Sun N. Step Club Through Director Vinod Prajapti v. My Preferred Transformation And Hospitality Pvt. Ltd.
2024-07-12
SUNITA AGARWAL
body2024
DigiLaw.ai
ORDER : (Sunita Agarwal, CJ.) : 1. Heard Ms. Hetvi Sancheti, learned advocate for the petitioner and Mr. Nachiket D. Mehta, learned advocate for the respondent and perused the record. 2. The dispute raised in the instant petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“the Act’ 1996”), is about the jurisdiction of this Court to make a reference. On the notice invoking arbitration clause sent by the petitioner, the respondent, referring to Clause 14.3 contained in dispute resolution Clause 14, had objected about the jurisdiction of this Court with the assertion that the place of arbitration seat in the contract is at New Delhi. The High Court, therefore, would be without jurisdiction to make a reference under Section 11 of the Arbitration Act. 3. The reliance is placed by the learned counsel for the respondent on the decisions of the Apex Court in the case of Indus Mobile Distribution Private Limited vs. Datawind Innovations Private Limited and others, (2017)7 SCC 678 and the judgement of the High Court of Delhi in the case of M/s.Devyani International Ltd. vs. Siddhivinayak Builders and Developers, 2017 SCC OnLine (Del) 11156 to substantiate his submissions that this Court has no territorial jurisdiction to agitate the present petition. 4. Ms. Sancheti, learned advocate appearing for the petitioner, however, would rely on the judgement of this Court in Instakart Services Private Limited vs. Megastone Logiparks Pvt. Ltd., 2024(1) GLH 180 to submit that the issue is squarely covered by the decision of this Court and the “place of arbitration” cannot be confused with “seat”. The place of arbitration being at New Delhi contained in clause 14.3 only enables the arbitral tribunal to meet at any place for conducting hearings at a place of convenience, in accordance with Section 20(3) of the Act’ 1996. Further reference has been made to clause 16.6, which deals with the governing laws and provides that the deed and any consequence arising therefrom shall be governed by the laws of India and shall be under the jurisdiction of the Courts at Ahmedabad. 5. Dealing with the submissions of the learned counsels for the parties, we may note the provisions of Section 20 contained in Chapter V, which contains the procedure for conduct of arbitral proceedings. Section reads as under:- “20. Place of arbitration.—(1) The parties are free to agree on the place of arbitration.
5. Dealing with the submissions of the learned counsels for the parties, we may note the provisions of Section 20 contained in Chapter V, which contains the procedure for conduct of arbitral proceedings. Section reads as under:- “20. Place of arbitration.—(1) The parties are free to agree on the place of arbitration. (2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. (3) Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at anyplace it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.” 6. A careful reading of Section 20 indicates that the parties are at freedom to agree on the place of arbitration and in case of failure of the parties, the place of arbitration shall be determined by the arbitral tribunal, having due regard to the circumstances of the case including the convenience of the parties. Sub-section (3) of Section 20 begins with the nonobstante clause and provides that the unless otherwise agreed by the parties, the arbitral tribunal may meet at any place it considers appropriate for consultation amongst its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property. The conjoint reading of sub-sections (1) to (3) of Section 20 leads to the conclusion that in the event, the parties do not agree with regard to the place of arbitration, the arbitral tribunal would be free to decide the venue of the arbitration. 7. This Court in Instakart Services Private Limited (supra) has examined the distinction between “place” or “venue” or “seat” of arbitration. 8. Noticing the judgements of the Apex Court in BGS SGS SOMA JV vs. NHPC, (2020) 4 SCC 234 and in Indus Mobile Distribution Private Limited vs. Datawind Innovations Private Limited and others, 2020 (5) SCC 399 , in Indus Mobile Distribution Private Limited (supra) it was noted that it is well settled that the seat of arbitration and venue of arbitration cannot be used interchangeably. Mere expression of the place of arbitration cannot be the basis to determine the intention of the parties that they have intended the place as the seat of arbitration.
Mere expression of the place of arbitration cannot be the basis to determine the intention of the parties that they have intended the place as the seat of arbitration. The intention of the parties as to the seat should be determined from other clauses in the agreement and the conduct of the parties. Mere designation of a place of arbitration as being the venue of the arbitration proceedings, would not be the determinative factor to decide the seat of arbitral proceedings. It was concluded in Paragraph no.39 and 40 as under:- “39. In light of the above discussion, this Court may record that law on "seat" and "venue" of arbitration proceedings is fairly well settled. The cases, where the parties have determined "seat" in their agreements, the same is akin to conferring exclusive jurisdiction on the Court(s) thereof. The expression 'place' occurring in Subsection (1) and (2) of the Section 20, where the word 'place' is used, refers to "juridical seat"; whereas, expression "place" occurring in sub-section (3) of Section 20, is equivalent to 'venue', i.e., the location of the meeting of arbitral proceedings, as per the convenience of the parties or the arbitrators. The "place" mentioned in Section 20(3) of the Act, 1996 is only a physical place of meeting and has no relevance insofar as "juridical seat", which shall vests exclusive jurisdiction with the Court of competent civil jurisdiction or High Court of original jurisdiction; (i) As has been held by the Apex Court in the case of M/s. Ravi Ranjan Developers Pvt. Ltd. versus Aditya Kumar undefined Chatterjee(supra), Section 11(6) and Section 2(1)(e) of the Act, 1996, have to be harmoniously read and construed to mean, the High Court which exercises superintendence / supervisory jurisdiction over a Court within the meaning of Section 2(1)(e) of the Act, 1996. Meaning thereby, where a clause in the contract vests exclusive jurisdiction at a Civil Court for all actions / proceedings arising out of the contract, the Court of the 'place' located as having exclusive jurisdiction over the disputes should be considered as "seat" and having jurisdiction to entertain applications under the Act, 1996.
Meaning thereby, where a clause in the contract vests exclusive jurisdiction at a Civil Court for all actions / proceedings arising out of the contract, the Court of the 'place' located as having exclusive jurisdiction over the disputes should be considered as "seat" and having jurisdiction to entertain applications under the Act, 1996. (ii) Where the parties have agreed that all actions and proceedings arising out of / related to contract shall lie in the Courts of competent jurisdiction at place 'A' and have agreed to conduct arbitration proceedings at place 'B', the expression in the agreement that the Court at place 'A' will have jurisdiction, would be a contrary indicator, as indicated by the Apex Court in the case of BGS SGS Soma JV versus NPHC Ltd. (supra). In such cases, the intention of the parties to confer exclusive jurisdiction on the Court at place undefined 'A', would be clear indication that the seat of arbitration shall be at the same place 'A' and the Court at place 'A' will have jurisdiction to deal with the applications under section 11(6) of the Act, 1996. (iii) The law laid down by the Apex Court in Mankastu Impex Private Limited versus Airvisual Limited (supra), and BGS SGS Soma JV versus NPHC Ltd. (supra), as has been relied upon by the learned counsel for the respondent, does not support his contention that the statement about the "place of arbitration" or the expression "arbitration proceedings" in the agreement would mean that "venue" is the "seat". 40. Coming to the facts of the instant case, Clause 25(iii) of the Lease Agreement exclusively confers jurisdiction to the Courts at Ahmedabad in all matters arising out of the said agreement. Whereas Sub-clause (ii) of the Clause 25 reads that the parties have agreed that the arbitration proceedings will be conducted at Bangalore. The expression of the place of arbitration proceedings in Clause 25(ii) as undefined extracted hereinabove, is indication of the agreement arrived at between the parties to choose the place of convenience within the meaning of Section 20(3) of the Act, 1996.
The expression of the place of arbitration proceedings in Clause 25(ii) as undefined extracted hereinabove, is indication of the agreement arrived at between the parties to choose the place of convenience within the meaning of Section 20(3) of the Act, 1996. The words "the parties agree that the arbitration proceedings will be conducted at Bangalore" cannot be read to mean that the place "Bangalore" has been designated under the contract as the "seat of arbitration" and would operate as an exclusive jurisdiction clause to decide the jurisdiction of the High Court under Section 11(6) of the Act, 1996. The exclusive jurisdiction has been conferred to the Courts at Ahmedabad, the subject matter of the Lease Agreement, which is the main agreement containing arbitration clause, is located at Ahmedabad; the agreement was signed at Ahmedabad between the parties; the agreement was executed and stamped in the State of Gujarat; the respondent is situated in Ahmedabad and the petitioner has its corporate headquarters in Ahmedabad.” 9. Coming to the facts of the instant case, the sub-lease deed executed on 30.06.2019 at Ahmedabad relates to the property located at Ahmedabad, which has been given on rent by the petitioner to the respondent with a lock in period of 36 months. The dispute arose on account of the default in payment or rent, outstanding taxes and other expenses. As per the sub-lease deed, the parties to the contract are governed by the arbitration clause, which reads as under:- “14. DISPUTE RESOLUTION 14.1 Amicable Settlement. Any dispute or controversy arising out of or in connection with the Deed or its performance, including the validity, interpretation or application hereof, shall to the extent possible be settled amicably by negotiation and discussion among the Parties. 14.2 Arbitration. Failing such an amicable settlement, any dispute, controversy or claim arising out of, or relating to the Deed within 30(thirty) days as of the date requested by either Party shall be referred to arbitration in accordance with the Indian Arbitration and Conciliation Act, 1996 at present in force. 14.3 The place of arbitration shall be New Delhi, India; and the language of the arbitration shall be English. The arbitration costs shall be equally borne by the Parties.” 10. Territorial jurisdiction for any dispute arising out of any lease deed and any consequences arising therefrom has been conferred by the parties to the Courts at Ahmedabad.
14.3 The place of arbitration shall be New Delhi, India; and the language of the arbitration shall be English. The arbitration costs shall be equally borne by the Parties.” 10. Territorial jurisdiction for any dispute arising out of any lease deed and any consequences arising therefrom has been conferred by the parties to the Courts at Ahmedabad. Both the petitioner and the respondent are carrying on their businesses within the State of Gujarat, within the jurisdiction of the High Court at Ahmedabad. 11. The conjoint reading of the dispute resolution clause 14.3 and the jurisdiction of the Court in 16.6 would indicate that there was no intention of the parties to confer exclusive jurisdiction to the Courts at New Delhi. The expression of the place of arbitration proceedings to be conducted at New Delhi in Clause 14.3 is merely an indication of the agreement arrived at between the parties to choose the place of convenience within the meaning of Section 20(3) of the Act’1996. The said statement in the arbitration clause does not fall within the meaning of ‘place’ as the ‘seat’ of arbitration, referrable to sub-sections (1) and (2) of Section 20, referring to juridical seat. The place mentioned in Clause 14.3 is only a physical place of meeting and has no relevance in so far as the juridical seat which shall vest exclusive jurisdiction with the Court of competent jurisdiction or the High Court of original jurisdiction as has been held by the Apex Court in M/s. Ravi Ranjan Developers Private Limited vs. Aditya Kumar Chatterjee , 2022(5) SCALE 372 , Section 11(6) and 2(1)(e) of the Act’ 1996( which defines ‘Court’) have to be harmoniously read and construed to mean, the High Court which exercises superintendence/supervisory jurisdiction over a Court within the meaning of Section 2(1)(e) of the Act’ 1996. Meaning thereby, where the clause in the contract, vests exclusive jurisdiction at a Civil Court for all actions/proceedings arising out of the contract, the Court of the place located as having exclusive jurisdiction over the dispute should be considered as seat and having jurisdiction to entertain applications under the Act’ 1996.
Meaning thereby, where the clause in the contract, vests exclusive jurisdiction at a Civil Court for all actions/proceedings arising out of the contract, the Court of the place located as having exclusive jurisdiction over the dispute should be considered as seat and having jurisdiction to entertain applications under the Act’ 1996. However, where the parties have agreed that all actions and proceedings arising out / related to the contract shall lie in the Courts of competent jurisdiction at place ‘A’ and have agreed to conduct arbitration proceedings at place ‘B’, the expression in the agreement that the Court at place ‘A’ will have jurisdiction, would be a contra indica. Meaning thereby that, in such cases, the intention of the parties to confer exclusive jurisdiction on the Court at place ‘A’ would be clear indication that the seat of arbitration shall be at the same place ‘A’ and the Court at place ‘A’ will have jurisdiction to deal with the applications under Section 11(6) of the Act’ 1996. 12. In light of the above, the expression in Clause 16.6 of the agreement that the dispute shall be under the jurisdiction of the Courts at Ahmedabad is a contra indica making clear the intention of the parties that the seat of arbitration shall be at the place indicated in the said clause, namely Ahmedabad. 13. As noted hereinbefore, the exclusive jurisdiction has been conferred to the Courts at Ahmedabad, subject matter of lease agreement is located at Ahmedabad; the agreement was signed at Ahmedabad between the parties and was executed and stamped in the State of Gujarat. Both the petitioner and respondent are located in Ahmedabad. 14. In light of the language of the agreement and above noted facts, this Court is of the considered view that the place at New Delhi is merely convenient location for holding of arbitration proceedings and the Courts at Ahmedabad selected as having exclusive jurisdiction in all disputes arising out of the lease agreement should be considered as the seat of arbitration. 15. This Court, thus, would be having territorial jurisdiction to entertain the application under Section 11(6) of the Act’ 1996 to refer the dispute to the Arbitrator. The objection of the respondent about the territorial jurisdiction of this Court to entertain the instant application is, therefore, turned down. 16.
15. This Court, thus, would be having territorial jurisdiction to entertain the application under Section 11(6) of the Act’ 1996 to refer the dispute to the Arbitrator. The objection of the respondent about the territorial jurisdiction of this Court to entertain the instant application is, therefore, turned down. 16. Learned advocates appearing for the parties would submit that the parties are agreeable to the appointment of Arbitrator to participate in the arbitration proceedings though not consented to the name of Arbitrator. 17. Noticing the above, I proceed to pass following : ORDER: (i) Petition is ALLOWED. (ii) Mr. V.B. Barot, Retired Principal Judge, Residing at : 104, 4th Floor, Advait Apartment, Opp. Saurabh Society, Near Memnagar Fire Station, Navrangpura, Ahmedabad, e-mail address: vbbarot12@gmail.com, (M)9429627258 & (M) 8980524324, is appointed as sole Arbitrator to resolve the disputes between the parties in accordance with the Arbitration Centre (Domestic and International), High Court of Gujarat Rules, 2021. Both parties would be governed by said Rules. (iii) Registry is directed to communicate this order to the sole arbitrator forthwith by speed post. No order as to costs. (iv) Consequently, all pending connected application/s, if any, stands disposed of.