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IN THE HIGH COURT OF JUDICATURE AT MADRAS
P.T. ASHA, J.
M/s. Balapreetham Guest House Pvt Ltd represented by its Authorised Signatory Arunjitkaurkohli – Appellant
Versus
Mypreferred Transformation and Hospitality Pvt. Ltd., 'known as' “Alcott Town Planners Private Limited”, (Under the Brand Name OYO) – Respondent
O.P.No. 438 of 2020 & A. Nos. 2723, 2108 & 2687 of 2020
Decided On : 19-03-2021
Arbitration and Conciliation Act, 1996 – Sections 9, 11, 2, 20, 31, 17 – Violation of the Agreement – Arbitrator – Appointment – Petition filed under Section 11 of the Arbitration and Conciliation Act, 1996, to appoint an arbitrator to arbitrate over the dispute arising out of the violation of the Agreement
Finding of court: Considering the apparent conflict in respect of these 2 clauses the two have to be harmoniously constructed to give meaning to both. – The rule of harmonious construction is to harmonise and not to destroy and while interpreting the clauses Courts have to presume that the parties had inserted every clause thereof for a purpose and therefore attempt to give effect to both. – A reading of the 2 clauses would indicate that the parties had agreed that in case of a cause of action arising from out of the agreement then the Courts at Chennai alone will have jurisdiction, if parties abandon their right to arbitrate the dispute and file a civil suit. – Latter clause viz; 10.2 and 10.3 relates to disputes between the parties arising out of or in connection with the agreement and parties have agreed to resolve their disputes through Arbitration and have agreed that the seat of such Arbitral proceedings will be New Delhi. – Therefore, the two clauses can be harmoniously constructed without one doing violence to the other. – Even if court were to assume that the two clauses are in conflict with each other the same can be resolved by considering the law laid down by the Supreme Court. – The Hon'ble Supreme Court has in the judgments referred above placed importance on the juridical seat to confer jurisdiction on Courts in the case of Arbitration Proceedings. – In the Judgment in BGS Soma the learned Judges had held that the very fact that parties have chosen a place to be the seat necessarily implies that both parties have agreed that the Courts at the seat would have jurisdiction over the entire arbitral process. – Therefore, on account of a conspectus of the above judgments of the Hon'ble Supreme Court, wherein emphasis and importance has been given to the juridical seat, in the instant case the Court having supervisory jurisdiction is the Courts where parties have agreed would be the place of arbitration. – Relying upon the judgment BGS Soma in the case on hand since parties herein have agreed to have the arbitration proceedings at New Delhi, the “seat” is at New Delhi. Consequently only the High Court at Delhi would have the jurisdiction over the arbitral proceedings. – Therefore, the proceedings before this Court is without jurisdiction and therefore stands dismissed. – Respondent has already moved the High Court of Delhi for appointment of an arbitrator. It is open to the petitioner to file necessary applications for interim measures before the High Court of Delhi under Section 9 of the Arbitration Act or before the Arbitration Tribunal once constituted, under Section 17 of the Arbitration Act.
Result: Order Accordingly
JUDGMENT :
(Prayer: Petition filed under Section 11 of the Arbitration and Conciliation Act, 1996, to appoint an arbitrator to arbitrate over the dispute arising out of the violation of the Agreement dated 30.09.2018.)
1. Despite the definitive pronouncements on the terms “Place”, “Seat” and "Venue" by the Hon'ble Supreme Court through its decisions in BALCO, Indus Mobile Distribution Private ltd., Brahmani River Pellets Limited, BGS SGS Soma JV to name but a few, innovative and incisive arguments continue to engage both the Bench and the Bar. This could probably be on account of the fact that though Judicial pronouncements have been made on seat and place of arbitration, however, the definition of Court as defined in Section 2 (1) (e) of the Arbitration and Conciliation Act, 1996 has not been amended. Therefore, arguments are time and again being addressed in this regard. Since I am considering the Preliminary issue regarding the maintainability I have not traversed into the facts and merits of the case except extracting the arbitration clause in the instant case.
2. As a prelude, the instant petition has been filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996, which hereinafter for the sake of brevity will be referred to as the Act. The respondents have raised the preliminary objection regarding the jurisdiction as it is their case that the seat of arbitration having been agreed to be at New Delhi this Court does not have the jurisdiction to entertain the petition and it is only the Courts at Delhi that has supervisory jurisdiction over the arbitration proceedings. It was also stated that the respondents have moved a similar application before the High Court of Delhi.
3. Useful reference may be made to the following provisions of the Act:
"Section 2 (1) (e): (i) “Court” in the case of an arbitration other than international commercial arbitration, 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;"
“Section 2 (e) (ii): in the case of international commercial arbitration, 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, and in other cases, a High Court having jurisdiction to hear appeals from decrees of Courts subordinate to that High Court.”
"(ii) Section 2 (2): This Part shall apply where the place of arbitration is in India."
"Section 20: Place of arbitration.—
(1) The parties are free to agree on the place of arbitration.
(2) Failing any agreement referred to in sub-section (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 otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property"
"Section 31 (4): The arbitral award shall state its date and the place of arbitration as determined in accordance with section 20 and the award shall be deemed to have been made at that place."
"Section 42: Jurisdiction.—Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdic
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