Madhya Pradesh High Court
Sabu Khan vs Mahindra @ Mahindra Financial Services ... on 2 April, 2026
Author: Gurpal Singh Ahluwalia
Bench: G. S. Ahluwalia
NEUTRAL CITATION NO. 2026:MPHC-GWL:11208
1 AA-289-2025
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE G. S. AHLUWALIA
ON THE 2 nd OF APRIL, 2026
ARBITRATION APPEAL No. 289 of 2025
SABU KHAN
Versus
MAHINDRA @ MAHINDRA FINANCIAL SERVICES LTD
Appearance:
Shri Ashish Sharma - Advocate for the appellant.
None for the respondent though served.
ORDER
This arbitration appeal under Section 37 of the Arbitration and Conciliation Act, 1996 has been filed against order dated 29/09/2025 passed by Twentieth District Judge and Special Judge (Commercial Act), Gwalior (M.P.) in MJC AV No.900067/2016 by which application filed by appellant under Section 34 of the Arbitration and Conciliation Act has been rejected.
2. The facts necessary for disposal of present appeal, in short, are that appellant entered into a loan agreement dated 18/11/2013 for a sum of Rs.7,50,000/- by getting an Eicher Truck financed.
3. As per Clause 15 of said loan agreement, all disputes, differences and/or claim arising out of these presents or in any way touching or concerning the same or as to constructions, meaning or effect thereof or as to the right and liabilities of the parties thereunder, shall be settled by arbitration to be held in accordance with the provisions of Arbitration and Conciliation Act, 1996 or any statutory amendments thereof and shall be referred to the sole arbitrator to be nominated by Signature Not Verified Signed by: PRINCEE BARAIYA Signing time: 4/7/2026 05:18:40 PM NEUTRAL CITATION NO. 2026:MPHC-GWL:11208 2 AA-289-2025 the Lender.
4. As per Clause 16 of said loan agreement, it was agreed by and between the parties that Courts at Mumbai alone shall have exclusive jurisdiction in respect of any matter, claims or dispute arising out of or in any way related to these presents or to anything to be done under or pursuant to these presents or of any clause or provision thereof, notwithstanding that the whole or substantial part of the cause of action may not have arisen at Mumbai.
5. It appears that appellant did not repay the installments, and accordingly, Ms. Ameeta Chheda was appointed as a sole arbitrator by respondent.
6. It is the case of appellant that neither any notice was given by respondent before appointing Ms. Ameeta Chheda as arbitrator, nor Ms. Ameeta Chheda issue any notice to appellant and, therefore, appellant could not get any opportunity to participate in the arbitration proceedings, and ultimately, an ex- parte arbitration award was passed on 19/08/2016 in ARB (M & M) No.MP/2016/2654 of 2016. Appellant received certified copy of award from arbitrator, and only then, he came to know about passing of an ex-parte award. Accordingly, appellant filed an application under Section 34 of the Arbitration and Conciliation Act before the Court of Seventh Additional District Judge, Gwalior, thereby challenging the award dated 19/08/2016 passed in ARB (M & M) No.MP/2016/2654 of 2016.
7. The Court below has rejected the application primarily on two grounds, i.e.;
(i) that notices were issued to the appellant, and
(ii) that the Court of Seventh Additional District Judge, Gwalior has no territorial jurisdiction to entertain the application.
8. Challenging the order passed by trial Court, it is submitted by counsel Signature Not Verified Signed by: PRINCEE BARAIYA Signing time: 4/7/2026 05:18:40 PM NEUTRAL CITATION NO. 2026:MPHC-GWL:11208 3 AA-289-2025 for appellant that it is clear from the record of arbitrator that no notice was either given by respondent before appointing Ms. Ameeta Chheda as arbitrator, and even no notice was issued by Ms. Ameeta Chheda, the sole arbitrator, to appellant. It is further submitted that since a part of cause of action had arisen in District Gwalior, therefore, Court of Seventh Additional District Judge, Gwalior has territorial jurisdiction to entertain the application filed under Section 34 of the Arbitration and Conciliation Act filed against arbitration award passed in Mumbai.
9. Heard the learned counsel for the appellant.
10. Before considering the merits of the case, this Court would like to consider as to whether the Court of Seventh Additional District Judge, Gwalior had jurisdiction to entertain an application under Section 34 of the Arbitration and Conciliation Act.
11. This Court has already reproduced Clause Nos.15 and 16 of the loan agreement, which provides that the sole arbitrator can be appointed by the Lender only, and irrespective of fact as to whether the whole or part of cause of action has arisen within the city of Mumbai or not, Courts at Mumbai alone shall have exclusive jurisdiction in respect of any matter, claims or dispute arising out of the loan agreement, the seat of the sole arbitrator was the Mumbai.
12. Therefore, now the only question for consideration is as to whether appellant should have filed an application under Section 34 of the Arbitration and Conciliation Act before the competent Court at Mumbai or it is maintainable before Court of Seventh Additional District Court, Gwalior, is no more res integra.
13. This Court in the case of National Highways Authority of India (Ministry of Road Transport and Highways), Government of India Vs. Sanjay Signature Not Verified Signed by: PRINCEE BARAIYA Signing time: 4/7/2026 05:18:40 PM NEUTRAL CITATION NO. 2026:MPHC-GWL:11208 4 AA-289-2025 Kumar and others, decided on 25/07/2025 in Arbitration Appeal No.37/2022 has held as under:-
"10. The Supreme Court in the case of Hindustan Construction Company Ltd. Vs. NHPC Ltd. And Another reported in (2020) 4 SCC 310 has held as under:
3. This Court in Civil Appeal No. 9307 of 2019 entitled BGS SGS Soma JV v. NHPC [BGS SGS Soma JV v. NHPC, (2020) 4 SCC 234] delivered a judgment on 10-12-2019 i.e. after the impugned judgment was delivered, in which reference was made to Section 42 of the Act and a finding recorded thus : (SCC pp. 287-88, para
59) "59. Equally incorrect is the finding in Antrix Corpn.
Ltd. [Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd., 2018 SCC OnLine Del 9338] that Section 42 of the Arbitration Act, 1996 would be rendered ineffective and useless. Section 42 is meant to avoid conflicts in jurisdiction of courts by placing the supervisory jurisdiction over all arbitral proceedings in connection with the arbitration in one court exclusively. This is why the section begins with a non-obstante clause, and then goes on to state '...where with respect to an arbitration agreement any application under this Part has been made in a court...' It is obvious that the application made under this part to a court must be a court which has jurisdiction to decide such application. The subsequent holdings of this Court, that where a seat is designated in an agreement, the courts of the seat alone have jurisdiction, would require that all applications under Part I be made only in the Court where the seat is located, and that Court alone then has jurisdiction over the arbitral proceedings and all subsequent applications arising out of the arbitral Signature Not Verified Signed by: PRINCEE BARAIYA Signing time: 4/7/2026 05:18:40 PM NEUTRAL CITATION NO. 2026:MPHC-GWL:11208 5 AA-289-2025 agreement. So read, Section 42 is not rendered ineffective or useless. Also, where it is found on the facts of a particular case that either no "seat" is designated by agreement, or the so-called "seat" is only a convenient "venue", then there may be several courts where a part of the cause of action arises that may have jurisdiction. Again, an application under Section 9 of the Arbitration Act, 1996 may be preferred before a court in which part of the cause of action arises in a case where parties have not agreed on the "seat" of arbitration, and before such "seat" may have been determined, on the facts of a particular case, by the Arbitral Tribunal under Section 20(2) of the Arbitration Act, 1996. In both these situations, the earliest application having been made to a court in which a part of the cause of action arises would then be the exclusive court under Section 42, which would have control over the arbitral proceedings. For all these reasons, the law stated by the Bombay [Konkola Copper Mines v. Stewarts & Lloyds of India Ltd. , 2013 SCC OnLine Bom 777 : (2013) 5 Bom CR 29] , [Nivaran Solutions v. Aura Thia Spa Services (P) Ltd., 2016 SCC OnLine Bom 5062 : (2016) 5 Mah LJ 234] and Delhi [Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd., 2018 SCC OnLine Del 9338] High Courts in this regard is incorrect and is overruled."
(emphasis in original)
4. This was made in the backdrop of explaining para 96 o f Balco [Balco v. Kaiser Aluminium Technical Services Inc. , (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] , which judgment read as a whole declares that once the seat of arbitration is designated, such clause then becomes an exclusive jurisdiction clause as a result of which only the courts where the seat is located Signature Not Verified Signed by: PRINCEE BARAIYA Signing time: 4/7/2026 05:18:40 PM NEUTRAL CITATION NO. 2026:MPHC-GWL:11208 6 AA-289-2025 would then have jurisdiction to the exclusion of all other courts.
5. Given the finding in this case that New Delhi was the chosen seat of the parties, even if an application was first made to the Faridabad Court, that application would be made to a court without jurisdiction. This being the case, the impugned judgment is set aside following BGS SGS Soma JV [BGS SGS Soma JV v. NHPC, (2020) 4 SCC 234] , as a result of which it is the courts at New Delhi alone which would have jurisdiction for the purposes of challenge to the award.
6. As a result of this judgment, the Section 34 application that has been filed at Faridabad Court, will stand transferred to the High Court of Delhi at New Delhi. Any objections taken on the ground that such objection filed under Section 34 is out of time hence cannot be countenanced. The appeal is disposed of accordingly.
11. From the above-mentioned judgment, it is clear that once the seat of arbitration is designated, then such clause becomes an exclusive jurisdiction clause, as a result of which only the Courts where the seat is located would then have jurisdiction to the exclusion of all other Courts. The seat of arbitration can be determined by the arbitration agreement, conduct of parties or the arbitrators designated. In the present case, the seat of arbitration was determined by Arbitrator's Designation. By letter dated 11.02.2002, various Divisional Commissioners of different divisions were appointed as Arbitrators for the districts mentioned in the order. The said letter was issued in view of the notification issued by the Union of India dated 31.12.2001. Thus, it is clear that for the purposes of this dispute the Commissioner, Gwalior Division, Gwalior was appointed as the Arbitrator. It is not out of place to mention here that thereafter the Union of India by notification dated 03.01.2022 issued under Section 3G of National Highways Act, 1956, had appointed the Collectors of respective districts as Arbitrators. Therefore, the legal position has changed after the notification dated 03.01.2022 and now every Collector of Signature Not Verified Signed by: PRINCEE BARAIYA Signing time: 4/7/2026 05:18:40 PM NEUTRAL CITATION NO. 2026:MPHC-GWL:11208 7 AA-289-2025 the respective district where the subject matter is situated has been appointed as the Arbitrator. But in the present case, the arbitration was conducted by the Commissioner, Gwalior Division Gwalior as per the notification issued by the Union of India under Section 3G of National Highways Act, 1956. Accordingly, this Court is of considered opinion that by issuing a notification under Section 3G of National Highways Act, 1956, the Union of India had designated the seat of arbitration by arbitrator's designation. Accordingly, this Court is of considered opinion that the District Court, Shivpuri had no territorial jurisdiction to entertain the application filed under Section 34 of Arbitration and Conciliation Act."
14. Therefore, it is clear that where the seat has been designated by agreement, then the Court of the seat alone will have jurisdiction, and the clause designating the seat of arbitration would become an exclusive jurisdiction clause, as a result of which only the Courts where the seat is located would then have jurisdiction to the exclusion of all other Courts.
15. In the present case, as per Clause 16 of the loan agreement, a provision was made that only Courts at Mumbai shall have jurisdiction, and as per Clause 15, the Lender was given exclusive authority to refer dispute to the sole arbitrator to be nominated by it. In the present case, Ms. Ameeta Chheda was appointed as a sole arbitrator by respondent, who held the arbitration proceedings at Mumbai, therefore, this Court is of considered opinion that only the Civil Court of original jurisdiction at Mumbai will have jurisdiction to entertain an application filed under Section 34 of the Arbitration and Conciliation Act, and thus, trial Court did not commit any mistake by holding that it has no territorial jurisdiction to entertain an application under Section 34 of Arbitration and Conciliation Act.
16. So far as the merits of the case are concerned, once it has already been Signature Not Verified Signed by: PRINCEE BARAIYA Signing time: 4/7/2026 05:18:40 PM NEUTRAL CITATION NO. 2026:MPHC-GWL:11208 8 AA-289-2025 held that Court of Seventh Additional District Judge, Gwalior has no territorial jurisdiction, then any discussion on merits will have to be treated a nullity, and it is always expected from a Court that after having held that it has no jurisdiction, should not touch the merits of the case.
17. Under these circumstances, this Court is of considered opinion that as Seventh Additional District Judge, Gwalior has no jurisdiction to entertain the application filed under Section 34 of the Arbitration and Conciliation Act, accordingly, it did not commit any illegality by rejecting the application on the ground of lack of jurisdiction.
18. Ex consequenti , order dated 29/09/2025 passed by Twentieth District Judge and Special Judge (Commercial Act), Gwalior (M.P.) in MJC AV No.900067/2016 is hereby affirmed so far it relates to question of jurisdiction but so far as the findings given by Court below on the merits of the case are concerned, they are held to be nullity and will not have any effect in case appellant approaches Court of competent jurisdiction.
19. With aforesaid observation, the appeal fails and is hereby dismissed.
(G. S. AHLUWALIA) JUDGE PjS/-
Signature Not Verified Signed by: PRINCEE BARAIYA Signing time: 4/7/2026 05:18:40 PM