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The Joint Commissioner / Executive Officer Arulmigu Dhandayuthapani Swamy Thirukoil, Dindigul v/s Damodar Ropeways & Infra Ltd., A Company incorporated under the provisions of the Companies Act, 1956 Represented by its Vice President (Marketing & Business Development) & Others

    O.P (D) No. 147319 of 2018

    Decided On, 25 February 2021

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE M. SUNDAR

    For the Petitioner: M. Sriram, Advocate. For the Respondents: --------



Judgment Text

(Prayer: Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 read with Section 2(i)(c)(vi) of Commercial Courts, Commercial Division and Commercial Appellate Division of High Court, 2015 to set aside the award dated 02.10.2018 as the same is against the petitioner by the Hon'ble Arbitrators in the disputes between the petitioner and the 1st Respondent as illegal, without jurisdiction and not a proper disposal of the case and to direct the 1st Respondent to pay the cost of this petition.)

1. Captioned 'Original Petition' ('OP' for the sake of brevity) has been listed before me under the cause list caption 'FOR MAINTAINABILITY' owing to doubts regarding territorial jurisdiction of this Court qua supervisory Court under Section 34 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)', hereinafter 'A and C Act' for the sake of brevity.0

2. The maintainability note placed before me by the Registry, reads as follows:

“IMAGE”

3. Mr.M.Sriram, learned counsel on record for petitioner in captioned OP is before me. Notwithstanding the endorsement made at the time of representing the papers, learned counsel very fairly submitted that the legal position under arbitration law is different as Sections 16 to 21 of 'The Code of Civil Procedure, 1908' ('CPC' for the sake of brevity), operate in a different realm.

4. This takes us to Section 20 of the A and C Act. Hon'ble Supreme Court in Indus Mobile case, being Indus Mobile Distribution Private Limited Vs. Datawind Innovations Private Limited and Others reported in (2017) 7 SCC 678, had held that the juridical seat will determine the territorial jurisdiction of the supervisory Court and the jurisdiction of the supervisory Court will be exclusive jurisdiction. In the instant case, arbitration agreement between the parties being arbitration agreement within the meaning of section 2(1)(b) read with Section 7 of A and C Act is in the form of two clauses, namely Clauses 20.0 and 21.0 in an agreement dated 07.10.2010 between the parties. These two clauses, namely clauses 20 and 21 read as follows:

'20.0 ARBITRATION: Any arbitration proceedings in connection with this contract shall be governed by the provisions of current Indian Arbitration and Conciliation Act and the place of arbitration shall be at Palani.

21.0 LEGAL JURISDICTION: Only the courts at Palani, Dindigul and Madurai shall have jurisdiction for any suit or proceedings regarding the matter arising in any respect under this contract, even though any part of the cause of action may arise outside Tamilnadu.'

5. Therefore, it is clear that Courts specified in the clauses supra alone will be supervisory jurisdictional Courts and not this Court.

6. Relevant paragraphs in Indus Mobile case are paragraphs 5, 6, relevant paragraphs in BGS SGS Soma [BGS SGS Soma JV vs NHPC Ltd. reported in (2020) 3 MLJ 336 (SC)] are paragraphs 97 to 101 and the same read as follows:

'Paragraphs 5 and 6 of Indus Mobile case:

5. Both the applications were disposed of by the impugned judgment [Datawind Innovations (P) Ltd. v. Indus Mobile Distribution (P) Ltd., 2016 SCC OnLine Del 3744] . First and foremost, it was held by the impugned judgment that as no part of the cause of action arose in Mumbai, only the courts of three territories could have jurisdiction in the matter, namely, Delhi and Chennai (from and to where goods were supplied), and Amritsar (which is the registered office of the appellant company). The court therefore held that the exclusive jurisdiction clause would not apply on facts, as the courts in Mumbai would have no jurisdiction at all. It, therefore, determined that Delhi being the first Court that was approached would have jurisdiction in the matter and proceeded to confirm interim order dated 22-9-2015 [Datawind Innovations (P) Ltd. v. Indus Mobile Distribution (P) Ltd., OMP (I) No. 531 of 2015, order dated 22-9-2015 (Del)] and also proceeded to dispose of the Section 11 petition by appointing Justice S.N. Variava, retired Supreme Court Judge, as the sole arbitrator in the proceedings. The judgment recorded that the conduct of the arbitration would be in Mumbai.

6. The learned counsel on behalf of the appellant has assailed the judgment of the Delhi High Court, stating that even if it were to be conceded that no part of the cause of action arose at Mumbai, yet the seat of the arbitration being at Mumbai, courts in Mumbai would have exclusive jurisdiction in all proceedings over the same. According to him, therefore, the impugned judgment was erroneous and needs to be set aside. '

'Paragraphs 97 to 101 of BGS SGS Soma case:

97. 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.

98. 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 subclause, 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 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 subclause (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.

'99. 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 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.

100. 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 exclusive jurisdiction clause so far as courts of the “seat” are concerned.

101. Consequently, the impugned judgment [NHPC Ltd. v. Jaiparkash Associates Ltd., 2018 SCC OnLine P&H 1304 : (2019) 193 AIC 839] is set aside, and the Section 34 petition is o

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rdered to be presented in the courts in New Delhi, as was held by the learned Single Judge of the Special Commercial Court at Gurugram. The appeals are allowed in the aforesaid terms.' 7. Therefore, this Court holds that captioned OP cannot be entertained by this Court as this is not the supervisory jurisdiction Court going by the aforementioned Indus Mobile and BGS SGS Soma principles laid down by Hon'ble Supreme Court. 8. In the light of the narrative thus far, captioned OP stands rejected. Registry to return the entire case file including signed copy of the impugned award and court fee receipt to the counsel on record under due acknowledgement so as to enable the learned counsel to present the captioned OP in the jurisdictional Court. 9. Though obvious, for the purpose of abundant clarity, it is mentioned that it is open to the petitioner to make a plea inter alia under Section 14 of Limitation Act (before jurisdictional Court) if the need arises. Registry to do the needful within a fortnight from today i.e., on or before 11.03.2021.
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