8 August 2022


Judgments

High Court of Delhi

Aarka Sports Management Pvt. Ltd. Vs. Kalsi Buildcon Pvt. Ltd.

MANU/DE/1347/2020

06.07.2020

Arbitration

Once the seat is determined, the Court of that place shall have exclusive jurisdiction to deal with all matters relating to arbitration agreement between the parties

The Petitioner is seeking appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. The arbitration agreement between the parties is contained in clause 15 of the operation, maintenance and management agreement dated 16th March, 2018.

The arbitration agreement as well as notice of invocation is not disputed. Learned counsel for the Respondent however disputes the jurisdiction of present Court to entertain this petition. According to the Respondent, Delhi is neither the seat of arbitration nor any cause of action arose at Delhi. The agreement was drawn at Ranchi; the agreement was signed at Lucknow and the place of performance/execution of the agreement was Patna, Bihar.

Learned counsel for the Petitioner urged at the time of the hearing that, this Court has exclusive jurisdiction to entertain this petition under clause 15.1 which specifically provides that the jurisdiction of the agreement shall be exclusively with the Courts at New Delhi.

Section 20 (1) of the Act, 1996 empowers the parties to determine the seat of arbitration. The parties are at liberty to choose a neutral seat of arbitration where neither the cause of action arose nor the parties reside or work and Sections 16 to 20 of the Code of Civil Procedure, 1908 (CPC) would not be attracted. Once the seat is determined, the Court of that place shall have exclusive jurisdiction to deal with all matters relating to arbitration agreement between the parties.

If the parties have not determined the seat of arbitration, the seat of arbitration shall be determined by the Arbitral Tribunal under Section 20(2) of the Act, 1996. If the parties have not agreed on the seat of the arbitration, the Court competent to entertain an application under Section 11 of the Act, 1996 would be the “Court” as defined in Section 2(1) (e) of the Act read with Sections 16 to 20 of the CPC.

The arbitration agreement dated 16th March, 2018 does not stipulate any seat of arbitration as the parties had not agreed on the seat of the arbitration under Section 20(1) of the Act, 1996. In that view of the matter, the seat of the arbitration shall be determined by the Arbitral Tribunal under Section 20(2) of the Act, 1996. Since the parties have not agreed on the seat of the arbitration, the Court within the meaning of Section 2(1)(e) of Act, 1996 read with Sections 16 to 20 of CPC would be competent to entertain an application under Section 11 of the Act,1996.

This Court lacks territorial jurisdiction as Delhi is not the seat of arbitration; no cause of action arose at Delhi and the respondent does not work at Delhi. The agreement was drawn at Ranchi, signed at Lucknow and was to be performed at Patna.

The Petitioner could have succeeded, if the agreement had provided the seat of arbitration to be Delhi. In that case, this Court would have exclusive jurisdiction to entertain this application. Clause 15.1 which provides for exclusive jurisdiction of Delhi Courts, is not valid as the parties cannot confer jurisdiction on a Court which otherwise has no jurisdiction. The jurisdiction, in the present case, has to be determined according to Section 2(1)(e) of the Act, 1996 read with Sections 16 to 20 of the CPC. This Court holds that it has no territorial jurisdiction to entertain this Arbitration petition. The petition is dismissed with liberty to the petitioner to approach the Court of competent jurisdiction.

Tags : Agreement Dispute Jurisdiction

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