Balancehero India Private Limited v. Arthimpact Finserve Private Limite

confined to Part I. It has a reference and connection with the process of dispute resolution. Its purpose is to identify the courts having supervisory control over the arbitration proceedings. Hence, it refers to a court which would essentially be a court of the seat of the arbitration process. In our opinion, the provision in Section 2(1)(e) has to be construed keeping in view the provisions in Section 20 which give recognition to party autonomy. Accepting the narrow construction as projected by the learned counsel for the appellants would, in fact, render Section 20 nugatory. In our view, the legislature has intentionally given jurisdiction to two courts i.e. the court which would have jurisdiction where the cause of action is located and the courts where the arbitration takes place. This was necessary as on many occasions the agreement may provide for a seat of arbitration at a place which would be neutral to both the parties. Therefore, the courts where the arbitration takes place would be required to exercise supervisory control over the arbitral process. For example, if the arbitration is held in Delhi, where neither of the parties are from Delhi, (Delhi having been chosen as a neutral place as between a party from Mumbai and the other from Kolkata) and the tribunal sitting in Delhi passes an interim order under Section 17 of the Arbitration Act, 1996, the appeal against such an interim order under Section 37 must lie to the courts of Delhi being the courts having supervisory jurisdiction over the arbitration proceedings and the tribunal. This would be irrespective of the fact that the obligations to be performed under the contract were to be performed either at Mumbai or at Kolkata, and only arbitration is to take place in Delhi. In such circumstances, both the courts would have jurisdiction i.e. the court within whose jurisdiction the subject-matter of the suit is situated and the courts within the jurisdiction of which the dispute resolution i.e. arbitration is located.”

9. In Enercon (India) Ltd. & Ors. v. Enercon GMBH and Ors.: (2014) 5 SCC 1, the Supreme Court held that “once the seat of arbitration has been fixed in India, it would be in the nature of exclusive jurisdiction to exercise supervisory powers over the arbitration”.

10. The said decision was followed by the Supreme Court in Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. & Ors.: (2017) 7 SCC 678. The Supreme Court referred to various other decisions rendered by it and reiterated the above principle. The relevant extract of the said decision is set out below:

16. It may be mentioned, in passing, that the Arbitration and Conciliation Act, 1996 has been amended in 2015 pursuant to a detailed Law Commission Report. The Law Commission specifically adverted to the difference between “seat” and “venue” as follows:

(ii) While the decision in BALCO was made prospective to ensure that hotly negotiated bargains are not overturned overnight, it results in a situation where Courts, despite knowing that the decision in Bhatia is no longer good law, are forced to apply it whenever they are faced with a case arising from an arbitration agreement executed pre-BALCO.

42. The above issues have been addressed by way of proposed Amendments to Sections 2(2), 2(2-A), 20, 28 and 31.”

11. In Cinepolis India Pvt. Ltd. v. Celebration City Projects Pvt. Ltd. & Anr.: (2020) 2 ArbLR 355 (Del), this Court had examined a controversy arising in respect of an Arbitration Clause which provided that the place of arbitration shall be New Delhi. However, one of the Sub-clauses also provided that the Courts in Ghaziabad would have ‘exclusive jurisdiction’ on the subject matter of the agreement. This Court following the decision of the Constitution Bench of the Supreme Court in Bharat Aluminum Company & Ors. v. Kaiser Aluminum Technical Services & Ors. (supra) and Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. & Ors. (supra), rejected the contention that this Court would not have the jurisdiction to entertain the petition. The Court after referring to various other decisions observed that “what emerges therefore by reading of various judgments referred to above is that it is really the seat of arbitration which is akin to an exclusive jurisdiction clause where there are no contrary provisions in the agreement. The place would be the juridical seat which would determine the territorial jurisdiction of a Court. No doubt, 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.”

12. In view of the above, the Court, where the seat of the arbitration is located, would exercise jurisdiction in respect of the arbitral proceedings.

13. In Mr. Raman Deep Singh Taneja v. Crown Realtech Private Ltd.: (2017) SCC OnLine Del 11966, this Court had examined a similar case. In that case, the Agreement provided that the Courts at Delhi would have jurisdiction, however, Faridabad (Haryana) was agreed as the place of arbitration. This Court following the decision of the Supreme Court in Bharat Aluminum Company & Ors. v. Kaiser Aluminum Technical Services & Ors. (supra) held that place of the court where the subject matter of arbitration is situated, would have precedence over other courts. Accordingly, this Court held that the Courts at Haryana would have exclusive jurisdiction in respect of the arbitral proceedings.

14. The decision in M/s Swastik Gases Pvt. Ltd. v. Indian Oil Corporation Ltd. (supra) has no application in the facts of this case. In that case, the Arbitration Clause did not mention the place of arbitration. However, it did mention that the agreement would be subject to jurisdiction of the courts at Kolkata. It was also not disputed that a part of the cause of action had arisen in Kolkata and that the courts at Kolkata would have jurisdiction in respect of the subject disputes. However, it was contended that the courts at Jaipur would also have jurisdiction over the subject matter as part of the cause of action had arisen within the jurisdiction of the courts at Jaipur. The Supreme Court held that the import of the clause stipulating that the courts at Kolkata would have jurisdiction was that the jurisdiction of other courts was excluded. The controversy involved in this petition is materially different.

15. In the present case, no part of the cause of action has arisen within the territorial jurisdiction of this Court and it is doubtful whether this Court has any jurisdiction in respect of the disputes that have arisen between the parties.

16. In view of the above, the present petition is dismissed while reserving the rights of the parties to approach the appropriate court.

VIBHU BAKHRU, J MARCH 22, 2021 pkv