Bombay High Court

Honey Bee Multitrading Pvt.Ltd. - ... vs Ruchi Soya Industries Ltd on 21 March, 2023

Author:
Bharati Dangre

Bench:
Bharati Dangre

1/42 CARAP-82-22 J.odt

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM. ARBITRATION APPLICATION NO.82 OF 2022
WITH
INTERIM APPLICATION (L) NO.40991 0F 2022

Honey Bee Multitrading Pvt. Ltd. .. Applicant
Versus
Ruchi Soya Industries Ltd. .. Respondent

...
Mr.Bidan Chandran with Ms.Nandita Dethe i/b Jyoti Badgujar
for the Applicant.
Mr.Kunal Vaishnav with Ms.Surbhi Soni i/b MGV & Associates
for the Respondent.
...

CORAM: BHARATI DANGRE, J.

RESERVED ON : 20th JANUARY, 2023
PRONOUNCED ON : 21st MARCH, 2023

JUDGMENT:
-

1. The succinct distinction between 'venue' and 'seat' of
arbitration is one of the most hotly debated aspects of
arbitration in India, though for some time a quietus was put, to
it, by a Five-Judge Bench of the Hon'ble Supreme Court in the
case of Bhartiya Aluminium Company (for short, BALCO)
Vs.Kaiser Aluminium Technical Services INC1, but
unfortunately after a decade of it's authoritative
1 (2012) 9 SCC 552

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pronouncement, once again the debate between the 'venue'
and 'seat' has reappeared, in the wake of the latest decision of
the Supreme Court in the case of
Ravi Ranjan Developers Pvt.
Ltd. Vs. Aditya Kumar Chatterjee2
.

2. This enigma is placed before me through the present
case, where the counter arguments are advanced on issue,
whether prescription of mere, 'venue' in the arbitration clause
contained in the 'Lease Agreement' would confer jurisdiction
on this Court to appoint an Arbitrator, as prayed in the
application, particularly when the subject matter of the suit
would fall outside the jurisdiction of this Court.

3. The applicant before me is a Private Limited Company,
registered under the provisions of the
Companies Act
, inter
alia, engaged in the business of manufacturing of Mustard oil,
having it's plant at Ganganagar, Rajasthan. The respondent is
also engaged in the business of production, processing and
preservation of edible oil.

The applicant and the respondent entered into a Lease
Agreement on 01/04/2019, wherein the Mustard Oil Plant
belonging to the applicant, and located in Rajasthan was leased
out to the respondent, by executing a Lease Agreement in
Indore (State of Madhya Pradesh).

The Lease Agreement executed on 01/04/2019, expired
on 31/03/2020 and the respondent came with an offer to
extend the arrangement for a further period of seven years.

2 2022 SCC OnLine SC 568

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Correspondence was exchanged between the parties for
extension of the existing Lease and, ultimately on October 20,
2020, the Lease Agreement was renewed and it became
effective from 01/01/2021, where the monthly license rental
was agreed at Rs.3,00,000/- per month. However, the Lessor
sought to terminate the said Agreement, by issuing a notice of
termination to the respondent, as contemplated in the Lease
Agreement, by seeking vacant peaceful possession of it's
manufacturing plant, failing which it was notifed that the
respondent is liable to pay rent of Rs.15,00,000/- per month.

This notice was contested by submitting that the
termination is illegal and not binding. The notice period
expired on September 19, 2021 and on 13/10/2021, the
applicant forwarded a notice for termination of the Lease
Agreement and invoked arbitration on 24/11/2021 as per
clause 20 of the Lease Agreement. The respondent con tested
the invocation of arbitration, by submitting it's reply.

4. Since the disputes arose between the applicant and the
respondent, out of the Lease Agreement, which comprised of
clause for referring the disputes for arbitration and since the
parties failed to reach a consensus to negotiate the arbitration
proceedings, within 30 days of the invocation notice, the
applicant has approached this Court, with a request to
exercise the power of the Court under sub-section (6) of
Section 11 of the Arbitration and Conciliation Act, 1996 (for
short, "The Act of 1996")

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5. I have heard the learned counsel Mr.Bidan Chandran for
the Applicant and Mr.Kunal Vaishnav for the respondent.

SUBMISSIONS ADVANCED

The contentions raised by them in support of the
applicant and the respondent are briefy culled out in the
subsequent paragraphs.

6. The learned counsel for the applicant would justify the
relief, for appointment of a sole Arbitrator, at the hands of this
Court, by relying upon the following decisions of the Apex
Court, which according to him, has sealed the position of law,
to the effect that the seat of arbitration is it's centre of gravity,
as
laid down by
the Constitution Bench in the case of BALCO
(supra). Reliance is placed particularly on paragraphs 96 to
98 of the law report.

Reliance is also placed upon the decision of the Hon'ble
Apex Court in the case of
Brahmani River Pellets Limited Vs.
Kamachi Industries Limited3
, where once again the party
autonomy contemplated under
Section 20
of the Act of 1996,
came to be recognised and it was held that the intention of the
parties to confer jurisdiction upon a particular Court would be
indicative of implied exclusion of jurisdiction of other Courts.

According to the learned counsel, it was held in the facts
of the case that when the parties have agreed that the 'venue'
of arbitration shall be at Bhubaneshwar, the intention of the
parties is to exclude all other Courts and, therefore, it was held
that the Madras High Court has erred in assuming the

3 (2020) 5 SCC 462

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jurisdiction under
Section 11(6)
of the Act of 1996, since only
the Orissa High Court could have entertained the application
fled under
Section 11(6)
of the Act.

7. Further the learned counsel Mr.Chandran would press
into service the decision of Three-Judge Bench of the Apex
Court in the case of BGS SGS Soma JV Vs.NHPC Limited 4,
where the concept of 'seat' was once again focused upon and in
the background facts, it was specifcally held as under:-

"wherever there is a expressed designation of a 'venue' and no
designation of any alternative place as the 'seat', combined
with a supranational body of rules governing the arbitration
and no other signifcant, contrary indicia, the inexorable
conclusion is that the stated venue is actually the juridical
seat of the arbitral proceedings".

By gainfully relying upon the observations in the law
report, where it was concluded that when both the parties
have chosen the Court at New Delhi to have exclusive
jurisdiction, the fact that the part of cause of action may have
arisen in Faridabad, was held to be of no relevance.

Reliance is also placed upon
Mankastu Impex Private
Limited Vs. Airvisual Limited5
, where the shashoua test was
reiterated, by relying upon the decision in the case of BGS SGS
Soma JV (supra).

The decision of the learned single Judge of this Court in
the case of
Priya Malay Sheth Vs. VLCC Health Care Ltd.
(citation) is also cited, and according to the learned counsel,

4 (2020) 4 SCC 234
5 (2020) 5 SCC 399
6 Comm.Arb.App.(L) No.3094/22 decided on 06/06/2022

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Justice G.S.Kulkarni has rightly captured the essence of the
existing position of law, fowing through the authoritative
pronouncements of the Apex Court.

8. The respondent resisted the application, seeking
appointment of a sole Arbitrator, by contesting the same on
two counts, the frst being that the Lease Agreement is
insuffciently stamped and also on the ground of lack of
jurisdiction in this Court to entertain the application, as
according to the learned counsel Mr.Vaishnav for the
respondent, the Lease Agreement comprise of a clause, under
which, it is agreed that 'venue' of arbitration shall be Mumbai,
but Mumbai was never intended to be a 'seat' of arbitration.
It is sought to be argued that the claims sought to be projected
before the Arbitral Tribunal is for recovery of possession /
eviction of the respondent from the Mustard oil plant, which is
situated in Ganganagar, and since, the Lease Agreement is
executed in Indore (State of Madhya Pradesh), this Court
would not exercise jurisdiction, as it is not a Court, as defned
under
Section 2(1)(e)
of the Act of 1996.

The proposition propounded by the learned counsel, by
relying upon the authoritative pronouncements of the highest
Court of the country is, the term 'seat' and 'venue' have
different connotations and cannot be used interchangeably.
Reliance is also placed upon the Constitution Bench decision
in the case of BALCO (supra) to bolster his argument that it
has been categorically held by the Apex Court that the terms

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'seat' and 'venue' have different meanings and these two
terms cannot be used interchangeably.

The learned counsel would further submit that Law
Commission of India in it's 246th report gave a suggestion for
substituting the term 'place', in
section 20(2)
with 'seat' and in

section 20(3)
with 'venue'. However, these changes are not
implemented in the 2015 Amendment and the Hon'ble
Supreme Court in
Indus Mobile Distribution Private Limited
Vs. Datawind Innovations Private Limited & Ors.
7, has
categorically observed that such amendment was unnecessary
in view of the BALCO (supra) judgment and it was noted that
the Law Commission specifcally adverted to the difference
between 'seat' and 'venue' and has recommended so, but the
amended Act does not contain the above amendments.

Presumably the BALCO (supra) in no uncertain terms has
referred to 'place' as 'juridical' seat for the purposes of
Section
2(2)
of the Act. It further made it clear that
Section 20(1)

and
Section 20(2)
, where the word 'place' is used refers to
jurisdictional seat whereas in
Section 20(3)
, the word 'place' is
equivalent to 'venue'. This being the settled law, it was found
unnecessary to expressly interpret what the Constitution
Bench of the Hon'ble Supreme Court has already done by way
of construction of the Act.

9. The learned counsel, in support of the case of the
respondent, also placed reliance upon the decision of the
Hon'ble Apex Court in the case of Mankastu Impex Private

7 2017(7) SCC 678

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Limited
(supra) and, in particular, on the following
observation :-

"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."

10. The learned counsel would strenuously rely upon the
decision of the Apex Court in the case of
Ravi Ranjan
(supra),
where the question arose, whether the Calcutta High Court has
jurisdiction to pass an order appointing the Arbitrator in the
case, where the parties executed the Development Agreement
for a property situated at Muzaffarpur, Bihar and also
registered the Agreement in Muzaffarpur, but the arbitration
clause provided that the seat of the Tribunal 'shall be at
Kolkata'.

While allowing the Appeals, the Apex Court has, inter
alia, observed that, Kolkata was only the venue for holding the
seating of the Tribunal and 'venue' does not indicate the 'seat',
since particularly, when no agreement was arrived between
the parties, to refer their disputes to the jurisdiction of the
Court in Calcutta, which was only intended to be the 'venue'. It
was, therefore, held that Calcutta High Court lacks the
jurisdiction to entertain an application under
Section 11(6)
of
the Act of 1996 and it was held that an application cannot be
moved in any High Court in India, unmindful of the territorial
jurisdiction.

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The learned counsel would submit that it has been
specifcally held, by the Two-Judge Bench of the Apex Court
that
Section 11(6)
of the Act of 1996 has to be harmoniously
read with
Section 2(1)(e)
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 Act.

11. Assisted by the aforesaid authoritative pronouncements,
the learned counsel for the respondent would submit that this
Court has no jurisdiction to entertain the application in the
wake of the peculiar facts involved in the present case, and
merely because the venue of arbitration has been decided to be
in Mumbai, it cannot be construed as 'seat' of arbitration as
the plant is situated in Ganganagar and Bombay High Court
will have no territorial jurisdiction, as it is not a 'Court' within
the meaning of
Section 2(1)(e)
of the Act of 1996.

Per contra, the learned counsel for the applicant has
relied upon a decision in the case of
BBR (India) Private
Limited Vs. S.P.Singla Constructions Private Limited8

ANALYSIS OF SUBMISSIONS

12. Before I proceed to deal with the rival contentions to
ascertain whether, this Court would be in a position to exercise
it's power for appointment of an Arbitrator in terms of clause
20 of the Lease Agreement, it would be apposite to reproduce
the arbitration clause contained in the Agreement, which
reads thus :-

8 2022 LiveLaw (SC) 493

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"In case of any dispute/difference arising out of this
agreement, the same shall be referred to the sole Arbitrator to
be appointed by the Lessee in consultation and approval with
the Lessor. Incase of failure to appoint Arbitrator with mutual
consent then High Court Judge will decide the Arbitrator. The
award passed by the Arbitrator shall be fnal and binding upon
the parties. The venue of arbitration shall be Mumbai."

13. The statutory scheme compiled in the Act of 1996
provide for appointment of an Arbitrator by the Court, when
the circumstances enumerated in
Section 11
of the Act of
1996, come into foreplay and in particular, where the parties
to an agreement fail to arrive at the consensus regarding the
appointment of the Arbitrator, and as contemplated by the
appointment procedure agreed between the parties, one party
fails to act as required or the parties or the two appointed
arbitrators fail to reach an agreement expected of them, or
under the procedure, a person, including an institution, fails to
perform any function entrusted to him or it, on a request by
the parties, the High Court or the Supreme Court, as the case
may be, take such necessary measures as are warranted.

14.
The Act
of 1996 has defned certain terms and in
Section
, the term 'Court' is defned as under :-

"(e) "Court" means-

(i) in the case of an arbitration other than intentional
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

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forming the subject-matter of the arbitration 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."

15.
Section 20
of the Act specify the place of arbitration and
the relevant Section reads thus :-

"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 convenienece 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."

Another relevant Section for determining the discord
between the parties as regards the selection of seat/venue of
arbitration, is in form of
Section 42
, which determine the
jursidiction and reads thus :-

"42.Jurisdiction.- Notwithstanding anything contained
elsewhere in this Part or in 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 a 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 in no other Court."

16.
The Act
of 1996 do not defne the term 'venue' as well as
the term 'seat', though
Section 20
of the Act has left the
discretion in the parties to agree on the 'place of arbitration'.

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Failing any agreement between the parties, the place of
arbitration shall be determined by the Arbitral Tribunal,
having regard to the circumstances of the case, including the
convenience of the parties.

In the wake of a notwithstanding clause, the Arbitral
Tribunal may, unless otherwise agreed by the parties, meet at
any place, which it considers appropriate for consultation
among its members, for hearing witnesses, experts or the
parties, of for inspection of documents, goods or other
property. The discretion is left in the parties to agree upon the
language to be used in the proceedings and if there is no
agreement, the Arbitral Tribunal shall determine the language
to be used throughout the proceedings.

17. The place of arbitration in terms of
Section 20
may thus
either refer to 'seat' or 'venue' and the legislature has carefully
chosen not to apply the term, 'venue' or 'seat', but instead it
has used th e term 'place of arbitration'.

The term 'place of arbitration' itself carries two distinct
meanings;
Section 20(1)
and
20(2)
signifying the seat of
arbitration, whereas notwithstanding sub-section (1) and (2)
of
Section 20
, any indication to the location, as distinct from
the seat, where the Arbitral Tribunal would conduct it's
proceedings, signifying the geographical location.

Despite the importance of choice of a 'seat' in arbitration
proceedings, it being a juridical concept, the arbitration
agreements often apply the terms 'seat', 'venue' or 'place'
inter-changeably and in such situation, it is left either to the

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Court or Arbitral Tribunal to determine, which place would
amount to 'seat' of the arbitration.

18. Indian jurisprudence on the subject of arbitration,
undisputedly has witnessed divergent use, with regard to it's
various fascets, including the subject-matter of arbitrability of
the dispute and the fne line of distinction between 'seat' and
'venue'. Through various binding precedents, the highest
Court of this country, the Hon'ble Apex Court and various High
Courts assigned distinct connotation to the term 'seat', 'venue',
'place', but it was the Constitution Bench of the Apex Court in
the case of BALCO (supra) examined the concept of 'seat' and
'venue' and deduced an inference that they are distinct. It
offered a clarifcation that although the arbitration
proceedings may take place anywhere in the world, the seat of
those proceedings is located at a specifc Arbitral institution
such as international commercial Court or another similar
authority, whereas the venue where the meetings are held,
would only refer to any geographical area, within which the
party can negotiate.

19. The conundrum between the 'seat' and the 'venue'
expressedly featured in the case of BALCO (supra) before a
Constitution Bench of the Apex Court, and in paragraph 75,
Their Lordships turned down the argument advanced, that Act
of 1996 does not make seat of the arbitration as the centre of
gravity and observed as under :-

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"75. We are also unable to accept the submission of the
learned counsel for the appellants that the
Arbitration Act,
does not make seat of the arbitration as the centre of
gravity of the arbitration. On the contrary, it is accepted by
most of the experts that in most of the national laws,
arbitrations are anchored to the seat/place/situs of
arbitration. Redfern in Paragraph 3.54 concludes states that
"the seat of the arbitration is thus intended to be its centre of
gravity." This, however, does not mean that all the
proceedings of the arbitration have to take place at the seat of
the arbitration. The arbitrators at times hold meetings at
more convenient locations. This is necessary as arbitrators
often come from different countries. It may, therefore, on
occasions be convenient to hold some of the meetings in a
location which may be convenient to all. Such a situation was
examined by the court of appeal in England in Naviera
Amazonica Peruana S.A. Vs. Compania Internacionale de
Seguros del Peru wherein at p.121 it is observed as follows :

"The preceding discussion has been on the basis that
there is only one "place" of arbitration. This will be the
place chosen by or on behalf of the parties; and it will
be designated in the arbitration agreement or the
terms of reference or the minutes of proceedings or in
some other way as the place or "seat" of the
arbitration. This does not mean, however, that the
arbitral tribunal must hold all its meetings or hearings
at the place of arbitration. International commercial
arbitration often involves people of many different
nationalities, from many different countries. In these
circumstances, it is by no means unusual for an
arbitral tribunal to hold meetings or even hearings in a
place other than the designated place of arbitration,
either for its own convenience or for the convenience of
the parties or their witnesses...... It may be more
convenient for an arbitral tribunal sitting in one
country to conduct a hearing in another country, for
instance, for the purpose of taking evidence..... In fact
circumstances each move of the arbitral tribunal does
not of itself mean that the seat of arbitration changes.
The seat of arbitration remains the place initially
agreed by or on behalf of the parties."

Paragraph 76, further recorded as under :-

"76. It must be pointed out that the law of the seat or
place where the arbitration is held, is normally the law to
govern that arbitration. The territorial link between the place

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of arbitration and the law governing that arbitration is well
established in the international instruments, namely, the New
York Convention of 1958 and the UNCITRAL Model Law of
1985. It is true that the terms "seat" and "place" are often
used interchangeably. In Redfern and Hunter on International
Arbitration, 5th Edn. (para 3.51), the seat theory is defned
thus: "The concept that an arbitration is governed by the law
of the place in which it is held, which is the 'seat' (or 'forum'
or locus arbitri) of the arbitration, is well established in both
the theory and practice of international arbitration. In fact,
the 1923 Geneva Protocol states:

"2. The arbitral procedure, including the constitution of
the arbitral tribunal, shall be governed by the will of the
parties and by the law of the country in whose territory the
arbitration takes place."

20. Dealing with the defnition of the term "Court", in
paragraph 96, the Constitution Bench has remarked as
under :-

"96. .....

We are of the opinion, the term "subject-matter of the
arbitration" cannot be confused with "subject-matter of the
suit". The term "subject-matter" in
Section 2(1)(e)
is confned
to Part I. It has a reference and connection with the process of
dispute resolution. Its purpose is to identify the courts having
supervisory control over the arbitration proceedings. Hence,
it refers to a court which would essentially be a court of the
seat of the arbitration process. In our opinion, the provision in

Section 2(1)(e)
has to be construed keeping in view the
provisions in
Section 20
which give recognition to party
autonomy. Accepting the narrow construction as projected by
the learned counsel for the appellants would, in fact, render

Section 20
nugatory. In our view, the legislature has
intentionally given jurisdiction to two courts i.e. the court
which would have jurisdiction where the cause of action is
located and the courts where the arbitration takes place. This
was necessary as on many occasions the agreement may
provide for a seat of arbitration at a place which would be
neutral to both the parties. Therefore, the courts where the
arbitration takes place would be required to exercise
supervisory control over the arbitral process. For example, if
the arbitration is held in Delhi, where neither of the parties
are from Delhi, (Delhi having been chosen as a neutral place

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as between a party from Mumbai and the other from Kolkata)
and the tribunal sitting in Delhi passes an 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."

21. While construing
Section 20
, which determine the place
of arbitration, it was specifcally held as under :-

"98. .....A plain reading of
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, be it Delhi,
Mumbai etc. In the absence of the parties' agreement thereto,

Section 20(2)
authorises the tribunal to determine the
place/seat of such arbitration.
Section 20(3)
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."

In Paragraph 117 of the law report, the conclusion is drawn in
the following words :-

"117. It would, therefore, follow that if the arbitration
agreement is found or held to provide for a seat/place of
arbitration outside India, then the provision that the

Arbitration Act, 1996
would govern the arbitration
proceedings, would not make
Part I of the Arbitration Act,
applicable or enable the Indian courts to exercise
supervisory jurisdiction over the arbitration or the award. It
would only mean that the parties have contractually imported
from the
Arbitration Act, 1996
, those provisions which are
concerned with the internal conduct of their arbitration and
which are not inconsistent with the mandatory provisions of
the English procedural law/curial law. This necessarily
follows from the fact that Part I applies only to arbitrations
having their seat/place in India."

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22. The Constitution Bench accepted that the parties could
confer jurisdiction on an unconnected/neutral forum to
supervise arbitration proceedings, but did not offer
clarifcation, whether this choice would be the exclusive or
non-exclusive choice.

This clarifcation, however, came from the Apex Court in
the case of
Indus Mobile Distribution Private Limited
(supra)
wherein it was clarifed that the contracting party would
choose an un-connected forum as a 'seat' and that would vest
exclusive jurisdiction in the said Court to decide any dispute.

23.
In the case of
Union of India Vs. Hardy Exploration and
Production (India) Inc.9
, the parties entered into a production
sharing contract containing an arbitration clause, which
provided that the "venue of conciliation or arbitration
proceedings....unless the parties otherwise agree, shall be
Kuala Lumpur..." and that "arbitration proceedings shall be
conducted in accordance with the UNCITRAL Model Law on
International Commercial Arbitration of 1985...."

Union of India challenged the arbitral award rendered in
the arbitration proceedings under
Section 34
of the Act before
the Delhi High Court on the ground that the arbitration clause
did not satisfy the seat of arbitration, but only specifed the
venue of arbitration as 'Kuala Lumpur' and, hence, New Delhi
was the 'seat' of arbitration.

The above claim was contested by Hardy Exploration
and in the background facts, the Apex Court held that the
choice of Kuala Lumpur as a 'venue' did not mean that Kuala
9 (2019) 13 SCC 472

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Lumpur was the 'seat' of arbitration. It was held that the mere
choice of venue could not by itself be construed as choice of the
seat of arbitration; instead, venue could become the seat, if
someting else is added to it as a concomitant, though the Apex
Court did not deem it appropriate to identify as to what would
be the additional factors, which would be considered by it to
determine, whether the choice of venue is to be treated as
choice of seat.

24. After this decision, came the verdict of the Hon'ble Apex
Court in the case of
Brahmani River Pellets Limited
(supra),
wherein the arbitration clause in form of caluse 18 read thus :-

"18. Arbitration shall be under Indian Arbitration and
Conciliation Law 1996 and the Venue of Arbitration shall be
Bhubaneswar."

In paragraph 15, the Apex Court held as under :-

"15. As per
Section 20
of the Act, parties are free to agree
on the place of arbitration. Party autonomy has to be
construed in the context of parties choosing a court which has
jurisdiction out of two or more competent courts having
jurisdiction. This has been made clear in the three-Judges
Bench decision in
Swastik Gases (P) Ltd. v. Indian Oil Corpn.
Ltd
.

15.1. In the said case, respondent-Indian Oil Corporation
Ltd. appointed M/s. Swastik Gases (P) Ltd. situated at Jaipur,
Rajasthan as their consignment agent. The dispute arose
between the parties as huge quantity of stock of lubricants
could not be sold by the applicant and they could not be
resolved amicably. In the said matter, Clause 18 of the
agreement between the parties provided that the agreement
shall be subject to the jurisdiction of the courts at Kolkata.
15.2 The appellant-Swastik invoked Clause 18 -
arbitration clause and fled application under
Section 11(6)
of
the Act before the Rajasthan High Court for appointment of
arbitrator. The respondent contested the application made by

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Swastik inter alia by raising the plea of lack of territorial
jurisdiction of the Rajasthan High Court in the matter. The
plea of Indian Oil Corporation was that the agreement has
been made subject to jurisdiction of the courts at Kolkata and
the Rajasthan High Court lacks the territorial jurisdiction in
dealing with the application under
Section 11(6)
of the Act.
15.3 The designated Judge held that Rajasthan High
Court did not have territorial jurisdiction to entertain the
application under
Section 11(6)
of the Act and gave liberty to
Swastik to fle the arbitration application in the Calcutta High
Court which order came to be challenged before the Supreme
Court.

15.4 Pointing out that the words like "alone", "only",
"exclusive" or "exclusive jurisdiction" have not been used
in the agreement and use of such words is not decisive and
non-use of such words does not make any material difference
as to the intention of the parties by having Clause 18 of the
agreement that the courts at Kolkata shall have the
jurisdiction, the Supreme Court held as under:-

"31. In the instant case, the appellant does not dispute that
part of cause of action has arisen in Kolkata. What the
appellant says is that part of cause of action has also arisen in
Jaipur and, therefore, the Chief Justice of the Rajasthan High
Court or the designate Judge has jurisdiction to consider the
application made by the appellant for the appointment of an
arbitrator under
Section 11
. Having regard to
Section 11(12)

(b) and
Section 2(e)
of the 1996 Act read with
Section 20(c)

of the Code, there remains no doubt that the Chief Justice or
the designate Judge of the Rajasthan High Court has
jurisdiction in the matter. The question is, whether parties by
virtue of Clause 18 of the agreement have agreed to exclude
the jurisdiction of the courts at Jaipur or, in other words,
whether in view of Clause 18 of the agreement, the
jurisdiction of the Chief Justice of the Rajasthan High Court
has been excluded?

32. For answer to the above question, we have to see the effect
of the jurisdiction clause in the agreement which provides
that the agreement shall be subject to jurisdiction of the
courts at Kolkata. It is a fact that whilst providing for
jurisdiction clause in the agreement the words like "alone",
"only", "exclusive" or "exclusive jurisdiction" have not been
used but this, in our view, is not decisive and does not make
any material difference. The intention of the parties--by
having Clause 18 in the agreement-- is clear and
unambiguous that the courts at Kolkata shall have

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jurisdiction which means that the courts at Kolkata alone
shall have jurisdiction. It is so because for construction of
jurisdiction clause, like Clause 18 in the agreement, the
maxim expressio unius est exclusio alterius comes into play
as there is nothing to indicate to the contrary. This legal
maxim means that expression of one is the exclusion of
another. By making a provision that the agreement is subject
to the jurisdiction of the courts at Kolkata, the parties have
impliedly excluded the jurisdiction of other courts. Where the
contract specifes the jurisdiction of the courts at a particular
place and such courts have jurisdiction to deal with the
matter, we think that an inference may be drawn that parties
intended to exclude all other courts. A clause like this is not
hit by
Section 23
of the Contract Act at all. Such clause is
neither forbidden by law nor it is against the public policy. It
does not offend
Section 28
of the Contract Act in any manner."

25. Paragraphs 18 and 19 recorded the conclusion in the
following words :-

"18. Where the contract specifes the jurisdiction of the
court at a particular place, only such court will have the
jurisdiction to deal with the matter and parties intended to
exclude all other courts. In the present case, the parties have
agreed that the "venue" of arbitration shall be at
Bhubaneswar. Considering the agreement of the parties
having Bhubaneswar as the venue of arbitration, the intention
of the parties is to exclude all other courts. As held in Swastik,
non-use of words like "exclusive jurisdiction", "only",
"exclusive", "alone" is not decisive and does not make any
material difference.

19. When the parties have agreed to have the "venue" of
arbitration at Bhubaneswar, the Madras High Court erred in
assuming the jurisdiction under
Section 11(6)
of the Act.
Since only Orissa High Court will have the jurisdiction to
entertain the petition fled under
Section 11(6)
of the Act, the
impugned order is liable to be set aside."

26.
In this case, the Hon'ble Supreme Court deviated from
the decision in
Hardy Exploration
(supra) holding that the
parties' choice of the "venue of arbitration" is really that of the
"seat of arbitration", though the Apex Court did not consider it

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necessary to examine whether there existed any
circumstances, justifying designation of venue as designation
of seat.

27. Thereafter, the Apex Court was once again confronted
with a similar issue in BGS SGS Soma JV (supra) , wherein the
arbitration agreement specifed that, "the arbitration
proceedings shall be held at New Delhi/Faridabad".
It is this
decision, in which the Apex Court declared it's earlier decision
in
Hardy Exploration
(supra) to be per incuriam, since it did
not follow the decision of the Five-Judge Bench in BALCO
(supra), which approved the "shashoua principle".

The Hon'ble Apex Court reiterated the "shashoua
principle" and laid down the following tests for determining
the 'seat' of arbitration :-

"1. Where the arbitration clause contains a choice of a place as
the venue of arbitration proceedings, the use of the
expression "arbitration proceedings" signifes that the entire
proceedings would be held at such place, as opposed to one or
more hearings. In such case, the chosen venue is really the
seat of the arbitration.

2. Where the arbitration clause contains wording such as
"tribunals are to meet at or have witnesses, experts or the
parties" where only hearings are to be conducted at such
place, it would lead to the conclusion that, other things beings
consistent, the chosen venue is not the seat of the arbitration.

3. Where the arbitration clause contains wording such as
"arbitration proceedings shall be held at" at a particular
venue, this would indicate that the arbitration proceedings
are anchored at such venue and accordingly, such venue is
the seat of the arbitration.

4. In all these cases above, there must be no other
"signifcant contrary indicia" which suggest that the chosen

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venue is merely a geographically convenient place for meeting
and not the seat of the arbitration.

5. In the context of an international arbitration, if a
supranational body of rules is to govern the arbitration, then
this would be a further indication that the venue is really the
seat of the arbitration Similarly, in the context of a domestic
arbitration, the choice of the Act to govern arbitral
proceedings would point towards the choice of venue being in
reality a choice of seat."

In paragraph, 61, the Hon'ble Apex specifcally held that,
"wherever there is an express designation of a "venue", and
no designation of any alternative place as the "seat",
combined with a supranational body of rules governing the
arbitration, and no other signifcant contrary indicia, the
inexorable conclusion is that the stated venue is actually the
juridical seat of the arbitration proceedings."

28. In paragraph 82, it is specifcally held 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 "tribunal are to meet or
have witnesses, experts or the parties" where only hearings
are to take place in the "venue", which 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 the
place is the seat of the arbitral proceedings. This, coupled
with there being no other signifcant 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

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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."

29. Another decision of the Apex Court, which is relevant
and which must be referred to is in the case of
Mankastu
Impex Private Limited
(supra), where the parties, an Indian
company and a Hong Kong company had entered into a
Memorandum of Understanding (MoU), which stipulated In-
dian law as governing law and specifed that the Court at New
Delhi has jurisdiction for resolution of disputes by providing
as under :-

"Arbitration administered in Hong Kong" and "place of
arbitration shall be Hong Kong".

When the dispute arose between the parties, the Mankastu
Impex Private Limited approached the Supreme Court for
appointment of a sole arbitrator under
Section 11(6)
of the Act of
1996 and it was contended that the Courts at New Delhi shall
have jurisdiction and the seat of arbitration was New Delhi.

Relying upon the decision in the case of
Hardy
Exploration
(supra), it was argued that Hong Kong was only
the venue and not the seat.

The respondent -Airvisual, relying upon the decision in
the case of BGS SGS Soma JV (supra) , contended that Hong
Kong was the seat of arbitration, on the basis that the
arbitration agreement in the MoU specifcally provided that
the place of arbitration was Hong Kong.

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In the wake of the rival contentions, it was held that
mere reference to Hong Kong as the "place of arbitration" did
not signify that the parties had chosen Hong Kong as the seat
of arbitration. Instead, the intention of the parties have to be
determined by examining the rest of the arbitration
agreement and their conduct, as the use of the words
"arbitration administered in Hong Kong" in rest of the
agreement clearly indicated that the seat of the arbitration
was Hong Kong and the Hong Kong law was the procedural law
and, hence, the Indian Courts did not have jurisdiction.

30. Once again in
PASL Wind Solutions Private Limited Vs.
GE Power Conversion Indian Private Limited10
, the Hon'ble
Supreme Court clarifed the position in the case of
Mankastu
Impex
(supra), when it drew a parallel in the agreement
between the parties, which provided for "that dispute to be
resolved in Zurich in accordance with the Rules of Conciliation
and Arbitration of the ICC". It was held that seat of arbitration
is Zurich and this conclusion was derived upon one signifcant
factor, being the agreement between the parties provided that
the dispute shall be resolved in Zurich.

31.
In this legal scenario, when the position of law was
crystallised as above, the Two-Judge Bench of the Apex Court
delivered it's decision in the case of
Ravi Ranjan
(supra),
where it determined a similar issue, in the backdrop of the fact
that the Development Agreement was entered into between
10 (2021) 7 SCC 1

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the parties for development of the property situated at
Muzaffarpur in Bihar, outside the jurisdiction of Calcutta High
Court. The Development Agreement was also executed in
Muzaffarpur and contained an arbitration clause, which read
as under :-

"37. That in case of any dispute or difference between the
parties arising out of and relating to this development
agreement, the same shall be settled by reference of the
disputes or differences to the Arbitrators appointed by both
the parties and such arbitration shall be conducted under the
provisions of the
Indian Arbitration and Conciliation Act,
as amended from time to time and the sitting of the said
Arbitral Tribunal shall be at Kolkata."

32. The facts placed before the Court reveal that, the
respondent moved an arbitration application in Calcutta High
Court, seeking appointment of an Arbitrator, but it was
withdrawn on technical grounds. It again fled a second
arbitration petition, wherein the appellant fled an affdavit
questioning the territorial jurisdiction of the Calcutta High
Court, by submitting that Calcutta High Court has no
territorial jurisdiction to entertain and determine the
application, as the agreement has been executed and
registered in Muzaffarpur, Bihar and the piece and parcel of
land, subject matter of the agreement, was also situated in
Muzaffarpur Municipal Corporation, outside Calcutta. It was
also objected on the ground that no part of cause of action has
arisen within the jurisdiction of the Court and, hence, the
Court in Calcutta had no territorial jurisdiction to entertain
and determine the present application, as it is not a Court
within the meaning of
Section 2(i)(e)
of the Act of 1996.

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Merely because a place of sitting was Kolkata was not
determinative of the jurisdiction in Calcutta High Court was
the submission advanced.

The Calcutta High Court allowed the arbitration petition
and appointed a sole Arbitrator. The said order was passed,
since the counsel for the parties did not dispute the existence
of valid arbitration clause and agreed to appoint an Arbitrator
to settle the disputes.

It was sought to be argued that the consent was given on
behalf of the appellant, without any instructions.

33. The question which, therefore, arose for consideration
before the Hon'ble Supreme Court was, whether the Calcutta
High Court had jurisdiction to appoint an Arbitrator. The
answer was given in the negative, in the following words :-

"20. The question in this case is, whether the Calcutta
High Court had territorial jurisdiction to pass the impugned
orders. The answer to the question has to be in the negative
for the reason that the Development Agreement was
admittedly executed and registered outside the jurisdiction of
the High Court of Calcutta, the agreement pertains to
development of property located in Muzzafarpur outside
jurisdiction of the Calcutta High Court. The Appellant has its
registered offce in Patna outside the jurisdiction of Calcutta
High Court. The appellant has no establishment and does not
carry on any business within the jurisdiction of the Calcutta
High Court. As admitted by the respondent, no part of the
cause of action had arisen within the jurisdiction of Calcutta
High Court."

34. Further observation in paragraphs 26 to 28 is also
relevant, which read thus :-

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"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 defnition of Court in
Section 2(1)(e)
of the A &
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,
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 raised 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."

35. By referring to the decision in the case of
Mankastu
Impex
(supra) and
Hardy Exploration
(supra), the Hon'ble
Apex Court concluded as under :-

"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 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

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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 protec-
tion under Section 9 of the A & C Act. The Respondent having
himself invoked the jurisdiction of the of the District Court at
Muzaffarpur, is estopped from contending that the parties
had agreed to 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."

36. Recently, in the case of
BBR (India) Private Limited

(supra), the Hon'ble Supreme Court considered the issue,
whether the change in place of conducting arbitration due to
appointment of new Arbitrator will shift the jurisdictional seat
of arbitration. In this case, the arbitration agreement did not
stipulate either the 'seat' or 'venue' and the sole Arbitrator
determined the venue of proceedings.

The Hon'ble Supreme Court, relying upon BGS SGS Soma
JV (supra), held that the reference to the venue of the
proceedings was really a reference to the seat of the
arbitration and once the seat is fxed by the Arbitral Tribunal

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under
Section 20(2)
, it shall remain static and fxed, whereas
the venue can be moved to new location, but change of venue
does not change the seat of arbitration and the Court held that,
subsequent hearings or proceedings at a different location
other than the place fxed by the Arbitrator as the seat of
arbitration should not be treated as a change or relocation of
jurisdictional seat.

37. The seat of arbitration is a juridical concept, which refers
to the legal home of the arbitration and it assumes great
signifcance, since the seat would determine the procedural
law applicable to the arbitration process. The Courts of the
seat have exclusive jurisdiction over the conduct of arbitration
except in relation to certain ancillary matters like grant of
interim relief and enforcement of arbitral award. As a result,
the seat of arbitration has primary jurisdiction over the
arbitration, with all other jurisdictions becoming secondary.
Thus, the seat is considered to be centre of gravity of
arbitration and it is often described as anchor for the
arbitration.

In contrast, the venue of arbitration is merely a
geographical location, where the parties and/or the Arbitral
Tribunal may fnd it convenient to meet or hold meetings, with
little signifcance.

When place of arbitration is referred to, it may either
cover a 'seat' or a 'venue'.
The Act
of 1996 do not defne the
terms 'seat' or 'venue', but instead uses the term, 'place of
arbitration' in
Section 20
and this has been interpreted by the

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Hon'ble Apex Court by referring to the two distinct meaning
being assigned.

However,
Section 20(1)
, which uses the expression
'place' in the same context, in terms of the 'seat' i.e. the 'centre
of gravity' of an arbitration, the same expression 'place' is
used in the different context i.e. 'venue', which is a location for
conducting meetings, hearings and consultations, which can be
changed in accordance with the convenience of the Arbitrators
or the parties. Often, it result into a confusing state of affairs,
when there is a reference to 'seat of arbitration', which
indicate a legal system, which an arbitration can call it's
'home', indicating not a physical location, but connection with
the legal system of a country, which has great signifcance in
the context of the international arbitration because the choice
of 'seat' can effectively determine, what is the governing law of
arbitration. It would determine, whether Part I or
Part II of
the Act
of 1996 is applicable, but within a domestic framework
of Indian Courts, the choice of seat as 'city' has no relevance to
the applicable system of law, which shall be always the Indian
law irrespective of which city is chosen as 'seat'.

Prior to the decision in BALCO (supra), a stipulation of
'seat' in arbitration clause was not perceived to have bearing
purely on domestic arbitration. A jurisdiction of a Court was
determined by taking recourse to
Section 2(1)(e)
of the Act of
1996 and the relevant provisions of the Civil Procedure Code,
1908. However, the Five-Judge Bench of the Apex Court in
BALCO (supra) clearly opined that the subject matter of
arbitration cannot be confused with the subject matter of the
seat. The former has reference and connection with the

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process of dispute resolution. It was held that jurisdiction is
vested in two courts i.e. the court having jurisdiction over the
cause of action and the court where the arbitration takes
place. The Five-Judge Bench clothed the jurisdiction upon the
courts located at the seat of arbitration. Even in the purely
domestic context which in the Court's world do not otherwise
exist, thus paving the way for the concept of 'seat' to assume
center stage in domestic arbitrations, despite indication in the
statutory framework to the contrary. Persuaded to accept
that the party autonomy is supreme, the Constitution Bench
found it appropriate to extend it's scope in the domestic
arbitration too. This was attempted through para 96 of the
judgment, focusing upon the concept of 'seat' in Indian
arbitration, by clearly carving out a term 'subject-matter of
arbitration', so as to identify the Court having supervisory
control over the arbitration proceedings, which was held to be
essentially a Court of the 'seat of the arbitration' process.

While emphasising on party autonomy, the Hon'ble
Supreme Court, however, conferred upon jurisdiction on two
different Courts to exercise the power under the Act i.e. the
Court with supervisory jurisdiction over the seat of arbitration
and the Court in whose jurisdiction the cause of action arose.
The observation in the case of BALCO (supra), in para 96,
particularly created confusion and led to conficting decisions
of different High Courts.
However, in
Enercon (India) Limited
& Ors. Vs. Enercon GMBH & Anr.11
, the Apex Court once again
ruled to the effect that once a seat of arbitration has been fxed
in India, it would be in the nature of exclusive jurisdiction to

11 (2014) 5 SCC 1

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exercise the supervisory powers over the arbitration process.

In
Indus Mobile Distribution Private Limited
(supra) , while the
Apex Court was dealing with the issue of exclusive jurisdiction
with reference to the seat of arbitration, it re-examined the
concept of 'seat' and 'venue' and the conclusion drawn was,
once a seat is designated, it is akin to exclusive jurisdiction
clause and consequently, the Courts at the 'seat' are vested
with the exclusive jurisdiction to exercise the powers and
regulate arbitral proceedings to the exclusion of all other
Courts, including the Courts, where the cause of action arose.

The above principle was followed in
Brahmani River
Pellets Limited
(supra).

38. The aforesaid authoritative rulings are, therefore,
indicative of the fact that the Apex Court deviated from the
concurrent jurisdiction principle highlighted in paragraph 96
of BALCO (supra) and held that the exclusive jurisdiction is in
the Court of 'seat' of arbitration. It was ultimately in BGS SGS
Soma JV (supra), a Three-Judge Bench, speaking through
Hon'ble Shri Justice Rohinton Nariman (as His Lordship was
then), offered some stability to the contradicting trends by
expressly recording a fnding that there do not exist a concept
of concurrent jurisdiction.

The Three-Judge Bench reiterated that once the parties
designate the seat of arbitration, only the Courts governing the
seat shall have exclusive jurisdiction to govern such

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arbitration proceedings and the jurisdiction of all other Courts
stand ousted.

The aforesaid observation came in the wake of the fact of
an arbitration clause, which stipulated that arbitration shall
be held in New Delhi/Faridabad and 71 sittings were held in
Delhi and the Award was passed in Delhi, which was appealed
in District Court, Faridabad, Haryana. In paragraphs 60 and
61, it is held as under :-

"60. The judgments of the English courts have examined
the concept of the "juridical seat" of the arbitral proceedings,
and have laid down several important tests in order to deter-
mine whether the "seat" of the arbitral proceedings has, in
fact, been indicated in the agreement between the parties.
The judgment of Cooke, J., in Shashoua, states :

"34. London arbitration is a well-known phenomenon which is
often chosen by foreign nationals with a different law, such as
the law of New York, governing the substantive rights of the
parties. This is because of the legislative framework and
supervisory powers of the courts here which many parties are
keen to adopt. When therefore there is an express designation
of the arbitration venue as London and no designation of any
alternative place as the seat, combined with a supranational
body of rules governing the arbitration and no other signifcant
contrary indicia, the inexorable conclusion is, to my mind, that
London is the juridical seat and English Law the curial law. In
my judgment it is clear that either London has been designated
by the parties to the arbitration agreement as the seat of the
arbitration, or, having regard to the parties' agreement and all
the relevant circumstances, it is the seat to be determined in
accordance with the fnal fall back provision of
Section 3
of the
Arbitration Act."

61. It will thus be seen that wherever there is an
express designation of a "venue", and no designation of any
alternative place as the "seat", combined with a supranational
body of rules governing the arbitration, and no other
signifcant contrary indicia, the inexorable conclusion is that
the stated venue is actually the juridical seat of the arbitral
proceeding."

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39.
In paragraph 91 of the said law report, the principle laid
down in
Hardy Exploration
(supra), was not approved, as it
was found to be contrary to BALCO (supra) and paragraphs 98
and 99, it was specifcally recorded as under :-

"98. However, the fact that in all the three appeals before
us the proceedings were fnally held at New Delhi, and the
awards were signed in New Delhi, and not at Faridabad, would
lead to the conclusion that both parties have chosen New
Delhi as the "seat" of arbitration under
Section 20(1)
of the
Arbitration Act, 1996. This being the case, both parties have,
therefore, chosen that the courts at New Delhi alone would
have exclusive jurisdiction over the arbitral proceedings.
Therefore, the fact that a part of the cause of action may have
arisen at Faridabad would not be relevant once the "seat" has
been chosen, which would then amount to an exclusive
jurisdiction clause so far as courts of the "seat" are concerned.

99. Consequently, the impugned judgment is set aside,
and the
Section 34
petition is ordered to be presented in the
courts in New Delhi, as was held by the learned Single Judge
of the Special Commercial Court at Gurugram. The appeals
are allowed in the aforesaid terms."

40. In BGS SGS Soma JV (supra), once again Shashoua
principle was reiterated. In no uncertain terms, the Hon'ble
Supreme Court concluded that when a clause designates a
venue of arbitration and declare that arbitration shall be held
at such a place, it indicates that venue is actually the seat,
coupled with the fact that there are no contrary signifcant
indicia that 'venue' is not a 'seat'.
The judgment of
Hardy
Exploration
(supra), was held to be contrary to the principle

laid down in
BALCO (supra) and, hence, "not being good law".

It was categorically held that the Three-Judge Bench in

Hardy Exploration
(supra), failed to apply the Shashoua
principle to the arbitration clause in question and had it been

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applied, in the facts of the case, the answer would have been
that Kuala Lumpur, which was stated to be the 'venue' of
arbitration proceedings, would be governed by a supranational
set of rules i.e. UNCITRAL Model Law, and there being no
other contrary indicated, Kuala Lumpur would have been the
juridical 'seat' of arbitration.

By construing that there is no contrary indication, where
India was designated as 'seat' and the parties had chosen
either New Delhi or Faridabad, as a place where the arbitration
could be held, considering the wordings, "arbitration
proceedings shall be held at New Delhi/Faridabad, India" and,
since the clause did not state that it is the venue nor is the
language used "the Tribunal may meet," or "may hear
witnesses, experts or parties", the use of word 'venue' is really
the 'seat' of the arbitral proceedings and, hence, New Delhi/
Faridabad, India was designated as seat of arbitration under

Section 20(1)
of the Act of 1996 and, hence, it was held that
the Courts at New Delhi alone, would have exclusive
jurisdiction over the arbitral proceedings.

41.
In
Mankastu Impex Private Limited
(supra), the Three-
Judge Bench relied upon the principle
laid down in
BALCO
(supra) and focused upon the exclusive jurisdiction clause, the
moment 'seat' is determined in arbitration proceedings.
Construing a clause in the MoU stipulating that the MoU is
governed by the law of India and the Courts at New Delhi shall
have jurisdiction, it was held that the the words did not mean
to take away or dilute the intention of the parties in clause

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17.2, where it was agreed that the arbitration shall be
administered in Hong Kong, since the words in clause 17.1 did
not suggest that the seat of arbitration is in New Delhi. Since,
the arbitration was seated at Hong Kong, the petition fled
under
Section 11(6)
of the Act of 1996 in New Delhi was held
to be without jurisdiction and not entertained.

42. The law has thus been crystallized to the above effect
from the series of judgments and while this legal scenario was
prevailing, when the decision delivered by the Two-Judge
Bench of the Appex Court in
Ravi Ranjan
(supra) is carefully
perused, it is apparent that Their Lordships dealt with the
peculiar facts and on it's assimilation, considered the objection
raised by the respondent in the reply that whenever there is
designation of place of arbitration in the arbitration clause as
being the 'venue', the expression "arbitral proceedings" would
make it clear that venue is really the 'seat'.

In the peculiar facts it is noted that the appellant fled
petition under
Section 9
. Thereafter, the respondent moved
an arbitration petition before Calcutta High Court, seeking
appointment of Arbitrator, which was withdrawn for technical
reasons and a second arbitration petition came to be fled once
again before the Calcutta High Court, which was allowed by
appointing an Arbitrator and this appointment was challenged
before the Hon'ble Apex Court.

While dealing with the issue, whether Calcutta High
Court had territorial jurisdiction to pass the impugned order,

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the learned counsel for the appellant emphasised upon the
property being located in Muzaffarpur, outside jurisdiction of
Calcutta High Court and the appellant having it's registered
offce in Patna.
Section 2(1)(e)
, defning the term 'Court', was
pressed into service and the argument advanced was, no suit
could have been fled in any Court over which the Calcutta
High Court exercise the jurisdiction, as the suit admittedly
pertain to immovable property situated at Muzaffarpur in
Bihar, outside the territorial jurisdiction of Calcutta High
Court and no part of action arose in the jurisdiction of Calcutta
High Court.

The crux of the matter is crystallized in paragraph 27,
where it is recorded as under :-

"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,
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."

43.
Section 42
of the Act of 1996 was also pressed into
service and one of the argument advanced on behalf of the
appellant is, on an application for interim protection having
moved at the District Court at Muzzafarpur, the respondent
could not have invoked jurisdiction of the Calcutta High Court.

This background was appreciated positively by holding
that
Section 42
of the Act of 1996 is mandatory. The counsel
for the respondent pressed into service the decision of Indus

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Mobile Distribution Private Limited
(supra) and BGS SGS
Soma JV (supra), in support of his submission that the seat of
arbitration confers a exclusive jurisdiction clause and the
arguments advanced were dealt with by recording that the
decision in the case of
Indus Mobile Distribution Private
Limited
(supra) as well as BALCO (supra) was in context of

section 2(2)
of the Act of 1996 and the Constitution Bench
decided upon whether
Part-I of the Act
of 1996 applied to
arbitrations, where the place of arbitration was outside India.

The judgment in the case of BGS SGS Soma JV (supra) was
also held to be rendered in context of
Section 2(2)
of the Act of
1996 and the applicability of
Part-I of the Act
to an
international commercial arbitration, where the seat of
arbitration was not India.
Hardy Exploration
(supra) was
relied upon for the proposition that the 'seat of arbitration' and
'place of arbitration' has different connotations. The ultimate
conclusion derived is that it was not the intention of the
parties that Kolkata should be the seat of arbitration, but it
was only intended to be venue for arbitration sittings.

44. The aforesaid observations in
Ravi Ranjan
(supra) are
in the peculiar facts of the case, where
Section 42
was pressed
into service and Their Lordships focused upon the intention of
the parties to the effect that Kolkata would not be the seat of
arbitration, but was intended to be venue.

45. In the light of the authoritative pronouncement by the
Constitution Bench of the Hon'ble Apex Court, which is further
reiterated in the case of BGS SGS Soma JV (supra), the
position of law is crystallized to the effect that once the parties

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have agreed as to the venue of arbitration, unless indicated
otherwise, amount to the 'seat' of arbitration.

In the present case, perusal of clause 20 of the Lease
Agreement would make it explicit that the parties have agreed
for their differences to be resolved through a sole Arbitrator,
with his Award being given a fnal and binding effect. The
venue of arbitration has been agreed to be in Mumbai, a
conscious choice despite the fact that the plant is situated in
Ganganagar and the Agreement is executed in Madhya
Pradesh, Indore.

By applying the principle enunciated by the Constitution
Bench in the case of BALCO (supra), which is re-affrmed in
BGS SGS Soma JV (supra), in case of domestic arbitration
when the venue of arbitration is decided to be Mumbai,
without reference to the seat of arbitration, the Court in
Mumbai would be the competent Court to exercise jurisdiction
over the proceedings and
Section 2(1)(e)
, which provide for
jurisdiction of the subject-matter of a suit, will not be a
determinative factor in ascertaining the Court, which would
exercise the jurisdiction as regards the appointment of the
Arbitrator under
Section 11
.

46.
In recording the aforesaid conclusion, I am gainfully laid
by the decision of this Court in the case of
Priya Malay Sheth

(supra), wherein relying upon the decision of the Apex Court
in BALCO (supra) as well as BGS SGS Soma JV (supra), a
similar conclusion was drawn in the wake of a clause where it
was agreed that the venue of arbitration shall be Delhi and it
was held that seat of arbitration shall be necessarily at Delhi.

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47. As regards the objection in respect of insuffcient stamp
duty is concerned, the issue having been made over to a larger
Bench to settle the jurisprudence on the issue of stamping and
arbitrality, the specifc observation that at a pre-appointment
stage, the matters cannot be kept hanging, with a further
clarifcation, being offered in the case of
Weatherford Oil Tool
Middle East Limited Vs. Baker Hughes Singapore Pte
. 12 in
paragraph 16, I see no legal impediment to the enforceability
of the arbitration agreement, pending payment of stamp duty
on the substantive contract.

48. In the light of the aforesaid discussion, I deem it
appropriate to exercise the power conferred under
Section 11

for appointment of a sole Arbitrator, since the arbitration
clause contained in the Lease Agreement is not in dispute nor
is it's invocation. The appointment of a sole Arbitrator, as
prayed in the application, shall be in the following manner :-

TERMS OF APPOINTMENT

(a) Appointment of Arbitrator :

Mr.Gautam Ankhad, an Advocate of this Court, is
hereby appointed as a Sole Arbitrator to decide the
disputes and differences between the parties under the
Lease Agreement.

(b) Communication to Arbitrator of this order :-

(i) A copy of this order will be communicated to the
learned Sole Arbitrator by the Advocates for the applicant/
petitioner within one week from the date this order is
uploaded.

12 AIR 2022 SC 5229

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(c) Disclosure : The learned Arbitrator, within a
period of 15 days before entering the arbitration reference,
shall forward a statement of disclosure as per the
requirement of
Section 11(8)
read with
Section 12(1)
of
the Arbitration and Conciliation Act, 1996, to the
Prothonotary & Senior Master of this Court, to be placed
on record of this application, with a copy to be forwarded to
both the parties.

(d) Appearance before the Arbitrator :The parties
shall appear before the Sole Arbitrator within a period of
two weeks from today and the learned Arbitrator shall fx
up a frst date of hearing in the week commencing from
03/04/2023. The Arbitral Tribunal shall give all further
directions with reference to the arbitration and also as to
how it is to proceed.

(e) Contact and communication information of the
parties : Contact and communication particulars are to be
provided by both sides to the learned Sole Arbitrator. This
information shall include a valid and functional E-mail
address as well as mobile numbers of the parties,
participating in the process as well as of the Advocates.

(f)
Section 16
application : The respondent is at
liberty to raise all questions of jurisdiction within the
meaning of
section 16
of the Arbitration Act. All
contentions are left open.

(g) Fees : The sole Arbitrator shall be entitled to the
fees prescribed under the Bombay High Court (Fee Payable
to Arbitrators) Rules, 2018 and the arbitral costs and fees
of the Arbitrator shall be borne by the parties in equal
portion and shall be subject to the fnal Award that may be
passed by the Tribunal.

(h) Venue and seat of Arbitration : Parties agree that
the venue and seat of the arbitration will be in Mumbai.

(i) Procedure : These directions are not in derogation
of the powers of the learned Sole Arbitrator to decide and
frame all matters of procedure in arbitration.

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49. All contentions of both the sides are left open, to be
raised by the respective parties before the Arbitral Tribunal, in
accordance with law.

50. Comm. Arbitration Application No.82 of 2022 stands
disposed off.

51. In view of the disposal of the Comm. Arbitration
Application, Interim Application does not survive and stands
disposed off.

( SMT. BHARATI DANGRE, J.)

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