Shrawan Kumar Saraff v. M/S Gannon Dunkerley and Co. Ltd.

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.”

15. The respondent has placed reliance on Clause 3 of the General Conditions of Contract as stipulated in the Work Order. The relevant clause reads as under –

16. It is well settled that the stipulation of the kind incorporated in clause 3 of the aforesaid General Conditions of Contract cannot be construed to be in the nature of ‘contrary indicia’ so as to divest the jurisdiction of the Court where arbitral proceedings are mandatorily required to be conducted in terms of specific covenants in the arbitration clause.

17. Importantly, Clause 3 of the GCC does not expressly referred to arbitration proceedings when it speaks of Courts in Kolkata having exclusive jurisdiction.

18. In Reliance Infrastructure Limited v. Mandhyanchal Vidyut Vitran Nigam Limited, 2023:DHC:5745 this Court dealt with the similar situation wherein the Arbitration Clause stipulated that the venue of arbitration shall be New Delhi, whereas another part of the contract provided that another Court shall have exclusive Jurisdiction in all matters arising out of the Contract. It was held by this Court as under:- “32. On a conspectus of the aforesaid judgments, the position of law that emerges is that when the contract contains an arbitration clause that specifies a “venue”, thereby anchoring the arbitral proceedings thereto, then the said “venue” is really the “seat” of arbitration. In such a situation the courts having supervisory jurisdiction over the said “seat” shall exercise supervisory jurisdiction over the arbitral process, notwithstanding that the contract contains a clause seeking to confer “exclusive jurisdiction” on a different court.

33. In the present case, the relevant clause in the LOA purporting to confer “exclusive jurisdiction” is a generic clause, and does not specifically refer to arbitration proceedings. For this reason, the same also does not serve as a “contrary indicia” to suggest that that Delhi is merely the “venue” and not the “seat” of Arbitration. As such, the same cannot be construed or applied so as to denude the jurisdiction of the Courts having jurisdiction over the “seat” of Arbitration.”

19. In Cars24 Services Pvt. Ltd. v. Cyber Approach Workspace LLP 2020:DHC:3257 it has been held as under:- “58. Aarka Sports Management Pvt. Ltd[4] – on which, too, Mr. Srivastava relied – did not deal with any conflict between the exclusive jurisdiction clause and the seat of arbitration clause, for the simple reason that there was no seat of arbitration clause. The contract, however, stipulated that the jurisdiction of the agreement would be exclusively “in the Courts of New Delhi, India”. In this background, this Court held that, as Delhi was not the seat of arbitration, and no cause of action arose at Delhi, this Court would not have jurisdiction to deal with the matter. Though Mr. Srivastava places reliance on the general principle, enunciated in para 24 of the report in the said case, to the effect that “once the seat is determined, the Court of that place shall have exclusive jurisdiction to deal with all matters relating to the arbitration agreement between the parties”, that principle, in my view, would necessarily be required to be applied with caution in a case such as the present, where exclusive jurisdiction, qua a particular relief – specifically, appointment of the arbitrator – available under the 1996 Act, is contractually conferred on courts located elsewhere than at the seat of arbitration

20. The Division Bench of this Court in Yash Deep Builders LLP v. Sushil Kumar Singh and Ors, MANU/DE/1688/2024, while relying upon the judgment rendered in Reliance (supra) has observed as under –.”

the jurisdiction of courts at Gurugram, Haryana alone. The other being Clause 23 (arbitration) stipulating that “in the event any dispute or difference arises out of or in connection with the interpretation or implementation of this agreement, or out of or in connection with the breach, or alleged breach of this agreement, such dispute shall be referred to arbitration under the Arbitration and Conciliation Act, 1996 to be decided by a sole arbitrator appointed mutually by the parties hereto. In case of any difference between the parties on appointment of a sole arbitrator, the Arbitration Tribunal shall consist of three arbitrators. The second party shall appoint one arbitrator and the first party shall appoint the second arbitrator. The third arbitrator shall be appointed by the two selected arbitrators failing which such appointment shall be done by the Arbitration Council of India, New Delhi. The decision taken by the majority of arbitrators shall be final and binding on the parties hereto. The venue of the arbitration shall be at Delhi, India.

44. Clause 23 is the arbitration clause and it is distinct from Clause 19. The arbitration contract is contained in Clause 23 and it is a complete contract between the parties relating to arbitration. When Clause 23 is read, it clearly establishes that the parties agreed that the venue of the entire arbitration proceedings would be Delhi, India. Even in case of a disagreement between the two selected arbitrators, the appointment of the third arbitrator is to be done by the Arbitration Council of India, New Delhi, Clause 23.1.5, which is under the main Clause 23 pertaining to arbitration stipulates that the provisions of the clause shall survive the termination of the agreement. This clearly shows that Clause 23 pertaining to arbitration is distinct from the collaboration agreement and is to survive even the termination of the agreement.”

21. As such, Clause 3 of the GCC does not detract from the position that Delhi is the seat of arbitration. Consequently, this Court has jurisdiction to entertain the present petition.

22. There is also no merit in the second objection raised on behalf of the respondent. Clause 27 of the agreement explicitly states: “If the parties fail to settle their differences or disputes arising out of or in connection with this Work Order (including interpretation of the terms thereof) and the order/work value is more than INR one crore

23. The respondent’s final contention is that the petitioner failed to comply with the mandatory pre-arbitration conciliation process prescribed in Clauses 27 and 40 of the Work Order. Clause 40 provides as under -, the same shall be referred to arbitration.” Thus, what is contemplated is that the order/work value should be more than Rs. 1,00,00,000/-. In the present case, the total orders/work value is Rs.8,73,33,180/-, as is evident from the work order itself which far exceeds threshold contemplated in the clause. As such, the objection raised by the respondent is based on misreading of the said Clause 27.

The respondent argues that this prescribed process was not followed, rendering the petitioner’s actions procedurally flawed.

24. It has been held by this Court in numerous judgments that preconditions in arbitration agreements requiring parties to exhaust pre-arbitral resolution mechanisms, such as mediation or conciliation, are directory rather than mandatory. In Oasis Projects Ltd. v. National Highway & Infrastructure Development Corporation Limited 2023/DHC/000828, it was reiterated that such pre-conditions do not bar a party from invoking arbitration if they are not strictly complied with.

protocol for amicable resolution, such as issuance of a notice in that regard and completion of any stipulated time period thereafter, before which arbitral proceedings could be invoked. In the absence of any such stipulation, I am of the opinion, following the law laid down in Demarara Distilleries Pvt. Ltd. and Ravindra Kumar Verma v. BPTP Ltd. nothing worthwhile would be achieved, by relegating the parties to explore any avenue of amicable resolution. Besides, the appointment of an arbitrator by this Court would not act as an impediment in the parties resolving their disputes amicably, should it be possible at any point of time.”

26. Importantly, the Supreme Court in the case of In Re: Interplay between Arbitration Agreement under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899 In re, 2023 SCC OnLine SC 1666, and SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 SCC OnLine SC 1754 has exclusively laid down that the scope of examination in these proceedings are confined to ascertaining, prima facie, the existence of an arbitration agreement. In the present case, the existence of the arbitration agreement is prima facie established. As such, there is no impediment in appointing an independent sole arbitrator to adjudicate the disputes between the parties.

27. Accordingly, Mr. Raman Yadav, Advocate (Mob. No. +91

9999345388) is appointed as the Sole Arbitrator to adjudicate the disputes between the parties.

28. The respondent shall be entitled to raise preliminary objections as regards jurisdiction/arbitrability, which shall be decided by the learned arbitrator, in accordance with law.

29. The learned Sole Arbitrator may proceed with the arbitration proceedings subject to furnishing to the parties requisite disclosures as required under Section 12 of the A&C Act.

30. The learned Sole Arbitrator shall be entitled to fee in accordance with Fourth Schedule to the A&C Act; or as may otherwise be agreed to between the parties and the learned Sole Arbitrator.

31. All rights and contentions of the parties in relation to the claims/counter-claims are kept open, to be decided by the learned Arbitrator on their merits, in accordance with law.

32. Needless to say, nothing in this order shall be construed as an expression of this court on the merits of the case.

33. The present petition stands disposed of in the above terms.

SACHIN DATTA, J NOVEMBER 21, 2024