A court has jurisdiction to appoint an arbitrator if any part of the cause of action arises within its limits, even if a pending NCLT application exists.

ORDER

This petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (in short “the Act”) seeking for appointment of an Arbitrator by this Court.

2. There seems to be a dispute between the petitioner and the respondent arising out of the Memorandum of Understanding (MoU) dated 20.06.2016. There exists an arbitration clause in the said MoU dated 20.06.2016 and the same is extracted hereunder:-

“24. All dispute, differences and/or any claims those may arise between the parties against each other will be resolved by a Sole Arbitrator, to be appointed on mutual agreement, within 30 days, from the date on which a party communicates such dispute difference or claim to the other party and if no such agreement could be reached within such date, the sole arbitrator will be appointed following the provisions in Arbitration and Conciliation Act, 1996 , as modified from time to time.

The provisions of Arbitration and Conciliation Act, 1996 , as modified from time to time will be applicable to the said arbitration proceedings.”

3. The petitioner has invoked arbitration in accordance with Section 21 of the Act by issuing notice to the respondent on 29.11.2024. Admittedly, no reply was sent by the respondent to the arbitration invocation notice dated 29.11.2024 sent by the petitioner.

4. The respondent has raised the following objections:-

(a) The MoU dated 20.06.2016 was entered into only at Mumbai and therefore, no part of cause of action arose within the jurisdiction of this Court. Therefore, this Court does not have territorial jurisdiction to decide this petition.

(b) The respondent has already approached the National Company Law Tribunal (NCLT) and has filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 , against the petitioner and therefore, this petition is not maintainable.

5. With regard to the objections raised by the respondent for the maintainability of this petition before this Court, the learned counsel for the petitioner drew the attention of this Court to the MoU dated 20.06.2016, which is the subject matter of the dispute, and would submit that since the petitioner is having its office at Chennai and has signed the MoU dated 20.06.2016 also only at Chennai and part payments were also made by the petitioner to the respondent only from Chennai and the arbitration clause contained in the MoU dated 20.06.2016 has not stipulated the seat of the arbitration, a part of cause of action arose within the jurisdiction of this Court and therefore, this Court is having the territorial jurisdiction to entertain this petition.

6. The learned counsel for the petitioner drew the attention of this Court to a decision of the Hon'ble Supreme Court in the case of Alchemist Ltd. and another Vs. State Bank of Sikkim and others [2007 (11) SCC 335] and would submit that as held in the said decision, even if a small fraction of cause of action arises within the jurisdiction of the Court, the Court would have territorial jurisdiction to entertain the petition. According to him, since the MoU dated 20.06.2016 was signed by the petitioner only at Chennai and the petitioner is having its office at Chennai and part payments were also made by the petitioner to the respondent only at Chennai, this Court is having territorial jurisdiction to decide this petition.

7. On the other hand, the learned counsel for the respondent drew the attention of this Court to a judgment of the Hon'ble Supreme Court in the case of Ravi Ranjan Developers Pvt Ltd Vs. Aditya Kumar Chatterjee [ 2022 SCC Online SC 568 ] and would submit that as per the said decision, Section 11(6) of the Act has to be harmoniously read with Section 2(1)(e) of the Act and construed to mean, a High Court which exercises superintendence/supervisory jurisdiction over a Court within the meaning of Section 2(1)(e) of the Act. Therefore, according to him, since the contract was entered into only at Mumbai, High Court of Bombay alone has got territorial juri