TaxTMI 
TaxTMI 
2024 (6) TMI 34
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....uction of a bus depot at Kharkhari Nahar Village, New Delhi. 3. Disputes having arisen between the parties, the respondent made a claim for payment of its alleged dues under the Agreement before the Facilitation Council. For this purpose, it invoked jurisdiction of the Facilitation Council under Section 18 of the MSME Act. The Facilitation Council first adopted conciliation proceedings. The conciliation proceedings were closed on 15.10.2020, and the reference was taken up for arbitration. The petitioner also raised an objection as to the jurisdiction of the Facilitation Council, which was rejected by an order dated 26.10.2020. By the impugned award, the Facilitation Council has awarded a sum of Rs. 4,11,55,845/- (inclusive of interest until the date of the award), to the respondent. It is undisputed that the Facilitation Council conducted its proceedings, and made its award, in Pathankot. B. Submissions of the Parties 4. At the outset, Mr. Sameer Chandwani, learned counsel for the respondent, takes an objection as to the territorial jurisdiction of this Court to entertain this petition, which is directed against an arbitral award made by the Facilitation ....
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....f action in the arbitral proceedings arose entirely in Delhi, and no part of the cause of action arose at Pathankot. He relies upon the judgment of the Supreme Court in BBR (India) (P) Ltd. v. S.P. Singla Constructions (P) Ltd. [(2023) 1 SCC 693.], and a judgment of a coordinate Bench of this Court in Cement Corporation of India v. S. Sultan [2004 SCC OnLine Del 505], to contend that the cause of action in the underlying dispute is determinative of the seat of arbitration. C. Analysis 10. Having heard learned counsel for the parties, two questions arise for consideration: • Whether the Agreement between the parties contains an exclusive jurisdiction clause for the purposes of the present petition? • Whether the seat of the arbitration was, in any event, in Delhi? 11. As far as the first aspect is concerned, it may be noted that the Agreement contains an arbitration clause [Clause 25 of the General Conditions of Contract ("GCC")] which is entitled, "Settlement of Disputes & Arbitration". It contains detailed provisions with regard to resolution of disputes between the parties, and provides for arbitration in the event they are not....
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....t at all. The two documents, as suggested by Mr. Tripathy, have to be read together, but such reading must be harmonious and reconcilable. As far as the main Agreement is concerned, disputes as to contractual performance, which were admittedly the subject matter of arbitration proceedings, are not covered by Clause 7 of the Integrity Pact. 15. I thus find that, upon a proper interpretation of the contractual terms, the parties did not expressly provide for the seat of the arbitration under the Agreement, and only provided that the venue would be at the discretion of the arbitrator. 16. It would be appropriate at this stage, to deal with the two judgments of the Division Bench of this Court, relied upon by Mr. Tripathy, which have considered the question of jurisdiction for the purposes of Section 34 of the Arbitration Act, in the context of arbitrations under the MSME Act. In Indian Oil Corporation [Supra (note 3).], the arbitral proceedings were conducted by the Maharashtra Facilitation Council at Thane. The Division Bench nevertheless held that this Court had jurisdiction to entertain the petition under Section 34 the Arbitration Act, in view of an exclusive jur....
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....risdiction of the MSME Council to act as an Arbitrator and other similar issues will not be examined by us, as the learned Single Judge has not considered any of those aspects and has decided the objection petition only on the ground of territorial jurisdiction. However, this does not mean that the jurisdiction clause agreed between the parties has to be given a go-by. The overriding effect of the MSME Act, cannot be construed to mean that the terms of the agreement between the parties have also been nullified. Thus, jurisdiction of the MSME Council which is decided on the basis of the location of the supplier, would only determine the 'VENUE', and not the 'SEAT' of arbitration. The 'SEAT' of arbitration would continue to be governed in terms of the arbitration agreement between the parties, which in the present case as per jurisdiction Clause No. 35 is New Delhi. As a result, in terms of the decision of the Supreme Court in Indus Mobile (supra), it would be the Courts at New Delhi that would have exclusive jurisdiction to entertain the petition under Section 34 of the Act." [Emphasis supplied] 17. This judgment has been followed by the Division Bench in IRCON Internationa....
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....tion of jurisdiction under Sections 16 to 20 of the CPC for the purposes of filing a suit has no relevance [Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. [(2017) 7 SCC 678], paragraph 19.]. 20. In BGS SOMA [Supra (note 10).], the Supreme Court has clearly held that in the absence of any significant contrary indicia, "the inexorable conclusion is that the stated venue is actually the juridical seat of the arbitral proceeding" [Ibid., paragraph 61.]. The aforesaid view has subsequently been followed by the Supreme Court inter alia in Inox Renewables Ltd. v. Jayesh Electricals Ltd. [(2023) 3 SCC 733, paragraph 11]. 21. Mr. Tripathy's reliance upon Cement Corporation of India [Supra (note 6).] is misconceived, as that was a judgment under the Arbitration Act, 1940, which interpreted Section 20 of Code of Civil Procedure, 1908, for the purposes of determining jurisdiction on the basis of the cause of action. The Supreme Court's judgment in BBR (India) [Supra (note 5).], relied upon by him, also follows BGS SOMA [Supra (note 10).]. It, in fact, supports the case of the respondent herein, in holding that the seat court alone has jurisdiction to de....