2020 (4) TMI 831 - SC - Indian Laws

Arbitration clause valid despite different venue specifications when same curial law applies under section 11

The SC allowed the appeal and set aside the HC's permanent injunction that restrained the appellant from relying on arbitration clauses. The court held ... Waiver of right to object under Section 4 - Competence of arbitral tribunal to rule on its jurisdiction under Section 16 - Place of arbitration and party autonomy to agree venue - Deemed waiver for failure to raise jurisdictional or venue objections during arbitral proceedings - Institutional appointment of arbitrator by CIACWaiver of right to object under Section 4 - Competence of arbitral tribunal to rule on its jurisdiction under Section 16 - Deemed waiver for failure to raise jurisdictional or venue objections during arbitral proceedings - Whether the respondent, having not taken objection to jurisdiction, composition or venue before the arbitral tribunal and having allowed the arbitral proceedings to conclude, is deemed to have waived those objections. - HELD THAT: - The Court examined Sections 4 and 16 and the authorities applying them. Section 16 permits the arbitral tribunal to rule on its own jurisdiction and requires pleas against jurisdiction to be raised not later than submission of statement of defence, while Section 4 treats as waived any objection known to a party which it proceeds with the arbitration without stating without undue delay. Applying these principles and the precedents (including Narayan Prasad Lohia), the Court found that the respondent never raised objections to jurisdiction or venue before the arbitrator, participated not at all in the proceedings and allowed an ex parte award to be passed. In these circumstances the respondent must be deemed to have waived the right to object to the tribunal's jurisdiction or to the venue of the arbitration, and is precluded from raising those objections subsequently under Section 34. [Paras 16, 23]Respondent waived objections to jurisdiction/venue by failing to raise them before the arbitral tribunal and is precluded from raising them subsequently.Place of arbitration and party autonomy to agree venue - Institutional appointment of arbitrator by CIAC - Deemed waiver for failure to raise jurisdictional or venue objections during arbitral proceedings - Whether the High Court at Calcutta was correct in setting aside the order of the Alipore Court that declined jurisdiction, and whether the award was vitiated because one agreement specified Kolkata as venue while proceedings took place at Delhi. - HELD THAT: - The Court observed that although one agreement specified Kolkata as venue and others provided for New Delhi, the arbitration was a domestic institutional arbitration where CIAC nominated the arbitrator under a common modality. The specification of place has different implications in international arbitrations; here substantive and curial law were the same. Given that the respondent did not challenge the arbitral tribunal's jurisdiction or venue during proceedings, and permitted an ex parte award, the Alipore Court's conclusion that jurisdiction for setting aside lay in New Delhi was correct. The High Court erred in setting aside the Alipore Court's order restoring the petition; the cause title by itself indicating amenability to Alipore was not decisive. [Paras 22, 24]High Court erred in setting aside the Alipore Court's order; the Alipore Court's decision declining jurisdiction was correct in view of the respondent's waiver and the institutional arbitration by CIAC did not render the award invalid.Final Conclusion: Appeal allowed. The judgment and order under challenge are set aside and the Order dated 13.08.2018 of the Court at Alipore in Misc. Case No.298 of 2015 is restored. No costs. Issues Involved:1. Existence and validity of arbitration agreements.2. Jurisdiction of the arbitration proceedings.3. Waiver of the right to object by the respondent.4. Validity of the arbitral award and its enforcement.Detailed Analysis:1. Existence and Validity of Arbitration Agreements:The respondent company, engaged in infrastructure development, entered into multiple agreements with the claimant company for renting construction equipment. Each agreement contained an arbitration clause specifying different venues for arbitration. The respondent later denied the existence of these agreements, leading to a legal dispute.2. Jurisdiction of the Arbitration Proceedings:The agreements specified different venues for arbitration. The agreement dated 01.08.2010 specified New Delhi, while the agreement dated 14.04.2011 specified Kolkata. The claimant initiated arbitration proceedings in New Delhi, which the respondent contested, arguing that the venue should be Kolkata as per one of the agreements.3. Waiver of the Right to Object by the Respondent:The respondent did not participate in the arbitration proceedings and failed to raise any objections regarding the jurisdiction or the arbitrator's authority during the arbitration. The Supreme Court noted that under Sections 4 and 16 of the Arbitration and Conciliation Act, 1996, the respondent's failure to object in a timely manner constituted a waiver of their right to raise such objections later.4. Validity of the Arbitral Award and Its Enforcement:The arbitrator issued an ex-parte award in favor of the claimant, covering all four agreements, and awarded the claimant a sum of Rs. 78,78,533 along with interest and costs. The respondent challenged the award under Section 34 of the Act, arguing jurisdictional issues. The Court at Alipore dismissed the petition, stating that the arbitration proceedings were validly conducted in New Delhi as per the agreements.Separate Judgments:The Supreme Court upheld the decision of the Court at Alipore, emphasizing that the respondent had waived their right to object to the arbitration venue by not raising timely objections. The Court also clarified that the cause title indicating the appellant's amenability to the jurisdiction of the Alipore Court was not a decisive factor.Conclusion:The Supreme Court allowed the appeal, set aside the judgment of the High Court at Calcutta, and restored the order of the Court at Alipore, thereby validating the arbitral award and the proceedings conducted in New Delhi. The respondent's failure to object timely was deemed a waiver of their right to contest the jurisdiction of the arbitration.