The court ruled that the original arbitration venue remained valid despite a subsequent novation agreement designating exclusive jurisdiction elsewhere, emphasizing the importance of the seat of arbitration.

JUDGMENT :

Arun Bhansali, CJ.

1. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (‘the Act’) is directed against the order dated 13.01.2025 passed by Commercial Court No. 2, Gautam Buddha Nagar, whereby the application filed by the appellant under Section 9 of the Act for grant of interim measures against the respondent for lack of territorial jurisdiction has been dismissed.

2. The appellant is the builder and developer and respondent is a Cooperative Housing Society, which was allotted land by Greater Noida Industrial Development Authority for development and construction of multi-storey Group Housing Complex. Initially, after issuing tender, Arcmate Housing Solutions Pvt. Ltd. along with the appellant formed a consortium and was granted contract by the respondent and the work was awarded to the consortium on 08.02.2013. A construction contract was entered into on 11.03.2013. The contract was amended on 11.11.2013 and on account of delay, the same was again amended on 25.04.2016. Further, an addendum to the existing agreements was entered into between the parties on 14.12.2017. Subsequently, a quadripartite agreement dated 15.03.2020 was executed between the appellant, respondent, Arcmate and consortium by which the settlement agreement between the appellant and Arcmate dated 19.11.2019 was acknowledged, whereby the appellant took over and acquired the entire business from the consortium with effect from 19.11.2019. A novation agreement dated 15.03.2020 was entered into between the appellant and respondent by which all the business agreements were kept alive, except for incremental changes including the appellant stepping into the shoes of Arcmate.

3. The respondent issued show-cause notice dated 02.07.2023 calling upon the appellant to show cause as to why the agreement should not be terminated to which a reply was given on 04.07.2023/14.07.2023. On 11.08.2024, the contract was terminated by the respondent. An application was filed by the appellant claiming prima facie case, balance of convenience and irreparable injury for grant of interim measures under Section 9 of the Act before the Commercial Court, Gautam Buddha Nagar and it was prayed that the operation of the letters dated 17.07.2024 withdrawing the selling rights granted to the appellant and 11.08.2024 terminating the agreement be stayed and further restraint was sought from appointing any contractor, developer or person for carrying out further construction and development at the project site.

4. A reply to the application was filed alleging concealment of material facts regarding dismissal of petition under Section 9 of the Act filed before the Delhi High Court on 05.09.2024 and a pending pre-litigation at Delhi High Court Mediation Centre. The territorial jurisdiction of the Court at Gautam Buddha Nagar was questioned and response was given on merits of the application. It was claimed that as per novation agreement dated 15.03.2020, it was agreed between the parties that all the disputes arising out of or in connection with the agreement shall be subject to the exclusive jurisdiction of the Courts situated at New Delhi and the collaboration agreement dated 15.03.2020 also mentions that in case of any dispute jurisdiction of Courts will be at New Delhi.

5. After hearing the parties, the Commercial Court came to the conclusion that the novation agreement upheld all the previous agreements which also included the arbitration clause, however, place of arbitration from Uttar Pradesh was changed to New Delhi in the novation agreement, whereafter referring to Section 20 of the Act, came to the conclusion that petitioner, in an application filed under Section 9 of the Act before New Delhi High Court, had admitted that High Court at Delhi has the territorial jurisdiction to entertain the petition in view of Clause 7 of the novation agreement dated 15.03.2020 and consequently dismissed the application for lack of territorial jurisdiction.

6. Counsel fo