The main legal point established in the judgment is that the courts at the seat or place of arbitration have territorial jurisdiction to entertain an application under the Arbitration and Conciliation Act, 1996, subject to the provisions of Section 42, regardless of the location of the cause of action or the residence of the respondent.

Badar Durrez Ahmed, ACJ. (Oral)

1. This petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the said Act’) was, as per roster, heard by a learned single Judge of this Court. By an order dated 04.02.2014, the learned single Judge, because he felt that an earlier decision of a single Judge in Sai Consulting Engineers Pvt. Ltd. v. Rail Vikas Nigam Ltd. (OMP No.981/2012 decided on 18.02.2013) required re-consideration, referred the issue with regard to territorial jurisdiction for determination by a larger bench. That is how this petition is before us.

2. The question which needs resolution is whether this court would have territorial jurisdiction to hear the present petition under Section 9 of the said Act when neither the respondents reside in Delhi nor has any part of the cause of action arisen in Delhi, but the arbitration clauses provide that the arbitration proceedings shall be held in New Delhi ? In other words, is the agreed seat or place of arbitration alone sufficient to confer territorial jurisdiction on the courts of that place ?

3. A brief resume of facts would be necessary. The parties had executed two agreements – a Development Agreement and a Sales Agreement both dated 14.09.2011. The Development Agreement was executed between Panasonic Electric Works having its office in Japan and Ion Exchange having its office at Mumbai. By virtue of the Development Agreement, the petitioner was required to develop a water purifier (hereinafter referred to as the “Product”) in terms of Annexure-A to the said agreement, by investing in research and development. Clause 11.6 of the Development Agreement stated that in case of any dispute or difference arising between the parties, the same would be referred to arbitration. It also stipulated that:-

“The seat or legal place of arbitration shall be New Delhi”.

4. Similarly, the Sales Agreement also contained an Arbitration Clause (Clause 36.1) which, inter alia, provided that:-

“The arbitration proceedings shall be held in New Delhi in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any amendment made thereto. The decision of the Arbitrators shall be final and binding upon the parties. The courts of Delhi shall have exclusive jurisdiction to deal with any issue arising out of execution of this Agreement.”

The Sales Agreement was executed between Panasonic India Pvt. Ltd having its office at Gurgaon and Ion Exchange having its office in Mumbai.

5. It is alleged by the petitioner that, pursuant to the execution of the said Agreements, over a span of about 2 years, the petitioner developed the Product for and on behalf of the respondents and delivered all the components to the respondents. It is further alleged that the respondents with a dishonest intent, without making the agreed payments to the petitioner in terms of the Development Agreement, used the Product developed by the petitioner and started manufacturing the product, by engaging another manufacturer.

6. It is in this background that the petitioner filed this petition under Section 9 of the Act seeking interim measures against the respondents. As mentioned above, by an order dated 04.02.2014, the learned single Judge referred the question of jurisdiction to a larger Bench as he felt that the decision in Sai Consulting (supra) required re-consideration.

7. At this juncture, it would be appropriate to refer to the decision of a learned single Judge of this Court in the case of Sai Consulting (supra). After considering the Supreme Court decision in Bharat Aluminium Co. Ltd. v. Kaiser Aluminium Technical Services: 2012 (9) SCC 552, the learned single Judge in Sai Consulting (supra) held as under:-

“17. Clause 16.01 of the contract provides that the arbitration shall take place in New Delhi. The seat of arbitration confers jurisdiction on the courts situated there. This is the view taken by the latest judgment of the Hon’ble Supreme Court in Bharat Alumin