Place Of Arbitration Does Not Become The Seat Of Arbitration When The Exclusive Jurisdiction Is Conferred On Courts Of Another Place: Rajasthan High Court

The bench of Justice Pushpendra Singh Bhati held that where a place is designated merely as a ‘venue’ and courts of another place have been granted the exclusive jurisdiction, the latter is a clear ‘contrary indicia’ that prevents the place from becoming the seat of arbitration.

The Court held that New Delhi would merely be the venue of arbitration when the exclusive jurisdiction is conferred on the Courts at Bikaner which would be the seat of arbitration.

Facts

The respondent invited a tender for Providing and Laying of Re-Surfacing With (HMP Mix) MSS Type “B” 2.0 Cm Thick Consolidated with Bitumen VG-30 etc. Pursuant thereto, the bid of the applicant was accepted, ergo, the parties entered into an agreement dated 22.09.2015.

Certain disputes arose between the parties regarding delays and defaults in performance of the project work. Accordingly, the petitioner sent a legal notice and invoked the arbitration clause by requesting the respondent to mutually appoint the arbitrator. On failure of the parties to mutually appoint the arbitrator in terms of the agreement, the petitioner filed the application under Section 11 of the Act.

Contention of the Parties

The respondent objected to the maintainability of the petition on the following grounds:

• In terms of the agreement, the arbitrator was to be appointed by the respondent, therefore, the petition is not maintainable.
• Clause 35 of the agreement provides that New Delhi shall be the venue of arbitration which tantamount to designating the seat of arbitration as New Delhi , therefore, the High Court of Delhi shall have the exclusive jurisdiction to appoint the arbitrator.

The applicant made the following counter-arguments against the objection to the maintainability:

• Clause 35 merely designates New Delhi as the venue of arbitration and mere designation of venue would not translate into the designation of seat of arbitration
• The agreement evidently contains a contrary indicia in the form of conferment of exclusive jurisdiction on courts at another place as Clause 46 confers exclusive jurisdiction on the Courts at Bikaner.

Analysis by the Court

The Court observed that Clause 35 of the agreement provides that New Delhi shall be the place of arbitration, however, Clause 46 conferred exclusive jurisdiction on the Courts at Bikaner.

The held that where a place is designated merely as a ‘venue’ and courts of another place have been granted the exclusive jurisdiction, the latter is a clear ‘contrary indicia’ that prevents the place from becoming the seat of arbitration.

The Court held that the place of arbitration does not become the seat of arbitration when the exclusive jurisdiction is conferred on Courts of another place.

Accordingly, the Court rejected the objection raised by the respondent to the maintainability of the petition on ground of lack of territorial jurisdiction. The Court allowed the petition and appointed the arbitrator.

Case Title: Aseem Watts v. Union of India, S.B. Arbitration Application No. 14 of 2021

Date: 02/09/2023

Counsel for the Petitioner: Mr. Meenal Garg and Mr. Aakash Kukkar

Counsel for the Respondent: Mr. Deelip Kawadia, Mr. Dinesh Bishnoi and Mr. B.L. Bishnoi

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