Introduction
The
Background
On
While the Appellant filed for a review application against Order 1, by an Order dated
Submission and Findings
- The Appellant submitted that (i) the Agreement is executed in Muzaffarpur; (ii) the subject matter of the Agreement is in Muzaffarpur; (iii) the Appellant's registered office is in
Patna , and (iv) the Appellant has no establishment/business within the jurisdiction of the Calcutta HC. Admittedly, no part of the cause of action arose within the jurisdiction of the Calcutta HC. Relying uponKiran Singh 3 , the Appellant submitted that a decree passed by a court without jurisdiction is a nullity and its invalidity can be set up at any stage, including at the stage of execution. The defect of jurisdiction i.e., territorial, pecuniary, or subject matter jurisdiction, cannot be cured by consent of parties. - The Appellant submitted that that the Property was an immovable property situated in Muzaffarpur and therefore, was outside the territorial jurisdiction of the Calcutta HC. Subject to the pecuniary or other limitations in law, suits pertaining to immovable property can be instituted in a court within whose jurisdiction the immovable property is situated, or the defendant actually or voluntarily resides or carries on business.
Parties cannot confer jurisdiction by consent upon a court that inherently lacks jurisdiction
-
The
Supreme Court observed that when two or more courts have jurisdiction to adjudicate upon disputes arising out of an arbitration agreement, parties may, by agreement, decide to refer all disputes to any one court to the exclusion of all other courts, which might otherwise have had jurisdiction the decide the disputes. However, the parties cannot by consent confer jurisdiction on a court which inherently lacked jurisdiction.
An application under Section 11 (6) of the Act ought to be filed before the
-
Upon examining Section 2(1)(e), 11 (6) and 42 of the Act, the
Supreme Court observed that an application under Section 11(6) of the Act has to be filed before a “High Court” irrespective of whether such court has original jurisdiction to decide suits or jurisdiction to decide a suit in respect of the subject matter of arbitration. Therefore, the definition of Section 2 (1)(e) of the Act would not be plainly applicable in the matter of aHigh Court exercising jurisdiction under Section 11(6). At the same time, the application under Section 11(6) cannot be moved in 'any'High Court of India . -
The
Supreme Court held that the intention of Section 11 (6) of the Act could not have been that arbitration proceedings should be initiated in anyHigh Court , irrespective of whether the respondent resided/ carried on business within the jurisdiction of thatHigh Court and irrespective of whether any part of the cause of action arose within the jurisdiction of thatHigh Court . Section 11(6) shall be read harmoniously with Section 2(1)(e) and construed to mean, “aHigh Court which exercises superintendence/ supervisory jurisdiction over a 'Court' within the meaning of Section 2 (1) (e) of the A&C Act.”
Section 42 would not be applicable if the court where the first application was instituted inherently lacked jurisdiction
-
Since the Section 9 Application was filed before the
Muzaffarpur District Court , the application under Section 11(6) could not have been made before a district court. Therefore, Section 42 of the Act was not attracted. TheSupreme Court held that there is no ambiguity regarding the mandatory nature of Section 42 of the Act. However, Section 42 would not be applicable if the court where the first application was instituted inherently lacked jurisdiction.
Venue cannot be equated with seat of arbitration
-
The Respondent contended that the arbitration clause fixed the 'seat' of arbitration as
Kolkata . Relying uponIndus Mobile Distribution Pvt. Ltd. 4,Hindustan Construction Co. Ltd. 5 and BGS SGS Soma JV6, the Respondent submitted that once a 'seat' of arbitration is designated, the clause designating the seat becomes an exclusive jurisdiction clause. Thus, only those courts that fall within the territorial limit of the seat would have jurisdiction to the exclusion of all other courts. -
The
Supreme Court inter alia referred toHardy Exploration and Production (India) Inc. 7, and concurred that there may be various 'venues' but these cannot be equated with the 'seat' or place of arbitration. Relying uponMankastu Impex Pvt. Ltd. v.Airvisual Ltd. 8, theSupreme Court reiterated that the 'seat' and 'venue' cannot be used interchangeably. The intention of the parties regarding the 'seat' has to be determined from other clauses in the agreement and conduct of the parties. -
The
Supreme Court observed that the parties did not intend forKolkata to be the seat of arbitration since the Respondent himself filed the Section 9 Application before theMuzaffarpur District Court , thereby, ousting the jurisdiction of Calcutta HC. -
The Apex Court examined the Agreement and held that the parties only agreed that the “sittings” of the arbitral tribunal would be in
Kolkata and therefore,Kolkata was the venue for holding the sittings. Parties neither agreed toKolkata as the seat of arbitration nor did they submit to the jurisdiction of the Calcutta HC.
Conclusion and Analysis
The
Route Section 11 Applications through Section 2 (1) (e) of the Act
In the above backdrop, an application under Section 11(6) would now have to be made before the
The
Diverging from Indus Mobile
Contrastingly, in Indus Mobile, the
The potential confusion stemming from the present judgment seems to be brewing already. Recently, in
Footnotes
1 Arising out of SLP (C) No. 17397-17398 of 2021.
2 “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
3
4 Indus
5
6 BGS SGS Soma JV v.
7
8
9
10
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