Supreme Court - Daily Orders

M/S Ravi Ranjan Developers Pvt. Ltd. vs Aditya Kumar Chatterjee on 24 March, 2022

Author:
Indira Banerjee

Bench:
Indira Banerjee
,
A.S. Bopanna

REPORTABLE
IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. OF 2022
(Arising out of SLP (C) No. 17397-17398 of 2021)

M/S RAVI RANJAN DEVELOPERS PVT. LTD. … Appellant(s)

VERSUS

ADITYA KUMAR CHATTERJEE … Respondent(s)

JUDGMENT

INDIRA BANERJEE, J.

Leave granted.

2. These appeals are against an order dated 13 th August 2021 passed by the

Calcutta High Court, allowing the Arbitration Petition No.46/2021 filed by the

Respondent under
Section 11(6)
of the Arbitration and Conciliation Act, 1996

(hereinafter referred to as the 'A&C Act'), for appointment of an Arbitrator and

also an order dated 4th October 2021 passed by the High Court, rejecting an

application made by the Appellant for review of the said order dated 13 th

August 2021, being R.V.W.O. No.14/2021.

3.

Signature Not Verified

The Appellant and the Respondent entered into a Development

Digitally signed by

Agreement dated 15th June 2015 for development of property situated at
Rachna
Date: 2022.03.28
20:35:42 IST
Reason:

Muzaffarpur in Bihar measuring about 12 Kaithas and 11 Dhurs, more fully

described in the said Development Agreement, outside the jurisdiction of
Calcutta High Court. The said Development Agreement executed and registered

in Muzaffarpur in Bihar, contains an arbitration clause, which is set out

hereinbelow for convenience:

“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, 1996
as amended from time to time and the sitting
of the said Arbitral Tribunal shall be at Kolkata.”

4. Differences and disputes arose in relation to the said Development

Agreement, giving rise to various proceedings between the parties. On 24 th April

2019, the Respondent terminated the said Development Agreement. The

Appellant has not accepted the termination of the said Development

Agreement.

5. On 15th May 2019, the Appellant filed a petition before the Real Estate

Regulatory Authority, (referred to in short as ‘RERA’) at Patna, which was

registered as RERA Case No.56/377/2019. Soon thereafter, on 17th August 2019,

the Respondent filed a petition under
Section 9
of the A&C Act in the Court of

the District Judge, Muzaffarpur seeking interim protection in respect of the

property in question.

6. On 1st October 2019, the Respondent filed a complaint before the

Muzaffarpur Municipal Corporation alleging that the building being constructed

by the Appellant was in violation of the sanctioned building plan and seeking

stoppage of construction. The Muzaffarpur Municipal Corporation dismissed the

complaint on 22nd January 2020.
7. The Respondent appealed to the Bihar Building Municipal Tribunal. The

appeal is stated to be pending. Soon thereafter, the Respondent sent notice to

the Appellant invoking the arbitration clause under the Development

Agreement. The notice was sent to the registered office of the Appellant at

Patna in Bihar, outside the jurisdiction of the Calcutta High Court. In November,

2020, the Respondent moved an arbitration petition being A.P. No.2020 in the

Calcutta High Court under
Section 11
sub-section (6) of the A&C Act for

appointment of Arbitrator. The application was, however, withdrawn for

technical reasons.

8. On 15th January 2021, the Respondent filed a second arbitration petition

under
Section 11
sub-section (6) of the A&C Act being A.P. No.46/2021 in the

Calcutta High Court. The Appellant filed an Affidavit in Opposition questioning

the territorial jurisdiction of the Calcutta High Court to decide the application

under
Section 11(6)
of the Arbitration Act.

9. In the Affidavit in Opposition, the Appellant contended :

“a) There is no valid or enforceable or existing Arbitration clause
between the parties for reference of the disputes to Arbitration
in terms of the said clause.

b) …

c) This Hon’ble Court has no territorial jurisdiction to try entertain

and determine the instant application as the agreement
between the Petitioner and the Respondent has been executed
and registered in the office of the District Registrar,
Muzaffarpur, in the district of Bihar.

d) The subject matter of the agreement is for development and
construction to be carried out of all that piece and parcel of
land situated within the limits of Muzaffarpur Municipal
Corporation, Bihar, outside the jurisdiction of this Hon’ble
Court.

e) No part of the cause of action for filing the present application
has arisen within the jurisdiction of this Hon’ble Court and by
reasons whereof the this Hon’ble Court has no territorial
jurisdiction to try entertain and determine the present
application.

f) The building plan of the property in question has been duly
sanctioned by the Muzaffarpur Municipal Corporation for
construction of a property at Muzaffarpur. The disputes
covered by the present reference relates to an immoveable
construction of an immovable property in Muzaffarpur. This
Hon’ble Court has no territorial jurisdiction to try entertain or
determine the present application as this Hon’ble Court is not
a court within the meaning of
Section 2(i)(e)
of the Arbitration
and Conciliation Act, 1996. This Hon’ble Court is not the
designated High Court for appointing an arbitrator in
accordance with and in true scope and ambit of
Section 11
of
the Act of 1996.

g) …

h) The subject matter of the present application is sub-judice
before the Real Estate Regulatory Authority, Muzaffarpur
under RERA Case No.56/377/2019 and the same is pending
adjudication and by reasons whereof this Hon’ble Court has no
jurisdiction to try entertain or determine the present
application.

i) It is submitted that mere place of sitting mentioned in an
Arbitration agreement stating that the Arbitration will be held
in Kolkata does not confer any jurisdiction on this Hon’ble
Court to try entertain and determine the instant application.

No part of the cause of action has arisen within the jurisdiction
of this Hon’ble Court and by reasons whereof this Hon’ble
Court has no jurisdiction to try entertain and determine the
present application.”

10. The Respondent duly filed an Affidavit in Reply. In the Affidavit in Reply,

the Respondent has merely denied that the Calcutta High Court lacks territorial

jurisdiction to entertain or decide the application under
Section 11(6)
of the

A&C Act. It is admitted that the Development Agreement is in respect of

property situated at Muzaffarpur in Bihar, outside the jurisdiction of Calcutta

High Court. It is also admitted that the Development Agreement was executed

and registered in the State of Bihar, outside the jurisdiction of Calcutta High
Court. It was contended that the Calcutta High Court exercises jurisdiction over

the place agreed upon as the seat of arbitration, and would thus have

jurisdiction to entertain the Arbitration proceedings. Paragraph 5-E of the

Affidavit in Reply is set out hereinbelow for convenience :-

“5-E It is submitted that though the agreement was
executed outside the jurisdiction of this Hon’ble Court and the
property in question is also located outside the Jurisdiction of
this Hon’ble Court but as the Arbitration agreement contained in
the said development agreement where parties have agreed to
submit to the Jurisdiction of this Hon’ble Court thereby, fixing it at
Kolkata, then this Hon’ble Court has jurisdiction to try and entertain
the instant lis. It is submitted that where a seat is designated in an
agreement, the courts of the seat alone have jurisdiction which would
require that all applications arising out of the arbitral agreement
needs to be filed in the Court having jurisdiction over the seat of
Arbitration, and that Court also will have jurisdiction to try the
Arbitration petition. The Hon’ble Courts of this country have made it
clear that the moment a seat is designated by agreement between
the parties, it is akin to an exclusive jurisdiction clause, which would
then vest the courts at the ‘seat’ with exclusive jurisdiction for the
purposes of regulating arbitral proceedings arising out of the
agreement between the parties. 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. In view of the aforesaid
development of law, there is no confusion with regard to what the
seat of Arbitration and venue of Arbitration mean. There is no shadow
of doubt that the Arbitration clause has to be read in a holistic manner
so as to determine the jurisdiction of the Court. That apart, if there is
mention of venue and something else is appended thereto, depending
on the nature of the prescription, the Court can come to a conclusion
that there is implied exclusion.”

11. On 13th August 2021, the Calcutta High Court allowed the Arbitration

Petition and appointed a retired judge of the Calcutta High Court as Sole

Arbitrator. Mr. Ajit Kumar Sinha, learned Senior Counsel appearing on behalf of

the Appellant submitted that even though the Appellant had opposed the

application under
Section 11(6)
of the A&C Act, objecting to the territorial

jurisdiction of the Calcutta High Court, the Calcutta High Court did not decide
the objection. There is no finding by the Calcutta High Court with regard to its

jurisdiction. The order of the High Court reads:-

“1. The present application has been filed under
Section 11(6)(a)
of
the Arbitration and Conciliation Act, 1996 for appointment of the
arbitrator for settlement of the disputes between the parties.

2. At the time of hearing it was not disputed by the learned Counsel
appearing for the parties that there is a valid arbitration clause in the
development agreement.

3. Learned counsel for both the parties have agreed to appoint ... to
resolve the disputes sought to be raised by both the parties.

Accordingly, ... is appointed as arbitrator to settle the disputes
between the parties.

4. The present application is accordingly disposed of.”

12. Mr. Sinha submitted that Counsel appearing on behalf of the Appellant in

the Calcutta High Court gave consent without instructions from the Appellant.

Be that as it may, the Calcutta High Court did not adjudicate the issue of

territorial jurisdiction raised by the Appellant in its Affidavit in Opposition filed in

the High Court.

13. On or about 30th September 2021, the Appellant filed an application for

review of the final order dated 13th August 2021. In the application for review,

the Appellant took the following grounds:

“I FOR THAT the order dated 13th August, 2021 discloses error
apparent on the face of records and mistake inasmuch as the
objections of the petitioner pertaining to the Hon'ble Court not having
jurisdiction in the matter and the objections regarding non-arbitrability
of the disputes involved, have not been considered by this Hon'ble
Court.

II. For THAT the order dated 13th August, 2021 discloses error
apparent on the face of records, mistake inasmuch as the Hon'ble
Court lacked jurisdiction to entertain the petitioner since the Hon'ble
High Court at Patna had to be approached under
section 11
of the
Arbitration and Conciliation Act, 1996
.

xxx xxx xxx

VII. FOR THAT the order dated 13th August, 2021 proceeding on
concession of counsel which is contrary to the petitioners instructions
discloses error apparent on the face of record.

VIII. FOR THAT the petitioner has not instructed counsel to concede
and has to the contrary instructed counsel to oppose the petition and
therefore consent, if any, counsel is without jurisdiction and void and
the order dated 13th August, 2021 proceeding on the basis of the
same, discloses error apparent on the face of record.

IX. FOR THAT there has no consent given by the petitioner and the
order dated 13th August, 2021 proceeding on the basis of the consent,
discloses error apparent on the face of records.”

14. By the order dated 4th October 2021, the High Court dismissed the review

application, which is also impugned in this Court. The High Court held that

consent given by learned Counsel could not be permitted to be withdrawn.

15. The question before this Court is, whether the Calcutta High Court at all

had jurisdiction to entertain the application filed by the Respondent and appoint

an Arbitrator. Mr. Sanjay Ghosh, learned Senior Counsel appearing on behalf of

the Respondent, argued with force, that the initial order of appointment of

Arbitrator was passed by the Court by consent. The Appellant appeared in the

arbitration proceedings. In other words, the Appellant acquiesced to the

reference of the disputes to the Arbitrator appointed by the High Court.

16. The Appellant did not accept the order of the Calcutta High Court. After

the High Court appointed the Arbitrator, the Appellant filed a review application,

taking objection to the jurisdiction of the High Court, which was rejected. On

the same day i.e. 4th October 2021, the Arbitrator passed an interim order

restraining the Appellant from creating any third party interest in the property.
17. The minutes of the proceedings before the learned Arbitrator appointed

by the Calcutta High Court does not indicate that the Appellant willingly

submitted to arbitration by the learned Arbitrator. The Appellant only agreed to

the fees of the Arbitrator appointed by the High Court. This Court cannot be

oblivious to practical realities, such as embarrassment of Counsel to oppose the

fees of an Arbitrator who happens to be a former Judge of the High Court.

18. Mr. Sinha rightly argued that an order without jurisdiction can be

questioned at any time at any stage irrespective of any consent that may have

been given by the Counsel, which the Appellant asserts, was without

instructions of the Appellant.

19.
In
Kiran Singh and Ors. v. Chaman Paswan and Ors.1
, a four Judge

Bench of this Court held that it is a fundamental principle, well-established, that

a decree passed by a Court without jurisdiction is a nullity, and that its invalidity

could be set up whenever and wherever it is sought to be enforced or relied

upon, even at the stage of execution and even in collateral proceedings. A

defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in

respect of the subject matter of the action, strikes at the very authority of the

Court to pass any decree, and such a defect cannot be cured even by

consent of the parties.

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
1 (1955) SCR 117 : AIR 1954 SC 340
Muzaffarpur outside jurisdiction of the Calcutta High Court. The Appellant has

its registered office 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.

21. Mr. Sinha referred to the definition of Court in
Section 2(1)(e)
of the A&C

Act, set out hereinbelow for convenience:

“2. Definitions.—(1) In this Part, unless the context otherwise requires,
—

(a) to (d) …

(e) “Court” means— (i) in the case of an arbitration other than
international 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 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;

22. As argued by Mr. Sinha, the word ‘Court’ has been defined, in case of an

arbitration other than international commercial arbitration, to mean the

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 questions forming the subject matter of the arbitration, if the same

had been the subject matter of the suit, but it does not include any Civil Court

of a grade inferior to such principal Civil Court or any Court of small causes.
23. Subject to the pecuniary or other limitations prescribed by any law, suits

for recovery of immovable property or determination of any other right to or

interest in an immovable 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.

24. 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.

Where there is more than one Defendant, a suit may be instituted in the Court

within whose jurisdiction any of the Defendants voluntarily resides or carries on

business. A suit may also be instituted in a Court within whose jurisdiction the

cause of action arises either wholly or in part.

25. In the present case, no suit could have been filed in any Court over which

the Calcutta High Court exercises jurisdiction, since as stated above, the suit

admittedly pertains to immovable property situated at Muzaffarpur in Bihar,

outside the territorial jurisdiction of the Calcutta High Court and admittedly, no

part of the cause of action had arisen within the territorial jurisdiction of the

Calcutta High Court. The Appellant who would be in the position of Defendant

in a suit, neither resides nor carries on any business within the jurisdiction of

the Calcutta High Court.

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, 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.

29. Mr. Sinha also relied on
Section 42
of the A&C Act set out hereinbelow:

“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.”
30. Mr. Sinha emphasized on
Section 42
of the A&C Act to argue that an

earlier application for interim protection having been moved at the District

Court at Muzaffarpur, the Respondent could not have invoked the jurisdiction of

the Calcutta High Court.

31. There could be no doubt, as argued by Mr. Sinha, that
Section 42
of the

A&C Act is mandatory. The Section has obviously been enacted to prevent the

parties from being dragged into proceedings in different Courts, when more

than one Court has jurisdiction. Where with respect to any arbitration

agreement, any application under Part I of the A&C Act has been made in a

Court, that Court alone would have jurisdiction over the arbitral proceedings

and all subsequent applications arising out of that agreement, and the arbitral

proceedings, would have to be made in that Court and in no other Court, unless,

of course, the Court in which the first application had been instituted, inherently

lacked jurisdiction to entertain that application. The Section which starts with a

non obstante clause, is binding irrespective of any other law for the time being

in force, and irrespective of any other provision in Part I of the A&C Act.

32. However,
Section 42
cannot possibly have any application to an

application under
Section 11(6)
, which necessarily has to be made before a

High Court, unless the earlier application was also made in a High Court. In the

instant case, the earlier application under
Section 9
was made in the District

Court at Muzaffarpur and not in the High Court of Judicature at Patna. An

application under
Section 11(6)
of the A&C Act for appointment of Arbitrator,

could not have been made in the District Court of Muzaffarpur. Therefore,

Section 42
is not attracted.
33. In the Affidavit in Reply filed in the High Court, the Respondent contended

that the parties to the Arbitration Agreement had agreed to submit to the

jurisdiction of Calcutta High Court. The Arbitration Agreement entered into by

the parties clearly states that the seat and/or the place of the Arbitral Tribunal

shall be Kolkata.

34. Mr. Sanjay Ghosh, learned Senior Counsel appearing on behalf of the

Respondents submitted that the Calcutta High Court had the territorial

jurisdiction to entertain the application under
Section 11(6)
of the A&C Act as

the seat of arbitration was Kolkata.

35.
In support of his argument that the Calcutta High Court had exclusive

jurisdiction to entertain and decide the application under
Section 11(6)
filed by

the Respondent, Mr. Ghosh cited
Indus Mobile Distribution Private Limited

v. Datawind Innovations Private Limited and Ors.
2,
Hindustan

Construction Company Limited v. NHPC Limited and Anr.
3 and
BGS SGS

Soma JV v. NHPC Limited4
and argued that once a seat of arbitration is

designated, the clause designating the seat of arbitration becomes an exclusive

jurisdiction clause, as a result of which, only the Courts within whose territorial

limits, the seat is located would have jurisdiction to the exclusion of all other

Courts.

36.
In
Indus Mobile Distribution Private Limited
(supra), this Court

referred to and relied upon the dictum of a Constitution Bench of this Court in

Bharat Aluminium Company v. Kaiser Aluminium
5 and held that once the

seat of arbitration had been fixed, that would be in the nature of an exclusive

2 (2017) 7 SCC 678
3 (2020) 4 SCC 310
4 (2020) 4 SCC 234
5 (2012) 9 SCC 552
jurisdiction clause, binding the parties to specific Courts which alone could

exercise supervisory powers over the arbitration.

In
Bharat Aluminium

Company
(supra) what was in issue before the Constitution Bench was the

meaning of the expression “place of arbitration” in the context of
Section 2(2)
of

the A&C Act, which as amended by Act 33 of 2019 is set out hereinbelow:

“(2) This Part shall apply where the place of arbitration is in India.
3[Provided that subject to an agreement to the contrary, the
provisions of
Sections 9
,
and
[clause (b)] 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 made or to be made in such place is
enforceable and recognised under the provisions of Part II of this
Act.]”

37. The question before the Constitution Bench was whether of Part-I of the

A&C Act applied to arbitrations, where the place of arbitration was outside India.

38. As observed by the Constitution Bench,
Section 2(2)
of the A&C Act places

a threshold limitation on the applicability of Part-I, where the place of arbitration

is not in India. The Constitution Bench in effect and substance drew a

distinction between venue and place of arbitration, as contemplated in
Section
and held that only if the agreement of the parties was construed to provide

for seat/place of arbitration in India, would Part-I of the 1996 Act be applicable.

If the seat/place were outside India, Part-I would not apply, even though the

venue of a few sittings may have been in India, or the cause of action may have

arisen in India.

39. The judgment of this Court in
BGS SGS Soma JV
(supra) cited by Mr.

Sanjay Ghosh, was also rendered in the context of
Section 2(2)
of the A&C Act

and the applicability of Part I of the A&C Act to an international commercial

arbitration, where the seat of arbitration was not in India.
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 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.

41. It is well settled that a judgment is a precedent for the issue of law that is

raised and decided. The judgment has to be construed in the backdrop of the

facts and circumstances in which the judgment has been rendered. Words,

phrases and sentences in a judgment, cannot be read out of context. Nor is a

judgment to be read and interpreted in the manner of a statute. It is only the

law as interpreted by in an earlier judgment, which constitutes a binding

precedent, and not everything that the Judges say.

42. It can never be an absolute general proposition of law, that where an

arbitration agreement says that the place of arbitration is Faridabad/Delhi and

proceedings under Part I of the A&C Act are also validly initiated in Faridabad,

the Court in Faridabad would, notwithstanding
Section 42
of the A&C Act, lose

its jurisdiction, just because arbitration is later conducted in Delhi and Award is

made in Delhi.

43. This Court has perused the Development Agreement. The contention of

the Respondent in the Affidavit in Opposition, that the parties to the arbitration

agreement had agreed to submit to the jurisdiction of Calcutta High Court, is

not correct. The parties to the arbitration agreement only agreed that the

sittings of the Arbitral Tribunal would be in Kolkata. Kolkata was the venue for

holding the sittings of the Arbitral Tribunal.
44.
In
Union of India v. Hardy Exploration and Production (India) Inc.
a three Judge Bench of this Court held that the sittings at various places are

relatable to venue. It cannot be equated with the seat of arbitration or place of

arbitration, which has a different connotation.

45.
In
Mankastu Impex Private Limited v. Airvisual Limited7
a three

Judge Bench of which one of us (Hon. A.S. Bopanna, J) was a member, held:

“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) Ltd. v. Enercon GmbH [Enercon (India)
Ltd.
v. Enercon GmbH, (2014) 5 SCC 1 : (2014) 3 SCC (Civ) 59] , the
Supreme Court held that : (SCC pp. 43 & 46, paras 97 & 107)
“[T]he 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.”

20. It is well settled that “seat of arbitration” and “venue of
arbitration” cannot be used interchangeably. 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.”

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.

6 (2019) 13 SCC 472
7 (2020) 5 SCC 399
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 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.

49. These appeals are therefore, allowed and the impugned orders of

appointment of Arbitrator and dismissal of the review application are set aside.
The appointment of the learned Arbitrator is set aside on the ground that the

order of his appointment is without jurisdiction and in view of the objection to

his appointment raised by the Appellant. It is made absolutely clear that this

order is not to be construed as any aspersion on the learned Arbitrator

appointed by the Calcutta High Court, or the manner in which he has conducted

the proceedings so far.

50. Since the meetings of the Arbitral Tribunal are to be held in Kolkata, this

Court deems it appropriate to appoint Justice Bhaskar Bhattacharya, Former

Chief Justice of the High Court of Gujarat as Sole Arbitrator, to decide the

disputes between the parties. The parties have consented to the appointment

of Justice Bhaskar Bhattarcharya.

51. The status quo with regard to the property in question shall be maintained

for a period of 15 days from today to enable the respective parties to approach

the learned Arbitrator under
Section 17
of the A&C Act, for interim relief in

accordance with law.

…...……………………………,J.

(INDIRA BANERJEE)

…...……………………………,J.

(A.S. BOPANNA)
NEW DELHI;

MARCH 24, 2022.
ITEM NO.2 COURT NO.8 SECTION XVI

S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C)No(s). 17397-17398/2021

(Arising out of impugned final judgment and order dated 13-08-2021
in AP No. 46/2021 04-10-2021 in RVWO No. 14/2021 passed by the High
Court At Calcutta)

M/S RAVI RANJAN DEVELOPERS PVT. LTD. Petitioner(s)

VERSUS

ADITYA KUMAR CHATTERJEE Respondent(s)

(IA No. 141111/2021 - EXEMPTION FROM FILING C/C OF THE IMPUGNED
JUDGMENT)

Date : 24-03-2022 These matters were called on for hearing today.

CORAM : HON'BLE MS. JUSTICE INDIRA BANERJEE
HON'BLE MR. JUSTICE A.S. BOPANNA

For Petitioner(s) Mr. Ajit Kumar Sinha, Sr. Adv.
Dr. Maurya Vijay Chandra, Adv.
Mr. Abhishek Ritabh Shukla, Adv.
Mr. Naveen Soni, Adv.
Mr. Prem Prakash, AOR

For Respondent(s) Mr. Sanjay Ghosh, Sr. Adv.
Mr. Rajiv Ranjan Mishra, Adv.
Mr. Partho Ganguly, Adv.
Mr. Saurabh, Adv.
Mr. Naman Jain, Adv.
Mr. Narender Kumar Verma, AOR

UPON hearing the counsel the Court made the following
O R D E R

Leave granted.

The appeals are allowed in terms of the signed reportable

judgment. The operative part of the signed reportable judgment

reads as under :-

“49. These appeals are therefore, allowed and the
impugned orders of appointment of Arbitrator and
dismissal of the review application are set
aside. The appointment of the learned Arbitrator
is set aside on the ground that the order of his
appointment is without jurisdiction and in view
of the objection to his appointment raised by the
Appellant. It is made absolutely clear that this
order is not to be construed as any aspersion on
the learned Arbitrator appointed by the Calcutta
High Court, or the manner in which he has
conducted the proceedings so far.

50. Since the meetings of the Arbitral Tribunal
are to be held in Kolkata, this Court deems it
appropriate to appoint Justice Bhaskar
Bhattacharya, Former Chief Justice of the High
Court of Gujarat as Sole Arbitrator, to decide
the disputes between the parties. The parties
have consented to the appointment of Justice
Bhaskar Bhattarcharya.

51. The status quo with regard to the property
in question shall be maintained for a period of
15 days from today to enable the respective
parties to approach the learned Arbitrator under

Section 17
of the A&C Act, for interim relief in
accordance with law.”

Pending applications, if any, stand disposed of accordingly.

(ARUSHI SUNEJA) (MATHEW ABRAHAM)
SENIOR PERSONAL ASSISTANT COURT MASTER (NSH)

(Signed reportable judgment is placed on the file)