Place Of Arbitration Would Not Become The 'Seat' When The Exclusive Jurisdiction Is Conferred On A Court At A Different Place: Delhi High Court

The bench of Justice Neena Bansal Krishna held that conferring exclusive jurisdiction, over a Court different from the Court at the place of arbitration, would be a contrary indicia and the place of arbitration would merely be the venue and only the Court at which exclusive jurisdiction is conferred shall have the jurisdiction to decide all applications arising out of the arbitration between the parties.

Facts

The parties entered into a Registered Lease Deed dated 10.05.2011 vide which the petitioner leased the subject property to the respondent for monthly rent to the tune of 1,90,650/- with a period of over 11 years as the lock-in period.

A dispute arose between the parties when allegedly the respondent stopped paying the monthly rent. Thereafter, the respondent terminated the lease deed, thus, the petitioner was constrained to issue the notice of arbitration suggesting the name of the arbitrator. The respondent in its reply did not agree with the proposal of the petitioner. Accordingly, the petitioner approached the High Court under Section 11 of the A&C Act.

Objections

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

• The dispute between the parties involves a landlord-tenant relationship which is governed by a special Statute i.e., Haryana Urban (Control of Rent and Eviction) Act, 1973, therefore, the dispute between the parties is not arbitrable.
• The High Court of Delhi has no jurisdiction as the Lease Deed conferred exclusive jurisdiction on the Courts at Gurugram, Haryana.
• The arbitration clause only mentions New Delhi as the place of arbitration and the same cannot amount to designating a seat of arbitration.

Analysis by the Court

The Court held that the dispute between the parties pertains to the recovery of rent for which there is no provision in the Haryana Rent Legislation, therefore, the objection taken by the respondent regarding non-arbitrability of the subject matter is not tenable and liable to be rejected.

Next, the Court dealt with the objection regarding the jurisdiction of the Court to entertain the petition. The Court observed that both under Clauses 48 & 49 of the Lease Deed, the parties have conferred exclusive jurisdiction upon the Courts at Gurugram, Haryana. Moreover, the arbitration clause only mentions New Delhi as the place of arbitration.

The Court referred to judgments of the Supreme Court and various High Courts to hold that mere expression 'place of arbitration' cannot be the basis to determine the intention of the parties that they have intended that place as the "Seat of Arbitration". It held that intention of the parties to designate a place as seat of arbitration is to be determined on the basis of other relevant clauses.

The Court referred to the judgment of the Supreme Court in Roger Shashoua v. Mukesh Sharma to hold that a place would be deemed to be the seat of arbitration unless there is any contrary indication or Contrary Indicia. The Court held that conferment of exclusive jurisdiction on the Courts at Gurugram, Haryana is a contrary indication that the parties did not intend to make New Delhi the seat of arbitration.

The Court held that New Delhi would remain the place of arbitration but the seat of arbitration shall be Gurgaon and High Court at Chandigarh.

Accordingly, the Court dismissed the petition for want of jurisdiction.

Case Title: Kush Raj Bhatia v. DLF Power and Services Limited

Citation: 2022 LiveLaw (Del) 978

Counsel for the Petitioner: Mr. Akhil Sachar, Ms. Sunanda Tulsyan & Mr. Sangram Singh, Advocates.

Counsel for the Respondent: Ms. Meghna Mishra, Mr. Ankit Rajgarhia & Mr. Tarun Sharma, Advocates.

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