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2023 Supreme(Online)(All) 18615
ALLAHABAD HIGH COURT
, J
Zapdor-Ubc-Abnjv Delhi (M/s) v. U.O.I. Thru. General Manager Northern Railway New Delhi
Petition under Art.227 | S.34 of the Arbitration and Conciliation Act 1996
For the Appellants/Petitioners: Sri Divyam Krishna, Sri Utkarsh Srivastava
For the Respondents: Sri Brajesh Kumar Shukla, Pratyush Chaubey
The designated place of arbitration constitutes the juridical seat, granting exclusive jurisdiction to the court at that location for supervisory control over arbitration proceedings, regardless of where any cause of action arose.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 34 and 36 - Jurisdictional issues regarding the seat of arbitration - The petitioners challenged the order rejecting their application for return of the arbitration application under S.34 for lack of jurisdiction, asserting that arbitration took place in New Delhi, citing the clauses of the contract and relevant judicial precedents. (Paras 1-23)
(B) The court held that the place of arbitration designated by the parties constitutes the juridical seat, and the courts at that location alone possess exclusive jurisdiction over the arbitration proceedings, notwithstanding any cause of action arising elsewhere. (Paras 31-38)
(C) The Supreme Court's precedent in BALCO is pivotal in determining jurisdiction effects under S.34, clarifying the distinctions between 'jurisdictional seat' and 'venue' of arbitration, thus impacting the interpretation of conflicting legal principles from earlier judgments. (Paras 65-72)
(D) The court found that the conduct of the parties implied a mutual understanding that New Delhi served not only as the venue but also the seat of arbitration, leading to the determination of exclusive jurisdiction for the courts in Delhi regarding supervisory oversight over arbitration awards. (Paras 93-96)
Result: Impugned order set aside; petition allowed.
1. Heard Sri Divyam Krishna and Sri Utkarsh Srivastava for the Petitioners and Sri Brajesh Kumar Shukla along with Pratyush Chaubey for Respondents. The Petitioners have challenged the order passed by the Learned District Judge / Commercial Court, Lucknow dated 12.12.2019 rejecting the Petitioners Application for Return of Arbitration Application filled under S.34 by the Railways against Award of the Arbitral Tribunal dated 06.03.2019, and allowing the Application for Condonation of Delay moved by the Respondents.
2.The facts as mentioned in the petition briefly are that on 30.10.2015 the Respondents floated a Tender Notice entitled "Design, Supply, Erection, Testing and Commissioning of 25 KV, 50 Hz Single Phase, Electrification works including OHE And TSS composite Electrical Works (hereinafter referred to as the Tender Paper ELCORE) The Petitioner's bid was adjudged viable and a Letter of Acceptance awarding the contract for a total value of more than Rs.30 crores 27 lakhs was issued by the Chief Electrical Engineer / P and D Central Organisation for Railway Electrification (CORE) at Allahabad 19.04.2016. An Agreement was executed on 14.7.2016 between the Petitioner and Chief Project Director Railway Electrification Lucknow, as the contract was to be operated for the composite electrification works in Jafrabad - Akbar Pur - Tanda Section under the supervision and control of Divisional Headquarters at Lucknow.
3. The contract was terminated by the Respondents because of slow progress as only 8% of the work was completed in seven and a half months as opposed to hundred percent target for fifteen months.
4. The Petitioner invoked the Arbitration clause and Arbitral Tribunal was constituted through letter dated 01.12.2017 comprising of Three senior officers of the Railways. The entire arbitral proceedings were conducted in New Delhi at the CORE office. The Arbitral Tribunal rendered an Award of more than three crore rupees along with interest at the rate of 10% in favour of the Petitioner which was signed and delivered at New Delhi on 6 March 2019. Arbitration Application No. 925 of 2019 was filed on 30 August 2019 under S.34 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as "the 1996 Act") by the Respondents against the Arbitral Award before the Commercial Court at Lucknow along with an Application for Condonation of Delay duly supported by an affidavit. Subsequently the Petitioner preferred an Execution petition / Enforcement Application under S.36 of the 1996 Act before the High Court at Delhi on 17.09.2019. The Petitioner filed an Application for Return of Arbitration Application on 19.11.2019. It also moved an Application containing objections to the Application for Condonation of Delay in the S.34 Application. A Reply to both the Applications was filed by the Respondents on 04.12.2019. The Learned Commercial Court by its order dated 12.12.2019 rejected the Petitioner's Application for Return of Arbitration Application, and allowed the Application for Condonation of Delay moved by the Respondents by a composite order.
5. It is the case of the Petitioners that such order has been passed by the Commercial Court at Lucknow exercising a jurisdiction not vested in it by law, causing grave injustice to the Petitioner and no Appeal under S.37 of the Act of 1996 lies against the impugned order so far as return of plaint (Arbitration Application) under S.34 of the Act read with Order VII R.10 CPC is concerned. Hence, a petition under Art.227 of the Constitution of India has been filed before this Court. It is the case of the Petitioners that Clause 4.0 of the Letter of Acceptance dated 19.04.2016 specifically mentioned "the contract shall be governed by the terms and conditions given in the Tender Paper Number ELCORE / OHE and TSS / group 199 with ANC slip number 1".
The agreement executed between the parties after Letter of Acceptance also referred to the said Tender Paper as governing the contract. The Tende
