Madhya Pradesh High Court
Cobra Cipl Jv vs Chief Project Manager on 17 September, 2021
Author: Chief Justice
Bench: Chief Justice
AC-96/2019
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THE HIGH COURT OF JUDICATURE FOR MADHYA PRADESH
AT JABALPUR
(Single Bench)
Arbitration Case No.96/2019
Cobra-CIPL JV .... Petitioner
Vs.
Chief Project Manager, Railway Electrification, ....Respondent
Jabalpur
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Presence:
Shri Kapil Arora, learned Counsel with Shri Shashank Verma and Shri
Mallikarjun Khare, learned counsel for the petitioner.
Shri Atul Choudhary, learned counsel for the respondent.
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Heard on: 03.09.2021
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ORDER
(Passed on this 17th day of September, 2021) This order will dispose of the application filed by petitioner Cobra- CIPL JV, a joint venture established by M/s Cobra Instalaciones Y Servicios, S.A. and Cobra Instalaciones Y Servicios India Pvt. Ltd. under Section 11(4) of the Arbitration and Conciliation Act, 1996 (for short "the Arbitration Act") praying for a direction to appoint the Sole Arbitrator for resolving the dispute between the petitioner and the respondent.
2. The facts of the case are that the Central Organization for Railway Electrification, Allahabad (for short "CORE") through the Chief Electrical Engineer floated a tender in March, 2013 for composite electrical works, design, supply, erection, testing and commissioning of 25 KV, 50 Hz, AC single phase electrification works including OHE, TSS and SCADA works in Satna (Excl.)-Jabalpur (Excl.) Section, Group (Gr.) 174 of AC-96/2019
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Jabalpur Division of West Central Railway under RE project Jabalpur. The petitioner in response to the aforesaid tender submitted its offer on 22.05.2013 and thereafter submitted negotiated offer on 10.03.2014, which was accepted by the respondent vide letter of acceptance dated 21.03.2014. The letter of acceptance dated 21.03.2014 was issued by the Chief Electrical Engineer, CORE, Allahabad vide Annexure A/3. Consequently, a contract was entered into between the parties on 18.06.2014. Thereafter, on account of disputes having arisen between the parties, the respondent terminated the contract on 12.02.2019. The petitioner served a notice on the respondent on 06.08.2019 invoking arbitration clause 1.2.54 of the contract. The respondent in turn wrote to the petitioner seeking its consent to waive off the applicability of Section 12(5) of the Arbitration Act. Thereafter, the respondent issued a letter on 25.09.2019 proposing names of four retired Railway Officers and asking the petitioner to select any two out of the four names so proposed. According to the petitioner, this was contrary to the terms of the contract which provides for appointment of serving Railway Officers as Arbitrators and not retired once. Since the respondent failed to nominate its Arbitrator within 30 days from the date of notice given by the petitioner, the petitioner filed the present application on 4.10.2019. While the respondent put in appearance before this Court on 01.11.2019 but despite pendency of the present application, the General Manager of CORE unilaterally appointed an Arbitral Tribunal comprising retired Railway Officers.
3. Shri Kapil Arora, learned counsel for the petitioner submitted that AC-96/2019
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the respondent have wrongly raised the preliminary objection about territorial jurisdiction of this Court. It is not correct to contend that the jurisdiction to file the application would lie only with the Courts at Allahabad. The respondent has not even remotely alleged in the reply that the parties had agreed in the agreement or otherwise that the seat of arbitration shall be only at Allahabad. It is contended that the Allahabad was only the place from where letter of acceptance was issued. In terms of Clause 15 of the contract, it is clear that subsequent to award of the contract, there is no role of the Allahabad office of the respondent. The aforesaid clause also clarified that prior to award of the contract, any correspondence and documents in relation to contractual and commercial matters were required to be sent to the Chief Electrical Engineer, Railway Electrification, Allahabad. However, subsequent to award of the contract, all such correspondence and documents in relation to contractual and commercial matters and also the correspondence and documents in relation to design, working and drawing as well as field work, scheduling of quantifies and submission of bills had to be addressed to the Chief Project Manager, Railway Electrification, Jabalpur. It is clear that in terms of Clause 15 of the contract, for all purposes arising out of the contract subsequent to award of the contract, the relevant authority was the Chief Project Manager, Railway Electrification, Jabalpur and therefore, the Chief Project Manager, Railway Electrification, Allahabad had no authority in the matter.
4. Referring to Clause 1.2.54 of the contract, Shri Kapil Arora, learned counsel argued that Clause 1.2.54(k) has clearly provided that the venue AC-96/2019
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for an arbitration to be the place from where the letter of acceptance of tender is issued or such other place as the purchaser at his discretion may determine. In respect of similar project i.e. tender for composite electrical works, design, supply, erection, testing and commissioning of 25 KV, 50 Hz, AC single phase overhead equipment including TSS and SCADA works in Manikpur (Excl)-Satna (Incl) and Satna to Rewa Section, Gr. 173-B of Jabalpur Division of West Central Railway under RE Project Jabalpur, similar disputes had arisen between parties. This Court vide order dated 4.2.2019 in A.C No.107/2017-Cobra CIPL Vs. Chief Project Manager while allowing the application appointed Mr. Justice (Retd.) D.M.Dharmadhikari, former Judge of the Supreme Court as the Sole Arbitrator. It is argued that the arbitration clause in the aforesaid matter was exactly similar to the arbitration clause in the present matter. This Court in the aforesaid case has categorically held that this Court will have jurisdiction to appoint arbitrator under Section 11 of the Arbitration Act on the basis that the word 'venue' used in the arbitration clause referred only to the venue for conducting arbitration proceedings and the same cannot be construed as or equated with, 'seat' of the arbitration proceedings. This Court in the aforesaid case held that the definition of 'venue' did not fulfill the requirement to be 'seat: as set forth in Indus Mobile Distribution Pvt. Ltd. Vs. Datawind Innovations Pvt. Ltd. and others (2017) 7 SCC 678.
5. The learned counsel argued that the respondent has heavily relied on the judgment of the Supreme Court in Brahmani River Pellets Ltd. Vs. Kamachi Industries Ltd. (2020) 5 SCC 462 to argue that this Court AC-96/2019
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will not have territorial jurisdiction to entertain present application. It is argued that the judgment in Brahmani River Pellets (supra) has been passed relying on earlier judgment of the Supreme Court in Indus Mobile (supra). The judgment of the Supreme Court in Indus Mobile (supra) was also discussed and distinguished by this Court in the earlier case between the present parties having the exactly similar arbitration clause. Moreover, the arbitration clause in Brahmani River Pellets (supra) categorically mentioned that the arbitration shall be under Indian Arbitration and Conciliation Act, 1996 and venue of arbitration shall be Bhubaneshwar. A comparison of the arbitration clause in the present matter and the arbitration clause in the Brahmani River Pellets (supra) would clearly bring it out that both are entirely different. Even in Indus Mobile (supra), the agreement provided that all disputes and differences of any kind whatever arising out of or in connection with the agreement shall be subject to the exclusive jurisdiction of Courts of Mumbai only, which is not the situation in the present case. It is argued that after Brahmani River Pellets judgment, the Supreme Court has examined this issue in BGS SGS Soma JV Vs. NHPC (2020) 4 SCC 234, which being later judgment would prevail over the judgments in Brahmani River Pellets (supra) and Indus Mobile (supra). It is judgment of three-judge Bench whereas the judgment in Brahmani River Pellets (supra) was delivered by a two-judge Bench. The arbitration clause in BGS Soma (supra) had provided that the arbitration proceedings shall be held at New Delhi/Faridabad, India and the language of the arbitration proceedings and that of all documents and communications between the parties shall be English. The learned counsel argued that the test for the seat of the AC-96/2019
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arbitration proceedings in the Shashoua principle has to be applied before determining the question of jurisdiction. Referring to para 61 of BGS Soma judgment, learned counsel for the petitioner argued 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 jurisdictional seat of the arbitral proceeding. It is argued that role and purpose of Section 42 of the Arbitration Act is for determining the jurisdiction of the Courts where seat is not identifiable from arbitration agreement entered between the parties and multiple Courts may have jurisdiction because cause of action arises at multiple places. The Supreme Court while dealing with Section 20(1) and (2) of the Arbitration Act categorically mentioned that if seat is not identifiable by bare reading of the contract, then seat has to be determined by the Arbitral Tribunal under Section 20(2) of the Act and not by the Court. It is argued that for a venue to be designated as seat, it must be discernible from the clause that the arbitration proceedings as a whole are to be held at a particular place and not one or more individual hearings.
6. Shri Kapil Arora, learned counsel has argued that the cause of action in the present case arose within the territorial jurisdiction of this Court, inter alia, for the reasons; (1) the tender was floated for composite electrical works for design, supply, erection, testing and commissioning of works in Satna-Jabalpur Section, Gr. 174 of Jabalpur Division of West Central Railway under RE Project Jabalupr; (2) the entire works pertaining to the contract were performed in Jabalpur and (3) the AC-96/2019
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extension letters were also issued to the petitioner from the office of Chief Project Director, Railway Electrification, Jabalpur. Moreover, the petitioner in the present case filed a petition (MJC (AV)-11/2019) under Section 9 of the Arbitration Act before the District Judge, District Court at Jabalpur seeking injunction against invocation of bank guarantees. The respondent did not however raise any objection in that matter to the jurisdiction of Jabalpur District Court. The respondent filed an appeal (AA No.91/2019) under Section 37 of the Arbitration Act before this Court challenging the order dated 17.09.2019 passed by the District Judge, District Court, Jabalpur in the aforementioned case under Section 9 of the Arbitration Case. The petitioner thereafter also filed an application under Section 14 of the Arbitration Act before the Jabalpur District Court challenging the constitution of the Arbitral Tribunal by the respondent. Even during proceeding of that application, no objection with regard to territorial jurisdiction was raised by the respondent. The District Court passed an order dated 10.09.2020 on the aforesaid application. It is argued that the judgment of the Supreme Court in Central Organization for Railway Electrification Vs. ECI-SPIC-SMO-MCML, 2019 SCC OnLine SC 1635 is distinguishable on facts. On the contrary, the Supreme Court in the case of Union of India Vs. Tantia Constructions, wherein the Calcutta High Court held that the General Manager of the respondent- Railway could not appoint any existing Railway Officer as the Arbitrator, upheld the said order while dismissing SLP No.12670/2020 on 11.01.2021, filed by the Railway.
7. Relying on the judgment of the Supreme Court in Bharat Broadband Network Limited Vs. United Telecoms Limited, (2019) 5 AC-96/2019
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SCC 755, leaned counsel for the petitioner argued that if a person becomes ineligible to be appointed as Arbitrator vide Section 12(5) read with Schedule VII of the Arbitration Act, then an Arbitrator appointed by him is de jure ineligible and appointment of such Arbitrator is void ab initio. Moreover, all the members of the Tribunal including the Presiding Arbitrator were in the present case appointed unilaterally by the General Manager, CORE without any involvement of the petitioner. Relying on the judgment of the Supreme Court in TRF Limited Vs. Energo Engg Project Limited (2017) 8 SCC 377, learned counsel argued that it was held therein that once the Managing Director has become ineligible to act as the Arbitrator by operation of law, he cannot nominate another arbitrator. Aforesaid judgment of TRF Limited (supra) was followed in Bharat Broadband Network Limited (supra). Since the General Manager, CORE is the head/employee of the respondent, who is a party to the dispute, his interest in the outcome of the present matter would only be natural. Even if retired Railway Officers have been appointed as Arbitrators, considering the fact that the General Manager became ineligible, he could not have appointed them as members/presiding member of the arbitral tribunal. It is argued that the unilateral constitution of the Arbitral Tribunal by the respondent is in blatant violation of Section 11(6) of the Arbitration Act. Once when this Court was in seisin of the matter, the respondents lost their right to appoint the arbitrator. The respondent's right to issue a letter dated 19.11.2019 constituting the Tribunal was extinguished upon expiry of the statutory period of 30 days and especially after the present application was filed by the petitioner before this Court. In support of this argument, learned counsel has relied AC-96/2019
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on the judgments of the Supreme Court in Union of India Vs. Bharat Battery Manufacturing Co. (P) Ltd. (2007) 7 SCC 684 and Dakshin Shelters (P) Ltd. Vs. Geeta S.Johari (2012) 5 SCC 152.
8. Per contra, Shri Atul Choudhary, learned counsel for the respondent argued that contract of the petitioner had to be terminated by the respondent because it failed to complete the work as per the schedule of work, which is evident from termination order dated 12.02.2019. The petitioner submitted a legal notice dated 06.08.2019 invoking arbitration clause in terms of Clause 1.2.54(b) of the contract, which required that all such disputes must be referred to an Arbitral Tribunal. This notice was addressed to the Chief Project Manager and not to the General Manager of the Zonal Railways, Allahabad, which is requirement of arbitration clause d(i) and (ii). As per this clause, the application had to be made to the office of the General Manager, Allahabad and no notice has been filed with the present application so as to indicate that any application was made before the General Manager, Allahabad. It is submitted that the appointment of the Arbitrator was made by the General Manager and it was informed by e-mail as well as speed post, which was served well before expiry of 30 days. The argument of the petitioner that the right of the respondent to appoint Arbitral Tribunal is waived is liable to be rejected. Learned counsel argued that in the present matter, the questions which emerge for consideration are that; (1) whether "venue" synonyms to word "seat"; (2) whether after the amendment of Section 12(5) of the Arbitration Act, the respondent will have any right to constitute arbitration tribunal as per procedure given in the agreement; (3) whether in this case the tribunal was appointed by the respondent after the expiry of 30 days AC-96/2019
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period from the date of receipt of notice and (4) whether the judgment passed by this Court in earlier application of the petitioner A.C.No.107/2017 is binding in the light of judgment of the Supreme Court in Brahmani River Pellets's case (supra)?.
9. Learned counsel for the respondent argued about applicability of Part 1 of the Arbitration Act to internationally seated arbitrations right from Bhatia International Vs. Bulk Trading SA (2002) 4 SCC 105, which was finally settled by the Supreme Court in Bharat Aluminium Co. Vs. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552, it was held that the place of arbitration to be chosen on behalf of the parties has to be designated in the arbitration agreement or the terms of the reference, minutes of proceedings or in some other way as the place or seat of the arbitration. It would be quite unusual for an Arbitral Tribunal to hold the meetings 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. Learned counsel submitted that in view of Section 20(1), (2) and (3), the correct depiction of the practical consideration and 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. Only if the agreement of the parties is construed for the seat/place being in India, Part 1 of the Arbitration Act would be applicable. If the agreement has provided for a seat/place outside India, Part 1 would not be applicable to the extent inconsistent with the arbitration law of the seat. The same principle of law has been laid down by the Supreme Court in Brahmani River Pellets (supra), which has been followed in subsequent judgment of Mankastu Impex Pvt. Ltd. Vs. AC-96/2019
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Arivisual Ltd. (2020) 4 SCC 399, wherein the Supreme Court held that when the seat is agreed by contracting parties to be outside India, in that case the seat and venue are not synonymous and interchangeable, because the laws of Hongkong are different than the laws which govern arbitration in India.
10. Shri Atul Choudhary, learned counsel for the respondent argued that earlier order passed by this Court in A.C.No.107/2017 was based on wrong interpretation of the judgment in Bharat Aluminium Co. Vs. Kaiser Aluminium Technical Services INC (2012) 9 SCC 552. The findings recorded by this Court in para 13 and 14 of judgment in Cobra CIPL Vs. Chief Project Manager reported in 2020(2) MPLJ 71 are therefore liable to be declared per curiam. Aforesaid judgment of this Court should be taken as impliedly overruled by the Supreme Court in subsequent judgment of Brahmani River Pellets Ltd. (supra). It is argued that after the judgment of the Supreme Court in BGS Soma (supra), the choice of venue is choice of seat in the absence of any contrary indicia. The Supreme Court in BGS Soma (supra) in para 61 of the report held that whenever 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 proceedings.
11. Learned counsel argued that the Supreme Court in Mankastu Impex Pvt. Ltd. Vs. Airvisual Ltd. 2020 5 SCC 399 was dealing with the case where arbitration agreement did not use the words "seat" or "venue". The arbitration agreement laid down that the arbitration would AC-96/2019
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be administered in Hongkong and the place of arbitration was Hongkong. The governing law was Indian law and the Courts of New Delhi shall have jurisdiction. When the disputes arose, Mankastu approached the Supreme Court for appointment of arbitrator contending that as Indian law was the governing law and the courts at New Delhi had jurisdiction and therefore New Delhi was the seat of arbitration. Reliance was placed on the judgment of Supreme Court in Union of India Vs. Hardy Exploration and Production (India) INC (2018) SCC Online SC 1640. The Supreme Court arrived at its conclusion that Hong Kong was the seat of arbitration. The Supreme Court instead of applying that ratio in Hardy Exploration (supra) or BGS Soma (supra) employed a different method of inquiry altogether. It is therefore argued that in cases where the venue is described in agreement then it will mean that the venue and seat are same and both are interchangeable. The finding recorded by the leaned Single Bench in earlier application filed by the petitioner is thus contrary to the law laid down by the Supreme Court in Brahmani River Pellets (supra).
12. Shri Atul Choudhary, learned counsel for the respondent argued that in Union of India Vs. Pradeep Vinod Construction Company, 2020 14 SCC 712, the Supreme Court relying on the earlier judgment in Union of India vs Parmar Construction Co. (2019) 15 SCC 682 held that the Court should depart from the agreement procedure for appointment of arbitrator, only where exceptional reasons exit. Clause 64 of the General Condition of the Contract in that case is pari materia to the arbitration clause in the present case which also similarly provided for appointment of serving railway officers as the arbitrators. The Supreme Court in above AC-96/2019
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case set aside the appointment of the independent arbitrators and directed the General Manager of the Railways to appoint arbitrator in terms of Clause 64(3). In that case, the Supreme Court held that the appointment of an employee as arbitrator cannot be assailed merely because he is a retired employee of the parties.
13. Learned counsel for the respondent further submitted that the contention of the petitioner that respondent's right to appoint the arbitrator was forfeited because they failed to act within 30 days from the date of receipt of the notice, is factually incorrect. The present application which was submitted by the petitioner as Annexure A/14 clearly shows that the application invoking arbitration clause was submitted by the petitioner to the Chief Project Manager on 06.08.2019 and not to the General Manager. Therefore, the period of 30 days' as per Section 11(5) of the Arbitration Act cannot be counted from the date mentioned in the application submitted before incompetent authority. Then the petitioner submitted a fresh application on 26.08.2019 and on that basis, a panel of arbitrators was sent to the petitioner on 25.09.2019 (Annexure R/1) within 30 days from the date of service of notice. Instead of submitting the response to the said panel, the petitioner straightaway approached this Court by filing present application. It is therefore prayed that the application be dismissed.
14. I have given my anxious consideration to the rival submissions and perused the record.
15. This Court in earlier application filed by the petitioner having dispute with the respondent herein, albeit, in the context of another agreement having similar arbitration clause in Arbitration Case AC-96/2019
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No.107/2017 decided vide judgment dated 04.02.2019 also considered the same objection regarding lack of territorial jurisdiction which is being again agitated by the respondent in the present case. The Clause 1.2.54(k) which is the bone of the contention between the parties in the present case, was exactly similarly worded in that case as well, which reads as under:-
"(k) VENUE- the Venue for an arbitration shall be the place from which the letter of acceptance of tender is issued or such other place as the purchaser at his discretion may determine." (Emphasis supplied) In that case the "letter of acceptance" was issued from Allahabad but neither "seat" nor "place" of arbitration was indicated in the agreement. The question was whether "venue" will determine the jurisdiction of this Court and whether "venue" and "seat" are synonymous.
16. Relying on the Constitution Bench judgment of the Supreme Court in BALCO (supra), it was held that since the parties have not mandated out any clause prescribing the seat of arbitration, it can be safely concluded that they intended to give jurisdiction to two Courts which would also include the court having jurisdiction based upon the cause of action. Since except letter of acceptance from Allahabad, all necessary events had taken place within the territorial jurisdiction of this Court at Jabalpur, therefore, mere use of the "venue" in the agreement cannot be equated with "seat" and it cannot form basis for determining the question of jurisdiction of this Court.
17. The only additional argument which the learned counsel for the respondent has now sought to advance for persuading this Court to take a AC-96/2019
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different view than the one taken in the earlier order dated 04.02.2019 is that in Brahmani River Pellets (supra), the Supreme Court held that parties are free to agree on the place of arbitration. Party autonomy can be construed in the context of parties choosing a court which has jurisdiction out of two or more competent courts having jurisdiction under Section 2(1)(e) of the Arbitration Act. It was held that when the parties, in the facts of that case agreed to have "venue" of arbitration at Bhubaneswar, the Madras High Court erred in assuming the jurisdiction under Section 11(6) of the Act, as per which, if the subject matter of the suit is situated within the arbitral jurisdiction of two or more courts, the parties may confine jurisdiction in one of the competent courts. For this purpose, the provisions of Section 2(1)(e) of the Act have to be read in conjunction with Section 20 of the Arbitration Act which gives recognition to the autonomy of the parties as to the "place of arbitration". Obviously, unlike in the present case, relevant clause of the observation in Brahmani River Pellets (supra), Bhubaneshwar was indicated as the one venue of arbitration. However, in the present case, this is not the position. Even in Indus Mobile Distribution (P) Ltd. (supra), the judgment relied by the Supreme Court in Brahmani River Pellets (supra), the relevant clause of arbitration provided that all disputes and differences of any kind whatever arising of or in connection with the agreement shall be subject to exclusive jurisdiction of courts at Mumbai only. Even that is not the situation in the present case.
18. This issue in fact has been clarified in later three-judge Bench judgment of the Supreme Court in BGS SGS Soma JV (supra) on analysis of Constitution Bench judgment in BALCO (supra) holding that AC-96/2019
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juridical or legal seat of arbitration once designated or determined, exclusively determines which courts will have jurisdiction over the arbitration, as opposed to the place where all or part of the cause of action arises. Once the seat of arbitration is designated or determined, the same operates as an exclusive jurisdiction clause as a result of which only the courts where the seat is located would have the jurisdiction over the arbitration to the exclusion of all other courts, even courts where part of cause of action may have arisen. However, where it is found on facts of the very case that either no "seat" is designated by agreement or has not been so determined by the arbitral tribunal or the so-called "seat" is only a convenient "venue", then there may be several courts where a part of cause of action arises, that may have jurisdiction over arbitration. It was held that an application under Section 9 of the Arbitration Act, in such a situation, may be preferred before a court in which part of the cause of action arises in a case where the parties have not agreed on the "seat" of arbitration and before such a "seat" may have been determined, on the facts of the particular case by the arbitral tribunal under Section 20(2) of the Arbitration Act. The Supreme Court held that test for determination of juridical seat wherever there is an express designation of a "venue" and no designation any alternative place as the "seat" under Indian law as laid down by the Constitution Bench of the Supreme Court in BALCO(supra) is the Shashoua principle as laid down in Shashoua, 2009 EWHC 957 (Comm).
19. The Supreme Court in Central Organisation for Railway Electrification (supra) was dealing with the case where as per the agreement procedure, the contractor was to suggest to General Manager at AC-96/2019
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least two names out of the panel of four names sent by the Department, for appointment as his nominee and the General Manager had to appoint at least one out of them to three-member arbitral tribunal as his nominee. It was held that since the contractor had been given the power to select two names out of panel of four retired railway officers, at least one of them has to be appointed as one of three arbitrators by the General Manager as per the agreed procedure. It was held that the right of General Manager, who is himself ineligible to act as arbitrator, in formation of the arbitral tribunal was counterbalanced by the respondent's above said power to choose any two from out of the four names. In that case also panel of the arbitrators consisted of retired Railway employees who have worked with the Railways and it was held that this did not make him eligible to act as arbitrator.
20. The Supreme Court in Union of India vs. M/s Tantia Constructions Limited in Special Leave to Appeal No.12670/2020 vide order dated 11.01.2021 while disagreeing with the view taken in that case observing that once appointing authority itself is incapacitated from referring the matter to arbitration, it does not then follow that notwithstanding this yet appointments may be valid depending on the facts of the case. The aforesaid judgment, therefore, cannot help in any manner in the present facts of the case. As to the relevance of Section 42 of the Arbitration Act, it was held that it is the seat of arbitration alone and not the place where the cause of action arises wholly or partly, which determines the jurisdiction of courts over the arbitration, when such seat is found to be designated or determined. Section 42 is meant to avoid conflicts in jurisdiction of courts by placing the supervisory jurisdiction AC-96/2019
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over all arbitral proceedings in connection with the arbitration in one court exclusively. Further, 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 the part of the cause of action arises that may have jurisdiction and application under Section 9 of the Act may be preferred in a case where the parties have not agreed as regards 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).
21. Contention of the respondent that since the "venue" was clearly defined in the agreement between the parties and, therefore, "letter of acceptance" having been issued from Allahabad, "venue" in this context should be taken as a "seat" of the arbitration and the court of Allahabad would have only the jurisdiction if it cannot be that clause 1.2.54(k) while providing that the "venue" for arbitration shall be the place from which the "letter of acceptance" of tender is issued also alternatively provided such other place as the purchaser at his discretion may determine. On a pointed query by the court whether the respondent, independent of the "letter of acceptance" ever separately conveyed to the petitioner in response to its notices invoking the arbitration clause or otherwise in the pleadings before this Court that they as purchasers in their discretion have determined Allahabad as the "venue", the learned counsel for the respondents was not in a position to dispute that no such option was ever exercised. The clause of the arbitration in the arbitration case, apart from the fact that it does not indicate "seat" of arbitration but has merely mentioned "venue" has itself left the possibility of having more than one AC-96/2019
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places as possible venue. Since the respondent failed to act in response to notice of the petitioner served on them on 06.08.2019 invoking arbitration clause followed by another notice dated 26.08.2019 and did not act upon the said notices in accordance with the agreed procedure in the agreement by proposing name of serving Railway Officers till the filing of application on 04.10.2019 and rather offered the name of four retired Railway Officers vide letter dated 25.09.2019, it would be deemed that the respondents have failed to act according to the agreed procedure thereby forfeiting their right to appoint arbitrators in terms of the Section 11(6) of the Arbitration Act. Moreover, the identical application between the same parties in respect of the similar dispute having been already allowed by this Court in view of Section 12(5) of the Act, when the respondent-Railway have decided not to challenge any further, they cannot be now allowed to proceed with the appointment of their own employees as the arbitrators. The present application, therefore, deserves to succeed and is allowed.
22. Resultantly, I deem it proper to provisionally appoint Hon'ble Shri Justice D.M. Dharmadhikari, Former Judge of Supreme Court of India as a Provisional Arbitrator in the present case. The Registry of this Court shall seek his consent/willingness in terms of section 11(8) of the Act.
23. List the matter on 22.10.2021.
(Mohammad Rafiq) Chief Justice C. Digitally signed by CHRISTOPHER PHILIP Date: 2021.09.20 16:31:16 +05'30'