TaxTMI 
TaxTMI 
2019 (7) TMI 1287
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....to procure the Iron Ore Pellets from other sources at higher rates. The appellant denied any liability to pay damages on the ground that contract was later modified and that the respondent breached the material terms of the contract and this led to the dispute between the parties. 4. Clause 18 of the agreement between the parties contains an arbitration clause which reads as under:- "18. Arbitration shall be under Indian Arbitration and Conciliation Law 1996 and the Venue of Arbitration shall be Bhubaneswar." 5. The respondent on 07.10.2016 invoked arbitration clause. The appellant did not agree for the appointment of the arbitrator. Hence, the respondent filed petition being OP No.398 of 2018 under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') before the Madras High Court on 24.01.2018 for appointment of sole arbitrator. The appellant contested the petition challenging the jurisdiction of the Madras High Court on the ground that the parties have agreed that Seat of arbitration be Bhubaneswar and therefore, only the Orissa High Court has exclusive jurisdiction to appoint the arbitrator. The Madras High Court vide impugned order appointed a....
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.... "exclusive", "only" etc. or other circumstances, then only the jurisdiction of the other court which otherwise would have had jurisdiction would stand excluded. Taking us through the impugned order, the learned counsel for the respondent submitted that mere expression "venue of arbitration shall be Bhubaneswar will have no special significance" and the High Court rightly exercised its jurisdiction under Section 11 (6) of the Act in appointing the arbitrator. 8. We have carefully considered the submissions of both the parties and perused the impugned order and the judgments relied upon by the parties. 9. As per Section 2(2) of the Act, arbitrations which take place in India are governed by Part-I of the Act. The "court" which will have jurisdiction to decide the questions forming the subject matter of arbitration is the "court" as defined by Section 2(1)(e) of the Act which reads as under:- 2. Definitions. - (1) In this Part, unless the context otherwise requires,- ...... (e) "Court" means - (i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court ....
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....main in India. The court then envisages a situation where the arbitration agreement designates a foreign Seat and also selects Arbitration Act, 1996 as the law applicable to the conduct of arbitration proceedings and in such circumstances, hearing of the arbitration conducted at the venue fixed by the parties would not have the effect of changing the Seat of arbitration which would remain in India. In para (100), the Supreme Court held as under:- "100. True, that in an international commercial arbitration, having a seat in India, hearings may be necessitated outside India. In such circumstances, the hearing of the arbitration will be conducted at the venue fixed by the parties, but it would not have the effect of changing the seat of arbitration which would remain in India. The legal position in this regard is summed up by Redfern and Hunter, The Law and Practice of International Commercial Arbitration (1986) at p. 69 in the following passage under the heading "The Place of Arbitration": This, in our view, is the correct depiction of the practical considerations and the distinction between "seat" [Sections 20(1) and 20(2)] and "venue" [Section 20(3)]. We may point out here th....
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....art 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 p....
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....orial jurisdiction of the Rajasthan High Court in the matter. The plea of Indian Oil Corporation was that the agreement has been made subject to jurisdiction of the courts at Kolkata and Rajasthan High Court lacks the territorial jurisdiction in dealing with the application under Section 11(6) of the Act. The designated judge held that Rajasthan High Court did not have territorial jurisdiction to entertain the application under Section 11(6) of the Act and gave liberty to Swastik to file the arbitration application in Calcutta High Court which order came to be challenged before the Supreme Court. Pointing out that the words like "alone", "only", "exclusive" or "exclusive jurisdiction" have not been used in the agreement and use of such words is not decisive and non-use of such words does not make any material difference as to the intention of the parties by having clause 18 of the agreement that the courts at Kolkata shall have the jurisdiction, the Supreme Court held as under:- "31. In the instant case, the appellant does not dispute that part of cause of action has arisen in Kolkata. What appellant says is that part of cause of action has also arisen in Jaipur and, therefore, ....
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.....B.C. Laminart Private Limited v. A.B.C. Agencies (1989) 2 SCC 163, R.S.D.V. Finance Corporation Private Limited v. Shree Vallabh Glass Works Limited (1993) 2 SCC 130, Angile Insulations v. Davy Ashomore India Limited (1995) 4 SCC 153, Shriram City Union Finance Corporation Limited v. Rama Mishra (2002) 9 SCC 613, Hanil Era Textiles Limited v. Puromatic Filters Private Limited (2004) 4 SCC 671 and Balaji Coke Industry Private Limited v. Maa Bhagwati Coke Gujarat Private Limited (2009) 9 SCC 403." [underlining added] 14. In Swastik, the Supreme Court held that clause like (18) of the agreement will not be hit by Section 23 of the Contract Act and it is not forbidden by law nor it is against public policy. It was so held that as per Section 20 of the Act, parties are free to choose the place of arbitration. This "party autonomy" has to be construed in the context of choosing a court out of two or more courts having competent jurisdiction under Section 2(1) (e) of the Act. 15. The inter-play between "Seat" and "place of arbitration" came up for consideration in the case of Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd. and others (2017) 7 SCC 678. After referr....