1. Arbitration agreement silent on seat — First arbitrator determines place of arbitration under Section 20(2), Arbitration and Conciliation Act, 1996 — Subsequent arbitrator conducts proceedings elsewhere. (Para 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 )
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2022 Supreme(SC) 466
SUPREME COURT OF INDIA
AJAY RASTOGI, SANJIV KHANNA, JJ.
BBR (India) Private Limited – Appellant
Versus
S.P. Singla Constructions Private Limited – Respondent
Civil Appeal Nos. 4130-4131 of 2022 (Arising out of Special Leave Petition (Civil) Nos. 30019-30020 of 2019)
Decided On : 18-05-2022
Advocates appeared:
For the Petitioner(s):Kunal Verma, Advocate
For the Respondent(s):Ratin Rai, Anirudh Wadhwa, Shivam Singh, Ritika Sinha, Tahira Kathpalia, Bharghav Thali, Anushka Pandey, Jaideep Khanna, Hamza Tariq, Gopal Singh, Advocates
For the Petitioner(s):Kunal Verma, Advocate
For the Respondent(s):Ratin Rai, Anirudh Wadhwa, Shivam Singh, Ritika Sinha, Tahira Kathpalia, Bharghav Thali, Anushka Pandey, Jaideep Khanna, Hamza Tariq, Gopal Singh, Advocates
The jurisdictional seat of arbitration was Panchkula in Haryana, and not Delhi, as the arbitrator had fixed the jurisdictional seat under Section 20(2) of the Act before any party had moved the court under the Act. The courts in Delhi would not get jurisdiction as the jurisdictional seat of arbitration is Panchkula and not Delhi.
Headnote:
arbitration - jurisdictional seat of arbitration - Arbitration and Conciliation Act, 1996 - Section 20, Section 42 - The court held that the jurisdictional seat of arbitration was Panchkula in Haryana, and not Delhi, as the arbitrator had fixed the jurisdictional seat under Section 20(2) of the Act before any party had moved the court under the Act. The courts in Delhi would not get jurisdiction as the jurisdictional seat of arbitration is Panchkula and not Delhi.
Fact of the Case:
The appellant and the respondent had entered into a contract with an arbitration clause for resolution of disputes by a sole arbitrator. The arbitration clause did not stipulate the seat or venue of arbitration. Disputes arose between the parties, and the matter was referred to arbitration. The first arbitrator fixed the venue of the proceedings at Panchkula in Haryana. After the recusal of the first arbitrator, the new arbitrator conducted the arbitration proceedings at Delhi. The respondent filed an application for interim orders under Section 9 of the Arbitration and Conciliation Act, 1996 before the Additional District Judge, Panchkula, and the appellant filed a petition under Section 34 of the Act before the Delhi High Court. The question of the jurisdictional seat of arbitration assumed importance, which must be appropriately answered.
Finding of the Court:
The court held that the jurisdictional seat of arbitration was Panchkula in Haryana, and not Delhi, as the arbitrator had fixed the jurisdictional seat under Section 20(2) of the Act before any party had moved the court under the Act. The courts in Delhi would not get jurisdiction as the jurisdictional seat of arbitration is Panchkula and not Delhi.
Issues: The main issue was whether conducting the arbitration proceedings at Delhi, owing to the appointment of a new arbitrator, would shift the ‘jurisdictional seat of arbitration’ from Panchkula in Haryana, the place fixed by the first arbitrator, for the arbitration proceedings.
Ratio Decidendi: The court held that once the jurisdictional ‘seat of arbitration’ has been fixed by the arbitral tribunal under Section 20(2) of the Act, it should remain static and fixed. The place or the venue fixed for arbitration proceedings, when sub-section (2) of Section 20 applies, will be the jurisdictional ‘seat’ and the courts having jurisdiction over the jurisdictional ‘seat’ would have exclusive jurisdiction. The court also emphasized that the aspect of certainty as to the court's jurisdiction must be given and accorded priority over the contention that the supervisory courts located at the place akin to the venue where the arbitration proceedings were conducted or substantially conducted should be preferred.
Final Decision: The court dismissed the appeals without any order as to costs.
Legal Category Hierarchy
- practice and procedure
Table of Contents
2. Whether the appointment of a new arbitrator and conducting proceedings at a different location shifts the jurisdictional seat of arbitration from the place fixed by the first arbitrator. (Para 2 , 24 , 27 , 28 )
3. Distinction between jurisdictional seat and venue — Seat fixed under Section 20(2) remains static — Change of venue for convenience does not relocate the jurisdictional seat. (Para 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 25 , 26 , 27 )
4. Seat determined by tribunal under Section 20(2) remains fixed unless parties expressly agree otherwise; subsequent change of venue does not shift the jurisdictional seat. (Para 23 , 24 , 28 , 29 )
5. Appeals dismissed — Jurisdictional seat remains at the place fixed by the first arbitrator. (Para 33 )
6. What is the distinction between the jurisdictional seat and the venue of arbitration under the Arbitration and Conciliation Act, 1996?
The seat is the center of gravity and determines the jurisdictional court for supervisory control. The venue is a convenient location for meetings, hearings, or inspections and does not, by itself, determine the jurisdictional seat. (Para 15 , 16 , 17 , 25 )
7. Can the jurisdictional seat of arbitration be shifted if a subsequent arbitrator conducts proceedings at a different location?
No. Once the seat is fixed by the tribunal under Section 20(2), it remains static. A change in the location of hearings is treated as a change of venue, not a relocation of the jurisdictional seat, unless parties expressly agree to change the seat. (Para 24 , 25 , 28 , 29 )
8. How does Section 42 of the Arbitration and Conciliation Act, 1996, affect the jurisdiction of courts once a seat is determined?
Section 42 prevents conflicts of jurisdiction by vesting exclusive supervisory jurisdiction in the court where the seat is located. Once the seat is determined under Section 20(2), that court alone has jurisdiction over all subsequent applications. (Para 29 , 30 , 31 , 32 )
9. How is the seat of arbitration determined when the arbitration agreement is silent on the matter?
Under Section 20(2), the arbitral tribunal determines the place of arbitration considering the circumstances and convenience of parties. This determined place becomes the jurisdictional seat by default. (Para 16 , 21 , 22 , 23 )
JUDGMENT :
Sanjiv Khanna, J.
Leave granted.
2. The short and interesting issue which arises in the present appeals is – whether conducting the arbitration proceedings at Delhi, owing to the appointment of a new arbitrator,1[Mr. Justice (Retd) T.S. Doabia] would shift the ‘jurisdictional seat of arbitration’ from Panchkula in Haryana, the place fixed by the first arbitrator,2[Mr. Justice (Retd.) N.C. Jain] for the arbitration proceedings?
3. Before we refer to the statutory provisions and the case law precedents, facts in brief, relevant to decide the aforesaid question, are required to be stated. The appellant – BBR (India) Private Limited, and the respondent – S.P. Singla Constructions Private Limited, had entered into a contract dated 30th June 2011, under which the appellant was required to supply, install and undertake stressing of cable strays for the 592 metre long cable stay bridge being constructed by the respondent over the river Ravi at Basouli, Jammu and Kashmir. Letter of intent dated 30th June 2011 issued under the contract had an arbitration clause for resolution of disputes by a sole arbitrator, which reads thus :
“Dispute Resolution and Arbitration
Save where the decision of the contractor is final and binding on the subcontract any dispute difference arising between the contractor and sub-contractor relating to any matter. In first instance shall be attempted to be resolved by the arbitration of the sole arbitrator to be appointed by the managing director of S.P. Singla Constructions Pvt. Ltd.
This letter of intent is being issued to you in two original you are requested return one original duty signed in token of your acceptance, which shall constitute a valid agreement for the work till such time a formal agreement is signed between you and us.”
4. The arbitration clause is silent and does not stipulate the seat or venue of arbitration. The contract and letter of intent were executed at Panchkula in Haryana. The corporate office of the respondent is also located at Panchkula. However, the registered office of the appellant is located in Bengaluru, Karnataka.
5. As disputes arose between the parties, the matter was referred to arbitration, and Mr. Justice (Retd.) N.C. Jain was appointed as the sole arbitrator. In the first sitting held on 5th August 2014, the arbitral tribunal held that the venue of the proceedings would be H.No. 292, Sector-6, Panchkula, Haryana. The respondent was not present at the proceedings and had submitted a written request for an adjournment, which request was accepted. Neither party had objected to the place of arbitration proceedings as fixed by the arbitral tribunal. Arbitration proceedings were thereafter held at H.No. 52, Sector-8A, Chandigarh, on 16th December 2014, where the parties were directed to complete the pleadings, and the matter was adjourned for the framing of issues on 22nd February 2015. In the proceedings held on 29th May 2015, Mr. Justice (Retd.) N.C. Jain recused recording that he did not want to continue as the arbitrator for personal reasons. The records received thus far would be handed over to the new arbitrator. Pleadings were completed by then.
6. Thereupon, Mr. Justice (Retd.) T.S. Doabia took over as the sole arbitrator and recorded his consent in this regard in the first procedural order dated 30th June 2015. The order stated that the venue of the proceedings would be Delhi. Apparently, the appellant was not present and accordingly, the respondent was directed by the arbitral tribunal to take steps to intimate the appellant.
7. The next order dated 18th July 2015 mentions that the parties had filed the claim petition and the statement of defence along with the counterclaim before Mr. Justice (Retd.) N.C. Jain. Rejoinder had also been filed before the previous arbitrator. The parties were directed to file their evidence by way of affidavits for which timelines were fixed. The records from the previous arbitrator were required to be collected by the respondent and
