KIRLOSKAR PNEUMATIC COMPANY LIMITED vs OIL AND NATURAL GAS CORPORATIN LIMITED
- Court
- Gujarat High Court
C/SCA/4277/2026 CAV JUDGMENT DATED: 08/05/2026
Reserved On : 06/04/2026
Pronounced On : 08/05/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4277 of 2026
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL
and
HONOURABLE MR.JUSTICE D.N.RAY
==========================================================
Approved for Reporting Yes No
✔
==========================================================
KIRLOSKAR PNEUMATIC COMPANY LIMITED
Versus
OIL AND NATURAL GAS CORPORATIN LIMITED
==========================================================
Appearance:
MR. MIHIR THAKORE, SR. ADV. WITH KHYATI PRAVIN JHA WITH HELLY
PARIKH(9450) WITH MR. NIRAG N. PATHAK for the Petitioner(s) No. 1
MS. MANISHA LUVKUMAR, SR. ADV. WITH MR. ROHAN LUVKUMAR
WITH MR. AADITYA DAVE WITH MS. PANCHAM JHALA WITH MR.
AADITYA KARNAVAT for the Respondent(s) No. 1
==========================================================
CORAM: HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA
AGARWAL
and
HONOURABLE MR.JUSTICE D.N.RAY
CAV JUDGMENT
(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL)
Heard Mr. Mihir Thakor, the learned Senior Advocate
assisted by Mr. Nirag N. Pathk for the petitioner and Ms. Manisha
Luvkumar, the learned Senior Advocate assisted by the learned
advocate Mr. Rohan Luvkumar for the respondent.
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2. The short question which arose for our consideration in the
present petition is as to the seat of arbitration, as agreed between
the parties in the initial agreement, and the change of seat, if any,
agreed between them during the course of arbitration proceedings
conferring exclusive jurisdiction to the Court at the place of
arbitration. In other words, the question is as to whether the seat
of arbitration shall remain static at ‘Ankleshwar’ as agreed in the
written agreement, or would shift to ‘Ahmedabad’ as alleged to
have been agreed between the parties during the course of
arbitration proceedings, held at Ahmedabad.
3. The undisputed facts of the case are :-
(i) A written contract dated 17.10.2018 for “Design, Engineering,
Supply, Installation and Commissioning of 3 Nos. x 2.5 LSCMD
GAS COMPRESSION OF FACILITIES AT CTF-ANKLESHWAR ON
LSTK BASIS” was executed between the parties namely the Oil and
Natural Gas Company (the respondent herein) having its registered
office at New Delhi and one of its work center at Ankleshwar
Asset, Ankleshwar, District Bharuch, Gujarat and M/s. Kirloskar
Pneumatic Co. Ltd., the petitioner.
(ii) At the outset, the terms and conditions of the contract signed
by the parties relevant for our purposes in Clause No. 1.2.6, 1.3.1
and 1.3.2(11) of the General conditions of the contract contained in
Annxure-A, are set out as under :-
“1.2.6 Amendment to the Contract
No amendment or other variation of the Contract shall be effective
unless it is in writing, is dated, expressly refers to the Contract and
is signed by a duly authorised representative of each party hereto.
1.3.1 Applicable Laws
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All questions, disputes or differences arising under, out of or in
connection with this Contract shall be settled in accordance with
laws of India (both procedural and substantive) from time to time
in force and to the exclusive jurisdiction of the Courts at the place
where the CONTRACT is signed in India, subject to the provisions
of clause 1.3.2.
1.3.2 Arbitration
1.3.2(11) The seat of the arbitration shall be the place from where
the LOA/NOA has been issued. For the sake of convenience,
parties may agree to hold the proceedings at any other venue. The
arbitration shall be conducted in the English language. Insofar as
practicable, the Parties shall continue to implement the terms of
the Contract notwithstanding the initiation of Arbitration
Proceedings.”
(iii) On a dispute arose between the parties in the year 2021
emanating from the contract, a three member Arbitral Tribunal was
constituted on 01.10.2021 with the consensus of the parties. On a
notice dated 01.10.2021 issued by the learned Presiding Arbitrator,
the preliminary meeting was held on 07.10.2021. The Arbitral
Tribunal rendered its award on 13.03.2023, and a clarificatory
order dated 15.04.2023 was passed on the application under
Section 33(1) of the Arbitration and Conciliation Act, 1996 (in short
as ‘the Act, 1996).
(vi) The respondent ONGC filed application under Section 34 of the
Act, 1996 before the Court at Ankleshwar, Gujarat challenging the
award as well as the clarificatory order.
(vii) On the first returnable date, the petitioner herein raised a
preliminary objection as to the jurisdiction of the Commercial Court
at Ankleshwar based on the minutes of the preliminary meeting
dated 07.10.2021 recorded by the learned Presiding Arbitrator,
asserting that the learned Presiding Arbitrator had recorded
therein the mutual agreement of the parties to the arbitration to
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have the seat of arbitration at Ahmedabad,
(viii) It is the case of the petitioner that in reply to the said
objection, the respondent ONGC had admitted that the parties have
consented to have a jurisdictional seat of the arbitration at
Ahmedabad.
(ix) The respondent ONGC, thus, has admitted that the parties
consented to have the jurisdictional seat of the arbitration at
Ahmedabad in light of the minutes of the preliminary meeting
dated 07.10.2021.
(x) On 28.08.2025, the respondent ONGC filed application under
Section 36(2) of the Act, 1996 before the Additional District Judge,
Bharuch at Ankleshwar seeking stay of the operation of the Award.
(xi) On 14.11.2025, the respondent ONGC filed application below
Exh,. 16 to convert the proceedings of Regular CMA No. 38 of 2023
(Section 34 Application) under the Commercial CMA and for
transfer of the said application to the Commercial Court at
Ankleshwar. Under the order dated 06.01.2026 passed by the
Additional District Judge, Bharuch at Ankleshwar Section 34
application was transferred to the Commercial Court of
Commercial Division at Ankleshwar.
(xii) The respondent ONGC filed Special Civil Application No. 209
of 2026 before this Court inter alia seeking directions to decide the
Section 34 application as well as the stay application within time
bound period. However, without serving the notice upon the
petitioner herein, the said petition has been decided by an order
dated 09.01.2026 directing the Commercial Court at Ankleshwar
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to decide the Section 34 application as well as the stay application
expeditiously, preferably within a period of six weeks from the date
of receipt of the copy of the said order.
(xiii) The petitioner preferred a Misc. Civil Application No.1 of
2026, before this Court seeking clarification of the order dated
09.01.2026 which was also decided vide order dated 23.02.2026
clarifying that :-
“8. In this scenario, we clarify the order dated 09.01.2026, as
under:-
i. The Court concerned shall decide the pending application under
Section 36 (2) as well as application under Section 34 of the
Arbitration and Conciliation Act, 1996, both by dealing with the
preliminary objections as to the territorial jurisdiction raised by
the respondent/applicant herein as well as on merits, in case, issue
raising preliminary objection goes against the respondent objector.
ii. As to the pendency of the execution application before the other
Court, we find it fit and proper to say that any directions contained
in the order dated 09.01.2026 or in the present order will have no
bearing in the said proceedings.”
(xiv) Thereafter, preliminary objections filed by the petitioner as to
the jurisdiction of the Commercial Court at Ankleshwar were heard
on various dates and on 18.03.2026, the Commercial Court passed
the impugned order rejecting the objections of the petitioners
holding that :-
“15. Considering the applicability of the judgment of videocon
Industries Limited (supra), as discussed in Inox Renewables Ltd.
(supra), the distinguishing facts as argued by opponents does not
transpire to be helpful to the opponent, as the crux transpire that,
when written agreement as to Seat is there, which provides that
terms of agreement can be amended only by written agreement,
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then seat can be changed by written agreement only. In present
case there is written agreement, as per which seat is at
Ankleshwar, and the said agreement provides that amendment or
other variation of the Contract shall be effective only when it is in
writing, is dated, expressly refers to the Contract and is signed by
a duly authorised representative of each party hereto.
15.1 The law laid down by the above judgments do not provide for
amendment in seat of arbitration by consent/waiver of agreement.
Hence, judgments relied on by the opponent in this regard are not
helpful to the opponent.
16. Opponent have relied on the averments made by the applicant
in reply, however on reading the entire reply, the alleged
admission is not clear, and legal position cannot change on the
admission of either side, and hence the said arguments of the
opponent are not accepted.
17. In view of the legal position laid down by the judgment of the
Videocon (supra), and considering the clause 1.2.6, 1.3.1, & 1.3.2
(11) of the agreement between the parties, and in absence of any
amendment in writing to the initial agreement between the parties,
the mention in the minutes of meetings and the arbitral award, as
to seat of arbitration being Ahmedabad, does not changes the seat
of arbitration and the seat of arbitration in view of the initial
agreement between the parties, remains at Ankleshwar, and so this
court has jurisdiction to entertain the application u/s.34 of the
arbitration & conciliation act. Hence, the following order.
ORDER
-Application exh.9 is hereby rejected.
-No order as to costs.”
(xv) The petitioner thereafter preferred application seeking for stay
of the operation and implementation of the said order dated
18.03.2026 for a period of two weeks, alongwith the request that
the proceedings in Section 34 application be not proceeded with
during the said period so that the petitioner can avail appropriate
remedies under law to challenge the impugned order dated
18.03.2026. However, the said application has also been rejected
vide order of the same date, i.e. 18.03.2026 referring to the
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directions of this Court in the judgment and order dated
09.01.2026 passed in Special Civil Application No. 209 of 2026.
4. Both the impugned orders dated 18.03.2026 are subject
matter of challenge in the present petition seeking invocation of
the extraordinary supervisory jurisdiction of the Court under
Article 227 of the Constitution of India, wherein the above noted
issues have arisen for examination.
5. At the outset, Ms. Manisha Luvkumar, the learned senior
advocate assisted by the learned advocate Mr. Rohan Luvkumar,
for the respondent No.1 would raise a preliminary objection as to
the maintainability of the present petition referring to Section 8 of
the Commercial Courts Act, 2015, which reads as under :-
“8. Bar against revision application or petition against an
interlocutory order – Notwithstanding anything contained in any
other law for the time being in force, no civil revision application or
petition shall be entertained against any interlocutory order of a
Commercial Court, including an order on the issue of jurisdiction,
and any such challenge, subject to the provisions of section 13,
shall be raised only in an appeal against the decree of the
Commercial Court.”
6. The submission is that the present petition may not be
entertained being directed against the interlocutory order of the
Commercial Court on the issue of jurisdiction, inasmuch as, such
challenge can very well be raised in an appeal against the order
under Section 34 of the Act, 1996, if it finally goes against the
petitioner herein.
7. At the first blush, we were convinced by the submissions of
the learned senior advocate appearing for the respondent No.1, but
on an elaborate hearing on the issue, we find that under Article 227
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of the Constitution, the power of superintendence of the
Constitutional Court, which has been conferred with an object to
keep inferior Courts and Tribunals within the limits of their
authority, considering the nature of challenge herein, cannot be
circumscribed by statutory limits of Section 8 of the Commercial
Courts Act. We are conscious that though no hurdle can be put
against the exercise of constitutional powers of the High Court,
however, if parties have available statutory remedies, the High
Court should direct them to avail such remedies before they resort
to the constitutional remedy and the petition under Article 227 of
the Constitution may not be entertained. However, this is a self
imposed rule of discipline devised by the Court that the supervisory
jurisdiction may be refused to be exercised when an alternative
efficacious remedy by way of appeal or revision is available to the
persons aggrieved. (Reference : Surya Dev Rai v. Ram Chander
1
Rai ) .
8. Having given thoughtful consideration to the facts and
circumstances of the present case and the nature of challenge,
noticing that the issue of jurisdiction of the Commercial Court at
Ankleshwar has been raised in light of exclusive jurisdiction clause
and the arbitration clause of the written contract, whereunder the
award has been rendered by the learned Arbitrator; and that the
issue as to the seat of arbitration conferring exclusive jurisdiction
to the Principal Civil Court of original jurisdiction in a District
within the meaning of Section 2(1)(e)(i) read with Section 20 of the
Act, 1996 has arisen; which is fundamental to sustaining the
challenge to the arbitral award under Section 34 of the Act, 1996,
we do not find it just and proper to reject the present petition
under Article 227 of the Constitution leaving it open for the
1 [(2003) 6 SCC 675]
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petitioner to raise the issue in an appeal under Section 37, where
the challenge to the award can be sustained.
9. In our considered opinion, being the supervisory
jurisdictional High Court, looking to the nature of controversy at
hand, which may arise at the stage of Section 37 appeal, we find it
fit and proper to adjudicate the issue at this stage for two reasons,
firstly, (i) that the issue is purely legal in nature and secondly, (ii)
to render a decision as a guiding principles to the District Courts
under the supervisory jurisdiction of the High Court.
10. Besides that, the object of the Commercial Courts Act, 2015
enacted for the Constitution of the Commercial Courts, Commercial
Appellate Courts and and Commercial Appellate Division in the
High Court for adjudicating commercial disputes of specified value
and the matters connected therewith, is to provide for speedy
disposal of high value commercial disputes to accelerate economic
growth, improve the international image of the Indian Justice
delivery system and the faith of the investor world in the legal
culture of the Nation. The Commercial Courts Act, 2015 not only
provides for constitution of the Commercial Courts as a special
designated Court to adjudicate commercial disputes of specified
value, but also restricts the remedies of appeal and revision in
various provisions contained in Section 8, 11, 12 and Section 13(2),
by providing specific provisions by amendment of the Code of Civil
Procedure, 1908 in the manner specified in the Schedule (as per
Section 16 of the Act, 2015, for early resolution of the commercial
dispute.
11. By virtue of Section 10 of the Commercial Courts Act, 2015
the jurisdiction in respect of arbitration matters other than an
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international commercial arbitration where the subject matter of
arbitration is a commercial dispute of specified value, all
applications or appeals arising out of such arbitration under the
provisions of the Arbitration and Conciliation Act, 1996, shall be
adjudicated by the Commercial Court exercising territorial
jurisdiction over such arbitration where such commercial court has
been constituted. By virtue of Section 10(3) of the Commercial
Courts Act, 2015, the word ‘Court’ as defined in Section 2(1)(e)(i)
of the Arbitration and Conciliation Act, 1996 shall be the
designated Commercial Court exercising territorial jurisdiction
over such arbitration, where such Commercial Court has been
constituted, to adjudicate commercial dispute of specified value.
12. Thus, the territorial jurisdiction of the designated
Commercial Court dealing with arbitration matters, where the
subject matter of arbitration is a commercial dispute of specified
value, is governed by Section 10(3) of the Commercial Courts Act,
2015.
13. However, the fact remains that, in the instant case, we are
not concerned with the territorial jurisdiction of the Commercial
Court in terms of Section 10(3) of the Commercial Courts Act, 2015
at Ankleshwar, inasmuch as, Section 34 application herein has
been filed under the Act, 1996 before a designated Commercial
Court having territorial jurisdiction over the subject matter of
arbitration falling in its territory, and also where the cause of
action is located.
14. The question before us is about the fixation of the seat of
arbitration with the consent of the parties to the agreement within
the meaning of Section 20 of the Arbitration and Conciliation Act,
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1996, which would confer exclusive jurisdiction to the Court
defined in Section 2(1)(e)(i) of the Act, 1996. In our considered
opinion, the jurisdictional issue raised before us in the present
petition is distinct from “the issue of jurisdiction” as conceived
under Section 8 of the Commercial Courts Act, 2015.
15. Suffice it to say that by virtue of Section 10(3) of the
Commercial Courts Act, 2015, though the jurisdiction to deal with
the subject matter of arbitration, where it is a Commercial dispute
of specified value though has been conferred upon the Commercial
Court designated under the Act, 2015 within its territory, but in the
proceedings under Section 34, any issue raised about seat of
arbitration confering exclusive jurisdiction, would be guided and
circumscribed by the Act, 1996, which is a complete code in itself.
The question of fixation of seat so as to confer exclusive jurisdiction
to the Court dealing with the challenge to the arbitral award is
central to entertaining the application under Section 34 of the Act,
1996, if raised before such Court.
16. In view of the above, the preliminary objection as to the
maintainability of the present petition under Article 227 of the
Constitution of India arising out of the proceedings under the
Arbitration and Conciliation Act, 1996, in light of the provisions of
Section 8 of the Commercial Courts Act, 2015 based on the
decision of the Delhi High Court in Black Diamond Trackparts
2
Pvt. Ltd. And Others v/s. Black Diamond Motors Pvt. Ltd. ,
are hereby rejected.
17. Proceeding to answer the question posed by us hereinabove,
we may record the submissions of the learned senior counsels
2 (2021 SCC OnLine Delhi 3946)
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appearing for the rival parties.
18. Mr. Mihir Thakore, the learned senior counsel for the
petitioner, at the outset, invited attention of the Court to page No.
‘104’ of the minutes of the preliminary arbitral meeting held on
07.10.2021 by video conferencing. Much emphasis has been laid to
the contents of paragraph No.’5’ of the said minutes which reads as
under :-
“With the consent of learned Counsel/Advocates for the parties, it
was decided that the seat of Arbitration shall be at Ahmedabad and
that arbitral proceedings shall be conducted in English and in
accordance with the provisions of the Act or any statutory
modification thereof.”
19. Based on the statement made therein, it was vehemently
argued that after constitution of the tribunal on 01.10.2021, in the
preliminary arbitral meeting dated 07.10.2021, after notice was
issued to the parties, the learned advocates for the parties had
appeared before the learned Presiding Arbitrator for settling the
issues. While it was agreed by the learned advocates and
representatives, at the outset, that they have no objection to the
constitution and composition of the arbitral tribunal, it was also
agreed that the seat of arbitration shall be at ‘Ahmedabad’ and the
arbitration proceedings shall be conducted at the said place.
20. The contention is that with this agreement of the parties
recorded in the preliminary arbitral meeting held on 07.10.2021
the seat of arbitration has been fixed within the meaning of Section
20(1) of the Act, 1996 at Ahmedabad. The result is that only the
Principal Civil Court having original jurisdiction in the Ahmedabad
district would be competent to entertain the challenge to the award
under Section 34 of the Act, 1996. It was argued that the
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application under Section 34 filed by the ONGC at Ankleshwar is a
mischievous attempt to file proceedings before a wrong court when
the seat of arbitration was chosen to be at Ahmedabad with the
consent of the parties recorded at the preliminary arbitral meeting
held on 07.10.2021. The Court at Ankleshwar would have no
jurisdiction to try and entertain the application under Section 34 or
any other application under the Act, 1996 at all.
21. It was argued that not only the parties agreed to the seat of
arbitration being at Ahmedabad, but all other events during the
course of proceedings of arbitration were held at Ahmedabad and
on conclusion, the award was signed and delivered at Ahmedabad.
Even the order under Section 33 of the Act, 1996 was delivered and
signed at Ahmedabad.
22. It was argued that the respondent ONGC also acted in
consonance of the preliminary arbitral meeting and participated
throughout the same without raising any dispute whatsoever
regarding the seat being at Ahmedabad. The minutes of the
preliminary arbitral meeting confirming the seat of arbitration
being at Ahmedabad has neither been challenged nor it was ever
submitted that such minutes cannot be relied upon. In view of the
express consent of both the parties as also the determination of the
seat of arbitration by the learned Arbitrator, the parties to the
arbitration have in fact chosen the Courts at the seat of Arbitration
at Ahmedabad, to be the proper Court for the purpose of challenge
to the award.
23. It was argued that the seat of arbitration is akin to exclusive
jurisdiction clause and the choice of seat for arbitration would
necessarily amount the parties chosing the forum for remedies in
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the nature of attack on the award. In absence of any challenge to
the fixation of seat in the preliminary meeting with the consent of
the parties, the respondent has knowingly waived the requirement
of clause 1.3.2(11) of the agreement recording the seat of
arbitration being at the place from where the LOA/NOA has been
issued.
24. Besides that, even in their reply to the application Exh.9 filed
by the petitioner raising objection as to the jurisdiction of the
Commercial Court at Ankleshwar, it was admitted by the
respondent that the seat of arbitration as decided in the arbitral
meeting dated 07.10.2021 was fixed by the parties for smooth
conducting of the arbitration, inasmuch as, it helps the parties to
determine the Court at which application for appointment of
Arbitrator is to be made or application for interim relief is to be
submitted or any other application during the arbitration
proceedings to be submitted at the Court.
25. Learned senior counsel for the petitioner, thus, would
vehemently argue that this statement of the respondent ONGC in
their reply to the application Exh.9 raising objection to the Court at
Ankleshwar, clinches the issue and is sufficient to hold the order of
the Commercial Court being illegal. Once chosen with open eyes
that fixation of seat during the course of arbitral proceedings,
would determine the jurisdiction of the Court at the place of seat
fixed, the respondent cannot be permitted to take a U-turn to
contend that after the arbitral award has been passed, they are
free to challenge the award at the Court having territorial or
pecuniary jurisdiction as prescribed under the arbitration clause.
The statement of the respondent that since the arbitral clause was
clear regarding the seat of arbitration at Ankleshwar, there stood
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no reason for the parties to shift to it to Ahmedabad having no
nexus to the dispute and also the submissions based on the clause
No. 1.2.6 of the arbitral agreement appreciated by the learned
Commercial Court, are nothing but an after thought.
26. The submission is of a clear admission of the respondent in
their reply to the application Exh. 9, which has been pressed into
service to agitate that the Commercial Court has committed a
grave error of law in ignoring the fact that if the parties are free to
agree at the place of arbitration (seat) under Section 20(1) of the
Act, 1996, they are also free to change the seat at any point of time
before inception of the arbitral proceedings.
27. The submission is that the decision of the parties to fix the
seat of Arbitration at Ahmedabad as recorded in the minutes of the
preliminary meeting dated 07.10.2021 would amount to
modification of clause 1.3.2(11) and change of seat, fixing the place
of arbitration with the consent of the parties at Ahmedabad within
the meaning of Section 20(1) of the Act, 1996. Once fixed, the
respondent cannot resile from its own consent and plead otherwise.
It was, thus, urged that in the peculiar facts and circumstances of
the present case, the order of the Commercial Court of rejection of
Exh. 9 application raising jurisdictional issue to be set aside and
resultantly, the application under Section 34 filed by the
respondent be rejected being outside the jurisdiction of the Court
at Ankleshwar.
28. In support of the above submissions, the learned senior
counsel for the petitioner would refer to the decision of the Apex
Court in Bharat Aluminium Technical Services Inc. V. Kaiser
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3
Aluminum Technical Services Inc. (BALCO) specifically
paragraph Nos. 95, 97, 98 and 99 therein, to emphasis on the party
autonomy. It was argued that in the context of Section 20 of the
Act, 1996 it was held therein that the term “subject-matter of
arbitration” cannot be confused with “subject-matter of suit”. The
term “subject matter” in Section 2(1)(e) is confined to part-I and its
purpose is to notify the Court having supervisory control over the
arbitration proceedings and hence, it refers to the court which
would essentially be a Court of the seat of the arbitration process.
29. It was held therein that the provisions of Section 2(1)(e) has
to be construed keeping in view of Section 20, which give
recognition to party autonomy or else Section 20 would render
negatory.
30. We may note at this juncture, that it was observed therein
that the Legislature has consciously given jurisdiction to two
Courts, i.e. the Court which would have jurisdiction where the
cause of action is located and the Courts where the arbitration
takes place. This was necessary as on many occasions the
agreement may provide for seat of arbitration at a place which
would be neutral to both the parties. Therefore, the Courts where
the arbitration takes place would be required to exercise
supervisory control over the arbitral process.
31. It was further observed that a plain reading of Section 20
leaves no room for doubt that the parties are free to agree to any
“place” or “seat” and in absence of the parties agreement thereto,
Section 20(2) authorises the Tribunal to determine the place/seat of
such arbitration. Section 20(3) is an enabling provision which
3 [(2012) 9 SCC 552]
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permits the Tribunal to meet at any place of convenience for
conducing hearings, consultations, recording of witnesses
statement, expert or parties examination etc.. The fixation of the
most convenient “venue” for smooth conduct of the arbitration
proceedings is, thus, taking care of by Section 20(3). It was
observed that while Section 20(1) and 20(2) fix/determine the
place/seat of the arbitration either with the agreement of the
parties or by the order of the Tribunal, Section 20(3) only talks of
venue or convenient place for conducting arbitration proceedings,
which may be one or more than one.
32. It was, thus, resolved therein that :
“ Party autonomy
95. The learned counsel for the appellants have submitted that
Section 2(1)( e ), Section 20 and Section 28 read with Section 45
and Section 48(1)( e ) make it clear that Part I is not limited only to
arbitrations which take place in India. That these provisions
indicate that the Arbitration Act, 1996 is subject-matter centric and
not exclusively seat-centric . That therefore, “ seat ” is not the
“ centre of gravity ” so far as the Arbitration Act, 1996 is concerned.
We are of the considered opinion that the aforesaid provisions have
to be interpreted by keeping the principle of territoriality at the
forefront. We have earlier observed that Section 2(2) does not
make Part I applicable to arbitrations seated or held outside India.
In view of the expression used in Section 2(2), the maxim
expressum facit cessare tacitum , would not permit by
interpretation to hold that Part I would also apply to arbitrations
held outside the territory of India. The expression “ this Part shall
apply where the place of arbitration is in India ” necessarily
excludes application of Part I to arbitration seated or held outside
India. It appears to us that neither of the provisions relied upon by
the learned counsel for the appellants would make any section of
Part I applicable to arbitration seated outside India. It will be
apposite now to consider each of the aforesaid provisions in turn.
96. Section 2(1)( e ) of the Arbitration Act, 1996 reads as under:
“ 2. Definitions .—(1) In this Part, unless the context otherwise
requires( a )-( d )*
( e ) ‘ Court ’ means the Principal Civil Court of Original Jurisdiction
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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;”
We are of the opinion, the term “ subject-matter of the arbitration ”
cannot be confused with “ subject-matter of the suit ”. The term
“ subject-matter ” in Section 2(1)( e ) is confined to Part I. It has a
reference and connection with the process of dispute resolution. Its
purpose is to identify the courts having supervisory control over
the arbitration proceedings. Hence, it refers to a court which
would essentially be a court of the seat of the arbitration process.
In our opinion, the provision in Section 2(1)( e ) has to be construed
keeping in view the provisions in Section 20 which give recognition
to party autonomy. Accepting the narrow construction as projected
by the learned counsel for the appellants would, in fact, render
Section 20 nugatory. In our view, the legislature has intentionally
given jurisdiction to two courts i.e. the court which would have
jurisdiction where the cause of action is located and the courts
where the arbitration takes place. This was necessary as on many
occasions the agreement may provide for a seat of arbitration at a
place which would be neutral to both the parties. Therefore, the
courts where the arbitration takes place would be required to
exercise supervisory control over the arbitral process. For
example, if the arbitration is held in Delhi, where neither of the
parties are from Delhi, (Delhi having been chosen as a neutral
place as between a party from Mumbai and the other from Kolkata)
and the tribunal sitting in Delhi passes an interim order under
Section 17 of the Arbitration Act, 1996, the appeal against such an
interim order under Section 37 must lie to the courts of Delhi being
the courts having supervisory jurisdiction over the arbitration
proceedings and the tribunal. This would be irrespective of the fact
that the obligations to be performed under the contract were to be
performed either at Mumbai or at Kolkata, and only arbitration is
to take place in Delhi. In such circumstances, both the courts
would have jurisdiction i.e. the court within whose jurisdiction the
subject-matter of the suit is situated and the courts within the
jurisdiction of which the dispute resolution i.e. arbitration is
located.
97. The definition of Section 2(1)( e ) includes “ subject-matter of the
arbitration ” to give jurisdiction to the courts where the arbitration
takes place, which otherwise would not exist. On the other hand,
Section 47 which is in Part II of the Arbitration Act, 1996 dealing
with enforcement of certain foreign awards has defined the term
“ court ” as a court having jurisdiction over the subject-matter of the
award . This has a clear reference to a court within whose
jurisdiction the asset/person is located, against which/whom the
enforcement of the international arbitral award is sought. The
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provisions contained in Section 2(1)( e ) being purely jurisdictional
in nature can have no relevance to the question whether Part I
applies to arbitrations which take place outside India.
98 . We now come to Section 20, which is as under:
“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 otherwise agreed by the parties, meet at any
place it considers appropriate for consultation among its members,
for hearing witnesses, experts or the parties, or for inspection of
documents, goods or other property.”
A plain reading of Section 20 leaves no room for doubt that where
the place of arbitration is in India, the parties are free to agree to
any “place” or “seat” within India, be it Delhi, Mumbai, etc. In the
absence of the parties' agreement thereto, Section 20(2) authorises
the tribunal to determine the place/seat of such arbitration. Section
20(3) enables the tribunal to meet at any place for conducting
hearings at a place of convenience in matters such as consultations
among its members for hearing witnesses, experts or the parties.
99. The fixation of the most convenient “venue” is taken care of by
Section 20(3). Section 20, has to be read in the context of Section
2(2), which places a threshold limitation on the applicability of Part
I, where the place of arbitration is in India. Therefore, Section 20
would also not support the submission of the extra-territorial
applicability of Part I, as canvassed by the learned counsel for the
appellants, so far as purely domestic arbitration is concerned.
117. It would, therefore, follow that if the arbitration agreement is
found or held to provide for a seat/place of arbitration outside
India, then the provision that the Arbitration Act, 1996 would
govern the arbitration proceedings, would not make Part I of the
Arbitration Act, 1996 applicable or enable the Indian courts to
exercise supervisory jurisdiction over the arbitration or the award.
It would only mean that the parties have contractually imported
from the Arbitration Act, 1996, those provisions which are
concerned with the internal conduct of their arbitration and which
are not inconsistent with the mandatory provisions of the English
procedural law/curial law . This necessarily follows from the fact
that Part I applies only to arbitrations having their seat/place in
India.”
33. Emphasizing on party autonomy, reliance is further placed on
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the decision of the Apex Court in BGS SGS SOMA JV v/s. NHPC
4
Ltd. . The relevant paragraph Nos. 44, 45, 46, 47, 48, 49, 50, 53,
55, 56, 57, 60, 61, 63 and 64 were placed before us to substantiate
the above submissions, which are reproduced hereinunder :-
“44. If paras 75, 76, 96, 110, 116, 123 and 194 of B ALCO [ B ALCO v.
Kaiser Aluminium Technical Services Inc. , (2012) 9 SCC 552 :
(2012) 4 SCC (Civ) 810] are to be read together, what becomes
clear is that Section 2(1)( e ) has to be construed keeping in view
Section 20 of the Arbitration Act, 1996, which gives recognition to
party autonomy — the Arbitration Act, 1996 having accepted the
territoriality principle in Section 2(2), following the U NCITRAL
Model Law. The narrow construction of Section 2(1)( e ) was
expressly rejected by the five-Judge Bench in B ALCO [ B ALCO v.
Kaiser Aluminium Technical Services Inc. , (2012) 9 SCC 552 :
(2012) 4 SCC (Civ) 810] . This being so, what has then to be seen is
what is the effect Section 20 would have on Section 2(1)( e ) of the
Arbitration Act, 1996.
45. It was not until this Court's judgment in Indus Mobile
Distribution (P) Ltd. [ Indus Mobile Distribution (P) Ltd. v. Datawind
Innovations (P) Ltd. , (2017) 7 SCC 678 : (2017) 3 SCC (Civ) 760]
that the provisions of Section 20 were properly analysed in the
light of the 246th Report of the Law Commission of India titled,
“Amendments to the Arbitration and Conciliation Act, 1996”
(August, 2014) (hereinafter referred to as “the Law Commission
Report, 2014”), under which Sections 20(1) and (2) would refer to
the “seat” of the arbitration, and Section 20(3) would refer only to
the “venue” of the arbitration. Given the fact that when parties,
either by agreement or, in default of there being an agreement,
where the Arbitral Tribunal determines a particular place as the
seat of the arbitration under Section 31(4) of the Arbitration Act,
1996, it becomes clear that the parties having chosen the seat, or
the Arbitral Tribunal having determined the seat, have also chosen
the courts at the seat for the purpose of interim orders and
challenges to the award.
46. This Court in Indus Mobile Distribution (P) Ltd. [ Indus Mobile
Distribution (P) Ltd. v. Datawind Innovations (P) Ltd. , (2017) 7 SCC
678 : (2017) 3 SCC (Civ) 760] , after referring to Sections 2(1)( e )
and 20 of the Arbitration Act, 1996, and various judgments
distinguishing between the “seat” of an arbitral proceeding and
“venue” of such proceeding, referred to the Law Commission
Report, 2014 and the recommendations made therein as follows :
(SCC pp. 692-93, paras 17-20)
“ 17 . In amendments to be made to the Act, the Law Commission
4 [(2020) 4 SCC 234]
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recommended the following:
‘ Amendment of Section 20
12. In Section 20, delete the word “place” and add the words “seat
and venue” before the words “of arbitration”.
( i ) In sub-section (1), after the words “agree on the” delete the
word “place” and add words “seat and venue”.
( ii ) In sub-section (3), after the words “meet at any” delete the
word “place” and add word “venue”. [ Note .—The departure from
the existing phrase “place” of arbitration is proposed to make the
wording of the Act consistent with the international usage of the
concept of a “seat” of arbitration, to denote the legal home of the
arbitration. The amendment further legislatively distinguishes
between the “[legal] seat” from a “[mere] venue” of arbitration.]
*
Amendment of Section 31
17. In Section 31
( i ) In sub-section (4), after the words “its date and the” delete the
word “place” and add the word “seat”.’
18 . The amended Act, does not, however, contain the aforesaid
amendments, presumably because the B ALCO [ B ALCO v. Kaiser
Aluminium Technical Services Inc. , (2012) 9 SCC 552 : (2012) 4
SCC (Civ) 810] judgment in no uncertain terms has referred to
“place” as “juridical seat” for the purpose of Section 2(2) of the
Act. It further made it clear that Sections 20(1) and 20(2) where
the word “place” is used, refers to “juridical seat”, whereas in
Section 20(3), the word “place” is equivalent to “venue”. This being
the settled law, it was found unnecessary to expressly incorporate
what the Constitution Bench of the Supreme Court has already
done by way of construction of the Act.
19 . A conspectus of all the aforesaid provisions shows that the
moment the seat is designated, it is akin to an exclusive
jurisdiction clause. On the facts of the present case, it is clear that
the seat of arbitration is Mumbai and Clause 19 further makes it
clear that jurisdiction exclusively vests in the Mumbai courts.
Under the law of arbitration, unlike the Code of Civil Procedure
which applies to suits filed in courts, a reference to “seat” is a
concept by which a neutral venue can be chosen by the parties to
an arbitration clause. The neutral venue may not in the classical
sense have jurisdiction — that is, no part of the cause of action may
have arisen at the neutral venue and neither would any of the
provisions of Sections 16 to 21 of the Code of Civil Procedure 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.
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20 . It is well settled that where more than one court has
jurisdiction, it is open for the parties to exclude all other courts.
For an exhaustive analysis of the case law, see Swastik Gases (P)
Ltd. v. Indian Oil Corpn. Ltd. [ Swastik Gases (P) Ltd. v. Indian Oil
Corpn. Ltd. , (2013) 9 SCC 32 : (2013) 4 SCC (Civ) 157] This was
followed in a recent judgment in B.E. Simoese Von Staraburg
Niedenthal v. Chhattisgarh Investment Ltd. [ B.E. Simoese Von
Staraburg Niedenthal v. Chhattisgarh Investment Ltd. , (2015) 12
SCC 225 : (2016) 1 SCC (Civ) 427] . Having regard to the above, it
is clear that Mumbai courts alone have jurisdiction to the exclusion
of all other courts in the country, as the juridical seat of arbitration
is at Mumbai. This being the case, the impugned judgment
[ Datawind Innovations (P) Ltd. v. Indus Mobile Distribution (P)
Ltd. , 2016 SCC OnLine Del 3744 : (2016) 158 DRJ 391] is set aside.
The injunction confirmed by the impugned judgment will continue
for a period of four weeks from the date of pronouncement of this
judgment, so that the respondents may take necessary steps under
Section 9 in the Mumbai Court. Appeals are disposed of
accordingly.”
This judgment has recently been followed in Brahmani River
Pellets Ltd. v. Kamachi Industries Ltd. [ Brahmani River Pellets Ltd.
v. Kamachi Industries Ltd. , (2020) 5 SCC 462 : 2019 SCC OnLine
SC 929 at para 15]
47. In fact, the Law Commission Report, 2014 also recommended
an amendment in the definition of “court” under Section 2(1)( e ) of
the Arbitration Act, 1996, so that in the case of international
commercial arbitrations held in India, the High Court alone should
be the “court” for the purposes of the Arbitration Act, 1996, even
where such a High Court does not exercise ordinary original
jurisdiction. The recommendation made by the Law Commission,
which was followed, leading to an amendment of the Arbitration
Act, 1996, is as follows:
“26. It is recommended that in case of international commercial
arbitrations, where there is a significant foreign element to the
transaction and at least one of the parties is foreign, the relevant
“court” which is competent to entertain proceedings arising out of
the arbitration agreement, should be the High Court, even where
such a High Court does not exercise ordinary civil jurisdiction. It is
expected that this would ensure that international commercial
arbitrations, involving foreign parties, will be heard expeditiously
and by commercial oriented Judges at the High Court level. …”
*
Amendment of Section 2
1. In Section 2 of the Arbitration and Conciliation Act, 1996
(hereinafter referred to as the principal Act)—
*
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( ii ) In sub-section (1), clause ( e ), after the words “court means”—
add sub-section ( i ) beginning with the words “in the case of an
arbitration other than international commercial arbitration”, before
the words “the Principal civil court of Original Jurisdiction”
In sub-section (1), clause ( e ) replace sub-clause ( ii ) by following:
‘1. ( e )( ii ) in the case of an international commercial arbitration, the
High Court exercising jurisdiction over 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 court of a grade inferior to such High
Court, or in cases involving grant of interim measures in respect of
arbitrations outside India, the High Court exercising jurisdiction
over the court having jurisdiction to grant such measures as per
the laws of India, and includes the High Court in exercise of its
ordinary original civil jurisdiction.’
[ Note .—This is to solve the problem of conflict of jurisdiction that
would arise in cases where interim measures are sought in India in
cases of arbitrations seated outside India. This also ensures that in
international commercial arbitrations, jurisdiction is exercised by
the High Court, even if such High Court does not exercise ordinary
original civil jurisdiction.]”
48. The aforesaid amendment carried out in the definition of
“Court” is also a step showing the right direction, namely, that in
international commercial arbitrations held in India, the High Court
alone is to exercise jurisdiction over such proceedings, even where
no part of the cause of action may have arisen within the
jurisdiction of such High Court, such High Court not having
ordinary original jurisdiction. In such cases, the “place” where the
award is delivered alone is looked at, and the High Court given
jurisdiction to supervise the arbitration proceedings, on the footing
of its jurisdiction to hear appeals from decrees of courts
subordinate to it, which is only on the basis of territorial
jurisdiction which in turn relates to the “place” where the award is
made. In the light of this important change in the law, Section 2(1)
( e )( i ) of the Arbitration Act, 1996 must also be construed in the
manner indicated by this judgment.
49. Take the consequence of the opposite conclusion, in the light of
the facts of a given example, as follows. New Delhi is specifically
designated to be the seat of the arbitration in the arbitration clause
between the parties. Part of the cause of action, however, arises in
several places, including where the contract is partially to be
performed, let us say, in a remote part of Uttarakhand. If
concurrent jurisdiction were to be the order of the day, despite the
seat having been located and specifically chosen by the parties,
ALCO ALCO
party autonomy would suffer, which B [ B v. Kaiser
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Aluminium Technical Services Inc. , (2012) 9 SCC 552 : (2012) 4
SCC (Civ) 810] specifically states cannot be the case. Thus, if an
application is made to a District Court in a remote corner of the
Uttarakhand hills, which then becomes the court for the purposes
of Section 42 of the Arbitration Act, 1996 where even Section 34
applications have then to be made, the result would be contrary to
the stated intention of the parties — as even though the parties
have contemplated that a neutral place be chosen as the seat so
that the courts of that place alone would have jurisdiction, yet, any
one of five other courts in which a part of the cause of action
arises, including courts in remote corners of the country, would
also be clothed with jurisdiction. This obviously cannot be the case.
If, therefore, the conflicting portion of the judgment of B ALCO
ALCO
[ B v. Kaiser Aluminium Technical Services Inc. , (2012) 9 SCC
552 : (2012) 4 SCC (Civ) 810] in para 96 is kept aside for a
moment, the very fact that parties have chosen a place to be the
seat would necessarily carry with it the decision of both parties
that the courts at the seat would exclusively have jurisdiction over
the entire arbitral process.
50. In fact, subsequent Division Benches of this Court have
understood the law to be that once the seat of arbitration is
chosen, it amounts to an exclusive jurisdiction clause, insofar as
the courts at that seat are concerned. In Enercon (India) Ltd. v.
Enercon GmbH [ Enercon (India) Ltd. v. Enercon GmbH , (2014) 5
SCC 1 : (2014) 3 SCC (Civ) 59] , this Court approved the dictum in
Shashoua [ Shashoua v. Sharma , 2009 EWHC 957 (Comm) : (2009)
2 Lloyd's Law Rep 376] as follows : ( Enercon case [ Enercon (India)
Ltd. v. Enercon GmbH , (2014) 5 SCC 1 : (2014) 3 SCC (Civ) 59] ,
SCC p. 55, para 126)
“ 126 . Examining the fact situation in the case, the Court in
Shashoua case [ Shashoua v. Sharma , 2009 EWHC 957 (Comm) :
(2009) 2 Lloyd's Law Rep 376] observed as follows:
‘The basis for the court's grant of an anti-suit injunction of the kind
sought depended upon the seat of the arbitration. An agreement as
to the seat of an arbitration brought in the law of that country as
the curial law and was analogous to an exclusive jurisdiction
clause . Not only was there agreement to the curial law of the seat ,
but also to the courts of the seat having supervisory jurisdiction
over the arbitration, so that, by agreeing to the seat , the parties
agreed that any challenge to an interim or final award was to be
made only in the courts of the place designated as the seat of the
arbitration .
Although, “ venue ” was not synonymous with “ seat ”, in an
arbitration clause which provided for arbitration to be conducted in
accordance with the Rules of the ICC in Paris (a supranational
body of rules), a provision that “the venue of arbitration shall be
London, United Kingdom” did amount to the designation of a
juridical seat.…’
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In para 54, it is further observed as follows:
‘There was a little debate about the possibility of the issues
relating to the alleged submission by the claimants to the
jurisdiction of the High Court of Delhi being heard by that Court,
because it was best fitted to determine such issues under the
Indian law. Whilst I found this idea attractive initially, we are
persuaded that it would be wrong in principle to allow this and that
it would create undue practical problems in any event. On the basis
of what I have already decided, England is the seat of the
arbitration and since this carries with it something akin to an
exclusive jurisdiction clause, as a matter of principle the foreign
court should not decide matters which are for this Court to decide
in the context of an anti-suit injunction .’”
(emphasis in original)
53. In Indus Mobile Distribution (P) Ltd. [ Indus Mobile Distribution
(P) Ltd. v. Datawind Innovations (P) Ltd. , (2017) 7 SCC 678 :
(2017) 3 SCC (Civ) 760] , after clearing the air on the meaning of
Section 20 of the Arbitration Act, 1996, the Court in para 19 (which
has already been set out hereinabove) made it clear that the
moment a seat is designated by agreement between the parties, it
is akin to an exclusive jurisdiction clause, which would then vest
the courts at the “seat” with exclusive jurisdiction for purposes of
regulating arbitral proceedings arising out of the agreement
between the parties.
55. Having so stated, the Division Bench then went on to give a
restricted meaning to Indus Mobile Distribution (P) Ltd. [ Indus
Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd. ,
(2017) 7 SCC 678 : (2017) 3 SCC (Civ) 760] in para 56 as follows :
( Antrix Corpn. Ltd. case [ Antrix Corpn. Ltd. v. Devas Multimedia
(P) Ltd. , 2018 SCC OnLine Del 9338] , SCC OnLine Del)
“ 56 . In Datawind [ Datawind Innovations (P) Ltd. v. Indus Mobile
Distribution (P) Ltd. , 2016 SCC OnLine Del 3744 : (2016) 158 DRJ
391] , as the facts and the question framed by the Court in the
second paragraph of its decision suggest, the Court was faced with
a situation where the parties had designated both the seat and
specified an exclusive forum selection clause. Therefore, its
findings have to be interpreted in that light. In fact, were this
Court to find otherwise, and interpret Datawind [ Datawind
Innovations (P) Ltd. v. Indus Mobile Distribution (P) Ltd. , 2016 SCC
OnLine Del 3744 : (2016) 158 DRJ 391] as holding that the
designation of seat alone would amount to an exclusive forum
selection clause in domestic arbitrations, then this would run
ALCO ALCO
contrary to the five-Judge decision in B [ B v. Kaiser
Aluminium Technical Services Inc. , (2012) 9 SCC 552 : (2012) 4
SCC (Civ) 810] , which as noticed above, gave jurisdiction under
Section 2(1)( e ) to two courts — one of which was the court of the
seat, thereby clearly implying that the designation of a seat would
not amount to an exclusive forum selection clause.”
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(emphasis in original)
56. The Court then went on to state : ( Antrix Corpn. Ltd. case
[ Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd. , 2018 SCC OnLine
Del 9338] , SCC OnLine Del paras 58-59)
“ 58 . The Court is of the opinion that in this case, only if the parties
had designated the seat as New Delhi and also provided an
exclusive forum selection clause in favour of the courts at New
Delhi , could it be said that this Court would have exclusive
jurisdiction over all applications filed under the Arbitration Act.
Indeed, it is open to parties to an arbitration to designate a
particular forum as the exclusive forum to which all applications
under the Act would lie. This would merely be an exercise of the
right of the parties to choose one among multiple competent
forums as the exclusive forum. This is a clearly permissible
exercise of the right of party autonomy as held by the Supreme
Court in Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. [ Swastik
Gases (P) Ltd. v. Indian Oil Corpn. Ltd. , (2013) 9 SCC 32 : (2013) 4
SCC (Civ) 157] . Conversely, merely choosing a seat, cannot
amount to exercising such a right of exclusive forum selection.
59 . This court is of opinion that, holding otherwise would in effect
render Section 42 of the Arbitration Act ineffective and useless.
Section 42 of the Act presupposes that there is more than one
competent forum to hear applications under the Arbitration Act,
and hence to ensure efficacy of dispute resolution, this provision
enacts that the court, which is first seized of any such application
under the Act, would be the only court possessing jurisdiction to
hear all subsequent applications. If seat were equivalent to an
exclusive forum selection clause in Part-I arbitrations, then every
time parties would designate a seat, that would in effect mean that
Section 42 would have no application. Thus, only those few
situations where parties do not actually designate any seat (and
thus no exclusive competence is conferred on one forum) would
Section 42 have any role. In fact, often, when parties do not agree
upon a seat in the arbitration agreement, for convenience, the
Arbitral Tribunal designates a particular seat of the arbitration, or
the agreement vests the discretion in the tribunal to decide the
seat (and not just the “venue”). In all those circumstances then as
well, the decision of the tribunal to agree upon a “seat” would
amount to an exclusive jurisdiction clause and Section 42 would
have no application. This would dilute Section 42 and would
accordingly, be contrary to Parliamentary intent. Undoubtedly, in
the present case, the parties have only chosen the seat as New
Delhi and have not specified an exclusive forum selection clause.
Therefore, it cannot be said that the courts in Delhi have exclusive
competence to entertain applications under the Arbitration Act in
the present dispute. The jurisdiction of the courts where the cause
of action arises, which in this case, is the Bangalore City civil
court, cannot be said to have been excluded therefore. Accordingly,
question ( ii ) is also answered in favour of Antrix.”
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(emphasis in original)
57. The view of the Delhi High Court in Antrix Corpn. Ltd. [ Antrix
Corpn. Ltd. v. Devas Multimedia (P) Ltd. , 2018 SCC OnLine Del
9338] , which followed judgments [ Nivaran Solutions v. Aura Thia
Spa Services (P) Ltd. , 2016 SCC OnLine Bom 5062 : (2016) 5 Mah
,
LJ 234] [ Konkola Copper Mines v. Stewarts & Lloyds of India Ltd. ,
2013 SCC OnLine Bom 777 : (2013) 5 Bom CR 29] of the Bombay
High Court, does not commend itself to us. First and foremost, it is
incorrect to state that the example given by the Court in para 96 of
B ALCO [ B ALCO v. Kaiser Aluminium Technical Services Inc. , (2012)
9 SCC 552 : (2012) 4 SCC (Civ) 810] reinforces the concurrent
jurisdiction aspect of the said paragraph. As has been pointed out
by us, the conclusion that the Delhi as well as the Mumbai or
Kolkata courts would have jurisdiction in the example given in the
said paragraph is wholly incorrect, given the sentence, “ This would
be irrespective of the fact that the obligations to be performed
under the contract were to be performed either at Mumbai or at
Kolkata, and only arbitration is to take place in Delhi ”. The
sentence which follows this is out of sync with this sentence, and
the other paragraphs of the judgment. Thus, B ALCO [ B ALCO v.
Kaiser Aluminium Technical Services Inc. , (2012) 9 SCC 552 :
(2012) 4 SCC (Civ) 810] does not “unmistakably” hold that two
courts have concurrent jurisdiction i.e. the seat court and the court
within whose jurisdiction the cause of action arises. What is missed
by these High Court judgments is the subsequent paragraphs in
B ALCO [ B ALCO v. Kaiser Aluminium Technical Services Inc. , (2012)
9 SCC 552 : (2012) 4 SCC (Civ) 810] , which clearly and
unmistakably state that the choosing of a “seat” amounts to the
choosing of the exclusive jurisdiction of the courts at which the
“seat” is located. What is also missed are the judgments of this
Court in Enercon (India) Ltd. [ Enercon (India) Ltd. v. Enercon
GmbH , (2014) 5 SCC 1 : (2014) 3 SCC (Civ) 59] and Reliance
Industries Ltd. [ Reliance Industries Ltd. v. Union of India , (2014) 7
SCC 603 : (2014) 3 SCC (Civ) 737]
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 [ 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
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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.
63. The Court in Enercon GmbH [ Enercon GmbH v. Enercon (India)
Ltd. , 2012 EWHC 689 (Comm) : (2012) 1 Lloyd's Rep 519] began
its discussion on the “seat” of the arbitration by referring to
Shashoua [ Shashoua v. Sharma , 2009 EWHC 957 (Comm) : (2009)
2 Lloyd's Law Rep 376] , and then referring to “ The Conflict of
Laws ”, Dicey, Morris & Collins, 14th Edn. as follows:
“ 58 . Moreover, as Cooke, J. noted, this conclusion is consistent
with the views expressed in The Conflict of Laws , Dicey, Morris &
Collins, 14th Edition at ¶16-035 where the authors state that the
seat “is in most cases sufficiently indicated by the country chosen
as the place of the arbitration. For such a choice of place not to be
given effect as a choice of seat, there will need to be clear evidence
that the parties … agreed to choose another seat for the arbitration
and that such a choice will be effective to endow the courts of that
country with jurisdiction to supervise and support the arbitration ”.
59 . Apart from the last sentence in Clause 18.3 (i.e. “The
provisions of the Indian Arbitration and Conciliation Act, 1996 shall
apply”), it seems to me that the conclusion that London is the
“seat” of any arbitration there-under is beyond any possible doubt.
Thus, the main issue is whether this last sentence is to be regarded
as “significant contrary indicia” (using the language of Cooke, J.)
so as to place the “seat” of the arbitration in India. A similar issue
was considered by Saville, J. in Union of India v. McDonnell
Douglas [ Union of India v. McDonnell Douglas Corpn. , (1993) 2
Lloyd's Rep 48] which, of course, pre-dates the English 1996 Act.
The arbitration agreement in that case provided as follows:“In the
event of a dispute arising out of or in connection with this
agreement…the same shall be referred to an Arbitration Tribunal…
The arbitration shall be conducted in accordance with the
procedure provided in the Indian Arbitration Act of 1940 or any
enactment or modification thereof. The arbitration shall be
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conducted in the English language…The seat of the arbitration
proceedings shall be London, United Kingdom.” Saville, J.
expressed the view that the arguments on both sides were “finely
balanced” but in effect concluded that the reference to the Indian
Arbitration Act, 1940 did not have the effect of changing the “seat”
of the arbitration designated by the parties. Rather, the phrase
referring to the 1940 Act was to be reconciled with the rest of the
clause by reading it as referring to the internal conduct of the
arbitration as opposed to the external supervision of the arbitration
by the courts.”
(emphasis supplied)
64. The Court in Enercon GmbH [ Enercon GmbH v. Enercon (India)
Ltd. , 2012 EWHC 689 (Comm) : (2012) 1 Lloyd's Rep 519] then
held that although the word “venue” is not synonymous with
“seat”, on the facts of that case, 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 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, Joseph QC submitted that the last sentence of Clause
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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 i.e. the enforcement provisions. 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. Alternatively, 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.”
34. The judgment of the Apex Court in Inox Renewables Ltd.
5
v/s. Jayesh Electricals Ltd. has further been placed to submit
that the said case squarely covers the dispute before us. Referring
to the facts of the said case, it as submitted that :-
(i) The said case emanates from the decision of this High Court
itself, where the High Court referrring to the arbitration clause 8.5
of the purchase order therein, had held that even if one is to go by
the said clause, exclusive jurisdcition being vested in the Courts at
Rajasthan, the appropriate Court shall be at Jaipur.
(ii) The relevant sentence in clause 8.5 of the purchase order
therein read that :-
“ The venue of the arbitration shall be Jaipur. ”
(iii) The appellant therein argued before the Apex Court that the
Arbitrator had recorded in the arbitral award that venue/place of
arbitration shall be shifted by mutual consent to ‘Ahmedabad’, as a
result of which the place of arbitration or the seat of arbitration
became ‘Ahmedabad’ resulting into the courts at Ahmedabad
having exclusive jurisdiction, heavily relying upon BGS SGS
4
SOMA JV .
5 [(2023) 3 SCC 733]
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(iv) The respondent therein, on the other side, had argued that
shifting of place of arbitration even by mutual agreement cannot be
done without a written agreement between the parties. It was
contended that vesting of exclusive jurisdiction with the Courts at
Rajasthan being independent from the arbitration clause stating
that the arbitration is to be held at Jaipur, would indicate that the
Courts at Rajasthan alone would have exclusive jurisdiction. It was
argued therein that the Arbitrator’s finding that the venue was
shifted by mutual consent from ‘Jaipur’ to ‘Ahmedabad’ has
reference only to Section 20(3) of the Act, 1996, as Ahmedabad was
in reality a convenient place for the arbitration to take place, the
seat of the arbitration always remained at Jaipur.
(v) In light of the said dispute, raised before the Apex Court, it was
noted in paragraph Nos. ‘9’, ‘10’, ‘11’, and ‘12’ as under:-
“ 9. Having heard the learned counsel for both the parties, it is first
necessary to set out what the learned arbitrator has held in the
award with respect to the venue/place of the arbitration. In para
12.3, the learned arbitrator holds thus:
“ 12.3 . There is no controversy as to the constitution of the Tribunal
between the parties and the parties have agreed to get their
dispute resolved by a sole arbitrator. As per arbitration agreement,
the venue of the arbitration was to be Jaipur. However, the parties
have mutually agreed, irrespective of a specific clause as to the
[venue, that the place] of the arbitration would be at Ahmedabad
and not at Jaipur. The proceedings, thus, have been conducted at
Ahmedabad on constitution of the Tribunal by the learned Nominee
Judge of the Hon'ble High Court of Gujarat.”
10. What is clear, therefore, as per this paragraph is that by
mutual agreement, parties have specifically shifted the venue/place
of arbitration from Jaipur to Ahmedabad. This being so, is it not
possible to accede to the argument made by the learned counsel
for the respondent that this could only have been done by written
agreement and that the arbitrator's finding would really have
reference to a convenient venue and not the seat of arbitration.
11. In BGS SGS [ BGS SGS SOMA JV v. NHPC Ltd. , (2020) 4 SCC
234 : (2020) 2 SCC (Civ) 606] , this Court, after an exhaustive
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review of the entire case law, concluded thus : (SCC pp. 268, 281,
284, 301-02 & 309, paras 32, 48-49, 53, 82 & 98)
“ 32 . It can thus be seen that given the new concept of “juridical
seat” of the arbitral proceedings, and the importance given by the
Arbitration Act, 1996 to this “seat”, the arbitral award is now not
only to state its date, but also the place of arbitration as
determined in accordance with Section 20. However, the definition
of “court” contained in Section 2(1)( c ) of the Arbitration Act, 1940,
continued as such in the Arbitration Act, 1996, though narrowed to
mean only Principal Civil Court and the High Court in exercise of
their original ordinary civil jurisdiction. Thus, the concept of
juridical seat of the arbitral proceedings and its relationship to the
jurisdiction of courts which are then to look into matters relating to
the arbitral proceedings — including challenges to arbitral awards
— was unclear, and had to be developed in accordance with
international practice on a case-by-case basis by this Court.
*
48 . ……...
49 . ……….
*
53 . ……..
*
82 . On a conspectus of the aforesaid judgments, it may be
concluded that whenever there is the designation of a place of
arbitration in an arbitration clause as being the “venue” of the
arbitration proceedings, the expression “arbitration proceedings”
would make it clear that the “venue” is really the “seat” of the
arbitral proceedings, as the aforesaid expression does not include
just one or more individual or particular hearing, but the
arbitration proceedings as a whole, including the making of an
award at that place. This language has to be contrasted with
language such as ‘tribunals are to meet or have witnesses, experts
or the parties’ where only hearings are to take place in the
“venue”, which may lead to the conclusion, other things being
equal, that the venue so stated is not the “seat” of arbitral
proceedings, but only a convenient place of meeting. Further, the
fact that the arbitral proceedings “shall be held” at a particular
venue would also indicate that the parties intended to anchor
arbitral proceedings to a particular place, signifying thereby, that
that place is the seat of the arbitral proceedings. This, coupled
with there being no other significant contrary indicia that the
stated venue is merely a “venue” and not the “seat” of the arbitral
proceedings, would then conclusively show that such a clause
designates a “seat” of the arbitral proceedings. In an International
context, if a supranational body of rules is to govern the
arbitration, this would further be an indicia that “the venue”, so
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stated, would be the seat of the arbitral proceedings. In a 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.
*
98 . However, the fact that in all the three appeals before us the
proceedings were finally held at New Delhi, and the awards were
signed in New Delhi, and not at Faridabad, would lead to the
conclusion that both parties have chosen New Delhi as the “seat”
of arbitration under Section 20(1) of the Arbitration Act, 1996. This
being the case, both parties have, therefore, chosen that the courts
at New Delhi alone would have exclusive jurisdiction over the
arbitral proceedings. Therefore, the fact that a part of the cause of
action may have arisen at Faridabad would not be relevant once
the “seat” has been chosen, which would then amount to an
exclusive jurisdiction clause so far as Courts of the “seat” are
concerned.”
12. This case would show that the moment the seat is chosen as
Ahmedabad, it is akin to an exclusive jurisdiction clause, thereby
vesting the courts at Ahmedabad with exclusive jurisdiction to deal
with the arbitration. However, the learned counsel for the
respondent referred to and relied upon paras 49 and 71 of the
aforesaid judgment. Para 49 only dealt with the aspect of
concurrent jurisdiction as dealt with in B ALCO v. Kaiser Aluminium
Technical Services Inc. [ B ALCO v. Kaiser Aluminium Technical
Services Inc. , (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810]
[“ B ALCO ”] which does not arise on the facts of the present case.
Para 71 is equally irrelevant, in that, it is clear that the parties
have, by mutual agreement, entered into an agreement to
substitute the venue at Jaipur with Ahmedabad as the place/seat of
arbitration under Section 20(1) of the Arbitration and Conciliation
Act, 1996.”
(vi) Further, the Apex Court taking note of the earlier decision in
6
Videocon Industries Ltd. v/s. Union of India and Anr. ,
(heavily relied upon by the learned senior counsel for the
respondent herein), has concluded in paragraph Nos. ‘13’, ‘14’ and
5
‘15’ in Inox Renewables Ltd. as under :-
“13. The learned counsel for the respondent relied heavily upon
Videocon [ Videocon Industries Ltd. v. Union of India , (2011) 6 SCC
161 : (2011) 3 SCC (Civ) 257] for the proposition that any change
6 [(2011) 6 SCC 161]
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in seat could only be by a written agreement signed by the parties.
A close look at the judgment in Videocon [ Videocon Industries Ltd.
v. Union of India , (2011) 6 SCC 161 : (2011) 3 SCC (Civ) 257]
would show that it contained Clause 34.12 which dealt with “venue
and law of arbitration agreement” and Clause 35.2 which dealt
with “amendment”, as follows : (SCC p. 164, para 3)
“ 3 . … 34.12. Venue and Law of Arbitration Agreement .—The venue
of sole expert, conciliation or arbitration proceedings pursuant to
this Article, unless the parties otherwise agree, shall be Kuala
Lumpur, Malaysia, and shall be conducted in the English language.
Insofar as practicable, the parties shall continue to implement the
terms of this contract notwithstanding the initiation of arbitral
proceedings and any pending claim or dispute. Notwithstanding
the provisions of Article 33.1, the arbitration agreement contained
in this Article 34 shall be governed by the laws of England.
*
35.2. Amendment .—This contract shall not be amended, modified,
varied or supplemented in any respect except by an instrument in
writing signed by all the parties, which shall state the date upon
which the amendment or modification shall become effective.”
14. Given the above, this Court concluded : ( Videocon case
[ Videocon Industries Ltd. v. Union of India , (2011) 6 SCC 161 :
(2011) 3 SCC (Civ) 257] , SCC pp. 169-70, paras 20-21)
“ 20 . We shall first consider the question whether Kuala Lumpur
was the designated seat or juridical seat of arbitration and the
same had been shifted to London. In terms of Clause 34.12 of the
PSC entered into by 5 parties, the seat of arbitration was Kuala
Lumpur, Malaysia. However, due to outbreak of epidemic SARS,
the Arbitral Tribunal decided to hold its sittings first at Amsterdam
and then at London and the parties did not object to this. In the
proceedings held on 14-10-2003 and 15-10-2003 at London, the
Arbitral Tribunal recorded the consent of the parties for shifting
the juridical seat of arbitration to London. Whether this amounted
to shifting of the physical or juridical seat of arbitration from Kuala
Lumpur to London? The decision of this would depend on a holistic
consideration of the relevant clauses of the PSC.
21 . Though, it may appear repetitive, we deem it necessary to
mention that as per the terms of agreement, the seat of arbitration
was Kuala Lumpur. If the parties wanted to amend Article 34.12,
they could have done so only by a written instrument which was
required to be signed by all of them. Admittedly, neither there was
any agreement between the parties to the PSC to shift the juridical
seat of arbitration from Kuala Lumpur to London nor was any
written instrument signed by them for amending Article 34.12.
Therefore, the mere fact that the parties to the particular
arbitration had agreed for shifting of the seat of arbitration to
London cannot be interpreted as anything except physical change
of the venue of arbitration from Kuala Lumpur to London.”
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15. The aforesaid judgment would have no application to the facts
of the present case as there is nothing akin to Clause 35.2, which is
the amendment clause which was applied to the facts in Videocon
case [ Videocon Industries Ltd. v. Union of India , (2011) 6 SCC
161 : (2011) 3 SCC (Civ) 257] . This being the case, the parties may
mutually arrive at a seat of arbitration and may change the seat of
arbitration by mutual agreement which is recorded by the
arbitrator in his award to which no challenge is made by either
party.”
(vii) Referring to the decision in Indus Mobile Distribution (P)
7
Ltd. Datawind Innovations (P) Ltd. (also relied on by the
learned senior counsel for the respondent herein), it was held in
paragraph No. ‘16’:-
“16. The reliance placed by the learned counsel for the respondent
on Indus Mobile [ Indus Mobile Distribution (P) Ltd. v. Datawind
Innovations (P) Ltd. , (2017) 7 SCC 678 : (2017) 3 SCC (Civ) 760] ,
and in particular, on paras 18 and 19 thereof, would also support
the appellant's case, inasmuch as the “venue” being shifted from
Jaipur to Ahmedabad is really a shifting of the venue/place of
arbitration with reference to Section 20(1), and not with reference
to Section 20(3) of the Arbitration and Conciliation Act, 1996, as it
has been made clear that Jaipur does not continue to be the seat of
arbitration and Ahmedabad is now the seat designated by the
parties, and not a venue to hold meetings. The learned arbitrator
has recorded that by mutual agreement, Jaipur as a “venue” has
gone and has been replaced by Ahmedabad. As Clause 8.5 of the
purchase order must be read as a whole, it is not possible to accept
the submission of Shri Malkan that the jurisdiction of courts in
Rajasthan is independent of the venue being at Jaipur. The two
clauses must be read together as the courts in Rajasthan have been
vested with jurisdiction only because the seat of arbitration was to
be at Jaipur. Once the seat of arbitration is replaced by mutual
agreement to be at Ahmedabad, the courts at Rajasthan are no
longer vested with jurisdiction as exclusive jurisdiction is now
vested in the courts at Ahmedabad, given the change in the seat of
arbitration.
(viii) It was, thus, concluded therein that once the seat of
arbitration is replaced by mutual agreement to be at ‘Ahmedabad’,
7 [(2017) 7 SCC 678]
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the Courts at ‘Rajasthan’ are no longer vests with jurisdiction, as
exclusive jurisdiction is now vests in the Courts at Ahmedabad
given the change in the seat of arbitration.
35. It was, thus, vehemently argued by Mr. Mihir Thakore, the
learned senior counsel for the petitioner that the discussion in Inox
5
Renewables Ltd. about the mutual agreement of the parties to
change the seat of arbitration at the inception of arbitration
proceedings from ‘Jaipur’ to ‘Ahmedabad’, which has been treated
as an agreement under Section 20(1) of the Arbitration Act, 1996
and proceeding on the principle of ‘party autonomy’, for holding
that the mutual agreement arrived at the inception of arbitration,
would act as exclusive jurisdiction clause to confer jurisdiction to
the Courts at ‘Ahmedabad’, are guiding principles which would
squarely be applicable in the facts and circumstances of the
present case. Once the learned Presiding Arbitrator fixed the seat
of arbitration with the mutual consent of the parties and the
respondent also admitted that they gave consent before the
Arbitrator for the seat being at Ahmedabad for interim challenges,
the case of the respondent based on the clauses of the agreement
namely 1.2.6, 1.3.1 and 1.3.2 (11) is liable to be rejected. The
Commercial Court has committed manifest error in deciding the
issue.
36. Learned senior counsel further relied on the following
decisions :
(i)Ashiana Infra-Homes Pvt. Ltd. & Ors. v/s. Adani Power Ltd.
[(2018) SCC OnLine Del 9110].
(ii) Viva Infraventure Pvt. Ltd. v/s. New Okhla Industrial
Development Authority [(2025) SCC Onlie Del. 4648].
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(iii) Kalpraj Dharamshi and Another v/s. Kotak Investment Advisors
Limited and Anr. [(2021) 10 SCC 401].
(iv) Quippo Construction Equipment Ltd. v/s. Janardan Nirman
Private Limited [(2020) 18 SCC 277].
(v) Nagindas Ramdas v/s. Dalpatram Iccharam alias Brijram and
Ors. [(1974) 1 SCC 242].
(vi) Jagad Bandhu Chatterjee v/s. Nilima Rani and Others [(1969) 3
SCC 445)].
(vii) The Decision of this Court in Special Civil Application No. 5057
of 2024 in the case of Union of India by Chief Engineer Navy
Mumbai v/s. Ms. Pushkarraj Construction P Ltd. Decided on
06.05.2025.
(viii) Narayan Prasad Lihia v/s. Nikunj Kumar Lohia and Others
[(2002) 3 SCC 585].
37. Ms. Manisha Luvkumar, the learned senior counsel for the
respondent ONGC, in rebuttal, would argue that the clauses 1.2.6,
1.3.1 and 1.3.2 (11) have to be read and considered as the clauses
settled under the arbitral agreement signed by the parties with
open eyes to anchor the place of dispute resolution at Ankleshwar.
Clauses 1.3.1 and 1.3.2 (11) are indicative of the mutual decision of
the parties conferring exclusive jurisdiction of the Courts at the
place where the contract is signed and the Letter of Intent
(LOA/NOA) has been issued. Clause 1.2.6 would act as contrary
indicia , restraining any party to the agreement to resile from the
terms and conditions of the contract set out in writing and signed
by them. The said clause clarifies categorically that no amendment
or variation of the contract shall be effective, unless it is in writing,
that too only if it expressly refers to the contract and is signed by
each party or their duly authorised representative.
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38. The submission is that the clause 1.3.2(11) fixes the seat of
arbitration, which undoubtedly is at Ankleshwar and has not been
shifted by any mutual agreement in writing of the parties referring
to the said clause, signed by them. The terms and conditions
conferred by the parties unto themselves for any change in the
contract being in writing and expressly referring to the contract, is
a responsibility entrusted upon them by mutual agreement. None
of the parties to the contract can resile or ignore the same.
39. The submission is that indisputably, there is no amendment
to clause 1.3.1(11) in writing signed by the parties expressly
referring to the contract. The minutes of the preliminary arbitral
meeting dated 07.10.2021, held before the learned Presiding
Officer for settling the issues, cannot be raised to the level of a
written mutual agreement of the parties to amend the said clause.
It was argued that the minutes dated 07.10.2021 drawn by the
learned Presiding Arbitrator are for settlement of preliminary
issues like the disclosure under Section 12(1) of the Arbitration
Act, 1996 and Section 16(1) on ‘competence- competence
principle’, noticing that the parties have no objection whatsoever to
the constitution and composition of the arbitral tribunal. The
procedural and practice directions contained therein are in terms
of Section 19 and Section 11(14) of the Arbitration Act, 1996.
However, the statement in paragraph No. ‘5’ of the said minutes,
cannot alleviate the written contract considering to be the free
consent of the parties to change the place or seat of the arbitration
in terms of sub-section(1) or sub-section(2) of Section 20.
Moreover, as recorded by the learned Presiding Officer therein the
consent was of the learned counsel/advocate for the parties and not
of the parties. The statement therein only conveys that the
arbitration proceedings shall be conducted at Ahmedabad, and in
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English, with the consent of the learned advocates for the parties,
in accordance with the provisions of the Act or any statutory
modification thereto.
40. It was submitted that the only inference which can be drawn
from the said statement is that the learned Presiding Officer
decided at a convenient place being at Ahmedabad for smooth
conducting of the arbitration proceedings, which would obviously
fall within the meaning of “venue” or “at a convenient place”,
under sub-section(3) of Section 20. In absence of any agreement in
writing of the parties, the expression “seat of arbitration”
incorporated in clause-’5’ of the minutes of preliminary meeting,
cannot be said to fall in any of the two categories of sub-section(1)
and sub-section(2) of Section 20. The word “seat” used before “of
arbitration” therein is superfluous and cannot be pressed into
service to hold that the parties by their mutual agreement had
arrived at a consensus to shift the seat of arbitration from the place
fixed in the agreement [clause 1.3.2(11)], to confer exclusive
jurisdiction to the Courts at Ahmedabad, in terms of sub-section(1)
or sub-section(2) of Section 20 in relation to arbitration
proceedings.
41. In any case, in terms of the restrictions clearly conferred by
the parties unto themselves under clause 1.2.6, oral agreement, if
any, even if accepted for a moment, cannot alleviate the conditions
mentioned therein. The conditions incorporated in Clause 1.3.1
and 1.3.2(11) of the written contract remained sacrosanct, in
absence of any written contract signed by the parties modifying the
same expressly referring thereto, in terms of Section 1.2.6. None
of the submissions of the learned senior counsel for the petitioner,
as such, can be appreciated to hold that there was an amendment
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to the written contract with the mutual agreement of the parties
under which they have decided to shift “the seat of arbitration”
from “the place” fixed in the contract to the “place” referred to in
clause 5 of the minutes of the preliminary meeting set out by the
learned Presiding Arbitrator.
5,
42. Referring to paragraph No. ‘12’ of Inox Renewables Ltd.
noted hereinbefore, it was argued that in view of the observations
therein that the moment the seat is chosen under the written
contract (undoubtedly at Ankleshwar herein), it is akin to an
exclusive jurisdiction clause, the Courts at Ankleshwar would vest
with exclusive jurisdiction to deal with the dispute arising out of
the arbitration proceedings. However, in the peculiar facts and
circumstances of the said case before the Apex Court, where the
learned Arbitrator has specifically recorded in the award with
respect to the venue/place of arbitration, that “as per the
arbitration agreement the venue of the arbitration was to be Jaipur,
however, the parties have mutually agreed, irrespective of specific
clause as to [the “venue”, with the place] of the arbitration would
be at Ahmedabad and not at Jaipur and thus, the proceedings have
been conducted at Ahmedabad on constitution of the Tribunal”, it
was concluded that the parties have mutually shifted the ‘venue’
and their ‘seat’. It was submitted that such an expression is
completely missing in paragraph No. ‘5’ of the preliminary meeting
(heavily relied on by the learned senior counsel for the petitioner).
5
The ratio of Inox Renewables Ltd. , as noted in paragraph No.
‘12’ therein that “it is clear that the parties have by mutual
agreement entered into an agreement to substitute the venue at
Jaipur with Ahmedabad as the place/seat of arbitration under
Section 20(1) of the Arbitration and Conciliat4ion Act, 1996”, as
such, cannot be applied in the facts and circumstances of the
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present case. The reliance placed upon the decision of the Apex
5
Court in Inox Renewables Ltd. by the learned senior counsel for
the petitioner, to submit that the said decision squarely covers the
dispute at hands, is, thus, wholly misplaced.
43. Reliance is further placed upon the decision of the Apex
7
Court in Indus Mobile Distribution Private Limited . From a
reading thereof, we may note that the question before the Apex
Court therein was as to “whether when the seat of arbitration is
Mumbai, an exclusive jurisdiction clause stating that the Courts at
Mumbai alone would have jurisdiction in respect of disputes arising
under the agreement to oust the jurisdiction of all other courts”.
The relevant statement in the dispute resolution mechanism
clauses set out therein are to be extracted hereinunder :
“Such arbitration shall be conducted at Mumbai, in English
language.”
“All disputes and differences of any kind whatever arising out of or
in connection with this agreement shall be subject to the exclusive
jurisdiction of the courts of Mumbai only.”
44. The dispute raised by the respondent therein was that the no
part of the cause of action arose in Mumbai, that being the case,
even if the seat were at Mumbai, it makes no difference as one of
the tests prescribed by the Code of Civil Procedure, 1908 to give a
Court jurisdiction must, atleast, be fulfilled.
45. Deliberating on the issues, the concept of juridical seat, as
has been evolved by the Courts in England and as now effectively
embodied in our jurisdiction, reading Section 20 referring to
paragraph Nos. ‘98’ to ‘100’ laying down the law as to the seat in
3
BALCO , it was noted therein in paragraph No. ‘10’ as under :-
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“10. Paras 98 to 100 have laid down the law as to “seat” thus:
( Bharat Aluminium case [ BALCO v. Kaiser Aluminium Technical
Services Inc. , (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] , SCC pp.
606-08)
“ 98 . We now come to Section 20, which is as under:
‘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 otherwise agreed by the
parties, meet at any place it considers appropriate for
consultation among its members, for hearing witnesses,
experts or the parties, or for inspection of documents, goods
or other property.’
A plain reading of Section 20 leaves no room for doubt that where
the place of arbitration is in India, the parties are free to agree to
any “place” or “seat” within India, be it Delhi, Mumbai, etc. In the
absence of the parties' agreement thereto, Section 20(2) authorises
the tribunal to determine the place/seat of such arbitration. Section
20(3) enables the tribunal to meet at any place for conducting
hearings at a place of convenience in matters such as consultations
among its members for hearing witnesses, experts or the parties.
99 . The fixation of the most convenient “venue” is taken care
of by Section 20(3). Section 20 has to be read in the context
of Section 2(2) which places a threshold limitation on the
applicability of Part I, where the place of arbitration is in
India. Therefore, Section 20 would also not support the
submission of the extra-territorial applicability of Part I, as
canvassed by the learned counsel for the appellants, so far
as purely domestic arbitration is concerned.
100 . True, that in an international commercial arbitration,
having a seat in India, hearings may be necessitated outside
India. In such circumstances, the hearing of the arbitration
will be conducted at the venue fixed by the parties, but it
would not have the effect of changing the seat of arbitration
which would remain in India. The legal position in this
regard is summed up by Redfern and Hunter, The Law and
Practice of International Commercial Arbitration (1986) at p.
69 in the following passage under the heading “The Place of
Arbitration”:
‘The preceding discussion has been on the basis that
there is only one “place” of arbitration. This will be
the place chosen by or on behalf of the parties; and it
will be designated in the arbitration agreement or the
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terms of the reference or the minutes of proceedings
or in some other way as the place or “seat” of the
arbitration. This does not mean, however, that the
Arbitral Tribunal must hold all its meetings or
hearings at the place of arbitration. International
commercial arbitration often involves people of many
different nationalities, from many different countries.
In these circumstances, it is by no means unusual for
an Arbitral Tribunal to hold meetings—or even
hearings—in a place other than the designated place
of arbitration, either for its own convenience or for the
convenience of the parties or their witnesses.… It may
be more convenient for an Arbitral Tribunal sitting in
one country to conduct a hearing in another country—
for instance, for the purpose of taking evidence.… In
such circumstances, each move of the Arbitral
Tribunal does not of itself mean that the seat of
arbitration changes. The seat of the arbitration
remains the place initially agreed by or on behalf of
the parties.’
This, in our view, is the correct depiction of the practical
considerations and the distinction between “seat” [Sections 20(1)
and 20(2)] and “venue” [Section 20(3)]. We may point out here that
the distinction between “seat” and “venue” would be quite crucial
in the event, the arbitration agreement designates a foreign
country as the “seat”/“place” of the arbitration and also selects the
Arbitration Act, 1996 as the curial law/law governing the
arbitration proceedings. It would be a matter of construction of the
individual agreement to decide whether:
( i ) the designated foreign “seat” would be read as in fact only
providing for a “venue”/“place” where the hearings would be held,
in view of the choice of the Arbitration Act, 1996 as being the
curial law , OR
( ii ) the specific designation of a foreign seat, necessarily carrying
with it the choice of that country's arbitration/ curial law , would
prevail over and subsume the conflicting selection choice by the
parties of the Arbitration Act, 1996.”
(emphasis in original)
46. It was further noted in paragraph Nos. ‘11’,‘12’ and ‘13’ as
under :-
“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: ( Bharat Aluminium case [ BALCO v.
Kaiser Aluminium Technical Services Inc. , (2012) 9 SCC 552 :
(2012) 4 SCC (Civ) 810] , SCC p. 621, para 123)
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“ 123 . 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 U NCITRAL 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 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 [ C v. D , 2008 Bus LR 843 : 2007 EWCA
Civ 1282] wherein it is observed that: (Bus LR p. 851G, para 17)
‘ 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 .’
In the aforesaid case, the Court of Appeal had approved the
observations made in A v. B [ 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 in original)
12. The Constitution Bench's statement of the law was further
expanded in Enercon (India) Ltd. v. Enercon GmbH [ Enercon
(India) Ltd. v. Enercon GmbH , (2014) 5 SCC 1 : (2014) 3 SCC (Civ)
59] . After referring to various English authorities in great detail,
this Court held, following the Constitution Bench, as follows: (SCC
p. 58, para 134)
“ 134 . It is accepted by most of the experts in the law relating to
international arbitration that in almost all the national laws,
arbitrations are anchored to the seat /place/situs of arbitration.
Redfern and Hunter on International Arbitration (5th Edn., Oxford
University Press, Oxford/New York 2009), in Para 3.54 concludes
that “the seat of the arbitration is thus intended to be its centre of
gravity”. In BALCO [ BALCO v. Kaiser Aluminium Technical
Services Inc. , (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] ( BALCO
v. Kaiser Aluminium Technical Services Inc. ) it is further noticed
that this does not mean that all proceedings of the arbitration are
to be held at the seat of arbitration. The arbitrators are at liberty to
hold meetings at a place which is of convenience to all concerned.
This may become necessary as arbitrators often come from
different countries. Therefore, it may be convenient to hold all or
some of the meetings of the arbitration in a location other than
where the seat of arbitration is located. In BALCO [ BALCO v.
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Kaiser Aluminium Technical Services Inc. , (2012) 9 SCC 552 :
(2012) 4 SCC (Civ) 810] , the relevant passage from Redfern and
Hunter has been quoted which is as under: (SCC p. 598, para 75)
‘ 75 . … “The preceding discussion has been on the basis that
there is only one “place” of arbitration. This will be the place
chosen by or on behalf of the parties; and it will be
designated in the arbitration agreement or the terms of
reference or the minutes of proceedings or in some other
way as the place or “seat” of the arbitration. This does not
mean, however, that the Arbitral Tribunal must hold all its
meetings or hearings at the place of arbitration.
International commercial arbitration often involves people of
many different nationalities, from many different countries.
In these circumstances, it is by no means unusual for an
Arbitral Tribunal to hold meetings—or even hearings—in a
place other than the designated place of arbitration, either
for its own convenience or for the convenience of the parties
or their witnesses.… It may be more convenient for an
Arbitral Tribunal sitting in one country to conduct a hearing
in another country — for instance, for the purpose of taking
evidence.… In such circumstances each move of the Arbitral
Tribunal does not of itself mean that the seat of arbitration
changes. The seat of arbitration remains the place initially
agreed by or on behalf of the parties.” [ Naviera case
[ Naviera Amazonica Peruana S.A. v. Compania Internacional
De Seguros Del Peru , (1988) 1 Lloyd's Rep 116 (CA)]
( Naviera Amazonica Peruana S.A. v. Compania Internacional
De Seguros Del Peru ), Lloyd's Rep p. 121]’
These observations have also been noticed in Union of India v.
McDonnell Douglas Corpn. [ Union of India v. McDonnell Douglas
Corpn. , (1993) 2 Lloyd's Rep 48] ”
(emphasis in original)
13. This Court reiterated that once the seat of arbitration has been
fixed, it would be in the nature of an exclusive jurisdiction clause
as to the courts which exercise supervisory powers over the
arbitration. ( See para 138.)”
47. The Apex Court further noted in paragraph No. ‘16’ that the
proposed amendment in 2015 Act pursuant to a detailed Law
Commission Report had sought to make a clear distinction between
the usage of the concept of “seat of arbitration” and “mere venue of
3
arbitration” by noticing the decision in BALCO that the seat is
“the center of gravity of arbitration” and that the Supreme Court
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recognises the “seat of arbitration” to be a juridical seat.
48. It was noted therein that the Amendment Act, 2015, however,
does not incorporate the proposed amendment to delete the word
“place” and add the words “seat and venue” in sub-section(1) of
Section 20 and the word “venue” in sub-section(3) of Section 20,
3
presumbly because the BALCO judgment in no uncertain terms
has referred to “place” as “juridical seat” and made it clear that
Sections 20(1) and 20(2) where the word “place” is used, refers to
“juridical seat”, whereas in Section 20(3), the word “place” is
equivalent to “venue”. That being the settled law, in view of the
construction of the Act by the Constitution Bench of the Supreme
Court, it was found unnecessary to expressly incorporate the said
proposed amendment. It was, thus, finally held in paragraph Nos.
7
‘19’ and ‘20’ in Indus Mobile Distribution Private Limited as
under:-
“19. A conspectus of all the aforesaid provisions shows that the
moment the seat is designated, it is akin to an exclusive
jurisdiction clause. On the facts of the present case, it is clear that
the seat of arbitration is Mumbai and Clause 19 further makes it
clear that jurisdiction exclusively vests in the Mumbai courts.
Under the Law of Arbitration, unlike the Code of Civil Procedure
which applies to suits filed in courts, a reference to “seat” is a
concept by which a neutral venue can be chosen by the parties to
an arbitration clause. The neutral venue may not in the classical
sense have jurisdiction — that is, no part of the cause of action may
have arisen at the neutral venue and neither would any of the
provisions of Sections 16 to 21 of CPC be attracted. In arbitration
law however, as has been held above, the moment “seat” is
determined, the fact that the seat is at Mumbai would vest Mumbai
courts with exclusive jurisdiction for purposes of regulating
arbitral proceedings arising out of the agreement between the
parties.
20. It is well settled that where more than one court has
jurisdiction, it is open for the parties to exclude all other courts.
For an exhaustive analysis of the case law, see Swastik Gases (P)
Ltd. v. Indian Oil Corpn. Ltd. [ Swastik Gases (P) Ltd. v. Indian Oil
Corpn. Ltd. , (2013) 9 SCC 32 : (2013) 4 SCC (Civ) 157] This was
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followed in a recent judgment in B.E. Simoese Von Staraburg
Niedenthal v. Chhattisgarh Investment Ltd. [ B.E. Simoese Von
Staraburg Niedenthal v. Chhattisgarh Investment Ltd. , (2015) 12
SCC 225 : (2016) 1 SCC (Civ) 427] Having regard to the above, it is
clear that Mumbai courts alone have jurisdiction to the exclusion of
all other courts in the country, as the juridical seat of arbitration is
at Mumbai. This being the case, the impugned judgment [ Datawind
Innovations (P) Ltd. v. Indus Mobile Distribution (P) Ltd. , 2016 SCC
OnLine Del 3744] is set aside. The injunction confirmed by the
impugned judgment will continue for a period of four weeks from
the date of pronouncement of this judgment, so that the
respondents may take necessary steps under Section 9 in the
Mumbai Court. The appeals are disposed of accordingly.”
49. It may be noted, at this juncture, that Indus Mobile
7
Distribution Private Limited was a case pertaining to a
domestic award where the issue of “seat” and “venue” under the
law of arbitration, unlike the Code of Civil Procedure which applies
to suits filed across in India, has been settled taking into
consideration the statement of law in the Constitution Bench
3
decision in BALCO .
50. Ms. Manisha Luvkumar, the learned senior counsel for the
respondent has taken us extensively to another decision of the
Apex Court in the case of a domestic arbitration in BBR (India)
8
Private Limited v/s. S.P.Singla Constructions Private Limited
to submit that the answer to the question posed “whether
conducting arbitration proceedings at Delhi, owing to the
appointment of new Arbitrator, would shift the “jurisdictional seat
of arbitration” from Panchkula in Haryana, the place fixed by the
first arbitrator for the arbitration proceedings?, would provide a
guidance on the issue of shifting of the place of arbitration. It was
pointed out that in the said case, the arbitration clause was silent
and did not stipulate “seat” or “venue” of arbitration. The contract
and Letter of Intent were executed at Panchkula in Haryana. The
8 [(2023) 1 SCC 693]
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first sole arbitrator, in the first sitting of the arbitral tribunal held
that the venue of the proceedings would be at Panchkula, Haryana.
However, proceedings could not be taken further, but no party
objected to the place of arbitration proceedings as fixed in the said
meeting of the arbitral tribunal, where the parties were directed to
complete the pleadings and matter was adjourned for framing of
the issues. The first arbitrator, however, recused and the second
arbitrator while recording his consent for appointment as a sole
arbitrator in the first procedural order stated that the venue of the
proceedings would be at Delhi. The arbitral proceedings were
thereafter held and the award was pronounced at New Delhi.
51. The parties have invoked the jurisdiction of two different
courts for interim order under Section 9 and the challenge to the
arbitral award under Section 34 of the Act, 1996. The question of
“jurisdictional seat” of arbitration, therefore, assumed importance
therein.
52. The Apex Court while holding that the place of arbitration
designated by the first Arbitrator recorded in the first procedural
order, shall be the ‘arbitral seat” of arbitration in terms of sub-
section(2) of Section 20 of the Act, 1996 and the courts having
jurisdiction over Panchkula in Haryana would have exclusive
jurisdiction, has noted in paragraph Nos. ‘31’ and ‘32’ 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 as the venue of
arbitration. If we accept this contention of the appellant, we would,
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as observed in C v. D [ C v. D , 2008 Bus LR 843 : 2007 EWCA Civ
1282 (CA)] , 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.
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-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.”
53. Placing the observations made therein, it was argued by the
learned senior counsel for the respondent that the Apex Court has
laid stress therein upon the fact that in all commercial matters,
there should be certainty as to the Court that should exercise
jurisdiction. It was categorically observed therein that the law of
arbitration does not visualise repeated shifting of the Court “seat of
arbitration”. 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. Any such situation may entail the risk of
conflicting decisions that the law does not contemplate and is to be
avoided.
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54. In the context of the supervisory jurisdiction by the Courts in
juxtaposition to the “seat” determined which confer exclusive
jurisdiction of the Courts, it was observed therein that though
exercise of supervisory jurisdiction by the Courts where arbitration
proceedings are being conducted is a relevant consideration, but
not a conclusive and determinative factor when the “venue” is not
the “seat”. It was held that the “seat” determines the jurisdiction
of the Court. There may be a situation where the venue of the
arbitration in terms of Section 20(3) would be different from the
place of the “jurisdictional seat” and it is equally possible that
majority or most of the hearings may have taken place at a venue
which is different from the “seat of arbitration”. However,
considering the aspect of certainty, the Courts jurisdiction must be
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. On the arguments therein that the proceedings before
the first arbitrator at Panchkula, Haryana was restricted to filling
of pleadings and documents and the most of or all substantial
proceedings were conducted in New Delhi, it was held that “seat of
arbitration” as agreed by the parties or as determined by the
arbitrator should be given precedent over the place or venue,
where the arbitration proceedings may have been held.
55. Inviting attention of the Court to the observations in
paragraph Nos. 33 and 34 therein, it was argued that the Apex
Court while dealing with the question of territorial jurisdiction has
held that the mutual consent of the parties agreeing on the change
of jurisdictional seat should be express and clearly understood and
mutually agreed by the parties. Relevant paragraph Nos. ‘33’ and
8
‘34’ of the decision in BBR (India) Private Limited may also be
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extracted hereinunder :-
“33. At this stage, we must also deal with the appellant's argument
that substantive proceedings were held in Delhi and, therefore, it
would be the “seat of arbitration”. The proceedings before the first
arbitration at Panchkula, Haryana, were restricted to filing of
pleadings and documents. On deeper consideration, this argument
should be rejected for the reasons recorded above, as it will lead to
confusion and uncertainty. The legal question raised in the present
case must be answered objectively and not subjectively with
reference to the facts of a particular case. Otherwise, there would
be a lack of clarity and consequent mix-up about the courts that
would exercise jurisdiction. There could be cases where the
arbitration proceedings are held at different locations, but the
“seat of arbitration”, as agreed by the parties or as determined by
the arbitrator, may be different, and at that place — “the seat”,
only a few hearings or initial proceedings may have been held. This
would not matter and would not result in shifting of the
jurisdictional “seat”. Arbitrators can fix the place of residence,
place of work, or in case of recusal, arbitration proceedings may be
held at two different places, as in the present case.
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.”
56. Taking aid of the above decision of the Apex Court, it was,
thus, argued that the minutes of the preliminary meeting, in the
instant case, would not amend the contract and in view of the
exclusive jurisdictional clause, the Presiding Arbitrator had no
power to deciding on the “jurisdictional seat” fixed under the
contract, without mutual agreement of the parties recorded in
writing.
57. Further, the judgment of this Court in Instakart Services
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9
Private Limited v/s. Megastone Logisparks Pvt. Ltd. in a
proceeding under Section 11(6) of the Arbitration Act, 1996 has
been placed before us to submit that on an extensive consideration
of the decision of the Apex Court in light of the terms of the dispute
resolution and jurisdiction clause of the contract therein, it was
held therein that :-
“39. In light of the above discussion, this Court may record that law on
“seat” and “venue” of arbitration proceedings is fairly well settled. The
cases, where the parties have determined “seat” in their agreements, the
same is akin to conferring exclusive jurisdiction on the Court(s) thereof.
The expression ‘place’ occurring in Sub-section (1) and (2) of the Section
20, where the word 'place' is used, refers to “juridical seat”; whereas,
expression “place” occurring in sub-section (3) of Section 20, is equivalent
to 'venue', i.e., the location of the meeting of arbitral proceedings, as per
the convenience of the parties or the arbitrators. The “place” mentioned
in Section 20(3) of the Act, 1996 is only a physical place of meeting and
has no relevance insofar as “juridical seat”, which shall vests exclusive
jurisdiction with the Court of competent civil jurisdiction or High Court of
original jurisdiction;
(i) As has been held by the Apex Court in the case of M/s. Ravi Ranjan
Developers Pvt. Ltd. versus Aditya Kumar Chatterjee (Supra),
Section 11(6) and Section 2(1)(e) of the Act, 1996, have to be
harmoniously read and construed to mean, the High Court which exercises
superintendence / supervisory jurisdiction over a Court within the meaning
of Section 2(1)(e) of the Act, 1996. Meaning thereby, where a clause in
the contract vests exclusive jurisdiction at a Civil Court for all actions /
proceedings arising out of the contract, the Court of the ‘place’ located as
having exclusive jurisdiction over the disputes should be considered as
“seat” and having jurisdiction to entertain applications under the Act,
1996.
(ii) Where the parties have agreed that all actions and proceedings arising
out of / related to contract shall lie in the Courts of competent jurisdiction
at place ‘A’ and have agreed to conduct arbitration proceedings at place
‘B’, the expression in the agreement that the Court at place ‘A’ will have
jurisdiction, would be a contrary indicator, as indicated by the Apex Court
in the case of BGS SGS Soma JV versus NPHC Ltd. (supra). In such
cases, the intention of the parties to confer exclusive jurisdiction on the
Court at place ‘A’, would be clear indication that the seat of arbitration
shall be at the same place ‘A’ and the Court at place ‘A’ will have
jurisdiction to deal with the applications under section 11(6) of the Act,
9 (Arbitration Petition No. 159 of 2022)
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1996.
(iii) The law laid down by the Apex Court in Mankastu Impex Private
Limited versus Airvisual Limited (supra), and BGS SGS Soma JV
versus NPHC Ltd. (supra), as has been relied upon by the learned
counsel for the respondent, does not support his contention that the
statement about the “place of arbitration” or the expression “arbitration
proceedings” in the agreement would mean that “venue” is the “seat”.
40. Coming to the facts of the instant case, Clause 25(iii) of the Lease
Agreement exclusively confers jurisdiction to the Courts at Ahmedabad in
all matters arising out of the said agreement. Whereas Sub-clause (ii) of
the Clause 25 reads that the parties have agreed that the arbitration
proceedings will be conducted at Bangalore. The expression of the place
of arbitration proceedings in Clause 25(ii) as extracted hereinabove, is
indication of the agreement arrived at between the parties to choose the
place of convenience within the meaning of Section 20(3) of the Act, 1996.
The words “the parties agree that the arbitration proceedings will be
conducted at Bangalore” cannot be read to mean that the place
“Bangalore” has been designated under the contract as the “seat of
arbitration” and would operate as an exclusive jurisdiction clause to
decide the jurisdiction of the High Court under Section 11(6) of the Act,
1996. The exclusive jurisdiction has been conferred to the Courts at
Ahmedabad, the subject matter of the Lease Agreement, which is the main
agreement containing arbitration clause, is located at Ahmedabad; the
agreement was signed at Ahmedabad between the parties; the agreement
was executed and stamped in the State of Gujarat; the respondent is
situated in Ahmedabad and the petitioner has its corporate headquarters
in Ahmedabad.
41.In light of the language of the agreement and the abovenoted facts
related to the case, this Court is of the considered view that “venue” at
Bangalore is merely a convenient location for holding of arbitration
proceedings and the Courts at Ahmedabad selected as having exclusive
jurisdiction in all disputes arising out of the Lease Agreement, should be
considered as the “seat of arbitration”. “
58. Based on the said decision, it was argued that the exclusive
jurisdiction clause therein has been considered to be a contrary
indicia to the physical place of meeting for conducting arbitration
proceedings and the Courts at the place mentioned in the
exclusive jurisdiction clause, shall be the ‘seat of Arbitrator’
irrespective of the place of arbitration where the proceedings are
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held.
59. Reliance is further placed on the decision of the Apex Court
in Videocon Industries Limited v/s. Union of India and
6
Another to submit that the Apex Court therein has rejected the
argument of shifting of the seat of arbitration for the mere fact that
the arbitral proceedings were conducted at a different place than
the place or seat fixed under the written contract. In the facts of
the said case, it was noted that the the contractual and juridical
seat of arbitration in terms of the clause 34 of the contract therein
was Kuala Lumpur. The dispute arose between the parties therein
that the arbitral tribunal though fixed the date of hearings at Kuala
Lumpur, Malaysia but had shifted the venue of its seat to
Amsterdam in the first instance and thereafter Kuala Lumpur
because of outbreak of epidemic SARS. Even in the order passed
by the learned arbitrator, it was noted that “by consent of the
parties, the seat of the arbitration is shifted to London”. The
subsequent proceedings were held by the arbitral tribunal at
London and the partial award was declared therein.
60. At that stage, an application under Section 9 of the
Arbitration Act, 1996 was filed in the Delhi High Court for stay of
the arbitral proceedings. The learned single Judge of Delhi High
Court overruling the objection of the respondent therein had held
that the Delhi High Court has jurisdiction to entertain the petition
filed under Section 9 of the Act, 1996. In this context, the matter
reached to the Apex Court and it was argued therein that after
having expressly consented to the shifting to the seat of arbitration
from Kuala Lumpur to Amsterdam in the first instance and
effectively taken part in the arbitral proceedings held at London,
the respondent therein was estopped from complaining that the
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seat of arbitration continues to be at Kuala Lumpur. The
contention was that the challenge to the partial award rendered by
the arbitral tribunal at London could have been raised only under
the relevant provisions of the English Arbitration Act, 1996.
61. The respondent therein, however, argued that the conscious
decision was taken by the parties, as recorded in the arbitration
agreement binding on all the parties to the contract that the
Malaysia would be the seat for intended arbitration and the Indian
Law as the law of contract and the English law as the law of
arbitration shall govern the proceedings. Mere fact that the
arbitration was held outside Kuala Lumpur due to outbreak of
epidemic SARS, the venue of arbitration cannot be said to have
been changed from Kuala Lumpur to London. Once the parties
have decided by written agreement to the place of arbitration, the
same could not have been changed except by amending the written
agreement as per Article 35.2 of the contract. The relevant clauses
33, 34 and 35 of the Project Sharing Contract (PSC) subject matter
of consideration therein, noted in paragraph No. ‘3’ of the said
decision, are to be extracted herein as under :-
“3. For the sake of convenience, the relevant clauses of Articles 33,
34 and 35 of the PSC are extracted below:
“33.1. Indian law to govern .—Subject to the provisions of Article
34.12, this contract shall be governed and interpreted in
accordance with the laws of India.
33.2. Laws of India not to be contravened .—Subject to Article 17.1
nothing in this contract shall entitle the contractor to exercise the
rights, privileges and powers conferred upon it by this contract in a
manner which will contravene the laws of India.
*
34.3. Unresolved disputes .—Subject to the provisions of this
contract, the parties agree that any matter, unresolved dispute,
difference or claim which cannot be agreed or settled amicably
within twenty-one (21) days may be submitted to a sole expert
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(where Article 34.2 applies) or otherwise to an Arbitral Tribunal for
final decision as hereinafter provided.
*
34.12. Venue and law of arbitration agreement .—The venue of sole
expert, conciliation or arbitration proceedings pursuant to this
article, unless the parties otherwise agree, shall be Kuala Lumpur,
Malaysia, and shall be conducted in the English language. Insofar
as practicable, the parties shall continue to implement the terms of
this contract notwithstanding the initiation of arbitral proceedings
and any pending claim or dispute. Notwithstanding the provisions
of Article 33.1, the arbitration agreement contained in this Article
34 shall be governed by the laws of England.
*
35.2. Amendment .—This contract shall not be amended, modified,
varied or supplemented in any respect except by an instrument in
writing signed by all the parties, which shall state the date upon
which the amendment or modification shall become effective.”
62. It was, thus, placed before us that in view of the nature of
clause 35.2 therein that the contract shall not be amended,
modified, varied or supplemented in any respect except by an
instrument in writing signed by all the parties, it was held that the
change of seat of arbitration could have been only by written
instrument, which was required to be signed by all the parties. The
Apex Court has concluded that as there was no agreement between
the parties to the contract (PSC) to shift the juridical seat from
Kuala Lumpur to London nor there was any written instrument
signed by the parties for amending the article 34.12 of the
contract, the mere fact that the parties to the arbitration had
agreed for shifting the seat of arbitration to London cannot be
interpreted to anything except physical change of the venue of the
arbitration from Kuala Lumpur to London.
63. It was, thus, sought to be demonstrated before us that the
clause 34.12 therein restraining the parties from making any
amendment or modification to the terms of the contract had
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prevailed upon the Apex Court to hold that the juridical seat could
not have been changed except by a written agreement signed by all
the parties and the mere change in the physical venue of the
hearings from Kuala Lumpur to Amsterdam and then to London did
not amount to change in the juridical seat of arbitration.
64. The submission, thus, is that upon a conjoint reading of the
above noted decisions would make it clear that there cannot be any
dispute in the facts of the present case that the place of
conducting arbitration proceedings agreed by the parties before
the learned arbitrator being at ‘Ahmedabad’ was “only the
convenient place” conferring supervisory jurisdiction of the Courts
at ‘Ahmedabad’ during the course of the arbitration proceedings.
However, once the arbitral proceedings have been concluded and
the award is rendered, the seat as fixed by the parties under the
written contract would be conferring exclusive jurisdiction to the
Courts at ‘Ankleshwar’ for any further challenge. There being no
written contract signed by the parties to modify or amend the
clause 1.3.2 (11) of the contract fixing the seat of arbitration at the
place where the Letter of Intent had been issued, the objections
taken by the petitioner had rightly been upturned by the
Commercial Court while holding that it has jurisdiction to entertain
and maintain the application under Section 9 of the Act, 1996.
65. It was, thus, submitted that there cannot be any other view
to substitute the view already taken by the Commercial Court in
light of the terms and conditions of the contract and the law laid
down by the Apex Court discussed hereinabove. This Court,
therefore, may not entertain the present petition filed under Article
227 of the Constitution of India so as to substitute the justifiable
view taken by the Commercial Court. Placing decision on the
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decision of the Apex Court in Rena Drego (Mrs.) v/s. Lalchand
10
Soni and Others , it was submitted that power of
superintendence conferred by the Article 227 of the Constitution of
India being extraordinary, is to be exercised most sparingly and
only in an appropriate case and the present case is not one of such
cases where the High Court may entertain the challenge under
Article 227 of the Constitution of India.
66. Lastly, as regards the vehement submissions made by the
learned senior counsel for the petitioner about the reply statement
made by the respondent before the Commercial Court to the
preliminary objection application of the petitioner challenging the
territorial jurisdiction, it was argued by the leaned senior counsel
for the respondent that none of the statements in the reply given by
the respondent before the Commercial Court can be given undue
importance. Placing statements in paragraph No. ‘7’, ‘8’ and ‘9’ of
the reply of the respondent to the objection of jurisdiction (before
the Commercial Court), vehemently pressed into service by the
learned senior counsel for the petitioner, it was argued that the
statement therein clearly conveys the understanding of the
respondent that it had admitted to consider the seat at Ahmedabad,
as recorded in the first arbitral meeting, during the course of the
arbitration proceedings only, which would have helped the parties
to determine the Courts at which the application for interim relief
or any other application could be submitted during the course of
arbitration proceedings. However, once the award is rendered, no
objection can be taken to the territorial jurisdiction of the Court
mutually agreed by the parties under the arbitration clause with
the clear understanding regarding the seat of arbitration being at
Ankleshwar. The submission is that the fact that the arbitral
10 [(1998) 3 SCC 341]
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proceedings were conducted at Ahmedabad and the learned
Presiding Arbitrator has recorded in the minutes of the first
arbitral meeting about the seat of arbitration being at Ahmedabad,
is having no nexus to the specific agreement of the parties about
the seat of arbitration in a written contract and that the
amendment or variation of the contract, if any, has to be in writing,
expressly referring to the contract, duly signed by the authorised
representatives of each of the parties.
67. Reliance is placed on the decision of the Apex Court in
Pratap Narain v/s. The Fifth Additional District Judge,
11
Allahabad and Others and in the case of Sopan Sukhdeo
Sable and Others v/s. Assistant Charity Commissioner and
12
others to submit that the pleadings cannot be construed like a
piece of Legislation. Often loosely drafted pleadings should be
given liberal construction and the intention of the parties should be
gathered by the Court looking to the substance rather than the
wording of the pleadings and the manner in which they have been
pleaded. Pleadings should be read and construed as a whole and
not in piece-meal. No word or sentence can be picked-up and used
for or against the party pleading in isolation of other part of the
pleadings. The true import of the pleadings can be ascertained
only if it is read as a whole and it is not permissible to pull-out a
sentence or a passage to read it out of the context.
68. There cannot be any compartmentalisation, dissection,
segregation and inversions of the various paragraphs of the reply of
the application of the petitioner herein, raising objection as to the
jurisdiction of the Commercial Court. The intention of the
respondent herein is to be gathered from the tenor and terms of
11 (1998 SCC OnLine ALL 215)
12 [(2004) 3 SCC 137]
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the pleadings taken as a whole, which makes it clear that the
respondent has categorically stated before the Commercial Court
that the seat of arbitration as decided in the arbitral meeting dated
07.10.2021 was fixed by the parties for smooth conduct of the
proceedings of the arbitration, which has no relevance or nexus to
the dispute resolution clause where the parties had agreed to
anchor the Court proceedings at Ankleshwar conferring exclusive
jurisdiction to the Courts where the Letter of Intent/NOC has been
issued.
69. It was categorically denied therein that the respondent
ONGC had waived in respect of the seat of arbitration to fix it at
Ahmedabad and the clause 1.2.6 of the agreement was pressed into
service to submit that there cannot be any shifting of the juridical
seat of arbitration from Ankleshwar to Ahmedabad in absence of
any written instrument signed by the parties for amending the
clause 1.3.2(11).
70. In rejoinder, the learned senior counsel Mr. Mihir Thakore
for the petitioner sought to distinguish Videocon Industries
6 8
Limited and BBR (India) Private Limited to reiterate that
7
Indus Mobile Distribution Private Limited squarely governs
the issue before this Court. While making distinction to BBR
8
(India) Private Limited for its applicability to the facts of the
present case, it was submitted in the said case that :-
(i) there was no seat fixed under the contract.
(ii) there was no significant contrary indicia in the contract
(iii) the Arbitrator fixed the place of arbitration under Section
20(2), which became the ‘seat’.
(iv) Thus, in the context of the facts of the said case, it was held by
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the Apex Court that the seat once fixed at Panchkula, should
remain static and cannot be changed by the subsequent arbitrator.
71. The submission is that for the mere fact that the arbitration
clause therein was silent about the fixing of the ‘seat of
arbitration’, the opinion drawn by the Apex Court that the
proceedings therein were held at New Delhi rendering the arbitral
award would not change the seat of arbitration, is of no application
in the facts of the present case.
72. The submission is that the principles in Videocon Industries
6
Limited cannot be applied for the statement of the parties
recorded by the learned Presiding Arbitrator in the first arbitration
proceedings and for the further fact that there has been no
objection by the respondent herein at any stage of the arbitral
proceedings.
73. Lastly, relying upon Section 4 of the Act, 1996 it was argued
that the respondent has waived its right to object to the legal
implication of fixation of the seat by the learned arbitrator and
further in view of its own admission before the Commercial Court
in its reply the respondent had admitted to the change of seat at
Ahmedabad for the arbitration proceedings and that the
respondent had adhered to such explicit understanding throughout
the arbitration proceedings. The submission is that the principle of
waiver incorporated in Section 4 of the Act. 1996 comes into play in
light of the clear statement of the respondent made in their reply
before the Commercial Court.
74. It was further submitted that the admission in the pleadings
before the Commercial Court is sufficient to hold that the
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respondent understood the legal implication of fixation of seat at
Ahmedabad during the course of arbitral proceedings and thus,
agreed to shift the place and, as such, seat of the arbitration for
new challenges confers exclusive jurisdiction to the Courts at
Ahmedabad.
75. Reliance is placed on the decision of this Court in the case of
Union of India represented by Chief Engineer Navy Mumabi
13
v/s. M/s. Pushkarraj Construction P. Ltd. decided on
06.05.2035, in rejoinder, to substantiate the arguments made on
the issue of change of seat of Arbitration.
Analysis :
76. Having heard learned counsels for the parties and perused
the record, before entering into the merits of the arguments of the
learned advocates for the parties, in order to answer the question
posed by us, we would like to summarise the law relating to the
“seat” and “venue” of arbitration conferring exclusive jurisdiction
to the Court chosen by the parties, which is fairly well settled :-
(i) The concept of “seat” and “venue” incorporated under Section
20 of the Arbitration Act, 1996 is on the fundamental principle of
‘party autonomy’ incorporated under the Arbitration Act, 1996
based on the UNCITRAL model laws. A plain reading of Section 20
leaves no room for doubt that in an arbitration seated in India or in
a domestic arbitration, the parties are free to agree to any “place”
or “seat” of Arbitration within the India, be it in any city.
(ii) The word “Court” defined in Section 2(1)(e)(i) has to be
13 (SCA No. 5057 of 2024 with SCA No. 15264 of 2024)
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construed keeping in view the provisions in Section 20, which gives
recognition to ‘party autonomy’. The Legislature has given
jurisdiction to two Courts, i.e. the Court which would have
jurisdiction where the cause of action is located and the Court
where the arbitration takes place, with a view to give freedom to
the parties to agree for a “seat” of arbitration at a place which
would be neutral to both the parties.
The definition of “Court” under Section 2(1)(e) read with
Section 20 is, thus, ‘seat-centric’ and not ‘subject matter-centric’.
(iii) Section 20(1) centers around the ‘party autonomy’. While
Section 20(1) provides that the parties are free to agree on the
place of arbitration, Section 20(2), authorises the arbitral tribunal
to determine the place/seat of such arbitration in case where there
is no agreement as per sub-section(1). Section 20(3) enables the
tribunal to meet at any place for conducting hearings at a place of
convenience in matters, such as consultations amongst its
members, for hearing witnesses, experts or the parties.
3
[Reference : BALCO ].
7
(iv) In Indus Mobile Distribution Private Limited , the
th
provisions of Section 20 of the Act were analysed in light of 246
Report of the Law Commission of India bringing amendments to
Arbitration and Conciliation Act, 1996 in the year 2015. It was held
therein that under the law of arbitration unlike the Code of Civil
Procedure, which applies to the suits filed in Court, 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 be in
the classical sense have jurisdiction - i.e. no part of the cause of
action may have arisen at the neutral venue and neither would any
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of the provisions of Sections 16 to 21 of the CPC be attracted.
In arbitration law, the moment the seat is designated, it is
akin to an exclusive jurisdiction clause for the purposes of
regulating the arbitral proceedings arising out of the agreement
between the parties. Where more than one Court has jurisdiction,
it is open for the parties to exclude all other Courts.
While Sections 20(1) and 20(2) would refer to the “seat” of
arbitration, Section 20(3) would refer only to the “venue” of the
arbitration. The word “place” occurring in Sections 20(1) and
20(2) refers to “juridical seat”, whereas the same word “place” in
Section 20(3) is equivalent to “venue”.
3
(v) Referring to BALCO and Indus Mobile Distribution Private
7 4
Limited , the Apex Court in BGS SGS SOMA JV has observed that
when the parties, either by agreement or, in default of there being
an agreement, where the arbitration tribunal determines a
particular place as the “seat” of the arbitration under Section 31(4)
of the Arbitration Act, 1996, it becomes clear that the parties
having chosen the seat of the arbitral tribunal having determined
the “seat”, have also chosen the Courts at the seat for the purposes
of interim orders and challenges to the award. (Reference para-45).
The very fact that the parties have chosen the place to be the
“seat” would necessarily carry with it the decision of both the
parties with the Courts at the “seat” would exclusively have
jurisdiction over the entire arbitral process. Meaning thereby,
once the “seat” of arbitration is chosen, it amounts to an exclusive
jurisdiction clause, in so far as the Courts at that seat are
concerned.
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4
It was further noted in BGS SGS Soma that in Indus
7
Mobile Distribution Private Limited , two separate and distinct
reasons are given for arriving at the conclusion that the Courts at
the seat chosen by the parties (i.e. the Courts at Mumbai) alone,
would have jurisdiction. The first reason, which is independent of
the second, is that as the seat of the arbitration was designated as
Mumbai, it would carry with it the fact that the Courts at Mumbai
alone would have jurisdiction over the arbitration process. The
second reason given was that in any case, following the Hakam
14
Singh principle in Hakam Singh v/s. Gammon (India) Ltd. ,
where more than one Court can be said to have jurisdiction, the
agreement itself designated the Mumbai Court as having exclusive
jurisdiction.
Further, considering the judgments of the English Courts, the
tests for determination of “seat”, “whether the seat of the arbitral
proceedings has, in fact, been indicated in the agreement between
the parties”, it was held in paragraph No. ‘61’ (as noted
hereinbefore) that wherever there is express designation of a
“venue”, and no designation of any alternative place as “the seat”
combined with supernational body of rules governing arbitration,
and no further significant contrary indicia, inexorable conclusion is
that the stated “venue” is actual the ‘juridical seat” of the arbitral
proceedings. It was, thus, concluded in paragraph No. ‘82’ as
under :-
“82. On a conspectus of the aforesaid judgments, it may be
concluded that whenever there is the designation of a place of
arbitration in an arbitration clause as being the “venue” of the
arbitration proceedings, the expression “arbitration proceedings”
would make it clear that the “venue” is really the “seat” of the
14 [(1971) 1 SCC 286]
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arbitral proceedings, as the aforesaid expression does not include
just one or more individual or particular hearing, but the
arbitration proceedings as a whole, including the making of an
award at that place. This language has to be contrasted with
language such as “tribunals are to meet or have witnesses, experts
or the parties” where only hearings are to take place in the
“venue”, which may lead to the conclusion, other things being
equal, that the venue so stated is not the “seat” of arbitral
proceedings, but only a convenient place of meeting. Further, the
fact that the arbitral proceedings “shall be held” at a particular
venue would also indicate that the parties intended to anchor
arbitral proceedings to a particular place, signifying thereby, that
that place is the seat of the arbitral proceedings. This, coupled
with there being no other significant contrary indicia that the
stated venue is merely a “venue” and not the “seat” of the arbitral
proceedings, would then conclusively show that such a clause
designates a “seat” of the arbitral proceedings. In an international
context, if a supranational body of rules is to govern the
arbitration, this would further be an indicia that “the venue”, so
stated, would be the seat of the arbitral proceedings. In a national
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.”
77. In light of the above stated legal principles on the concept of
the “juridical seat” of the arbitration proceedings; the distinction
between “seat” and “venue” under the provisions of Section 20(1)
and Section 20(2) as against Section 20(3) of the Act, 1996; in light
of the test for determination of “seat” laid down in BGS SGS
4
SOMA JV , we may now deal with the rival contentions of the
learned senior counsels for the parties based on the decision in
5 6.
Inox Renewables Ltd. and Videocon Industries Limited
78. The learned senior counsel for the petitioner has strenously
argued that the decision of the Apex Court in Inox Renewables
5
Ltd. about the change of “seat”, though agreed initially under a
written contract during the course of arbitration proceedings,
would squarely apply in the facts and circumstances of the present
case and it is to be held by this Court that “the seat of arbitration”,
as stated in the minutes of the preliminary arbitral meeting drawn
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by the learned Presiding Arbitrator with the consent of the parties,
shall be the ‘juridical seat’ of the arbitral proceedings and under
Section 20(1) conferring exclusive jurisdiction to the Courts at
Ahmedabad.
79. To the contrary, the vehement plea of the learned senior
counsel for the respondent is that the decision in Videocon
6
Industries Limited , in fact, governs the whole controversy herein
as in light of clauses 1.2.6 and 1.3.2(11) of the contract, there can
be no change of the seat agreed by the parties under the written
contract. Moreover, the minutes of the preliminary arbitral
meeting held on 07.10.2021, (para ‘5’ whereof has been relied on
by the petitioner), does not record the consent of the parties as to
the change of seat of arbitration from ‘Ankleshwar’ to
‘Ahmedabad’.
80. To deal with the above rival submissions of the parties, we
5
may first go through the decision in Inox Renewables Ltd. , which
is the bone of contention of the petitioner. In the said case, it may
be noted that : (a) the venue of arbitration was fixed at Jaipur in the
purchase order, containing the dispute resolution clause; (b)
however, the arbitration proceedings were held at Ahmedabad and
it was categorically stated by the learned Arbitrator in the award
rendered at Ahmedabad, as noted in paragraph ‘9’ of the judgment,
extracted hereinbefore, that the parties have mutually agreed,
irrespective of a specific clause as to the [“venue” that the “place”]
of the arbitration, would be at ‘Ahmedabad’ and not at ‘Jaipur’.
The said statement incorporated in paragraph No. ‘12.3’ of the
5
award therein [extracted in para 9 in Inox Renewables Ltd. ] was
specific referring to the written arbitration agreement, recording
that “as per arbitration agreement the venue of arbitration was to
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be at Jaipur” and “that the parties have mutually agreed
irrespective of the specific clause”.
81. In light of the said statement recorded by the learned
Arbitrator, the Apex Court has held therein that by mutual
agreement the parties have specifically shifted the venue/place of
arbitration from ‘Jaipur’ to ‘Ahmedabad’ and the contention of the
respondent therein that this could only have been done by written
agreement and that the arbitrator’s findings would really have
reference to a convenient venue and not the seat of tribunal, was
rejected, considering the test to determine the juridical seat of
4
arbitration tribunal, laid down in BGS SGS SOMA JV .
4
82. It was recorded that in BGS SGS SOMA JV , has noted that
concept of juridical seat of arbitral proceedings and its relationship
to the jurisdiction of the Courts which are then to look into the
matters relating to the arbitral proceedings-including the
challenges to the arbitral awards, was unclear and had to be
developed in accordance with the international practice on a case-
by-case basis by the Apex Court. Further, considering the
4
statement of law in paragraph No. ‘82’ of BGS SGS SOMA JV
3
extracted hereinbefore and the BALCO it was held in the facts of
the said case therein, that it was clear that the parties have by
mutual agreement, entered into an agreement to substitute the
venue at Jaipur with Ahmedabad as the place/seat of arbitration
under Section 20(1) of the Arbitration and Conciliation Act, 1996.
83. On the reliance placed therein upon Videocon Industries
6
Limited for the proposition that any change in seat could only be
by way of a written agreement signed by the parties, specific
reference has been made to the amendment clause 35.2 in
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6
Videocon Industries Limited , to conclude that the said
judgment would have no application to the facts of the case in Inox
5
Renewables Ltd. as there is nothing akin to clause 35.2,
6
applying to the facts in Videocon case.
5
84. It was, thus, held in Inox Renewables Ltd. that the parties
may mutually arrive at a seat of arbitration, may change seat of
arbitration by mutual agreement which is recorded by the
Arbitrator in his award to which no challenge had been made by
either party, “venue” being shifted from Jaipur to Ahmedabad, is
really a shifting of the venue/place of arbitration with reference to
Section 20(1) and with reference to Section 20(2) of the
Arbitration Act, 1996. This would further make it clear that Jaipur
does not continue the seat of arbitration and Ahmedabad is now the
seat designated by the parties, and not a venue to hold the
meetings. The learned Arbitrator has categorically recorded that
by mutually agreement Jaipur as a “venue” has gone and has been
replaced by Ahmedabad. Once the seat of arbitration is replaced
by mutual agreement to be at Ahmedabad, the Courts at Rajasthan
are no longer vested with jurisdiction as exclusive jurisdiction is
now vested in the Courts at Ahmedabad given the change in the
seat of arbitration.
85. Considering the ratio of the decision in Inox Renewables
5
Ltd. , reverting to the present case, when we look to the statement
in paragraph No. ‘5’ of the preliminary arbitral meeting held on
07.10.2021 recorded by the learned Presiding Arbitrator, we may
opine without any semblance of doubt that the statement recorded
therein cannot be considered to be the mutual agreement of the
parties for shifting of the venue/place of arbitration with reference
to Section 20(1) of the Act, 1996. A bare reading of paragraph No.
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‘5’ of the minutes of the preliminary meeting dated 07.10.2021
shows that the learned Arbitrator has decided the place of
arbitration to be at Ahmedabad with the consent of the learned
counsels/advocates for the parties. The said consent of the learned
advocate/parties, as accepted by the parties, can only be said to be
determination of the place of convenience for conducting of
arbitration proceedings with reference to Section 20(3) of the
Arbitration and Conciliation Act, 1996. The said statement cannot
be said to be the mutual agreement of the parties on the place of
arbitration within the meaning of Section 20(1), nor it can be said
to be the place of arbitration determined by the learned Presiding
Arbitrator as per Section 20(2) of the Act, `1996..
86. Having regard to the facts and circumstances of the present
case, including the convenience of the parties, within the meaning
of Section 20(2), which can be invoked only in a case where there is
no agreement referred to in sub-section(1) of Section 20, the word
“seat” occurring in the expression “the seat of arbitration shall be
at Ahmedabad” in paragraph No. ‘5’ of the minutes of the
preliminary arbitral meeting dated 07.10.2021 is to be considered
to be superfluous, as it can only convey to a place of convenience
for conducting of the arbitration proceedings decided by the
learned Presiding Arbitrator within the meaning of sub-section(3)
of Section 20 (notwithstanding sub-section(1) and sub-section(2) of
Section 20). The arguments of the learned senior counsel for the
change of seat of arbitration by mutual agreement of the parties,
based on the statement recorded by the learned Presiding
Arbitrator in paragraph No. ‘5’ of the preliminary arbitral meeting
dated 07.10.2021, therefore, are liable to be turned down.
87. The ratio of the decision of the Apex Court in Inox
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5
Renewables Ltd. , cannot be applied in the facts and
circumstances of the present case.
6
88. Coming to the Videocon Industries Limited , a distinction
is sought to be drawn by the learned senior counsel for the
petitioner about the applicability of the said decision in the facts
and circumstances of the present case; firstly by submitting that
3
the said decision was rendered prior to BALCO and hence cannot
be considered to be a statement of law on the question of “seat”
and “venue”. On this submission, suffice it to say that besides
making the said statement at the Bar, it could not be elaborated by
the learned senior counsel as to how in the matter of distinction
between “seat” and “venue”, this judgment has no relevance. We,
therefore, do not find any reason to deliberate it further.
89. The second submission is based on the observations of the
Apex Court therein in paragraph No. 16, wherein the submission of
the respondent therein was recorded that any change in the
agreement (PSC) required a concurrence by all the parties to the
contract and the consent, if any, given by two of the parties, cannot
have the effect of changing the seat of arbitration. The submission
is that the Apex Court therein has categorically recorded that the
PSC agreement was between five parties whereas only two of the
parties had agreed to shift the place of arbitration proceedings
outside Kuala Lumpur due to outbreak of epidemic SARS. Thus, in
absence of any agreement between all the parties to the contract,
the Apex Court has held that the seat of the arbitration as per the
agreement of the parties was Kuala Lumpur and mere change in
the physical venue outside the Kuala Lumpur did not amount to
change in the juridical seat of arbitration.
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90. Considering the above, suffice it to record that for the
discussions made in the foregoing paragraphs, we have found that
the statement recorded by the learned Presiding Arbitrator in
paragraph No. ‘5’ of the preliminary arbitral meeting dated
07.10.2021 does not record the mutual agreement of the parties for
shifting of the seat of arbitration with reference to clause 1.3.2(11)
of the agreement, wherein the parties have fixed the seat of
arbitration to be at ‘Ankleshwar’. We do not find any substance in
the submissions of the learned senior counsel to distinguish the
applicability of the ratio of the decision in Videocon Industries
6
Limited , for the facts and circumstances of the present case.
91. The fact remains that in the instant case, the parties by
mutual agreement under a written contract dated 17.10.2018 not
only consented on the seat of arbitration being the place where the
LOA/NOA has been issued, but also agreed, for the sake of
convenience, that the parties may agree to hold the proceedings at
any other “venue”. The language employed in clause 1.3.2(11) of
the written contract signed by the parties with open eyes is clear
and specific as to the “seat” of arbitration and the “venue” within
the meaning of Section 20(1) and 20(3) of the Arbitration Act,
1996; respectively.
92. It is evident that the parties specifically agreed to anchor the
court proceedings at Ankleshwar by conferring exclusive
jurisdiction to the said court by determining the seat of arbitration,
with the clear understanding that “venue” of arbitration may be
different from the “seat” as per their convenience. Besides that,
the clause 1.2.6 of the agreement, relating to amendment of the
contract is clear and specific to the extent that no amendment or
other variation of the contract shall be effected, unless it is in
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writing, specifically referring to the contract. No such amendment,
in any case, has either been made or even agreed by the parties
referring to the written contract for shifting the ‘seat’ fixed at
Ankleshwar (where LOA/NOA has been issued).
93. It, thus, cannot be accepted that there is a mutual agreement
of the parties within the meaning of section 20(1) of the Act, 1996
shifting the seat of arbitration from Ankleshwar to be at
Ahmedabad. At the most, under the written contract between the
parties, the place of arbitration at ‘Ahmedabad’ was a convenient
place chosen by the parties for holding arbitration proceedings in
terms of clause 1.3.2 (11) of the written agreement itself.
94. In this scenario, the minutes of the preliminary arbitral
meeting dated 07.10.2021 recorded by the learned Presiding
Arbitrator would have no bearing on the terms and conditions of
the written contract between the parties. We, thus, find that the
6
decision in Videocon Industries Limited supports the case of
the respondent and has rightly been referred, to rely upon, by the
learned senior counsel appearing for the said respondent.
95. At this stage, we may also refer to the decision of the Apex
8
Court in BBR (India) Private Limited as a guiding principle in
the matter of shifting of ‘juridical seat’ during the course of
arbitration proceedings. We are conscious of the fact that in BBR
8
(India) Private Limited , there was no seat fixed under the
arbitration agreement and there was no significant contrary indicia
as in the present case, about the ‘juridical seat’ agreed by the
parties. It was a case where in absence of any agreement between
the parties choosing the ‘seat of arbitration’ in terms of Section
20(1), the learned Arbitrator in the first meeting had determined
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the place of arbitration within the meaning of section 20(2) of the
Act, 1996, which was considered to be the seat of arbitration by the
Apex Court.
96. What is relevant for us to be considered from the discussion
8
in BBR (India) Private Limited is the distinction drawn between
Section 20(1), Section 20(2) and Section 20(3) of the Act, 1996
3
referring to the previous decisions of the Apex Court in BALCO ,
7
Indus Mobile Distribution (P) Ltd. Datawind Innovations (P) Ltd. ,
4 5
BGS SGS SOMA JV , Inox Renewables Ltd. . It was noted in
4
paragraph No. ‘23’ therein referring to BGS SGS SOMA JV. and
7
Indus Mobile Distribution Private Limited that the moment
the parties by agreement designate “seat”, it becomes akin to
exclusive jurisdiction clause and it would then vest the courts at
“the seat” with exclusive jurisdiction to regulate the arbitration
proceedings arising out of the agreement between the parties.
8
97. It was noted in BBR (India) Private Limited that the court
4
in BGS SGS SOMA JV has dealt with the situation where the
parties have not agreed or have not fixed the “seat” of arbitration.
In such a situation the proceedings must be considered at any rate
prima facie as being governed and subject to jurisdiction of the
Court where the arbitration is being held on the ground that the
said court is most likely to be connected with the proceedings. The
law as applicable, where the parties by agreement have not fixed
the jurisdictional seat, has been crystallized in BGS SGS SOMA
4
JV in paragraph No. ‘82’, that whenever there is an express
designation of “venue” and no designation of any alternative place,
as the “seat” combined with the supranational body of rules
governing the arbitration and no significant contrary indicia, the
inexorable conclusion is that the stated “venue” is actually is ‘the
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juridical seat” of the arbitration proceedings.
98. We may also refer to the observations in paragraph No. ‘26’
8
in BBR (India) Private Limited where taking note of the BGS
4
SGS SOMA JV , it was recorded that it would be correct to hold
that while exercising jurisdiction under sub-section(2) of Section 20
of the Act, 1996, the Arbitrator is not to pass a detailed or
considered decision. The place where the arbitral tribunal holds
the arbitral proceedings, would by default be “the venue” of
arbitration and consequentially “the seat” of arbitration. However,
the said observation, can only be considered to be a statement of
law in a case where the parties have not agreed to or have not fixed
the “juridical seat” of arbitration and the arbitrator decides at the
place under Section 20(2).
99. However, relevant is to note that the Apex Court in BBR
8
(India) Private Limited has categorically observed that the seat
once fixed by the arbitral tribunal under Section 20(2) of the Act,
1996 should remain static and fixed, whereas “the venue” of
arbitration can change and move from “the seat” to a new location.
The venue is not constant and stationary and can move and change
in terms of sub-section(3) of Section 20 of the Act, 1996. However,
the change of venue does not result in change or relocation of the
“seat of arbitration”.
8
100. It was categorically held in BBR (India) Private Limited ,
as noted hereinbefore by extracting paragraph Nos. ‘31’ and ‘32’
that the aspect of certainty as to the courts’ jurisdiction must be
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
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preferred.
101. It is categorically held in paragraph No. ‘34’ in BBR (India)
8
Private Limited , as extracted hereinbefore, that when the
question of territorial jurisdiction arises, 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.
102. The further observation in paragraph No. ‘34’ is that 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, is relevant for our consideration in the
facts of the present case.
103. Taking clue of what has been observed by the Apex Court in
8
paragraph Nos. ‘31’ to ‘34’ in BBR (India) Private Limited , in
the context of fixation of ‘jurisdictional seat” under sub-section (2)
of Section 20 of the Act, 1996, in our considered opinion, must be
the guiding principle for us in the facts and circumstances of the
present case, where, admittedly, “the juridical seat of arbitration”
had been fixed by the parties at ‘Ankleshwar’ under the written
contract “in terms of Section 20(1) of the Act, 1996”. For shifting
of ‘juridical seat’, there may be a mutual agreement of the parties,
however, such an agreement or consent shall be express in writing,
clearly understood and agreed by the parties. As found by us that
there is no such mutual agreement or consent of the parties in
writing, expressly and clearly understood and agreed by them, it
cannot be held that the statement recorded by the learned
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Arbitrator in paragraph No. ‘5’ of the preliminary arbitral meeting
dated 07.10.2021 is the mutual agreement of the parties for
shifting of the jurisdictional “seat” of arbitration from ‘Ankleshwar’
to ‘Ahmedabad’.
104. On a careful reading and understanding of the decision of the
6
Apex Court in Videocon Industries Limited and BBR (India)
8
Private Limited , as also the test laid down to determine the seat
of arbitration as discussed hereinbefore, none of the arguments
made by the learned senior counsel for the petitioner to assert that
there was a mutual agreement of the parties recorded by the
learned Presiding Arbitrator for change of jurisdictional “seat” of
arbitration from ‘Ankleshwar’ to ‘Ahmedabad’, can be appreciated.
105. Lastly, on the submissions made by the learned senior
counsel for the petitioner on the principle of waiver incorporated in
Section 4 of the Act, 1996, based on the pleadings in the reply
submitted by the respondent to the preliminary objection as to the
jurisdiction of the Commercial Court in Section 34 proceedings,
suffice it to say that there is no question of waiver by pleadings,
wherein the respondent specifically stated that as to its
understanding, the supervisory jurisdiction of the Court at
‘Ahmedababad’ during the course of arbitration proceedings was
fixed by the parties for smooth conducting of the arbitration
proceedings. From the statement in paragraph Nos. ‘7’, ‘8’ and ‘9’
of the reply pleadings of the respondent, it is evident that the
respondent has clearly understood the distinction between the
supervisory jurisdiction of the Court at ‘Ahmedabad’ over the
arbitral proceedings and and during the course of arbitral
proceedings and the jurisdictional “seat” conferring exclusive
jurisdiction to the Courts at ‘Ahkleshwar’ after conclusion of the
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arbitration proceedings in terms of clause 1.3.2(11) of the written
contract signed by the parties. The pleadings in reply cannot be
taken out of the context to be considered as an admission of the
respondent for change of ‘juridical seat’ of arbitration from
‘Ankleshwar’ to ‘Ahmedabad’.
8
106. The Apex Court in BBR (India) Private Limited
discouraging the shifting of “seat of arbitration” except with the
express intention of the parties, has categorically observed that
sub-section(3) of Section 20 specifically draws distinction between
“venue of arbitration” and “seat of arbitration” by stating that for
convenience and other reasons, the arbitration proceedings may be
held at places different from the “seat of arbitration”, which
location is to be referred to as the “venue of arbitration”. At the
cost of repetition, the observations therein referring to C v/s. D
2008 Bus LR 843: 2007 EWCA Civ 1282(CA) may be noted here
that the place of arbitration or the seat must be certain and static
and not vague or changeable, as the parties should not remain in
doubt as to the jurisdiction of the Courts for availing of judicial
remedies. Any such interpretation of the Courts would be a risk of
parties approaching different courts, resulting into conflicting
decisions that the law does not contemplate, and is to be avoided
[Refer Para 31 (BBR)].
107. In view of the above discussion, in the totality of facts and
circumstances of the present case, we do not find any error in the
decision of the Commercial Court in rejecting the preliminary
objection raised by the petitioner as to the territorial jurisdiction of
the Court at Ankleshwar, considering the terms and conditions of
the written contract and the abovenoted law stated by the Apex
Court. All the reasonings of the Commercial Court in the judgment
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impugned are in consonance with the settled law pertaining to the
distinction between “seat” and “venue” of arbitration within the
meaning of Section 20 of the Arbitration Act, 1996 read with
Section 2(1)(e)(i) of the Arbitration Act, 1996.
108. The present petition is, accordingly, dismissed being devoid
of merits. No order as to costs.
(SUNITA AGARWAL, CJ )
(D.N.RAY,J)
C.M. JOSHI/PPS
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