Gujarat High Court
Union Of India Repr By Chief Engineer ... vs M/S Pushkarraj Construction P Ltd on 6 May, 2025
Author: Sunita Agarwal
Bench: Sunita Agarwal
NEUTRAL CITATION
C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025
undefined
Reserved On : 30/01/2025
Pronounced On : 06/05/2025
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 5057 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 15264 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA
AGARWAL
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
=============================================
Approved for Reporting Yes No
✔
=============================================
UNION OF INDIA REPR BY CHIEF ENGINEER NAVY MUMBAI
Versus
M/S PUSHKARRAJ CONSTRUCTION P LTD.
=============================================
Appearance:
SCA No. 5057 of 2024:
MRS KRISHNA G RAWAL for the Petitioner(s) No. 1
MR ANSIN DESAI, SR ADVOCATE with MR DIGANT B KAKKAD for
the Respondent(s) No. 1
SCA No. 15264 of 2024:
MR ANSIN DESAI, SR ADVOCATE with MR DIGANT B KAKKAD for
the Petitioner
MR HARSHEEL D. SHUKLA for the Respondent(s) No. 1
=============================================
CORAM:HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE
SUNITA AGARWAL
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
CAV JUDGMENT
Page 1 of 76
Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025
NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined (PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL)
1. The present petition invoking the extraordinary jurisdiction of this Court under Article 227 of the Constitution of India has been filed challenging the order dated 18.07.2022 passed by the Additional District Judge, Porbandar in rejecting the application under Section 34 of the Arbitration and Conciliation Act, 1996 read with Order XLI of the Code of Civil Procedure seeking to challenge the arbitral award dated 24.10.2018 for want of jurisdiction. It is opined by the concerned Court that there was no reference by the Court at Porbandar in any judicial proceedings relegating the parties to the arbitral proceedings, rather the parties themselves went in for arbitration.
2. Further, Section 10(3) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 has been referred by the Commercial Court to note that the Commercial Court exercising territorial jurisdiction over such arbitration where such commercial court has been constituted, shall have jurisdiction to hear and dispose of all applications or appeals arising out of such arbitration. It was opined that since the arbitration proceedings were not held at Porbandar, Gujarat and the dispute has not been referred by any judicial authority of Porbandar, Gujarat, the Courts at Porbandar would not have the jurisdiction to examine the validity of the impugned award.
Page 2 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined
3. As regards the plea of the petitioner herein relying upon clause 72 of the contract about the jurisdiction of the civil court to decide any dispute arising out of or in respect of the contract, it was opined that the place/venue of the arbitration proceeding was Chandigarh and hence, the Court at Porbandar would have no jurisdiction to set aside the impugned award. The application under Section 34, as noted hereinabove, has, thus, been dismissed on the ground of lack of jurisdiction.
4. Ms. Krishna G. Raval, learned advocate appearing for the petitioner places two clauses of the contract, namely General Conditions of the Contracts (GCC) entered into between the parties. There is no dispute with regard to the applicability of the GCC worked out for Military Engineer Services. Clause 70 and clause 72 of the GCC are relevant to be extracted hereinunder :-
"70. Arbitration - All disputes, between the parties to the Contract (other than those for which the decision of the C.W.E. or any other person is by the Contract expressed to be final and binding) shall, after written notice by either party to the Contract to the other of them, be referred to the sole arbitration of a [Serving Officer having degree in Engineering or equivalent or having passed final/ direct final Examination of sub-Division II of Institution of Surveyor (India) recognised by the Govt. of India] to be appointed by the authority mentioned in the tender documents.
Unless both parties agree in writing such reference shall not take place until after the completion or Page 3 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined alleged completion of the Works or termination or determination of the Contract under Condition Nos. 55, 56 and 57 hereof.
Provided always that commencement or continuance of any arbitration proceeding hereunder or otherwise shall not in any manner militate against the Government's right of recovery from the Contractor as provided in Condition 67 hereof.
If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing him may appoint a new Arbitrator to act in his place.
The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties, asking them to submit to him their statement of the case and pleadings in defence.
The Arbitrator may proceed with the arbitration, ex parte, if either party, inspite of a notice from the Arbitrator fails to take part in the proceedings.
The Arbitrator may, from time to time with the consent of the parties, enlarge, the time for making and publishing the award.
The Arbitrator shall give his award within a period of six months from the date of his entering on the reference or within the extended time as the case may be on all matters referred to him and shall indicate his findings, along with sums awarded, separately on each individual, item of dispute. The arbitrator shall give reason for the award in each and every case irrespective of the value of claims or counter claims.
The venue of Arbitration shall be such place or places as may by fixed by the Arbitrator in his sole discretion. The Award of the Arbitrator shall be Page 4 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined final and binding on both parties to the Contract."
"72. Jurisdiction of Courts - Irrespective of the place of issue of tenders, the place of acceptance of tenders, the place of execution of contract or the place of payment under the contract, the contract shall be deemed to have been made at the place from where the acceptance of tenders has been issued and the work is executed/executable. The Courts of the place from where the acceptance of the tender has been issued or the place where the work is executed/ under execution shall alone have jurisdiction to decide any dispute arising out of or in respect of the contract."
5. Placing clause 70, it was argued by the learned advocate for the petitioner that the seat of the arbitration had not been delineated in the contract, rather the agreement only talks of the venue of arbitration being place or places (one or more, as may be fixed by the arbitrator in his sole discretion). The venue as stated in clause 70, fixed by the arbitrator would not be the seat of arbitration under Sections (1) and (2) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Arbitration Act' 1996"), rather it would be a place of convenience for conducting the arbitration proceeding as per sub-section (3) of Section 20. The arbitral proceedings having been conducted at Chandigarh would not determine the seat of arbitration. Moreover, reference to sub-section (3) of Section 10 of the Commercial Courts Act, 2015 in the order impugned is wholly misplaced, inasmuch as, it talks of the jurisdiction of the Commercial Court without any reference to the seat or venue of the arbitration.
Page 5 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined
6. The contention is that in the instant case, the subject contract to erect building for residential purpose for the personnel serving at Naval Base Porbandar had been agreed and signed by the parties at Porbandar. The place of execution of the work being Porbandar, the dispute with respect to the bills raised by the contractor after completion of the work and payments made by the petitioner on deduction for the sub-standard work is a dispute arising out of or in respect of the contract. In view of clause 70 of GCC, the disputes between the parties were referred to the sole arbitrator by the competent authority. The contention is that the sole arbitrator conducted hearings both at Mumbai, the headquarter of the petitioner and then at Chandigarh, and both the places can only be considered as venue of arbitration, though may be agreed by both the parties.
7. On the rival claims put forth by the parties, the arbitrator rejected the claims of the petitioner and allowed the contractor's claim vide award dated 24.12.2018, which has led to the filing of the application under Section 34 of the Arbitration Act' 1996. As the application has been rejected on the ground of lack of territorial jurisdiction, there was no option but to file this petition invoking extraordinary supervisory jurisdiction under Article 227 of the Constitution of the High Court to set the things right, to undo the wrong committed by the District Court at Porbandar. It is the case of the petitioner that for the fact that the arbitrator Page 6 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined had chosen the venue to conduct the arbitration proceedings at Chandigarh, the same would not become the seat of arbitration so as to confer jurisdiction to the courts at Chandigarh.
8. Reliance is placed on the decision of the Apex Court in BBR (India) Private Ltd. v. S.P. Singla Constructions (P) Ltd. [(2023) 1 SCC 693] to argue that there is a distinction between juridical seat and the venue in the context of the arbitration proceedings. Even where the seat of the arbitration is fixed by the parties, it does not mean that all arbitration proceedings must take place at the seat. The arbitrators at times hold meetings at more convenient locations. The expression "subject matter of arbitration" occurring in clause (e) of sub-section (1) of Section 2 of the Arbitration Act' 1996 though cannot be confused with the subject matter of the suit, but the said clause (e) of sub-section (1) of Section 2 has to be construed keeping in view the provisions of Section 20 of the Arbitration Act' 1996, which is relevant to decide the question of the seat of arbitration. Section 20 recognises the principle of party autonomy, which is the edifice of arbitration. It was argued that the Apex Court in BGS SGS SOMA JV v. NHPC [(2020) 4 SCC 234] recognises that the legislature has given jurisdiction to two courts; the court which would have jurisdiction where the cause of action is located; and the courts where the arbitration takes place.
Page 7 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined
9. The observations made in BGS SGS SOMA JV (supra) is that it may be, on some occasions, the agreement may provide for a seat of arbitration that would be neutral to both the parties. The observation in BGS SGS SOMA JV (supra) that where both the courts have jurisdiction, i.e. the Courts within whose jurisdiction the arbitral tribunal is located, is applicable in a case of international commercial arbitration. The said observation cannot be applied in this case to confer exclusive jurisdiction to the courts at Chandigarh of having jurisdiction to examine the validity of the arbitral award. In any case, the seat of arbitration cannot be said to have been fixed by the fact that the arbitrator had conducted the hearings at Chandigarh and the award was declared thereafter.
10. It was argued that after the sole arbitrator was appointed on 22.09.2017 by the Engineer-in-Chief's Branch, Integrated Headquarter of Military of Defence (Army), Kashmir House, New Delhi, the first hearing of the matter was fixed on 12/13.02.2018 in the office of the Chief Engineer (Navy), Mumbai. This fact is reflected from the reading of the award itself, which is at page '253' of the paper book. The hearing was fixed on 12.01.2018, however, was postponed based on the request made by the Union of India vide letter dated 20.01.2018 and was further fixed on 22.01.2018. Thereafter, on the two dates fixed for hearing, i.e. 27th and 28th April, 2018, the hearing was conducted in the Page 8 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined office of the panel of arbitrators at Chandigarh. The award was published on 24.10.2018 after the said hearing was concluded. The submission, thus, is that the present is not a case where arbitral proceedings were conducted solely and wholly at Chandigarh or where the parties had agreed to fix the seat of arbitration at Chandigarh, but understanding its impact.
11. It was argued that it is well settled that where more than one court has jurisdiction, it is open for the parties to choose one and exclude all other courts. Clause 72 of the GCC, as agreed by the parties, contains exclusion clause to the effect that the courts of the place from where the acceptance of the tender has been issued or the place where the work is executed/under execution, shall alone have jurisdiction to decide any dispute arising out of or in respect of the contract. The exclusive jurisdiction clause contained in the contract specifies the jurisdiction of the Court at a particular place and as such, only such court will have the jurisdiction to deal with the matter as it signifies the intention of the parties to exclude all other courts.
12. Moreover, in the present case, the parties did not agree at a specific place of arbitration, rather, it was left to the discretion of the arbitrator to decide the venue of arbitration, which was also kept flexible as it may be at one or more places. The statement in clause 70 GCC, thus, signifies the intention of the parties to leave the choice of place to the discretion of the arbitrator to Page 9 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined conduct the proceedings at one or more than one. No seat/venue, as such, has been fixed under the agreement and the place where the arbitral proceedings were conducted before the award was declared, cannot be referred as the juridical seat for the purpose of conferring exclusive jurisdiction to the Chandigarh Courts.
13. It was argued that where the agreement between the parties restricted jurisdiction to adjudicate the dispute arising out of or in respect to the contract, that Court alone would have jurisdiction and no other. In the instant case, the contract having been entered into at Porbandar with the acceptance of the tender and the place of work being at Porbandar, the Civil Court at Porbandar shall have exclusive jurisdiction to decide the dispute pertaining to the award passed by the arbitrator as it would be a dispute arising out of or in respect of the contract.
14. For the mere fact that two hearings of the arbitration proceedings were conducted at Chandigarh, i.e. the place where the panel of arbitrator is located, would not fix the seat of arbitration being at Chandigarh so as to exclude the jurisdiction of the Court at Porbandar, which is otherwise having jurisdiction over the subject matter of the suit and to decide the questions forming the subject matter of the arbitration, as they are the same as had been the subject matter of the suit.
Page 10 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined
15. Reference has been made to the decisions of the Apex Court in Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. [(2013) 9 SCC 32], State of W.B. v. Associated Contractors [(2015) 1 SCC 32], Brahmani River Pellets Ltd. v. Kamachi Industries Ltd.[(2020) 5 SCC 462] and Inox Renewables Ltd. v. Jayesh Electricals Ltd. [2021 SCC Online SC 448] to substantiate the above submissions.
16. Further reference has been made to the decision of this Court in Instakart Services Private Ltd. vs. Megastone Logiparks Pvt. Ltd. [2024 (1) GLH 180], to argue that it is held by this Court that mere designation of a place of arbitration in the arbitration clause as being venue of arbitration proceedings would not be determinative factor to decide seat of arbitral proceedings.
17. It was argued that the question of exclusion of the jurisdiction of the Court at Porbandar would arise only in case where seat of arbitration was designated, so as to operate as an exclusive jurisdiction clause to exclude the jurisdiction of all other courts including the Court (as where cause of action or a part of cause of action may have arisen). The said principle laid down in BGS SGS SOMA JV (supra) as applied by the Apex Court in the subsequent decisions would not be attracted in the facts and circumstances of the present case as the parties have not fixed the seat of arbitration being at Chandigarh, conferring exclusive jurisdiction to the Page 11 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined Chandigarh Courts.
18. Mr. Anshin Desai, learned senior advocate assisted by Mr. Digant B. Kakkad, learned advocate appearing for the respondent, referring to Section 20(2) of the Arbitration and Conciliation Act, 1996 would submit that the seat of arbitration, in the instant case, was fixed by the arbitrator with the consent of the parties and the entire arbitration proceedings were held in the office of the panel of arbitrators at Chandigarh. Reference was made to the communications sent by the arbitrator fixing the place of arbitration at Chandigarh to submit that on a significant consent of the petitioner, the entire arbitration proceedings held at Chandigarh must be treated to be the seat of arbitration fixed by the arbitrator with the consent of the parties and cannot be said to be the venue and hence, the Civil Court at Porbandar has rightly rejected the application under Section 34 holding that the jurisdiction in respect of arbitration matters would be with the Civil Court of original jurisdiction exercising territorial jurisdiction over such arbitration where the commercial court has been constituted shall have exclusive jurisdiction to hear and dispose of applications or appeals arising out of such arbitration. As the arbitration proceedings were not held at Porbandar, Gujarat nor the dispute has been referred by any judicial authority within the State of Gujarat, the Court at Porbandar cannot be said to have the jurisdiction to examine the validity of the award.
Page 12 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined
19. It was vehemently argued that clause 72 of the contract which talks about the jurisdiction of the Court to decide any dispute arising out of or in respect of the contract cannot be treated as contra indicia and will have no bearing insofar as the exercise of supervisory jurisdiction over the arbitral proceedings is concerned. The place/venue of the arbitration fixed by the arbitrator under Section 20(2) of the Arbitration and Conciliation Act, 1996 shall be the seat of arbitration decided with the consent of the parties and once the parties have agreed to a place of arbitration where all arbitration hearings were held, no court other than the court having supervisory jurisdiction and control over the arbitration proceedings will be competent court having jurisdiction to examine the validity of the award. Heavy reliance has been placed on the decisions of the Apex Court in BGS SGS SOMA JV (supra) and Inox Renewables Ltd. (supra) to support the above submissions and to argue that the courts at venue/seat of arbitration have exclusive jurisdiction notwithstanding general jurisdiction clause. It was further argued that a separate jurisdiction clause in the contract has nothing to do with arbitration clause as they are independent to each other.
20. Reliance is further placed on the decision of the Apex Court in BBR (India) (P) Ltd. (supra) to vehemently argue that juridical seat of arbitration once Page 13 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined fixed under Section 20(2) by the arbitrator shall be the seat of arbitration and thereby the Court having jurisdiction over the place where the arbitration proceedings were held would have exclusive jurisdiction over the arbitral proceedings and all subsequent proceedings arising out of the arbitral proceedings.
21. Referring to the decision of the Apex Court in Hindustan Construction Company Ltd. vs. NHPC Limited and Anr. [(2020) 4 SCC 310) and Mankastu Impex Private Ltd. vs. Airvisual Ltd. [(2020) 5 SCC 399], it was urged by the learned counsel for the respondent that the seat of arbitration is a vital aspect of any arbitration proceedings. Significance of the seat of arbitration is that it determines the applicable law when deciding the arbitration proceedings and arbitration procedure as well as judicial review over the arbitration award. The situs is not just about where an institution is based or where the hearings will be held. But it is all about which court would have the supervisory power over the arbitration proceedings. The location of the seat will determine the courts that will have the exclusive jurisdiction to oversee the arbitration proceedings. Once the seat of arbitration is designated, opposed to on the basis of cause of action, 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 to the exclusion of all other courts, even court(s) where part of the cause of action may have Page 14 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined arisen.
22. Heard learned counsels for the parties and perused the record.
23. Having gone through the decision of the Apex Court in BGS SGS SOMA JV (supra), we may record that while dealing with the question as to the maintainability of the appeals under Section 37 of the Arbitration and Conciliation Act, 1996, the Apex Court therein was dealing with a case of international commercial arbitration where the dispute was between NHPC Ltd. and a foreign contractor. Clause 67.3 of the agreement between the parties therein provided for dispute resolution through arbitration and has categorically stated that "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". In this context the observations in paragraph '97' of the Apex Court in BGS SGS SOMA JV (supra) are relevant to be taken note of :-
"97. Given the fact that if there were a dispute between NHPC Ltd. and a foreign contractor, Clause 67.3 (vi) would have to be read as a clause designating the "seat" of arbitration, the same must follow even when sub-clause (vi) is to be read with sub-clause (i) of Clause 67.3, where the dispute between NHPC Ltd. would be with an Indian contractor. The arbitration clause in the present case states that "Arbitration proceedings shall be held at New Delhi/Faridabad, India...", thereby Page 15 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined signifying that all the hearings, including the making of the award, are to take place at one of the stated places. Negatively speaking, the clause does not state that the venue is so that some, or all, of the hearings take place at the venue; neither does it use language such as "the Tribunal may meet", or "may hear witnesses, experts or parties". The expression "shall be held" also indicates that the so-called "venue" is really the "seat" of the arbitral proceedings. The dispute is to be settled in accordance with the Arbitration Act, 1996 which, therefore, applies a national body of rules to the arbitration that is to be held either at New Delhi or Faridabad, given the fact that the present arbitration would be Indian and not international. It is clear, therefore, that even in such a scenario, New Delhi/Faridabad, India has been designated as the "seat" of the arbitration proceedings."
24. A careful reading of the paragraph indicates that the Apex Court by reading the arbitration clause in the said case has stated that the statement of the clause signify that all the hearings including making of the award were to be taken at one of the stated places, i.e. New Delhi or Faridabad. The expression "shall be held"
also indicated that the place of arbitration chosen by the parties was really the seat of arbitral proceedings. India has been designated as the "seat" of arbitration proceedings by both the parties and, thus, New Delhi chosen by the parties alone would have exclusive jurisdiction over the arbitral proceedings. Therefore, the fact that part of cause of action may have arisen at Faridabad would not be relevant as once the "seat" has been chosen, which would then amount to an exclusive jurisdiction clause so far as Courts of the "seat" are Page 16 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined concerned.
25. In this context, the observations in paragraph '33' of BGS SGS SOMA JV (supra) are also relevant to be noted herein wherein the Apex Court has noted the observations in paragraph '96', '98' and '99' of the larger Bench decision in Balco vs. Kaiser Aluminium Technical Services Inc. [(2012) 9 SCC 552] :-
"33. ..............
The five-Judge Bench in Balco [Balco v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] dealt with this problem as follows : (SCC pp. 597-99, 605-607, paras 75-76, 95-96, 98-99)"
"96. Section 2(1)(e) of the Arbitration Act, 1996 reads as under:
'2. Definitions.--(1) In this Part, unless the context otherwise requires.--
(e) "Court" means 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.' 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 Page 17 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined 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. 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 Page 18 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined is located.
98. We now come to Section 20, which is as under: '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) authorises 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 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."
(emphasis in original and supplied) Page 19 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined
26. On a reading of paragraph '96' of Balco (supra), noted hereinabove, along with other paragraphs, it was noted by the Apex Court in paragraphs '44' and '45' as under :-
"44. If paras 75, 76, 96, 110, 116, 123 and 194 of Balco [Balco v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] are to be read together, what becomes clear is that Section 2(1)(e) has to be construed keeping in view Section 20 of the Arbitration Act, 1996, which gives recognition to party autonomy --
the Arbitration Act, 1996 having accepted the territoriality principle in Section 2(2), following the Uncitral Model Law. The narrow construction of Section 2(1)(e) was expressly rejected by the five- Judge Bench in Balco [Balco v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] . This being so, what has then to be seen is what is the effect Section 20 would have on Section 2(1)(e) of the Arbitration Act, 1996.
45. It was not until this Court's judgment in Indus Mobile Distribution (P) Ltd. [Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd., (2017) 7 SCC 678 : (2017) 3 SCC (Civ) 760] that the provisions of Section 20 were properly analysed in the light of the 246th Report of the Law Commission of India titled, "Amendments to the Arbitration and Conciliation Act, 1996" (August, 2014) (hereinafter referred to as "the Law Commission Report, 2014"), under which Sections 20(1) and (2) would refer to the "seat" of the arbitration, and Section 20(3) would refer only to the "venue" of the arbitration. Given the fact that when parties, either by agreement or, in default of there being an agreement, where the Arbitral Tribunal determines a particular place as the seat of the arbitration under Section 31(4) of the Page 20 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined Arbitration Act, 1996, it becomes clear that the parties having chosen the seat, or the Arbitral Tribunal having determined the seat, have also chosen the courts at the seat for the purpose of interim orders and challenges to the award."
27. The distinction laid down between the "seat" and "venue" of arbitration proceeding, as discussed in Indus Mobile Distribution (P) Ltd. vs. Datawind Innovations (P) Ltd. [(2017) 7 SCC 678] after referring to Section 2(1)(e) and 20 of the Arbitration and Conciliation Act, 1996, it has noted the observations in paragraphs '18' '19' and '20' of Indus Mobile Distribution (P) Ltd. in paragraph '46' as under :-
"46. This Court in Indus Mobile Distribution (P) Ltd. [Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd., (2017) 7 SCC 678 : (2017) 3 SCC (Civ) 760] , after referring to Sections 2(1)(e) and 20 of the Arbitration Act, 1996, and various judgments distinguishing between the "seat" of an arbitral proceeding and "venue" of such proceeding, referred to the Law Commission Report, 2014 and the recommendations made therein as follows : (SCC pp. 692-93, paras 17-20) :
"18. The amended Act, does not, however, contain the aforesaid amendments, presumably because the Balco [Balco v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] judgment in no uncertain terms has referred to "place"
as "juridical seat" for the purpose of Section 2(2) of the Act. It further made it clear that Sections 20(1) and 20(2) where the word "place" is used, refers to "juridical seat", whereas in Section 20(3), the word "place" is Page 21 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined equivalent to "venue". This being the settled law, it was found unnecessary to expressly incorporate what the Constitution Bench of the Supreme Court has already done by way of construction of the Act.
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 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 Sections 16 to 21 of the Code of Civil Procedure 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......"
28. Having read the above paragraphs of Indus Mobile Distribution (P) Ltd. (supra), it may be noted that by reading Section 20(1) and Section 20(2), it was held therein that the word "place" is equivalent to "venue" to hold that the conspectus of the provisions of Section 20 read with Section 2(1)(e) shows that the Page 22 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined moment the seat is designated, it is akin to an exclusive jurisdiction clause. 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. The neutral venue may not have jurisdiction, i.e. no part of cause of action may have arisen at the neutral venue and neither would any of the provisions of Sections 16 to 20 of the Code of Civil Procedure be attracted. In arbitration law, however, the moment the "seat" is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for the purpose of regulating arbitration proceedings arising out of the agreement between the parties. This was stated noticing that it is well settled that "where more than one court has jurisdiction, it is open for the parties to exclude all other courts".
29. It was, thus, observed in paragraph '53' of BGS SGS SOMA JV (supra) that :-
"53. In Indus Mobile Distribution (P) Ltd. [Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd., (2017) 7 SCC 678 : (2017) 3 SCC (Civ) 760] , after clearing the air on the meaning of Section 20 of the Arbitration Act, 1996, the Court in para 19 (which has already been set out hereinabove) made it clear that the moment a seat is designated by agreement between the parties, it is akin to an exclusive jurisdiction clause, which would then vest the courts at the "seat" with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties."Page 23 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025
NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined
30. In the context of the above stated law, it was further observed in paragraph '82' as under :-
"82. On a conspectus of the aforesaid judgments, it may be concluded that whenever there is the designation of a place of arbitration in an arbitration clause as being the "venue" of the arbitration proceedings, the expression "arbitration proceedings" would make it clear that the "venue"
is really the "seat" of the arbitral proceedings, as the aforesaid expression does not include just one or more individual or particular hearing, but the arbitration proceedings as a whole, including the making of an award at that place. This language has to be contrasted with language such as "tribunals are to meet or have witnesses, experts or the parties" where only hearings are to take place in the "venue", which may lead to the conclusion, other things being equal, that the venue so stated is not the "seat" of arbitral proceedings, but only a convenient place of meeting. Further, the fact that the arbitral proceedings "shall be held" at a particular venue would also indicate that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby, that that place is the seat of the arbitral proceedings. This, coupled with there being no other significant contrary indicia that the stated venue is merely a "venue" and not the "seat" of the arbitral proceedings, would then conclusively show that such a clause designates a "seat" of the arbitral proceedings. In an international context, if a supranational body of rules is to govern the arbitration, this would further be an indicia that "the venue", so stated, would be the seat of the arbitral proceedings. In a national context, this would be replaced by the Arbitration Act, 1996 as applying to the "stated venue", which then becomes the "seat" for the purposes of arbitration."
Thus, by reading the expression/statement in the Page 24 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined agreement it was held that the language therein has to be contrasted with the language of convenient place of arbitration such as "tribunals are to meet or have witnesses, experts or the parties" used in section 20(3) of the Arbitration and Conciliation Act, 1996, where only hearings are to take place at the venue, which may lead to the conclusion or other things being equal with that the venue so stated is not the "seat" of arbitral proceedings, but only a convenient place of meeting.
31. It was noted in the facts of the said case that the fact that the "arbitral proceedings" shall be held at a particular venue would indicate that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby that the place is the seat of the arbitral proceedings. This is coupled with there being no other significant contrary indicia that the stated venue is merely a "venue" and not the "seat" of the arbitral proceedings, would then conclusively show that such a clause designates a "seat" of the arbitral proceedings. It was, thus, held that it may be concluded that whenever there is the designation of a place of arbitration in an arbitration clause as being the "venue" of the arbitration proceedings, the expression "arbitration proceedings" would make it clear that the "venue" is really the "seat" of the arbitral proceedings, as the aforesaid expression does not include just one or more individual or particular hearing, but the arbitration proceedings as a whole, including the making of an Page 25 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined award at that place. It was further observed that in the national context, for the Arbitration Act, 1996, the "stated venue" becomes the "seat" for the purposes of arbitration."
32. In light of the above discussion made in BGS SGS SOMA JV (supra), we may further note the observations in paragraphs '95' and '96' and '98' therein :-
"95. Coming to the impugned judgment in the present appeals, it is clear that the reasoning followed stems from the subject-matter test that flows from the definition of "court" in Section 2(1)
(e)(i) of the Act. According to the impugned judgment [NHPC Ltd. v. Jaiparkash Associates Ltd., 2018 SCC OnLine P&H 1304 : (2019) 193 AIC 839] , since the agreement was executed at Faridabad, part of the cause of action would arise at Faridabad, clothing Faridabad courts with jurisdiction for the purposes of filing a Section 34 petition. The second part of the reasoning is that Faridabad is the place where the request for reference to arbitration was received, as a result of which part of the cause of action arose in Faridabad, which ousts the jurisdiction of courts of New Delhi, in which no part of the cause of action arose."
"96. We have extracted the arbitration agreement in the present case (as contained in Clause 67.3 of the agreement between the parties) in para 3 of this judgment. As per the arbitration agreement, in case a dispute was to arise with a foreign contractor, Clause 67.3(ii) would apply. Under this sub-clause, a dispute which would amount to an "international commercial arbitration" within the meaning of Section 2(1)(f) of the Arbitration Act, 1996, would have to be finally settled in accordance Page 26 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined with the Arbitration Act, 1996 read with the UNCITRAL Arbitration Rules, and in case of any conflict, the Arbitration Act, 1996 is to prevail (as an award made under Part I is considered a domestic award under Section 2(7) of the Arbitration Act, 1996 notwithstanding the fact that it is an award made in an international commercial arbitration). Applying the Shashoua [Shashoua v. Sharma, 2009 EWHC 957 (Comm) : (2009) 2 Lloyd's Law Rep 376] principle delineated above, it is clear that if the dispute was with a foreign contractor under Clause 67.3 of the agreement, the fact that arbitration proceedings shall be held at New Delhi/Faridabad, India in sub-clause (vi) of Clause 67.3, would amount to the designation of either of these places as the "seat" of arbitration, as a supranational body of law is to be applied, namely, the UNCITRAL Arbitration Rules, in conjunction with the Arbitration Act, 1996. As such arbitration would be an international commercial arbitration which would be decided in India, the Arbitration Act, 1996 is to apply as well. There being no other contra indication in such a situation, either New Delhi or Faridabad, India is the designated "seat" under the agreement, and it is thereafter for the parties to choose as to in which of the two places the arbitration is finally to be held."
"98. However, the fact that in all the three appeals before us the proceedings were finally held at New Delhi, and the awards were signed in New Delhi, and not at Faridabad, would lead to the conclusion that both parties have chosen New Delhi as the "seat" of arbitration under Section 20(1) of the Arbitration Act, 1996. This being the case, both parties have, therefore, chosen that the courts at New Delhi alone would have exclusive jurisdiction over the arbitral proceedings. Therefore, the fact that a part of the cause of action may have arisen at Faridabad would not be relevant once the "seat"
has been chosen, which would then amount to an Page 27 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined exclusive jurisdiction clause so far as courts of the "seat" are concerned."
33. In Inox Renewables Ltd. (supra), challenge before the Apex Court was to the jurisdiction of the Commercial Court at Ahmedabad to entertain the application under Section 34 of the Arbitration and Conciliation Act, 1996. In the said case, the agreement stated that the venue of the arbitration shall be Jaipur. The High Court of Gujarat held that the Court at Jaipur, Rajasthan would be the courts in which the Section 34 petition could be filed. The Apex Court while dealing with the challenge referred to the statement made in the arbitral award with respect to the venue/place of arbitration noted that :-
"09. Having heard the learned counsel for both the parties, it is first necessary to set out what the learned arbitrator has held in the award with respect to the venue/place of the arbitration. In para 12.3, the learned arbitrator holds thus:
"12.3. There is no controversy as to the constitution of the Tribunal between the parties and the parties have agreed to get their dispute resolved by a sole arbitrator. As per arbitration agreement, the venue of the arbitration was to be Jaipur. However, the parties have mutually agreed, irrespective of a specific clause as to the [venue, that the place] of the arbitration would be at Ahmedabad and not at Jaipur. The proceedings, thus, have been conducted at Ahmedabad on constitution of the Tribunal by the learned Nominee Judge of the Hon'ble High Court of Gujarat."Page 28 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025
NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined
10. What is clear, therefore, as per this paragraph is that by mutual agreement, parties have specifically shifted the venue/place of arbitration from Jaipur to Ahmedabad. This being so, is it not possible to accede to the argument made by the learned counsel for the respondent that this could only have been done by written agreement and that the arbitrator's finding would really have reference to a convenient venue and not the seat of arbitration."
34. Having said so, noticing the observations in paragraphs 32, 48, 49, 53, 82 and 98 in BGS SGS SOMA JV (supra), it was held in paragraph '12 that :-
"12. This case would show that the moment the seat is chosen as Ahmedabad, it is akin to an exclusive jurisdiction clause, thereby vesting the courts at Ahmedabad with exclusive jurisdiction to deal with the arbitration. However, the learned counsel for the respondent referred to and relied upon paras 49 and 71 of the aforesaid judgment. Para 49 only dealt with the aspect of concurrent jurisdiction as dealt with in Balco v. Kaiser Aluminium Technical Services Inc. [Balco v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] ["Balco"] which does not arise on the facts of the present case. Para 71 is equally irrelevant, in that, it is clear that the parties have, by mutual agreement, entered into an agreement to substitute the venue at Jaipur with Ahmedabad as the place/seat of arbitration under Section 20(1) of the Arbitration and Conciliation Act, 1996."
35. It was held that the appellant's case that the "venue" being shifted from Jaipur to Ahmedabad is acceptable, inasmuch as, Jaipur does not continue to be the seat of arbitration and Ahmedabad was the seat Page 29 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined designated by the parties, and not a venue to hold meetings. It was noted that once the arbitrator had recorded by mutual agreement, Jaipur as "venue" had gone and had been replaced by Ahmedabad. Referring to the clause contained in clause 8.5 of the purchase order therein, as a whole, it was held that it was not possible to accept the submission of the learned advocate that the jurisdiction of the courts in Rajasthan was independent of the venue being at Jaipur. It was further held that the courts in Rajasthan had been vested with jurisdiction only because the seat of arbitration was to be at Jaipur. Once the seat of arbitration was replaced by mutual agreement to be at Ahmedabad, the courts at Rajasthan were no longer vested with jurisdiction as exclusive jurisdiction was then vested in the courts at Ahmedabad, given the change in the seat of arbitration.
36. In order to understand the law stated in Inox Renewables Ltd. (supra), the relevant clause 8.5 of the purchase order, which was read and interpreted by the Apex Court in paragraph '17' of the judgment, is relevant to be extrated hereinunder along with the findings returned in paragraph '17' as under :-
"3.....The arbitration clause is contained in clause 8.5 of the purchase order which reads as follows :-
8.5 All the dispute[s] and differences if any shall be settled by arbitration in the manner hereinafter provided.
Arbitration shall be conducted by three arbitrators;
Page 30 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined one each to be nominated by you and the owner and third to be appointed as an umpire by both the [arbitrators] in accordance to the Arbitration and Conciliation Act, 1996. In case either party fails to appoint an arbitrator within sixty days after receipt of notice from the other party invoking the arbitration clause, the arbitrator appointed by the party invoking the arbitration clause shall become the sole arbitrator to conduct the arbitration.
The venue of the arbitration shall be Jaipur.
The decisions of the majority of the arbitrators shall be final and binding on both the parties. The arbitrators may from time to time with the consent of all the parties: extend the time for making the award. In the event of any of the arbitrators dying, neglecting, resigning or being unable to act for any reason, it shall be lawfully binding for the party concerned to nominate another arbitrator in place to the outgoing arbitrator.
The arbitrator shall have full powers to review and/ or revise any decision, opinion, direction, certification or valuation in accordance with the agreement and neither party shall be limited in proceedings before such arbitration to the evidence or arguments for the purpose of obtaining the said decision.
During settlement of disputes and arbitration proceedings, both parties shall be obliged to carry out their respective obligations under the agreement.
In the event of arbitrators' award being not acceptable to either party, the parties shall be free to seek lawful remedies under the law of India and the jurisdiction for the same shall be courts in the State of Rajasthan."
"17. The reliance placed by the learned counsel for the respondent on Indus Mobile [Indus Mobile Page 31 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined Distribution (P) Ltd. v. Datawind Innovations (P) Ltd., (2017) 7 SCC 678 : (2017) 3 SCC (Civ) 760] , and in particular, on paras 18 and 19 thereof, would also support the appellant's case, inasmuch as the "venue" being shifted from Jaipur to Ahmedabad is really a shifting of the venue/place of arbitration with reference to Section 20(1), and not with reference to Section 20(3) of the Arbitration and Conciliation Act, 1996, as it has been made clear that Jaipur does not continue to be the seat of arbitration and Ahmedabad is now the seat designated by the parties, and not a venue to hold meetings. The learned arbitrator has recorded that by mutual agreement, Jaipur as a "venue" has gone and has been replaced by Ahmedabad. As Clause 8.5 of the purchase order must be read as a whole, it is not possible to accept the submission of Shri Malkan that the jurisdiction of courts in Rajasthan is independent of the venue being at Jaipur. The two clauses must be read together as the courts in Rajasthan have been vested with jurisdiction only because the seat of arbitration was to be at Jaipur. Once the seat of arbitration is replaced by mutual agreement to be at Ahmedabad, the courts at Rajasthan are no longer vested with jurisdiction as exclusive jurisdiction is now vested in the courts at Ahmedabad, given the change in the seat of arbitration."
37. From a careful reading of the judgment in Inox Renewables Ltd. (supra), it is, thus, evident that the Apex Court in holding that the parties have by mutual agreement, entered into an agreement to substitute the venue at Jaipur with Ahmedabad as the place/seat of arbitration under Section 20(1) of the Arbitration and Conciliation Act, 1996, has exhaustively referred to the facts and circumstances of the said case, wherein mutual agreement of the parties to shift the venue was recorded in the arbitral award itself.
Page 32 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined
38. In Hindustan Construction Company Ltd. (supra), the Apex Court in construing the arbitration clause in the agreement between the parties arrived at the finding that the seat of arbitration was at New Delhi, chosen by the parties. It was held 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 would have jurisdiction to the exclusion of all other courts.
39. In BBR (India) Private Ltd. (supra), the question before the Apex Court was that whether conducting the arbitration proceedings at Delhi, owing to the appointment of a new arbitrator, would shift the "jurisdictional seat of arbitration" from Panchkula in Haryana, the place fixed by the first arbitrator for the arbitration proceedings? It was noted by the Apex Court that the arbitration clause in the agreement therein was silent and did not stipulate the seat and venue of arbitration. The contract and letter of intent were executed in Panchkula in Haryana. The corporate office of the respondent was also located at Panchkula whereas, the registered office of the appellant was located in Bengaluru, Karnataka. The appellant had entered into a contract with the respondent wherein the appellant was required to supply, install and undertake stressing of cable stays for the 592 m long cable-stay bridge being constructed by the respondent over the River Ravi at Basouli, Jammu and Kashmir.
Page 33 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined
40. On the dispute arose between the parties, the matter was referred to arbitration and arbitrator so appointed held holding in the first sitting that the venue of the arbitration proceedings would be at Panchkula, Hariyana. The respondent, however, was not present at the proceeding and sought adjournment, which request was accepted. Neither party objected to the place of arbitration proceeding as fixed by the arbitral tribunal. The arbitration proceeding were, thereafter, held at Chandigarh where the parties were directed to complete the pleadings and matter was adjourned for framing of issues. Thereafter the arbitrator recused and a new arbitrator was appointed. After taking over, the new arbitrator recorded in its first procedural order that the venue of the proceedings would be Delhi. In the said proceeding, the appellant was not present. All proceedings, thereafter, were held at Delhi and the award was signed and pronounced at Delhi.
41. Two proceedings were initiated thereafter. The appellant filed application under Section 34 of the Arbitration Act, 1996 before the Delhi High Court whereas the respondent filed Section 9 application before the Additional District Judge, Panchkula after passing of the award. The application under Section 9 of the Act was rejected by the Court at Panchkula on the ground of lack of territorial jurisdiction holding that the Court at Delhi where a prior petition under Section 34 had been filed by the appellant would be competent to Page 34 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined entertain the application under Section 9, which was subsequent petition and, thus, would be barred under Section 42 of the Arbitration Act, 1996. The order passed by the Civil Court had been set aside by the High Court of Punjab and Hariyana holding that the courts at Delhi did not have jurisdiction to entertain the petitions under Section 34 of the Act, 1996, inasmuch as, the parties were silent as to the "seat" of the arbitration proceeding and the second arbitrator had not determined Delhi to be the seat of arbitration. Consequently, the courts at Panchkula had jurisdiction to deal with the case. The order passed by the High Court was taken up in appeal before the Apex Court, where and referring to Section 2(1)(e) and Section 20, the Apex Court has observed in paragraphs '15', '16', '17', '18', '19', '20', '21', '22' and '23' as under :-
"15. Interpretation of the term "court", as defined in clause (e) to sub-section (1) of Section 2 of the Act, had come up for consideration before a Constitutional Bench of five Judges in Balco v. Kaiser Aluminium Technical Services Inc. [Balco v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] , (for short "Balco case") which decision had examined the distinction between "jurisdictional seat" and "venue" in the context of international arbitration, to hold that the expression "seat of arbitration" is the centre of gravity in arbitration. However, this does not mean that all arbitration proceedings must take place at "the seat". The arbitrators at times hold meetings at more convenient locations. Regarding the expression "court", it was observed that Section 2(2) of the Act does not make Part I applicable to arbitrations seated outside India. The Page 35 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined expressions used in Section 2(2) [See para 20 below. By Act 3 of 2016 proviso to Section 2(2) of the Act has been inserted with retrospective effect from 23-10-2015, and the provision as substituted/amended by Act 33 of 2019 for clause
(a), now reads--"(2) Scope.--This Part shall apply where the place of arbitration is in India:Provided that subject to an agreement to the contrary, the provisions of Sections 9, 27 and clause (b) of sub-
section (1) and sub-section (3) of Section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognised under the provisions of Part II of this Act."] of the Act do not permit an interpretation to hold that Part I would also apply to arbitrations held outside the territory of India.
16. Noticing the above interpretation, a three-Judge Bench of this Court in BGS SGS Soma JV v. NHPC Ltd. [BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234 : (2020) 2 SCC (Civ) 606] has observed that the expression "subject to arbitration" used in clause (e) to sub-section (1) of Section 2 of the Act cannot be confused with the "subject-matter of the suit". The term "subject-matter of the suit" in the said provision is confined to Part I. The purpose of the clause is to identify the courts having supervisory control over the judicial proceedings. Hence, the clause refers to a court which would be essentially a court of "the seat" of the arbitration process. Accordingly, clause (e) to sub-section (1) of Section 2 has to be construed keeping in view the provisions of Section 20 of the Act, which are, in fact, determinative and relevant when we decide the question of "the seat of an arbitration". This interpretation recognises the principle of "party autonomy", which is the edifice of arbitration. In other words, the term "court" as defined in clause
(e) to sub-section (1) of Section 2, which refers to the "subject-matter of arbitration", is not necessarily used as finally determinative of the court's territorial jurisdiction to entertain Page 36 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined proceedings under the Act.
17. In BGS SGS Soma [BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234 : (2020) 2 SCC (Civ) 606] , this Court observed that any other construction of the provisions would render Section 20 of the Act nugatory. In view of the Court, the legislature had given jurisdiction to two courts : the court which should have jurisdiction where the cause of action is located; and the court where the arbitration takes place. This is necessary as, on some occasions, the agreement may provide the "seat of arbitration" that would be neutral to both the parties. The courts where the arbitration takes place would be required to exercise supervisory control over the arbitral process. The "seat of arbitration" need not be the place where any cause of action has arisen, in the sense that the "seat of arbitration" may be different from the place where obligations are/had to be performed under the contract. In such circumstances, both the courts should have jurisdiction viz. the courts within whose jurisdiction "the subject-matter of the suit"
is situated and the courts within whose jurisdiction the dispute resolution forum, that is, where the Arbitral Tribunal is located.
18. Turning to Section 20 of the Act, sub-section (1) in clear terms states that the parties can agree on the place of arbitration. The word "free" has been used to emphasise the autonomy and flexibility that the parties enjoy to agree on a place of arbitration which is unrestricted and need not be confined to the place where the "subject-matter of the suit" is situated. Sub-section (1) to Section 20 gives primacy to the agreement of the parties by which they are entitled to fix and specify "the seat of arbitration", which then, by operation of law, determines the jurisdictional court that will, in the said case, exercise territorial jurisdiction. Sub- section (2) comes into the picture only when the parties have not agreed on the place of arbitration as "the seat". [ Section 20(2) also applies when "the Page 37 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined seat" as mentioned in the agreement is only a convenient venue.] In terms of sub-section (2) of Section 20 the Arbitral Tribunal determines the place of arbitration. The Arbitral Tribunal, while doing so, can take into regard the circumstances of the case, including the convenience of the parties. Sub-section (3) of Section 20 of the Act enables the Arbitral Tribunal, unless the parties have agreed to the contrary, to meet at any place to conduct hearing at a place of convenience in matters, such as consultation among its members, for the recording of witnesses, experts or hearing parties, inspection of documents, goods, or property.
19. Relying upon the Constitutional Bench decision in Balco [Balco v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] , in BGS SGS Soma [BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234 : (2020) 2 SCC (Civ) 606] , it has been held that sub-section (3) of Section 20 refers to "venue" whereas the "place" mentioned in sub-section (1) and sub-section (2) refers to the "jurisdictional seat". To explain the difference, in Balco [Balco v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] , a case relating to international arbitration, reference was made to several judgments, albeit the judgment in Shashoua v. Sharma [Shashoua v. Sharma, 2009 EWHC 957 (Comm)] was extensively quoted to observe that an agreement as to the "seat of arbitration" draws in the law of that country as the curial law and is analogous to an exclusive jurisdiction clause. [C v. D, 2008 Bus LR 843 : 2007 EWCA Civ 1282 (CA)] The parties that have agreed to "the seat" must challenge an interim or final award only in the courts of the place designated as the "seat of arbitration". In other words, the choice of the "seat of arbitration" must be the choice of a forum/court for remedies seeking to attack the award.
20. The aforesaid principles relating to international arbitration have been applied to Page 38 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined domestic arbitrations. In this regard, we may refer to para 38 of BGS SGS Soma [BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234 : (2020) 2 SCC (Civ) 606] , which reads as under : (SCC p. 274) "38. A reading of paras 75, 76, 96, 110, 116, 123 and 194 of Balco [Balco v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] would show that where parties have selected the seat of arbitration in their agreement, such selection would then amount to an exclusive jurisdiction clause, as the parties have now indicated that the courts at the "seat" would alone have jurisdiction to entertain challenges against the arbitral award which have been made at the seat. The example given in para 96 buttresses this proposition, and is supported by the previous and subsequent paragraphs pointed out hereinabove. The Balco [Balco v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] judgment, when read as a whole, applies the concept of "seat" as laid down by the English judgments (and which is in Section 20 of the Arbitration Act, 1996), by harmoniously construing Section 20 with Section 2(1)(e), so as to broaden the definition of "court", and bring within its ken courts of the "seat" of the arbitration [ Section 3 of the English Arbitration Act, 1996 defines "seat" as follows:"3. The seat of the arbitration.--In this Part "the seat of the arbitration" means the juridical seat of the arbitration designated--
(a) by the parties to the arbitration agreement, or (b) by any arbitral or other institution or person vested by the parties with powers in that regard, or (c) by the Arbitral Tribunal if so authorised by the parties, or determined, in the absence of any such designation, having regard to the parties' agreement and all the relevant circumstances."It will be noticed that this Page 39 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined section closely approximates with Section 20 of the Indian Arbitration Act, 1996. The meaning of "Court" is laid down in Section 105 of the English Arbitration Act, 1996 whereby the Lord Chancellor may, by order, make provision allocating and specifying proceedings under the Act which may go to the High Court or to County Courts.] ."
21. The Court in BGS SGS Soma [BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234 : (2020) 2 SCC (Civ) 606] , then proceeded to examine the contention whether para 96 of Balco [Balco v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] , which speaks of concurrent jurisdiction of the courts, that is, the jurisdiction of courts where the cause of action has arisen wholly or partly, and the courts within the jurisdiction in which the dispute resolution forum
-- arbitration is located, to observe and elucidate the legal position : (BGS SGS Soma case [BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234 : (2020) 2 SCC (Civ) 606] , SCC pp. 274-75, para 40) "40. Para 96 of Balco case [Balco v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] is in several parts. First and foremost, Section 2(1)
(e), which is the definition of "court" under the Arbitration Act, 1996 was referred to, and was construed keeping in view the provisions in Section 20 of the Arbitration Act, 1996, which give recognition to party autonomy in choosing the seat of the arbitration proceedings. Secondly, the Court went on to state in two places in the said paragraph that jurisdiction is given to two sets of courts, namely, those courts which would have jurisdiction where the cause of action is located; and those courts where the arbitration takes place. However, when it came to providing a neutral place as the "seat" of arbitration proceedings, the example Page 40 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined given by the five-Judge Bench made it clear that appeals under Section 37 of the Arbitration Act, 1996 against interim orders passed under Section 17 of the Arbitration Act, 1996 would lie only to the courts of the seat -- which is Delhi in that example -- which are the courts having supervisory control, or jurisdiction, over the arbitration proceedings. The example then goes on to state that this would be irrespective of the fact that the obligations to be performed under the contract, that is, the cause of action, may arise in part either at Mumbai or Kolkata. The fact that the arbitration is to take place in Delhi is of importance. However, the next sentence in the said paragraph reiterates the concurrent jurisdiction of both courts."
22. BGS SGS Soma [BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234 : (2020) 2 SCC (Civ) 606] extensively refers to the judgment of this Court in Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd. [Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd., (2017) 7 SCC 678 : (2017) 3 SCC (Civ) 760] , which decision refers to the legislative history of Section 2(1)(e) and Section 20 of the Act and the recommendations of the 246th Law Commission Report, 2014. These recommendations, it is observed, were not implemented in consonance with the decision in Balco [Balco v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] , 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 Ltd. v. Kamachi Industries Ltd. [Brahmani River Pellets Ltd. v. Kamachi Industries Ltd., (2020) 5 SCC 462 : (2020) 3 SCC (Civ) 326].
23. It may, however, be noted that clause (e) to sub-section (1) of Section 2 was amended by Page 41 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined inserting sub-clause (ii) [ "2. (1)(e)(ii) in the case of international commercial arbitration, 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, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court;"] 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 [BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234 : (2020) 2 SCC (Civ) 606] , and Indus Mobile [ In Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd., (2017) 7 SCC 678 : (2017) 3 SCC (Civ) 760, the Court after clearing the air on the meaning of Section 20 of the Arbitration Act, 1996 made it clear that the moment a seat is designated by agreement between the parties, it is akin to an exclusive jurisdiction clause, which would then vest the courts at the "seat" with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties.] , 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."
42. It was, thus, held by the Apex Court in paragraph 23 that in the context of domestic arbitration, it must be Page 42 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined 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. Referring to BGS SGS SOMA JV (supra), and Indus Mobile Distribution (P) Ltd. (supra), it was held that 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 the arbitration proceedings arising out of the agreement between the parties.
43. The Apex Court has further noted that in BGS SGS SOMA JV (supra), the test to determine the "seat of arbitration" has been laid down in a situation where the parties have not agreed on or have not fixed the juridical seat of arbitration, in paragraph '61' of BGS SGS SOMA JV (supra) as under :-
"61. It will thus be seen 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 juridical seat of the arbitral proceeding."
44. It was further held that the law, as applicable where the parties by agreement have not fixed the "juridical seat" is crystallised in paragraph 82 of BGS Page 43 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined SGS SOMA JV (supra), which has been extracted hereinbefore in this judgment.
45. A careful reading of the observations in paragraph '82' in BGS SGS SOMA JV (supra), as noted and emphasized in paragraph 25 in BBR (India) Private Ltd. (supra), the test to determine the juridical seat of arbitration has to be applied considering the language employed in the agreement between the parties containing arbitration clause. In respect of an agreement, wherein the language can be such "tribunals are to meet or have witnesses, experts or the parties" (as occurred in sub-section (2) of Section 20 of the Act' 1996) referring to the stated place as only the convenient place of meeting where hearings are to take place, such place of meeting be taken as "venue" and the "venue" so stated shall not be the seat of arbitral proceedings, but only a convenient place of meeting. However, where the language of agreement is contrasted with such clause as in sub-section (3) of Section 20, lead to the conclusion that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby that the place is the seat of the arbitral proceedings, such expression of intention in the arbitral agreement coupled with there being no other significant contrary indicia that the stated venue is merely a "venue" and not the "seat" of the arbitral proceedings, would then conclusively show that such a clause designates a "seat" of the arbitral proceedings.
Page 44 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined The stated venue would then become the "seat" for the purpose of arbitration.
46. Having said that, it was further noted by the Apex Court in BBR (India) Private Ltd. (supra) that the first arbitral tribunal in its first order has stipulated that the place of proceedings would be at Panchkula in Haryana and in absence of significant indicia on the application of Section 20(2) of the Arbitration Act, 1996, the seat of Panchkula in Haryana would be the juridical seat of arbitration by the arbitrator. As the seat was fixed by the arbitral tribunal, the subsequent proceedings having been held in Delhi, would not matter and would not result in shifting of juridical seat. It was, thus, concluded in paragraphs '33' and '34' as under :-
"33. At this stage, we must also deal with the appellant's argument that substantive proceedings were held in Delhi and, therefore, it would be the "seat of arbitration". The proceedings before the first arbitration at Panchkula, Haryana, were restricted to filing of pleadings and documents. On deeper consideration, this argument should be rejected for the reasons recorded above, as it will lead to confusion and uncertainty. The legal question raised in the present case must be answered objectively and not subjectively with reference to the facts of a particular case. Otherwise, there would be a lack of clarity and consequent mix-up about the courts that would exercise jurisdiction. There could be cases where the arbitration proceedings are held at different locations, but the "seat of arbitration", as agreed by the parties or as determined by the arbitrator, may be different, and at that place -- "the seat", only a few hearings or initial proceedings may have been Page 45 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined held. This would not matter and would not result in shifting of the jurisdictional "seat". Arbitrators can fix the place of residence, place of work, or in case of recusal, arbitration proceedings may be held at two different places, as in the present case.
34. 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."
47. The Apex Court has, concluded in BBR (India) Private Ltd. (supra) in the facts of the said case, that once the arbitrator had fixed the juridical seat under Section 20(2) of the Arbitration Act, 1996, thereby the Courts having jurisdiction over Panchkula in Haryana would have exclusive jurisdiction. The Courts in Delhi would not get jurisdiction as the juridical seat "seat of arbitration" is Panchkula and not Delhi.
48. In Mankastu Impex Private Ltd.(supra), the Apex Court was dealing with an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, for appointment of arbitrator in international commercial dispute. The question was about the interpretation of clause 17.2 of the Memorandum of Understanding between the parties, which read as Page 46 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined under:-
"17.2. Any dispute, controversy, difference or claim arising out of or relating to this MoU, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered in Hong Kong."
49. By reading the arbitration clause therein "The place of arbitration shall be Hong Kong", it was held therein that the reference to Hong Kong as "place of arbitration" is not a simple reference as to the "venue" for the arbitral proceedings. Further, the words in clause 17.2 that "arbitration administered in Hong Kong"
is an indicia that the seat of arbitration is at Hong Kong. Once the parties have chosen "Hong Kong as the place of arbitration to be administered in Hong Kong, the laws of Hong Kong would govern the arbitration. The Indian courts have no jurisdiction for appointment of the arbitrator. It was further held that the stipulation in clause 17.1 of the memorandum of understanding that the "MoU is governed by the laws of India", do not take away or dilute the intention of parties in clause 17.2 that the arbitration be administered in Hong Kong. The words in clause 17.1 do not suggest that the seat of arbitration is in New Delhi. It was, thus, observed in paragraphs '19' and '20' as under :-
"19. The seat of arbitration is a vital aspect of any arbitration proceedings. Significance of the seat of Page 47 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined arbitration is that it determines the applicable law when deciding the arbitration proceedings and arbitration procedure as well as judicial review over the arbitration award. The situs is not just about where an institution is based or where the hearings will be held. But it is all about which court would have the supervisory power over the arbitration proceedings. In Enercon (India) Ltd. v. Enercon GmbH [Enercon (India) Ltd. v. Enercon GmbH, (2014) 5 SCC 1 : (2014) 3 SCC (Civ) 59] , the Supreme Court held that : (SCC pp. 43 & 46, paras 97 & 107) "[T]he location of the seat will determine the courts that will have exclusive jurisdiction to oversee the arbitration proceedings. It was further held that the seat normally carries with it the choice of that country's arbitration/curial law."
(emphasis supplied)
20. It is well settled that "seat of arbitration" and "venue of arbitration" cannot be used interchangeably. It has also been established that mere expression "place of arbitration" cannot be the basis to determine the intention of the parties that they have intended that place as the "seat" of arbitration. The intention of the parties as to the "seat" should be determined from other clauses in the agreement and the conduct of the parties."
50. We may further refer to the decision of the Apex Court in Ravi Ranjan Developers Pvt. Ltd. vs. Aditya Kumar Chatterjee [(2022) SCC Online SC 568], wherein the arbitration clause 37 of the Development Agreement read as under :-
"37. That in case of any dispute or difference between the parties arising out of and relating to this development agreement, the same shall be settled by reference of the disputes or differences to the Arbitrators appointed by both the parties and such Page 48 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined Arbitration shall be conducted under the provisions of the Indian Arbitration and Conciliation Act, 1996 as amended from time to time and the sitting of the said Arbitral Tribunal shall be at Kolkata."
51. The High Court of Calcutta therein had allowed the application under Section 11(6) of the Arbitration Act, 1996 for appointment of arbitration reading the aforesaid clause, which stated that the sitting of the arbitral tribunal shall be at Calcutta. The Apex Court has, however, held that the Calcutta High Court had no jurisdiction to pass the order of appointment of arbitrator by noticing that the development agreement was executed and registered outside the jurisdiction of the High Court of Calcutta, the agreement pertaining to development of a property located in Muzaffarpur outside the jurisdiction of Calcutta High Court. The appellant had its registered office in Patna, outside the jursidiction of the Calcutta High Court. The appellant has not established that it has carried on any business within the jurisdiction of the Calcutta High Court. It was considered that admittedly, no part of the cause of action had arisen within the jurisdiction of the Calcutta High Court. By reading Section 2(1) (e) of the Arbitration and Conciliation Act, 1996, it was further observed in paragraphs '22', '23', '24', '25', '26', '27' and '28' as under :-
"22. As argued by Mr. Sinha, the word 'Court' has been defined, in case of an arbitration other than international commercial arbitration, to mean the Page 49 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined principal Civil Court of original jurisdiction in a district and would include the High Court in exercise of its ordinary original jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration, if the same had been the subject matter of the suit, but it does not include any Civil Court of a grade inferior to such principal Civil Court or any Court of small causes.
23. Subject to the pecuniary or other limitations prescribed by any law, suits for recovery of immovable property or determination of any other right to or interest in an immovable property or compensation for wrong to immovable property, is to be instituted in the Court, within the local limits of whose jurisdiction, the property is situated. Certain specific suits relating to immovable property can be instituted either in the Court within the limits of whose jurisdiction the property is situated, or in the Court within the local limits of whose jurisdiction the Defendant actually or voluntarily resides or carries on business.
24. All other suits are to be instituted in a Court, within the local limits of whose jurisdiction the Defendant voluntarily resides or carries on business. Where there is more than one Defendant, a suit may be instituted in the Court within whose jurisdiction any of the Defendants voluntarily resides or carries on business. A suit may also be instituted in a Court within whose jurisdiction the cause of action arises either wholly or in part.
25. In the present case, no suit could have been filed in any Court over which the Calcutta High Court exercises jurisdiction, since as stated above, the suit admittedly pertains to immovable property situated at Muzaffarpur in Bihar, outside the territorial jurisdiction of the Calcutta High Court and admittedly, no part of the cause of action had arisen within the territorial jurisdiction of the Calcutta High Court. The Appellant who would be in the position of Defendant in a suit, neither Page 50 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined resides nor carries on any business within the jurisdiction of the Calcutta High Court.
26. Of course, under Section 11(6), an application for appointment of an Arbitrator necessarily has to be moved in the High Court, irrespective of whether the High Court has the jurisdiction to decide a suit in respect of the subject matter of arbitration and irrespective of whether the High Court at all has original jurisdiction to entertain and decide suits. As such, the definition of Court in Section 2(1)(e) of the A&C Act would not be applicable in the case of a High Court exercising jurisdiction under Section 11(6) of the A&C Act to appoint an Arbitrator/Arbitral Tribunal.
27. At the same time, an application under Section 11(6) of the A&C Act for appointment of an Arbitrator/Arbitral Tribunal cannot be moved in any High Court in India, irrespective of its territorial jurisdiction. Section 11(6) of the A&C Act has to be harmoniously read with Section 2(1)(e) of the A&C Act and construed to mean, a High Court which exercises superintendence/supervisory jurisdiction over a Court within the meaning of Section 2(1)(e) of the A&C Act.
28. It could never have been the intention of Section 11(6) of the A&C Act that arbitration proceedings should be initiated in any High Court in India, irrespective of whether the Respondent resided or carried on business within the jurisdiction of that High Court, and irrespective of whether any part of the cause of action arose within the jurisdiction of that Court, to put an opponent at a disadvantage and steal a march over the opponent."
52. The Apex Court in Ravi Ranjan (supra) has also taken note of the decision in BGS SGS SOMA JV (supra); Indus Mobile Distribution (P) Ltd. (supra);
Page 51 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined Hindustan Construction Company Ltd. (supra), Constitution Bench judgment in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.[(2012) 9 SCC 552] to note that the question before the Constitution Bench in 'Bharat Aluminum' was about applicability of Part I of Arbitration and Conciliation Act to arbitrations where the place of arbitration was outside India. Section 2(2) of the Arbitration and Conciliation Act places a threshold limitation on the applicability of Part I, where the place of arbitration is not in India. It was observed that the Constitution Bench in effect and substance drew a distinction between the venue and place of arbitration as contemplated under Section 20 and held that only if the agreement of the parties was construed to provide for seat/place of arbitration in India, would Part I of the 1996 Act be applicable. If the seat/place were outside India, Part I would not apply even though the venue or a few sittings may have been in India or the cause of action may have arisen in India. It was further observed that in BGS SGS SOMA JV (supra), the decision was rendered by the Apex Court in the context of section 2(2) of the Arbitration and Conciliation Act, 1996 and the applicability of Part I of the said Act to an international commercial arbitration, where the seat of arbitration was not in India.
53. It was, thus, observed in paragraphs 42 and 43 as under :-
"42. It can never be an absolute general Page 52 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined proposition of law, that where an arbitration agreement says that the place of arbitration is Faridabad/Delhi and proceedings under Part I of the A&C Act are also validly initiated in Faridabad, the Court in Faridabad would, notwithstanding Section 42 of the A&C Act, lose its jurisdiction, just because arbitration is later conducted in Delhi and Award is made in Delhi.
43. This Court has perused the Development Agreement. The contention of the Respondent in the Affidavit in Opposition, that the parties to the arbitration agreement had agreed to submit to the jurisdiction of Calcutta High Court, is not correct. The parties to the arbitration agreement only agreed that the sittings of the Arbitral Tribunal would be in Kolkata. Kolkata was the venue for holding the sittings of the Arbitral Tribunal."
54. Further, referring to the observations in paragraphs 19 and 20 in Mankastu Impex Private Ltd. (supra), it was held in Ravi Ranjan (supra) that the development agreement provided therein that the sittings of arbitral tribunal would be conducted in Calcutta, but the parties never agreed to submit to the jurisdiction of the Calcutta High Court in respect of disputes nor had the parties agreed upon Calcutta as the seat of arbitration. Calcutta was only the venue for sitting of the arbitral tribunal. While holding so, it was further observed in paragraph 47 that when two or more courts have jurisdiction to adjudicate disputes arising out of an arbitration agreement, the parties might, by agreement, decide to refer all disputes to any one court to the exclusion of all other courts, which might Page 53 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined otherwise have had jurisdiction to decide the disputes. However, the parties cannot by consent, confer jurisdiction on a court which inherently lacked jurisdiction. In light of the clause of development agreement, it was held that the parties do not agree to refer their disputes to the jurisdiction of the Court in Calcutta. It was not the intention of the parties that Calcutta should be the seat of arbitration. Calcutta was only intended to be the venue for arbitration seats. The Calcutta High Court, thus, inherently lacked jurisdiction to entertain the application under Section 11(6) of the Arbitration Act for appointment of arbitrator.
55. Three other decisions relied upon by Ms. Rawal, learned advocate appearing for the petitioner are also relevant to be looked into.
56. In Swastik Gases (P) Ltd. (supra), the arbitration clause was silent about the venue or seat of arbitration whereas the jurisdiction clause 18 in the agreement read that the "agreement shall be subject to the jurisdiction of the courts at Calcutta". The question before the Apex Court was whether in view of the said clause 18 of the agreement, the Calcutta High Court has exclusive jurisdiction in respect of the application made by the appellant under Section 11 of the Arbitration and Conciliation Act, 1996? The Apex Court has observed that when it comes to the question of territorial jurisdiction relating to the application under Section 11 besides the legislative provisions of Section 2(1)(e) of Page 54 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined the Arbitration and Conciliation Act, 1996, Section 20 of the Code of Civil Procedure is also relevant in respect of cause of action. In the facts of the said case therein it was found that the part of cause of action had arisen in Calcutta and parties by virtue of clause 18 of the agreement have agreed to submit to the jurisdiction of the courts at Calcutta, which shall mean that the Courts at Calcutta alone shall have the jurisdiction. It was also held that where the contract specifies the jurisdiction of the Court at the particular place and such courts have jurisdiction to deal with the matter an inference may be drawn that the parties intended to exclude all other courts. It was, thus, held that from the fact that the ouster clause included in the agreement between the parties conveys their clear intention to exclude the jurisdiction of the Courts other than those mentioned in the concerned clause, notwithstanding the absence of the words "only", "alone" or "exclusively" and the like.
57. In another decision in the State of West Bengal (supra), the three Judge Bench of the Apex Court was called upon to answer the question as to which Court will have the jurisdiction to entertain and decide the application under Section 34 of the Arbitration and Conciliation Act, 1996. In the said case, the tender was granted and the contract was executed for execution of work of excavation of canal in District Jalpaiguri, West Bengal. The respondent had filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 Page 55 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined for interim order in the High Court of Calcutta. The interim order passed by the High Court continued from time to time and was later confirmed. In the meantime, the arbitrator was appointed under Section 11 of the Arbitration and Conciliation Act, 1996. The arbitral award was challenged before the Principal Civil Court at Jalpaiguri, West Bengal. The respondent filed an application under Article 227 of the Constitution of India challenging the jurisdiction of the Civil Court at Jalpaiguri on the ground that the parties had already submitted to the ordinary original civil jurisdiction of the Calcutta High Court and in view of Section 42 of the Arbitration and Conciliation Act, 1996, the jurisdiction of the Civil Court at Jalpaiguri to entertain the application for setting aside of the award was excluded. The Calcutta High Court in its ordinary original civil jurisdiction is the only Court which can entertain the application for setting aside the said award.
58. In the context of this dispute, the Apex Court while reading Section 2(1)(e) has noted the definition in the Arbitration Act, 1996 which fixes the court to be the "principal civil court of original jurisdiction in a District or the High court in exercise of its ordinary original civil jurisdiction". On reading of Section 2(1)(e) and Section 42 of the Arbitration Act, 1996, it was held therein that :-
"25. Our conclusions therefore on Section 2(1)(e) and Section 42 of the Arbitration Act, 1996 are as follows:Page 56 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025
NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined
(a) Section 2(1)(e) contains an exhaustive definition marking out only the Principal Civil Court of Original Jurisdiction in a district or a High Court having original civil jurisdiction in the State, and no other court as "court" for the purpose of Part I of the Arbitration Act, 1996.
(b) The expression "with respect to an arbitration agreement" makes it clear that Section 42 will apply to all applications made whether before or during arbitral proceedings or after an award is pronounced under Part I of the 1996 Act.
(c) However, Section 42 only applies to applications made under Part I if they are made to a court as defined. Since applications made under Section 8 are made to judicial authorities and since applications under Section 11 are made to the Chief Justice or his designate, the judicial authority and the Chief Justice or his designate not being court as defined, such applications would be outside Section 42.
(d) Section 9 applications being applications made to a court and Section 34 applications to set aside arbitral awards are applications which are within Section 42.
(e) In no circumstances can the Supreme Court be "court" for the purposes of Section 2(1)(e), and whether the Supreme Court does or does not retain seisin after appointing an arbitrator, applications will follow the first application made before either a High Court having original jurisdiction in the State or a Principal Civil Court having original jurisdiction in the district, as the case may be.
(f) Section 42 will apply to applications made after the arbitral proceedings have come to an end provided they are made under Part I. Page 57 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined
(g) If a first application is made to a court which is neither a Principal Court of Original Jurisdiction in a district or a High Court exercising original jurisdiction in a State, such application not being to a court as defined would be outside Section 42.
Also, an application made to a court without subject-matter jurisdiction would be outside Section 42."
59. The third decision in Brahmani River Pellets Ltd. (supra), the question was whether the Madras High Court could exercise jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996 despite the fact that the agreement contains the clause that venue of arbitration shall be Bhubaneswar. It was noted that Section 2(1)(3) of the Arbitration Act, 1996 defines "Court" with reference to the term "subject matter of the suit". As per Section 2(1)(e) of the Act if the "subject matter of the suit" is situated within the arbitral jurisdiction of two or more courts, the parties may agree to confine the jurisdiction in one of the competent courts. Referring to paragraph '96' of Balco (supra), the Apex Court noted that the term "subject matter" in Section 2(1)(e) of the Act is to identify the Court having supervisory control over the arbitral proceedings. The provisions of Section 2(1)(e) of the Act has to be read in conjunction with Section 20 of the Act, which gives recognition to the autonomy of the parties as to the place of arbitration. As per Section 20 of the Arbitration Act, 1996 the parties are free to agree on the place of arbitration. Party autonomy has to be construed in the context of parties choosing the Court, which is Page 58 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined Bhubaneshwar as the venue of arbitration. It was held that the intention of the parties to exclude all other courts was clear and only Orissa High Court will have the jurisdiction to entertain the petition filed under Section 11(6) of the Arbitration Act, 1996.
60. Having exhaustively gone through the decisions of the Apex Court, about the 'seat', 'place/venue' of arbitration, determinative factors to decide the "seat of arbitral proceedings" so as to exclude the jurisdiction of one of the two competent courts having jurisdiction under section 2(1) & (2) of the Arbitration Act, 1996, the legal position can be culled out as under :-
(a)As per law stated in Balco (supra) (para 96) pertaining to arbitration governed by Part I of the Arbitration Act, i.e., where the "place of arbitration" is in India:-
i. 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.
ii. The term "subject matter of the arbitration" cannot be confused with "subject matter of the suit". The Page 59 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined provisions in Section 2(1)(e) has to be construed keeping in view of the provisions in Section 20 of the Arbitration Act which gives recognition to party autonomy.
iii. As explained in Balco (supra), the legislature has intentionally given jurisdiction to two courts, i.e. the Court which would have jurisdiction where the cause of action is located and the courts where the arbitration takes place. The Apex Court has further observed in Balco(supra) that this was necessary as on many occasion, the agreement may provide for a seat of arbitration which would be neutral to both the parties and, therefore, the Courts where arbitration takes place would be required to exercise supervisory control over the arbitral process.
iv. The observations in paragraph '96' in Balco(supra), thus, are in the context that as per Section 20 of the Act, the parties are free to agree on the "place of arbitration". The agreement may provide for a seat of arbitration at a place, which would be neutral to both the parties. In such circumstances, out of two Courts having jurisdiction, i.e. the Court within whose jurisdiction "subject matter of suit" is situated and the Court within the jurisdiction of which the dispute resolution, i.e. the "venue" of arbitration is located. As per Section 20 of the Act, the party autonomy Page 60 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined has to 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.
(b) In Indus Mobile Distribution (P) Ltd. (supra), the Apex Court after referring to Balco (supra) and other decisions of the Apex Court, including the amendment of the Act pursuant to the Law Commission Report, has held that the amendment act made it clear that in Sections 20(1) and 20(2) where the word "place" is used, refers to "judicial seat".
Whereas, in Section 20(3), the word "place" is equivalent to "venue". It was held therein that a conspectus of all the provisions show that the moment the seat is designated, it is akin to an exclusive jurisdiction clause, inasmuch as, it is well settled that where more than one court has jurisdiction, it is open for the parties to exclude all other courts.
(c)In BGS SGS SOMA JV (supra), referring to para '96' of Balco (supra), it was observed that when it came to provide a neutral place as the "seat" of arbitration proceedings, irrespective of the fact that the obligations to be performed under the contract, i.e. the cause of action may arise at a different place, the fact that the arbitration is to take place at the place chosen by the parties, is of importance.
(d) BBR (India) Private Ltd. (supra), was a case Page 61 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined where the Apex Court has dealt with a case where the question was of fixation of seat under Section 20(2) by the Arbitrator, it was, thus held therein that :-
i. In the context of domestic arbitration, 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 control over the arbitration. The Courts at other locations would not have jurisdiction, including the Court where the cause of action has arisen. The "seat" chosen by the parties would then vest the courts at "the seat" with exclusive jurisdiction to regulate arbitration proceedings arising out of the agreement between the parties.
ii. Further referring to BGS SGS SOMA JV (supra), while holding Union of India v. Hardy Exploration & Production (India) Inc.[(2019) 13 SCC 472] being per incuriam as it contradicts the ratio of the law laid down in Balco (supra), it was held 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".Page 62 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025
NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined iii. It was further held that when the arbitrator fixes "the seat" in terms of sub-section (2) of Section 20 of the Act, "the seat" of the arbitration cannot be changed except when and if the parties mutually agree and state that the "seat of arbitration"
should be changed to another location. The subsequent hearings or proceedings at a different location other than the place fixed by the arbitrator as the "seat of arbitration" should not be regarded or treated as a change of jurisdictional or relocation of "seat", as any such situation would lead to uncertainty and confusion as to the jurisdictional "seat of arbitration".
iv. The Apex Court held that "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 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".
v. It was held that the law of arbitration does not visualises repeated or constant shifting of the "seat of arbitration". In fact sub-section (3) of Section 20 draws a distinction between the venue of arbitration and the seat of arbitration by stating that for convenience and other reasons, the Page 63 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined arbitration proceedings may be held at a place different than the "seat of arbitration", which location is referred to as the venue of arbitration. The place of jurisdiction or "the seat" must be certain and static and not vague or changeable, as the parties should not be in doubt as to the jurisdiction of the courts for availing of judicial remedies. This would be a risk of parties rushing to the courts to get first hearing or conflicting decisions, which is to be avoided.
vi. We may refer to para '32' in BBR (India) Private Ltd. (supra), where the contention that the courts where arbitration proceedings are being conducted be given supervisory jurisdiction, was rejected by noticing that the exercise of supervisory jurisdiction by the courts where the arbitration proceedings are being conducted is a relevant consideration, but not a conclusive and determinative factor when the venue is not the "seat". There would be situations where venue of arbitration in terms of sub-section (3) of Section 20 would be different from the place of the jurisdictional seat and it is equally possible that majority or most of the hearing may have taken place at a venue which is different from the "seat of arbitration". On balance, the aspect of certainty as to the court's jurisdiction must be given and accorded priority over the contention that the Page 64 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined supervisory courts located at the place akin to the venue where the arbitration proceedings were conducted or substantially conducted should be preferred.
vii. The fact that at the place agreed by the parties as "the seat", only a few hearings or initial proceedings may have been held would not matter and would not result in shifting of the jurisdictional "seat".
viii. It was, finally concluded in BBR (India) Private Ltd. (supra) that whenever the question of territorial jurisdiction arises in the context of sub- section (2) of Section 20, the "place" or "venue" fixed for arbitration proceedings will be the jurisdictional "seat" and the courts having jurisdiction over the jurisdictional "seat" would have exclusive jurisdiction. This principle would have an exception where the parties by mutual consent agree that the jurisdictional "seat" should be changed and such consent must be express and clearly understood and agreed by the parties.
61. Understanding the law stated and culled out from BGS SGS SOMA JV (supra) and BBR (India) Private Ltd. (supra) by reading Section 20 of the Arbitration and Conciliation Act, 1996, we may record that there are primarily three situations as stated by the Apex Court Page 65 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined where the concept of exclusive jurisdiction of the Court vis-a-vis the seat of arbitration would be attracted. The first may be a situation where the parties have agreed on the place of arbitration, which would be the cases governed under sub-section (1) of Section 20 of the Act and as sub-section (1) of Section 20 recognises party autonomy, the moment the parties by agreement designate "the seat" it becomes akin to an exclusive jurisdiction clause. It would vest the court at "the seat"
with exclusive jurisdiction to regulate arbitration proceedings arising out of the agreement between the parties. To ascertain the applicability of sub-section (1) of Section 20 of the Arbitration and Conciliation Act, 1996, the agreement containing arbitration clause between the parties has to be read and understood.
62. Another situation may be when the parties by mutual consent agree that the jurisdictional "seat" should be changed, but such consent must be express and clearly understood and agreed by the parties so as to avoid any confusion or conflicting situation, also gives primacy to party autonomy as recognised in sub-section (1) of Section 20 of the Act' 1996.
63. In a third situation where the parties have not agreed on or have not fixed the jurisdictional seat of arbitration, sub-section (2) of Section 20 would come into play, where the arbitrator may fix "the seat" having regard to the circumstances of the case including the convenience of the parties. The law is that once the Page 66 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined arbitrator fixes "the seat" in terms of sub-section (2) of Section 20 of the Act, the arbitrator also cannot change the "seat of the arbitration" except when and if parties mutually agree and state that the "seat of arbitration"
should be changed to another location by an express intention understood by the parties.
64. From a reading of sub-sections (1) and (2) of Section 20, we find that both the provisions recognise party autonomy. The fixation of seat of arbitration either in the contract, which specifies the particular place as the seat of arbitration or by the arbitrator in terms of sub-section (2) of Section 20, in any case, must be on the basic principle which recognises the party autonomy or convenience of the parties. The place of jurisdiction or the "seat" must be certain and static with clarity to the parties as to the jurisdiction of the courts for availing of judicial remedies in arbitration matters during or after the proceedings. It may also be noted that though there is no requirement for the arbitrator to pass a detailed order or a considered decision so as to fix the place of arbitration while exercising the jurisdiction under Sub- section (2) of Section 20 of the Act, but where there are more than one place or location, where the hearings or proceedings of arbitration had taken place, it would be relevant to fix the "seat of arbitration" for the purpose of application of exclusive jurisdiction clause by determining as to whether the parties by choice had agreed to accord jurisdiction to a Court at a place other Page 67 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined than the place where the cause of action has arisen. The default fixation of "seat of arbitration" at a place where the arbitral tribunal holds the arbitration proceedings being the "venue of arbitration" and consequently, the "seat of arbitration" would be attracted where there is no contrary indicia and inexorable conclusion is that the 'venue' is actually 'judicial seat' of the arbitration proceedings.
65. Having culled out the legal position of fixation of the "seat of arbitration", both sub-section (1) of Section 20 and sub-section (2) of Section 20 so as to attract exclusive jurisdiction concept, in the facts and circumstances of the present case, it is pertinent to note that the arbitration clause 70 of the agreement arrived between the parties stated that :-
"The venue of Arbitration shall be such place or places as may be fixed by the Arbitrator in his sole discretion."
66. The language is "Venue of arbitration: shall be such place or place as may be fixed by the arbitrator in his sole discretion", whereas the exclusive jurisdiction clause 72 conferred the jurisdiction on the civil court of the place where one of the causes, i.e. , where the acceptance of tender has been issued or the place where the work is executed/under execution, has arisen.
67. By reading of both the clauses, we may note that though the parties have agreed to confer jurisdiction Page 68 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined upon the courts having causes of action to decide any dispute arising out of or in respect of the contract, but the 'venue' or the 'seat' of arbitration has not been fixed by the parties under the agreement so as to exclude the jurisdiction of the Court having cause of action, as agreed by the parties. In the same agreement, a conjoint reading of clauses 70 and 72 of the agreement arrived at between the parties, makes it clear that the parties have agreed to submit to the jurisdiction of the courts having cause of action to decide the dispute arising out of or in respect of the contract. However, so far as the fixation of "venue" or "seat of arbitration", it was left to the sole discretion of the arbitrator. The above noted statement is Clause 70, which give the discretion upon the arbitrator to decide the venue of arbitration also speaks that the proceeding may be held at more than one places as may be fixed by the arbitrator. It is, thus, evident that the parties by mutual agreement have never decided on the place of arbitration, even if fixed by the arbitrator, which may be considered to be the 'seat of arbitration.
68. As regards, the "venue" of arbitration, which was left to the discretion of the arbitrator, in the instant case, there was no fixed venue where the arbitration proceedings had taken place. From the additional affidavit filed on behalf of the respondents, it may be noted that the sole arbitrator appointed on 22.09.2017 as per the general conditions of contract by the Engineer Page 69 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined in Chiefs Branch, Integrated Head Office of Ministry of Defence (Armed), Kashmir House, New Delhi, had fixed the first hearing of the case as on 12/13.02.2018 in the office of the Chief Engineer (Navy), Mumbai. The next dates of hearing were fixed on 27 and 28 of April, 2018 in the office of the Panel of Arbitrators, Chandigarh on 19.03.2018. The hearing was commenced on 27.08.2018 in the office of the Panel of Arbitrators, Chandigarh and the award was published on 24.10.2018.
69. Reference has been made by the learned senior counsel appearing for the respondent to the letter of appointment of arbitrator dated 22.09.2017 wherein it was requested that the arbitrator shall first decide on the question of jurisdiction and arbitrability of the claims as per the terms and conditions of the contract and Section 16 of the Arbitration and Conciliation Act, 1996 and only thereafter, take up the claims for adjudication on merits. It was argued that the arbitrator was aware of the fact that it was required to decide the question of jurisdiction first. We may note that vide communication dated 12.01.2018, while fixing the dates of hearing as 12/13.02.2018, the sole arbitrator has indicated the place/venue as the office of Chief Engineer (Navy), Mumbai and also that the hearing will be continued on the subsequent dates till completion. On the request for adjournment made on behalf of the petitioner herein vide letter dated 20.01.2018, the arbitrator sent a communication dated 22.01.2018 communicating that Page 70 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined hearing of the case fixed on 12/13.02.2018 was postponed and the next date of hearing shall be intimated later on.
70. The further dates fixed in the arbitral proceedings as 27/28.04.2018 was intimated vide letter dated 19.03.2018 and the place/venue indicated therein was the office of panel of arbitrators at Chandigarh. The record of the arbitration case hearing held in the office of panel of arbitrator at Chandigarh, placed before us, indicates that the hearing of the case was commenced on 27.04.2018. Apart from the above noted communications and brief record of the proceedings of arbitration, there is nothing on record, which would indicate that the parties had ever consented or agreed to fix the place/venue of arbitration in the office of panel of arbitrators at Chandigarh. The place/venue where hearing was held on 27/28.04.2018 and concluded was neither the place/venue chosen by the parties under Section 20(1) of the Arbitration and Conciliation Act, 1996 nor it can be said to be the place of arbitration fixed by the arbitrator under sub-section (2) of Section 20 having regard to the circumstances of the case including the convenience of the parties, so as to fix it as the "seat of arbitration", conveying intention of the parties to exclude the jurisdiction of other courts having competent jurisdiction under clause 72 of the general conditions of contract agreed between the parties.
71. In our considered opinion, the observations made Page 71 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined by the Apex Court in BBR (India) Private Ltd. (supra) (para '26') that the place where the arbitral tribunal holds the arbitral proceedings would, by default, be the venue of arbitration and consequently, the "seat of arbitration", would not be attracted in the facts of the present case, inasmuch as, the place/venue namely the office of panel of arbitrators at Chandigarh, where the arbitration proceedings were subsequently held on 27/28.04.2018, cannot be regarded as the seat fixed by the arbitrator while exercising powers under sub-section (2) of Section 20.
72. From a conjoint reading of clause 70 and clause 72 of the general conditions of contract, as also the record of the arbitration proceedings, in the instant case, the venue of arbitration in the office of panel of arbitrators at Chandigarh where subsequent hearings had taken place, can only be said to be the convenient place chosen by the arbitrator as per his convenience and shall be held to be the place of meeting of arbitral tribunal in terms of sub-section (3) of Section 20. There is nothing on record, which would indicate that the parties have ever expressed their consent to fix the place/venue at Chandigarh to be the seat of arbitration giving the Courts at Chandigarh exclusive jurisdiction over the arbitral proceedings nor it can be said to be a case where the parties have clearly understood that the place or venue for arbitration at Chandigarh where arbitration proceeding has been held, has been fixed as the Page 72 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined 'juridical seat' in terms of sub-section (2) of Section 20 so as to given exclusive jurisdiction to the courts at Chandigarh.
73. In the instant case, the arbitration proceedings were conducted at two different places, but none of them had been fixed by the arbitator in terms of sub-section (2) of Section 20 of the Arbitration Act, 1996. Both the parties were flexible as to the place/venue of the arbitration and had left it to the discretion of the arbitrator to hold hearing at one place or more than one, whereas they have agreed to the extent that the courts of the place from where the acceptance of the tender has been issued or the place where the work is executed/under execution, i.e. where any of the above part of cause of action has arisen, shall have exclusive jurisdiction to decide any dispute arising out of or in respect of the contract. This statement in clause 72 of the general conditions of contract agreed between the parties would act as a contra indicia against the default fixation of the seat of arbitration at the place of hearing at Chandigarh, as per the contention of the learned counsel for the petitioner.
74. There cannot be a dispute to the legal proposition that "seat of arbitration" and "venue of arbitration cannot be used interchangeably. It is also established principle as stated in Mankastu Impex Private Ltd. (supra), that mere expression, "place of arbitration"
cannot be the basis to determine the intention of the Page 73 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined parties that they have intended that place as the seat of arbitration. The intention of the parties as to the "seat"
should be determined from other clauses in the agreement and conduct of the parties. The "seat of arbitration" is a vital aspect of any arbitration proceeding. The situs is not just about the place where an institution is based or the hearing will be held. But it is all about which court would have the supervisory power over the arbitration proceedings. The location of the seat will determine the courts that will have the exclusive jurisdiction to oversee the arbitration proceedings.
75. In the instant case, the intention of the parties as to the determination of "seat of arbitration" cannot be gathered from either the arbitration clause in the agreement or the conduct of the parties. Mere fact that both the parties had participated in the hearings held at Chandigarh on the subsequent dates fixed by the sole arbitrator in the office of the panel of arbitrators, would not be a reason to hold that the location where hearing was held shall be the "seat" to determine the courts at Chandigarh to have exclusive jurisdiction to examine the validity of the award under Section 34 of the Arbitration Act, 1996.
76. Insofar as the reliance placed by the learned counsel for the petitioner on the decision of this Court in Instakart Services Private Ltd. (supra), suffice it to note that the issues discussed therein were with Page 74 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined reference to the territorial jurisdiction of the Court under section 11(6) of the Arbitration Act, 1996 to entertain the application for appointment of arbitrator and has no reference to the provisions of sub-section (2) of Section 20, which provides for fixation of seat by the arbitrator after appointment. The discussion made therein in light of the law laid down by the Apex Court in Ravi Ranjan Developers Pvt. Ltd. (supra), therefore, are not applicable in the present set of dispute.
77. In view of the above discussion, we find that the Commercial Court while rejecting the application under Section 34 of the Arbitration and Conciliation Act, 1996 on the ground of lack of jurisdiction has failed to take into account the above discussed vital aspects of the matter. Consequently, the order of rejection of the application under Section 34 of the Arbitration and Conciliation Act, 1996 dated 18.07.2022 passed by the Additional District Judge, Porbandar in Civil Misc. Application No. 20 of 2021 on Exhibit '1', is hereby set aside. The matter is remitted back to the competent court to adjudicate on the merits of the application under Section 34 of the Arbitration and Conciliation Act, 1996 by restoring it to its original number. The Special Civil Application No. 5057 of 2024 invoking the extraordinary supervisory jurisdiction of this Court under Article 227 of the Constitution of India is hereby allowed.
78. Insofar as the connected petition being Special Page 75 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025 NEUTRAL CITATION C/SCA/5057/2024 CAV JUDGMENT DATED: 06/05/2025 undefined Civil Application No. 15264 of 2024 filed by the award holder, respondent herein against the order dated 06.04.2024 passed by the executing court in Commercial Execution No. 126 of 21, it may be noted that the arguments of the learned counsels for the parties were extended mainly on the question of jurisdiction of the Courts at Porbandar to examine the validity of the arbitral award by entertaining the application under Section 34 of the Arbitration and Conciliation Act, 1996. With the above, the connected Special Civil Application No.15264 of 2024 stands disposed of leaving it open to the parties to raise all issues at the appropriate stage.
79. All pending Civil Applications stand disposed of, accordingly.
(SUNITA AGARWAL, CJ ) (PRANAV TRIVEDI,J) BIJOY B. PILLAI Page 76 of 76 Uploaded by BIJOY B. PILLAI(HC00202) on Wed May 07 2025 Downloaded on : Thu May 08 03:13:42 IST 2025