TaxTMI 
TaxTMI 
2019 (9) TMI 1701
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....an Region, Thana (hereinafter "MSME Council"). The learned Single Judge dismissed the aforesaid petition on the ground that this Court does not have the territorial jurisdiction to entertain the petition. Since the learned Single Judge has not examined merits of the case and has decided the petition only on the ground of jurisdiction, the scope of the present appeal lies in narrow compass and is restricted to evaluation of the legality of the impugned order on the issue of jurisdiction of this Court. Brief Facts: 3. The bare essential facts that are necessary for disposing of the present appeal are as follows: 3.1. Pursuant to a Notice Inviting Tender issued by the Appellant for "Supply, Installation, Testing, Commissioning and 5 years AMC of 1000 KW Grid Interactive Solar Power System at Gujarat Refinery", a purchase order was issued to the Respondent for Rs. 4,95,00,000/- (Rupees Four Crore Ninety-Five Lac Only). Certain disputes arose between the parties and on 6th March 2017, Appellant issued a Show Cause Notice as to why the Respondent should not be debarred from entering into any contracts with the Appellant because of its failure to comply with the terms of co....
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....ion of the impugned judgment is reproduced hereunder: "5. I am unable to agree with the submission made by the learned senior counsel for the petitioner for more than one reason. 6. At first, it is seen that Clauses 34 and 35 of the GPC relied upon by the learned senior counsel for the petitioner do not provide for an exclusive 'Seat of arbitration' nor vest exclusive jurisdiction in this Court. Clause 34 infact, leaves the Venue of arbitration as blank 'or' at New Delhi. Therefore, the parties were to decide on the Venue of arbitration in terms of Clause 34 GPC. 7. By not filling up the blank in Clauses 34 of the GPC, it is apparent that the parties did not arrive at a consensus or a determination on the Venue leave alone the Seat of arbitration. 8. Equally, in Clause 35 of the GPC, the blank was again not filled up by the parties, clearly showing that the parties either could not arrive at a consensus on vesting exclusive jurisdiction to any Court or did not deem it appropriate to do the same. Merely because an alternate was given for the Venue of arbitration to be at Delhi or the Court(s) at Delhi to have jurisdiction would not....
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....upplied located within its jurisdiction and a buyer located anywhere in India. (5) Every reference made under this section shall be decided within a period of ninety days from the date of making such a reference." 12. A reading of the above provision would show that the MSME Council, where the supplier is located, shall have jurisdiction in the matter. In exercise of this power, MSME Council at Thane exercised its jurisdiction in the present dispute. The Seat of arbitration, therefore, would be at Thane, Maharashtra and even applying the judgment of the Supreme Court in Indus Mobile (supra), it would only be the Courts at Thane which will have exclusive jurisdiction to entertain the present petition. 13. To hold, otherwise, would infact run counter to the mandate of the MSMED Act. The MSMED Act being a special legislation dealing with;-the Micro, Small and Medium Enterprises, would certainly have precedence over the general law, that is the Arbitration and Conciliation Act, 1996. (emphasis supplied) 5. Before dealing with the contentions of the parties it is also apposite to refer to the relevant clauses of the GPC that have been noticed in the impu....
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....y are located." (emphasis supplied) Contentions of the Parties 6. Mr. Abhinav Vashisht, learned Senior Counsel appearing on behalf of the Appellant contended that the learned Single Judge has wrongly interpreted Clause 34 & 35 of GPC. He argued that by keeping blanks in the aforesaid Clause, it implies that the parties agreed to expressly vest exclusive jurisdiction to the Courts at Delhi, as no other place of jurisdiction finds mention in the said Clauses. It was further contended that the impugned order is erroneous both on facts and law, inasmuch as the learned Single Judge has wrongly interpreted the concept of 'SEAT' in respect of arbitration proceedings. Mr. Vashisht urged that the provisions of the MSME Act referred to in the impugned order are applicable only to dispute resolution proceedings i.e. Conciliation and/or Arbitration and after conclusion of the dispute resolution proceedings under Section 18 (4) of the MSME Act, the MSME Council does not have jurisdiction in respect of proceeding(s) that may be undertaken thereafter, and jurisdiction of the court has to be ascertained in accordance with the agreement between the parties. 7. Mr. Rajesh Sharda,....
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....o not show that any cause of action has arisen in Delhi. d) Clause 18 of MSME Act shows that the jurisdiction of the MSME Council is on the basis of the location of the supplier. In the instant case, the MSME Council at Thane exercised its jurisdiction. The seat of arbitration was at Thane and accordingly in terms of the judgment of Indus Mobile (supra), the Courts at Thane would have the exclusive jurisdiction. e) Any interpretation would be contrary to the mandate of MSME Act. 10. An analysis of the impugned judgment reveals that the learned Single Judge was persuaded to reject the petition, primarily for the reason that the Clauses, referred to above, contain certain blanks, with respect to the seat and venue of Arbitration. The learned Single Judge held that since the relevant portion of the said Clauses is blank, it demonstrates that the parties could not arrive at a consensus on vesting exclusive jurisdiction to any Court. 11. We do not agree with the aforesaid findings. The fact that the parties did not fill the blanks, would be a measure of significance, but to the contrary. The contracting parties had the option to agree to the venue of the arbitrat....
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....to disregarding the test of business efficacy. This is because the placeholder that was not filled does not render the clause unworkable. The clause remains legally enforceable. It is also to be noted that filling in the name of another city before conjunction 'or' would have rendered the exclusivity of jurisdiction ambiguous. "New Delhi" was certainly one of the firmed-up choice of venue and seat, agreed between the parties. Introduction of another place was certainly a selection that the parties could have made, but since parties did not avail this opportunity, it only means that the agreed place was preserved as final. 13. As a result of the foregoing discussion, the judgments of the Supreme Court in Swastik Gases (supra) and Indus Mobile (supra) would be relevant and applicable. 14. In the case of Swastik Gases (supra), the Supreme Court held that where the ouster is included in an agreement between the parties, it conveys the intention to exclude the jurisdiction of Courts other than those mentioned in the agreement. The Supreme Court also held that absence of the use of words like "alone", "only", "exclusive" or "exclusive jurisdiction" is not decisive, and does....
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....sions of Sections 16 to 21 of CPC be attracted. In arbitration law however, as has been held above, the moment "seat" is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties. 20. It is well settled that where more than one court has jurisdiction, it is open for the parties to exclude all other courts. For an exhaustive analysis of the case law, see Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. [Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd., (2013) 9 SCC 32: (2013) 4 SCC (Civ) 157] This was followed in a recent judgment in B.E. Simoese Von Staraburg Niedenthal v. Chhattisgarh Investment Ltd. [B.E. Simoese Von Staraburg Niedenthal v. Chhattisgarh Investment Ltd., (2015) 12 SCC 225: (2016) 1 SCC (Civ) 427] Having regard to the above, it is clear that Mumbai courts alone have jurisdiction to the exclusion of all other courts in the country, as the juridical seat of arbitration is at Mumbai. This being the case, the impugned judgment [Datawind Innovations (P) Ltd. v. Indus Mobile Distribution (P) Ltd., 2016 SCC OnLine Del 3744] i....
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....ts filed in courts, a reference to "seat" is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction -- that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Sections 16 to 21 of CPC be attracted. In arbitration law however, as has been held above, the moment "seat" is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties. 9. In the light of the above legal position, it is manifest that the Agreement records that the seat of arbitration shall be Delhi. In view of the above legal position the courts at Delhi would have exclusive jurisdiction to adjudicate the dispute between the parties. The reliance of the learned counsel for the respondent on clause 12 of the agreement is misplaced due to the clear terminology used in clause 11.1 of the agreement, i.e. "seat of arbitration shall be Delhi." 18. Thus, in view of the aforesaid decisions of the Supreme Court and the p....
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....f CPC would not be attracted. Thus notwithstanding the fact that cause of action may not have arisen in New Delhi, since the Seat has been agreed to be in Delhi, the courts here would have the jurisdiction to entertain the petition under section 34 of the Arbitration Act. 21. There is yet another aspect, which needs to be dealt with at the present stage. Section 18 of the MSME Act provides that the provisions of the Arbitration and Conciliation Act 1996 shall apply to the dispute between the parties. Learned Single Judge has decided the 'SEAT' of arbitration in the present case, on the basis of Section 18 of the MSME and has held that exclusive jurisdiction would be with the Courts at Thane. 22. Section 18 of the MSME Act, reads as under: "18. Reference to Micro and Small Enterprises Facilitation Council.-- (1) Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under section 17, make a reference to the Micro and Small Enterprises Facilitation Council. (2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation....