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SUPREME COURT OF INDIA
PINAKI CHANDRA GHOSE, ROHINTON FALI NARIMAN, JJ.
INDUS MOBILE DISTRIBUTION PRIVATE LIMITED – APPELLANT
VERSUS
DATAWIND INNOVATIONS PRIVATE LIMITED & ORS. – RESPONDENTS
APPEAL NOS. 5370-5371 OF 2017 (ARISING OUT OF SLP (CIVIL) NOS. 27311-27312 OF 2016)
Decided On : 19-04-2017
(2012) 9 SCC 552; (2014) 5 SCC 1; (2014) 7 SCC 603; (2016) 11 SCC 508; (2013) 9 SCC 32; (2015) 12 SCC 225 – Relied upon
Facts of the case:
The present appeals raise an interesting question as to whether, when the seat of arbitration is Mumbai, an exclusive jurisdiction clause stating that the courts at Mumbai alone would have jurisdiction in respect of disputes arising under the agreement would oust all other courts including the High Court of Delhi, whose judgment is appealed against.
Respondent No.1 was supplying goods to the appellant at Chennai from New Delhi. The appellant approached Respondent No.1 and expressed an earnest desire to do business with Respondent No.1 as its Retail Chain Partner. This being the case, an agreement dated 25.10.2014 was entered into between the parties.
Disputes arose between the parties and a notice dated 25.9.2015 was sent by Respondent No.1 to the appellant stating that the appellant had been in default of outstanding dues of Rs.5 crores with interest thereon and calling upon it to pay the outstanding dues within 7 days.
Clause 18 of the Agreement was invoked by Respondent No.1, and one Justice H.R. Malhotra was appointed as the Sole Arbitrator between the parties. By a reply dated 15.10.2015, the appellant objected to the appointment of Justice Malhotra and asked Respondent No.1 to withdraw its notice. By a further reply dated 16.10.2015, the averments made in the notice were denied in toto.
Two petitions were then filed by Respondent No.1 – the first under Section 9 of the Arbitration and Conciliation Act, 1996 asking for various interim reliefs in the matter. The Delhi High Court issued notice in the interim application and restrained the appellant from transferring, alienating or creating any third party interests in respect of the property bearing No.281, TK Road, Alwarpet, Chennai-600018 till the next date of hearing. By the second application Respondent No.1 filed a Section 11 petition to appoint an Arbitrator.
It was held by the High Court that as no part of the cause of action arose in Mumbai, only the courts of three territories could have jurisdiction in the matter, namely, Delhi and Chennai (from and to where goods were supplied), and Amritsar (which is the registered office of the appellant company). The court therefore held that the exclusive jurisdiction clause would not apply on facts, as the courts in Mumbai would have no jurisdiction at all. It, therefore, determined that Delhi being the first Court that was approached would have jurisdiction in the matter and proceeded to confirm the interim order and also proceeded to dispose of the Section 11 petition by appointing Justice S.N. Variava, retired Supreme Court Judge, as the sole Arbitrator in the proceedings. The judgment recorded that the conduct of the arbitration would be in Mumbai.
Finding of the Court:
Seat of arbitration fixed by the parties decides the exclusive jurisdiction of courts which exercise supervisory powers over the arbitration.
Result: Appeals disposed of.
JUDGMENT
R.F. NARIMAN, J.
1. Leave granted.
2. The present appeals raise an interesting question as to whether, when the seat of arbitration is Mumbai, an exclusive jurisdiction clause stating that the courts at Mumbai alone would have jurisdiction in respect of disputes arising under the agreement would oust all other courts including the High Court of Delhi, whose judgment is appealed against.
3. The brief facts necessary to appreciate the controversy are that Respondent No.1 is engaged in the manufacture, marketing and distribution of Mobile Phones, Tablets and their accessories. Respondent No.1 has its registered office at Amritsar, Punjab. Respondent No.1 was supplying goods to the appellant at Chennai from New Delhi. The appellant approached Respondent No.1 and expressed an earnest desire to do business with Respondent No.1 as its Retail Chain Partner. This being the case, an agreement dated 25.10.2014 was entered into between the parties. Clauses 18 and 19 are relevant for our purpose, and are set out hereinbelow:
“Dispute Resolution Mechanism:
Arbitration: In case of any dispute or differences arising between parties out of or in relation to the construction, meaning, scope, operation or effect of this Agreement or breach of this Agreement, parties shall make efforts in good faith to amicably resolve such dispute.
If such dispute or difference cannot be amicably resolved by the parties (Dispute) within thirty days of its occurrence, or such longer time as mutually agreed, either party may refer the dispute to the designated senior officers of the parties.
If the Dispute cannot be amicably resolved by such officers within thirty (30) days from the date of referral, or within such longer time as mutually agreed, such Dispute shall be finally settled by arbitration conducted under the provisions of the Arbitration & Conciliation Act 1996 by reference to a sole Arbitrator which shall be mutually agreed by the parties. Such arbitration shall be conducted at Mumbai, in English language.
The arbitration award shall be final and the judgment thereupon may be entered in any court having jurisdiction over the parties hereto or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be. The Arbitrator shall have the power to order specific performance of the Agreement. Each Party shall bear its own costs of the Arbitration.
It is hereby ‘agreed between the Parties that they will continue to perform their respective obligations under this Agreement during the pendency of the Dispute.
19. All disputes & differences of any kind whatever arising out of or in connection with this Agreement shall be subject to the exclusive jurisdiction of courts of Mumbai only.”
4. Disputes arose between the parties and a notice dated 25.9.2015 was sent by Respondent No.1 to the appellant. The notice stated that the appellant had been in default of outstanding dues of Rs.5 crores with interest thereon and was called upon to pay the outstanding dues within 7 days. Clause 18 of the Agreement was invoked by Respondent No.1, and one Justice H.R. Malhotra was appointed as the Sole Arbitrator between the parties. By a reply dated 15.10.2015, the appellant objected to the appointment of Justice Malhotra and asked Respondent No.1 to withdraw its notice. By a further reply dated 16.10.2015, the averments made in the notice were denied in toto.
5. Two petitions were then filed by Respondent No.1 – the first dated September 2015, under Section 9 of the Arbitration and Conciliation Act, 1996 asking for various interim reliefs in the matter. By an order dated 22.9.2015, the Delhi High Court issued notice in the interim application and restrained the appellant from transferring, alienating or creating any third party interests in respect of the property bearing No.281, TK Road, Alwarpet, Chennai-600018 till the next date of hearing. By an application dated 28.10.2015, Respondent No.1 filed a Section
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