Court Lacking Territorial Jurisdiction Cannot Decide Section 34 Application on Merits and Must Return the Petition.

The appellant (Oyo) challenged an arbitral award by filing applications under Section 34 of the Arbitration and Conciliation Act, 1996, before the Commercial Court at the City Civil Court, Ahmedabad

Despite a joint pursis by both parties consenting to the court's jurisdiction, the Commercial Court held that it lacked territorial jurisdiction because the arbitral proceedings were conducted at the arbitrator's residence, which falls within the territorial limits of the Ahmedabad District (Rural) Court

However, after finding it lacked jurisdiction, the Commercial Court proceeded to dismiss the Section 34 applications on their merits

The appellant challenged the court's decision to rule on the merits after denying its own jurisdiction, while the respondent filed cross-objections (treated as cross-appeals) challenging the finding on the lack of territorial jurisdiction

1. Whether the Commercial Court at the City Civil Court, Ahmedabad, had territorial jurisdiction to adjudicate the Section 34 applications

2. Whether a court, after determining it lacks territorial jurisdiction, can legally proceed to decide the merits of the case

Section 37 of the Arbitration and Conciliation Act, 1996, regarding appeals

The "seat of arbitration" doctrine established in BGS SGS Soma JV v. NHPC Ltd. (2020) 4 SCC 234, which holds that the designation of a seat operates as an exclusive jurisdiction clause, conferring supervisory jurisdiction only to the courts where the seat is located

Section 20 of the Arbitration Act to distinguish between "seat" and "venue"

Order 7 Rule 10 of the Code of Civil Procedure, which mandates the return of a plaint/application if the court lacks jurisdiction

The High Court observed that while the agreement fixed the "seat" generally as Ahmedabad, the city is split into two distinct judicial territories: City Civil and Rural. Since the arbitral proceedings actually took place and the award was signed within the Rural limits, that location became the specific "seat" under Section 20(2), conferring exclusive supervisory jurisdiction to the Ahmedabad Rural Court

The Court rejected the respondent's argument regarding "party autonomy" and "consent," noting that consent cannot confer jurisdiction upon a court that lacks it under the law

Critically, the High Court held that once the Commercial Court concluded it had no territorial jurisdiction, its power was exhausted except for the ministerial act of returning the application. Entering into the merits of the Section 34 case after finding a lack of jurisdiction was a jurisdictional error

The Court held that the applications must be returned to the appellant under Order 7 Rule 10 of the CPC for presentation before the competent Ahmedabad District (Rural) Court. The First Appeals were allowed to this extent, and the cross-objections/appeals were dismissed