C/ARBI.

P/159/2022 CAV JUDGMENT DATED: 13/10/2023

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/PETN. UNDER ARBITRATION ACT NO. 159 of 2022

FOR APPROVAL AND SIGNATURE:

HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL

Sd/-
==========================================================

1 Whether Reporters of Local Papers may be allowed No

to see the judgment ?

2 To be referred to the Reporter or not ? Yes

3 Whether their Lordships wish to see the fair copy No

of the judgment ?

4 Whether this case involves a substantial question No

of law as to the interpretation of the Constitution
of India or any order made thereunder ?

==========================================================
INSTAKART SERVICES PRIVATE LIMITED
Versus
MEGASTONE LOGIPARKS PVT. LTD.
==========================================================
Appearance:
Appearance:
MR. DEVANG S. NANAVATI, SENIOR ADVOCATE WITH MR. TABISH
SAMDANI, ADVOCATE FOR J SAGAR ASSOCIATES(8162) for the
Petitioner(s) No. 1
ADITYA A GUPTA(7875) for the Respondent(s) No. 1
MOHIT A GUPTA(8967) for the Respondent(s) No. 1
==========================================================

CORAM:HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE

SUNITA AGARWAL

Date : 13/10/2023

CAV JUDGMENT

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1. Heard learned Senior Counsel Mr. Devang Nanavati

assisted by learned counsel Mr. Tabish Samdani appearing

for the petitioner, and learned counsel Mr. Mohit Gupta

appearing for the respondent.

2. In the instant petition, seeking for appointment of

arbitrator under Section 11(6) of the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as ‘the Act,

1996’, for short), two issues have been raised by the learned

counsel for the respondent for consideration, raising an

objection with regard to appointment of Arbitrator on the

dispute arising out of the Maintenance and Amenities

Agreement (hereinafter referred to as ‘M & E Agreement’,

for short) dated 07.05.2018, and further with regard to the

territorial jurisdiction of this Court to entertain the petition

under Section 11 of the Act, 1996.

3. Contesting the claim of the petitioner to appoint

Arbitrator, to deal with the dispute arising out of the M & E

Agreement, it is argued by the learned Senior Counsel for

the petitioner that M & E Agreement contains no arbitration

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clause and the arbitration clause in the Lease Agreement

dated 01.03.2018 cannot be invoked to refer the dispute to

the Arbitrator. Second submission is that, even if it is

assumed for a moment without admitting that the arbitration

clause under the Lease Agreement dated 01.03.2018 can be

invoked for appointment of Arbitrator to deal with the above

noted dispute, this Court does not have territorial jurisdiction

to entertain the petition under Section 11 of the Act, 1996,

inasmuch as, the seat of the arbitration as agreed is at

Bangalore, as per Clause ‘25’ of the agreement. It was

argued that a bare reading of the Clause 25(ii) of the Lease

Agreement indicates that the parties had agreed that the

arbitration proceedings will be conducted at Bangalore, and

hence, the seat of the arbitration having been agreed, the

jurisdiction to entertain the petition under Section 11 of the

Act, 1996 can only be with the Karnataka High Court.

4. Reliance is placed on the decisions in BGS SGS

Coma JV versus NPHC reported in (2020) 4 SCC 234,

M/s. Devyani International Ltd. versus Siddhivinayak

Builders and Developers reported in 2017 SCC OnLine

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Del 11156, Cinepolis India Pvt. Ltd. versus Celebration

City Projects Pvt. Ltd. and Another reported in 2020

SCC Online Del 301, M/s. Raman Deep Singh Taneja

versus Crown Realtech Private Limited reported in

2017 SCC OnLine Del 11966, to substantiate the above

submission.

5. In reply to the objections raised by the learned

counsel appearing for the respondent, it was argued by the

learned Senior Counsel appearing for the petitioner that the

petitioner and the respondent had executed a Lease

Agreement dated 01.03.2018 for leasing of the premises

admeasuring 68,890 sq. feet at Building No. 12, Jupiter

Industrial & Logiparks, Survey No. 607, Vadala Road, Village

Hariyala, District Kheda, Gujarat – 387120 for warehouses.

Another agreement named as M & E Agreement dated

07.05.2018 was executed between the parties, whereunder

the respondent had agreed to maintain the premises under

Lease and provide various common services and amenities

there. Some dispute has arisen between the parties, as a

result of which, the petitioner had terminated the Lease

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Agreement as also the Maintenance Agreement on

07.07.2021, asking the respondent to take the possession of

the premises-in-question and also to refund the security

deposit paid by the petitioner under the M & E Agreement.

6. It is submitted by the learned Senior Counsel

appearing for the petitioner that the respondent had failed to

perform their contractual obligations and stopped the water

supply in the premises. The petitioner had issued pre-

arbitration notice dated 16.05.2022 disclosing its intention of

amicable settlement of disputes in terms of Clause ‘25’ of the

Lease Agreement. By the reply dated 22.06.2022, the

respondent had denied the petitioner’s stance mainly on the

ground that the Lease Agreement and M & E Agreement are

separate agreements and that though the disputes arising

out of the Lase Agreement are subject to arbitration, the

arbitration proceedings with respect to the disputes arising

out of the M & E Agreement, cannot be referred to the

arbitration by invoking Clause ‘25’ of the Lease Agreement.

7. It is argued by the learned Senior Counsel for the

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petitioner that M & E Agreement is an ancillary agreement,

which is related to the principal agreement (which is Lease

Agreement) and performance of one agreement was being

intrinsically related to another agreement. Clause ‘25’ of

the Lease Agreement can be invoked. The Clause 25 of the

Lease Agreement and the clauses of M & E Agreement

placed before the Court, are relevant to be noted

hereinunder : -

“25. Dispute Resolution and Jurisdiction

i. Disputes: The Parties shall attempt to amicably

settle any dispute arising out of this Agreement and
the obligations hereunder ("Dispute"). Either Party
may give written notice of a Dispute to the other Party
within seven (7) days of the occurrence of the event
which gives rise to such Dispute or the day that such
event came to the notice of the applicable Party.

ii. Arbitration: If any Dispute arising between the

Parties is not amicably settled within 10 days of
commencement of amicable attempts to settle the
same as provided above, such dispute shall be referred
to, and be finally settled by arbitration proceedings.
The Parties agree that the arbitration proceedings will
be conducted at Bangalore and shall be governed by
the provisions of the Arbitration and Conciliation Act,
1996. That the Dispute shall be adjudicated by a single
arbitrator mutually agreeable to, and appointed by,
the Parties. In the event the Parties fail to appoint a
single arbitrator due to non-cooperation from the
other Party, post due discussions, the other party shall
be free to appoint a sole arbitrator to conduct the
Proceedings. The decision of the arbitrator shall be
final and binding on the Parties. Each Party shall be
responsible for the costs of appointing their respective

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arbitrator as contemplated herein, however, where a

joint appointment of an arbitrator occurs, the costs
thereof will be shared equally by the Parties. Such
Arbitration will be conducted in Bangalore.

iii. Jurisdiction: Subject to the foregoing, the courts at

Ahmedabad only shall have exclusive jurisdiction in all
matters arising out of this Agreement.

WITNESSETH

A. WHEREAS on 1st March 2018 the Second party has

entered into a Agreement to Lease a reprint with
minor modifications was then registered with Sub
Registrar Kheda on 7th April 2018 with various owners
of the building block No. A2, lying and situate in the
project named Jupiter Industrial & Logiparks, Survey
No 607p, Vadala Road, Village Hariyala, Distt. Kheda,
Gujarat together with right to use project's common
area, passages along with four-wheeler parking
facilities, right of ingress to and egress from the said
building A2, water, sanitary and power amenities.

B. The property that the Second Party have taken on

lease under the Agreement to Lease mentioned in
Clause - 1 above, is more fully described in Schedule
'A' annexed hereto and shall hereinafter be referred to
as the 'Leased Premises'.

C. The Second party has requested the First party to

provide certain services in the Project named Jupiter
Industrial & Logiparks required for business purpose
of the second Party to enable the Second Party to start
and conduct its business operations and more fruitfully
enjoy the Leased Premises. First party has agreed to
provide the services on the Terms & Conditions
hereinafter contained. This Agreement shall
hereinafter be referred to as the Service Level
Agreement.

NOW THIS SERVICE LEVEL AGREEMENT

WITNESSES AS FOLLOWS:

1) GRANT:
In consideration of the payment of maintenance
charges and amenities charges reserved hereunder,
the First Party shall provide to the Second Party, the

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services and amenities as set out in this agreement at

the common area of the Jupiter Industrial & Logiparks.

2) TERM:
This Agreement shall be operative & co-terminus from
the date of the operation of the Agreement to Lease dt.
1st March 2018 (01.03.2018) and shall be operative
until the term of the said Agreement ie 01.03.2018 to
28.02.2027 to Lease and to be executed as registered
Lease Deed and renewal thereof as provided in the
said Agreement to Lease or Registered Lease Deed, as
the case may be. Provided specifically that this
agreement shall be co-terminus with the term of or
early termination of any of the said Agreements, as the
case may be.”

8. The submission of the learned Senior Counsel

appearing for the petitioner is that the fact that the M & E

Agreement has been made operative and co-terminus from

the date of operation of the agreement to lease dated

01.03.2018, and further has been made operative only under

the terms of the Lease Agreement, makes it clear that M & E

Agreement is an ancillary agreement, which was intrinsically

related to principal agreement. In absence of M & E

Agreement, the petitioner was not in position to enjoy the

premises as the responsibilities of the respondent in carrying

out the operation as contemplated by M & E Agreement were

to be discharged with respect to the premises on lease. The

Lease Agreement being the Mother agreement, the

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arbitration clause therein would have to be invoked for

deciding the disputes arising out of the ancillary agreement,

which is M & E Agreement. The claims of the petitioner

cannot be bifurcated in two different jurisdictions.

9. Reliance is placed on the decision of the Apex Court

in the case of Chloro Controls India Private Ltd. vs.

Severn Trent Water Purification Inc. & Ors. reported in

(2013) 1 SCC 641, Ameet Lalchand Shah and Others

versus Rishabh Enterprises and Another reported in

(2018) 15 SCC 678, and Duro Felguera S.A. versus

Gangavaram Port Ltd. reported in (2017) 9 SCC 729, to

submit that the question whether or not the arbitration

clause contained in another document is incorporated in the

contract, is always a question of construction of document

with reference to the intention of the parties. In a case,

where several parties are involved in a single transaction, or

commercial project, all the parties can be covered by the

arbitration clause in the main agreement. In cases involving

execution of multiple agreements between the same parties,

two essential features are to be seen; firstly, that all ancillary

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agreements are related to Mother agreement and, secondly,

performance of one is so intrinsically interlinked with the

other agreement that they are incapable of being beneficially

performed without performance of the others or severed

from the rest. The intention of the parties to refer all the

disputes of the parties to the Arbitral Tribunal is one of the

determinative factor. Where agreements are consequential

and in the nature of a follow-up to the principal or mother

agreement, the latter containing the arbitration agreement

and such agreement being so intrinsically intermingled or

interdependent that it is their composite performance which

shall discharge the parties to their respective mutual

obligations and performances, that would be a sufficient

indicator of intent of the parties to refer signatory as well as

non-signatory parties to arbitration.

10. On the question of territorial jurisdiction of this

Court, according to Clause ‘25’ of the Lease Agreement, it is

argued by the learned Senior Counsel for the petitioner that

the statement in Clause ‘25’ that “the parties agree that the

arbitration proceedings will be conducted at Bangalore”, will

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give only an indication that the parties had agreed to the

‘venue’, and not the ‘seat’ of arbitration. Section 20(3) of the

Act, 1996 gives freedom to the Arbitral Tribunal to meet at

any place for conducting hearings at the place of

convenience in the matter, such as, consultation among its

members, for hearing witnesses, experts or the parties. It is

further submitted that same clause ‘25’ states with regard to

jurisdiction that “Courts at Ahmedabad only shall have

exclusive jurisdiction in all matters arising out of this

agreement.” If both the above statements in Clause 25 (ii)

and (iii) are read together and analysed to ascertain the

intention of the parties, it can be seen that Bangalore was

chosen as the ‘venue’ and not the ‘seat’. The arbitration

agreement at Clause ‘25’ provides that exclusive jurisdiction

vests with Courts at Ahmedabad; the agreement was

executed and stamped in Gujarat; the respondent is situated

in Ahmedabad and the petitioner has its Corporate

headquarters in Ahmedabad; the premises in dispute is

located in Ahmedabad, Gujarat. All these situation

cumulatively establish that the seat of Arbitration is

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Ahmedabad.

11. Reliance is placed on the decision of the High Court

of Calcutta in the case of Homevista Decor and

Furnishing Pvt. Ltd. and Another versus Connect

Residuary Private Limited reported in 2023 SCC

OnLine Cal 1405, decisions of High Court of Delhi in the

case of Cravants Media Private Limited versus

Jharkhand State Co. Operative Milk Producers

Federation Ltd. and Another reported in 2021 SCC

OnLine Del 5350, and in the case of Mrs. Meenakshi

Nehra Bhat and Anr. Versus Wave Megacity Centre

Private Limited passed in Arbitration Petition No.

706/2020 and the latest decision of the Apex Court in the

case of M/s. Ravi Ranjan Developers Pvt. Ltd. versus

Aditya Kumar Chatterjee passed in Civil Appeal arising

out of Special Leave to Appeal (C) No(s). 17397-

17398/2021, to submit that only in case where there is a

standalone clause in the agreement, which states that

arbitration is to be held at a particular place, then that place

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would be the ‘seat’ of arbitration. However, in cases, where

there are other clauses in the agreement and are contrary

indicative that the stated place of arbitration is merely a

‘venue’ and not the ‘seat’ of the arbitral proceedings, the

Courts to the exclusive jurisdiction of which the parties have

submitted for entertaining the disputes arising out of the

agreement, would have exclusive jurisdiction even in the

matter of appointment of Arbitrator under Section 11 of the

Act, 1996.

12. It is argued that the decisions relied upon the

learned Counsel for the respondent in the case of BGS SGS

Soma JV versus NPHC Ltd. reported in (2020) 4 SCC

234, will not be of benefit to the respondent, inasmuch as,

the said decision pertains to international commercial

arbitration, and it was noted by the Apex Court therein that

there being no other significant contrary indica that the

stated venue was merely a “venue” and not the “seat” of the

arbitral proceedings, it would conclusively show that such a

clause designated “seat” of the arbitral proceedings.

However, it was held therein that other clauses of the

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agreement must be read to ascertain whether a venue is

actually the seat or simplicitor a place owing to there being a

contrary indica, in the form of further clauses or conduct of

the parties.

13. The decision in the case of Cinepolis India Pvt.

Ltd. versus Celebration City Projects Pvt. Ltd. and

Another reported in 2020 SCC Online Del 301, relied by

the Counsel for the respondents has been distinguished with

the submission that the same was taken note by the Delhi

High Court in the subsequent decision in Kush Raj Bhatia

versus DLF Power and Services Limited through its

Director reported in 2022 SCC OnLine Del 3309, Mrs.

Meenakshi Nehra Bhat and Anr. Versus Wave Megacity

Centre Private Limited (supra), Cravants Media Private

Limited versus Jharkhand State Co. Operative Milk

Producers Federation Ltd. and Another (Supra), IGSEC

Heavy Engineering Ltd. versus Indian Oil Corporation

Ltd. reported in 2021 SCC OnLine Del 4748 of Delhi

High Court, which have held to the contrary. In M/s.

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Devyani International Ltd. versus Siddhivinayak

Builders and Developers (supra), the arbitration clause

itself provided for the seat of arbitration. In M/s. Raman

Deep Singh Taneja versus Crown Realtech Private

Limited (supra), it was noted that there was a conflict in

the arbitration clause, inasmuch as, there was no distinction

for arbitration proceedings and other Court reference. It

was, thus, submitted that in view of the above noted decision

of the Delhi High Court, clear law laid down therein, the

decisions relied by the respondent Counsel will have no

application.

14. Heard learned counsels for the parties and perused

the record. On the first question with respect to the

invocation of arbitration clause ‘25’ of the Lease Agreement,

to seek appointment of Arbitrator with respect to the

disputes arising out of M & E Agreement, the decision of the

Apex Court in the case of Chloro Controls India Private

Limited versus Seevern Trent Water Purification Inc.

and Others (Supra), is relevant to be noted. Relevant

paragraphs 73 and 74 of the said decision are extracted

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hereinunder : -

“73. A non-signatory or third party could be subjected

to arbitration without their prior consent, but this
would only be in exceptional cases. The Court will
examine these exceptions from the touchstone of direct
relationship to the party signatory to the arbitration
agreement, direct commonality of the subject matter
and the agreement between the parties being a
composite transaction. The transaction should be of a
composite nature where performance of mother
agreement may not be feasible without aid, execution
and performance of the supplementary or ancillary
agreements, for achieving the common object and
collectively having bearing on the dispute. Besides all
this, the Court would have to examine whether a
composite reference of such parties would serve the
ends of justice. Once this exercise is completed and the
Court answers the same in the affirmative, the
reference of even non-signatory parties would fall
within the exception afore-discussed.

74. In a case like the present one, where origin and

end of all is with the Mother or the Principal
Agreement, the fact that a party was non-signatory to
one or other agreement may not be of much
significance. The performance of any one of such
agreements may be quite irrelevant without the
performance and fulfillment of the Principal or the
Mother Agreement. Besides designing the corporate
management to successfully complete the joint
ventures, where the parties execute different
agreements but all with one primary object in mind, the
Court would normally hold the parties to the bargain of
arbitration and not encourage its avoidance. In cases
involving execution of such multiple agreements, two
essential features exist; firstly, all ancillary agreements
are relatable to the mother agreement and secondly,
performance of one is so intrinsically inter- linked with
the other agreements that they are incapable of being
beneficially performed without performance of the
others or severed from the rest. The intention of the
parties to refer all the disputes between all the parties
to the arbitral tribunal is one of the determinative

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factor.”

15. In Duro Felguera S.A. versus Gangavaram Port

Ltd. (supra), it was held in paragraph 35 as under : -

“35. Section 7(5) of the Arbitration and Conciliation

(Amendment) Act, 2015 reads as under:-

“7. Arbitration agreement.—(1)-(4)

(5) The reference in a contract to a document

containing an arbitration clause constitutes an
arbitration agreement if the contract is in writing and
the reference is such as to make that arbitration
clause part of the contract.”

As per Section 7 (5) of the Act, even though the

contract between the parties does not contain a
provision for arbitration, an arbitration clause
contained in an independent document will be
imported and engrafted in the contract be- tween the
parties, by reference to such independent document
in the contract, if the reference is such as to make the
arbitration clause in such document, a part of the
contract. Section 7(5) requires a conscious
acceptance of the arbitration clause from another
document, as a part of their contract, before such
arbitration clause could be read as a part of the
contract between the parties. The question whether
or not the arbitration clause contained in another
document, is incorporated in the contract, is always a
question of construction of document in reference to
intention of the parties. The terms of a contract may
have to be ascertained by reference to more than one
document.”

16. In Ameet Lalchand Shah and Others versus

Rishabh Enterprises and Another (supra), it was held in

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paragraphs 17, 21 and 22 as under : -

“17. xxxxxxxx……..

Through the Sale and Purchase Agreement

(05.03.2012) does not have any arbitration clause, by
the above clauses, it is clearly linked with the main
agreement - Equipment Lease Agreement
(14.03.2012). Sale and Purchase Agreement was
entered into between Astonfield and Rishabh only for
the purpose of onward transmission of leasing of the
goods by Rishabh to Dante Energy. There is no merit
in the contention that the Sale and Purchase
Agreement is not connected with the Equipment
Lease Agreement with Dante Energy.”

21. Mr. Sibal, learned senior counsel for the

respondents submitted that the High Court rightly
relied upon Sukanya Holdings as it relates to Part-I of
the Act that the parties who are not signatories to the
arbitration agreement (in this case, Astonfield under
Sale and Purchase Agreement) cannot be referred to
arbitration. It was further submitted that Chloro
Controls arises under Part-II of the Act and was
rightly distinguished by the High Court and Sukanya
Holdings was not overruled by Chloro Controls and
hence, the appellants cannot rely upon Chloro
Controls. It was contended that the Sale and
Purchase Agreement (05.03.2012) under which huge
money was parted with, is the main agreement
having no arbitration clause cannot be referred to
arbitration. It was submitted that the subject matter
of the suit cannot be bifurcated between the parties
to arbitration agreement and others.

22. In Chloro Controls, this Court was dealing with

the scope and interpretation of Section 45 of the Act -
Part-II of the Act and in that context, discussed the
scope of relevant principles on the basis of which a
non-signatory party also could be bound by the
arbitration agreement. Under Section 45 of the Act,
an applicant seeking reference of disputes to
arbitration can either be a party to the arbitration

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agreement or any person claiming through or under

such party. Section 45 uses the expression “….at the
request of one of the parties or any person claiming
through or under him…..” includes non-signatory
parties who can be referred to arbitration provided
they satisfy the requirements of Sections 44 and 45
read with Schedule I of the Act.”

It was finally held in paragraph 24 therein in

the facts of that case that though there are different

agreements involving several parties, but they pertain to a

single commercial transaction and as per the commercial

understanding between the parties, the project has been

effected through several agreements, the agreement –

Equipment Lease Agreement for commissioning of the

Solar Plant is the principal / main agreement. The other

two agreements; (i) Equipment and Material Supply

Contract and (ii) Engineering, Installation and

Commissioning Contract were ancillary agreements which

led to the main purpose of commissioning the Photovoltaic

Solar Plant. Even though, the sale and projects

agreements did not contain arbitration clause, it being

integrally connected with the commissioning of the Solar

Plant, even though the parties to the subsequent

agreement are not signatories to the main agreement i.e.

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Equipment Lease Agreement, the disputes between the

parties to various agreements could be resolved only by

referring all the agreements and the parties thereon to

arbitration. In such a case, all the parties can be covered

by the arbitration clause in the main agreement i.e.

Equipment Lease Agreement.

17. We may note further decision in the case of M.R.

Engineers and Contractors Private Limited versus Som

Datt Builders Limited reported in (2009) 7 SCC 696,

relied on by the learned Senior Counsel for the petitioner,

referring to the wordings of Section 7(5) of the Act, 1996,

wherein it is held that : -

“15. Section 7(5) therefore requires a conscious

acceptance of the arbitration clause from another
document, by the parties, as a part of their contract,
before such arbitration clause could be read as a part
of the contract between the parties. But the Act does
not contain any indication or guidelines as to the
conditions to be fulfilled before a reference to a
document in a contract, can be construed as a
reference incorporating an arbitration clause
contained in such document, into the contract. In the
absence of such statutory guidelines, the normal
rules of construction of contracts will have to be
followed.

16. There is a difference between reference to

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another document in a contract and incorporation of

another document in a contract, by reference. In the
first case, the parties intend to adopt only specific
portions or part of the referred document for the
purposes of the contract. In the second case, the
parties intend to incorporate the referred document
in entirety, into the contract. Therefore when there is
a reference to a document in a contract, the court has
to consider whether the reference to the document is
with the intention of incorporating the contents of
that document in entirety into the contract, or with
the intention of adopting or borrowing specific
portions of the said document for application to the
contract.

18. Learned Senior Counsel for the petitioner has

further relied upon the decision in the State of M.P. and

another versus Mahendra Kumar Saraf and Others

reported in 2005 (3) M.P.L.J. 578, to submit the meaning

of co-terminus as it should mean to imply two things or

objects having the same end, same finishing point or same

terminating point. It is argued that both the agreements

namely Lease Agreement and M & E Agreement have ‘co-

terminus’ and integrally related to each other, performance

of Lease Agreement being dependent upon the M & E

Agreement, both being part of the same transaction, the

arbitration clause ‘25’ in the Lease Agreement will have to

be invoked to refer the dispute to the Arbitrator.

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19. From the above noted discussion, taking note of the

decisions of the Apex Court, this Court finds itself in

complete agreement with the contention of the learned

Senior Counsel for the petitioner that performance of the

Lease Agreement was not possible without performance of

the M & E Agreement. They being integrally related to each

other, even if there is no separate arbitration clause in M &

E Agreement, the intention of the parties can be ascertained

from the Lease Agreement that they had agreed to refer the

disputes arising out of the transaction, which is lease of the

premises-in-question to arbitration. The petitioner cannot be

forced to submit to two different Forums to determine the

disputes arising out of one single transaction. The

arbitration clause ‘25’ of the Lease Agreement is a conscious

acceptance of the agreement clause as part of the M & E

Agreement between the parties in view of the above noted

facts and the language employed in Section 7(5) of the Act,

1996. The objections raised by the learned Counsel for the

respondent with regard to invocation of Clause ‘25’ of the

Lease Agreement seeking to refer the disputes arising out of

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the M & E Agreement to the Arbitrator, therefore, is liable to

be turned down.

20. Coming to the question of territorial jurisdiction of

this Court to entertain the application under Section 11 of

the Act, 1996, the contention of the learned counsel for the

respondent that this Court lacks jurisdiction to appoint

Arbitrator under Section 11, is based on the statement in the

Lease Agreement, noted above, which states that “the parties

agree that the arbitration proceedings will be conducted at

Bangalore”. The contention is that this statement in the

Lease Agreement not only decides the “venue” but also the

“seat” of arbitration.

21. Learned Senior Counsel for the petitioner, however,

relied upon various judgments of the Apex Court and Delhi

High Court as noted above to submit that reference to the

decision of the Apex Court in BGS SGS Soma JV versus

NPHC Ltd. (supra) and Delhi High Court in the case of

Cinepolis India Pvt. Ltd. versus Celebration City

Projects Pvt. Ltd. and Another (supra), to assert that

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place of arbitration, the venue, is really the seat of

arbitration is misplaced. The submission is that these

judgments are distinguishable in the facts and circumstances

of the case as a result of misreading of the decision of the

Apex Court.

22. To examine the issue, this Court is required to note

the decision of the Apex Court BGS SGS Soma JV versus

NPHC Ltd. (supra), Mankastu Impex Private Limited

versus Airvisual Limited reported in (2020) 5 SCC 399,

wherein the question of “seat” and “venue” with reference to

the arbitration proceedings has been decided. In BGS SGS

Soma JV versus NPHC Ltd. (supra), the issue was

pertaining to maintainability of appeal under Section 37 of

the Act, 1996, on the premise that in view of the arbitration

clause, whether the seat of arbitration proceedings was New

Delhi or Faridabad, consequent upon which the petition

under Section 34 of the Act, 1996 may be filed dependent on

where the seat of arbitration was located.

23. The Apex Court has noted therein that in the

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judgment impugned, the Punjab and Haryana High Court

referred two earlier decisions of the Apex Court in Bharat

Aluminum Co.(BALCO) vs. Kaiser Aluminum reported

in (2012) 9 SCC 522 and Indus Mobile Distribution (P)

Ltd. versus Datawind Innovations (P) Ltd. reported in

(2017) 7 SCC 678, along with other decisions to arrive at a

conclusion that the arbitration clause in that case did not

refer to the seat of arbitration, but only referred to the

“venue” of arbitration. Consequently, since a part of the

cause of action had arisen in Faridabad, the Faridabad

Commercial Court alone would have jurisdiction over the

arbitral proceedings, and the Courts at New Delhi would

have no such jurisdiction. The correctness of the said

proposition was assailed before the Apex Court. The Apex

Court has proceeded to lay down the law on what constitutes

the “juridical seat” of arbitration proceedings, and whether,

once the seat is delineated by the arbitration agreement,

courts at the place of the seat would alone, thereafter, have

exclusive jurisdiction over the arbitral proceedings.

24. Considering the scheme of the old Arbitration Act,

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1940, it was observed therein that it did not refer to the

juridical seat of the arbitration proceedings at all. The

UNCITRAL Model of International Commercial Courts as

adopted by the United Nations Commission on International

Trade Law on 21.06.1985, introduced the concept of “place”

or “seat” of the arbitral proceedings, which has been adopted

by our country. The Arbitration Act, 1996 which repealed

the Arbitration Act, 1940, adopted provisions of UNCITRAL

Model and refers to “the place” of arbitration and defines

“Courts”, and indicates which Courts have jurisdiction in

relation to arbitral proceedings. The provisions in Part – I in

Section 2(1)(e), 2(2), Section 20, Section 31(4) and 42 of the

Act, 1996, noted therein are relevant to be extracted as

under : -

“2.Definitions. -

(1) In this Part, unless the context otherwise

requires,-

(a) to (d) – xxxxxx...xxxxxx...xxxxxx

(e)“Court” means-

(i) in case of an arbitration other than international

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commercial arbitration, the principal Civil Court of

original jurisdiction in a district, and includes the
High Court in exercise of its ordinary original civil
jurisdiction, having jurisdiction to decide the
questions forming the subject-matter of the
arbitration if the same had been the subject-matter of
a suit, but does not include any Civil Court of a grade
inferior to such principal Civil Court, or any Court of
Small Causes;

(ii) in the case of international commercial

arbitration, the High Court in exercise of its ordinary
original civil jurisdiction, having jurisdiction to decide
the questions forming the subject-matter of a suit if
the same had been the subject-matter of a suit, and in
other cases, a High Court having jurisdiction to hear
appeals from decrees of courts subordinate to that
High Court;

(f) to (h) –xxxxxx...xxxxxx...xxxxxx

(2) This part shall apply where the place of

arbitration is in India.

Provided that subject to an agreement to the

contrary, the provisions of sections 9, 27 and clause
(a) of sub-section (1) and sub-section (3) of Section 37
shall also apply to international commercial
arbitration, even if the place of arbitration is outside
India, and an arbitral award or to be made in such
place is enforceable and recognised under the
provisions of Part II of this Act.”

20. Place of Arbitration.-

(1)The parties are free to agree on the place of

arbitration.

(2)Failing any agreement referred to in sub-section

(1), the place of arbitration shall be determined by
the arbitral tribunal having regard to the
circumstances of the case, including the convenience

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of the parties.

(3)Notwithstanding sub-section (1) or sub-section (2),

the arbitral tribunal may, unless otherwise agreed by
the parties, meet at any place it considers appropriate
for consultation among its members, for hearing
witnesses, experts or the parties, or for inspection of
documents, goods or other property.”

“31. Form and contents of arbitral award.-

(1) to (3) - xxxxxx...xxxxxx...xxxxxx

(4) The arbitral award shall state its date and the
place of arbitration as determined in accordance with
section 20 and the award shall be deemed to have
been made at that place.”

“42. Jurisdiction.- Notwithstanding anything

contained elsewhere in this Part or any other law for
the time being in force, where with respect to an
arbitration agreement any application under this Part
has been made in any Court, that Court alone shall
have jurisdiction over the arbitral proceedings and all
subsequent applications arising out of that agreement
and the arbitral proceedings shall be made in that
Court and no other Court.”

25. It was further discussed in paragraph ‘31’ and ‘32’ in

BGS SGS Soma JV versus NPHC Ltd. (supra) that from

the above noted provisions, the new concept of “juridical

seat” of the arbitration proceedings has been given by the

Act, 1996 and the arbitral award is now not only to state its

date, but also the place of arbitration as determined in

accordance with Section 20. However, the definition of

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“Court” has been narrowed down to mean only principal civil

court and the High Court in exercise of their original

ordinary civil jurisdiction. Thus, the concept of “juridical

seat” of the arbitral proceedings, and its relationship to the

jurisdiction of the courts which are then to look into matters

relating to the arbitral proceedings including challenges to

arbitral awards had to be developed in accordance with

international practice on a case by case basis by the Apex

Court.

Noticing that in some of the earlier decisions of the

Apex Court, no proper distinction between the “seat” and

“venue” of arbitral proceedings was made, the observations

in the judgment in the case of Union of India versus

McDonnell Douglas Corporation reported in (1993) 2

Lloyd's Rep 48, were noted that the provisions of Section

2(1)(e) of the Act, 1996 had been considered therein to

provide jurisdiction of the original Civil Court and the High

Court to decide the question forming “the subject matter of

the arbitration”, if the same had been the subject matter of a

suit. The term “subject matter of the arbitration” cannot be

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confused with "subject matter of the suit". The term "subject

matter" in Section 2(1)(e) is confined to Part I of the Act,

1996. It has a reference and connection with the process of

dispute resolution. It’s 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. It was noted that the

provisions of Section 2(1)(e) have to be construed keeping in

view the provisions in Section 20, which give recognition to

party autonomy. It was further noted that 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.

Therefore, the Courts where the arbitration takes place,

would be required to exercise supervisory control over the

arbitral process. It was observed : -

“33. xxxxxxx ………..xxxxx

96 xxxxxxxxx For example, if the arbitration is held

in Delhi, where neither of the parties are from Delhi,
(Delhi having been chosen as a neutral place as be-
tween a party from Mumbai and the other from
Kolkata) and the tribunal sitting in Delhi passes an

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interim order Under Section 17 of the Arbitration

Act, 1996, the appeal against such an interim order
under Section 37 must lie to the Courts of Delhi
being the Courts having supervisory jurisdiction over
the arbitration proceedings and the tribunal. This
would be irrespective of the fact that the obligations
to be performed under the contract were to be
performed either at Mumbai or at Kolkata, and only
arbitration is to take place in Delhi. In such
circumstances, both the Courts would have
jurisdiction, i.e., the Court within whose jurisdiction
the subject matter of the suit is situated and the
courts within the jurisdiction of which the dispute
resolution, i.e., arbitration is located.”

26. It was further noted that a plain reading of the

Section 20 leaves no room for doubt that where the place of

arbitration is in India, the parties are free to agree to any

"place" or "seat" within India. In absence of the agreement

of the parties thereto, Sub-section (2) of Section 20

authorizes the tribunal to determine the place / seat of such

arbitration. Section 20(3), however, enables the tribunal to

meet at any place for conducting hearings at a place of

convenience in matters such as consultations among its

members for hearing witnesses, experts or the parties. The

observations in paragraph 99 in McDonnell Douglas

Corporation (supra), emphasis to which is supplied

therein, are relevant to be extracted hereinunder : -

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“99. The fixation of the most convenient "venue" is taken

care of by Section 20(3). Section 20, has to be read in
the context of Section 2(2), which places a threshold
limitation on the applicability of Part I, where the place
of arbitration is in India. Therefore, Section 20 would
also not support the submission of the extra-territorial
applicability of Part I, as canvassed by the Learned
Counsel for the Appellants, so far as purely domestic
arbitration is concerned.”
(emphasis in original and supplied)

27. While examining the concept of “juridical seat” of the

arbitral proceedings and the important test laid down in the

decision of the English Courts and the Apex Court, in order

to determine whether the “seat” of the arbitral proceedings

has, in fact, been indicated in the agreement between the

parties, it was observed by the Apex Court in BGS SGS

Soma JV versus NPHC Ltd. (Supra), in paragraph ‘82’ as

under : -

“82. On a conspectus of the aforesaid judgments, it

may be concluded that whenever there is the
designation of a place of arbitration in an arbitration
clause as being the “venue” of the arbitration
proceedings, the expression “arbitration proceedings”
would make it clear that the “venue” is really the
“seat” of the arbitral proceedings, as the aforesaid
expression does not include just one or more
individual or particular hearing, but the arbitration
proceedings as a whole, including the making of an
award at that place. This language has to be
contrasted with language such as “tribunals are to
meet or have witnesses, experts or the parties” where
only hearings are to take place in the “venue”, which

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may lead to the conclusion, other things being equal,

that the venue so stated is not the “seat” of arbitral
proceedings, but only a convenient place of meeting.
Further, the fact that the arbitral proceedings “shall
be held” at a particular venue would also indicate that
the parties intended to anchor arbitral proceedings to
a particular place, signifying thereby, that that place
is the seat of the arbitral proceedings. This, coupled
with there being no other significant contrary indicia
that the stated venue is merely a “venue” and not the
“seat” of the arbitral proceedings, would then
conclusively show that such a clause designates a
“seat” of the arbitral proceedings. In an International
context, if a supranational body of rules is to govern
the arbitration, this would further be an indicia that
“the venue”, so stated, would be the seat of the
arbitral proceedings. In a national context, this would
be replaced by the Arbitration Act, 1996 as applying
to the “stated venue”, which then becomes the “seat”
for the purposes of arbitration.”

28. In Mankastu Impex Private Limited versus

Airvisual Limited (supra), the Apex Court was dealing with

the question of maintainability of the petition under Section

11(6) of the Act, 1996 in the matter of international

commercial arbitration. The decision in the case of BGS

SGS Soma JV versus NPHC Ltd. (Supra), has been

considered to note that it was held therein that in absence of

contrary expression expressed by the parties, the conclusion

has to be drawn that the parties have chosen the place where

arbitration proceedings were held as the seat of arbitration

under Section 20(1) of the Act. It was noted that as per

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Section 2(2), Part - I, shall apply where the place of

arbitration is in India. If the “international commercial

arbitration” is seated in India, then Part – I of the Act shall

apply. It was observed in paragraph ‘19’ and ‘20’ therein as

under : -

“19. The seat of arbitration is a vital aspect of any

arbitration proceedings. Significance of the seat of
arbitration is that it determines the applicable law
when deciding the arbitration proceedings and
arbitration procedure as well as judicial review over
the arbitration award. The situs is not just about
where an institution is based or where the hearings
will be held. But it is all about which court would
have the supervisory power over the arbitration
proceedings. In Enercon (India) Limited and others
v. Enercon GMBH and another, (2014) 5 SCC 1, the
Supreme Court held that

“The location of the Seat will determine the

courts that will have exclusive jurisdiction to
oversee the arbitration proceedings. It was further
held that the Seat normally carries with it the
choice of that country’s arbitration/curial law”.
(emphasis supplied)

20. It is well-settled that “seat of arbitration” and

“venue of arbitration” cannot be used inter-
changeably. It has also been established that mere
expression “place of arbitration” cannot be the
basis to determine the intention of the parties that
they have intended that place as the “seat” of
arbitration. The intention of the parties as to the
“seat” should be determined from other clauses in
the agreement and the conduct of the parties.”

29. It was considered that though the arbitration

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agreement entered into between the parties provided Hong

Kong as the place of arbitration, however that fact by itself

will not be lead to the conclusion that the parties have

chosen Hong Kong as the seat of arbitration. However, by

reading further clauses of the arbitration agreement, it was

observed that reference to Hong Kong as “place of

arbitration” is not a simple reference as the “venue” for the

arbitral proceedings; but a reference to Hong Kong is for

final resolution by arbitration administered in Hong Kong.

The agreement between the parties that the dispute “shall be

referred to and finally resolved by arbitration administered in

Hong Kong” clearly suggests that the parties have agreed

that the arbitration be seated at Hong Kong and that laws of

Hong Kong shall govern the arbitration proceedings as well

as have power of judicial review over the arbitration award.

However, in the context of domestic arbitration, the

observations of the Apex Court in Indus Mobile

Distribution (P) Ltd. versus Datawind Innovations (P)

Ltd. (supra), (in paragraph 19) were noted therein as

under: -

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“24. In the context of domestic arbitration, holding

that once the “Seat” is determined, only that
jurisdictional court would have exclusive
jurisdiction, in Indus Mobile Distribution (P) Ltd. v.
Datawind Innovations (P) Ltd. and others, (2017) 7
SCC 678, it was held as under:-

“19. A conspectus of all the aforesaid provisions

shows that the moment the seat is designated, it
is akin to an exclusive jurisdiction clause. On
the facts of the present case, it is clear that the
seat of arbitration is Mumbai and Clause 19
further makes it clear that jurisdiction
exclusively vests in the Mumbai courts. Under
the Law of Arbitration, unlike the Code of Civil
Procedure which applies to suits 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.”

30. From the reading of the above noted decisions, it can

be seen that mere designation of a place of arbitration in

arbitration clause as being “venue of the arbitration

proceedings”, would not be determinative factor to decide

the “seat of the arbitral proceedings”. The language of the

arbitral agreement has to be read on case by case basis to

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determine as to whether “venue” so stated is “seat” of

arbitral proceedings, or it is only convenient place of

meeting. The moment the seat is designated, it is akin to an

exclusive jurisdiction clause for the purpose of regulating

arbitral proceedings arising out of the agreement between

the parties.

31. Taking note of the above, this Court is further

required to go through the recent decision of the Apex Court

in the case of M/s. Ravi Ranjan Developers Pvt. Ltd.

versus Aditya Kumar Chatterjee passed in Civil Appeal

arising out of Special Leave to Appeal (C) No(s).

17397-17398/2021 decided on 24.03.2022. The question

before the Apex Court in the said decision was with respect

to the maintainability of the application under Section 11(6)

of the Act, 1996, for appointment of Arbitrator. The

challenge was to the order of the Calcutta High Court in

rejecting the review application seeking for recall of the

order of appointment of Arbitrator. In the context of the

arbitration clause therein, which stated that “seat of the

arbitral tribunal shall be at Calcutta”, the dispute with

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regard to the territorial jurisdiction of the Calcutta High

Court examined. It was contended that the development

agreement (in question therein) is in respect of the property

situated at Muzaffarpur in Bihar outside the jurisdiction of

the Calcutta High Court. The development agreement was

executed and registered in the State of Bihar, outside the

jurisdiction of the Calcutta High Court. The appellant

therein had its registered office at Patna, outside the

jurisdiction of the Calcutta High Court, and has no

establishment or does not carry on any business within the

jurisdiction of the Calcutta High Court. It was, thus, argued

by the learned counsel for the appellant therein that no part

of the cause of action had arisen within the jurisdiction of

Calcutta High Court. Section 2(1)(e) of the Act, 1996 defines

the Court, in case of arbitration other than international

commercial arbitration, to mean Principal Civil Court of

Original jurisdiction in a district and would include the High

Court in exercise of its ordinary original jurisdiction, having

jurisdiction to decide the question forming the subject matter

of arbitration, if the same had been the subject matter of the

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suit. The contention, thus, was that subject to the pecuniary

or other limitations prescribed by law, suits for recovery of

immovable property or determination of any other right to or

interest in any movable property or compensation for wrong

to immovable property, is to be instituted in the Court, within

the local limits of whose jurisdiction the property is situated.

Certain specific suits relating to immovable property can be

instituted either in the Court within the limits of whose

jurisdiction the property is situated, or in the Court within

the local limits of whose jurisdiction the Defendant actually

or voluntarily resides or carries on business. All other suits

are to be instituted in a Court, within the local limits of

whose jurisdiction the Defendant voluntarily resides or

carries on business. A suit may also be instituted in the Court

within whose jurisdiction, the cause of action arises either

wholly or in part. In the said case, no suit could have been

filed in any court over which the Calcutta High Court

exercises jurisdiction, since the suit pertaining to immovable

property situated at Muzaffarpur in Bihar, would be outside

the territorial jurisdiction of the Calcutta High Court. No

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part of cause of action had arisen therein within the

territorial jurisdiction of the Calcutta High Court and the

appellant therein, who would be in position of Defendant in a

suit, neither resides nor carries on any business within the

jurisdiction of the Calcutta High Court. It was, thus, argued

that an application for appointment of Arbitration under

Section 11(6), necessarily has to be moved in the High Court,

irrespective of whether the High Court has supervisory

jurisdiction to decide the suit in respect of the subject matter

of arbitration situated and irrespective of whether the High

Court at all has Original jurisdiction to entertain and decide

suits. Dealing with this contention therein, it was observed

in paragraph Nos. 26, 27 and 28 as under : -

“26. Of course, under Section 11(6), an application for

appointment of an Arbitrator necessarily has to be moved
in the High Court, irrespective of whether the High Court
has the jurisdiction to decide a suit in respect of the
subject matter of arbitration and irrespective of whether
the High Court at all has original jurisdiction to entertain
and decide suits. As such, the definition of Court in Section
2(1)(e) of the A&C Act would not be applicable in the case
of a High Court exercising jurisdiction under Section 11(6)
of the A&C Act to appoint an Arbitrator/Arbitral Tribunal.

27. At the same time, an application under Section 11(6)

of the A&C Act for appointment of an Arbitrator/Arbitral
Tribunal cannot be moved in any High Court in India,

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irrespective of its territorial jurisdiction. Section 11(6) of

the A&C Act has to be harmoniously read with Section 2(1)
(e) of the A&C Act and construed to mean, a High Court
which exercises superintendence/supervisory jurisdiction
over a Court within the meaning of Section 2(1)(e) of the
A&C Act.

28. It could never have been the intention of Section 11(6)

of the A&C Act that arbitration proceedings should be
initiated in any High Court in India, irrespective of
whether the Respondent resided or carried on business
within the jurisdiction of that High Court, and irrespective
of whether any part of the cause of action arose within the
jurisdiction of that Court, to put an opponent at a
disadvantage and steal a march over the opponent.”

32. The judgment of the Apex Court in BGS SGS Soma

JV versus NPHC Ltd. (supra), relied on by the learned

counsel for the respondent therein was noted to record that

the said judgment was rendered in the context of Section

2(2) of the Act, 1996 and the applicability of Part I of the said

Act to an international commercial arbitration, where the

seat of arbitration was not in India. Another decision of

Hindustan Construction Company Limited versus

NHPC Limited and Anr. reported in (2020) 4 SCC 310,

was also noted therein to record in paragraph 40 as under : -

“40. In Hindustan Construction Company Limited

(supra), this Court held that once the seat of
arbitration is designated, the same operates as an
exclusive jurisdiction clause and only Courts within
whose jurisdiction the seat was located, would have

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jurisdiction to the exclusion of all other Courts. In the

facts and circumstances of that case this Court found
that Courts at New Delhi alone would have jurisdiction
for the purpose of challenge to the Award.”

33. The decision of the Apex Court in the case of

Mankastu Impex Private Limited versus Airvisual

Limited (supra), was also noted by the Apex Court therein

to record that : -

“46. In this case, the Development Agreement provided

that the sittings of the Arbitral Tribunal would be
conducted in Kolkata. As observed above, the parties
never agreed to submit to the jurisdiction of Calcutta
High Court in respect of disputes, nor did the parties 12
agree upon Kolkata as the seat of arbitration. Kolkata
was only the venue for sittings of the Arbitral Tribunal.

47. It is well settled that, when two or more Courts have

jurisdiction to adjudicate disputes arising out of an
arbitration agreement, the parties might, by agreement,
decide to refer all disputes to any one Court to the
exclusion of all other Courts, which might otherwise
have had jurisdiction to decide the disputes. The parties
cannot, however, by consent, confer jurisdiction on a
Court which inherently lacked jurisdiction, as argued by
Mr. Sinha.

48. In this case, the parties, as observed above did not

agree to refer their disputes to the jurisdiction of the
Courts in Kolkata. It was not the intention of the parties
that Kolkata should be the seat of arbitration. Kolkata
was only intended to be the venue for arbitration
sittings. Accordingly, the Respondent himself
approached the District Court at Muzaffarpur, and not a
Court in Kolkata for interim protection under Section 9
of the A&C Act. The Respondent having himself invoked
the jurisdiction of the District Court at Muzaffarpur, is
estopped from contending that the parties had agreed to

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confer exclusive jurisdiction to the Calcutta High Court

to the exclusion of other Courts. Neither of the parties to
the agreement construed the arbitration clause to
designate Kolkata as the seat of arbitration. We are
constrained to hold that Calcutta High Court inherently
lacks jurisdiction to entertain the application of the
Respondent under Section 11(6) of the Arbitration Act.
The High Court should have decided the objection raised
by the Appellant, to the jurisdiction of the Calcutta High
Court, to entertain the application under Section 11(6) of
A&C Act, before appointing an Arbitrator.”

34. The appeal was ultimately allowed and the order of

appointment of Arbitrator and dismissal of the review

application was set aside on the ground that the order of

appointment of Arbitrator was without jurisdiction. It was

held that the parties did not agree to submit to the

jurisdiction of Calcutta High Court and they had only agreed

that the sitting of the Arbitral Tribunal would be in Kolkata.

35. Further, this Court may note some other decisions of

other High Courts relied upon by the learned Senior Counsel

for the petitioner.

The Calcutta High Court in Homevista Decor and

Furnishing Pvt. Ltd. and Another versus Connect

Residuary Private Limited (Supra), considering the

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decision of the Apex Court in BGS SGS Soma JV versus

NPHC Ltd. (supra), and Mankastu Impex Private

Limited versus Airvisual Limited (supra), as also other

decisions of other High Courts has held in paragraph 19 and

20 as under : -

“19. I find myself in consonance with the above

view. In circumstances where a place is designated
merely as a 'venue' and courts of another place
have been granted the exclusive jurisdiction, the
latter is a clear 'contrary indicia'. It can be inferred
from a comprehensive reading of such clauses, that
the 'venue' is a convenient place of arbitration and
not the seat.

20. The Calcutta High Court's judgment in Height

Insurance Services Limited (supra) has been stayed
by the same judge who passed the judgment and is
therefore not required to be dealt by me.”

36. Similarly, the view has been taken by the Delhi High

Court in the case of Kush Raj Bhatia versus DLF Power

and Services Limited through its Director (supra), in

paragraph Nos. 28, 29, 30 and 31 as under : -

“28. Having discussed the distinct concepts of “Seat”

and “Venue‟, it may be examined how these two
concepts have been interpreted and applied in various
situations. In Isgec Heavy Engineering. Ltd. vs. Indian
Oil Corporation Ltd. & Anr. Arbitration Petition
No.164/2001 decided on 21.10.2021 by the Coordinate
Bench of this Court, similar Clause came up for

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interpretation. The parties have agreed for venue of

arbitration to be New Delhi, but in the other Clause, they
had agreed that all actions and proceedings arising out
of/related to the Contract shall lie in the Courts of
competent jurisdiction at Guwahati. The Court held that
since the Clauses of the Agreement expressly provided
that the Courts at Guwahati would have exclusive
jurisdiction, it was a contrary indicator coming within
the exception as held by the Supreme Court in the case
of DSG SGS Souma (supra).

29. Similarly, in Cravants Media Pvt. Ltd. vs. Jharkhand

State Cooperative Milk Food Federation Pvt. Ltd. & Ors.
Arbitration petition No. 915/2021 decided on 06.12.2021
by the Coordinate Bench, the Dispute Resolution Clause
provided that the venue of arbitration shall be Ranchi,
but any disputes arising out of this agreement shall be
subject to the sole and exclusive jurisdiction of Courts in
Delhi. It was held that the intention of the parties was
clear that the seat would be in New Delhi and the Court
at New Delhi was held to have the jurisdiction.

30. In the facts in hand, the relevant Clause 48 and

Clause 49 read as under:

48. All or any dispute arising out of touching upon

or in relation to the terms of the Lease Deed
including the interpretation and validity of the
terms thereof and the respective rights and
obligations of the parties shall be settled amicably
by mutual discussion failing which the same shall
be settled through arbitration. The arbitration
shall be governed by the Arbitration and
Conciliation Act, 1996 or any statutory
amendments/modifications thereto for the time
being in force. The arbitration proceedings shall
he held at an appropriate location in New Delhi by
a Sole Arbitrator who shall be appointed by the
Lessee and whose decision shall be final and
binding upon Lessor.

The Lessor hereby confirms that it shall have no

objection to this appointment even if the person
so appointed, as the Arbitrator, is an employee or

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Advocate of the Lessee or is otherwise connected

to the Lessee and the Lessor confirms that
notwithstanding such relationship/ connection,
the Lessor shall have no doubts as to the
independence or impartiality of the said
Arbitrator." That the Civil Courts at Gurgaon and
High Court at Chandigarh alone shall have
jurisdiction.

49. That the Civil Courts at Gurgaon and High

Court at Chandigarh alone shall have
jurisdiction."

31. It is quite evident that there is a contraindication in

the registered Agreement that while the venue of
arbitration may be New Delhi, but the seat of arbitration
shall be Gurgaon and High Court at Chandigarh. In the
circumstances, it has to be held that this Court has no
jurisdiction and it is the Courts at Gurgaon/High Court of
Chandigarh which have the exclusive jurisdiction for
entertaining the disputes arising out of the registered
Lease Agreement.”

37. The view taken by the High Court of Delhi in IGSEC

Heavy Engineering Ltd. versus Indian Oil Corporation

Ltd. (supra) in paragraph Nos. 8, 12, 13, 14, 15 is also

relevant to be noted as hereinunder : -

“8. There can be no doubt on the proposition that

the word 'seat' and 'venue' have different
connotations. They are not synonymous, in so far as
the arbitration proceedings are concerned, although,
they have often been used interchangeably. The law
on 'seat' and 'venue' of arbitration proceedings is
fairly well-defined in view of several judgments of
the Supreme Court. The Supreme Court has clearly
held that where the parties have determined the
'seat' in their agreement, the same is akin to
conferring exclusive jurisdiction on the court(s)

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thereof.5 The expression 'venue' and 'seat' do not

find any mention under the Act. The expression used
under the Act is 'place', which finds mention under
Section 20 of the Act. In BALCO v. Kaiser Aluminium
Technical Services Inc., 6 the Apex Court made it
clear that sub-sections (1) and (2) of Section 20,
where the word 'place' is used, refer to juridical
'seat'; whereas, in sub-section (3) of Section 20, the
word 'place' is equivalent to 'venue', i.e., the location
of the meeting of arbitral proceedings.

12. To answer the afore-mentioned question - What

constitutes the 'seat' of arbitral proceedings - the
intention of the parties is germane and that can be
gathered from the terms of the Contract. Let's have
a closer look at the clause. The clause provides a
general stipulation that the 'venue' so designated
can be changed by the Arbitrators, with the consent
of the parties. This, prima facie, suggests that the
'venue' specified is not really envisaged as the 'seat'
of the proceedings, which should be specified in
certain terms. This interpretation is also in sync with
Section 20(3) of the Act, which provides that
notwithstanding anything contained in Section 20(1)
and (2) - the Arbitral Tribunal can meet at any place
it considers appropriate for hearing witnesses,
experts, etc. In fact, the language used in the
present clause seems to be a replication of the
language used in Section 20(3). For this reason, as
well, the Court is inclined to agree that in the
present case, Clause 9.1.2.0 of the GCC specifies
New Delhi only as a geographically convenient place
where Arbitral Tribunal can hold meetings.

13. The above position gets reinforced upon a plain

reading of Article 4 of the Contract. This clause vests
exclusive jurisdiction at the civil court(s) at
Guwahati for - all actions/proceedings, including
arbitration, and reads as under: -

"ARTICLE 4 – JURISDICTION:

4.1 Notwithstanding any other court or courts

having jurisdiction to decide the question(s)

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forming the subject-matter of the reference if the

same had been the subject-matter of a suit, any
and all actions and proceedings arising out of or
relative to the contract (including any arbitration
in terms thereof) shall lie only in the Court of
Competent Civil Jurisdiction in this behalf at
GUWAHATI (where this contract has been signed
on behalf of the Owner) and the said Court(s) shall
have jurisdiction to entertain and try such actions
and/or proceeding(s) to the exclusion of all other
Courts." [Emphasis supplied]

14. As opposed to the general stipulation in Clause

9.1.2.0, Article 4 is worded in clear, unambiguous,
and directory terms. In fact, it serves as the
'contrary indica', which further demonstrates that
the 'venue' in Clause 9.1.2.0 is only a physical place
of meeting under Section 20(3) of the Act. Article 4
-leaves no room that all actions and proceedings
arising out of the Contract, including arbitration,
shall have to necessarily be tried by the civil court(s)
at Guwahati exclusively, and does not lead to
jurisdiction being vested in the court(s) at Delhi.

15. For the reasons laid out above, this Court is of

the view that Clause 9.1.2.0 only provides a 'venue'
of arbitration, and the juridical 'seat' shall vest with
the civil court(s) at Guwahati.”

38. The observations in Cravants Media Private

Limited versus Jharkhand State Co. Operative Milk

Producers Federation Ltd. and Another (supra) in

paragraph No. 11 is as under : -

“11. The question whether the intention of the

parties in specifying a location for arbitral
proceedings is merely to fix a convenient ‘venue’ or

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a seat/place of arbitration has to be ascertained

from the language of the arbitration agreement.”

39. In light of the above discussion, this Court may

record that law on “seat” and “venue” of arbitration

proceedings is fairly well settled. The cases, where the

parties have determined “seat” in their agreements, the

same is akin to conferring exclusive jurisdiction on the

Court(s) thereof. The expression ‘place’ occurring in Sub-

section (1) and (2) of the Section 20, where the word 'place'

is used, refers to “juridical seat”; whereas, expression

“place” occurring in sub-section (3) of Section 20, is

equivalent to 'venue', i.e., the location of the meeting of

arbitral proceedings, as per the convenience of the parties or

the arbitrators. The “place” mentioned in Section 20(3) of

the Act, 1996 is only a physical place of meeting and has no

relevance insofar as “juridical seat”, which shall vests

exclusive jurisdiction with the Court of competent civil

jurisdiction or High Court of original jurisdiction;

(i) As has been held by the Apex Court in the case of M/s.

Ravi Ranjan Developers Pvt. Ltd. versus Aditya Kumar

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Chatterjee (Supra), Section 11(6) and Section 2(1)(e) of

the Act, 1996, have to be harmoniously read and construed

to mean, the High Court which exercises superintendence /

supervisory jurisdiction over a Court within the meaning of

Section 2(1)(e) of the Act, 1996. Meaning thereby, where a

clause in the contract vests exclusive jurisdiction at a Civil

Court for all actions / proceedings arising out of the

contract, the Court of the ‘place’ located as having exclusive

jurisdiction over the disputes should be considered as “seat”

and having jurisdiction to entertain applications under the

Act, 1996.

(ii) Where the parties have agreed that all actions and

proceedings arising out of / related to contract shall lie in

the Courts of competent jurisdiction at place ‘A’ and have

agreed to conduct arbitration proceedings at place ‘B’, the

expression in the agreement that the Court at place ‘A’ will

have jurisdiction, would be a contrary indicator, as indicated

by the Apex Court in the case of BGS SGS Soma JV versus

NPHC Ltd. (supra). In such cases, the intention of the

parties to confer exclusive jurisdiction on the Court at place

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‘A’, would be clear indication that the seat of arbitration

shall be at the same place ‘A’ and the Court at place ‘A’ will

have jurisdiction to deal with the applications under section

11(6) of the Act, 1996.

(iii) The law laid down by the Apex Court in Mankastu

Impex Private Limited versus Airvisual Limited

(supra), and BGS SGS Soma JV versus NPHC Ltd.

(supra), as has been relied upon by the learned counsel for

the respondent, does not support his contention that the

statement about the “place of arbitration” or the expression

“arbitration proceedings” in the agreement would mean that

“venue” is the “seat”.

40. Coming to the facts of the instant case, Clause 25(iii)

of the Lease Agreement exclusively confers jurisdiction to

the Courts at Ahmedabad in all matters arising out of the

said agreement. Whereas Sub-clause (ii) of the Clause 25

reads that the parties have agreed that the arbitration

proceedings will be conducted at Bangalore. The expression

of the place of arbitration proceedings in Clause 25(ii) as

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extracted hereinabove, is indication of the agreement arrived

at between the parties to choose the place of convenience

within the meaning of Section 20(3) of the Act, 1996. The

words “the parties agree that the arbitration proceedings

will be conducted at Bangalore” cannot be read to mean that

the place “Bangalore” has been designated under the

contract as the “seat of arbitration” and would operate as an

exclusive jurisdiction clause to decide the jurisdiction of the

High Court under Section 11(6) of the Act, 1996. The

exclusive jurisdiction has been conferred to the Courts at

Ahmedabad, the subject matter of the Lease Agreement,

which is the main agreement containing arbitration clause, is

located at Ahmedabad; the agreement was signed at

Ahmedabad between the parties; the agreement was

executed and stamped in the State of Gujarat; the

respondent is situated in Ahmedabad and the petitioner has

its corporate headquarters in Ahmedabad.

41. In light of the language of the agreement and the

abovenoted facts related to the case, this Court is of the

considered view that “venue” at Bangalore is merely a

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convenient location for holding of arbitration proceedings

and the Courts at Ahmedabad selected as having exclusive

jurisdiction in all disputes arising out of the Lease

Agreement, should be considered as the “seat of arbitration”.

42. For the above discussion, the judgments relied by

the learned counsel for the respondent to dispute the

territorial jurisdiction of this Court under Section 11(6) of

the Act, 1996 to entertain application for appointment of

Arbitrator is hereby turned down.

43. As the parties have not been able to reach at an

agreement to the name of the Arbitrator for resolving the

disputes arising out of the said contract, I proceed to pass

following :

ORDER

(i) Petition is ALLOWED.

(ii) Shri Dr. Justice Ashokkumar C. Joshi, Former

Judge, High Court of Gujarat is appointed as sole

Arbitrator to resolve the disputes between the parties in

accordance with the Arbitration Centre (Domestic and

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International), High Court of Gujarat Rules, 2021. Both

parties would be governed by said Rules.

(iii) Registry is directed to communicate this order

to the sole arbitrator forthwith by speed post.

(iv) No order as to costs.

Sd/-
(SUNITA AGARWAL, CJ )
AMAR SINGH

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