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2023 Supreme(Del) 325

IN THE HIGH COURT OF DELHI AT NEW DELHI
Yashwant Varma, J.
Inland Waterways Authority of India - Petitioner
Versus
Reach Dredging Ltd. (Rdl) and Gayatri Projects (P) Ltd. (JV) - Respondent
O.M.P. (COMM) 487, 488, 489 of 2022 & I.A. 20823, 20839, 20845 of 2022(Stay), I.A. 20825, 20841, 20847 of 2022 (Delay in Re-filing Pet.)
Decided On : 17-01-2023

Advocates:
Advocate Appeared:
For the Petitioner: Mr. Naveen Chawla and Ms. Monica Madaan, Advs.
For the Respondent: Mr. Shatardu Chakraborty, Mr. Sanjay Mukherjee, Ms. Sonia Dube and Ms. Surbhi Anand, Advs.

Headnote:

The court held that the petitions challenging the validity of the arbitral awards were not maintainable before it as the seat of arbitration was Noida and not Delhi. The court interpreted the arbitration agreement and concluded that Clause 22, which prescribed that courts at Noida alone would have jurisdiction for filing the award and for any other judicial proceedings, was to be read as prescribing the seat of arbitration, while Clause 47.11, which designated Noida/New Delhi as the venue of arbitration proceedings, merely embodied the intent of parties to conduct arbitral proceedings either at Noida or New Delhi.

Fact of the Case:

The petitioners challenged the validity of three arbitral awards dated 28 July 2022. The Inland Waterways Authority of India, the respondent, had issued a Notice Inviting Tenders for dredging operations in the Tantighai-Kani river system in the stretch between Erada – Padanipal falling in the State of Odisha. The arbitration agreement was contained in Clause 47 titled “Settlement of Disputes and Arbitration”. Clause 47.11 specified Noida/New Delhi as the venue of the arbitration proceedings. The hearings in connection with the arbitral proceedings took place in Delhi. The award was drawn and published at Noida, District Gautambudh Nagar falling in the State of Uttar Pradesh. The respondent contended that the petitions were liable to be dismissed as the seat of arbitration was Noida and not Delhi.

Finding of the Court:

The court found that Clause 22, which prescribed that courts at Noida alone would have jurisdiction for filing the award and for any other judicial proceedings, was to be read as prescribing the seat of arbitration, while Clause 47.11, which designated Noida/New Delhi as the venue of arbitration proceedings, merely embodied the intent of parties to conduct arbitral proceedings either at Noida or New Delhi. The court held that the petitions were not maintainable before it as the seat of arbitration was Noida and not Delhi.

Issues: Whether the petitions challenging the validity of the arbitral awards were maintainable before the court.

Ratio Decidendi: The court held that the seat of arbitration was Noida and not Delhi, and therefore the petitions were not maintainable before it. The court interpreted the arbitration agreement and concluded that Clause 22, which prescribed that courts at Noida alone would have jurisdiction for filing the award and for any other judicial proceedings, was to be read as prescribing the seat of arbitration, while Clause 47.11, which designated Noida/New Delhi as the venue of arbitration proceedings, merely embodied the intent of parties to conduct arbitral proceedings either at Noida or New Delhi.

Final Decision: The court dismissed the petitions and returned them with liberty and right reserved to the petitioners to approach the competent court at Gautumbudh Nagar in the State of Uttar Pradesh.

ORDER :

1. These three petitions under Section 34 of the Arbitration and Conciliation Act, 1996, the Act, assail the validity of the awards dated 28 July 2022. On 09 December 2022 when the petitions were called, a preliminary objection was taken on behalf of the respondents with it being contended that this Court would not have the jurisdiction to entertain the challenge under Section 34 of the Act since Delhi could not be understood as constituting the seat of arbitration. Noticing the preliminary objection which was urged, the Court had on that date passed the following order: -

    “1. A preliminary objection is taken to the institution of the present petitions under Section 34 of the Arbitration and Conciliation Act, 1996 [the 1996 Act] with learned counsel for the respondent asserting that as per Clause 47.1.1 of the Contract, and which comprises the arbitration clause, two competing venues were indicated as being the venue for arbitration, namely, Noida/ Delhi. According to learned counsel, no part of the cause of action as may be generally understood arose within the territorial jurisdiction of this Court. It is pointed out that the work of dredging was carried out in Orissa and that the respondent is situate in the State of West Bengal. In view of the aforesaid, it was his submission that the petition under Section 34 of the 1996 Act had been wrongly instituted before this Court.

2. Learned counsel appearing for the petitioner, on the other hand, would contend that since all proceedings relating to arbitration were conducted in New Delhi, the present Court would have the requisite jurisdiction to entertain these petitions under Section 34.

3. The question which, consequently, arises is whether Delhi was understood to be merely the “venue” for arbitration as opposed to being the “seat”.

4. In order to enable learned counsels to address further submissions on this question, let these petitions be called again on 09.01.2023.”

2. The arbitral proceedings emanate from a Notice Inviting Tenders which was issued by the Inland Waterways Authority of India, the respondent herein, for dredging operations in the Tantighai-Kani river system of NW-5 in the stretch between Erada – Padanipal falling in the State of Odisha.

3. For the purposes of evaluating the correctness of the preliminary objection which stands raised, it would be apposite to extract the two competing clauses in the backdrop of which the question itself stands raised. Under the General Conditions of Contract, GCC, Clause 22 while dealing with the laws governing the contract made the following provisions: -

    “CLAUSE – 22: LAWS GOVERNING THE CONTRACT The Courts at Noida only shall have the jurisdiction for filing the award of the arbitration and for any other judicial proceedings.”

4. The arbitration agreement stood comprised in Clause 47 titled “Settlement of Disputes and Arbitration”. Clause 47.11 which alone would have some bearing is extracted hereinbelow: -

    “47.11 The parties to the agreement hereby undertake to have recourse only to arbitration proceedings under for Arbitration Act 1996 and the venue of the arbitration proceeding shall be Noida/ New Delhi and the parties will not have recourse to Civil Court to settle any of their disputes arising out of this agreement except through arbitration.”

5. On facts it was admitted that the hearings in connection with the arbitral proceedings took place in Delhi. The award dated 28 July 2022 is stated to have been drawn and published at Noida, District Gautambudh Nagar falling in the State of Uttar Pradesh. It is also stated to have been duly stamped in that State.

6. Learned counsel appearing for the respondent contended that Clause 47.11 of the GCC merely designates the venue of arbitration to be either Noida or New Delhi. However, according to learned counsel, the venue restriction clause as comprised in Clause 22 would clearly establish that the seat of arbitration must be understood to be Noida only. Apart from the above, lear

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