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Nims University v/s Valuer HR E-Solutions Pvt Ltd.

    Civil Writ Petition No. 9440 of 2019

    Decided On, 03 March 2020

    At, High Court of Rajasthan Jaipur Bench


    For the Appearing Parties: S.S. Hora, Anuroop Singhi, Advocates.

Judgment Text

1. Facts of the case leading to the present controversy may first be noticed. On 07-09-2017, an agreement was signed at Jaipur between the petitioner and the respondent No.1, whereby the latter had to provide 'Business Process Management Outsourcing Services' to the former at its campus located at Jaipur. A dispute arose between the parties regarding the fulfillment of the obligations contained in the agreement. Initially, on 19-07-2018, the petitioner lodged a First Information Report at Police Station Chandwaji, Jaipur against respondent No.1 alleging the breach of conditions of the agreement and subsequently, the respondent No. 1 filed a claim by way of e-mail before the respondent No. 2 for initiation of arbitration proceedings. Pursuant to the said request, a letter was issued by the respondent No. 2 stating that the arbitration proceedings shall be deemed to have begun on 04-04-2018 and in this regard, a Sole Arbitrator, namely, Shri Abhinav Chandrachud was appointed on 04-05-2018. The aforesaid Sole Arbitrator held the procedural hearing on 25- 07-2018 directing the respondent No. 1 to file his claim before 14- 08-2018. However, even after seeking several opportunities, the respondent No. 1 did not file the claim. Ultimately, vide order dated 11-10-2008, the aforesaid Sole Arbitrator recused himself from the arbitral proceedings. Thereafter, the respondent No. 2 appointed respondent No. 3 Mr. Sitesh Mukherjee as the Sole Arbitrator on 21-01-2019. The newly appointed Sole Arbitrator passed the Procedural Order No. 1 dated 28-01-2019 and provided 21 days' time to the respondent No. 1 to file statement of claim alongwith the documentary evidence and the witnesses statements. This procedural timetable again was against the mandate of the statutory period stipulated by Section 29 A of the Arbitration and the Conciliation Act, 1996 (in short 'the Act of 1996'). The respondent No.1 filed its statement of claim after inordinate delay of more than 10 months from the commencement of the arbitral proceedings. Thereafter, the petitioner submitted its objections under section 16 of the Act of 1996 regarding the maintainability of the proceedings. The Sole Arbitrator without deciding the said application, issued the Procedural Order No. 3 dated 10-04-2019 and revised the schedule of proceedings against the provisions of the Act of 1996. Therefore, by filing the instant writ petition, a prayer is made to quash and set-aside the arbitration proceedings in question with a further prayer to direct the respondents Nos.2 and 3 not to proceed in the matter as their mandate stands terminated.

2. By order dated 27-05-2019, a Coordinate Bench of this Court had directed that the further proceedings before the Arbitral Tribunal shall remain stayed. The said interim order is continuing.

3. On behalf the respondent No.1, a preliminary objection regrading lack of jurisdiction of this Court to entertain this writ petition was raised. To buttress his arguments, the learned counsel for the respondent No. 1 argued that the arbitration was agreed to be conducted by the Mumbai Centre for International Arbitration (in short 'MCIA') in accordance with MCIA Rules of 2016. Accordingly, the arbitration proceedings were initiated by the MCIA in Mumbai. As a matter of fact, this Court situated at Jaipur has no jurisdiction to hear and decide this writ petition. It was also contended that the writ petitioner has already appeared before the Sole Arbitrator during the arbitral proceedings and also filed an application under Section 16 of the Act of 1996, alleging that the dispute cannot be resolved through arbitration. Therefore, there was no occasion for the petitioner to have moved this Court by filing the present writ petition. In support of his aforesaid submissions, the learned counsel has placed reliance on the judgments in (i) BGS SGS SOMA JV vs NHPC Ltd., 2019 17 Scale 369, (ii) Brahmani River Pellets Ltd. vs Kamachi Industries, 2019 9 Scale 818, and (iii) Indus Mobile Distribution Pvt. Ltd. vs Datawind Innovations Pvt. Ltd, 2017 7 SCC 678.

4. Learned counsel for the petitioner opposed the above submissions. According to him, the controversy involved in the present case is squarely covered by the judgment passed by the Constitutional Bench of the Hon'ble Supreme Court in Bharat Aluminum Company Vs. Kaiser Aluminum Technical Services Inc., 2012 9 SCC 552 (in short 'BALCO'). In the said case, the Hon'ble Supreme Court has indicated that there are two types of Courts, which have jurisdictions over the subject matter, i.e. the Courts within whose jurisdiction the subject matter of the suit is situate and the Courts within the jurisdiction of which the dispute resolution is located. Therefore, the Courts at Jaipur (where the obligations have to performed by the parties) as well as the Courts at Mumbai (within the jurisdiction of which the arbitration is located) have concurrent jurisdictions. In such an eventuality, this Court also has jurisdiction to decide the controversy involved herein. In this regard the learned counsel has also placed reliance on Union of India vs. Hardy Exploration and Production(India) INC.,2019 13 SCC 472. Learned counsel also contended that the facts of BGS SGS (supra) and Indus Mobile (supra) do not bear resemblance to the facts of the present case and thus, the law laid down therein is not applicable to the instant case. Therefore, a prayer was made to overrule the objection regarding lack of jurisdiction of this Court and to decide the writ petition on its own merits.

5. I have given my thoughtful consideration to the above submissions and perused the records carefully.

6. The controversy raised before the Constitutional Bench of the Hon'ble Supreme Court in 'BALCO' was whether in international commercial arbitrations, whose juridical seat of arbitration was outside India, the provisions of Part 1 of the Act of 1996 for grant of the relief would be attracted ? The Hon'ble Supreme Court in the said case held thus:-

"96. ..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 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 is located."

It is apparent that in the above case, the Hon'ble Supreme Court after featuring the distinction between the 'Seat' and 'Venue' in the context of Section 20(3) of the Act of 1996, held that in an International Commercial Arbitration 'seated' in India, the parties mutually agree to hold arbitral proceedings outside India. This would not, however, have the effect of changing the 'seat of arbitration', which would continue to remain in India.

7. In Brahmani River (supra), the Hon'ble Supreme Court has further clarified the legal position by laying down that the observations made in para 96 of BALCO's case (supra) is in the context that on many occasions, agreement may provide for a seat of arbitration at a place which would be neutral to both the parties. In such circumstances, it was observed that the two Courts would have jurisdiction i.e. the Court within whose jurisdiction "subject-matter" of the suit is situated and the Court within the jurisdiction of which the dispute resolution i.e. the "venue" of arbitration is located.

8. Likewise, in Indus Mobile Distribution (supra), it was held by the Hon'ble Supreme Court that once the seat of arbitration has been fixed, it would be in the nature of an exclusive jurisdiction clause as to the Courts which exercise supervisory powers over the arbitration. Recently, in BGS SGS SOMA (supra), the Hon'ble Supreme Court has reiterated the legal position that the very fact that the parties have chosen a place to be the seat would necessarily carry with it the decision of both parties that the Courts at the seat would exclusively have jurisdiction over the entire arbitral process.

9. From the above discussion, it follows that the seat of arbitration remains the place initially agreed by the parties. In the present case, Clause 7 of the agreement contains an Arbitration Clause, which reads as under:-

"7. Arbitration: Any dispute, difference or claim arising out of or relating to this Agreement or the breach or alleged breach thereof, shall be referred to arbitration, to the "Mumbai Centre for International Arbitration" (MCIA) and shall be determined by a sole Arbitrator appointed by the MCIA. The arbitration shall be conducted, in accordance with and governed by the provisions of the MCIA Rules. The parties agree that the decision of the sole arbitrator shall be final and binding upon the Parties."

Rule 23 of the MCIA Rules is also relevant here, which is being reproduced thus:

"23. Seat and Venue:

23.1 The parties may agree on the seat of arbitration. Failing such an agreement, the seat of arbitration shall be Mumbai, India, unless the Tribunal determines, having regard to all the circumstances of the case, that another seat is more appropriate.

23.2 The Tribunal may hold hearings, meetings and deliberations by any means it considers expedient or appropriate and at any location it considers convenient or appropriate."

As per the above terms and conditions, the juridical seat of arbitration was expressed at a neutral venue i.e; Mumbai. Even though, no part of the cause of action may have arisen at Mumbai, the moment an express designation of venue was made, it would vest Mumbai Courts with exclusive jurisdiction for the purpose of regulating the ar

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bitral proceedings arising out of the agreement between the parties. Considering the agreement of the parties having Mumbai as the venue of arbitration, the intention of the parties was to exclude all other Courts. Non-user of words like 'exclusive jurisdiction', 'only', 'exclusive', 'alone', is not decisive since it does not make any material difference, as held in Brahmanu River Pellets Limited (supra). 10. It is also pertinent that in its reply to the statement of claim dated 08.04.2019, no objection was raised by the petitioner with respect to seat of arbitration in Mumbai. Besides it, on 19.03.2019, the petitioner filed an application before the Sole Arbitrator to fix the venue of hearing at Jaipur, where the services under the agreement had to be given. In that application also, no objection regarding fixing Mumbai as the seat of arbitration was raised. 11. Having regard to the above, the inescapable conclusion is that Mumbai is actually the juridical seat of the arbitration proceedings and thus, Mumbai Courts alone have jurisdiction to the exclusion of all other Courts in the country. 12. Resultantly, the writ petition is liable to be dismissed and is accordingly dismissed for lack of jurisdiction. Interim order stands vacated.