A court lacks territorial jurisdiction to entertain an application for the appointment of an arbitrator when an agreement explicitly confers exclusive judicial jurisdiction upon courts of a different location, regardless of whether the court's location is designated as a permissible venue for the conduct of arbitral proceedings.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11(6) - Territorial jurisdiction - Dispute resolution clause - Agreement conferring exclusive jurisdiction on courts of a specified location while designating multiple potential venues for arbitration - Whether petition is maintainable in a location designated only as an arbitral venue - Distinction between venue for arbitral proceedings and seat of judicial jurisdiction - A clause which identifies an exclusive judicial forum overrides any designation of a location as a mere venue for arbitration - The court held that where an agreement explicitly restricts jurisdiction to a specific location, the court in another location, even if named as an arbitral venue, cannot entertain proceedings for the appointment of an arbitrator. (Paras 4, 5 and 6)

Facts of the case:
A petition was filed seeking the appointment of an arbitrator to adjudicate disputes under a loan agreement. The respondent raised a preliminary objection regarding the lack of territorial jurisdiction of the court where the petition was filed, contending that the agreement vested exclusive jurisdiction in courts of a different location.

Findings of Court:
Upon examining the agreement, the court observed that while multiple locations were permissible for the conduct of arbitral proceedings, the judicial jurisdiction was explicitly reserved for the courts of a specific location. Consequently, the petition was found to be not maintainable.

Issues: Whether the court, located in a jurisdiction named as a potential arbitral venue under an agreement, possesses the requisite territorial jurisdiction to entertain a petition for the appointment of an arbitrator when the agreement confers exclusive judicial jurisdiction to courts in another location.

Ratio Decidendi: The court determined that a legal distinction exists between a venue for arbitral proceedings and the forum for judicial intervention. Contracting parties may designate a venue for arbitration while retaining exclusive jurisdiction for litigation in a separate forum; therefore, a petition must be filed in the forum specifically designated for judicial adjudication.

Result: Petition dismissed with liberty to move the competent court.

Table of Content
1. petitioner seeks arbitrator appointment; respondent challenges territorial jurisdiction. (Para 1 , 2)
2. interpretation of contractual jurisdiction and venue clauses. (Para 3 , 4 , 5)
3. contract designates mumbai as the exclusive jurisdictional forum. (Para 6)
4. petition dismissed with liberty to approach competent courts. (Para 7)

JUDGMENT :

HARISH VAIDYANATHAN SHANKAR, J.

1. The present Petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 [“The Act”], seeking the appointment of an independent Sole Arbitrator for adjudication of the disputes inter se the parties, which are stated to arise from the Loan Agreement dated 29.10.2018 [“Agreement”].

2. Learned counsel appearing on behalf of Respondent No. 1 raises a preliminary objection with respect to the maintainability of the present Petition. It is contended that, since the disputes in question arose in Ghaziabad, Uttar Pradesh, this Court lacks the territorial jurisdiction to entertain the present proceedings.

3. This Court has heard learned counsel appearing on behalf of Respondent No. 1 and has perused the Agreement executed inter se the parties. A perusal of the said Agreement reveals that it was entered into at New Delhi.

4. Furthermore, Clause 13 of the Agreement expressly stipulates the mechanism for dispute resolution in the following terms:

“13. DISPUTE RESOLUTION

13.1.1 If any dispute, difference or claim arises between the Obligors and the Lender in connection with the Loan or the security or as to the interpretation, validity, implementation or effect of the Loan Documents or as to the rights and liabilities of the parties under the Loan Documents or alleged breach of the Loan Documents or anything done or omitted to be done pursuant to the Loan Documents, the same shall be settled by arbitration to be held in Mumbai/Delhi/Kolkata /Chennai as may be decided by the Lender in accordance with the Arbitration and Conciliation Act, 1996, or any statutory amendments thereto and shall be referred to a sole arbitrator to be appointed by the Lender. The award of the arbitrator shall be final and binding on all parties concerned.

13.1.2 The Loan Documents shall be governed by the laws of India.

13.1.3 The Borrower agrees that subject to the provisions of Clause 13.1.1 above, the courts of Mumbai or the venue of arbitration decided by the Lender in accordance with Clause 13.1.1 above alone shall have the exclusive jurisdiction to entertain and try all matters arising from and out of the Loan Documents.

13.1.4 Notwithstanding anything contained hereinabove, the Lender reserves the right to, at its option, also enforce the security under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act) or proceed to recover dues from the Obligors under the SARFESI Act and/or the Recovery of Debts Due to Banks and Financial Institutions Act. 1993.”

5. A perusal of the dispute resolution clause of the said Agreement reveals that jurisdiction to entertain and adjudicate all disputes arising out of or in connection with the Loan Agreement is vested either in the Courts at Mumbai or at the venue of arbitration as may be determined by the lender in accordance with Clause 13.1.1 of the Agreement.

6. A conjoint reading of the said Agreement and the clauses contained therein prima facie indicates that the Courts vested with jurisdiction are the Courts at Mumbai and not Delhi. It further appears that Delhi has merely been designated as a venue for the arbitral proceedings, whereas Mumbai has been specifically identified as the jurisdictional forum for the purposes of adjudication by Courts. This, when read in conjunction with Clause 13.1.1, persuades this Court to hold that the present petition is not maintainable before the Courts at Delhi.

7. In view of the foregoing, the present Petition, along with all pending application(s), if any, stands dismissed, with liberty reserved in favour of th

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