Raj Group A Registered Partnership Firm Rep. By Its Managing Partner v. India Railway Catering And Tourism Corporation Ltd.
2025-02-03
SYAM KUMAR V.M.
body2025
DigiLaw.ai
ORDER : This Arbitration Request invoking Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) to appoint an Arbitrator to resolve the disputes that have arisen between the petitioner and the respondents. 2. Petitioner is a registered partnership firm which has been awarded the licence for the operation, maintenance and provision of catering services in the refreshment rooms (Kitchen Unit) at Ernakulam Town North Railway Station. Annexure A1 letter of intent evidencing the same had been issued to the petitioner on behalf of the 3 rd respondent. The petitioner had accepted Annexure A1 and had entered into Annexure A2 formal agreement. Petitioner had paid to the 3 rd respondent an amount of Rs.60,93,561/- towards licence fee and tax and commenced steps to set up the refreshment room in terms of the agreement between the parties. An interior designer was appointed and payments were made in the said respect as revealed in Annexures A3 and A4. An FSSAI registration and temporary power supply were also taken by the petitioner expending substantial amounts. The works pursuant to the agreement commenced on 02.07.2022 and to the dismay of the petitioner, the 3 rd respondent on 16.07.2022 orally directed the petitioner to close down the refreshment room and to stop the renovation work in view of the re-construction of platform No.1 of the Railway Station. Petitioner contends that though this decision to demolish the existing building and to reconstruct the same was known to the 3 rd respondent and to the Railway Authorities in advance, the same was not disclosed. The petitioner was made to enter into the agreement and remit licence fee and tax to the tune of Rs.60,93,561/- on 02.04.2022, only to be told within three months thereof that the entire building wherein the renovation was being carried out by the petitioner had been decided to be demolished. Petitioner had hence sought a refund of the amount spent by him towards renovation and reconstruction of the refreshment rooms. The 2 nd respondent then offered to return the licence amount paid, but withheld Rs.1,84,362/- from the licence amount purportedly towards the value of the kitchen utensils offered by the respondents which were never taken possession of by the petitioner as he had requested permission to use his own utensils.
The 2 nd respondent then offered to return the licence amount paid, but withheld Rs.1,84,362/- from the licence amount purportedly towards the value of the kitchen utensils offered by the respondents which were never taken possession of by the petitioner as he had requested permission to use his own utensils. Annexure A5 claim dated 27.10.2022 was hence preferred by the petitioner seeking to return an amount of Rs.12,44,582/- with interest. The same was replied to vide Annexure A6 letter dated 15.03.2023 rejecting the claim made. Hence the petitioner invoked the arbitration clause in Annexure A2 agreement and vide Annexure A7 sought the matter to be referred to an independent Arbitrator. Though Annexure A7 invocation of the arbitration was received by the respondents, the same was not responded to. Hence the petitioner has filed this Arbitration Request invoking Section 11 of the Act seeking to appoint an Arbitrator. 3. A counter affidavit has been filed by respondents 1 to 4 producing Annexures R4 (A) to R4 (E) inter alia contending that the Arbitration Request is not maintainable before this Court as this Court has no jurisdiction to entertain the same. Reliance is placed on Clause 5 of the General Conditions of Licence in Bid document, wherein it has been specifically stipulated that “The venue of the arbitration shall be New Delhi”. The clause regarding jurisdiction in Section 1 pertaining to General Provisions as part of the General Conditions of Licence is also pressed into service. The said clause reads as follows: “The award of License will be governed by the jurisdiction of court situated in the State of Tamil Nadu only.” As regards the address to which the notices to the Licensor have to be issued, Clause 2.7 of the Conditions governing the Performance of the License stipulate the same as Group General Manager, IRCTS Ltd., South Zone, 6A, The Rain Tree Place, No.9, Mc Nichols Road, Chetpet, Chennai - 600 031. Thus basing on all these clauses, it is contended in the counter affidavit that since the jurisdiction has been specified as vested in a court in a particular place, only such courts could exercise jurisdiction to deal with the matter and all other courts stands excluded. As regards the Arbitration Request, it is stated that the courts in Delhi alone shall have jurisdiction to entertain the Arbitration Request. 4.
As regards the Arbitration Request, it is stated that the courts in Delhi alone shall have jurisdiction to entertain the Arbitration Request. 4. Heard Sri.T.M.Raman Kartha, learned counsel for the petitioner and Smt.Asha Cherian, learned Standing Counsel for respondents 1 to 4. 5. It is submitted by the learned counsel for the petitioner that this Court possesses jurisdiction to entertain this Arbitration Request and the contention to the contrary put forth by the respondents is unsustainable. He contends that since the relevant clause states that “The venue of the arbitration shall be New Delhi” all that it could mean is New Delhi could be a ‘venue’ where the arbitration could be held. He submits that what matters more is the ‘seat’ of arbitration and not the ‘venue’ as the venue where the arbitration sittings could be held can be at more than one place. The learned counsel relies on the dictum laid down in Enercon (India) Ltd. and others v. Enercon GMBH and another [ (2014) 5 SCC 1 ] to support his contention wherein it had been held that arbitrations are anchored to the seat/place/situs of arbitration. The question that arose for consideration therein was whether the seat of arbitration was ‘London’ or in India since the phrase used therein was “venue shall be in London”. Whether that meant the 'seat' of arbitration to be London, was answered by the Hon’ble Supreme Court approvingly quoting the observation of Redfern and Hunter, in ‘International Arbitration’ (5 th edn. Oxford University Press, Oxford/ Newyork, 2009) that “The seat of the arbitration is thus intended to be its centre of gravity” and had held that the Arbitrators are at liberty to hold meetings at a place which is of convenience to all concerned. The Hon’ble Supreme Court had in the said judgment upheld the conclusion of Bombay High Court that the seat of arbitration was India notwithstanding the fact that the clause stated that the “venue shall be in London”. Drawing parallels with the case at hand, the learned counsel for the petitioner contended that “The venue of the arbitration shall be New Delhi” as used in Annexure A2 does not oust the jurisdiction of this Court to entertain this Arbitration Request. Reliance is also placed by the learned counsel on the dictum laid down by the Hon’ble Supreme Court in M/s.Arif Azim Co.
Reliance is also placed by the learned counsel on the dictum laid down by the Hon’ble Supreme Court in M/s.Arif Azim Co. Ltd. v. Micromax Informatics FZE [ 2024 SCC OnLine SC 3212 ], wherein the Hon’ble Supreme Court after a detailed exposition of law and discussion of precedents on the point, inter alia concluded as follows: “71. From the above exposition of law, the following position of law emerges:— (i) Part I of the Act, 1996 and the provisions thereunder only applies where the arbitration takes place in India i.e., where either (I) the seat of arbitration is in India OR (II) the law governing the arbitration agreement are the laws of India. (ii) Arbitration agreements executed after 06.09.2012 where the seat of arbitration is outside India, Part I of the Act, 1996 and the provisions thereunder will not be applicable and would fall beyond the jurisdiction of Indian courts. (iii) Even those arbitration agreements that have been executed prior to 06.09.2012 Part I of the Act, 1996 will not be applicable, if its application has been excluded by the parties in the arbitration agreement either explicitly by designating the seat of arbitration outside India or implicitly by choosing the law governing the agreement to be any other law other than Indian law. (iv) The moment ‘seat’ is determined, it would be akin to an exclusive jurisdiction clause whereby only the jurisdictional courts of that seat alone will have the jurisdiction to regulate the arbitral proceedings. The notional doctrine of concurrent jurisdiction has been expressly rejected and overruled by this Court in its subsequent decisions. (v) The ‘Closest Connection Test’ for determining the seat of arbitration by identifying the law with which the agreement to arbitrate has its closest and most real connection is no longer a viable criterion for determination of the seat or situs of arbitration in view of the Shashoua Principle. The seat of arbitration cannot be determined by formulaic and unpredictable application of choice of law rules based on abstract connecting factors to the underlying contract. Even if the law governing the contract has been expressly stipulated, it does not mean that the law governing the arbitration agreement and by extension the seat of arbitration will be the same as the lex contractus.
Even if the law governing the contract has been expressly stipulated, it does not mean that the law governing the arbitration agreement and by extension the seat of arbitration will be the same as the lex contractus. (vi) The more appropriate criterion for determining the seat of arbitration in view of the subsequent decisions of this Court is that where in an arbitration agreement there is an express designation of a place of arbitration anchoring the arbitral proceedings to such place, and there being no other significant contrary indicia to show otherwise, such place would be the ‘seat’ of arbitration even if it is designated in the nomenclature of ‘venue’ in the arbitration agreement. (vii) Where the curial law of a particular place or supranational body of rules has been stipulated in an arbitration agreement or clause, such stipulation is a positive indicium that the place so designated is actually the ‘seat’, as more often than not the law governing the arbitration agreement and by extension the seat of the arbitration tends to coincide with the curial law. (viii) Merely because the parties have stipulated a venue without any express choice of a seat, the courts cannot sideline the specific choices made by the parties in the arbitration agreement by imputing these stipulations as inadvertence at the behest of the parties as regards the seat of arbitration. Deference has to be shown to each and every choice and stipulations made by the parties, afterall the courts are only a conduit or means to arbitration, and the sum and substance of the arbitration is derived from the choices of the parties and their intentions contained in the arbitration agreement. It is the duty of the court to give weight and due consideration to each choice made by the parties and to construe the arbitration agreement in a manner that aligns the most with such stipulations and intentions. (ix) We do not for a moment say that, the Closest Connection Test has no application whatsoever, where there is no express or implied designation of a place of arbitration in the agreement either in the form of ‘venue’ or ‘curial law’, there the closest connection test may be more suitable for determining the seat of arbitration.
(ix) We do not for a moment say that, the Closest Connection Test has no application whatsoever, where there is no express or implied designation of a place of arbitration in the agreement either in the form of ‘venue’ or ‘curial law’, there the closest connection test may be more suitable for determining the seat of arbitration. (x) Where two or more possible places that have been designated in the arbitration agreement either expressly or impliedly, equally appear to be the seat of arbitration, then in such cases the conflict may be resolved through recourse to the Doctrine of Forum Non Conveniens, and the seat be then determined based on which one of the possible places may be the most appropriate forum keeping in mind the nature of the agreement, the dispute at hand, the parties themselves and their intentions. The place most suited for the interests of all the parties and the ends of justice may be determined as the ‘seat’ of arbitration. (emphasis supplied) Relying on (vi), (vii), (ix) and (x) of the conclusions thus arrived at by the Hon’ble Supreme Court, and pointing to the fact that the relevant clause in the case at hand only speaks of ‘venue’ of the arbitration as New Delhi and not its ‘seat’, whereas the jurisdiction clause in the agreement confers jurisdiction on the courts in the State of Tamil Nadu, the learned counsel for the petitioner contends that there has been no express or implied designation of a place of arbitration in the agreement and therefore, the closest connection test may be more suitable for determining the seat of arbitration. He also points to the doctrine of forum non conveniens as mentioned in (x) of the above-mentioned judgment of the Hon’ble Supreme Court and submits that the place most suited for the interests of all parties and the ends of justice may be determined as the ‘seat’ of arbitration. The learned counsel also relied on the dictum of the Hon’ble Supreme Court in Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar Chatterjee [ 2022 (2) KLT Online 1213 (SC) ] wherein the following proposition as laid down in Mankastu Impex Pvt. Ltd. v. Airvisual Ltd. [ (2020) 5 SCC 399 ] had been quoted with approval: “19. The seat of arbitration is a vital aspect of any arbitration proceedings.
The seat of arbitration is a vital aspect of any arbitration proceedings. Significance of the seat of arbitration is that it determines the applicable law when deciding the arbitration proceedings and arbitration procedure as well as judicial review over the arbitration award. The situs is not just about where an institution is based or where the hearings will be held. But it is all about which court would have the supervisory power over the arbitration proceedings. In Enercon (India) Ltd. v. Enercon GmbH [Enercon (India) Ltd. v. Enercon GmbH, (2014 (4) KLT Suppl. 82 (SC) = (2014) 5 SCC 1 : (2014) 3 SCC (Civ) 59], the Supreme Court held that : (SCC pp. 43 & 46, paras 97 & 107) “[T]he location of the seat will determine the courts that will have exclusive jurisdiction to oversee the arbitration proceedings. It was further held that the seat normally carries with it the choice of that country’s arbitration/curial law.” 20. It is well settled that “seat of arbitration” and “venue of arbitration” cannot be used interchangeably. It has also been established that mere expression “place of arbitration” Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar Chatterjee (Indira Banerjee, J.) (SC) 10 cannot be the basis to determine the intention of the parties that they have intended that 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.” (emphasis supplied) Reliance is also placed by the learned counsel for the petitioner on the decision of the High Court of Calcutta in Commercial Division Bowlopedia Restaurants India Ltd. v. Devyani International Ltd. [ 2021 SCC OnLine Cal 103 ], wherein it had been held as follows: “38. Party autonomy in an arbitration being imperative, it is just and proper that, in a domestic arbitration when the parties agree to a selected forum, which otherwise has jurisdiction, then, such selected forum should have precedence over the seat of arbitration. It is so in order to give primacy to party autonomy. Such view is permissible on a harmonious construction of the contract between the parties. Such a construction will not vitiate the forum selection clause or render it otiose. Any other construction will render the forum selection clause otiose. 39.
It is so in order to give primacy to party autonomy. Such view is permissible on a harmonious construction of the contract between the parties. Such a construction will not vitiate the forum selection clause or render it otiose. Any other construction will render the forum selection clause otiose. 39. In the case of a domestic arbitration: (i) Where the agreement has not prescribed the seat of arbitration and the parties have not selected any Court to try the disputes, then, the Court having jurisdiction over the subject matter of the arbitration will exercise jurisdiction; (ii) Where the parties to the arbitration agreement have prescribed a seat of arbitration and such agreement does not have a forum selection clause, then, the Court having jurisdiction over the seat of arbitration, will have jurisdiction to try the arbitration petition; (iii) Where the parties have prescribed the seat of arbitration as well as selected a forum, and there is no conflict between the two, then the Court having jurisdiction on the seat of arbitration, will exercise jurisdiction as there is no conflict; (iv) Where the parties have selected a seat of arbitration which is in conflict with the jurisdiction of the Court selected under the forum selection clause, then, the Court selected under the forum selection clause will have jurisdiction provided such Court otherwise has jurisdiction akin to Section 20 of the Code of Civil Procedure, 1908. The issue framed in paragraph 27 is answered accordingly.” (emphasis supplied) 6. Relying on the above precedents, the learned counsel for the petitioner contended that a mere reference to New Delhi as the venue does not oust the jurisdiction of this Court to entertain this Arbitration Request. According to the learned counsel, the seat of the arbitration, if any, agreed upon and specified by the parties alone matters and since no ‘seat’ has been suggested in the agreement at hand, the ‘situs’ of the dispute and the question whether this Court would have jurisdiction akin to the one under Section 20 of the Code of Civil Procedure (CPC) alone need to be looked into. Since the ‘situs’ and the subject matter of the dispute fall within the territorial limits of this Court, the learned counsel submits that this Court has jurisdiction under Section 20 of the CPC and has thus acquired jurisdiction to consider this Arbitration Request and to appoint an Arbitrator. 7.
Since the ‘situs’ and the subject matter of the dispute fall within the territorial limits of this Court, the learned counsel submits that this Court has jurisdiction under Section 20 of the CPC and has thus acquired jurisdiction to consider this Arbitration Request and to appoint an Arbitrator. 7. Per contra, the learned counsel appearing for the respondents submitted that wherever there is a designation of a place of arbitration in an arbitration clause as being the venue of the arbitration proceedings, the expression arbitration proceedings would make it clear that the venue is really the seat of the arbitration proceedings, as the aforesaid expression does not include just one or more individual or particular hearing, but the arbitration proceedings as a whole, including making of the award at that place. Reliance was placed on the dictum laid down by the Supreme Court in Inox Renewables Ltd. v. Jayesh Electricals Ltd. [ (2023) 3 SCC 733 ], wherein it was held as follows: “82. ….........the fact that the arbitral proceedings “shall be held” at a particular venue would also indicate that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby, that that place is the seat of the arbitral proceedings. This, coupled with there being no other significant contrary indicia that the stated venue is merely a “venue” and not the “seat” of the arbitral proceedings, would then conclusively show that such a clause designates a “seat” of the arbitral proceedings. In an international context if a supranational body of rules is to govern the arbitration, this would further be an indicia that “the venue”, so stated, would be the seat of the arbitral proceedings. In a national context, this would be replaced by the Arbitration Act, 1996 as applying to the “stated venue”, which then becomes the “seat” for the purposes of arbitration.” (emphasis supplied) In view of the said dictum the learned counsel for the respondents contend that the wording in Annexure A2 agreement that “The venue of the arbitration shall be New Delhi” can only be interpreted to mean that the seat of arbitration is New Delhi.
The learned counsel further places reliance on the dictum of the Hon’ble Supreme Court in Brahmani River Pellets Ltd. v. Kamachi Industries Ltd. [ (2020) 5 SCC 462 ], wherein it had been held that the reference of the parties to a specific place as venue reveals the intention of the parties to exclude all other courts and the non-use of the words like “exclusive jurisdiction”, “only”, “exclusive”, “alone” is not decisive and does not make any material difference. In that case, the parties have agreed on the venue of arbitration at Bhubaneswar, and then it was held that the Madras High Court erred in assuming the jurisdiction under Section 11 (6) of the Act, as only the Orissa High Court will have the jurisdiction to entertain the petition filed under Section 11 (6) of the Act. Reliance is also placed on the judgment of the Hon’ble Supreme Court in BGS SGS Soma JV v. NHPC Ltd. [ (2020) 4 SCC 234 ], wherein while interpreting the clause “Arbitration proceedings shall be held at New Delhi/Faridabad, India….”, the Hon’ble Supreme Court held that the said words signify that all the hearings including the making of the award are to take place at one of the stated places. The expression “shall be held” indicates that the so- called ‘venue’ is really the ‘seat’ of arbitration. Drawing parallels with the clause at hand which reads as “The venue of the arbitration shall be New Delhi”, the learned counsel contends that the venue of New Delhi thus mentioned is actually the seat of the arbitration. 8. I have heard both sides in detail and have perused the pleadings and precedents relied on. Annexure A2 agreement, which contains the relevant arbitration clause, pertains to the running of a railway refreshment room/ catering unit situated in Ernakulam Town North Railway Station at Ernakulam. The relevant arbitration clause therein stipulates that New Delhi shall be the venue of arbitration. The jurisdiction clause in Annexure A2 confers jurisdiction on the courts in the State of Tamil Nadu. I have afforded an anxious consideration to the contention put forth by the counsel for the petitioner that parties have selected a seat of arbitration that is in conflict with the court selected under the jurisdiction clause.
The jurisdiction clause in Annexure A2 confers jurisdiction on the courts in the State of Tamil Nadu. I have afforded an anxious consideration to the contention put forth by the counsel for the petitioner that parties have selected a seat of arbitration that is in conflict with the court selected under the jurisdiction clause. I have also weighed his contention that in the light of such a contradiction in the agreement, the place where the cause of action has arisen assumes relevance. However, the principle of party autonomy is by now a well-entrenched principle in contract law jurisprudence in India. Except for the fact that the ‘situs’ of the subject matter is Ernakulam and a part of the cause of action could be said to have arisen within the territorial limits of this Court or within the limits of the concerned civil court over which this Court has appellate or supervisory jurisdiction, there is nothing in the agreement between the parties revealing that they intended the disputes and/or differences arising from the agreement to be arbitrated in Kerala. As regards, the import of the term ‘shall’ as used in the “The venue of the arbitration shall be New Delhi” is concerned, I find merit in the contention put forth by the counsel for the respondents based on the dictum of the Supreme Court in BGS SGS Soma (supra) that the ‘shall’ therein signifies that all the hearings including the making of the award are to take place at New Delhi. Further, I am also persuaded by the ‘The Shashoua Principle’, as referred to by the Hon’ble Supreme Court in Arif Azim (supra) that when there is an express designation of the arbitration venue coupled with no designation of any alternative place as the seat, the inexorable conclusion leading therefrom would be that such ‘venue’ is in fact the juridical seat. This read with the fact that the parties have in Annexure A2 agreement stipulated that ‘ONLY’ the courts in Tamil Nadu shall have jurisdiction in the matter, confirms that party autonomy was exercised to exclude the jurisdiction that may exist within this Court under Section 20 of the CPC and specifically to confer jurisdiction on courts beyond the State. In the light of the above discussion, I conclude that this Court does not have the jurisdiction to entertain this Arbitration Request.
In the light of the above discussion, I conclude that this Court does not have the jurisdiction to entertain this Arbitration Request. This Arbitration Request is hence dismissed reserving the right of the petitioner to move the competent court. To facilitate the same, all questions on merits are left open.