The designation of the seat of arbitration determines exclusive jurisdiction for challenges to the arbitration award, limiting civil court involvement.

JUDGMENT :

Soumen Sen, J :

1. The present appeal has been preferred against the order dated 30th September 2024 passed by the single judge bench of Hon’ble Justice Sabyasachi Bhattacharya in GA COM 1 of 2024 arising out of AP COM 822 of 2024 wherein the learned single judge refused to adjudicate the application for setting aside of the Award under Section 34 of the Arbitration and Conciliation Act (hereinafter referred to as “the Act”) along with the connected application under Section 9of the Act before this Court due to lack of territorial jurisdiction.

2. The primary issue for consideration in this appeal is whether the City Civil Court or any other civil court in the State of West Bengal would have jurisdiction to entertain an application under Section 34 of the Arbitration and Conciliation Act, 1996 in view of a dispute being raised by the present appellant with regard to the validity of the arbitration agreement.

3. The facts of the case enumerate that the appellant herein is a proprietary concern engaged in the business of construction and transportation i.e, hiring vehicle for carrying goods. It had purchased a vehicle bearing registration No. WB39B9650 i.e., “Dumper” on 21st October, 2020 on hire-purchase basis financed by the respondent. The appellant obtained a loan for an amount of Rs.42,16,095/- out of which he had paid an amount of Rs.28,23,796/- and the balance amount of Rs.13,92,299/-was payable to the respondent. The respondent had invoked the arbitration clause contained in the loan agreement and a notice dated 19 July, 2022 was sent to the appellant but the appellant had admittedly not chosen to participate in the arbitration since he did not consent to the said arbitrator in terms of Section 12(5) of the Arbitration and Conciliation Act. Subsequently an award dated 9th September, 2024 was passed in the arbitration proceeding being arbitration case No. TMFL/295/5792 of 2022 held by Mr. Sachin Gorwadkar, the sole arbitrator.

4. At the stage of entertaining the Section 34 and/or Section 9 application, the learned single judge in the impugned order dated 30th September, 2024 has noted that at the very inception an issue as to the jurisdiction of this Court under Section 34 of the Act as well as the connected application under Section 9 of the Act has been raised. In the present case the appellant has already suffered an Award and irrespective of the contentions of the appellant in respect of the said Award and although the award was passed ex-parte, such an award was equally binding as an uncontested one. It was held by the learned single judge that it was settled position of law that once the seat of arbitration is decided by the parties the provisions of Sections 16 to 20 of the Code of Civil Procedure 1908 would not be a determinant as to the jurisdiction of the arbitral court.

5. The learned judge has observed that although the appellant in this case had disputed the veracity and authenticity of the purported loan agreement between the parties, a copy of the same had been made a part of the record in this court and was the premise of the Award passed against the appellant and hence at this stage the court is only to look into the clauses of the purported document and could not go elsewhere. Since clause 21.1 of the document clearly stated the phrase “Arbitration to be held in Mumbai”, in the absence of any contrary indication throughout the document as to any other place being designated as the seat of arbitration, Mumbai had to be construed to be not merely a “venue” but also the intended seat of arbitration. It was also significantly noted that the limited gateway for the court the enter into the dispute, even if pertaining to fraud, was the territorial jurisdiction envisaged in section 34 read with the definition of “Court” in Section 2(1)(e) of the 1996 Act, and the appellant having failed to cross the hurdle this Court could not entertain the issues including that of fraud in the present proceeding.

6. The le