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IN THE HIGH COURT OF ALLAHABAD
SUBHASH VIDYARTHI J.
M/s Amit Engineering, Mainpuri Thru. Prop. Mr. Amit Dixit – Appellant
Versus
Superintending Engineer, Electricity Work Circle, - Respondent
Matters Under Article 227 No. -1834 of 2024
Decided on : 13-05-2024
JURISDICTION - ARBITRATION AND CONCILIATION ACT, 1996 - Sections 34, 20, 42 - The court interpreted Sections 34 and 20 of the Arbitration and Conciliation Act, 1996, emphasizing that jurisdiction is determined by the agreement between the parties and the location of the arbitration proceedings. The court concluded that the jurisdiction of the courts at Lucknow was valid based on the contractual clauses, despite the arbitration being conducted in Aligarh. The court's decision was influenced by precedents that established the importance of jurisdictional agreements in arbitration contracts.
Fact of the Case:
The petitioner challenged an order from the Commercial Court in Lucknow regarding an arbitration award related to a construction contract. The contract specified that disputes would be subject to the jurisdiction of Lucknow courts, while the arbitration proceedings were held in Aligarh.
Finding of the Court:
The court found that the Commercial Court in Lucknow had jurisdiction to hear the application under Section 34 of the Arbitration Act, as the contract explicitly designated Lucknow as the jurisdiction for disputes, despite the arbitration proceedings taking place in Aligarh.
Issues: The primary issue was whether the Commercial Court at Lucknow had jurisdiction to entertain the application under Section 34 of the Arbitration and Conciliation Act, given that the arbitration proceedings were conducted in Aligarh.
Ratio Decidendi: The court held that the jurisdiction of the courts is determined by the parties' agreement and the location of the arbitration proceedings. The explicit contractual clauses indicating Lucknow as the jurisdiction for disputes were upheld, and the ad-hoc nature of the arbitration venue did not alter this agreement.
Final Decision: The petition was dismissed, affirming the validity of the Commercial Court's jurisdiction in Lucknow to hear the application under Section 34 of the Arbitration Act.
JUDGMENT :
SUBHASH VIDYARTHI J.
1. Heard Sri K. K. Arora Advocate, the learned counsel for the petitioner and Sri Mayank Sinha Advocate, the learned counsel for the respondent.
2. By means of the instant petition filed under Article 227 of the Constitution of India, the petitioner has challenged the validity of an order dated 07.03.2024 passed by the Commercial Court No. 2, Lucknow in Arbitration Case No. 126 of 2023, under Section 34 of the Arbitration and Conciliation Act, 1996 (which will hereinafter be referred to as ‘the Act’).
3. Briefly stated, facts of the case are that the petitioner had entered into a contract with the respondent for construction of 33 KV independent feeders emanating from 132 KV primary sub-station Amawan (Raebareli), 220 KV primary substation Sonik (Unnao) and 33/04 KV substation at District Courts Raebareli/Unnao on turnkey basis within stipulated time in compliance of order passed by Hon’ble High Court, Uttar Pradesh on 29.06.2019.
4. Clause 16 of the General Requirements of Specification mentioned in the contract entered between the parties provides as follows: -
All the dispute arising out and touching or relating to subject matter of agreement contract shall be subject to jurisdiction of local courts of Lucknow and Lucknow bench of High Court of Judicature at Allahabad only.”
5. Clause 38(A) of the General Conditions for the supply of plant and the execution of works in connection with schemes in Uttar Pradesh Power Corporation Limited (UPPCL) provides that “any action taken or proceedings initiated on any of the term of this agreement shall be only in the court of competent jurisdiction under the high court of judicature at Allahabad...”
6. Certain disputes arose between the parties, which led to the petitioner filing an application under Section 11 of the Act before this Court sitting at Allahabad, which was allowed and Justice Ifaqat Ali Khan, a former Judge of this Court was appointed as the sole Arbitrator for adjudicating upon the disputes between the parties.
7. The learned Arbitrator has held the first sitting of the arbitration proceedings on 30.08.2022 at his residence at Aligarh. The Rules of procedure and other incidental matters were decided on the first date and it was recorded in the aforesaid order that: -
“4/4 H1 Aftab Apartment Opposite Ek Minar wali Masjid, Qila Road, Shamshad Market, Civil Lines, Aligarh (U.P.)-202001”
8. It appears that no further suitable arrangement could be made and the arbitration proceedings continued to be held at the aforesaid place and ultimately an award was declared on 26.08.2023 directing the respondent to pay to the petitioner a sum of Rs.1,20,43,129.00 alongwith interest at the rate of 8% per annum from 06.07.2020 till the date of the award and the rate of interest will be 10% per annum from the date of award.
9. The respondent filed an application under Section 34 of the Act challenging the aforesaid award before the Commercial Court no. 2, Lucknow, which application has been registered as Arbitration Case No. 126 of 2023.
10. The petitioner filed an application (C-12) raising a preliminary objection regarding the territorial jurisdiction of the Commercial Court at Lucknow, stating that the entire arbitration proceedings took place at Aligarh without any protest of the respondent and the arbitration award was also passed at Aligarh, which falls within the territorial jurisdiction of this Court sitting at Allahabad. Therefore, the Courts sitting at Lucknow have no jurisdiction to entertain the application under Section 34 of the Arbitration Act.
11. The respondent filed objection against the aforesaid application inter alia stating that as per Clause 16.0 and 38(A) of the Contract referred to above and also keeping in view the fact that the contract was signed at Lucknow, the contract was for certain
The jurisdiction for arbitration-related applications is governed by the parties' contractual agreement, and courts at the designated location have exclusive jurisdiction, regardless of where the arb....
Once seat of arbitration is replaced by mutual agreement, parties have to be referred to Courts at that place for resolution of Section 34 petition.
The designated seat of arbitration establishes exclusive jurisdiction for related applications, affirming that the Commercial Court in Ranchi has jurisdiction over Section 34 applications.
The seat of arbitration is the place where the arbitration proceedings are held and not the place where the cause of action arose. The courts at the seat of arbitration have exclusive jurisdiction to....
Point of Law : There was concurrent jurisdiction conferred on the courts ceased with subject matter in dispute and the courts where arbitration was carried out.
The determination of the arbitration 'seat' and 'venue' is critical; if the 'venue' does not specify a 'seat', jurisdiction lies with the designated court under the arbitration agreement.
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