$~16
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision : 11.11.2024
+ ARB.P. 440/2024
M/S. GANESHA ECOSPHERE LTD .....Petitioner
Through: Mr. Divyanshu Rai, Mr. Vishal
Sharma, Ms. Taruna, Advs.
versus
M/S. SVP INDUSTRIES LTD .....Respondent
Through: Ms. Swati Surbhi, Mr. Pulkit Kamboj,
Advs.
CORAM:
HON'BLE MR. JUSTICE SACHIN DATTA
SACHIN DATTA, J. (Oral)
1. The present petition has been filed under Section 11(6) of the
Arbitration and Conciliation Act, 1996 (hereafter ‘the A&C Act’) seeking
appointment of a Sole Arbitrator to adjudicate the disputes between the
parties.
2. The disputes between the parties have arisen in the context of an
Agreement dated 01.10.2019. The said agreement contains an arbitration
clause as follows:-
“7) DISPUTE RESOLUTION
7.1 Any dispute or difference or claim arising out of or in
relation to this Agreement including the construction,
validity, performance or breach thereof which the Parties
cannot settle by mutual agreement shall be settled by
arbitration in accordance with the provisions of the
Arbitration and Conciliation Act, 1996 and any statutory
amendments thereto from time to time.
7.2 The award of the arbitrator/s shall be final and binding on
both the Parties.
7.3 The Arbitration shall be held at Delhi and the language
shall be English.”
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3. Clause 9.5 of the agreement says “the Courts in Delhi shall have
exclusive jurisdiction in the event of any dispute between the Parties of this
Agreement”. The said provision unmistakably indicates that the designated
seat of arbitration is Delhi in terms of the aforesaid clauses in the agreement
between the parties.
4. Learned counsel for the respondent, however, raises a four-fold
objection to the maintainability of the present petition and to oppose the
appointment of the arbitrator.
5. Firstly, it is contended that the notice invoking arbitration dated
16.09.2023, although filed by the petitioner as Document No. (P-7) was
never received by the respondent. It is submitted that a necessary
precondition, prior to invoking the jurisdiction of the court under Section 11
of the A&C Act, is that the notice invoking arbitration should have been
validly sent and served on the respondent. According to the learned counsel
for the respondent, this requirement is not satisfied in the present petition.
6. Secondly, it is contended that the invoices, that were issued by the
petitioner during the course of execution of the work, contain a printed
clause as under:-
“4) In case of dispute the jurisdiction shall of Kanpur Court.
Further the same shall be compulsory referred by aggrieved
party to the Arbitrator under the provisions of Arbitration and
Conciliation Act, 1996.”
On the basis of the above, it is submitted that, the parties agreed that
Kanpur Court would be vested with jurisdiction in the matter and that
Kanpur is also the seat of arbitration. It is submitted that the above quoted
printed clause, in the invoices issued by the petitioner himself serves clear
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“contrary indicia” showing that Delhi is not intended to be the seat of
arbitration.
7. Thirdly, it is submitted that the entire cause of action has arisen in the
state of Uttar Pradesh and that neither the agreement has been executed nor
any part of the performance of the contract has been done within the
jurisdiction of this Court.
8. Lastly, it is submitted that even the petitioner served the notice
invoking arbitration at the respondent’s address in Uttar Pradesh and this, by
itself, shows that the cause of action has arisen within the State of Uttar
Pradesh and, therefore, it would be the High Court of Judicature at
Allahabad that has jurisdiction to entertain the present petition.
9. Despite the erudite arguments of the learned counsel for the
respondent, this Court is not persuaded to accept the same. A perusal of the
arbitration clause in the present case evinces an unmistakable intention of
the parties to designate Delhi as a seat of arbitration.
10. The relevant arbitration clause, that is, Clause 7.3 mandates that “the
Arbitration shall be held at Delhi”, the language of the clause does not
indicate that Delhi has been chosen as a mere convenient location for
holding arbitral proceedings.
11. This aspect is fortified by Clause 9.5 which says that “the Courts in
Delhi shall have exclusive jurisdiction in the event of any dispute between
the Parties of this Agreement”.
12. The existence of the arbitration agreement in the above terms is not
disputed by the learned counsel for the respondent. The unilateral issuance
of an invoice by the petitioner and incorporation of a printed term thereon
would not alter above fundamental aspect of the agreement between the
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parties.
13. Moreover, the printed clause does not expressly state that Kanpur
would be the seat of Arbitration. It only contains a generic statement that
“in case of dispute the jurisdiction shall be of Kanpur Court”.
14. In Reliance Infrastructure Limited v. Madhyanchal Vidyut Vitran
Nigam Limited 2023 SCC OnLine Del 4894, this Court had occasion to
consider whether a clause of this kind can be construed to be a “contrary
indicia” as to the designated seat of arbitration, expressly chosen by the
parties in terms of a contractual provision (Clause 7.3 in the present case). It
has been held therein as under:-
“32. On a conspectus of the aforesaid judgments, the position of
law that emerges is that when the contract contains an arbitration
clause that specifies a “venue”, thereby anchoring the arbitral
proceedings thereto, then the said “venue” is really the “seat” of
arbitration. In such a situation the Courts having supervisory
jurisdiction over the arbitral process, notwithstanding that the
contract contains a clause seeking to confer “exclusive
jurisdiction” on a different court.
33. In the present case, the relevant clause in the LOA purporting
to confer “exclusive jurisdiction” is a generic clause, and does not
specifically refer to arbitration proceedings. For this reason, the
same also does not serve as a “contrary indicia” to suggest that
the Delhi is merely the “venue” and not the “seat” of Arbitration.
As such, the same cannot be construed or applied so as to denude
the jurisdiction of the Courts having jurisdiction over the “seat” of
Arbitration.”
15. In Yassh Deep Builders LLP v. Sushil Kumar Singh and Ors,
MANU/DE/1688/2024, relying upon Reliance Infrastructure Limited v.
Madhyanchal Vidyut Vitran Nigam Limited (supra), it has been held as
under:-
“42. In Reliance Infrastructure Limited v. Madhyanchal Vidyut
Vitran Nigam Limited MANU/DE/5224/2023, another learned single
judge of this court referring to several judgments held that the choice of
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Delhi as the venue of arbitration was demonstrative of the fact that the
arbitral proceedings were intended to be anchored to Delhi, and in the
absence of any contrary indicia, the inexorable conclusion was that
Delhi is the seat of Arbitration. It was further held that when the
contract contains an arbitration clause that specifies a "venue", thereby
anchoring the arbitral proceedings thereto, then the said "venue" is
really the "seat" of arbitration. In such a situation the courts having
supervisory jurisdiction over the said "seat" shall exercise supervisory
jurisdiction over the arbitral process, notwithstanding that the contract
contains a clause seeking to confer "exclusive jurisdiction" on a
different court. Further, that a generic clause, not specifically referring
to arbitration proceedings would not serve as a "contrary indicia" so as
to denude the jurisdiction of the Courts having jurisdiction over the
"seat" of Arbitration.
43. Coming back to the facts of the present case, reference has
been made by the parties to two different clauses of the collaboration
agreement. One is Clause 19 (jurisdiction) which stipulates that all
matters concerning the agreement and the development of the
scheduled property shall be subject to the jurisdiction of courts at
Gurugram, Haryana alone. The other being Clause 23 (arbitration)
stipulating that “in the event any dispute or difference arises out of or
in connection with the interpretation or implementation of this
agreement, or out of or in connection with the breach, or alleged
breach of this agreement, such dispute shall be referred to arbitration
under the Arbitration and Conciliation Act, 1996 to be decided by a
sole arbitrator appointed mutually by the parties hereto. In case of any
difference between the parties on appointment of a sole arbitrator, the
Arbitration Tribunal shall consist of three arbitrators. The second party
shall appoint one arbitrator and the first party shall appoint the second
arbitrator. The third arbitrator shall be appointed by the two selected
arbitrators failing which such appointment shall be done by the
Arbitration Council of India, New Delhi. The decision taken by the
majority of arbitrators shall be final and binding on the parties hereto.
The venue of the arbitration shall be at Delhi, India.
44. Clause 23 is the arbitration clause and it is distinct from
Clause 19. The arbitration contract is contained in Clause 23 and it is a
complete contract between the parties relating to arbitration. When
Clause 23 is read, it clearly establishes that the parties agreed that the
venue of the entire arbitration proceedings would be Delhi, India. Even
in case of a disagreement between the two selected arbitrators, the
appointment of the third arbitrator is to be done by the Arbitration
Council of India, New Delhi, Clause 23.1.5, which is under the main
Clause 23 pertaining to arbitration stipulates that the provisions of the
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clause shall survive the termination of the agreement. This clearly
shows that Clause 23 pertaining to arbitration is distinct from the
collaboration agreement and is to survive even the termination of the
agreement.”
16. Consequently, it cannot be held that the invoices, unilaterally issued by
the petitioner, bring about a change in the seat of arbitration, so as to
denude/prevent this Court from exercising jurisdiction.
17. Likewise, the contention that the entire cause of action has arisen
within the State of Uttar Pradesh, again, is not relevant inasmuch as, it is now
well settled in view of the decision in BGS SGS SOMA JV v. NHPC Ltd.
(2020) 4SCC 234, that the choice of seat of arbitration is akin to an exclusive
jurisdiction clause, and since the arbitral proceedings are anchored to the seat
of arbitration, it is only the Court having jurisdiction over the seat of
arbitration that can entertain the present petition, or any other application
under Part I of the A&C Act.
18. The contention of the respondent that arbitration is precluded on
account of the fact that the notice under Section 21 A&C Act was not
received by the respondent, constitution of an arbitral tribunal, is itself a
disputed question of fact that would not come in the way of constitution of an
arbitral tribunal. In fact, learned counsel for the respondent concedes that the
E-mail address at which the notice invoking arbitration was addressed belongs
to the respondent. Needless to say, it shall be open to the respondent to
further agitate this aspect before the duly constituted arbitral tribunal and raise
appropriate objections as to the maintainability of the arbitration for want of a
proper invocation notice. All jurisdictional objections are also necessarily to
be left open to be considered by a duly constituted arbitral tribunal. As held in
SBI General Insurance Co. Ltd. v. Krish Spinning 2024 SCC OnLine SC
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1754, in the present proceedings, the scope of enquiry is confined to
ascertaining the existence of an arbitration agreement having Delhi as the seat
thereof.
19. In the circumstances, this Court appoints Ms. Ritambhra Kalra,
Advocate (Mob. No.:+91 9773606577) as the Sole Arbitrator to adjudicate
the disputes between the parties.
20. At this stage, the parties jointly request that the arbitration be held
under the aegis and as per the rules of the Delhi International Arbitration
Centre (DIAC). It is directed accordingly.
21. The learned Sole Arbitrator may proceed with the arbitral
proceedings, subject to furnishing to the parties, requisite disclosures as
required under Section 12 of the A&C Act; and in the event there is any
impediment to the appointment on that count, the parties are given liberty to
file an appropriate application in this court.
22. All rights and contentions of the parties in relation to the
claims/counter-claims are kept open, to be decided by the learned Sole
Arbitrator on their merits, in accordance with law.
23. It is clarified that the consent given by learned counsel for the
respondent for constituting an Arbitral Tribunal, shall not be construed as an
admission of the averments made by the petitioner in the present petition.
24. The petition stands disposed of.
SACHIN DATTA, J
NOVEMBER 11, 2024/uk
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