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2020 Supreme(Del) 548

IN THE HIGH COURT OF DELHI AT NEW DELHI
V. Kameswar Rao, J.
Goyal Mg Gases Private Limited - Appellant
Versus
Steel Authority Of India - Respondent
Original Miscellaneous Petition (Comm) No. 536 of 2020
Decided On : 18-11-2020

Advocates Appeared:
Simran Mehta, Advocate, Sandeep Sethi, Advocate, Veronica Mohan, Advocate, Deepa Chansoliya, Advocate

The main legal point established in the judgment is that the agreed-upon juridical seat of arbitration and the exclusive jurisdiction clause are binding, and the rendering of the award in a different location does not alter the agreed-upon seat of arbitration.

Headnote:

Arbitration & Conciliation Act - Juridical Seat - Article 25.4 - [ARBITRATION & CONCILIATION ACT] - [Section 34] - [Article 25.4] - The court held that the juridical seat of arbitration was agreed to be at Durgapur, West Bengal, and the exclusive jurisdiction clause was binding. The court also emphasized that the rendering of an award in New Delhi did not alter the agreed-upon seat of arbitration.

Fact of the Case:

The petitioner filed a petition challenging an award dated May 05, 2020, under Section 34 of the Arbitration & Conciliation Act, 1996. The respondent raised a preliminary objection regarding the jurisdiction of the court to entertain the petition, citing an arbitration clause in the Agreement designating Durgapur, West Bengal as the seat of arbitration and conferring exclusive jurisdiction on the courts of Durgapur. The petitioner argued that the arbitration proceedings were held entirely in New Delhi, and the final award was rendered there.

Finding of the Court:

The court found that the parties had agreed to Durgapur, West Bengal as the juridical seat of arbitration, and the exclusive jurisdiction clause was binding. The court emphasized that the rendering of the award in New Delhi did not alter the agreed-upon seat of arbitration.

Issues: The main issue was whether the court had jurisdiction to entertain the petition challenging the award, considering the agreed-upon juridical seat of arbitration and the exclusive jurisdiction clause.

Ratio Decidendi: The court held that the agreed-upon juridical seat of arbitration and the exclusive jurisdiction clause were binding, and the rendering of the award in New Delhi did not alter the agreed-upon seat of arbitration.

Final Decision: The court held that it did not have jurisdiction to entertain the petition and directed the Registry to return the petition to the petitioner for presentation before the appropriate court of jurisdiction.

JUDGMENT

V. Kameswar Rao, J. - This petition has been filed under Section 34 of the Arbitration & Conciliation Act, 1996 (''Act of 1996'', for short) challenging the Award dated May 05, 2020.

2. A preliminary objection has been taken by Mr. Sandeep Sethi, Ld. Sr. Counsel appearing for the respondent that this petition is not maintainable in this Court. In this regard, he stated that the Agreement dated July 20, 2005 (''Agreement'', for short) between the parties contains an arbitration clause in Article 25.4 (''arbitration clause'', for short) which clearly states that (i) the arbitration proceedings shall be held in Durgapur, West Bengal and (ii) the Courts of Durgapur, West Bengal shall have exclusive jurisdiction over all matters of dispute. The parties have expressed their clear and unmistakable intent in writing that the juridical seat of the arbitration shall be at Durgapur, West Bengal with vesting of exclusive jurisdiction on the courts at Durgapur, West Bengal.

3. In the present case while for convenience sake, the hearing of arbitration was held at New Delhi, the juridical seat remained to be Durgapur, West Bengal as per the arbitration clause. The petitioner has failed to disclose any circumstances or any instrument in writing denoting any change in the choice of seat of the arbitration. Further, there was no agreement between the parties to alter the seat of the arbitration. The parties only chose to hold the proceedings in New Delhi for the sake of convenience. He draws the attention of the Court to Article 28.3 of the Agreement, which clearly stipulates that any amendment to the Agreement has to be in writing signed by the representatives of the parties. In the absence of any such agreement in writing, the exclusive jurisdiction and choice of seat clause contained in Article 25.4 is binding on both the parties. Hence, this Court does not have any jurisdiction to entertain the present petition. Mr. Sethi stated that the petitioner has suppressed the fact that the respondent had already invoked the jurisdiction of Commercial Court at Asansol in accordance with Article 25.4 of the Agreement, which was duly served on the petitioner on October 01, 2020.

4. It is the submission of Mr. Sethi that the Courts of the seat of arbitration shall have exclusive jurisdiction to decide petition under Section 34 of the Act of 1996. In this regard, he has relied upon the judgment of the Supreme Court in the case of BGS SGS SOMA JV vs. NHPC, (2020) 4 SCC 234 . According to Mr. Sethi, change of venue does not override choice of seat under arbitration agreement. He also relied upon the judgment of the Supreme Court in the case of Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 , to contend that the fixation of a venue for arbitration for the sake of convenience cannot override a clear and unambiguous choice of the seat under the arbitration agreement itself. He stated that the clear intent of the parties as stated in the arbitration clause in the absence of any ambiguity shall be the determinative test of the seat of arbitration. Mr. Sethi has drawn the attention of the Court to Section 20 of the Act of 1996 which incorporates the principle of party autonomy as the only determinant of the juridical seat of an arbitration. Section 20(3) provides the Tribunal choice of venue for convenience and expeditious conduct of the arbitration. This clearly denotes the legislative intent that changes in venue by the Tribunal for convenience under sub-section (3) does not change the juridical seat of the arbitration determined by parties under sub-section (1). He also relied upon the judgment of the Supreme Court in the case of Videocon Industries Ltd. vs. Union of India, (2011) 6 SCC 161 , to contend that in similar circumstances, the shift of proceedings from Kuala Lumpur to London by parties therein was held to be a change of venue and not of seat of the arbitration. Same principle was applied in Indus Mobile D

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