Point of Law : Section 2(1)(e) of Arbitration Act, 1996 defines 'Court' means principal Civil Court of original jurisdiction in a district, and includes High Court in exercise of its ordinary original civil jurisdiction.

JUDGMENT :

This Original Petition filed under Article 227 of the Constitution of India arises from the order dated 8.10.2018 passed by the Additional District Court-V, Ernakulam, in a petition (A.O.P.No.177 of 2018) filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short “the Arbitration Act, 1996”) holding that the District Court, Ernakulam has territorial jurisdiction to entertain the petition.

2. The essential facts leading to the Original Petition:-

The petitioner is the Southern Railway. The respondent is the licencee of a combined fruit and tea stall at Wadakkancherry Railway Station in Thrissur District. The High Court appointed an Arbitrator to resolve the dispute between the petitioner and the respondent concerning the licence fee payable. The Arbitrator held sittings at Ernakulam and passed the award dated 18.6.2018. The respondent challenged the award under Section 34 of the Arbitration Act, 1996 before the District Court, Ernakulam. The petitioner raised a preliminary objection regarding the territorial jurisdiction of the District Court, Ernakulam to entertain the application under Section 34. The District Court held that it has territorial jurisdiction to entertain the application.

3. Heard Sri. Dinesh Rao A., the learned counsel appearing for the petitioner, Sri. Varghese C. Kuriakose, the learned counsel appearing for the respondent and Sri. G. Sreekumar (Chelur), the Amicus Curiae.

4. The issue: Which Court has territorial jurisdiction to entertain the application filed under Section 34 of the Arbitration Act, 1996 ?

5. The parties had not agreed on the place of arbitration. The Arbitrator determined the place of arbitration as Ernakulam. Both parties participated in the proceedings and the impugned award was passed.

6. Section 2(1)(e) of the Arbitration Act, 1996 defines “Court”, which reads thus:-

“2. Definitions (1) ………………...………………

(e) 'Court' means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;”

7. The term “subject-matter of the arbitration” need not be confused with “subject-matter of the suit” referred to in the above extracted definition. The term “subject-matter” has a reference and connection with the process of dispute resolution between the parties. Undoubtedly the term is intended to identify the Court having supervisory control over the arbitration proceedings. It necessarily refers to a Court, which would essentially be a Court of the seat or place of the arbitration process. The Legislature has intentionally given jurisdiction to two Courts, the Court which would have jurisdiction where the cause of action is located and the Court where the arbitration takes place. This was essential as, in many cases, the arbitration agreement may provide a seat of arbitration at a place that would be neutral to both parties. Therefore, the Court where the arbitration takes place has to exercise supervisory control over the arbitral process. (Vide: Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc. [(2012) 9 SCC 552]).

8. The definition of “Court” as provided in Section 2(1)(e) of the Arbitration Act, 1996 is to be understood keeping in view the provisions in Section 20 of the Act.

Section 20 of the Arbitration Act, 1996 reads thus:-

“20. Place of arbitration.-(1) The parties are free to agree on the place of arbitration.

(2) Failing any agreement referred to in subsection (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.

(3) Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal may, unless othe