All Arbitration Proceedings Must Be Filed In Court With Jurisdiction Over The Arbitral Seat: Delhi High Court

Brief Facts:

The matter pertained to an objection raised by Union of India (Respondent) regarding the territorial jurisdiction of the High Court to entertain the petition. It argued that the petition should be dismissed because the Commercial Court at Bhopal has been designated as the appropriate forum. This contention was based on the fact that the Respondent filed a petition under Section 34 of the Arbitration Act before the Bhopal Court challenging the arbitral award. According to the Respondent, Section 42 of the Arbitration Act mandates that the petition must be presented before the same court where the arbitration proceedings are being contested.

The Petitioner referred to paragraph 1.12 of the arbitral tribunal's order dated 5 February 2020 which explicitly designated Delhi as the place of arbitration, with Bhopal being mentioned only as an additional venue. It referred to the Supreme Court judgment in BBR (India) Pvt Ltd v S P Singla Constructions Pvt Ltd to support his claim that once the place of arbitration is fixed as Delhi, it becomes the seat of arbitration. Therefore, it argued supervisory jurisdiction over the proceedings is vested solely with the High Court.

Observations by the High Court:

The High Court referred to BBR (India) Pvt Ltd and noted there is a clear distinction between the "seat" and the "venue" of arbitration as established by Sections 20(1) and 20(2), which refer to the seat of arbitration, and Section 20(3), which deals with the venue.

The High Court clarified that the place fixed as the seat of arbitration determines the jurisdictional court. In contrast, the venue merely serves as a location for the proceedings but does not affect the designation of the seat. Therefore, the High Court held that if Delhi is designated as the seat of arbitration, as per the arbitral tribunal's order dated 5 February 2020, Delhi becomes the proper venue for exercising supervisory jurisdiction over the arbitration.

The High Court held that even though Bhopal was designated as an alternate venue, it does not affect the jurisdiction of the court in Delhi, which remains competent to handle all matters related to the arbitration. The High Court rejected the Respondent's argument regarding Section 42 of the Arbitration Act. Section 42 states that if the first court approached has jurisdiction, all further proceedings must be before that court, even if other courts have concurrent jurisdiction. However, if the seat of arbitration is established, the High Court held that all proceedings should be conducted in the court corresponding to the arbitral seat.

Thus, the High Court held that if a court without territorial jurisdiction is approached initially, it does not mandate that all subsequent proceedings occur there. Instead, the High Court held that proceedings should follow the court corresponding to the seat of arbitration once it is determined.

The High Court held that the Commercial Court in Bhopal lacked territorial jurisdiction over the arbitration proceedings. Consequently, the objection regarding territorial jurisdiction was dismissed.

The case was scheduled for disposal at the end of the Board on 18 November 2024. Both parties were instructed by the High Court to submit short notes detailing their arguments and issues related to the arbitration.

Case Title: Bcc Developers And Promoters Pvt. Ltd. Vs Union Of India

Citation: 2024 LiveLaw (Del) 999

Case Number: O.M.P. (COMM) 122/2023

Advocate for the Petitioner: Mr. Rahul Malhotra, Adv.

Advocate for the Respondent: Mr. Mukul Singh, CGSC with Ms. Ira Singh, Adv

Date of Judgment: 02.09.2024

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