2017 Supreme(Bom) 845

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.C. GUPTE, J.
Municipal Corporation for the City of Kalyan & Dombivli – Petitioner
Versus
Rudranee Infrastructure Ltd. – Respondent
Arbitration Petition Nos. 372, 373 of 2016 with Notice of Motion (L) No. 1302 of 2016 with Miscellaneous Application No. 193 of 2016
Decided On : 05-07-2017

Headnote:Arbitration & Conciliation Act, 1996 - Sections 2(1)(b), 28 and 42-Jurisdiction of District Court.-Where application was made before Court at Thane prior to arbitration petitions therefore District Court of Thane has crucial jurisdiction over award within meaning of Section 42 r/w Section 2(1)(c) of Act.

       In the premises, the combined effect of the law laid down by the Supreme Court in the cases of Indus Mobile and Associated Contractors (supra), does not imply ouster of jurisdiction of the District Court at Thane. As noted above, it is not in dispute that the cause of action did arise in Thane and application/s under Part-I was/were in fact made before the Court at Thane prior to the present arbitration petitions. The District Court at Thane, accordingly, has crucial jurisdiction over the award within the meaning of Section 42 read with Section 2(1)(e) of the Act. It is the only Court to exercise jurisdiction in any challenge to the arbitral award, and not the Court.

       Arbitration & Conciliation Act, 1996 - Sections 20 and 42-Seat of Arbitration.-Arbitral Forum is free to hold sittings at any place other them seat of arbitration, designated by parties by their contract.

       Supreme Court in the case of Indus Mobile has indeed laid down as a matter of law that any agreement between the parties as to the seat of arbitration is in the nature of an exclusive jurisdiction clause. This exclusive jurisdiction clause would then oust the jurisdiction of any other Court having concurrent jurisdiction. Further, such exclusive jurisdiction clause would forbid Section 42 having any play for the purpose of determination of jurisdiction of the Court. As held by the Supreme Court in the case of State of West Bengal v. Associated Contractors, 2015 (3) Mh LJ (SC) 9 : (2015) 1 SCC 32, where the agreement between the parties restricted jurisdiction to only one particular Court out of Courts having concurrent jurisdiction, that Court alone would have jurisdiction, since neither Section 31(4) nor Section 42 contains a non obstante clause wiping out a contrary agreement between the parties.

       In other words, if there is a contrary agreement between the parties conferring exclusive jurisdiction on one particular Court, it is that Court and that Court alone which will entertain any challenge to an arbitral award. There is no difficulty thus far. The difficulty arises when Court come to consider whether or not there is indeed a seat of arbitration fixed or agreed between the parties in the present case. It is important to note that a seat of arbitration, as observed by the Supreme Court in case of Indus Mobile, is a place chosen by or on behalf of the parties; it is designated either in the arbitration agreement or in the terms of the reference or reflected in the minutes of proceedings or in some other way as "place or seat of arbitration." As far as the agreement between the parties in the present case is concerned, there is indeed no place of arbitration chosen. If at all, the agreement points to a seat outside Mumbai inasmuch as the jurisdiction to arbitrate, under the agreement, is conferred on the Commissioner of Municipal Corporation for the cities of Kalyan and Dombivli, whose seat is indisputably beyond the city of Mumbai. Senior counsel appearing for the petitioner, however, submits that in the face of this agreement, when this Court was approached under Section 11 of the Act, an independent arbitrator was chosen.

       It is submitted that this Arbitrator held the proceedings of the reference in Mumbai, with the concurrence of the parties and also declared his award in Mumbai. Counsel submits that there being nothing contrary either in the agreement or in the minutes of proceedings or otherwise, the very fact that the meetings in the arbitration reference were held, and the award was made, in Mumbai, fixes the seat of arbitration in Mumbai. Court is afraid that is not a correct way of ascertaining the seat of arbitration. The seat of arbitration, in the context of fixation of jurisdiction of the trial Court, is not the same as the venue where the arbitral forum held its sittings or the place where it made its award.

       In fact, there is a well-known distinction between the venue of arbitration and seat of arbitration. Even if the parties by their contract designate any place as the seat of arbitration, the arbitral forum is free to hold sittings at any place other than the seat of arbitration. For that matter, all sittings can be held and even an award can be made, at a location outside the place of seat of arbitration. In the face of this distinction, the simple fact of conduct of arbitration reference or making of an award at a particular place, in this case, Mumbai, is neither here nor there.

       In the present case, the seat of arbitration having not been designated either in the contract between the parties or in the terms of the reference or in the minutes of proceedings or otherwise, the city of Mumbai cannot be termed as the seat of arbitration, going by the sheer conduct of meetings in the reference there. Even there, as a matter of fact, it is not disputed that some of the meetings in the arbitration references were actually held in Thane, within the jurisdiction of the District Court at Thane, though even that fact, on the reasoning discussed above, is hardly relevant.

       Arbitration & Conciliation Act, 1996 - Section 42-Jurisdiction of Court.-An exclusive jurisdiction of arbitrator would oust jurisdiction of any other Court having concurrent jurisdiction.