

evidence. It was submitted that as the

petitioner did not object to the

jurisdiction of the Bombay High Court to

entertain the said application and as the

petitioner submitted to the jurisdiction

of the Bombay High Court by participating

in the proceedings, the District Court at

Ahmedabad (Rural) has no territorial

jurisdiction to hear the application filed

under section 34 of the Arbitration Act.

11. The petitioner filed reply to the

application filed by the respondents and

the respondents also filed rejoinder

followed by sur-rejoinder by the

petitioner.

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12. Learned 6th Additional District and

Sessions Judge, Ahmedabad (Rural), by the

Judgement and Order dated 08.12.2022,

allowed the application filed by the

respondents dismissing the application

filed by the petitioner under section 34

of the Arbitration Act on the ground of

lack of territorial jurisdiction.

13. Being aggrieved by the said order, the

petitioner has preferred this petition.

14. Learned Senior Advocate Mr. Mehul Shah

for the petitioner submitted that the

learned Judge has exceeded the scope and

the powers conferred under Order 7 Rule 10

and Rule 11 of the Code inasmuch as it is

well established principle of law that in

an application under Order 7 Rule 11, only

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the averments in the plaint/application

and documents annexed thereto have to be

considered and not the defense of the

respondents/defendants.

14.1 It was submitted that section

2(1)(e) of the Arbitration Act, defines

'Court'. It was submitted that in case of

commercial arbitration, "Court" means 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.

14.2 It was therefore submitted that as

held by the Hon'ble Supreme Court in case

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of BGS SGS Soma JV vs. NHPC reported in

(2020) 4 SCC 3234 that expression

'subject-matter of the arbitration' used

in clause (e) to sub-section (1) of

section 2 of the Arbitration Act cannot be

confused with the 'subject-matter of the

suit'. The term 'subject-matter of the

suit' in the said provision is confined to

Part-I of the Arbitration Act and the

purpose of clause (e) is to identify the

Courts having supervisory control over the

judicial proceedings and therefore,

clause (e) refers to a Court which would

be essentially a Court of the Seat of the

arbitration process.

14.3 It was therefore submitted

that when the parties have agreed that the

arbitration proceedings will be held at

Ahmedabad only meaning thereby that Seat

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of Arbitration is at Ahmedabad and

therefore, the territorial jurisdiction of

District Court, Ahmedabad (Rural) would be

applicable.

14.4 It was submitted that the

learned Judge therefore, failed to

consider the clause regarding arbitration

fixing the seat of arbitration at

Ahmadabad.

14.5 It was further submitted that the

order by consent is not mere a contract

between the parties but is something more

because it is superadded to the command of

a Judge and therefore, the order dated

15.10.2009 passed in Suit No. 1262 of 2007

by the Bombay High Court is not merely a

contract between the parties but more than

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a contract which cannot be waived or

deviated by both the parties. It was

further submitted that unless the Court

modifies the consent decree by an express

order, the clauses of consent decree will

operate with full force. In support of

such submission reliance was placed on the

decision of Shailesh Dhairyawan vs. Mohan

Balkrishna Lulla reported in (2016) 3 SCC

619.

14.6 It was further submitted by

learned Senior Advocate Mr. Shah that the

learned Judge did not consider that there

could be no novation, alternation or

modification of contract which forms part

of consent order/decree passed by the

Court and in view of the Clause 3 of the

consent decree, designated Ahmedabad as

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Seat of the Arbitration even after the

proceedings before the Bombay High Court.

14.7 It was also submitted that

reliance placed by the learned Judge upon

the decision of the Bombay High Court in

case of Naresh Kanaiyalal Rajwani vs.

Kotak Mahindra Bank reported in 2021 SCC

online Bom. 367 is not applicable to the

facts of the present case because the most

significant distinguishing factor between

the present case and the case before the

Bombay High Court is that in the present

case, the contract containing the

arbitration clause forms part of a consent

decree which was not the case before the

Bombay High Court.

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14.8 Learned Senior Advocate Mr. Shah

referred to and relied upon the relevant

observation of the Apex Court in case of

BGS SGS Soma JV vs. NHPC (supra) at paras

33, 44, 48, 53 and 59 whereby, section

2(1)(e) of the Arbitration Act is

interpreted defining the word 'Court' as

being the Court in whose jurisdiction the

Seat of Arbitration is situated. It was

therefore, submitted that the District

Court, Ahmedabad (Rural) is the Court

within whose jurisdiction the Seat of

Arbitration is situated and as such court

only has exclusive jurisdiction and is

only the 'Court' for the purpose of

section 2(1)(e) of the Arbitration Act. It

was submitted that the Bombay High Court

in para 22 of the decision in case of

Naresh Kanaiyalal Rajwani vs. Kotak

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Mahindra Bank (supra) has erred to hold

that it was a 'Court' under section 2(1)

(e) inasmuch as the interpretation of

section 2(1)(e) would not undergo a change

which is because in a given case the party

did not object to territorial jurisdiction

of the Court. It was therefore, submitted

that merely because the petitioner

participated in the proceedings of

application filed by the respondents under

section 27 of the Arbitration Act, it

would not take away the territorial

jurisdiction of the District Court,

Ahmedabad (Rural) though the Seat of

Arbitration is at Ahmedabad.

14.9 It was further submitted that

the learned Judge failed to consider that

the Bombay High Court, relied upon several

judgements to show that the objections to

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territorial jurisdiction can be waived if

not raised at the earlier available

opportunity and cannot be raised at a

subsequent stage of the proceedings.

However, in para 21 of the said judgement,

the Bombay High Court has exceeded the

peiciple to subsequent proceedings which

has absolutely no support of any

authority. It was submitted that the

proceedings under sections 27 and 34 of

the Arbitration Act are two separate

proceedings and hence, the Bombay High

Court would not have jurisdiction to

proceed with the application under section

34 of the Arbitration Act.

14.10 Learned Senior Advocate Mr.

Shah therefore, submitted that the learned

Judge has committed an error in applying

the decision of the Bombay High Court

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inasmuch as failure to object the

territorial jurisdiction at the maximum

would amount to waiver of such objection

in those proceedings at a subsequent stage

which cannot be stretched further to state

that the clause designating the Seat of

Arbitration is waived by submitting the

jurisdiction to the Bombay High Court

contrary to section 2(1)(e) of the

Arbitration Act. It was submitted that

where the Seat is not located within the

definition of 'Court' under section 2(1)

(e) of the Arbitration Act, then section

42 would be applicable and failure to

object to territorial jurisdiction in a

proceedings would at the best preclude

such party from challenging the order and

those proceedings on the ground of

territorial jurisdiction and it would not

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lead to application of section 42 of the

Arbitration Act as the Hon'ble Apex Court

in para 59 of the decision in case of BGS

SGS Soma JV vs. NHPC (supra) has clearly

held that section 42 of the Arbitration

Act would apply only when the application

is made to a Court in whose jurisdiction

the seat is situated as that Court alone

has exclusive jurisdiction. It was

submitted that the Hon'ble Supreme Court

clearly defined the field in which,

section 42 of the Arbitration Act can

operate which was neither appreciated by

the Hon'ble Bombay High Court and was

wrongly applied by the learned Judge while

dismissing the application under section

34 of the Arbitration Act. Learned Senior

Advocate Mr. Shah, in alternative and

without prejudice to his contention,

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submitted that, assuming for a while,

without admitting that the District Court,

Ahmedabad (Rural) does not have

territorial jurisdiction, then instead of

dismissing the application under section

34 of the Arbitration Act, the learned

Judge ought to have returned the same for

presentation to the proper Court as per

Order 7 Rule 10 of the Code. It was

submitted that the suit can be rejected on

the ground mentioned in Order 7 Rule 11

and none of the grounds mentioned therein

are applicable to the facts of the present

case. It was therefore, submitted that the

impugned Judgement and Order is liable to

be quashed and set aside.

14.11 Learned Senior Advocate Mr. Shah

has referred and relied upon the following

decisions:

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(1) Phani Bhusan Gupta vs. Mira Roy reported in 1986 SCC Online Cal 73

"11. Section 62 of the Contract Act lays down that if the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed. This is known as 'novation' of a contract and there is no quarrel about this proposition.

12. The lower appellate court took the view and, aie Fightly that since the first contract in the shape of compromise was made a part of the decree and received the imprimatur of the Court, there could be no novation of such contract.

13. As pointed out above, under S. 62 of the Contract Act, there may be novation of & contract by a subsequent contract between the parties. In the instant case, however, after the compromise decree was passed, the contract embodied in the compromise petition lost its character as a contract and got merged in the decree. In other words, it became a part of the decree which could not be altered by a subsequent agreement between the parties. Moreover, as held by & Division Bench of this Court in the case of Monohar koyal vs. Thakur Das Naskar, reported in ILR 15 Cal 319 the provisions of S. 62 have no application to a case

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where there has been a breach of the original contract before the subsequent agreement is come to. Therefore, even assuming that there could be a novation of the original contract the compromise decree notwithstanding still S. 62 of the Contract Act cannot be invoked by the appellant as there was a breach of the contract long before the alleged novation."

(2) Shailesh Dhairyawan vs. Mohan Balkrishna Lulla reported in 2016 3 SCC 619:

"21. In fact, as has correctly been pointed out by learned counsel for the respondent, Section 89 of the CPC specifically provides that a Court hearing a suit may formulate terms of settlement between the parties and may either settle the same or refer the same for settlement by conciliation, judicial settlement, mediation or arbitration. On the facts in the present case, it is clear that following the mandate of Section 89, the Bombay High Court disposed of the suit between the parties by recording the settlement between the parties in clauses 1 to 7 of the consent terms and by referring the remaining disputes to arbitration. In the present case therefore it is clear that it is the Bombay High Court that was the appointing authority which had

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in fact appointed Mrs. Justice Sujata Manohar as arbitrator in terms of clause 8 of the consent terms. We must remember, as was held in C.F. Angadi v. Y.S. Hirannayya, [1972] 2 S.C.R. 515 at 523 that an order by consent is not a mere contract between the parties but is something more because there is super-added to it the command of a Judge. On the facts of the present case, it is clear that the Bombay High Court applied its mind to the consent terms as a whole and appointed Mrs. Justice Sujata Manohar as arbitrator for the disputes that were left to be resolved by the parties. The said appointing authority has been approached by the respondent for appointment of a substitute arbitrator, which was then done by the impugned judgment. This would therefore be "according to the rules that were applicable to the appointment of the arbitrator being replaced" in accordance with Section 15(2) of the Act. We, therefore, find that the High Court correctly appointed another independent retired Judge as substitute arbitrator in terms of Section 15(2) of the Arbitration Act, 1996. The appeal is, therefore, dismissed."

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(3) Manish Mohan Sharma vs. Ram Bahadur Thakur reported in 2006 4 SCC 416:

"28. Furthermore, the order dated 19th August, 1999 was a consent order. Its terms and conditions were contained in the MOFA and the Transfer Document which expressly formed an integral part of the order itself. A consent decree has been held to be a contract with the imprimatur of the Court superadded. It is something more than a mere contract and has the elements of both a command and a contract. (See: Wentworth Vs. Bullen 141 ELR 769; C.F. Angadi Vs. Y.S. Hirannayya (1972) 1 SCC 191, 197). As was said by the Privy Council as early as 1929, "The only difference in this respect between an order made by consent and one not so made is that the first stands unless and until it is discharged by mutual agreement or is set aside by another order of the Court; the second stands until and unless it is discharged on an appeal (See: Charles Hubert Kinch Vs. Edward Keith Walcott and Ors. AIR 1929 Privy Council 289)."

(4) Govind Waman Shanbhag vs. Murlidhar Shrinivas Shanbhag reported in ILR 1953 Bom 948

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(5) Hindustan Construction Company Limited vs. NHPC Limited reported in 2020 4 SCC 310

"2.By an order dated 14.11.2019 passed by the learned Additional District Judge-cum-Presiding Judge, Special Commercial Court at Gurugram in Arbitration Case No. 252 of 2018, the learned Judge on construing the arbitration clause in the agreement between the parties arrived at the finding that the seat of arbitration was at New Delhi. Yet, by virtue of Bharat Aluminium Company and Ors. vs. Kaiser Aluminium Technical Services, Inc. and Ors. (2012) 9 SCC 552 since both Delhi as well as the Faridabad Courts would have jurisdiction as the contract was executed between the parties at Faridabad, and part of the cause of action arose there, and since the Faridabad Court was invoked first on the facts of this case, Section 42 of the Arbitration Act would kick in as a result of which the Faridabad Court would have jurisdiction to decide all other applications.

3. This Court in Civil Appeal No. 9307 of 2019 entitled BGS SGS Soma JV vs. NHPC Ltd. delivered a judgment on 10.12.2019 i.e. after the impugned

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judgment was delivered, in which reference was made to Section 42 of the Act and a finding recorded thus:

"61. Equally incorrect is the finding in Antrix Corporation Ltd.

(supra) 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 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

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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."

4. This was made in the backdrop of explaining para 96 of the Balco (supra), which judgment read as a whole declares that once the seat of arbitration is designated, such clause then becomes an exclusive jurisdiction clause as a result of which only the

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courts where the seat is located would then have jurisdiction to the exclusion of all other courts.

5. Given the finding in this case that New Delhi was the chosen seat of the parties, even if an application was first made to the Faridabad Court, that application would be made to a court without jurisdiction. This being the case, the impugned judgment is set aside following BGS SGS Soma JV (supra), as a result of which it is the courts at New Delhi alone which would have jurisdiction for the purposes of challenge to the Award.

(6) Apparel Export Promotion Council vs. Prabhati Patni reported in ILR 2005 II Delhi 1066:

"21. I now come to the argument advanced by Mr Rawal based upon a reading of Section 42 of the Arbitration and Conciliation Act, 1996. To appreciate what has been submitted by him, it would be relevant to examine the provisions of Section 42 which reads as under:-

"42. Jurisdiction.-"Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where with respect to an arbitration agreement any

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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."

A reading of Section 42 makes it clear that it is a non-obstante provision and that it indicates that if any application is submitted under Part I (which includes an application under Section 34) in a court, then that court alone would have jurisdiction over the arbitral proceedings and all subsequent applications arising out of the arbitral agreement and the arbitral proceedings shall be made in that court and in no other court. Mr Rawal has construed this provision to mean that since the petitioner had filed his objections under Section 34 first in this court and the respondent had thereafter filed its objections in the court at Jaipur, this court and this court alone would have jurisdiction and the court at Jaipur, notwithstanding anything contained elsewhere or in any other law for the time being in force, would not have jurisdiction. I am unable to agree with this submission of Mr Rawal. The primary reason being that Section 42 also uses the word 'court' which has to be construed in

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terms of the definition in Section 2(e). This court (i.e., Delhi High Court), clearly, is not the 'court', in the facts of the present case, which is referred to in Section 2(e) of the said Act. Therefore, the mere filing of the petition under Section 34 in this court would not clothe this court with jurisdiction in respect of the disputes between the parties for all times to come. Mere filing of the objections under Section 34 in a wrong court would not clothe that court with jurisdiction. This court does not otherwise have jurisdiction as indicated above and, therefore, the mere fact that the petition under Section 34 has been filed here would not confer jurisdiction on this court.

22. A similar issue arose in Virender Saigal v. Sumatilal Jamnalal: (V 57 C

3). In that case, a learned Single Judge (S.N. Andley, J) considered the provisions of Section 2(c) and 31(4) of the Arbitration Act, 1940. I have already indicated that the provisions of Section 2(c) of the 1940 Act and that of Section 2(e) of the 1996 Act, for the purpose of this case, are not materially different. Section 31(4) of the 1940 Act needs some explanation. It reads as under:-

"Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference any

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application under this Act has been made in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and Page 2416 all subsequent applications arising out of that reference and the arbitration proceedings shall be made in that Court and in no other Court."

A mere reading of the said provision would indicate its similarity with Section 42 of the 1996 Act. In respect of Section 31(4) of the 1940 Act, this court in Virender Saigal (supra), held that the mere filing of an application in any court irrespective of whether such court had jurisdiction in the matter or not would not fix that court permanently as the court in which all subsequent applications are to be filed. The only difference that I note which could be material when comparing the provisions of Section 31(4) of the 1940 Act and the Section 42 of the 1996 Act are the absence of the words 'competent to entertain it' in Section 42 of the 1996 Act. In my opinion, this would not make any difference inasmuch as the word 'court' itself has been given a specific meaning in terms of Section 2(e) of the 1996 Act and I have already held that this court would not, in the context of the factual matrix of the present case, qualify to be such a court as defined under Section 2(e) of the 1996 Act. Therefore, the mere fact

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that the filing of Section 34 application by the petitioner in this court was prior in time to the filing of the Section 34 application by the respondent in the court at Jaipur, would not confer jurisdiction on this court because the reference to 'court' in Section 42 has to be read in the light of the definition given in Section 2(e) of the 1996 Act.

In Hindustan Steel Works Construction (supra), the issue was whether the provisions of Section 31(4) of the Arbitration Act, 1940 or clause of the Letters Patent of the Calcutta High Court would prevail. It was held that the former would prevail. While considering the provisions of Section 31(4) of the Arbitration Act, 1940, the single Judge of the Calcutta High Court was of the view that the expression 'no other court' appearing therein clearly contemplated a situation where two or more courts have jurisdiction in respect of an application and when the application is made in one of such courts first in order of time, then that court will be fixed with the exclusive jurisdiction and all other courts which otherwise are entitled to entertain the application, will be divested of their jurisdiction in the matter.

From this, it becomes clear that for invoking the provisions of Section

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31(4) which is in pari materia to the provisions of Section 42 of the new Act, the court in which the application is first instituted must be a court having jurisdiction in the matter. Therefore, this decision also does not help the petitioner. In fact, it supports the contention of the respondent and the view taken by me."

(7) Brahmani River Pelles Ltd vs. Kamachi Industries reported in 2020 5 SCC 462

"18. Where the contract specifies the jurisdiction of the court at a particular place, only such court will have the jurisdiction to deal with the matter and parties intended to exclude all other courts. In the present case, the parties have agreed that the "venue" of arbitration shall be at Bhubaneswar. Considering the agreement of the parties having Bhubaneswar as the venue of arbitration, the intention of the parties is to exclude all other courts. As held in Swastik, non-use of words like "exclusive jurisdiction", "only", "exclusive", "alone" is not decisive and does not make any material difference.

19. When the parties have agreed to have the "venue" of arbitration at Bhubaneswar, the Madras High Court erred in assuming the jurisdiction under Section 11(6) of the Act. Since only Orissa High Court will have the

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jurisdiction to entertain the petition filed under Section 11(6) of the Act, the impugned order is liable to be set aside.

(8) Indus Mobile Distribution Private Ltd vs. Datawind Innovations Private Ltd reported in 2017 7 SCC 678

"11. In an instructive passage, this Court stated that an agreement as to the seat of an arbitration is analogous to an exclusive jurisdiction clause as follows:

                    "Thus,   it   is   clear    that   the
                    regulation              of conduct of
                    arbitration    and challenge to     an

award would have to be done by the courts of the country in which the arbitration is being conducted.

Such a court is then the supervisory court possessed of the power to annul the award. This is in keeping with the scheme of the international instruments, such as the Geneva Convention and the New York Convention as well as the Uncitral Model Law. It also recognises the territorial principle which gives effect to the sovereign right of a country to regulate, through its national courts, an adjudicatory duty being

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performed in its own country. By way of a comparative example, we may reiterate the observations made by the Court of Appeal, England in C v. D [2008 Bus LR 843 : 2007 EWCA Civ 1282 (CA)] wherein it is observed that:

"17. It follows from this that a choice of seat for the arbitration must be a choice of forum for remedies seeking to attack the award." (emphasis supplied) In the aforesaid case, the Court of Appeal had approved the observations made in A v. B [(2007) 1 All ER (Comm) 591 : (2007) 1 Lloyd's Rep 237] wherein it is observed that:

"... an agreement as to the seat of an arbitration is analogous to an exclusive jurisdiction clause. Any claim for a remedy ... as to the validity of an existing interim or final award is agreed to be made only in the courts of the place designated as the seat of arbitration." (emphasis supplied)

13. This Court reiterated that once the seat of arbitration has been fixed, it would be in the nature of an exclusive

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jurisdiction clause as to the courts which exercise supervisory powers over the arbitration.

14. In Reliance Industries Ltd. v. Union of India, (2014) 7 SCC, 603, this statement of the law was echoed in several paragraphs. This judgment makes it clear that "juridical seat" is nothing but the "legal place" of arbitration. It was held that since the juridical seat or legal place of arbitration was London, English courts alone would have jurisdiction over the arbitration thus excluding Part I of the Indian Act. (See: paragraphs 36, 41, 45 to 60 and 76.1 and 76.2). This judgment was relied upon and followed by Harmony Innovation Shipping Limited v. Gupta Coal India Limited and Another, (2015) 9 SCC 172 (See: paragraphs 45 and 48). In Union of India v. Reliance Industries Limited and Others, (2015) 10 SCC 213, this Court referred to all the earlier judgments and held that in cases where the seat of arbitration is London, by necessary implication Part I of the Arbitration and Conciliation Act, 1996 is excluded as the supervisory jurisdiction of courts over the arbitration goes along with "seat".

19. A conspectus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. On the

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

15. On the other hand, learned advocate

Ms. Malhotra for the respondents appearing

on caveat submitted that the Suit No.

1262/2007 was filed before the Bombay High

Court wherein the consent decree was drawn

on 15.10.2009. It was submitted that thus,

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the entire subject-matter of the

arbitration is within the territorial

jurisdiction of the Bombay High Court.

15.1 It was further submitted that the

respondents preferred an application under

section 27 of the Arbitration Act before

the Bombay High Court.

(i) pursuant to the order passed by the

Arbitral Tribunal on the ground that the

Bombay High Court has jurisdiction to

entertain the petition as the arbitration

agreement, by way of consent terms, dated

15.10.2009 between parties was arrived at

Mumbai;

(ii) the said terms were filed in Suit No.

1262 of 2007 which was filed before the

Bombay High Court in respect of the

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disputes between the parties;

(iii) that the partnership firm has its

office situated at situated at Mumbai and

carries on business from Mumbai;

(iv) The Agency Agreement between the

parties was entered into at Mumbai;

(V) The substantial amounts and equipments

were supplied from Mumbai and the

petitioner was liable to render accounts

at Mumbai;

(vi) Material part of the cause of action

for the dispute between the parties had

arisen at Mumbai and accordingly, the Suit

No. 1262/2007 was filed before the Bombay

High Court and therefore, as per section

(2) (1) (e) of the Arbitration Act, the

jurisdiction of the Court would be

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governed by the subject-matter of the

suit.

15.2 Learned advocate Ms. Malhotra

submitted that the petitioner participated

in the proceedings of the Arbitration

Petition No. 101/2017 filed by the

respondents under section 27 of the

Arbitration Act by filing affidavit- in-

reply before the Bombay High Court.

15.3 It was submitted that the Bombay

High Court, by order dated 30.03.2017,

passed a detailed order under section 27

of the Arbitration Act by allowing the

application in terms of prayer clause (a)

by directing the Wise Chairman and Chief

Executive Officer of the Gujarat Maritime

Board, Gandhinagar, to remain present and

produce documents as required before

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Arbitral Tribunal. It was therefore

submitted that the learned Judge has

rightly dismissed the application filed

under section 34 of the Arbitration Act.

15.4 Learned advocate Ms. Malhotra

submitted that the decision in case of the

BGS SGS Soma JV vs. NHPC (supra) would

not be applicable in the facts of the case

inasmuch as the Hon'ble Supreme Court was

dealing with the issue of juridical or

legal seat of the arbitration vis-a-vis

place where whole or part of the cause of

action arises. It was submitted that as

per section 2(1)(e), the tests for

determination of juridical seat when there

is express designation of "venue", and no

designation of any alternative place as

the "seat" and the same is combined with a

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supranational body of rules governing the

arbitration and therefore, the subject-

matter of the Arbitration would govern the

territorial jurisdiction as held by the

Bombay High Court in case of Naresh

Kanayalal Rajwani vs. Kotak Mahindra Bank.

15.5 Learned advocate Ms. Malhotra

therefore submitted that the Bombay High

Court has elaborately discussed the

decision of the Apex Court in case of BGS

SGS Soma JV vs. NHPC (supra) as well as

the decision of State of West Bengal and

others vs. Associated Contractors

reported in (2015) 1 SCC 32 and the

decision in case of Sneh Lata Goel vs

Pusplatta & Ors. reported in (2019) 3 SCC

594.

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15.6 Learned advocate Ms. Malhotra

submitted that as held by the Bombay High

Court in case of Naresh Kanayalal

Rajwani vs. Kotak Mahindra Bank (supra)

in domestic arbitration, though the seat

is located at New Delhi, the respondent,

despite appearing in the arbitration

petition before the Bombay High Court,

did not object to its territorial

jurisdiction and also acted in

furtherance of the order passed therein

nor any objection was taken to the

proceedings under section 34 of the

Arbitration Act filed before the Bombay

High Court, then the plea that the Bombay

High Court has no jurisdiction to

entertain the arbitration application

under section 34 of the Act, was not

accepted.

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15.7 It was submitted that in the Apex

Court in various judgements has

distinguished the seat and venue of

arbitration for deciding the territorial

jurisdiction of the Court and the

intention of the parties has rightly been

considered by the learned Judge to come

to the conclusion that whether the place

agreed for arbitration is the seat or

just the convenient venue for the

arbitration proceedings. It was submitted

that it is not in dispute that the entire

transaction between the parties took

place at Mumbai and arbitration seat as

well as decree was also passed at Bombay.

Necessary application under section 27 of

the Arbitration Act was also filed at

Bombay and therefore, when the subject-

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matter of the arbitration falls within

the territorial jurisdiction of the

Mumbai, and as such, only because the

venue of the arbitration has agreed

between the parties at Ahmedabad, would

not take away territorial jurisdiction of

the Bombay High Court.

15.8 It was therefore submitted that

the learned Judge has not committed any

error while dismissing the application

under section 34 of the Arbitration Act.

Therefore, the petition may not be

entertained by this Court while

exercising extraordinary jurisdiction

under Article 227 of the Constitution of

India.

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16. Having heard learned advocates for the

respective parties and on considering the

facts which are not in dispute, the moot

question that calls for consideration is

whether the District Court, Ahmedabad

(Rural) has the territorial jurisdiction

to consider the application filed by the

petitioner under section 34 of the

Arbitration Act or not?

17. In order to consider the issue raised

in this petition, it would be germane to

refer to the various provisions of the

Arbitration Act which read 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

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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;]

20. Place of arbitration.--(1) The parties are free to agree on the place of arbitration. (2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. (3) Notwithstanding sub- section (1) or sub-section (2), the arbitral tribunal may, unless

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otherwise agreed by the parties, meet at anyplace it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.

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.

18. The issue with regard to the seat of

arbitration is no more res integra in view

of the decision of the Apex Court in case

of BGS SGS Soma JV vs. NHPC (supra) which

is followed in case of BBR (India) Private

Limited vs. S.P. Singla Constructions

Private Limited reported in (2023) 1 SCC

693. It is undisputed that both the

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parties have given consent in the consent

terms filed before the Bombay High Court

in Suit No. 1262/2007 which is part of the

consent decree dated 15.10.2009 that the

arbitration proceedings will be held at

Ahmedabad only. Section 2 (1) (e) of the

Arbitration Act defines the term 'Court'.

Section 20 defines 'the place of

arbitration' as well as section 42 refers

to Jurisdiction. All the three provisions

are considered by the Apex Court in case

of BGS SGS Soma JV vs. NHPC (supra)

wherein, the Apex Court has provided for

the tests for determination of "seat" in

following paragraphs:

"59. Equally incorrect is the finding in Antrix Corporation Ltd. (supra) 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

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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 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"

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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.

62. 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 Roger Shashoua (supra), 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

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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 in- exorable 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.

64. The Court then held that although the word "venue" is not synonymous with "seat", on the facts of that case,

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London - though described as the "venue" - was really the "seat" of the arbitration. This was for the reason that London was a neutral place in which neither party worked for gain, and in which no part of the cause of action arose. It was thus understood to be a neutral place in which the proceedings could be "anchored". Secondly, the Court stressed on the expression "arbitration proceedings" in clause 18.3, which the Court held to be an expression which included not just one or more individual hearings, but the arbitral proceedings as a whole, culminating in the making of an award. The Court held:

"63. Second, the language in clause 18.3 refers to the "arbitration proceedings". That is an expression which includes not just one or more individual or particular hearings but the arbitration proceedings as a whole including the making of an award. In other words the parties were anchoring the whole arbitration process in London right up to and including the making of an award. The place designated for the making of an award is a designation of seat. Moreover the language in clause 18.3 does not refer to the venue of all hearings "taking place" in London. Clause 18.3 instead provides that the venue of the arbitration proceedings "shall be"

London. This again suggests the

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parties intended to anchor the arbitration proceedings to and in London rather than simply physically locating the arbitration hearings in London. Indeed in a case where evidence might need to be taken or perhaps more likely inspected in India it would make no commercial sense to construe the provision as mandating all hearings to take place in a physical place as opposed to anchoring the arbitral process to and in a designated place. All agreements including an arbitration agreement should be construed to accord with business common sense. In my view, there is no business common sense to construe the arbitration agreement (as contended for by EIL) in a manner which would simply deprive the arbitrators of an important discretion that they possess to hear evidence in a convenient geographical location.

64. Third, Mr Joseph QC submitted that the last sentence of clause 18.3 can be reconciled with the choice of London as the seat. First, he submitted that it can be read as referring simply to Part II of the Indian 1996 Act ie the enforcement provisions. Mr Edey QC's response was that if that is all the last sentence meant, then it would be superfluous. However, I do not consider that any such superfluity carries much, if any, weight.

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Alternatively, Mr Joseph QC submitted that it can be read as referring only to those provisions of the Indian 1996 Act which were not inconsistent with the English 1996 Act." (emphasis supplied)

67. After referring to Roger Shashoua(supra) and Enercon GmbH (supra), the Court held:

"In my judgment the approach adopted in Shashoua v Sharma and in other cases is appropriate in this case also. An agreement that the arbitration is 'to be held in Hong Kong' would ordinarily carry with it an implied choice of Hong Kong as the seat of the arbitration and of the application of Hong Kong law as the curial law. Clear words or 'significant contrary indicia'are necessary to establish that some other seat or curial law has been agreed."

69. The Court in Process and Industrial Developments Ltd then held that the gas supply agreement provided for the seat of the arbitration to be in London, inter alia, for the following reasons:

"85....(1) It is significant that clause 20 refers to the venue "of the arbitration" as being London.

The arbitration would continue up to

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and including the final award. Clause 20 does not refer to London as being the venue for some or all of the hearings. It does not use the language used in s. 16(2) ACA of where the tribunal may "meet" or may "hear witnesses, experts or the parties". I consider that the provision represented an anchoring of the entire arbitration to Lon- don rather than providing that the hearings should take place there.

(2) Clause 20 provides that the venue of the arbitration "shall be" London "or otherwise as agreed be- tween the parties". If the reference to venue was sim- ply to where the hearings should take place, this would be an inconvenient provision and one which the parties are unlikely to have intended. It would mean that hearings had to take place in London, however inconvenient that might be for a particular hearing, unless the parties agreed otherwise.

The question of where hearings should be conveniently held is, however, one which the arbitrators ordinarily have the power to decide, as indeed is envisaged in s. 16(2) ACA. That is likely to be a much more convenient arrangement. Clearly if the parties were in agreement as to where a particular hearing were to take place, that would be likely to be very influential on the

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arbitral tribunal. But if for whatever reason they were not in agreement, and it is not unknown for parties to arbitration to become at loggerheads about very many matters, then it is convenient for the arbitrators to be able to decide. If that arrangement was to be displaced it would, in my judgment, have to be spelled out clearly. Accordingly, the reference to the "venue" as being London or otherwise as agreed between the parties, is better read as providing that the seat of the arbitration is to be England, unless the parties agree to change it. This would still allow the arbitrators to decide where particular hearings should take place, while providing for an anchor to England for supervisory purposes, unless changed." (emphasis supplied)

81. Most recently, in Brahmani River Pellets (supra), this Court in a domestic arbitration considered clause 18 - which was the arbitration agreement between the parties - and which stated that arbitration shall be under Indian Arbitration and Conciliation Act, 1996, and the venue of arbitration shall be Bhubaneswar. After citing several judgments of this Court and then referring to Indus Mobile Distribution (supra), the Court held:

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"18. Where the contract specifies the jurisdiction of the court at a particular place, only such court will have the jurisdiction to deal with the matter and parties intended to exclude all other courts. In the present case, the parties have agreed that the "venue" of arbitration shall be at Bhubaneswar. Considering the agreement of the parties having Bhubaneswar as the venue of arbitration, the intention of the parties is to exclude all other courts. As held in Swastik, non-use of words like "exclusive jurisdiction", "only", "exclusive", "alone" is not decisive and does not make any material difference.

19. When the parties have agreed to the have the "venue" of arbitration at Bhubaneshwar, the Madras High Court erred in assuming the jurisdiction under Section 11(6)of the Act. Since only the Orissa High Court will have the jurisdiction to entertain the petition filed under Section 11(6)of the Act, the impugned order is liable to be set aside."

82. On a conspectus of the aforesaid judgments, it may be concluded that whenever there is the designation of a place of arbitration in an arbitration clause as being the "venue" of the

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

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

19. In the aforesaid decision, the Apex

Court has laid down the Shashoua principal

which stipulates that wherever there is an

express designation of a "venue" and no

designation of any alternative place as

the "seat" and the same is combined with

the superanotional body of the rules

governing the arbitration and there are no

other significant contrary indicia, the

inexorable conclusion is that the stated

venue is actually the juridical seat of

the arbitration proceeding to the

exclusion of all other courts even courts

where part of the cause of action may have

arisen. Therefore, where there is

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designation of a place of arbitration as

per the consent decree as being the venue

of the arbitration proceedings, the

expression 'arbitration proceedings' would

make it clear that the venue is really the

seat of the arbitral proceedings as

arbitration proceeding does not include

just one or more individual or particular

hearing but arbitration proceedings as a

whole including the making of an award at

that place. Therefore, as per clause 3 of

the consent decree, when the arbitration

proceedings are to be held at Ahmedabad

only and therefore the venue would also

indicate the parties intend to proceed

with the arbitration at Ahmedabdad

signifying that the Ahmedabad is the seat

of arbitral proceedings. Therefore, as

held by the Apex Court there being no

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other significant contrary indicia that

the stated venue is merely a venue and not

the seat of the arbitral proceedings, it

would then conclusively show that such a

clause designated as Seat of the Arbitral

proceedings to the exclusion of all other

courts.

20. The Apex Court in case of BBR (India)

Private Limited vs. S.P. Singla

Constructions Private Limited (supra) by

applying decision in case of BGS SGS Soma

JV vs. NHPC (supra) has further clarified

this issue as under:

"16. Noticing the above interpretation, a three Judges Bench of this Court in BGS SGS Soma JV v. NHPC Limited has observed that the expression 'subject to arbitration' used in clause (e) to sub-section (1) of Section 2 of the Act cannot be confused with the 'subject matter of the suit'. The term 'subject

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matter of the suit' in the said provision is confined to Part-I. The purpose of the clause is to identify the courts having supervisory control over the judicial proceedings. Hence, the clause refers to a court which would be essentially a court of 'the seat' of the arbitration process.

Accordingly, clause (e) to sub- section (1) of Section 2 has to be construed keeping in view the provisions of Section 20 of the Act, which are, in fact, determinative and relevant when we decide the question of 'the seat of an arbitration'. This interpretation recognises the principle of 'party autonomy', which is the edifice of arbitration. In other words, the term 'court' as defined in clause

(e) to sub-section (1) of Section 2, which refers to the 'subject matter of arbitration', is not necessarily used as finally determinative of the court's territorial jurisdiction to entertain proceedings under the Act.

17. In BGS SGS Soma (supra), this Court observed that any other construction of the provisions would render Section 20 of the Act nugatory. In view of the Court, the legislature had given 9 (2020) 4 SCC 224 jurisdiction to two courts: the court which should have jurisdiction where the cause of action is located; and the court where the

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arbitration takes place. This is necessary as, on some occasions, the agreement may provide the 'seat of arbitration' that would be neutral to both the parties. The courts where the arbitration takes place would be required to exercise supervisory control over the arbitral process. The 'seat of arbitration' need not be the place where any cause of action has arisen, in the sense that the 'seat of arbitration may be different from the place where obligations are/had to be performed under the contract. In such circumstances, both the courts should have jurisdiction, viz., the courts within whose jurisdiction 'the subject matter of the suit' is situated and the courts within whose jurisdiction the dispute resolution forum, that is, where the arbitral tribunal is located.

18. Turning to Section 20 of the Act, sub-section (1) in clear terms states that the parties can agree on the place of arbitration. The word 'free' has been used to emphasise the autonomy and flexibility that the parties enjoy to agree on a place of arbitration which is unrestricted and need not be confined to the place where the 'subject matter of the suit' is situated. Sub-section (1) to Section 20 gives primacy to the agreement of

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the parties by which they are entitled to fix and specify 'the seat of arbitration', which then, by operation of law, determines the jurisdictional court that will, in the said case, exercise territorial jurisdiction. Sub-section (2) comes into the picture only when the parties have not agreed on the place of arbitration as 'the seat'. 10 In terms of sub-section (2) of Section 20 the arbitral tribunal determines the place of arbitration. The arbitral tribunal, while doing so, can take into regard the circumstances of the case, including the convenience of the parties. Sub- section (3) of Section 20 of the Act enables the arbitral tribunal, unless the parties have agreed to the contrary, to meet at any place to conduct hearing at a place of convenience in matters, such as consultation among its members, for the recording of witnesses, experts or hearing parties, inspection of documents, goods, or property.

19. Relying upon the Constitutional Bench decision in BALCO (supra), in BGS SGS Soma (supra), it has been held that sub- section (3) of Section 20 refers to 'venue' whereas the 'place' mentioned in sub-section (1) and sub-section (2) refers to the 'jurisdictional seat'. To explain the difference, in BALCO (supra), a

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case relating to international arbitration, reference was made to several judgments, albeit the judgment in Shashoua v. Sharma was extensively quoted to observe that an agreement as to the 'seat of arbitration' draws in the law of that country as the curial law and is analogous to an exclusive jurisdiction clause. 12 The parties that have agreed to 'the seat' must challenge an interim or final award only in the courts of the place designated as the 'seat of arbitration'. In other words, the choice of the 'seat of arbitration' must be the choice of a forum/court for remedies seeking to attack the award.

                  20.   The    aforesaid    principles
                  relating       to      international

arbitration have been applied to domestic arbitrations. In this regard, we may refer to paragraph 38 of BGS SGS Soma (supra), which reads as under:

"38. A reading of paras 75, 76, 96, 110, 116, 123 and 194 of BALCO would show that where parties have selected the seat of arbitration in their agreement, such selection would then amount to an exclusive jurisdiction clause, as the parties have now indicated that the courts at the "seat" would alone have jurisdiction to entertain

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challenges against the arbitral award which have been made at the seat. The example given in para 96 buttresses this proposition, and is supported by the previous and subsequent paragraphs pointed out hereinabove. The BALCO judgment, when read as a whole, applies the concept of "seat" as laid down by the English judgments (and which is in Section 20 of the Arbitration Act, 1996), by harmoniously construing Section 20 with Section 2(1)(e), so as to broaden the definition of "court", and bring within its ken courts of the "seat" of the arbitration."

21. The Court in BGS SGS Soma (supra), then proceeded to examine the contention whether paragraph 96 of BALCO (supra), which speaks of concurrent jurisdiction of the courts, that is, the jurisdiction of courts where the cause of action has arisen wholly or partly, and the courts within the jurisdiction in which the dispute resolution forum - arbitration is located, to observe and elucidate the legal position:

"40. Para 96 of BALCO case is in several parts. First and foremost, Section 2(1)(e), which is the definition of "court" under

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the Arbitration Act, 1996 was referred to, and was construed keeping in view the provisions in Section 20 of the Arbitration Act, 1996, which give recognition to party autonomy in choosing the seat of the arbitration proceedings. Secondly, the Court went on to state in two places in the said paragraph that jurisdiction is given to two sets of courts, namely, those courts which would have jurisdiction where the cause of action is located; and those courts where the arbitration takes place. However, when it came to providing a neutral place as the "seat" of arbitration proceedings, the example given by the five-Judge Bench made it clear that appeals under Section 37 of the Arbitration Act, 1996 against interim orders passed under Section 17 of the Arbitration Act, 1996 would lie only to the courts of the seat -- which is Delhi in that example --

                  which   are   the    courts    having
                  supervisory        control,        or

jurisdiction, over the arbitration proceedings. The example then goes on to state that this would be irrespective of the fact that the obligations to be performed under the contract, that is the cause of action, may arise in part either at Mumbai or Kolkata. The fact that the arbitration is to take place in Delhi is of importance. However,

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the next sentence in the said paragraph reiterates the concurrent jurisdiction of both courts".

21. Thus, where there is an express

designation of a venue and no designation

of any alternative place as the seat, then

the expression 'subject to arbitration'

used in clause (e) to sub-section (1) of

section 2 of the Arbitration Act cannot be

confused with the 'subject-matter of the

suit'. Clause (e) of sub-section (1) of

section 2 of the Arbitration Act is to

identify the Courts having supervisory

control over the judicial proceedings. The

Apex Court has, therefore, held that

clause refers to a 'Court' which would be

essentially a court of the Seat of the

Arbitration process and accordingly,

clause (e) of sub-section (1) of section 2

has to be construed keeping in view of

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provisions of section 21 of the

Arbitration Act which are infact

determinative and relevant for deciding

the question of seat of arbitration.

22. The Apex Court has therefore, held

that in term 'court' as defined in clause

(e) of sub-section (1) of section 2 of the

Arbitration Act are refers to the subject-

matter of the arbitration is not

necessarily used as finally determinative

of the courts territorial jurisdiction to

entertain the proceedings under the Act.

Therefore, the Courts within whose

territorial the arbitration takes place

would be required to be exercised

supervisory control over the arbitral

process. It was further held that Seat of

Arbitration need not be the place where

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any cause of action has arisen and seat of

arbitration may be different from the

place where obligation had to be performed

under the contract.

23. As per section 20 of the Arbitration

Act which provides that the party can

agree on place of arbitration and in the

facts of the case, when the parties have

agreed to have arbitral proceedings at

Ahmedabad only, then in view of the

principle of 'Party Autonomy' and

flexibility that the parties enjoys to

agree at a place of arbitration which may

not be confined to the place where the

subject-matter of the suit is situated and

in such circumstances, the Arbitral

Tribunal can meet at any place to conduct

the hearing at a place of convenience in

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matters unless the parties have agreed to

the contrary. Sub- section (3) of section

20 of the Arbitration Act refers to the

venue whereas, the place mentioned in sub-

section (1) of section 2 refers to the

juridical seat. An agreement as to the

Seat of Arbitration draws in the law of

the country as the curial law and is

analogous to an exclusive jurisdiction

clause. Therefore, the parties agreed to

the Seat have to challenge any interim or

final award only in the courts of the

place designated as the Seat of

Arbitration meaning thereby the choice of

the seat of Arbitration must be the choice

of a forum/court for remedy to challenge

the award.

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24. Therefore, in view of the above

conspectus of law, once the seat of

arbitration has been fixed at Ahmedabad,

the Courts at Ahmedabad alone will have

exclusive jurisdiction to exercise

supervisory powers over the arbitration.

The reliance placed by the learned Judge

upon the decision of the Bombay High Court

in case of Naresh Kanayalal Rajwani vs.

Kotak Mahindra Bank (supra) is not

applicable in view of the above decision

of the Hon'ble Supreme Court. Learned

Judge has failed to consider the decision

of the Supreme Court in case of BGS SGS

Soma JV vs. NHPC (supra) as the Seat of

the Arbitration is focal point for

determining the territorial jurisdiction

of the Court and merely because the

petitioner participated in the proceeding

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arising of the application under section

27 of the Arbitration Act, shall not alter

the position of law with regard to the

territorial jurisdiction where the Seat of

Arbitration is located as all the parties,

by consent decree, have designated the

seat at Ahmedabad, it becomes the

exclusive jurisdiction clause and

therefore the only the District Court,

Ahmedabad would vest at the seat with

exclusive jurisdiction to regulate the

arbitration proceedings arising out of the

consent agreement between the parties in

the facts of the case. Section 42 of the

Arbitration Act would not apply when the

application is filed before a Court which

does not have jurisdiction as the said

application under section 42 has to be

made to a Court which has territorial

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jurisdiction as per definition of Court in

section 2 (1) (e) of the Arbitration Act.

25. The Apex Court in case of BBR (India)

Private Limited vs. S.P. Singla

Constructions Private Limited (supra)

further held that the seat once fixed by

the Arbitral Tribunal under section 20 (2)

of the Arbitration Act should remain

static and fixed whereas the venue of

arbitration can change and move from a

seat to a new location as the venue is not

constant and stationary and can move and

change in terms of sub-section (3) of

section 20 of the Arbitration Act and

change of venue does not result in change

of relocation of Seat of Arbitration.

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26. The Apex Court further held in para 31

of the said judgement as under:

"31. It is highly desirable in commercial matters, in fact in all cases, that there should be certainty as to the court that should exercise jurisdiction. We do not think the law of arbitration visualises repeated or constant shifting of the 'seat of arbitration'. In fact, sub-section (3) of Section 20 specifically states and draws a distinction between the venue of arbitration and the 'seat of arbitration' by stating that for convenience and other reasons, the arbitration proceedings may be held at a place different than the 'seat of arbitration', which location is referred to the venue of arbitration. If we accept this contention of the appellant, we would, as observed in the case of C v. D (supra), create a recipe for litigation and (what is worse) confusion which was not intended by the Act. The place of jurisdiction or 'the seat' must be certain and static and not vague or changeable, as the parties should not be in doubt as to the jurisdiction of the courts for availing of judicial remedies. Further, there would be a risk of parties rushing to the courts to get first hearing or conflicting decisions that the law does not contemplate and is to be avoided."

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27. Therefore, in view of the above, when

the place of jurisdiction or the seat is

certain and static and not vague or

changeable, there cannot be any doubt as

to the jurisdiction of the Court for

availing the judicial remedy. The Apex

Court therefore held as under that the

seat determines the jurisdiction of the

Court:

"32. A secondary contention to support the said plea on the ground that the courts where arbitration proceedings are being conducted should be given supervisory powers, on in-depth consideration, must be rejected as feeble when we juxtapose the unacceptable practicable consequences that emerge. Exercise of supervisory jurisdiction by the courts where the arbitration proceedings are being conducted is a relevant consideration, but not a conclusive and determinative factor when the venue is not 'the seat'.

'The seat' determines the jurisdiction of the courts. There would be situations where the venue of arbitration in terms of sub-

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section (3) of Section 20 would be different from the place of the jurisdictional 'seat', and it is equally possible majority or most of the hearing may have taken place at a venue which is different from the 'seat of arbitration'. Further, on balance, we find that the aspect of certainty as to the court's jurisdiction must be given and accorded priority over the contention that the supervisory courts located at the place akin to the venue where the arbitration proceedings were conducted or substantially conducted should be preferred.

34.For clarity and certainty, which is required when the question of territorial jurisdiction arises, we would hold that the place or the venue fixed for arbitration proceedings, when sub-section (2) of Section 20 applies, will be the jurisdictional 'seat' and the courts having jurisdiction over the jurisdictional 'seat' would have exclusive jurisdiction. This principle would have exception that would apply when by mutual consent the parties agree that the jurisdictional 'seat' should be changed, and such consent must be express and clearly understood and agreed by the parties.

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35. We have quoted Section 42 of the Act. Section 42 was also examined in BGS SGS Soma (supra) and the view expressed by the Delhi High Court in Antrix Corpn. Ltd. v.

                  Devas   Multimedia     (P)   Ltd.   was
                  overruled        observing         that

the Section 42 is meant to avoid conflicts of jurisdiction of courts by placing the supervisory jurisdiction over all arbitration proceedings in connection with the arbitration proceedings with one court exclusively. The aforesaid observation supports our reasoning that once the jurisdictional 'seat' of arbitration is fixed in terms of sub-section (2) of Section 20 of the Act, then, without the express mutual consent of the parties to the arbitration, 'the seat' cannot be changed. Therefore, the appointment of a new arbitrator who holds the arbitration proceedings at a different location would not change the jurisdictional 'seat' already fixed by the earlier or first arbitrator. The place of arbitration in such an event should be treated as a venue where arbitration proceedings are held."

28. The Division Bench of this Court in

case of Datang Technologies and

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Engineering Private Ltd vs. Sarjan

Construction Ltd by Judgement and Order

dated 20.07.2022 in First Appeal No. 3391

of 2021 held as under:

"17. As the law is very clear that where the seat is designated in the agreement or when the parties choose such seat or the arbitrator decides such seat, that Court's seat alone would have jurisdiction, on that count alone, this Court needs to uphold the contention raised before this Court by the appellant and the appeal needs to succeed without entering into the merit of the matter."

29. The SLP arising out of the aforesaid

order was also dismissed by the Apex Court

on 26.08.2022.

30. In view of the foregoing reasons, the

impugned order passed by the learned Judge

in Civil Misc. Application No. 79 of 2020

below Exhs 1 and 2 is not sustainable and

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is accordingly quashed and set aside. The

petition is allowed and Civil Misc.

Application No. 79 of 2020 is ordered to

be restored to file. Rule is made absolute

to the aforesaid extent. No order as to

costs.

(BHARGAV D. KARIA, J) JYOTI V. JANI