Arbitration Act | Section 6 Commercial Courts Act Is Enabling Provision, Doesn't Override Arbitration Agreement: Allahabad High Court Dismisses Appeal
The Allahabad High Court division bench of Chief Justice Arun Bhansali and Justice Vikas Budhwar held that Section 6 of Commercial Courts Act, 2015 is an enabling provision and does not override agreements made between parties regarding jurisdiction. It held that even if a Commercial Court has jurisdiction as per Section 6, this jurisdiction can be excluded by an arbitration...
The Allahabad High Court division bench of Chief Justice Arun Bhansali and Justice Vikas Budhwar held that Section 6 of Commercial Courts Act, 2015 is an enabling provision and does not override agreements made between parties regarding jurisdiction. It held that even if a Commercial Court has jurisdiction as per Section 6, this jurisdiction can be excluded by an arbitration agreement between the parties specifying a different jurisdiction based on their territorial situs.
Section 6 deals with the jurisdiction of Commercial Courts. This section empowers the Commercial Courts to adjudicate on suits and applications related to commercial disputes of a specified value. It specifies that Commercial Courts have jurisdiction over commercial disputes arising from the entire territory of the State over which they have been vested territorial jurisdiction.
Brief Facts:
The matter pertained to an arbitral award which the Appellant challenged under Section 34 of the Arbitration and Conciliation Act, 1996 in Commercial Court, Gorakhpur. However, the Respondent contested the jurisdiction of the court, arguing that the dispute should be addressed in the Courts of New Delhi, as per the contractual agreement.
The Respondent argued that Clause 23 and 24 of the acceptance letter specifically designated New Delhi Courts as having exclusive jurisdiction over any disputes arising from the contract.
In response, the Appellant argued that the primary party involved, North-Eastern Railways, operated from Gorakhpur, where payments were made, and where both parties were situated.
The Commercial Court held that since the tender process and acceptance originated from New Delhi, the New Delhi Courts have jurisdiction.
The Appellant contested this decision of the court in the Allahabad High Court (“High Court”).
Observations by the High Court:
The High Court noted that the tender documents and acceptance of tender were unequivocally issued from New Delhi. It noted that clause in the letter of the appendence stated that the Courts of the place where these documents were issued would exclusively have jurisdiction over disputes arising from or related to the order.
The High Court pointed out that the inclusion of the phrase 'shall alone' in the clause clearly indicated the parties' intention to exclude the jurisdiction of any other Courts except for the location where the tender documents and acceptance were issued, which in this instance was New Delhi. The High Court referred to the decision of the Supreme Court in Indus Mobile Distribution Private Limited, and held that parties are entitled to exclude the jurisdiction of other courts when more than one court has jurisdiction over a matter.
Referring to the Appellant's reliance on Section 6 of the Act of 2015, the High Court clarified that this provision pertains to the jurisdiction of Commercial Courts and does not override the parties' contractual agreement regarding jurisdiction. The High Court held that Section 6 is merely an enabling provision and cannot supersede the parties' agreement to exclude the jurisdiction of a particular court based on their territorial situs.
Consequently, the appeal was dismissed.
Case Title: North Eastern Railway vs Calstar Steel Ltd. 2024 LiveLaw (AB) 231
Case Citation: 2024 LiveLaw (AB) 231
Case Number: APPEAL UNDER SECTION 37 OF ARBITRATION AND CONCILIATION ACT 1996 No. - 2 of 2024
Advocate for the Appellant: Vivek Kumar Singh
Advocate for the Respondent: Hari Om Ojha
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