Sec. 11, A&C Act Petition Must Be Filed In High Court Where Cause Of Action Arose, Not Necessarily At Principle Place Of Business: Delhi High Court

“In the present case as well, the subordinate office of the respondent is situated at Satna, Madhya Pradesh and for the said reason, the State of Madhya Pradesh will have the jurisdiction to entertain and try the present petition under Section 11 of the Arbitration and Conciliation Act, 1996.”

Brief Facts:

Vijay Kumar Mishra Construction Pvt. Ltd (“Petitioner”) had an agreement with Oriental Insurance Co. Ltd. (“Insurance Company”) for an 'All Risk (Car) Policy'. The agreement had an arbitration clause which mandated that any disagreement regarding payment under the policy, where liability is admitted, shall be referred to a sole arbitrator appointed by the parties. Further, in the event of disagreement over the choice of arbitrator, a panel of three arbitrators shall be formed, according to the Arbitration and Conciliation Act, 1996 (“Arbitration Act”).

Later, disputes arose, and the Petitioner filed an application in the High Court of Delhi (“High Court”) for the appointment of an arbitrator under Section 11 of the Arbitration Act. The Petitioner argued that the Insurance Company's sole objection pertained to territorial jurisdiction. It asserted that the Insurance Company's registered office and head office were in Delhi. Therefore, the High Court possessed the territorial jurisdiction to adjudicate the matter.

In response, the Insurance Company contended that the cause of action for this case stemmed from Satna, Madhya Pradesh. It highlighted that its office was located in Satna, Madhya Pradesh. The policy also originated from there and the incident leading to the claim occurred within Madhya Pradesh. Consequently, it contended that the Delhi High Court lacked territorial jurisdiction to entertain the petition.

Observations by the High Court:

The High Court, after considering the absence of a designated seat of arbitration or an exclusive jurisdiction clause in the policy, relied on the provisions of Section 2(1)(e) of the Arbitration Act, in conjunction with Sections 16 to 20 of the Code of Civil Procedure (CPC).

The High Court noted that the Petitioner itself initiated the arbitration process by invoking the arbitration clause in a legal notice. Notably, this notice was addressed to the Insurance Company's Divisional Office in Satna, Madhya Pradesh, indicating the commencement of arbitration proceedings at that location.

The High Court referred to the decision of the Supreme Court in Indian Performing Rights Society Ltd. v. Sanjay Dalia (2015) 10 SCC 161 and emphasized the significance of the place linked with the cause of action, especially where a subordinate office of a corporation is situated. It held that such a place ought to be the jurisdiction for filing a suit, not necessarily the principal place of business.

The High Court noted that the Insurance Company's subordinate office was located in Satna, Madhya Pradesh. Therefore, the High Court of Madhya Pradesh would have the jurisdiction to entertain and try the present petition under Section 11 of the Arbitration Act. Consequently, the petition was dismissed. The Petitioner was granted liberty to approach the court of appropriate jurisdiction.

Case Title: Vijay Kumar Mishra Construction Pvt. Ltd. Through Its Director Vijay Kumar Mishra vs The Oriental Insurance Co. Ltd

Citation: 2024 LiveLaw (Del) 378

Case Number: ARB.P. 219/2022

Advocate for the Petitioner: Mr. Rahul Sharma, and Mr. Ayush Bhatia.

Advocate for the Respondent: Mr. Amandeep Singh.

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