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IN THE HIGH COURT OF DELHI
Vibhu Bakhru, J.
Balancehero India Private Limited - Appellant
Versus
Arthimpact Finserve Private Limited - Respondent
Arb.P. 516 of 2020
Decided On : 22-03-2021
| Table of Content |
|---|
| 1. loan agreement formation and default. (Para 1 , 2 , 3) |
| 2. jurisdictional arguments regarding the arbitration. (Para 4 , 7) |
| 3. analysis of arbitration jurisdiction based on seat. (Para 5 , 6 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15) |
| 4. dismissal of the petition. (Para 16) |
ORDER
Vibhu Bakhru, J. The petitioner has filed the present petition, inter alia, praying that a Sole Arbitrator be appointed to adjudicate the disputes that have arisen between the parties.
2. On 01.10.2019, a Loan Agreement was entered into between the parties whereby the petitioner granted an unsecured loan of Rs.50 lakhs to the respondent for a period of six months.
3. The petitioner alleges that the respondent defaulted in repaying the loan. Accordingly, it issued a legal notice dated 02.07.2020 demanding a sum of Rs.53,66,250/- as against the aforesaid loan. The petitioner alleges that it did not receive any response to the said legal notice. Thereafter, on 06.08.2020, the petitioner invoked the Arbitration Clause. However, according to the petitioner, this also did not elicit any response from the respondent.
4. The learned counsel appearing for the respondent submits that the present petition is not maintainable as the seat of arbitration is Gurugram, Haryana and this Court does not have the jurisdiction to entertain the present petition.
5. The said Loan Agreement includes an Arbitration Clause that reads as under:
"10. GOVERNING LAW AND DISPUTE RESOLUTION
10.1. This Agreement shall be governed by and construed in accordance with the laws of India, without regard to its rules of conflict of lawn and subject to Clause 12.3, competent courts at New Delhi shall have exclusive jurisdiction to entertain any dispute or suit arising out of or in relation this Agreement.
10.2. Any dispute, difference relating to interests, controversy or claims arising out of or relating to this Agreement or the breach, termination or invalidity thereof, shall be settled by the parties amicably in the first instance. The attempt to bring about an amicable settlement shall be treated as having failed as soon as one of the Parties hereto, after reasonable attempts, which shall continue for not less than 30 (thirty) days, gives a notice to this effect, to the other party in writing.
10.3. In case of such failure, the dispute shall upon the expiry of the aforesaid period, be referred to arbitration to be adjudicated by sole arbitrator to be appointed and nominated by both parties on mutual basis. In the event the parties are unable to mutually agree on the identity of the sole arbitrator in the manner specified above, then the arbitration proceedings shall be conducted by 3 arbitrators of which one arbitrator shall be appointed by the Borrower, the other arbitrator by the Lender and both such arbitrators appointed shall mutually appoint the third presiding arbitrator. The dispute shall be settled in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (as amended). The seat of Arbitration shall be at Gurugram, Haryana. The arbitral proceedings shall be conducted in the English language. The award of the arbitral tribunal shall be final, conclusive and binding upon the parties."
6. Whilst Clause 10.1 of the Loan Agreement between the parties records that Courts in Delhi would have exclusive jurisdiction to entertain any dispute or suit arising out or in relation to the Loan Agreement; Clause 10.3 of the Loan Agreement expressly provides that the seat of arbitration shall be at Gurugram, Haryana.
7. The Loan Agreement was executed at Mumbai. The petitioner has its registered office at Mumbai and the respondent has its office in Gurugram, Haryana. It is not disputed that no part of the cause of action has arisen within the territorial jurisdiction of this Court. Notwithstanding the above, the learned counsel appearing for the petitioner submits that this Court would have jurisdiction in view of Clause 10.1 of the Loan Agreement, which
The seat of arbitration, once agreed upon, confers exclusive jurisdiction to the designated court, preventing the invocation of other jurisdictions.
The main legal principle established in the judgment is that the court at the seat of arbitration has exclusive jurisdiction over all applications under Part I of the Arbitration and Conciliation Act....
The main legal point established in the judgment is that the designation of the seat of arbitration confers exclusive jurisdiction on the courts at that seat, influencing the court's decision on juri....
The main legal point established in the judgment is the significance of the seat of arbitration in conferring jurisdiction on Courts in arbitration proceedings.
The jurisdiction for appointing an arbitrator lies with the court where the principal agreement was executed, as per Section 11(6), despite a venue specified in an ancillary agreement.
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