Mere Signing Of The Award At A Place Cannot Be The Determinative Factor For Ascertaining The Place Of Arbitration: Bombay High Court

The bench of Justice Manish Pitale was dealing with a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), which was disputed on the ground that the court lacked jurisdiction to entertain the same. The court observed that there was a lack of material to show agreement between the parties with respect to the place of arbitration, as contemplated under Section 20(1) of the A&C Act. Further, in such a situation, the arbitrator could have determined the place of arbitration under Section 20(2) of the A&C Act, which he had failed to do so.

Relying on the Bombay High Court’s decision in Omprakash S/o. Ramnivas Varma and Ors. vs. Vijay Dwarkada Varma, 2020(5) Mh.L.J. 184, the bench relied on the conduct of the parties, including the fact that the Section 9 petition was filed before the court in Thane, and concluded that it did not have the jurisdiction to entertain the challenge under Section 34.

The petitioner/ award debtor, Gurumahima Heights Co-operative Housing Society Ltd, filed a petition under Section 34 of the A&C Act before the Bombay High Court, challenging an arbitral award passed in favour of the respondent, M/s. Admirecon Infrastructure Pvt Ltd.

The respondent, Admirecon, disputed the maintainability of the petition on the ground that the High Court did not have the jurisdiction to entertain the petition. It contended that except two hearings, all the other hearings in the arbitral proceedings had taken place at Navi Mumbai.

It further submitted that the building of the petitioner- society, in respect of which contract was awarded to the respondent, was also situated in Navi Mumbai. It added that since the application under Section 9 of the A&C Act was filed before the court at Thane, as per Section 42 of the A&C Act, the Section 34 petition ought to have been filed before the said court at Thane.

To this, the petitioner- society averred that the arbitral award signed by the arbitrator recorded the date of its pronouncement and the place as Mumbai. Therefore, the place of the arbitral proceedings and the award was Mumbai, due to which the Bombay High Court had the jurisdiction to entertain the Section 34 petition.

The High Court observed that as per Section 20 of the A&C Act, the parties are free to agree on a place of arbitration, failing which the arbitral tribunal determines the place of arbitration, having regard to the circumstances of the case and convenience of the parties. As per Section 20, the arbitral tribunal can meet at any place that it considers appropriate and the same has been interpreted as the “venue” of arbitration.

It further reckoned that Section 42 of the A&C Act starts with a non-obstante clause, specifying that where an application under Part I of the A&C Act is filed in a court in respect of an arbitration agreement, that court alone has jurisdiction over the arbitral proceedings and all subsequent applications arising out of such agreements and the arbitral proceedings. Further, it specifically provides that no other court shall have jurisdiction.

The bench observed that in the case of Omprakash S/o. Ramnivas Varma (2020), the Bombay High Court was dealing with a case where there was nothing to show an agreed place of arbitration and where the arbitrator had not determined the place of arbitration. In such a situation, the court had held that the conduct of the parties could also be a factor for determining or ascertaining the place of arbitration, which in turn would lead to ascertaining which court would have the jurisdiction to entertain the challenge under Section 34.

Referring to the relevant clauses in the contract executed between the parties, the bench noted that the same did not provide for a place of arbitration, or place exclusive jurisdiction on any particular court. “Clause 5 of the Articles of Agreement / Contract does specify that all disputes between the parties shall be deemed to have arisen at Navi Mumbai. This can be taken as a relevant factor, but admittedly, this specific clause was not invoked by the respondent while the parties went to arbitration,” the court further observed.

Perusing the facts of the case, the court said, “The aforementioned relevant factors lead at least to one conclusion that there is lack of material to show agreement on the part of the parties as to the place of arbitration, as contemplated under Section 20(1) of the said Act. In such a situation, under Section 20(2) of the said Act, the learned arbitrator could have determined the place of arbitration. But, a perusal of the arbitral award does not show any exercise on the part of the learned arbitrator of having determined the place of arbitration.”

The court further held that merely because the arbitral award recorded that the same was published at Mumbai cannot be the basis to hold that the place of arbitration, in the facts of the case, was Mumbai. This is because mere signing of the award at a place cannot be the determinative factor for ascertaining the place of arbitration, the court said. It added that if there is no agreement between the parties regarding the place of arbitration and the arbitrator has not determined the place, the overall circumstances would have to be taken into consideration to reach a conclusion on the said aspect.

Referring to the facts of the case, the bench took note that 22 out of the 24 hearings of the arbitral proceedings took place at Navi Mumbai. Further, the building of the petitioner – society in respect of which the contract was awarded to the respondent, was located in Navi Mumbai. Also, the Section 9 application was filed by the respondent before the court at Thane.

The court added: “In the present case, it cannot be said that no part of cause of action arose within jurisdiction of Court at Thane. It is an admitted position that the application under Section 9 of the said Act was indeed filed by the respondent before the Court at Thane.”

Thus, the bench concluded that the court at Thane alone had the jurisdiction to entertain the Section 34 petition.

“In the facts of the present case, considering the material on record, including the conduct of the parties, upon application of the position of law clarified by the Supreme Court and this Court in the aforementioned judgments, the only conclusion that can be reached is that the Court at Thane alone has jurisdiction to entertain the application / petition filed under Section 34 of the said Act to challenge the arbitral award.”

The court thus returned the petition to the petitioner-society, to file the same before the Court of Principal District Judge at Thane.

Case Title: Gurumahima Heights Co-operative Housing Society Ltd vs M/s Admirecon Infrastructure Pvt Ltd

Dated: 26.04.2023

Counsel for the Petitioner: Mr. Vyom Shah a/w. Mr. Anand Iyer i/b. Divya Shah Associates

Counsel for the Respondent: Mr. Ajinkya Kurdukar a/w. Mr. Subhash Gupta

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