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2025 DIGILAW 2004 (RAJ)

B. K. Engineering Enterprises, Chandigarh v. Union Of India, through Chief Engineer

2025-12-16

SANGEETA SHARMA, SANJEEV PRAKASH SHARMA

body2025
JUDGMENT : 1. The issue raised by the appellant in the present appeal is no more res-integra. The question regarding the jurisdiction of the concerned Court to hear objections under Section 34 / Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the Act of 1996’) has been well-settled by the judgment passed by the Supreme Court in Indus Mobile Distribution Private Limited Vs. Datawind Innovations Private Limited & Ors. reported in [ (2017) 7 SCC 678 ] . The fact that the Supreme Court after considering that the arbitration clause and the aspect regarding Section 2 (1)(e) as well as Section 20 of the Act of 1996 proceeded to hold as under:- “20. A conspectus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. On the facts of the present case, it is clear that the seat of arbitration is Mumbai and Clause 19 further makes it clear that jurisdiction exclusively vests in the Mumbai Courts. Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to "seat" is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Section 16 to 21 of the CPC be attracted. In arbitration law however, as has been held above, the moment "seat" is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties. 21. It is well settled that where more than one court has jurisdiction, it is open for parties to exclude all other courts. For an exhaustive analysis of the case law, see Swastik Gases Private Limited v. Indian Oil Corporation Limited, (2013) 9 SCC 32 . This was followed in a recent judgment in B.E. Simoese Von Staraburg Niedenthal and Another v. Chhastisgarh Investment Limited, (2015) 12 SCC 225 . Having regard to the above, it is clear that Mumbai courts alone have jurisdiction to the exclusion of all other courts in the country, as the juridical seat of arbitration is at Mumbai. This was followed in a recent judgment in B.E. Simoese Von Staraburg Niedenthal and Another v. Chhastisgarh Investment Limited, (2015) 12 SCC 225 . Having regard to the above, it is clear that Mumbai courts alone have jurisdiction to the exclusion of all other courts in the country, as the juridical seat of arbitration is at Mumbai. This being the case, the impugned judgment is set aside. The injunction confirmed by the impugned judgment will continue for a period of four weeks from the date of pronouncement of this judgment, so that the respondents may take necessary steps under Section 9 in the Mumbai Court. Appeals are disposed of accordingly.” 2. It would be relevant to quote Section 20 of the Act of 1996 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 any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.” 3. The said judgment passed in the case of Indus Mobile Distribution Private Limited (supra) has again been reiterated by the learned Single Judge of this Court while passing the order on similar lines in the case of TVS Motors Company Limited Vs. M/s. Bagaria Motors reported in [ 2023 :RJ-JP:19616] . The relevant paras of said judgment are quoted as under:- "13. It is noted that the ASC agreement was executed at Hosur and as per Clause 22 of the ASC agreement, the venue of Arbitration was also Hosur. Accordingly, as per Clause 21 of the ASC agreement, parties had consented to exclusive jurisdiction of Courts at Hosur. However, the venue of Arbitration was shifted from Hosur to Bangalore based on mutual agreement of the parties. Accordingly, as per Clause 21 of the ASC agreement, parties had consented to exclusive jurisdiction of Courts at Hosur. However, the venue of Arbitration was shifted from Hosur to Bangalore based on mutual agreement of the parties. As per the dictum of Apex Court judgment of BALCO (supra), which has been followed in Indus Mobile Distribution (supra), BGS SGS SOMA JV (supra) and Inox Renewables (supra), when parties had selected a venue of arbitration without designating a seat of arbitration, it would be safe to conclude that venue is the seat of the arbitration provided that the parties have selected a body of rules to govern the arbitration and there is no other indication to the contrary. In the case in hand, the parties had initially selected Hosur to be the venue of arbitration and had also conferred exclusive jurisdiction to Courts at Hosur. Therefore, in the light of above referred Apex Court judgments, it can safely be assumed that Hosur was intended to be the seat of the arbitration as well. Subsequently, when the parties had changed the venue from Hosur to Bangalore, as Clause 21 of ASC agreement was subject to Clause 22 of ASC agreement, it can further safely be assumed that Bangalore was the new seat and venue of arbitration. 14. In international commercial arbitration, it is a settled principle that if the parties choose to have a seat of arbitration in a particular country, then the laws of that country relating to regulation of arbitration proceedings will apply, and the Courts of that country will have supervisory jurisdiction over the arbitration proceedings. The question which remains is whether this principle can be extended to a choice of city in India as a seat so as to confer exclusive supervisory jurisdiction on the Courts of that city over the arbitration proceedings. The said question was considered in Indus Mobile Distribution (supra), wherein the Apex Court was directly dealing with the issue as to whether the seat of arbitration connotes an exclusive jurisdiction and ousts the jurisdiction of all other Courts. The Apex Court examined the concepts of Seat and Venue threadbare and after analyzing the entire legal position, concluded that once a seat is designated, it is akin to an exclusive jurisdiction clause. The Apex Court examined the concepts of Seat and Venue threadbare and after analyzing the entire legal position, concluded that once a seat is designated, it is akin to an exclusive jurisdiction clause. Consequently the Courtsat the "Seat" are vested with exclusive jurisdiction to exercise powers and regulate arbitral proceedings, to the exclusion of all other Courts, including Courts where the cause of action arose. 18. In the opinion of this Court, the lis in question is squarely covered by the Apex Court judgment of Inox Renewables (supra). There is no indication whatsoever that the seat of the arbitration was at District Sikar. Once the parties mutually agreed to change the venue from Hosur to Bangalore, where the arbitration proceedings commenced and concluded without any disturbance, only the Courts at Bangalore would have the exclusive supervisory jurisdiction. The Court of learned Additional District Judge, Fatehpur Shekhawati, District Sikar wrongly assumed jurisdiction and therefore the impugned order dated 06.10.2016 is liable to be quashed and set aside." 4. Keeping in view the provisions of Section 20 of the Act of 1996 and that the Arbitrator passed an award at Chandi Mandir in Chandigarh, the jurisdiction for challenged to the award would lie solely at Chandigarh. The order passed by the learned Judge Commercial Court No.4, therefore, does not warrant any interference. 5. This Court while taking into consideration that the award was passed way-back in the year 2009 and a lot of time has lapsed in deciding the jurisdiction issue, we deem it appropriate to hold that if any application is moved to the concerned Jurisdictional Commercial Court at Chandigarh, it is requested that the same may be decided at the earliest. 6. The appeal is disposed of accordingly.