Application U/s 9 Of Arbitration & Conciliation Act Can Be Filed Where A Part Of The Cause Of Action Has Arisen: Calcutta HC [Read Order]

The Calcutta High Court has observed that an application under section 9 of the Arbitration and Conciliation Act can be filed where a part of the cause of action has arisen.

Justice Moushumi Bhattacharya observed that an application under section 9 for interim relief urged in the background of an arbitration agreement between the parties is time-sensitive where the court has to decide on a prima facie assessment of the materials available before it. 

 was considering the maintainability of an application seeking interim relief filed by Srei Equipment Finance Limited. Seirra Infraventure Private Limited, the respondent, objected to the maintainability of the application on the ground that the Court does not have territorial jurisdiction to entertain the application. According to the petitioner, since the parties have designated 'Kolkata' as the chosen situs for arbitration, this court is the highest Civil Court having the requisite jurisdiction under section 2(1)(e)(i) of the Amendment Act, 2015, and would hence be the only competent court to receive and entertain the present application.

The court, while addressing this contention, noted that the factum of the cause of action having arisen within the jurisdiction of this Court marks the territoriality issue in favour of the petitioner and the 'seat' of arbitration becomes secondary. Referring to BGS SGS SOMA JV Vs. NHPC Limited reported in (2020) 4 SCC 234, the court said that an application under section 9 may be preferred before a court in which part of the cause of action arises in a case where the parties have not agreed on the seat of arbitration.  It said:

"The principles enunciated in the decisions cited can be structured thus; that an application under section 9 can be filed where a part of the cause of action has arisen or where the seat of arbitration has been chosen by the parties with the definitive caveat that the court determined, otherwise has the jurisdiction to receive and adjudicate the disputes between the parties. As discussed above, the petitioner has stated that part of the cause of action as pleaded in paragraphs 2, 3, 9 and 43 of the application has arisen within the jurisdiction of this court. It must also be borne in mind that the parties have consented to the jurisdictional clause-18(k) as well as the seat of arbitration as provided in clause 18(l). Both these clauses point to "Kolkata". The objection is to the interpretation of the outer limits of the city of Kolkata and whether the clause can be stretched to include the greater city of Kolkata. Section 2(1)(e)(i) of the 1996 Act designates the principal Civil Court of original jurisdiction in a district including the High Court in exercise of its Ordinary Original Civil Jurisdiction having jurisdiction to decide the questions forming the subject-matter of the arbitration for the purpose of applications in matters of domestic arbitration under Part I of the Act. The discussion would have been different had the issue in the present case been one where the petitioner would be left to rely only on the seat/venue of arbitration without the assistance of an exclusive jurisdiction clause also pointing to Kolkata. Section 2(1)(e)(i) as well as the effect of The Commercial Courts Act, 2015 have fortunately come to the aid of the petitioner to anchor the proceedings to the High Court at Calcutta as the only available court to decide the matter. The presumption of the contract having been signed at the office of the petitioner situated within the Ordinary Original Civil Jurisdiction of this Court also tilts in favour of the petition"

While rejecting the objections as to maintainability, the judge further observed: 

Unlike a challenge made to the territorial jurisdiction of a court in a suit where the court decides on the issue of rejection of a plaint on a meaningful reading thereof, the assessment of the jurisdiction issue in an application under section 9 of the 1996 Act stands on a different footing. An application under section 9 for interim relief urged in the background of an arbitration agreement between the parties is time-sensitive where the court has to decide on a prima facie assessment of the materials available before it. Hence, such applications are antithetical to leading evidence for deciding the issue of jurisdiction. The Court must therefore proceed on a conjoint reading of the averments, the documents and the strength of the rebuttal of such by the party who asserts that the petition must be taken elsewhere. The first principles of the burden of proof under The Indian Evidence Act, 1872, would also come into play in such cases; namely that whoever asserts the existence of certain facts to a legal right, must prove that those facts exist. In this case, since the respondent has asserted that this Court does not have jurisdiction to entertain the application, the respondent must discharge that burden by adducing evidence which would dislodge the factual statements and evidence shown by the petitioner for conferring jurisdiction on this Court to decide the matter. The respondent has not been able to discharge that burden on the strength of the documents placed before the court.

Case name: Srei Equipment Finance Limited vs. Seirra Infraventure Private Limited

Case no.:  A.P.185 of 2020 

Coram: Justice Moushumi Bhattacharya

Counsel: Adv Swatarup Banerjee, Adv Rohit Das

Click here to Read/Download Order

Read Order