Punjab-Haryana High Court
M/S Adie Broswon Breweries Pvt Ltd vs M/S Kla Contruction Technologies Pvt ... on 22 February, 2019
Equivalent citations: AIRONLINE 2019 P AND H 938
Author: Deepak Sibal
Bench: Deepak Sibal
C. R. No. 4897 of 2018 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.
Case No. : C. R. No. 4897 of 2018
Reserved On : January 24, 2019
Pronounced On : February 22, 2019
M/s Adie Broswon Breweries Pvt. Ltd. .... Petitioner
vs.
M/s KLA Construction Technologies
Private Limited and another .... Respondents
CORAM : HON'BLE MR. JUSTICE DEEPAK SIBAL.
* * *
Present : Mr. Chetan Mittal, Senior Advocate
with Mr. Kunal Mulwani, Advocate
Mr. Mayank Aggarwal, Advocate
and Mr. Aditya Sanghi, Advocate
for the petitioner.
Mr. Arjun Dewan, Advocate
Mr. G. S. Bedi, Advocate
and Ms. Anupama Kumar, Advocate
for respondent no. 1.
* * *
DEEPAK SIBAL, J. :
The present petition is directed against the order dated
27.03.2018 passed by the Additional District Judge, Gurdaspur (for short -
the Trial Court) dismissing a petition filed by the petitioner under Section
34 of the Arbitration and Conciliation Act, 1996 (for short - the Act) on the
ground that the Trial Court at Gurdaspur lacked territorial jurisdiction to
entertain such petition.
The facts, in brief, which are required to be noticed for
adjudicating upon the instant petition are that the petitioner intended to set
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up a brewery in Village Kiri Afgana, Tehsil Batala, District Gurdaspur
(Punjab) and for that purpose, invited bids, in pursuance whereof,
respondent no. 1 submitted its bid which was accepted. On 16.09.2010, the
parties entered into an agreement which contained the terms and conditions
governing the execution of the work. Clause 13.17 of the agreement
pertained to arbitration and the same reads as under :-
"13.17.1 All disputes and differences of any
kind whatsoever arising out of or in
connection with the Contract or
carrying out of the Works (whether
during the progress of the works or
after their completion and whether
before or after the determination,
abandonment or breach of the
Contract), any claims relating to the
meaning of specifications, design,
drawings and instructions herein
before mentioned and so as to the
quality of materials or workmanship
used in the Works or as to any other
question, claims, right, matter
whatsoever arising out of or relating
to this Contract be referred to in
writing as a notice to be given to the
Project Manager as pursuant to
terms of this Contract, and amicably
settled by the Project Manager
through friendly negotiations and
agreement with the Contractor. A
written notice specifying the
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decisions shall be issued within 30
(thirty) days by the Project Manager.
13.17. 2 In case the matters referred to above
in the immediately preceding Clause
cannot be settled amicably and the
Contractor be dissatisfied with the
decisions given by the Project
Manager as above, either party (the
Project Manager and the Contractor)
may within 28 (twenty eight) days
after receiving the notice of such
decisions, give a written notice to
other party through the Employer,
requesting that such matters in
dispute be arbitrated upon. Such
written notice shall specify clearly
the matters which are in dispute and
such dispute or differences of which
such written notice has been given;
no other matters shall be entertained
upon for the Arbitration.
13.17.3 The Arbitration shall be conducted
by a Sole Arbitrator who shall be
appointed on mutually agreeable
basis by both parties (The Employer
and the Contractor) within 15
(fifteen) days of giving written notice
as aforesaid in immediately
preceding paragraph. In case a
mutual agreement on appointing
such an Arbitrator cannot be
reached, both the Employer and the
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Contractor shall appoint an
Arbitrator of their choice and the two
appointed Arbitrators shall further
appoint a third Arbitrator, who shall
act as Presiding Arbitrator. The
proceedings of the Arbitration shall
follow the Indian Arbitration and
Conciliation Act 1996 or any latest
amendments, if any, then in force."
As per the work order through which the petitioner awarded the
work to respondent no.1, the parties further agreed that all the disputes
which may arise between them would be subject to Gurdaspur (Punjab)
Courts only. The relevant clause of the work order is as under :-
"All disputes are subject to the
Gurdaspur (Punjab) courts jurisdiction only."
In connection with the execution of the aforesaid work and qua
payments to be made for the same, disputes arose between the parties.
Relying on the afore-quoted clause 13.17 of the agreement, respondent no.1
sent a notice to the petitioner for settling their disputes through arbitration
and sought appointment of an Arbitrator but when the petitioner failed to do
so, respondent no.1 filed a petition under Section 11 of the Act before this
Court being Arb. Case No. 16 of 2013 - KLA Construction
Technologies Pvt. Ltd. vs. Adie Broswon Breweries Pvt. Ltd.. Such
petition was disposed of by this Court on 14.05.2013 appointing Justice
D. K. Jain (Former Judge, Supreme Court of India) as sole Arbitrator. On
refusal by Justice D. K. Jain to act as the Arbitrator, the doors of this Court
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were again knocked for appointing another Arbitrator and on 16.08.2013,
Justice Mukul Mudgal (Former Chief Justice of this Court) was appointed
as Arbitrator in place of Justice D. K. Jain. Justice Mukul Mudgal acted as
an Arbitrator between the parties and conducted proceedings at Delhi. On
18.10.2017, an Award was rendered by the Arbitrator, against which the
petitioner filed objections under Section 34 of the Act before the Trial court
at Gurdaspur. The grounds on which such objections were filed being not
relevant for the purpose of the present proceedings are not being discussed.
The Trial Court at Gurdaspur was of the view that since the seat of
arbitration had not been agreed to between the parties, the venue of the
arbitration would be taken as its seat which in the present case was Delhi.
Thus, placing reliance on the law laid down by the Hon'ble Apex Court in
Indus Mobile Distribution Pvt. Ltd. vs. Datawind Innovations Pvt. Ltd.
and others - (2017) 7 SCC 678, the Trial Court held that the Courts at
Delhi had exclusive jurisdiction to entertain and adjudicate upon the
petitioner's objections and therefore, declined to entertain such objections
filed before it. However, liberty was granted to the petitioner to file its
objections before the competent Court at Delhi. It is such order of the Trial
Court which is the subject matter of challenge in the present proceedings.
Mr. Chetan Mittal, learned senior counsel appearing on behalf
of the petitioner assailed the order passed by the Trial Court by submitting
that in the agreement between the parties, the seat of arbitration had not
been agreed to and while rendering his Award, no such seat had also been
determined by the Arbitrator in terms of Section 31 of the Act. Therefore,
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simply because the arbitration proceedings had taken place in Delhi, it
could not be said that only the Courts at Delhi would have territorial
jurisdiction to entertain the petitioner's petition. According to Mr. Mittal,
since the work was executed at Gurdaspur, the Courts at Gurdaspur, in
addition to the Courts at Delhi, would also have jurisdiction to entertain and
adjudicate upon the petitioner's objections especially in view of the
jurisdiction clause agreed to between the parties that the disputes between
them would be subject to the jurisdiction of the courts at Gurdaspur only.
He further submitted that the Trial Court erred in dismissing the petitioner's
objections by relying on Indus Mobile (supra) as that judgment had no
application since in that case, the seat as also the jurisdiction clause had
been agreed to by the parties which was not so in the present case.
Mr. Mittal placed reliance on the following judgments of the
Hon'ble Apex Court :-
1. Emkay Global Financial Services Limited vs. Girdhar Sondhi -
(2018) 9 SCC 49 and
2. Union of India vs. Hardy Exploration and Production (India)
INC - AIR 2018 SC 4871.
Mr. Arjun Dewan, learned counsel for respondent no. 1
countered the arguments raised on behalf of the petitioner by submitting
that in the initial notice sent by the Arbitrator informing the parties with
regard to his appointment as an Arbitrator, as also at the time of fixing the
first date of hearing before him, it had clearly been brought to the notice of
both the parties that the arbitration proceedings would take place at Delhi
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where they actually and factually also took place. According to him, in
pursuance to the aforesaid notices, once the petitioner took part in such
proceedings at Delhi, by its conduct, it accepted Delhi to be the seat of
arbitration and that being so, only the Courts at Delhi would have
jurisdiction to entertain and adjudicate upon the objections filed by the
petitioner. In support of his contentions, he placed reliance on a judgment
of the Delhi High Court in Ashiana Infrahomes Pvt. Ltd. and others vs.
Adani Power Ltd. - 2018 SCC Online Del 9110, as also a Single Bench
judgment of this Court in Green Builders & Promoters Pvt. Ltd. vs.
Ramesh and others (PHHC) - 2017 SCC Online P&H 4353.
Mr. Dewan further went on to submit that the reliance placed
by the petitioner on Emkay Global's case (supra), was misplaced as in that
case, the seat of the Arbitrator as also the jurisdiction clause had been
agreed to by the parties. Further, according to him, Hardy's case (supra)
was also not applicable to the facts of the present case as that case pertained
to international arbitration where the parties had agreed that the procedure
before the Arbitrator would be governed by Indian laws. In the light of
these facts, in Hardy's case (supra), the Hon'ble Apex Court held that
even if the arbitration had taken place in Malaysia, the Courts in Delhi
would have jurisdiction to entertain and adjudicate upon the objections filed
under Section 34 of the Act.
The relevant provisions of the Act are Sections 2(1)(e)(i), 20
and 31(4). They read as under :-
"2. Definitions. - (1) In this Part, unless the
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context otherwise requires -
xx xx xx xx xx
(e) "Court" means -
(i) in the case of an arbitration other
than international commercial arbitration,
the principal Civil Court of original
jurisdiction in a district, and includes the
High Court in exercise of its ordinary
original civil jurisdiction, having
jurisdiction to decide the questions forming
the subject-matter of the arbitration if the
same had been the subject-matter of a suit,
but does not include any civil court of a
grade inferior to such principal Civil Court,
or any Court of Small Causes;
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.
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31. Form and contents of arbitral award. -
(1) - (3) xx xx xx xx
(4) The arbitral award shall state its date and
the place of arbitration as determined in
accordance with section 20 and the award
shall be deemed to have been made at that
place."
The issue with regard to juridical seat of the Arbitral Tribunal
was gone into by a Constitution Bench of the Hon'ble Apex Court in
Bharat Aluminium Company vs. Kaiser Aluminium Technical Services
Inc. - (2012) 9 SCC 552. Paragraphs no.96, 98 and 99 which are relevant
read as under :-
"96......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.
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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.
xx xx xx xx xx
98. We now come to Section 20, which is
as under:-
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"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, good 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) authorizes 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
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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."
In Indus Mobile's case (supra), the question that arose before
the Hon'ble Apex Court was that if the seat of arbitration, as reflected in the
arbitration clause agreed to between the parties, was Mumbai and an
exclusive jurisdiction clause to adjudicate the disputes arising between the
parties also conferred jurisdiction upon the Courts in Mumbai alone, would
such facts oust the jurisdiction of all other Courts including the Courts at
Delhi where the arbitration had actually taken place. After noting that in the
arbitration clause, the parties had agreed that the seat of arbitration shall be
at Mumbai and that all disputes and differences that may arise out of or in
connection with their agreement had further been agreed to be subject to the
exclusive jurisdiction of the Courts at Mumbai only, the Hon'ble Apex
Court held that to entertain and adjudicate upon the petitions/applications
that may arise out of the arbitral proceedings between the parties, the Courts
at Mumbai would have exclusive jurisdiction. The relevant observations of
the Hon'ble Apex Court are 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
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Law of Arbitration, unlike the Code of Civil
Procedure which applies to suits filed in courts, a
reference to "seat" is a concept by which a
neutral venue can be chosen by the parties to an
arbitration clause. The neutral venue may not in
the classical sense have jurisdiction - that is, no
part of the cause of action may have arisen at the
neutral venue and neither would any of the
provisions of Section 16 to 21 of the CPC be
attracted. In arbitration law however, as has been
held above, the moment "seat" is determined, the
fact that the seat is at Mumbai would vest
Mumbai courts with exclusive jurisdiction for
purposes of regulating arbitral proceedings
arising out of the agreement between the parties.
20. It is well settled that where more
than one court has jurisdiction, it is open for
parties to exclude all other courts. For an
exhaustive analysis of the case law, see Swastik
Gases Private Limited v. Indian Oil Corporation
Limited, (2013) 9 SCC 32. This was followed in a
recent judgment in B.E. Simoese Von Staraburg
Niedenthal and Another v. Chhattisgarh
Investment Limited, (2015) 12 SCC 225. 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 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
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the respondents may take necessary steps
under Section 9 in the Mumbai Court. Appeals
are disposed of accordingly."
In Emkay Global's case (supra), in the agreement, the parties
therein had agreed to abide by the provisions of the Depositories Act, 1996
as also the 1996 Bye-Laws and Operating Instructions issued by CDSL
from time to time. The parties further agreed to submit to the exclusive
jurisdiction of the Courts at Mumbai. The Hon'ble Apex Court noted the
facts therein and held as under :-
"2. The appeal arises out of an
agreement dated 03.07.2008, which contains the
following clauses:
General Clause
1. The parties hereto agree to
abide by the provisions of the Depositories Act,
1996, SEBI (Depositories and Participants)
Regulations, 1996 Bye-Laws and Operating
Instructions issued by CDSL from time to time in
the same manner and to the same extent as if the
same were set out herein and formed part of this
Agreement.
xx xx xx xx xx
Arbitration
11. The parties hereto shall, in
respect of all disputes and differences that may
arise between them, abide by the provisions
relating to arbitration and conciliation specified
under the Bye-Laws.
xx xx xx xx xx
Jurisdiction
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12. The parties hereto agree to
submit to the exclusive jurisdiction of the courts
in Mumbai in Maharashtra (India).
3. Though the bye-laws referred to in
the agreement are under the provisions of the
Depositories Act, 1996, it is common ground that
the arbitration proceeding took place under the
National Stock Exchange Bye-laws. Under these
Bye-laws, Chapter VII speaks of dealings by
trading members and grants exclusive jurisdiction
to the civil courts in Mumbai in relation to
disputes that arise under the Bye-laws as follows:
CHAPTER VII
DEALINGS BY TRADING MEMBERS
Jurisdiction.
(1)(a) Any deal entered into through
automated trading system of the Exchange or any
proposal for buying or selling or any acceptance
of any such proposal for buying and selling shall
be deemed to have been entered at the
computerised processing unit of the Exchange at
Mumbai and the place of contracting as between
the trading members shall be at Mumbai. The
trading members of the Exchange shall expressly
record on their contract note that they have
excluded the jurisdiction of all other Courts save
and except, Civil Courts in Mumbai in relation to
any dispute arising out of or in connection with or
in relation to the contract notes, and that only the
Civil Courts at Mumbai have exclusive
jurisdiction in claims arising out of such dispute.
The provisions of this Bye-law shall not object the
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jurisdiction of any court deciding any dispute as
between trading members and their constituents
to which the Exchange is not a party.
xx xx xx xx xx
8. The effect of an exclusive jurisdiction
clause was dealt with by this Court in several
judgments, the most recent of which is the
judgment contained in Indus Mobile Distribution
Pvt. Ltd. (supra). In this case, the arbitration was
to be conducted at Mumbai and was subject to the
exclusive jurisdiction of courts of Mumbai only.
After referring to the definition of "Court"
contained in Section 2(1)(e) of the Act, and
Section 20 and 31(4) of the Act, this Court
referred to the judgment of five learned Judges in
Bharat Aluminium Co. v. Kaiser Aluminium
Technical Services Inc., (2012) 9 SCC 552, in
which, the concept of juridical seat which has
been evolved by the courts in England, has now
taken root in our jurisdiction. After referring to
several judgments and a Law Commission Report,
this Court held:
"19. A conspectus of all the aforesaid
provisions shows that 7 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.
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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 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."
9. Following this judgment, it is clear
that once courts in Mumbai have exclusive
jurisdiction thanks to the agreement dated
03.07.2008, read with the 8 National Stock
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Exchange bye-laws, it is clear that it is the
Mumbai courts and the Mumbai courts alone,
before which a Section 34 application can be
filed. The arbitration that was conducted at Delhi
was only at a convenient venue earmarked by the
National Stock Exchange, which is evident on a
reading of bye-law 4(a)(iv) read with (xiv)
contained in Chapter XI."
In Hardy's case (supra), the Hon'ble Apex Court interpreted
Section 20 and Section 31 of the Act as under :-
"27. It is submitted by Mr. Tushar Mehta,
learned Additional Solicitor General appearing
for the Union of India that there is no specific
mention of juridical seat but reference is to the
venue. He has also drawn our attention to the
UNCITRAL Model Law which is referred to in
Article 33.9 of the agreement. Article 20 of the
UNCITRAL Model Law reads as follows :-
"Article 20. Place of arbitration.--(1) The
parties are free to agree on the place of
arbitration. Failing such agreement, 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.
(2) Notwithstanding the provisions
of paragraph (1) of this article, 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 goods,
other property or documents."
[Emphasis added]
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Thus, Article 20(1) mandates "determination" of
"juridical seat" while Article 20(2) leaves it open
to the Arbitral Tribunal to select "venue".
28. Article 31(3) of the UNCITRAL
Model Law is as follows :-
"Article 31. Form and contents of award.
--
(3) The award shall state its date and the
place of arbitration as determined in
accordance with article 20(1). The award
shall be deemed to have been made at that
place."
29. On a perusal of Articles 20 and 31(3)
of the UNCITRAL Model Laws, we find that the
parties are free to agree on the place of
arbitration. Once the said consent is given in the
arbitration clause or it is interpretably deduced
from the clause and the other concomitant factors
like the case of Harmony Innovation Shipping Ltd.
which states about the venue and something in
addition by which the seat of arbitration is
determinable. The other mode, as Article 20 of the
UNCITRAL Model Law provides, is that where
the parties do not agree on the place of
arbitration, the same shall be determined by the
Arbitral Tribunal. Such a power of adjudication
has been conferred on the Arbitral Tribunal.
Article 31(3) clearly stipulates that the Award
shall state the date and the place of arbitration as
determined in accordance with Article 20(1).
xx xx xx xx xx
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31. In the present case, the place of
arbitration was to be agreed upon between the
parties. It had not been agreed upon ; and in case
of failure of agreement, the Arbitral Tribunal is
required to determine the same taking into
consideration the convenience of the parties. It is
also incumbent on the Arbitral Tribunal that the
determination shall be clearly stated in the "form
and contents of award" that is postulated in
Article 31. There has been no determination.
32. Be it noted, the word
"determination" requires a positive act to be
done. In the case at hand, the only aspect that has
been highlighted by Mr. C.U. Singh, learned
senior counsel, is that the arbitrator held the
meeting at Kuala Lumpur and signed the award.
That, in our considered opinion, does not amount
to determination. The clause is categorical. The
sittings at various places are relatable to venue. It
cannot be equated with the seat of arbitration or
place of arbitration which has a different
connotation as has been held in Reliance
Industries Ltd. (I), (II) (supra), Harmony
Innovation Shipping Limited (supra) and in Roger
Shashoua (supra).
33. The word "determination" has to be
contextually determined. When a "place" is
agreed upon, it gets the status of seat which
means the juridical seat. We have already noted
that the terms "place" and "seat" are used
interchangeably. When only the term "place" is
stated or mentioned and no other condition is
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C. R. No. 4897 of 2018 21
postulated, it is equivalent to"seat" and that
finalises the facet of jurisdiction. But if a
condition precedent is attached to the term
"place" the said condition has to be satisfied so
that the place can become equivalent to seat. In
the instant case, as there are two distinct and
disjunct riders, either of them have to be satisfied
to become a place. As is evident, there is no
agreement. As far as determination is concerned,
there has been no determination. In Ashok
Leyland Limited and State of T.N. and another,
(2004) 3 SCC 1, the Court has reproduced the
definition of "determination" from Law Lexicon,
2nd Edition by Aiyar, P. Ramanatha and Black's
Law Dictionary, 6th Edition. The relevant
paragraphs read thus:-
"Determination or order.-- The expression
"determination" signifies an effective
expression of opinion which ends a
controversy or a dispute by some authority
to whom it is submitted under a valid law
for disposal. The expression "order" must
have also a similar meaning, except that it
need not operate to end the dispute.
Determination or order must be judicial or
quasi-judicial. Jaswant Sugar Mills Ltd. v.
Lakshmi Chand, AIR 1963 SC 677, 680
(Constitution of India, 1950 Article 136)."
"A "determination" is a "final judgment"
for purposes of appeal when the trial court
has completed its adjudication of the rights
of the parties in the action. Thomas Van
Dyken Joint Venture v. Van Dyken, 90 Wis
236, 27 NW 2d 459, 463."
The said test clearly means that the expression of
determination signifies an expressive opinion. In
the instant case, there has been no adjudication
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C. R. No. 4897 of 2018 22
and expression of an opinion. Thus, the word
"place" cannot be used as seat. To elaborate, a
venue can become a seat if something else is
added to it as a concomitant. But a place unlike
seat, at least as is seen in the contract, can
become a seat if one of the conditions precedent is
satisfied. It does not ipso facto assume the status
of seat. Thus understood, Kuala Lumpur is not the
seat or place of arbitration and the
interchangeable use will not apply in stricto
sensu.
34. In view of the aforesaid analysis, the
irresistible conclusion is that the Courts in India
have jurisdiction and, therefore, the order passed
by the Delhi High Court is set aside. Resultantly,
the appeal stands allowed and the High Court is
requested to deal with the application preferred
under Section 34 of the Act as expeditiously as
possible. There shall be no order as to costs."
Under Section 20 (1) of the Act, the parties are free to agree on
the place of arbitration. In the event of such agreement, as expressly
reflected through the arbitration clause or to be deduced therefrom, the
agreed place becomes the seat of arbitration. If there is no such agreement,
the seat of arbitration can be determined by the Arbitral Tribunal under
Section 20(2) read with Section 31(4) of the Act. However, such
determination by the Arbitral Tribunal should be reflected through a
positive act by the Arbitrator by making specific mention in this regard in
the Award.
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In the event of the seat of arbitration having been agreed upon
or determined as above, the Courts, which have jurisdiction over the place
where such seat of arbitration has been agreed upon or determined, would
be vested with exclusive territorial jurisdiction to entertain and adjudicate
upon the proceedings which may arise out of the arbitral proceedings
between the parties. However, if the seat has not been agreed upon or
determined, as above, then the Courts where the arbitration actually takes
place, in addition to the Courts where part of the cause of action may have
arisen, would have territorial jurisdiction to regulate the arbitral
proceedings between the parties.
In the present case, a perusal of the arbitration clause in the
agreement between the parties clearly reveals that in terms of Section 20
(1) of the Act, the parties did not agree to any place of arbitration. No
other factors are also found in the instant case which when read with the
arbitration clause would lead to a deduction that the parties had agreed
to a particular place to be the seat of arbitration. The Award also does not
reflect any determination of the seat of arbitration by the Arbitrator in
terms of Section 20(2) read with Section 31(4) of the Act. Further, the
jurisdiction clause agreed to between the parties specifically confers
exclusive territorial jurisdiction on the Courts at Gurdaspur (Punjab) to
adjudicate all disputes between them. Thus, Delhi, where the arbitration
proceedings actually took place would merely be considered as a
convenient venue for arbitration in terms of Section 20 (3) of the Act and
in the light of these facts as also the position of law, as discussed earlier,
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the Courts at Delhi would not be conferred with exclusive jurisdiction to
entertain and adjudicate upon the petitioner's petition.
Mr. Dewan had submitted that two notices dated 30.08.2013
and 17.09.2013 had been sent by the Arbitrator to the parties wherein it had
specifically been stated that the arbitration proceedings would take place at
New Delhi, and once the petitioner, in response thereto, had taken part in
the arbitration proceedings at New Delhi, then the petitioner, by its conduct,
agreed to Delhi as the seat of arbitration and as a result thereof, only the
Courts in Delhi would have exclusive jurisdiction to entertain and
adjudicate the petitioner's objections. Such argument of Mr. Dewan does
not warrant a favourable consideration as a perusal of these notices show
that through them, the Arbitrator had merely informed the parties that the
venue of the arbitration proceedings would be at the Arbitrator's office in
New Delhi. No seat of arbitration had been determined. The notices are
reproduced below for ready reference :-
Notice dated 30.08.2013
"30th August, 2013
KLA CONSTRUCTION TECHNOLOGIES
PRIVATE LIMITED .....Claimant
Versus
ADIE BROSWON BREWERIES PVT. LTD.
.....Respondent
ORDER
I have been appointed as an Arbitrator by Hon'ble Justice Jasbir Singh, Judge of Punjab and 24 of 30 ::: Downloaded on - 10-03-2019 21:40:13 ::: C. R. No. 4897 of 2018 25 Haryana High Court in respect of the dispute between KLA CONSTRUCTION TECHNOLOGIES PRIVATE LIMITED and ADIE BROSWON BREWERIES PVT. LTD. by the order dated 16.08.2013.
Accordingly, I fix 17th September, 2013 at 5.30 p.m. as the first date for preliminary meeting of the parties to fix the schedule of the proceedings. Both the parties are required to appear themselves or through their counsel duly instructed on the date and time fixed.
The venue for the hearing will be the Arbitrators office at A-1 LGF, Nizamuddin East, New Delhi - 110013. Both the parties are to pay Rs. 1000/- each per hearing towards Establishment Expense."
Notice dated 17.09.2013
"17th September, 2013
KLA CONSTRUCTION TECHNOLOGIES
PRIVATE LIMITED .....Claimant
Versus
ADIE BROSWON BREWERIES PVT. LTD.
.....Respondent
PRESENT :-
For Claimant : Mr. Arjun Dewan, Advocate with Mr. K. K. Shukla, AR and Mr. S. K. Mittal For Respondent : Mr. Rahul Kumar, Ms. Snigdha Sharma, Advocates ORDER (FIRST HEARING) Schedule of steps to be taken :
25 of 30 ::: Downloaded on - 10-03-2019 21:40:13 ::: C. R. No. 4897 of 2018 26 In consultation with the learned counsel for the parties, the following dates are appointed for taking steps as under
On or Before Steps to be taken 31.10.2013 Statement of Claim 15.12.2013 Statement of Defence and Counter claim, if any, to be filed by the Respondent 15.01.2014 Rejoinder to the Statement of Defence and reply to Counter claim to be filed by the Claimant 15.02.2014 Rejoinder to the Reply to the Counter Claim to be filed by the Respondent Practice Directions :
1. Each pleading will be accompanied by documents in support of the case pleaded by the party.
2. Rejoinder is not necessarily to be filed. If filed, it shall remain confined only to such para of the Statement of Defence the averments made wherein need to be explained by raising necessary pleadings.
3. Filing by either party of any pleading, document, application and communication, etc. shall be deemed to have been effectively done only on having been delivered to the Tribunal and copy having been previously or simultaneously delivered to the opposite party.
4. Brief applications/communications to the Tribunal to be made by e-mail. All substantive pleadings, applications and documents shall
26 of 30 ::: Downloaded on - 10-03-2019 21:40:13 ::: C. R. No. 4897 of 2018 27 necessarily be filed as hard copies along with a soft copy sent by mail.
5. Communications and orders by the Tribunal to the parties will be made by e-mail on the e- address given hereunder, email communications shall be treated as effective communication to the tribunal and the parties and the learned counsel. For Claimant : [email protected]/ [email protected] For Respondent : [email protected] Next hearing :
The Tribunal shall next assemble on 18th February, 2014 at 4.30 pm for filing the Statement of Claim and for further directions. Fees of the Arbitrator :
It has been agreed that the fees of the Arbitrator shall be Rs.80,000/- (Eighty Thousand) per hearing to be shared by both the parties equally. Both the parties are directed to deposit their share of Arbitrator's fees for 4 hearings on or before 15th October, 2013.
Permanent Account Number and email address of the Arbitrator are as under :-
Justice Mukul Mudgal - AARPM0073A E-mail [email protected] Venue for the hearing :
The venue for the hearings henceforth will be the Arbitrator's office at A-1 LGF, Nizammudin East, New Delhi - 110013.
[Emphasis supplied]"
The petitioner's response to the afore-quoted notices was 27 of 30 ::: Downloaded on - 10-03-2019 21:40:13 ::: C. R. No. 4897 of 2018 28 merely to an information supplied to it by the Arbitrator with regard to the venue of the arbitral proceedings. Such response by the petitioner cannot be considered to be an express or implied agreement on its part to accept the venue of the arbitral proceedings as the seat of arbitration especially when a perusal of the Award shows that the Arbitrator himself also did not determine the venue of the arbitration as the seat of arbitration in terms of Section 20 (2) read with Section 31 (4) of the Act.
In Ashiana Infrahomes (supra), in the arbitration clause, the parties had agreed that the arbitration shall take place in Gurgaon. However, during the arbitration proceedings, by their consent, they agreed that the arbitration shall take place at Delhi. Such conduct/agreement by them was duly reflected in the orders passed by the Arbitrator. No such consent or order has been shown in the present case. Therefore, on facts, the judgment of the Delhi High Court in Ashiana Infrahomes (supra) would have no application.
In Green Builders (supra), the issue before this Court was with regard to the appointment of an Arbitrator under Section 11 (6) of the Act whereas the present case pertains to determination of territorial jurisdiction of a Court to entertain and adjudicate upon an objection petition filed under Section 34 of the Act which is necessarily to be after the Award has been rendered. Thus, in Green Builders (supra), the stage of determination of the seat of arbitration by the Arbitrator under Section 20(2) read with Section 31(4) of the Act had not yet reached. Even otherwise, since the judgment in Green Builders (supra) is dated 07.10.2017, it could 28 of 30 ::: Downloaded on - 10-03-2019 21:40:13 ::: C. R. No. 4897 of 2018 29 not and did not consider the law laid down by the Hon'ble Apex Court in Emkay Global's case (supra) as also Hardy's case (supra) pronounced on 22.08.2018 and 25.09.2018 respectively. Thus, Green Builders (supra) would be of no assistance to respondent no. 1.
The Trial Court wrongly placed reliance on Indus Mobile's case (supra) to hold that it lacked territorial jurisdiction to entertain and adjudicate upon the petitioner's objections as in that case, the seat of arbitration had been agreed upon by the parties to be at Mumbai and such agreement was duly reflected through the arbitration clause. The parties had further consented that if any dispute arose between them, the same shall be decided by the Courts at Mumbai only. It was in the light of these facts that the Hon'ble Apex Court held that even if the arbitration had taken place at Delhi, any proceeding regulating the arbitration proceedings would lie in Mumbai only irrespective of the fact that the arbitration had actually taken place in Delhi.
In view of the above discussion, in the facts of the present case, Delhi was not the seat of arbitration. It was merely a convenient venue where the arbitration proceedings actually took place. Therefore, the Courts at Delhi are not conferred with exclusive jurisdiction to entertain and adjudicate upon the objections filed by the petitioner and since admittedly, a part of the cause of action arose in Gurdaspur, the Courts at Gurdaspur would also have jurisdiction to entertain and decide the petitioner's objections, especially in view of the jurisdiction clause agreed to between the parties conferring jurisdiction upon the Courts at Gurdaspur to decide 29 of 30 ::: Downloaded on - 10-03-2019 21:40:13 ::: C. R. No. 4897 of 2018 30 disputes arising between them.
Resultantly, the impugned order dated 27.03.2018 passed by the Additional District Judge, Gurdaspur is set aside and the matter is remitted to the Trial Court for adjudication of the objections filed by the petitioner on its merits, in accordance with law.
The petition is allowed in the above terms. No costs.
( DEEPAK SIBAL ) JUDGE February 22, 2019 monika Whether speaking/reasoned ? Yes/No. Whether reportable ? Yes/No. 30 of 30 ::: Downloaded on - 10-03-2019 21:40:13 :::