Former Clause In The Agreement Will Prevail Over The Latter Clause In Case Of Inconsistency: Delhi High Court Reiterates

The bench of Justice Chandra Dhari Singh was dealing with the petitions filed under Section 11 and 9 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Court noted that the latter clause contained in the agreement, which conferred jurisdiction on the courts in Gautam Buddha Nagar, was not clear as no clear and unambiguous meaning was given regarding what kind of disputes shall be referred to the courts in the said jurisdiction.

The bench thus concluded that the former clause (arbitration clause), under which the parties agreed to resolve “any” dispute arising under the agreement through arbitration, shall have a prevailing effect over the latter clause.

After certain disputes arose between the petitioner, Sunil Kumar Chandra, and the respondent, M/s Spire Techpark Pvt Ltd, under an agreement, the petitioner invoked the arbitration clause contained in the agreement and filed a petition under Section 11 of the A&C Act before the Delhi High Court seeking appointment of the Arbitrator.

The petitioner also filed a petition under Section 9 of the A&C Act before the Delhi High Court seeking interim measures against the respondent.

The respondent, M/s Spire Techpark Pvt Ltd, argued before the Court that only the courts in Gautam Buddha Nagar would have the jurisdiction to decide the interim reliefs claimed by the petitioner, as stipulated in the relevant clause of the agreement.

Disputing the respondent’s contention, the petitioner, Chandra, contended that as per the relevant clause of the agreement (clause 18.2), it was mutually decided between the parties that any dispute arising out of the agreement would be adjudicated by way of arbitration in New Delhi.

Thus, in the light of the said clause, the following clause of the agreement (clause 18.3), which conferred jurisdiction on the courts of Gautam Buddha Nagar, became invalid, the petitioner pleaded.

It added that since the arbitration has been agreed to be held in New Delhi, the Delhi High Court is competent to grant the relief under Section 9.

While ruling that the law related to the jurisdiction of the court in matters pertaining to arbitration is no longer res integra, the Court reiterated that all matters arising out of an agreement/contract would be decided by the court in whose jurisdiction the seat of arbitration is decided.

Holding that the latter clause (clause 18.3) was ambiguous as no clear meaning was given as to what kind of disputes shall be referred to the court/forum in Gautam Buddha Nagar, the bench concluded that the said latter clause was subject to the arbitration clause, i.e., clause 18.2.

Perusing the arbitration clause contained in the agreement, the Court held that the parties, while entering into the agreement, had the intent of resolving “any” dispute arising out of the agreement by way of Arbitration in New Delhi only.

“It has been held in a catena of judgments by the Hon’ble Supreme Court that where there exists any iota of inconsistency between two provisions of a same instrument, the former clause shall prevail over the latter one. The instant petition has also drawn the attention of the court to reiterate the law of interpretation with respect to the two inconsistent clauses of a same instrument/document/deed,” the Court said.

The Court thus concluded that the arbitration clause (clause 18.2) shall have a prevailing effect over the latter clause (clause 18.3) of the agreement.

“Thus, in light of the detailed discussions above, this court is inclined to hold that clause 18.2 shall have a prevailing effect over the latter clause 18.3 of the agreement dated 26th August 2013 with respect to the mode of dispute resolution. It is further observed that parties have agreed for the arbitration proceedings to take place in New Delhi which can be construed as the “seat” of the arbitration and therefore, this court has the jurisdiction to entertain the present petition,” the Court said.

The Court thus allowed the Section 11 petition and appointed a Sole Arbitrator. In light of the same, the Court disposed of the Section 9 petition by granting liberty to the petitioner to seek the interim reliefs before the Sole Arbitrator in accordance with Section 17 of the A&C Act.

Case Title: Sunil Kumar Chandra versus M/s Spire Techpark Pvt Ltd

Citation: 2023 LiveLaw (Del) 160

Counsel for the Petitioner: Mr. S. D. Singh, Mr. Kamla Prasad, Mr. Jitender Singh, Mr. Kartikay Bhargava and Mr. Siddharth Singh, Advocates

Counsel for the Respondent: Mr. Tarun Singla and Mr. Balasubramanian Ramesh Iyer, Advocates

ClickHere To Read/ Download Order