Delhi District Court
S/O Sh. Rishal Singh vs Smt. Vagisha Suneja on 22 February, 2023
IN THE COURT OF SH. RAKESH SYAL,
DISTRICT JUDGE (COMMERCIAL COURT)-03,
SOUTH-WEST DISTRICT, DWARKA COURTS,
NEW DELHI.
CS (COMM) 18/2022
Sh. Krishan Kumar Mann
S/o Sh. Rishal Singh,
R/o 15-71, Alipur Narela Road,
Alipur, Delhi - 110036. ..... Petitioner
VERSUS
Smt. Vagisha Suneja
W/o Sh. Manish Suneja,
R/o C-149, Vikaspuri,
Delhi. 110018. ...Respondent
Date of Institution : 07.06.2022
Date of final arguments : 16.02.2023
Date of decision : 22.02.2023
JUDGMENT
1.1 This is a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act), CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 1 of 33 filed by the petitioner against the respondent challenging the award dated 26.07.2021, passed by Sh. Om Prakash, Ld. Sole Arbitrator in Arbitration Case no. 01/2014, titled as "Vagisha Suneja vs Krishan Kumar Mann".
2.1 As per the award dated 26.07.2021, the Ld. Arbitrator has, inter-alia, held, "a) That the respondent shall execute conveyance deed/sale in respect of the DDA Shop No. 210, 2 nd Floor, measuring 160 sq. ft. situated at Local Shopping Centre, C- Block, Vikaspuri, New Delhi-110018 in favour of the claimant within 03 months from publishing of the Award by completing all the required formalities including conversion of said property from leasehold to freehold. The claimant shall pay the balance sale consideration of Rs. 10 lacs (Rupees ten lacs only) at the time of execution of sale deed in her favour. The claimant shall pay all conversion charges to Delhi Development Authority and shall bear all expenses in that regard. The amount of conversion charges shall be paid immediately on the demand as per requirement of DDA.
b) The respondent shall be liable and obliged to pay property tax and related dues, electricity charges/water charges or any other dues in respect of said property upto the period 31.03.2008 and the claimant shall be responsible to pay property tax and related dues, electricity charges/water charges or any CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 2 of 33 other dues in respect of said property with effect from 01.04.2008.
..................."
Other claims/counter claims of the parties were rejected.
3.1 The petitioner's case is that he has purchased Shop No. 210, Second Floor, Local Shopping Centre, C-Block, Vikas Puri, New Delhi, in public auction held on 24.02.2006, in execution proceedings O.A. No. 87/02, from M/s Pankaj Carpet India Pvt. Ltd., before the Debt Recovery Tribunal, Delhi. The sale was confirmed by Debt Recovery Tribunal-III, Delhi, vide its order dated 04.12.2006.
3.2 It is further stated that vide Receipt-cum-Agreement dated 09.12.2007, it was agreed that the said shop was to be purchased by the respondent (claimant in the arbitration proceedings) for Rs. 16,00,000/- (Rupees sixteen lac only), i.e. 14,00,000/- (Rupees fourteen lac only) plus Rs. 2,00,000/- (Rupees two lac only), in case the property was of freehold status. The earnest money was to be paid by the respondent by cheque for which the petitioner had to issue a receipt. The petitioner was to handover physical possession of the shop. The rest of the payment was to be made within one month by the respondent, in default of which the respondent was liable to pay Rs. 50,000/- (Rupees fifty thousand only), as demurrage. The CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 3 of 33 sale deed was to be executed by him in favour of the respondent after receiving the sale deed in his favour from Debt Recovery Tribunal-III, Delhi. Accordingly, on 09.12.2007, the respondent paid a sum of Rs. 3,00,000/- (Rupees three lac only), as earnest money, through cheque no. 759270, against which the petitioner issued a receipt and handed over vacant possession to the respondent on 27.03.2008. All the original documents were handed over to the respondent on 31.03.2008, without receiving the balance amount. Hence, no separate written agreement was made between the parties as alleged by the respondent in the claim. It is further averred that the receipt, which was sent to the petitioner with legal notice dated 22.07.2008 by the counsel of the respondent, bears the true signature of the petitioner but the receipt dated 09.12.2007, which is attached with the present petition is forged and fabricated and the terms and conditions as stated in the same were never agreed between the parties.
3.3 It is further stated that the signature of the petitioner has been forged by the husband of the respondent, in collusion with her, on receipt dated 09.12.2007, filed by the respondent with Statement of Claim as Annexure C-2. Rs. 50,000/- (Rupees fifty thousand only), in cash were paid twice by the respondent towards demurrage, being late by one month each time, and this was not in addition to the total value of Rs. 16,00,000/- (Rupees sixteen lac only). It is also stated that the respondent made no further payment to the petitioner after payment of Rs. 1,00,000/-
CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 4 of 33(Rupees one lac only), as above, besides the earnest money. A receipt has always been issued by him against all the above three payments. No receipt has been issued against the alleged payment dated 10.02.2008, as there was no such payment. After receiving the title documents and physical possession of the shop from the petitioner on 31.03.2008, the respondent became dishonest and did not make any further payment, even after repeated requests over phone to make payment.
3.4 It is further stated that the petitioner was and is ready to transfer the title of the shop the moment the respondent makes the payment due to him. The delay in registration of the documents in favour of the petitioner on the basis of directions of Debt Recovery Tribunal-III was due to DDA, which had to register the documents in favour of the petitioner after clarification/NOC, which took more than one year. On the basis of false and concocted dispute, the respondent had filed Arbitration Petition no. 368/2008 in the Hon'ble High Court of Delhi for the purpose of establishing that there existed an arbitration clause between the parties. The respondent altered/forged the original receipts. The petitioner, upon coming to know about the forged receipts, filed a complaint on 17.01.2009, with Police Station, Alipur, Delhi, in this regard.
CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 5 of 333.5 It is further stated that the respondent, in order to save herself from prosecution, on 25.01.2009, filed an FIR/NCR falsely claiming that the original documents were lost while being taken to her Chartered Accountant. The original documents are with the respondent and she is also having the possession of the shop by paying just Rs. 3,00,000/- (Rupees three lac only), as earnest money, and thereafter Rs. 1,00,000/-, (Rupees one lac only), making it a total Rs. 4,00,000/- (Rupees four lac only). The petitioner has not received rest of the payments till date. Much litigation took place in this regard between the parties before the Hon'ble High Court of Delhi and the previous Arbitrator from 2009 to 2014.
3.6 It is further stated that the Hon'ble High Court of Delhi appointed Sole Arbitrator in Arbitration Petition No. 94/2013. Accordingly, ARB Case no. 01/2014 proceeded before the Sole Arbitrator. The petitioner, in reply, pleaded that he is not bound to execute sale transaction in terms of Receipt-cum- Agreement as the respondent has not fulfilled her part of the obligation and the money which was paid as earnest money should be confiscated. He has also filed counter-claim with his statement of defence. Vide counter claim no.1, he has prayed for direction to the respondent to pay the remaining amount of Rs.13,00,000/- (Rupees thirteen lac only), including freehold charges of Rs. 2,00,000/- (Rupees two lac only), plus the expenses of the civil proceedings i.e. Rs. 4,00,000/- (Rupees four CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 6 of 33 lac only), borne by him. As an alternative to the aforesaid prayer, under claim no. 1, he has prayed for direction to the respondent to handover the peaceful possession of the shop in question, and to confiscate the amount of Rs. 3,00,000/- (Rupees three lac only), given as earnest money, for non-fulfillment of her obligation, with further direction to the respondent to pay the rent of Rs. 20,000/- (Rupees twenty thousand only), per month, from 27.04.2008 till date, along with interest @18.00%, per annum. The petitioner has, vide counter claim no. 2, prayed for a direction to the respondent to pay interest on Rs. 13,00,000/- (Rupees thirteen lac only) from 09.12.2007 @ 18.00%, per annum.
3.7 It is further stated that the Ld. Sole Arbitrator passed order dated 26.07.2021, directing the petitioner to execute conveyance deed/sale deed in respect of suit property and that the respondent shall pay the balance sale consideration of Rs. 10,00,000/- (Rupees ten lac only). However, his request for payment of interest thereon was rejected. Hence, this petition has been filed for seeking interest on the said sum of Rs.10,00,000/- (Rupees ten lac only).
4.1 The award has been challenged on the ground that the award qua the rejection of interest on Rs. 10,00,000/- (Rupees ten lac only) is illegal, bad in law, and is based on surmises and conjectures. It is stated that the Ld. Arbitrator has failed to CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 7 of 33 appreciate that on the one hand, physical possession has been admittedly taken over by the respondent w.e.f. 27.03.2008 and on the other hand the remaining sale amount has not yet been paid to the petitioner. Because of non-payment of balance sale amount, the petitioner has been deprived of use of that money and, therefore, the petitioner is entitled to be compensated by way of interest on the sum due to him.
4.2 It is further stated that the Ld. Sole Arbitrator failed to appreciate that at the time of agreement, both the parties were not aware of the status of the suit property, which is evident from the condition stipulated in the agreement that if the property is found to be freehold, then the total sale consideration will be increased by additional Rs. 2,00,000/- (Rupees two lac only). The Ld. Arbitrator has accepted the total sale consideration as Rs. 14,00,000/- (Rupees fourteen lac only), on the basis of the leasehold status of the property.
4.3 It is further stated that the Ld. Arbitrator has failed to appreciate that delay in the execution of the sale deed is entirely on the part of the respondent as after the agreement, the respondent has herself asserted in legal notice dated 22.07.2008 and legal notice dated 12.10.2012 that the property is freehold and after two years she changed her stand by stating it to be leasehold. She herself created hurdles in the conversion of the suit property to freehold by retaining the original documents, CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 8 of 33 which are stated to have been lost by her. Therefore, the conversion of the suit property into freehold could not take place. The petitioner cannot give better title than what he has himself got through Debt Recovery Tribunal-III, Delhi.
4.4 It is further stated that the Ld. Arbitrator has failed to appreciate that the respondent is enjoying physical possession and use of suit property for more than a decade. She ought to have got it transferred as leasehold but with ulterior motive of not making the payment of the remaining sale consideration, she is insisting for conversion of the suit property from leasehold to freehold, which is not possible without the original documents. Since the original title documents were lost by the respondent, the petitioner cannot give any statement before the DDA regarding loss of such documents. Ld. Arbitrator has failed to appreciate that without making payment of the remaining sale consideration, the respondent cannot take the plea of non- installation of meter or other amenities which are not part of the agreement. The property can be used even without electricity connection by other modes of electricity or for purposes for which electricity connection is not required at all.
4.5 It is further stated that the petitioner is seeking 18.00% interest on the award of Rs. 10,00,000/- (Rupees ten lac only), which is justified in the facts and circumstances of the case, keeping in view that the market rate of property has CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 9 of 33 increased many fold and the present rate is approximately Rs. 35,00,000/- (Rupees thirty five lac).
5.1 The respondent has filed reply to the petition and has contested the same. In the reply, it is stated that the Ld. Arbitrator has passed the award dated 26.07.2021, after appreciation of evidence. There is an attempt by the petitioner to re-agitate the entire dispute. The respondent has denied all the averments in the petition which are contrary to or inconsistent with his reply. It is stated that the petition is misconceived, untenable and is full of false statements. The award dated 26.07.2021 of the Ld. Arbitrator is a well reasoned award which has been passed after consideration of the pleadings and the documentary evidence. The petition has also ben filed belatedly. The award was made on 26.07.2021. The period of limitation to challenge the award expired on 24.10.2021. Therefore, the petition which has been filed on 28.02.2022 is barred by limitation.
5.2 It is also stated that mere erroneous decision regarding any question of law or fact does not fall within the scope of patent illegality under Section 34 of the Act. None of the requirements of Section 34 of the Act, for setting aside the Arbitral Award are satisfied in the present case. The court, under Section 34 or 37 of the Act, can not enter into calculations or CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 10 of 33 specifics of computations or manner in which tribunals determine the amount payable to the respondent by the appellant.
5.3 On merits, in reply to para no. 1 of the petition, it is stated that the respondent had many times requested the petitioner to provide the original documents of the shop in question but the same were not provided by the petitioner. In reply to para no. 3 (i) of the petition, it is, inter-alia, stated that it was represented to the respondent by the petitioner that the original file of the shop in question was lying in Debt Recovery Tribunal-III, New Delhi, where the proceedings in respect of the shop were pending. Upon demand, the petitioner used to assure the respondent that he would take out the file containing original documents of the shop very soon and shall hand over the same to her, but he failed to hand over the original documents, as admittedly he had taken out the original papers from Debt Recovery Tribunal-III much later. It is denied that the earnest money was to be paid by the respondent by cheque for which the petitioner had to issue a slip and to hand over physical possession of the shop. It is also denied that rest of the payment was to be made within one month by the respondent and in default of which the respondent was liable to pay Rs. 50,000/- (Rupees fifty thousand only), as demurarge.
5.4 In reply to para 3 (iv) of the petition, it is denied that the receipt which was sent to the petitioner with legal notice CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 11 of 33 dated 22.07.2008 by the counsel for the respondent bears true signature of the petitioner. It is also denied that the receipt dated 09.12.2007, which is attached with the petition, is forged and fabricated. In reply to para no. 3 (v) of the petition, it is denied that the signature of the petitioner have been forged by the husband of the respondent, in collusion with her, on receipt dated 09.12.2007, filed as Annexure C-2, by the respondent with the statement of claim. It is denied that Rs. 50,000/- (Rupees fifty thousand only), in cash, was paid twice by the respondent towards demurrage, being late by one month each time. In reply to para no. 3 (vii) of the petition, it is stated that the respondent had never agreed to pay any demurrage to the petitioner as there was no such agreement.
5.5 In reply to para no. 3 (ix) of the petition, it is denied that on the basis of false and concocted dispute, the respondent had filed Arbitration Petition no. 368/2008 in the Hon'ble High Court of Delhi for the purpose of establishing that there existed an arbitration clause between the parties. It is further denied that the respondent had altered/forged the original receipts. It is stated that just to cause harassment to the respondent, the petitioner had filed false complaint on 17.01.2009 at Police Station, Alipur, Delhi, regarding forgery of receipt by the respondent.
5.6 In reply to para no. 3 (x) of the petition, it is denied that the respondent, in order to save herself from prosecution, on CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 12 of 33 25.01.2009, filed an FIR/NCR, falsely claiming that the original documents were lost while being taken to her Chartered Accountant. It is also denied that the delay in execution of sale deed was due to non-availability of original sale deed in favour of the petitioner retained by the respondent and non-payment of the total amount to the petitioner by the respondent. In reply to para no. 3 (xi) of the petition, it is denied that the original documents are with the respondent.
5.7 In reply to para no. 3 (xii) of the petition, it is denied that the respondent is liable to pay all the dues and freehold charges to DDA, on behalf of the petitioner, in addition to sale consideration of Rs. 14,00,000/- (Rupees fourteen lac only), and the petitioner is not liable to bear any freehold charges. In reply to para no. 3 (xiv) of the petition, it is denied that the petitioner is not bound to execute sale transaction in terms of Receipt-cum-Agreement. It is also denied that the respondent has not fulfilled her part of the obligation and the money which was paid as earnest money should be confiscated.
5.8 In reply to the grounds for challenging the award, it is, inter-alia, stated that judicial interference with the Arbitral Award is limited to the grounds given in Section 34 of the Act. It is denied that the Ld. Arbitrator has failed to appreciate that delay in execution of the sale deed is entirely on the part of the respondent as after the agreement, the respondent had herself CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 13 of 33 asserted in Legal Notice dated 22.07.2008 and Legal Notice dated 12.10.2012 that the property is freehold.
5.9 Further, it is denied that the Ld. Arbitrator has failed to appreciate that delay in the execution of the sale deed is entirely on the part of the respondent as admittedly physical possession and original documents of the property were handed over to the respondent on 27.03.2008. It is stated that the property-tax was deposited in terms of order dated 28.03.2018 and 19.04.2018, of the Ld. Arbitrator, vide which the respondent was held responsible to pay the property tax and all its related dues in respect of suit property upto 31.03.2008. It was also directed, vide order dated 19.04.2018, that the property tax already deposited shall be shared proportionately by the petitioner and the respondent, in terms of the award. Therefore, there was no occasion for Ld. Arbitrator to direct the adjustment of Rs. 26,000/-, while passing the final order. Other averments made in the petition have also been generally denied by the respondent.
6.1 It is pertinent to mention that on 16.02.2023, the respondent has also filed an application dated 04.02.2023, under Section 20 (2) r/w Section 42 of the Act and Section 10(3) of the Commercial Courts Act, 2015 and Section 151 CPC, seeking dismissal of the petition due to lack of territorial jurisdiction of this court.
CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 14 of 336.2 In the application, it is stated that admittedly the office of the Ld. Arbitrator is at Chamber no. 392, Civil Wing, Tis Hazari Courts Complex, Delhi-110054 and all the proceedings took place in Tis Hazari Courts at the Chamber of Ld. Arbitrator. The Ld. Arbitrator had commenced its proceedigs in his chamber in Tis Hazari Courts in 2014 and the parties participated in arbitration proceedings in the chamber of Ld. Arbitrator at Tis Hazari Courts. Therefore, the seat of the arbitrator was fixed at the chamber of the Ld. Arbitrator, Tis Hazari Courts and the entire arbitration proceedings took place at the said chamber. Thus, in terms of Section 20(2) of the Act, the seat of the arbitration was fixed by both the sides and no objection was ever raised by any party.
6.3 It is further stated that once the seat of the arbitration is fixed by the arbitrator, the parties or the court, who appointed the arbitrator, and the parties have never raised any objection to the same, then under Section 20(2) of the Act, the "seat" should remain static and fixed. In the present case, there is no dispute of "venue" and "seat" as the Ld. Arbitrator adjudicated the issues between the parties at his chamber at Tis Hazari Courts and there has not been a single hearing held anywhere except his chamber at Tis Hazari Courts. Therefore, this Hon'ble Court has no territorial jurisdiction to entertain the present petition. The respondent has also referred to BBR (India) CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 15 of 33 Private Limited vs S.P. Singla Constructions Private Limited, (2023) 1 SCC 693.
7.1 No reply to the above application was filed.
8.1 The petitioner and his counsel Sh. Anuj Kumar have generally argued on the lines of the petition. It is also contended that the property in question i.e. Shop no. 210, 2nd Floor, measuring 160 sq. ft., at Local Shopping Centre, C-Block, Vikaspuri, New Delhi-110018 is located within the jurisdiction of this court and, thus, this court has territorial jurisdiction in the matter. Ld. Counsel has also relied upon, De Nat Malyalam Digitals Pvt. Ltd.; V N Santhosh vs Asianet Satellite Communications Ltd., 2016 LawSuit(Ker) 673, National Highways Authority of India vs P. Nagaraju and Ors, 2022, SCC OnLine SC 864 and Ragya Bee and Ors vs P.S. R. Constructions and Ors., 2022 SCC OnLine TS 3386.
9.1 Sh. Sachin Bandooni, Ld. Counsel for the respondent has generally argued on the lines of the reply dated 12.10.2022 and application dated 04.02.2023. He has also contended that since the question of jurisdiction goes to the root of the matter, hence, the same is to be decided first. This court can adjudicate on the objections only if it is found that this court has territorial jurisdiction in the matter. Ld. Counsel for the repondent has relied upon, BBR (India) Private Limted vs S.P. CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 16 of 33 Singla Constructions Private Limited (Supra), M/s S.B. Construction vs General Manager Northern Railway & Anr., 2009 SCC OnLine Del 125, Delhi Airport Metro Express Private Limited vs Delhi Metro Rail Corporation Limited, (2022) 1 Supreme Court Cases 131, Brij Systems Ltd. vs Satspace Tel. Pvt. Ltd, 2021 SCC OnLine Del 2473, NHAI vs BSC-RBM Pati Joint Venture, 2018 SCC OnLine Del 6780, and Union Bank of India vs M/s Vascon Engineers Ltd., 2022 SCC OnLine Del 1623.
10.1 I have heard the petitioner, Sh. Anuj Kumar, Ld. Counsel for the petitioner and Sh. Sachin Bandooni, Ld. Counsel for the respondent and also perused the record.
11.1 A perusal of the record reveals that in this case, with respect to Receipt dated 09.12.2007, the respondent has invoked Arbitration Agreement vide Notice dated 22.07.2008. However, the parties could not mutually appoint the arbitrator. Thus, the respondent has filed Arbitration Petition no. 368/2008, before the Hon'ble High Court of Delhi for appointment of an Arbitrator. The Hon'ble High Court was of the view that in the said receipt, an arbitration clause exists between the parties. No place of arbitration was specified in the said receipt. Vide order dated 03.11.2009, the Hon'ble High Court of Delhi has appointed Smt. Kanwal Inder, Ld. Retired District and Session Judge as the Sole CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 17 of 33 Arbitrator. The Ld. Sole Arbitrator passed an award dated 22.11.2010, at B-50-B, Siddhartha Extn., New Delhi-110014. The same was challenged by the respondent before the Hon'ble High Court vide OMP No. 234/2011. Vide order dated 03.08.2012, the Hon'ble High Court had set aside the Award dated 22.11.2010 passed by the Ld. Sole Arbitrator. Liberty was given to the parties to take appropriate steps for having dispute resolved through arbitration. The petitioner filed an application in the Hon'ble High Court of Delhi for recall of order dated 03.01.2009 passed in Arbitration Application no. 368/2008, which was dismissed by the Hon'ble High Court of Delhi. The respondent again moved Arbitration Petition no. 94/2013, under Section 11 of the Act before the Hon'ble High Court of Delhi. Vide order dated 15.04.2014, Sh. Om Prakash was appointed as the Sole Arbitrator to decide the dispute between the parties arising out of agreement contained in the Receipt dated 09.12.2017. Ld. Sole Arbitrator conducted the arbitration proceedings and passed the award at Chamber no. 392, Civil Wing, Tis Hazari Court Complex, Delhi. A copy of the said award, filed along with the petition also shows that the same was passed by Sh. Om Prakash, Ld. Sole Arbitrator, at Chamber no. 392, Civil Wing, Tis Hazari Court Complex, Delhi. Both the parties have submitted that the entire arbitration proceedings were conducted and the award was also passed at Chamber no. 392, Civil Wing, Tis Hazari Court Complex, Delhi. Both the parties had participated in arbitration proceedings at the above CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 18 of 33 place. The said place does not fall within the territorial jurisdiction of this court.
11.2 It is pertinent to refer to Section 2 (1) (e), which defines 'Court' as under:-
"(e) "Court" means -
(i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court or any Court of Small Causes"
(ii) ........" 11.3 It is also pertinent to Section 20 of the Act, which
provides for the "Place of arbitration" 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.CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 19 of 33
(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 haring witnesses, experts or the parties, or for inspection of documents, goods or other property."
(emphasis supplied) 11.4 Further, Section 42 of the Act provides for jurisdiction for filing of any application in respect of an Arbitration Agreement as under:-
"42. Jurisdiction.--Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court."
11.5 In De Nat Malyalam Digitals Pvt. Ltd.; V N Santhosh vs Asianet Satellite Communications Ltd., (Supra), relied upon by the Ld. Counsel for the petitioner, the Hon'ble High Court of Kerala has, inter-alia, held, CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 20 of 33 "(12) On an analysis of the Secs. 15 to 20 of the CPC, it is discernible that the conferment of territorial jurisdiction to the courts are based on the place where the subject matter situates or defendant resides, or carries on business or personally works for gain or cause of action arises. The territorial jurisdiction has been conferred to the court on the basis of place where the subject matter situates, if the relief sought for in the suit falls either under (a) to (f) or the proviso to Section 16 of the C.P.C. In the instant case, the application under Section 34 is filed before the District Court to set aside the Award. Hence, we are of the opinion that the aforesaid relief will not fall under (a) to (f) or the proviso to Section 16 of the C.P.C. Therefore, the territorial jurisdiction of an application under Section 34 of the Act falls under Section 20 of the C.P.C and is not maintainable in the courts other than the courts within the local limits of whose jurisdiction the defendant actually and voluntarily resides or carries on business or personally works for gain or the original cause of action, wholly or in part arises."
11.6 However, in Cinepolis India Pvt. Ltd vs Celebration City Projects Pvt. Ltd. and Another, 2020 SCC OnLine Del 301, the Hon'ble High Court of Delhi has held, "21. ....... A bare perusal of the arbitration clause shows that the parties have clearly designated New Delhi as the place for arbitration proceedings. While it is true that the arbitration clause does not specifically use the word "seat" but it is no CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 21 of 33 longer res integra that the term "place" would be the "juridical seat" for the purpose of Section 2(2) of the Act. It has also been settled by various judgments that the word "place" would refer to "juridical seat" for the purpose of Section 20(1) and Section20(2)of the Act whereas in Section 20(3) the word "place" is equivalent to "venue". This position of law is clear from reading of the judgment of the Constitution Bench in the case of BALCO (supra) and Indus Mobile Distribution Private Limited (supra).
22. The Constitution Bench of the Supreme Court examining the issue of seat and venue of an Arbitral proceeding observed as under:-
75. We are also unable to accept the submission of the learned counsel for the appellants that the Arbitration Act, 1996 does not make seat of the arbitration as the centre of gravity of the arbitration. On the contrary, it is accepted by most of the experts that in most of the national laws, arbitrations are anchored to the seat/place/situs of arbitration. Redfern in Para 3.54 concludes that "the seat of the arbitration is thus intended to be its centre of gravity." ..............
We are of the opinion, the term "subject-matter of the arbitration" cannot be confused with "subject-matter of the suit". The term "subject-matter" in Section 2(1)(e) is confined to Part I. It has a reference and connection with the process of dispute resolution. Its purpose is to identify the courts having supervisory control over the arbitration proceedings. Hence, it CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 22 of 33 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 CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 23 of 33 jurisdiction the subject-matter of the suit is situated and the courts within the jurisdiction of which the dispute resolution i.e. arbitration is located."
23. The Supreme Court in the case of Indus Mobile Distribution Private Limited (supra) after referring to Sections 2(1)(e) and 20 of the Act and various judgments including the judgment in the case of BALCO (supra) held as under:-
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 Section2(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 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 CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 24 of 33 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 CPC be attracted. In arbitration law however, as has been held above, the moment "seat" is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties."
"24. The Supreme Court in the case of Indus Mobile Distribution Private Limited (supra) analyzed Section 2(1)(e) and Section 20 of the Act as well as the Law Commission Report, 2014. It was held that the moment a seat is designated it is akin to an exclusive jurisdiction clause. It was further held that under the law of arbitration unlike the CPC which applies to suits, reference to seat is a concept by which a neutral venue can be chosen by the parties which may not in the classic sense have jurisdiction i.e. no part of the cause of action may have arisen and neither would any of the provisions of Sections 16 to 21 of the CPC be attracted. In the said case, the Court was concerned with two different clauses, one which stipulated that arbitration shall be conducted at Mumbai and the other as per which the disputes and differences arising out of the agreement was subject to the exclusive jurisdiction of the courts at Mumbai. The CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 25 of 33 respondent had filed a petition under Section 11 of the Act for appointment of an arbitrator before this Court. The petition was disposed of by the High Court holding that no part of the cause of action arose in Mumbai and the exclusive jurisdiction clause would not apply and Delhi being the first Court in which the petition was filed and where the part of cause of action had arisen would have jurisdiction. The Supreme Court held that the seat of arbitration was Mumbai and even the exclusive jurisdiction vested in the Mumbai courts. It was thus held that Mumbai courts alone would have jurisdiction to the exclusion of all other courts as the juridical seat of arbitration was at Mumbai."
"26. The Supreme Court placed reliance on the observations made by the Court of Appeal, England in C v. D (2008) BusLR 843, wherein it is observed that:-
"It follows from this that a choice of seat for the arbitration must be a choice of forum for remedies seeking to attack the award."
"28. In fact in the case of BGS SGS Soma JV (supra), the Supreme Court has laid down the tests for determination of the seat. It has been held that wherever there is an express designation of a venue and no designation of any alternative place as the seat combined with 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.CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 26 of 33
29. Finally, it was held that whenever there is a 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 whether the venue is really the seat. If the arbitration proceedings as a whole are intended to be held at a particular place, including the making of an award at that place, then the venue is the seat. This language has to be contrasted with the language where it is only mentioned that the tribunal is to meet or have witnesses examined and in such a case the place is only a venue and not the seat." (emphasis supplied).
11.7 In Hindustan Construction Company Limited vs NHPC Limited and Another, (2020) 4 SCC 310, the Hon'ble Supreme Court held, "3. This Court in Civil Appeal No. 9307 of 2019 entitled BGS SGS Soma JV vs NHPC Ltd. delivered a judgment on 10.12.2019 i.e. after the impugned judgment was delivered, in which reference was made to Section 42 of the Act and a finding recorded thus:
"59. .....Section 42 is meant to avoid conflicts in jurisdiction of Courts by placing the supervisory jurisdiction over all arbitral proceedings in connection with the arbitration in one Court exclusively. This is why the section begins with a non-obstante clause, and then goes on to state "...where with respect to an arbitration agreement any application under this CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 27 of 33 Part has been made in a Court..." It is obvious that the application made under this part to a Court must be a Court which has jurisdiction to decide such application. The subsequent holdings of this Court, that where a seat is designated in an agreement, the Courts of the seat alone have jurisdiction, would require that all applications under Part I be made only in the Court where the seat is located, and that Court alone then has jurisdiction over the arbitral proceedings and all subsequent applications arising out of the arbitral agreement. So read, Section 42 is not rendered ineffective or useless. Also, where it is found on the facts of a particular case that either no "seat" is designated by agreement, or the so-called "seat" is only a convenient "venue", then there may be several Courts where a part of the cause of action arises that may have jurisdiction. Again, an application under Section 9 of the Arbitration Act, 1996 may be preferred before a court in which part of the cause of action arises in a case where parties have not agreed on the "seat" of arbitration, and before such "seat"
may have been determined, on the facts of a particular case, by the Arbitral Tribunal under Section 20(2) of the Arbitration Act, 1996. In both these situations, the earliest application having been made to a Court in which a part of the cause of action arises would then be the exclusive Court under Section 42, which would have control over the arbitral proceedings. For all these reasons, the law stated by the Bombay and Delhi High Courts in this regard is incorrect and is overruled. "
CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 28 of 334) This was made in the backdrop of explaining para 96 of the Balco, which judgment read as a whole declares that once the seat of arbitration is designated, such clause then becomes an exclusive jurisdiction clause as a result of which only the courts where the seat is located would then have jurisdiction to the exclusion of all other courts.
5) Given the finding in this case that New Delhi was the chosen seat of the parties, even if an application was first made to the Faridabad Court, that application would be made to a court without jurisdiction. This being the case, the impugned judgment is set aside following BGS SGS Soma JV, as a result of which it is the courts at New Delhi alone which would have jurisdiction for the purposes of challenge to the Award."
11.8 Further, in BBR (India) Private Limted vs S.P. Singla Constructions Private Limited", (Supra), the Hon'ble Supreme Court has held, "19. Relying upon the Constitutional Bench decision in BALCO, in BGS SGS Soma, 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, a case relating to international arbitration, reference was made to several judgments, albeit the judgment in Shashoua v. Sharma 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 CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 29 of 33 and is analogous to an exclusive jurisdiction clause. 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 domestic arbitrations. In this regard, we may refer to paragraph 38 of BGS SGS Soma, which reads as under:
"38. A reading of paras 75, 76, 96, 110, 116, 123 and 194 of BALCO 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.
"23. It may, however, be noted that clause (e) to sub-section (1) of Section 2 was amended by inserting sub-clause (ii) with the specific objective to solve the problem of conflict of jurisdiction that would arise in cases where interim measures are sought in India in cases of arbitration seated outside India. In the context of domestic arbitrations it must be held that once the 'seat of arbitration' has been fixed, then the courts at the said location alone will have exclusive jurisdiction to exercise the supervisory CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 30 of 33 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, and Indus Mobile, 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.
"24.The Court in BGS SGS Soma has also dealt with the situation where the parties have not agreed on or have not fixed the jurisdictional 'seat of arbitration', and has laid down the following test to determine the 'seat of arbitration' which would determine the location of the court that would exercise supervisory jurisdiction. The test is simple and reads:
"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."
For formulating the test reference was made to several Indian and foreign judgments to emphasise that where the parties had failed to choose the 'jurisdictional seat' which would be governing the arbitral proceedings, the proceedings must be considered at any rate prima facie as being governed and subject CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 31 of 33 to jurisdiction of the court where the arbitration is being held, on the ground that the said court is most likely to be connected with the proceedings." (emphasis supplied) 11.9 From the aforesaid, it is clear that arbitrations are anchored to the seat/place/situs of arbitration. The seat of arbitration is akin to an exclusive jurisdiction clause. The choice of seat for the arbitration is choice of forum for remedies seeking to attack the award. Once the seat of the arbitration has been fixed, then the court at the said location alone has the exclusive jurisdiction to exercise the supervisory powers over the arbitration. The courts at other locations, including the courts where the cause of action has arisen, would not have jurisdiction. Where the parties had failed to choose the "jurisdictional seat", which would be governing the arbitral proceedings, the proceedings are to be considered as being governed and subject to jurisdiction of the court where the arbitration is held, which is the place/seat of arbitration determined in terms of Section 20 (2) of the Act. In view of the above, the contention of Ld. Counsel for the petitioner that this court has the jurisdiction as the shop in question situated at Vikaspuri, New Delhi, falls within the territorial jurisdiction of this court is not tenable.
12.1 In view of the aforesaid facts and the judgments in Cinepolis India Pvt. Ltd vs Celebration City Projects Pvt. Ltd. and Another (Supra), Hindustan Construction Company Limited vs NHPC Limited and Another (Supra) and BBR CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 32 of 33 (India) Private Limited vs S.P. Singla Constructions Private Limited (Supra), it is considered that this court has no jurisdiction to adjudicate upon the present dispute. Accordingly, the petition under Section 34 of the Arbitration and Conciliation Act, 1996 is dismissed.
13.1 Parties to bear their own costs.
14.1 Decree be drawn accordingly.
15.1 A copy of this judgment be issued to all the parties to the dispute through electronic mail, if the particulars of the same have been furnished, or otherwise, in terms of Order XX Rule 1 of the Code of Civil Procedure, 1908 (as amended by the Commercial Courts Act, 2015).
16.1 File be consigned to Record Room.
Announced in open Court on 22.02.2023.
(Rakesh Syal) District Judge (Commercial Court)-03, South-West, Dwarka Courts, New Delhi 22.02.2023 CS (Comm) no.18/2022 Sh. Krishan Kumar Mann vs Smt. Vagisha Suneja Page 33 of 33