M/S PARWANI ENTERPRISES v. T BHIMJYANI WAREHOUSING COLD CHAIN PVT. LTD.

13. Learned counsel for the respondent has sought to highlight a seeming dichotomy within the arbitration clause in the agreement inasmuch as on the one hand, it is mentioned that the arbitration “shall be held in Delhi” and on the other hand, the agreement has been made “subject to Sonepat jurisdiction”.

14. It is now conclusively settled that a generic provision in the agreement to the effect that the same is subject to “Sonepat jurisdiction” would not detract from the exclusive jurisdiction of the Court at the seat of arbitration.

15. In Reliance Infrastructure Limited v. Mandhyanchal Vidyut Vitran Nigam Limited, 2023:DHC:5745, this Court was considering an identical situation in the context of the following clauses in the General Conditions of Contract:- “48.0 ARBITRATION 48.[1] All disputes or differences in respect of which the decision, if any, of the Engineer has not become final or binding as aforesaid shall be settled by arbitration in the manner hereinafter provided. 48.1.[1] The arbitration shall be conducted by three arbitrators, one each to be nominated by the Contractor and the Employer and the third to be appointed as an umpire by both the arbitrators in accordance with the Indian Arbitration Act. If either of the parties fails to appoint its arbitrator within sixty (60) days after receipt of a notice from the other party invoking the Arbitration Clause, the arbitrator appointed by the party invoking the arbitration clause shall become the sole arbitrator to conduct the arbitration. 48.1.[2] The arbitration shall be conducted in accordance with the provisions of the Indian Arbitration Act, 1940 or any statutory modification thereof. The venue of arbitration shall be New Delhi. 48.[2] The decision of the majority of the arbitrators shall be final and binding upon the parties. The arbitrators may, from time to time with the consent of the parties enlarge the time for making the award. In the event of any of the aforesaid arbitrators dying, neglecting, resigning or being unable to act for any reason, it will be lawful for the party concerned to nominee another arbitrator in place of the outgoing arbitrator. 48.[3] The arbitrator shall have full powers to review and/or revise any decision, opinion direction, certification or valuation of the Engineer in accordance with the arbitrators to the evidence or arguments put before the Engineer for the purpose of obtaining the said decision. 48.[4] No decision given by the Engineer in accordance with the foregoing provisions shall disqualify him as being called as a witness or giving evidence before the arbitrators on any matter whatsoever relevant to the dispute or difference referred to the arbitrators as aforesaid. 48.[5] During settlement of disputes and arbitration proceedings, both parties shall be obliged to carry out their respective obligations under the Contract.”

5. The petitioner was declared as a successful bidder by the respondent and consequently, the two Contracts were awarded to the petitioner. The Letter of Awards (“LOA”) dated 01.08.2005 that came to be issued, contained the following stipulation: “21.0

SETTLEMENT OR DISPUTES AND ARBITRATION: 21.[1] All the difference or disputes arising out of this Contract shall be settled through the process of “Settlement of Disputes” and “Arbitration” as per clause 49.0 Section-GCC. Conditions of Contract Vol-III of the bidding Documents/The provision of Arbitration & Reconciliation Act, 1996 as amended from time to time, shall apply 21.[2] The local court of Lucknow, high court of Allahabad & Supreme Court of Delhi along shall have the exclusive jurisdiction in all matters arising out of this contract.”

16. In the above context, where the ‘venue of arbitration’ was prescribed to be Delhi, and despite another Clause in the contract purporting to confer “exclusive jurisdiction in all matters arising of this contract” to some other court/s, it was held 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.”

17. 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 – “42. In Reliance Infrastructure Limited v. Madhyanchal Vidyut Vitran Nigam Limited MANU/DE/5224/2023, another learned single judge of this court referring to several judgments held that the choice of Delhi as the venue of arbitration was demonstrative of the fact that the arbitral proceedings were intended to be anchored to Delhi, and in the absence of any contrary indicia, the inexorable conclusion was that Delhi is the seat of Arbitration. It was further held 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. Further, that a generic clause, not specifically referring to arbitration proceedings would not serve as a "contrary indicia" so as to denude the jurisdiction of the Courts having jurisdiction over the "seat" of Arbitration.

43. Coming back to the facts of the present case, reference has been made by the parties to two different clauses of the collaboration agreement. One is Clause 19 (jurisdiction) which stipulates that all matters concerning the agreement and the development of the scheduled property shall be subject to 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.”

18. In Cinepolis India Pvt. Ltd. v. Celebration City Projects Pvt. Ltd. (2020) 2 Arb LR 355 (Del), the Court observed as under –

determine the territorial jurisdiction of a Court. Where the words in the arbitration clause are neither seat nor place and the arbitration clause only refers to words such as ‘venue’ or “held in” the intent of the parties would have to be seen from the agreement. If the parties intend that the arbitration proceedings are to be held as a whole at that particular venue then the venue also becomes a juridical seat. It is also clear from the now well settled law that it is the seat or the juridical seat which will be the guiding factor for a Court to determine its jurisdiction while examining a petition under Section 11 of the Act.”

19. In the present case, the agreement unequivocally provides that the arbitration shall be held in Delhi. The agreement does not afford any choice to the parties to conduct the arbitral proceedings at any other place.

20. It is thus evident that the parties intended to anchor the arbitral proceedings to Delhi. The inevitable inference is that Delhi is the seat of arbitration and therefore this Court, having jurisdiction over the seat of arbitration, has the territorial jurisdiction to entertain the present petition.

21. The judgments cited by the respondent do not apply to the facts and circumstances of the present case. The arbitration clause in the case of Kush Raj Bhatia (supra) was in the following terms:-

the Lessee or is otherwise connected to the Lessee and the Lessor confirms that notwithstanding such relationship/connection, the Lessor shall have no doubts as the appointment even if the person so appointed, as the Arbitrator, is an employee or Advocate of the Lessee or is otherwise connected to the Lessee and the Lessor confirms that notwithstanding such relationship/connection, the Lessor shall have no doubts as to the independence or impartiality of the said Arbitrator.” xxx xxx xxx

15. The main argument is in respect of the jurisdiction of this Court to entertain the petition under Section 11 of A&C Act, 1996. It is claimed that under Clause 49 of the Lease Deed, it has been clearly provided that the Civil Court at Gurgaon and High Court at Chandigarh alone shall only jurisdiction. Clause 49 reads as under: That the Civil Courts at Gurgaon and High Court at Chandigarh alone shall have jurisdiction

22. The use of the word “appropriate location” in that case, was clearly indicative that Delhi was merely a convenient venue for holding the arbitral proceedings..”

23. Likewise, in other judgments relied upon by the respondent, the conclusion of the Court turned on the peculiar language of the concerned arbitration clauses in terms of which it was construed that the prescribed place for conduct of arbitral proceedings was merely the venue and not the seat.

24. Likewise, in Meenakshi Nehra Bhat and Anr. v. Wave Megacity Centre Private Limited, 2022 SCC OnLine Del 3744, it was held that the prescription regarding holding of the arbitral proceedings in Delhi was indicative only of a convenient location for holding the arbitration seatings and could not be considered to be a choice of “seat”. This was in the light of the peculiar language of the clause in that case, which contemplated that the arbitration proceedings shall be held at “the corporate office of the Developer alone in the New Delhi”. Thus, the situs/place of arbitration was one dictated by or dependent upon the location of the corporate office of the Developer in that case. On the contrary, in the present case, the arbitration agreement is unequivocal that the arbitral proceedings “shall be held in Delhi”.

25. Isgec Heavy Engineering (Supra) is also distinguishable from the present case as the jurisdiction clause therein explicitly mentions that the Guwahati Courts will have the jurisdiction even with respect to the arbitration. The relevant portion of the case is as under –

13. The above position gets reinforced upon a plain reading of Article 4 of the Contract. This clause vests exclusive jurisdiction at the civil court(s) at Guwahati for - all actions/proceedings, including arbitration, and reads as under:— “ARTICLE 4 - JURISDICTION: 4.[1] Notwithstanding any other court or courts having jurisdiction to decide the question(s) forming the subject-matter of the reference if the same had been the subject-matter of a suit, any and all actions and proceedings arising out of or relative to the contract (including any arbitration in terms thereof) shall lie only in the Court of Competent Civil Jurisdiction in this behalf at GUWAHATI (where this contract has been signed on behalf of the Owner) and the said Court(s) shall have jurisdiction to entertain and try such actions and/or proceeding(s) to the exclusion of all other Courts.” [Emphasis supplied]

14. As opposed to the general stipulation in Clause 9.1.2.0, Article 4 is worded in clear, unambiguous, and directory terms. In fact, it serves as the ‘contrary indica’, which further demonstrates that the ‘venue’ in Clause 9.1.2.0 is only a physical place of meeting under Section 20(3) of the Act. Article 4 - leaves no room that all actions and proceedings arising out of the Contract, including arbitration, shall have to necessarily be tried by the civil court(s) at Guwahati exclusively, and does not lead to jurisdiction being vested in the court(s) at Delhi.

15. For the reasons laid out above, this Court is of the view that Clause 9.1.2.0 only provides a ‘venue’ of arbitration, and the juridical ‘seat’ shall vest with the civil court (s) at Guwahati.

26. In the circumstances, there is no impediment in appointing a sole arbitrator to adjudicate the disputes between the parties as contemplated in terms of Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re, 2023 SCC OnLine SC 1666

27. Accordingly, Ms. Tanvi Nigam, Advocate (Mob. No.: +91.9560586644) is appointed as the Sole Arbitrator to adjudicate the disputes between the parties. and SBI General Insurance Co. Ltd. v. Krish Spinning 2024 INSC 532.

28. It is clarified that the respondent shall be entitled to raise appropriate jurisdictional objections/move application under Section 16 of the Arbitration and Conciliation Act, 1996 inter alia on the ground that the claim/s sought to be raised fall within the scope of excepted matters.

29. Needless to say, in the event of any application under Section 16 of the Arbitration and Conciliation Act, 1996 being filed, the same shall be dealt with and adjudicated upon by the learned Sole Arbitrator on merits.

30. 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.

31. 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.

32. The parties shall share the arbitrator’s fee and arbitral costs, equally.

33. 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.

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

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

SACHIN DATTA, J OCTOBER 28, 2024/SV, TS