2019 Supreme(SC) 1350

SUPREME COURT OF INDIA
R.F. NARIMAN, ANIRUDDHA BOSE, V. RAMASUBRAMANIAN, JJ.
BGS SGS Soma JV – Petitioner
Versus
NHPC Ltd. – Respondent
Civil Appeal No. 9307, 9308, 9309 of 2019 (Arising Out of SLP (Civil) No.25618, 25848, 28062 of 2018)
Decided On : 10-12-2019

IMPORTANT POINTS
Appeal u/s 37 lies against orders setting aside, or refusing to set aside awards under Section 34.
A step towards an interim order would not amount to granting, or refusing to grant, any measure.
Judgments of Courts should neither be construed as statutes nor read as Euclid’s theorems. Judgment must be read as a whole so that conflicting parts may be harmonised to reveal the true ratio of the judgment.
Section 20(1) and (2) refer to “seat” of the arbitration, and Section 20(3) refers only to the “venue” of the arbitration.
Choosing the seat of arbitration amounts to an exclusive jurisdiction clause, insofar as the Courts at that seat are concerned.
Section 42 is meant to avoid conflicts in jurisdiction of Courts by placing the supervisory jurisdiction over all arbitral proceedings in connection with the arbitration in one Court exclusively.
The place where the arbitration proceedings as a whole, including making of an award are held is the seat of arbitration.

Headnote:

(a) Arbitration and Conciliation Act, 1996 - Section 37 r/w section 13, Commercial Courts Act, 2015 - Section 13(1) merely provides the forum of filing appeals, there is no independent right of appeal u/s 13(1) - Appeal u/s 37 lies against orders setting aside, or refusing to set aside awards under Section 34 - Instantly the Commercial Court held that it had no jurisdiction to decide application u/s 34 and directed the petition to be filed before competent court - There is no adjudication u/s 34 - Application u/s 34 has not been refused - Application u/s 37 not maintainable. (Para 16)

(b) Arbitration and Conciliation Act, 1996 - Section 9 - A step towards an interim order would not amount to granting, or refusing to grant, any measure. (Para 22)

(c) Arbitration and Conciliation Act, 1996 - Section 2(1)(e) and Section 2(2) r/w Sections 20, 31(4) and 42 - Arbitral award should not only to state its date, but also the place of arbitration as determined in accordance with Section 20 - “Court” means only principal civil court and the High Court in exercise of their original ordinary civil jurisdiction - Concept of juridical seat of the arbitral proceedings and its relationship to the jurisdiction of competent courts - Unclear - Developed in accordance with international practice on a case by case basis by Supreme Court. (Para 31, 34)

(d) Interpretation of judgment - Judgments of Courts should not be construed as statutes - Also, not to be read as Euclid’s theorems - All observations made must be read in the context in which they appear - Judgment must be read as a whole so that conflicting parts may be harmonised to reveal the true ratio of the judgment - Failing which it should be seen whether a ratio decidendi can be culled out without the conflicting portion - If not, the point of conflict loses its binding nature. (Para 43, 45)

(e) Arbitration and Conciliation Act, 1996 - Section 2(1)(e) and Section 2(2) r/w Sections 20, 31(4) and 42 - Seat and venue of arbitration - The Act gives recognition to party autonomy. (Para 46)

(e) Arbitration and Conciliation Act, 1996 - Section 2(1)(e) r/w Section 20 - Section 20(1) and (2) refer to “seat” of the arbitration, and Section 20(3) refers only to the “venue” of the arbitration - when a seat is agreed upon by the parties or in absence of an agreement the Arbitral tribunal determined the seat, Courts at the seat alone would be competent for the purpose of interim orders and challenges to the award. (Para 47, 50)

(f) Arbitration and Conciliation Act, 1996 - Section 2(1)(e) r/w Section 20 - Choosing the seat of arbitration amounts to an exclusive jurisdiction clause, insofar as the Courts at that seat are concerned. (Para 52, 55)

(g) Arbitration and Conciliation Act, 1996 - Section 42 - Meant to avoid conflicts in jurisdiction of Courts by placing the supervisory jurisdiction over all arbitral proceedings in connection with the arbitration in one Court exclusively. (Para 61)

(h) Arbitration and Conciliation Act, 1996 - Section 2(1)(e) r/w Section 20 - Seat and venue - Expression “venue” of the arbitration proceedings - Not including just one or more individual or particular hearing, but the arbitration proceedings as a whole, including making of an award at that place - That place would be the seat - On the other hand use of expressions like “tribunals are to meet or have witnesses, experts or the parties” where only hearings are to take place in arbitration clause - That place will not be the seat but only a convenient place of meeting, venue. (Para 63, 84)

(i) Arbitration and Conciliation Act, 1996 - Section 20(1) - Dispute with a foreign contractor - Arbitral proceedings agreed to be held at New Delhi/Faridabad - Parties choosing to apply a supranational body of law, namely, UNCITRAL Arbitration Rules, in conjunction with Act, 1996 - Arbitration would be an international commercial arbitration to be decided in India under Act, 1996 - New Delhi or Faridabad would be seat of arbitral proceedings - Instantly proceedings held at New Delhi, and awards were signed in New Delhi - Apparently New Delhi was chosen as the seat of arbitral proceedings - Courts at New Delhi alone would have exclusive jurisdiction over the arbitral proceedings - Part of the cause of action having arisen at Faridabad irrelevant. (Para 98, 99, 100)

Facts of the case:

The Petitioner was awarded a contract for construction of Diversion Tunnels, Coffer Dams, Concrete Gravity Dams, Plunge Pools and Cutoff Walls of Subansiri Lower Hydroelectric Project on river Subansiri. Clause 67.3 of the agreement between the parties provides for dispute resolution through arbitration.

A Notice of Arbitration was issued by the Petitioner to the Respondent, in regard to payment of compensation for losses suffered due to abnormal delays and additional costs as a result of hindrances caused by the Respondent. A three-member Arbitral Tribunal was constituted as per clause 67.3 of the agreement under the Arbitration Act, 1996. The Tribunal delivered its unanimous award at New Delhi on 26.08.2016, by which the claims of the Petitioner aggregating to INR 424,70,52,126.66 (rectified) was allowed. The Respondent filed an application under Section 34 of the Arbitration Act, 1996 seeking to set aside these awards before the Court of the District and Sessions Judge, Faridabad, Haryana. The Petitioner filed an application under Section 151 read with Order VII Rule 10 of the Code of Civil Procedure, 1908 and Section 2(1)(e)(i) of the Arbitration Act, 1996, seeking a return of the petition filed under Section 34 for presentation before the appropriate Court at New Delhi and/or the District Judge at Dhemaji, Assam. After the constitution of a Special Commercial Court at Gurugram, the Section 34 petition filed at Faridabad was transferred to the said Gurugram Commercial Court.

The Special Commercial Court, Gurugram allowed the application of the Petitioner, and returned the Section 34 petition for presentation to the proper court having jurisdiction in New Delhi. The Respondent filed an appeal under Section 37 of the Arbitration Act, 1996 read with Section 13(1) of the Commercial Courts Act, 2015 before the High Court. The High Court held that the appeal filed under Section 37 of the Arbitration Act, 1996 was maintainable, and that Delhi being only a convenient venue where arbitral proceedings were held and not the seat of the arbitration proceedings, Faridabad would have jurisdiction on the basis of the cause of action having arisen in part in Faridabad. Thus the appeal was allowed and the judgment of the Special Commercial Court, Guru-gram was set aside.

Finding of the Court:

Appeals filed in the present case do not fall within Section 37 of the Arbitration Act,1996 and are not maintainable.

New Delhi was seat of arbitration and hence courts at New Delhi alone would have exclusive jurisdiction over the arbitral proceedings.

Result: Appeals allowed.