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2025 DIGILAW 993 (BOM)

Ramesh Ramchandra Kalyankar v. Suresh K. Haware

2025-07-29

SOMASEKHAR SUNDARESAN

body2025
Judgement : SOMASEKHAR SUNDARESAN, J. Context and Factual Background : 1. Commercial Arbitration Petition (L) No. 18764 of 2025 is a Petition filed under Section 29 -A of the Arbitration and Conciliation Act, 1996 (“the Act”), seeking extension of mandate of the Arbitral Tribunal in connection with arbitration proceedings conducted by the Learned Sole Arbitrator right since November 2017. 2. The phrase “peculiar facts of the case” is so routinely used that it tends to not speak to real peculiarity. However, in the instant case, the factual matrix arising out of the conduct of the parties, renders this case, a true tale of the peculiar. 3. The parties executed an Agreement for Sale dated March 6, 2010, by which 108.9 acres of land were agreed to be sold by the Petitioners to the Respondents. Three days later, on March 9, 2010, the parties executed a Memorandum of Understanding whereby 22.9 acres of land to be acquired by the Petitioners from third parties were also agreed to be sold to the Respondents. 4. The land involved in both the agreements is located in Karjat, District Raigad. The seat of arbitration contained in both the agreements is evidently Karjat/Thane. Sometime in April 2010, an escrow agent was given the title documents pertaining to the land, to be held in escrow in order to secure the performance of the agreements. On August 22, 2015, the Petitioners terminated both the agreements. Disputes and differences broke out between the parties. Arbitration was invoked on January 25, 2016. 5. Considering the manner in which the arbitration clause is drafted, the Section 11 Court held that since the parties could not thrash out their differences on who the sole arbitrator would be, the arbitration agreement itself did not survive. However, before the Supreme Court, an arbitrator was appointed on November 6, 2017. Those arbitral proceedings are underway even today. 6. At the heart of the issues that fall for consideration is a preliminary objection as to whether this Court has territorial jurisdiction to consider the Section 29 -A Petition. However, before the Supreme Court, an arbitrator was appointed on November 6, 2017. Those arbitral proceedings are underway even today. 6. At the heart of the issues that fall for consideration is a preliminary objection as to whether this Court has territorial jurisdiction to consider the Section 29 -A Petition. The following facts collide in making the decision in this regard : A) As seen above, the arbitration clause in the agreements, explicitly indicates the seat of arbitration as Karjat/Thane; B) On November 27, 2017, the minutes of the meeting held before the Sole Arbitrator record that by “consent”, it is “decided” that the seat is Mumbai; C) In the eight years during which arbitration has been underway, at least three applications under Section 29 -A of the Act have been filed by the Petitioners before the District Court, Raigad at Alibag (“District Court”) (this Court has jurisdiction over Karjat) – the first such application was allowed on April 29, 2018; and the second, on June 15, 2020. The third was filed on June 16, 2021; D) On both occasions, i.e. April 29, 2018 and June 15, 2020, the mutual consent of the parties for extension of mandate by the District Court is writ large on the face of the record. The parties appear to have been ad idem on the territorial jurisdiction for such petitions being before the District Court; E) On March 7, 2018, dealing with an application under Section 17 of the Act, the Learned Arbitral Tribunal had ordered status-quo and that position has continued till date; F) On April 10, 2019, the Respondents are said to have chosen not to pursue specific performance and sue for damages instead. In view of this development, the Petitioners made an application under Section 17 of the Act to release the title documents from escrow, but nearly five years later (on January 31, 2024) on the premise that the Respondents have chosen not to pursue specific performance; and G) Since the filing of the last Section 29 -A application (June 16, 2021), arbitration proceedings have continued. Pursuant to a request for a detailed activity chart for what transpired since the filing of such application, a table has been submitted which shows that the cross examination of one witness of the Petitioners has gone on for a large part of the period, with about 1400 questions said to have been posed to that one witness; H) The Section 17 Application is said to have been postponed by the Learned Arbitral Tribunal on the ground that it could be taken up after completing the cross-examination of Petitioners’ first witness. This led to the Petitioners filing a Petition under Section 9 of the Act in this Court seeking the same relief of release of the escrow, despite arbitration proceedings already being underway; I) The Respondents objected to the filing of the Section 9 Petition on the ground that the parties have always gone to the District Court and under Section 42 of the Act, all applications must go to that Court; J) This led to the Petitioners filing this Section 29 -A Petition in this Court and withdrawing the pending Section 29 -A Petition from the District Court. Analysis and Findings: 7. The Parties truly present a conundrum with their conduct in the proceedings. This Court has to first decide whether territorial jurisdiction in fact lies in this Court before a decision can be taken under Section 29 -A of the Act. 8. While the seat of arbitration in the agreements is evidently in Karjat/Thane, parties are eminently capable of amending their consent and changing the seat. Towards this end, the minutes of meeting held on November 27, 2017 is noteworthy. It appears that the parties agreed before the Learned Arbitral Tribunal to record their consent that the seat would be Mumbai. Curiously, at the very same meeting, the Learned Arbitral Tribunal made a reference to Section 29 -A of the Act and indicated that if parties were to delay proceedings and not conduct it expeditiously within the timelines under Section 29 -A of the Act, exemplary costs would be imposed bearing in mind the spirit and principles underlying Section 29 -A. Almost a decade has gone by. No costs have been imposed on either side.The proceedings have meandered on, with 1400 questions being posed to one witness over the past few years. 9. No costs have been imposed on either side.The proceedings have meandered on, with 1400 questions being posed to one witness over the past few years. 9. Just as the parties’ consent before the Learned Arbitral Tribunal could lead to an amendment to change the seat from Karjat/Thane to Mumbai, equally, one would need to consider the consent of the parties when the Section 29 A Application came up before the District Court. If one were to infer consent to change the seat from the minutes of meeting before the Learned Arbitral Tribunal one would also need to interpret the same parties’ consent before the District Court, made twice over, when the Section 29 -A Applications filed there came up for consideration. As regards the Petitioners’ understanding of the seat, the Section 29 -A Application was filed not once but thrice, the Respondents contend, and therefore the parties have always understood the seat to not have changed and only the venue to have changed. 10. It is in this background that Learned Counsel for the Respondents submits that the reference to the word “seat” in the minutes of meeting held on November 27, 2017 is to be read as a reference to venue and not the seat. That apart, he would submit, if the minutes before the Learned Arbitral Tribunal evidenced change of seat, so would the consent before the District Court twice over, evidence the change of seat yet again. With that background, it is submitted, Section 42 of the Act would require all applications including the Section 9 Petition as well as the Section 29 -A Petition to be filed in the District Court and not in this Court. It was contended that it was convenient for the parties to conduct proceedings in Mumbai, but whenever an approach to a Court was felt necessary, the parties consciously chose the District Court, which would indicate that the consent between the parties was to shift only the venue to Mumbai and not the seat to Mumbai. Moreover, it is pointed out that even when the Section 11 Petition was filed in this Court, it had been filed on the Appellate Side and not on the Original Side. 11. The background in which the third application before the District Court came to be withdrawn is noteworthy. Moreover, it is pointed out that even when the Section 11 Petition was filed in this Court, it had been filed on the Appellate Side and not on the Original Side. 11. The background in which the third application before the District Court came to be withdrawn is noteworthy. Frustrated by the Section 17 Application not being taken up by the Learned Arbitral Tribunal, the Section 9 Petition, namely, Commercial Arbitration Petition (L) No. 33968 of 2024 was filed in this Court, even while the Section 29 -A Application remained pending on the docket of the District Court. Upon an objection on territorial jurisdiction being taken by the Respondents in the Section 9 proceedings, the Section 29 -A application was withdrawn from the District Court on June 30, 2025, but before such withdrawal, the 29-A Petition was filed in this Court, on June 9, 2025. 12. What is writ large on the face of the record is that the parties have demonstrated consent multiple times. The documented seat derived from consent in the agreements is Karjat / Thane. The parties indeed appear to have let the arbitrator record their consent for a decision that the seat would be Mumbai. However, well thereafter, by consent, the parties have twice presented themselves to the District Court for extension of time, which can also be regarded as consent over the seat, by necessary implication. In Ravi Ranjan,[Ravi Ranjan Developers (P) Ltd. v. Aditya Kumar Chatterjee - 2022 SCC OnLine SC 568] the Supreme Court has reconciled the potential difference between the “Court” under Section 2 (1)(e) of the Act and the Section 11 Court, by indicating that the High Court exercising supervisory jurisdiction over the Section 2 (1)(e) Court would have the jurisdiction under that provision. Indeed, the parties had filed the Section 11 Petition on the Appellate Side of this Court, but this facet by itself would not turn the needle because the consent before the Learned Arbitral Tribunal was recorded later, which purported to change the seat to Mumbai. However, one has to take a holistic view of the matter since the jurisdiction itself is dependent on consent of parties (in contract) and the principle of party autonomy unlike situation of jurisdictional issues imposed purely by provisions of law. 13. However, one has to take a holistic view of the matter since the jurisdiction itself is dependent on consent of parties (in contract) and the principle of party autonomy unlike situation of jurisdictional issues imposed purely by provisions of law. 13. No less than three approaches having been made to the District Court It would be reasonable to reconcile the parties’ conduct to the fact that the Petitioners apparently had no doubt about the District Court being the court under Section 2 (1)(e) of the Act. That the consent of the Respondents too was occasioned twice in that Court would indicate that the parties’ mutual understanding was that the seat had not changed to Mumbai. 14. In this view of the matter, a plausible and reasonable means of reconciling the conflicting positions emerging from the parties’ conduct (all by consent) would be that there was a foundational reinforcement of what was in any case, originally contained in the agreements as the seat, owing to the parties getting two extensions from the District Court. Towards this end, it can reasonably concluded that one could solve this otherwise inexplicable position posed by the parties by treating the change of seat to Mumbai as effectively a change of venue to Mumbai. This is why the parties chose to go each time to the District Court whenever the Court had to be approached. Another way of reconciling the positions that would yet lead to the same outcome is that the parties indeed changed the seat twice over – first to Mumbai, and then again to Raigad (leaving the venue at Mumbai) by consenting in the Section 29 -A applications in that court. 15. That an extension was sought the third time, would indicate that this was not a case of a filing by mistake but a conscious pattern of repeated and consistent filing in terms of the understanding of the seat of arbitration. When all these circumstances are put together, it is apparent that the parties were very clear in their mind about the District Court, being the Court under Section 2 (1)(e) of the Act, since they believed the seat was Karjat/Thane. This view would also be consistent with the original incumbent position on the seat having been firmly established in the arbitration clauses in the agreements in question. 16. This view would also be consistent with the original incumbent position on the seat having been firmly established in the arbitration clauses in the agreements in question. 16. It is indeed true that in no proceedings can parties confer jurisdiction on a forum that is inherently devoid of jurisdiction. However, in this case, the key question is that of the location of the seat, which is a product of party autonomy and mutual consent. This is not a simple question of jurisdiction being determined without the need of a jurisdictional fact, which fact falls well within the sovereign autonomy of the parties. This is why the conduct of the parties, from which their agreement can be discerned, cannot be wished away. The District Court is not a forum inherently lacking jurisdiction. Its jurisdiction depends on the consent of the parties. The parties’ consent is seen from their agreements and their conduct. In terms of the written arbitration agreement under Section 7 of the Act, the parties have clearly agreed that it would be Karjat / Thane, and thereafter but for the interlude of the arbitral meeting recording a “decision” by the Learned Arbitral Tribunal about the “seat”, the parties, in their own agency, have repeatedly gone to the District Court for the Section 29 -A proceedings filed by them. 17. The various principles cited from judgements pressed into service by both sides cannot be quarreled with. No judgement has had to deal with the peculiar matrix of facts seen in this case. Indeed, under BGS Soma, an explicit reference to the jurisdiction of courts agreed to by the parties would point to the location of the seat. By that token, the parties had explicitly agreed to jurisdiction of courts in Karjat / Thane. Consequently, the line in the minutes of the arbitral meeting held on November 27, 2017 would not displace the seat. It is not impossible for parties to have displaced the seat by consent before the arbitrator. Equally, subsequent conduct also needs to be considered to see if the parties displaced the seat yet again or if they never intended to change the seat. In short, the stance of the Petitioners taken not only ante-litem (before disputes broke out) but also post-litem (after disputes broke out) consistently point to Karjat / Thane as the seat. Equally, subsequent conduct also needs to be considered to see if the parties displaced the seat yet again or if they never intended to change the seat. In short, the stance of the Petitioners taken not only ante-litem (before disputes broke out) but also post-litem (after disputes broke out) consistently point to Karjat / Thane as the seat. It is only in the solitary line in the minutes of meeting held by the Learned Arbitral Tribunal that there is a doubt, which can be now resolved. 18. It is only when objection to the territorial jurisdiction was taken by the Respondents in the Section 9 Petition, that the Petitioners appeared to have changed their mind to withdraw the third application under Section 29 -A contemporaneously with the filing of the Section 29 -A Petition in this Court. This is a post-litem change that is eroded by the earlier post-litem conduct. 19. The approach to this Court under Section 9 too was made in 2024, a good four years after the Respondents indicated that they were giving up specific performance and chose only to seek damages. Even after the Respondents’ indication of giving up specific performance, the third application under Section 29 -A was filed by the Petitioners in the District Court. The Learned Arbitral Tribunal, which is the master of the proceedings too has accepted the orders received by consent under Section 29 -A twice, without demur about the extension order being non-est in law for having been issued by a forum purportedly lacking in jurisdiction. This facet also cannot be lost sight of. Conclusion: 20. In these circumstances, going by the overall circumstantial evidence available on the record and the conduct of the parties, the conundrum is solved by holding that the parties were ad idem in not displacing the agreed seat. The minutes of the arbitral meeting, therefore, have to be reasonably read as a matter of operational convenience of the parties, as shifting the venue to Mumbai. The seat always remained Karjat / Thane.Even if it were changed to Mumbai, the parties by their conduct, changed it again to the originally agreed position. 21. Therefore, I hold that this Court does not have territorial jurisdiction. The Petitioners are at liberty to go back to the District Court, , as they did twice in the past, seeking extension of the mandate. 21. Therefore, I hold that this Court does not have territorial jurisdiction. The Petitioners are at liberty to go back to the District Court, , as they did twice in the past, seeking extension of the mandate. Since I have held that this Court does not have territorial jurisdiction, I refrain from commenting upon the manner of conduct by the parties before the Arbitral Tribunal and the length of time for which these proceedings have meandered along since 2017. 22. The Petition under Section 29 -A is disposed of in the aforesaid terms. 23. The Section 9 petition, which was not listed yesterday, but is listed today, too cannot be considered for want of jurisdiction. Therefore, the Section 9 Petition is also disposed of without any intervention being made. The Petitioners are at liberty to approach the relevant court with an appropriate application in this regard. Being devoid of territorial jurisdiction, I make no comment about the potential for a Section 9 Petition being filed when arbitration is well underway. 24. All actions required to be taken pursuant to this order, shall be taken upon receipt of a downloaded copy as available on this Court’s website.