Court's Supervisory Role Over Arbitral Proceedings Would Be Determined As Per CPC If No Neutral Location Is Specified: Delhi High Court

The Delhi High Court bench of Justice Jasmeet Singh affirmed that if there is a neutral location specified in the contract data, that location would be the place of arbitration and the court having supervisory jurisdiction over the place would have jurisdiction. If no such location is specified, the provisions of the CPC from sections 16 to 20 would be attracted for determining the supervisory jurisdiction of the court.

Brief Facts

This is a petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 (“Act of 1996”) seeking appointment of the Sole Arbitrator for adjudication of disputes between the parties.

The respondent floated a tender for rehabilitation of Rohini, Jamini and Sanjam Dam canal systems in DistrictLalitpur, U.P. The petitioner participated in the same and the respondent accepted the bid of the petitioner. Thereafter on 15.11.2013, an Agreement was entered into between the petitioner and the respondent. Clause 20.6 of the agreement provides for arbitration.

Since there were disputes between the parties, the petitioner invoked arbitration vide legal notice dated 04.01.2024. Thereafter, the present petition has been filed.

Contentions

The petitioner submitted that the Clause 20.6 contains the place of arbitration as “neutral location” specified in the contract data and the contract data itself does not provide any neutral location.

The petitioner drew the attention of the court to the legal notice dated 04.01.2024 wherein the petitioner in para 29 proposed Delhi as the neutral location/seat. The same was not denied by the respondent and in terms of Section 7 of Act of 1996, „Delhi‟ will be the neutral venue, seat of arbitration and hence, this Court will have the jurisdiction to entertain and try the present petition.

Reliance was placed on Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd., (2017)

Per contra, the respondent submitted that the present petition by arguing that in the present case there is no neutral location. The cause of action in terms of Sections 16 to 20 of CPC has arisen within the jurisdiction of State of Uttar Pradesh and hence, this Court will not have jurisdiction at all.

That in reply to the notice dated 04.01.2024 even though there is no specific denial to Delhi jurisdiction, the whole notice has been denied.

Court's Analysis

The court, at the outset, noted that the venue of arbitration and seat of arbitration are different terms, having different meanings and application in the arbitration proceedings. The venue of arbitration is the place where the arbitration is to be conducted or held whereas the seat of arbitration decides the supervisory power/exclusive jurisdiction and the applicable laws. In other words, seat determines the judicial review over the entire arbitration proceedings and the arbitral award.

The court noted that In Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd., (2017) the Supreme Court has held that under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to “seat” is a concept by which a neutral venue can be chosen by the parties to an arbitration clause.

The Apex Court in the above further observed that the neutral venue may not in the classical sense have jurisdiction — that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Sections 16 to 21 of CPC be attracted. In arbitration law however, as has been held above, the moment “seat” is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties.

The court further referred to its own judgment in Simplex Infrastructures Ltd. v. Jammu & Kashmir Economic Reconstruction Agency, 2024 wherein it was held that Clause 20.6 of the GCC provides that, in the event of their existing of a neutral location specified in the Contract Data, that location would be the place of arbitration. Ergo, if there is no neutral location specified in the Contract Data, Clause 20.6 has no application.

The court further noted that the above judgment squarely covers the present controversy raised by the petitioner. In the present case, merely because the petitioner suggested „Delhi‟ as the neutral location in the notice under section 21 of Act of 1996 in the absence of any specific location in the said Agreement and the same was not „specifically‟ denied by the respondent (but the contents of the notice dated 04.01.2024 have been denied) would not give this Court the exclusive jurisdiction.

The court concluded that the work of the tender was executed in the District: Lalitpur, Uttar Pradesh, the office of the petitioner is located in Nagpur, Maharashtra and the respondent is the Government body of the State of Uttar Pradesh, this Court will not have the jurisdiction as there is no cause of action arisen within the territorial jurisdiction of this Court.

Accordingly, the present petition was dismissed.

Case Title: M/S Srinivasa Construction Corporation Pvt Ltd Versus Irrigation Works Circle, Through Superintendent Engineer District, Uttar Pradesh

Case Reference: ARB.P. 454/2024

Judgment Date: 06/11/2024

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