Delhi District Court
M/S Lease Plan India Private Limited vs M/S Rudraksh Pharma Distributor on 11 December, 2023
IN THE COURT OF SHRI PANKAJ GUPTA:
DISTRICT JUDGE, (S/W) (COMMERCIAL COURT)-01,
DWARKA COURTS : DELHI.
OMP (COMM) NO. 118/23
ID No. DLSW01-002338-2023
In the matter of :
M/s Lease Plan India Private Ltd.
Registered Office At: Ground Floor,
C4C/332, Janakpuri, New Delhi-110058
e-mail [email protected]
Mob/whatsapp no. 7985991604
...........PETITIONER
Versus
1. M/s Rudraksh Pharma Distributor
Shop No. 2, Parmanand Puram,
Opposite Modi Hospital, Swarg Ashram Road,
Hapur, Ghaziabad-245101, U.P.
Also At:
1690, New Shivpuri, Hapur,
Ghaziabad-245101, U.P.
e-mail: [email protected]
whatsapp no. 9412221717.
2. Mr. Hemant Shahni
Partner of M/s Rudraksh Pharma Distributor
Shop No. 2, Parmanand Puram,
Opposite: Modi Hospital, Swarg Ashwam Road,
Hapur, Ghaziabad-245101 (U.P.)
Also At:
1690, New Shivpuri, Hapur,
Ghaziabad-245101, (U.P)
e-mail: [email protected]
whatsapp no. 9568989898.
3. Smt. Geeta Shahni,
Partner of M/s Rudraksh Pharma Distributors
Shop No. 2, Parmanand Puram,
Opposite Modi Hospital, Swarg Ashram Road,
Hapur, Ghaziabad-245101, U.P.
Also At:
1690, New Shivpuri, Hapur,
Ghaziabad-245101 (U.P)
M/s Lease Plan India Pvt. Ltd. Vs. M/s Rudraksh Pharma Distributor
OMP (I) (Comm) No. 118/23 Page No. 1 of 9
Also At:
1690, New Shivpuri, Hapur,
Ghaziabad-245101, U.P.
e-mail: [email protected]
whatsapp no. 9412221717.
........RESPONDENTS
Date of Institution : 11.12.2023
Date when the case reserved
for Judgment : 11.12.2023
Date of Judgment : 11.12.2023
JUDGMENT
1. This is the petition under section 9 of the Arbitration and Conciliation Act, 1996 (the Act) filed by the petitioner.
2. In the petition, it is stated that the petitioner, a private limited company, provided the vehicles on lease to the respondents at their request vide lease agreement dated 21.03.2018 (the lease agreement). However, the respondents have failed to pay the outstanding amount. Consequently, the disputes arose between the parties. Hence, the present petition.
3. In para 21 of the petition, the petitioner pleaded that this court has the territorial jurisdiction to entertain the present petition because the petitioner's registered office is situated at and it works for gain at New Delhi; the lease agreement was executed between the parties at New Delhi; and the respondent had to make the payment at New Delhi. Further, vide Article 10.2 of the lease agreement, the parties agreed that the arbitration shall be conducted at New Delhi M/s Lease Plan India Pvt. Ltd. Vs. M/s Rudraksh Pharma Distributor OMP (I) (Comm) No. 118/23 Page No. 2 of 9 and the courts at New Delhi shall have the exclusive jurisdiction to take cognizance of the disputes arising out the lease agreement.
4. Accordingly, this court has raised a query upon counsel for the petitioner as to whether this court has the territorial jurisdiction to entertain the present petition.
5. I have heard the counsel for the petitioner and have perused the material available on record.
6. Counsel for the petitioner pleaded that the petitioner has its registered office at New Delhi, the petitioner works for gain at New Delhi, the lease agreement was executed between the parties at New Delhi, the respondent had to make the payment at New Delhi, Article 10.2 of the lease agreement provides that the arbitration shall be conducted at New Delhi and the courts at New Delhi shall have the exclusive jurisdiction to entertain the litigation arising out the lease agreement. Hence, this court has the territorial jurisdiction to entertain the petition.
7. The Hon'ble Supreme Court, in the judgment titled as "BBR (INDIA) Private Limited vs. S.P. Singla Constructions Private Limited", reported in 2022 LiveLaw (SC) 493, held:
"20. BGS SGS Soma (supra) extensively refers to the judgment of this Court in Indus Mobile Distribution Private Limited v. Datawind Civil and Others, which decision refers to the legislative history of Section 2(1)(e) and Section 20 of the Act and the recommendations of the M/s Lease Plan India Pvt. Ltd. Vs. M/s Rudraksh Pharma Distributor OMP (I) (Comm) No. 118/23 Page No. 3 of 9 246th Law Commission Report, 2014. These recommendations, it is observed, were not implemented in consonance with the decision in BALCO (supra), which, in no uncertain terms, refers to the 'place' as the 'jurisdictional seat' for the purpose of clause (e) to sub-section (2) of Section 2 of the Act. This judgment was subsequently followed in Brahmani River Pellets Limited v. Kamachi Industries Limited. It may, however, be noted that clause (e) to sub-section (1) of Section 2 was amended by inserting sub-
clause (ii) with the specific objective to solve the problem of conflict of jurisdiction that would arise in cases where interim measures are sought in India in cases of arbitration seated outside India. In the context of domestic arbitrations it must be held that once the 'seat of arbitration' has been fixed, then the courts at the said location alone will have exclusive jurisdiction to exercise the supervisory powers over the arbitration. The courts at other locations would not have jurisdiction, including the courts where cause of action has arisen. As observed above and held in BGS SGS Soma (supra), and Indus Mobile (supra), the moment the parties by agreement designate 'the seat', it becomes akin to an exclusive jurisdiction clause. It would then vest the courts at 'the seat' with exclusive jurisdiction to regulate arbitration proceedings arising out of the agreement between the parties.
22. BGS SGS Soma (supra) also refers to decision of this Court in Union of India v. Hardy Exploration and Production (India) Inc., which had held that the choice of the venue of arbitration did not imply that it had become the 'seat of arbitration' and that the venue could not by itself assume the status of 'the seat'; instead a venue could become 'the seat' only if "something else is added to it as a concomitant". According to BGS SGS Soma (supra), the reasoning given in Hardy Exploration (supra) is per incuriam as it contradicts the ratio and law laid down in BALCO (supra). Hence, BGS SGS Soma (supra) M/s Lease Plan India Pvt. Ltd. Vs. M/s Rudraksh Pharma Distributor OMP (I) (Comm) No. 118/23 Page No. 4 of 9 holds that it would be correct to hold that while exercising jurisdiction under sub-section (2) of Section 20 of the Act, an arbitrator is not to pass a detailed or a considered decision. The place where the arbitral tribunal holds the arbitration proceedings would, by default, be the venue of arbitration and consequently the 'seat of arbitration'.
24. ........................ This, in the context of the decision in Inox Renewables Ltd (supra), is undoubtedly correct, but the aforesaid decision cannot be read as a precept in cases governed by sub section (2) of Section 20 of the Act. Inox Renewables (supra) was a case governed under sub-section (1) of Section 20 of the Act, that is, where parties by the agreement had fixed the jurisdictional 'seat' at Jaipur, Rajasthan, but thereafter, by mutual consent, had decided to change the venue of proceedings to Ahmedabad prior to the commencement of the arbitration. This evidently resulted in the decision of this Court accepting that the jurisdictional 'seat of arbitration' was Ahmedabad. This decision would apply in case the parties, by consent, agree mutually that the 'seat of arbitration' would be located at a particular place. The said exercise would be in terms of sub-section (1) of Section 20 of the Act, which endorses and emphasises on party autonomy and choice that determines the 'seat of arbitration'. It would not apply when the arbitrator fixes 'the seat' in terms of sub-section (2) of Section 20 of the Act. Once the arbitrator fixes 'the seat' in terms of subsection (2) of Section 20 of the Act, the arbitrator cannot change 'the seat' of the arbitration, except when and if the parties mutually agree and state that the 'seat of arbitration' should be changed to another location, which is not so in the present case.
25. ........................... 'The seat' once fixed by the arbitral tribunal under Section 20(2), should remain static and fixed, whereas the 'venue' of arbitration can change and move from 'the seat' to a new location. Venue is not constant and M/s Lease Plan India Pvt. Ltd. Vs. M/s Rudraksh Pharma Distributor OMP (I) (Comm) No. 118/23 Page No. 5 of 9 stationary and can move and change in terms of sub-section (3) to Section 20 of the Act. Change of venue does not result in change or relocation of the 'seat of arbitration'.
28. ........................................For clarity and certainty, which is required when the question of territorial jurisdiction arises, we would hold that the place or the venue fixed for arbitration proceedings, when sub-section (2) of Section 20 applies, will be the jurisdictional 'seat' and the courts having jurisdiction over the jurisdictional 'seat' would have exclusive jurisdiction. This principle would have exception that would apply when by mutual consent the parties agree that the jurisdictional 'seat' should be changed, and such consent must be express and clearly understood and agreed by the parties."
8. In view of the judgment BBR (India) Private Limited (supra), it can be held that once the parties have fixed the seat for arbitration proceedings, then sub-section (1) of section 20 of the Act applies and that seat will be the jurisdictional 'seat' and the courts having jurisdiction over the jurisdictional 'seat' would have exclusive jurisdiction. This principle would have exception that would apply when by mutual consent the parties agree that the jurisdictional 'seat' should be changed, and such consent must be express and clearly understood and agreed by the parties. However, as evident from the record that subsequently, the parties by their mutual consent had not changed the seat of arbitration to deal with the subject dispute.
9. In the present case, in terms of sub-section (1) of section 20 of the Act, the parties have fixed the seat for arbitration proceedings at New Delhi. Not only that, the parties also agreed that the courts at New Delhi shall have M/s Lease Plan India Pvt. Ltd. Vs. M/s Rudraksh Pharma Distributor OMP (I) (Comm) No. 118/23 Page No. 6 of 9 the jurisdiction to entertain the disputes arising out of the lease agreement. Hence, the courts at New Delhi shall have the exclusive jurisdiction to entertain the disputes arising out of the lease agreement. Hence, section 20 of the Act being the special provision prevails over section 20 of Code of Civil Procedure 1908, the general provision for the purpose of deciding territorial jurisdiction of this court. Therefore, the place of the business of the petitioner, location of its registered office and the place of execution of the lease agreement are irrelevant to decide the territorial jurisdiction of this court.
10. Article 10.2 (i) of the lease agreement provides that the disputes arising out of the said agreement shall be referred to the arbitration to be conducted at New Delhi by a single arbitrator so appointed in accordance with the rules of Delhi International Arbitration Centre (DIAC), New Delhi and the rules DIAC shall govern the arbitration proceedings. Further, Article 10.2 (iii) provides that the lease agreement shall be governed by the laws of India and the courts in New Delhi shall have the exclusive jurisdiction over the disputes arising out of the lease agreement.
11. In Article 10.2 of the lease agreement, the parties have used 'New Delhi' and not 'Delhi'. This fact is of significance because the District Courts in Delhi are established district wise in 11 districts and exercise the jurisdiction as per their respective district.
12. Now, the question arises, what does 'New Delhi' as mentioned in the lease agreement signifies.
M/s Lease Plan India Pvt. Ltd. Vs. M/s Rudraksh Pharma Distributor OMP (I) (Comm) No. 118/23 Page No. 7 of 9
13. Main thrust of the arguments of counsel for the petitioner is that since, this court is situated in New Delhi, hence, it has the territorial jurisdiction to entertain the present petition. He also pleaded that since, no cause of action has arisen in New Delhi District, hence, 'New Delhi' mentioned in the arbitration clause does not mean 'New Delhi District'.
14. Perusal of Article 10.2 of the lease agreement reveals that the appointment of the arbitrator and the arbitration proceedings shall be governed by the rules of DIAC situated at New Delhi and the seat of the arbitration shall be at New Delhi. Further, the parties agreed that the courts in 'New Delhi' shall have the jurisdiction to entertain the disputes arising out the lease agreement. Admittedly, DIAC is situated in 'New Delhi District' and this court has the territorial jurisdiction over the matters falling in the 'South West District'. As discussed above, section 20 of CPC is not applicable in the present case. Hence, it can be held that 'New Delhi' mentioned in Article 10.2 of the lease agreement signifies 'New Delhi District'.
15. As discussed above, in the present case, the parties agreed that the seat of the arbitration shall be at New Delhi which does not fall in South-West District, Delhi. Therefore, in the terms of section 20(1) of the Act, that shall be the jurisdictional seat and the courts having the jurisdiction over the jurisdictional seat would have the exclusive jurisdiction. Therefore, I am of the opinion that this court does not have the territorial jurisdiction to entertain the present petition. Liberty is granted to the petitioner to file the petition in the M/s Lease Plan India Pvt. Ltd. Vs. M/s Rudraksh Pharma Distributor OMP (I) (Comm) No. 118/23 Page No. 8 of 9 court of competent jurisdiction. No order as to the cost. Petition is disposed of accordingly.
16. File be consigned to Record Room. Digitally signed by PANKAJ PANKAJ GUPTA GUPTA Date:
2023.12.11 ANNOUNCED IN THE OPEN COURT, 15:43:08 +0530 On this 11th day of December, 2023 (PANKAJ GUPTA) District Judge, S/W (Commercial Court)-01:
NEW DELHI M/s Lease Plan India Pvt. Ltd. Vs. M/s Rudraksh Pharma Distributor OMP (I) (Comm) No. 118/23 Page No. 9 of 9