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2024 Supreme(Ker) 1693

IN THE HIGH COURT OF KERALA AT ERNAKULAM
T.R. RAVI, J.
Bhagyasurya Engineers and Contractors Private Limited - Appellant
Versus
Siemens Limited - Respondent
A.R. No. 32 of 2023
Decided On : 30-04-2024

Advocates Appeared:
For the Appellants : Liza Meghan Cyriac, Jolly John
For the Respondents: Aadithyan S. Mannali, Parvathy Kottol

Jurisdiction for arbitration must align with the agreed seat specified in the contract, ensuring only that court adjudicates related matters.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11(5) - Jurisdiction - Appointment of arbitrator - Respondent contended jurisdiction lies in Mumbai based on agreement for arbitration seat, which was contested by petitioner citing local jurisdiction- Court followed principle that where contract specifies jurisdiction, only that court has jurisdiction. (Paras 2, 6, 7)

(B) Contractual Interpretation - The terms agreed upon in the Standard Terms and Conditions clearly establish intent for arbitration seat at Mumbai, eliminating doubts about consent for jurisdiction. (Paras 3, 4, 7)

Facts of the case:
The petitioner sought arbitration appointment under the Act. Respondent countered, citing a contractual agreement designating Mumbai for arbitration, which the petitioner contested as limiting their access to local courts.

Findings of Court:
The court found that agreement terms unequivocally indicated agreement for seat of arbitration at Mumbai.

Issues: The primary issue was whether the High Court had jurisdiction to entertain the arbitration application despite the agreement specifying the arbitration seat at Mumbai.

Ratio Decidendi: The court affirmed the position that specified arbitration seats in contracts dictate jurisdictional authority of courts, overriding arguments presented for local jurisdiction based on the cause of action.

Result: Arbitration request dismissed.

ORDER :

1. Heard the counsel for the petitioner and counsel for the respondents.

2. The petitioner has filed the arbitration request seeking the appointment of an Arbitrator, invoking Section 11 (5) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act). The respondent objects to the request on the ground that as per the agreement between the parties, the seat of Arbitration is at Mumbai. It is contended that this Court does not have jurisdiction to consider an application under Section 11 (5) of the Act.

3. The respondents entered into an agreement with the KSEB for the construction of Air Insulated Substations at Manjeri, Chalakudy, Kothamangalam, and Chithirapuram. The respondents thereafter floated enquiry to various subcontractors for procurement and construction of civil works for the project. Ext.P2 is the minutes of a meeting held on 9.7.2018 and 10.7.2018 between the officers of the petitioner and the respondents. A reading of the minutes would show that the minutes is not intended to be a confirmation of the order and that the order will be decided only after another meeting which was scheduled before 13.7.2018. It is also stated that the annexures to the minutes are an integral part of the contract and that other terms and conditions are based on the Standard Terms and Conditions (STC) finally concluded, signed off, and attached as reference. STC has been produced as Ext.P3. Serial No.32 of Ext.P3 shows that the petitioner agreed to Arbitration at Mumbai. It can be seen from Ext.P3 that wherever the petitioner wanted modification to the STC, the same has been specifically stated. With regard to Arbitration at Mumbai, all that is stated is “agreed.”

4. The respondent issued a purchase order for civil work at Manjeri site from its Mumbai office on 25.7.2018 and for civil work at Chalakudy site from its Mumbai office on 21.11.2018. The copies of the purchase orders have been produced by the respondents along with their counter affidavit as Exts.R1(c) and R1(d). The General Terms and Conditions in the Purchase orders specifically state that the current General Terms and Conditions (GTC) will apply to the purchase orders and that the GTC can be downloaded from the website. The petitioner accepted the purchase orders and proceeded to carry out the work. The copy of the GTC has been produced as Ext.R1(e) along with the counter affidavit. Clause 25 of Ext.R1(e) deals with “Dispute Resolution”. It says that the seat of arbitration shall be Mumbai, that the language to be used in Arbitration shall be English, and that each party submits to the jurisdiction of the Courts of Mumbai for the purposes only of compelling compliance with the arbitration provisions and for enforcement of any arbitration award made, in accordance with the provision.

5. The counsel for the petitioner relied on the judgment of the Hon’ble Supreme Court in Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar Chatterjee , 2022 SCC Online SC 568 to contend that an application under Section 11 (6) cannot be moved in any High Court in India irrespective of its territorial jurisdiction and that the provision has to be harmoniously read with Section 2 (1)(e) of the Act. It is submitted that when harmoniously read, the application has to be moved in a High Court with supervisory jurisdiction. The counsel submits that the subject matter of the case comes under the jurisdiction of the High Court of Kerala and all elements pertaining to the cause of action, have arisen in Kochi, and Ext.R1(a) has been signed at the office of the respondents in Kochi. The petitioner contends that there has been no agreement on an exclusive jurisdiction clause and the agreement is only as to the place of meeting as provided in Section 2 0(1) of the Act. It is also contended that if an arbitration clause contained in GTC is to be read into the contract, such incorporation should be as per Section 7 (5) of the Act and that there is no mention of arbitration in the p

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