Case Note & Summary
The petitioner, Dhule Municipal Commissioner, challenged an interim order dated 16/06/2024 passed by the sole Arbitrator in Arbitration Proceeding No.12/2024, which fixed the venue of arbitration at Aurangabad instead of the agreed place under Clause 19.3(b) of the agreement dated 02/09/2013, which stated that the place of arbitration shall be Regional Headquarter Commissioner, D.M.C., Dhule. The petitioner argued that the venue could not be changed without mutual agreement and that the arbitrator had no jurisdiction to alter it, relying on Section 20 of the Arbitration and Conciliation Act, 1996. The respondent contended that Clause 19.3(b) referred to the seat of arbitration, not the venue, and that the arbitrator had discretion under Section 20(3) to choose a different venue. The court examined Section 20 and Clause 19.3(b), noting that the clause allowed hearings elsewhere by agreement. The court also considered the history of the arbitration: earlier arbitrators had faced difficulties at Dhule, including non-cooperation from the petitioner, and one arbitrator had conducted proceedings at Nashik with consent. The court held that the arbitrator's decision to change venue to Aurangabad was within his discretion under Section 20(3), as the parties had not agreed on a specific venue for hearings. The court further held that interference under Article 226/227 was not warranted as there was no grave illegality or jurisdictional error. The petition was dismissed, and the arbitrator was directed to proceed with the arbitration at Aurangabad.
Headnote
A) Arbitration Law - Seat vs. Venue - Section 20 of the Arbitration and Conciliation Act, 1996 - The court held that Clause 19.3(b) of the agreement, which states 'place of arbitration shall be Regional Headquarter Commissioner, D.M.C.', refers to the seat of arbitration under Section 20(1), not the venue. The arbitrator has discretion under Section 20(3) to choose a different venue for hearings, unless the parties have agreed otherwise. The change of venue does not alter the seat. (Paras 13-16, 18-20)
B) Constitutional Law - Judicial Review of Arbitral Orders - Article 226 and 227 of the Constitution of India - The court held that interference under Article 226/227 in arbitration proceedings is permissible only in exceptional circumstances, such as grave illegality or jurisdictional error affecting the core of the matter. The impugned order changing venue did not warrant such interference as it was within the arbitrator's discretion and caused no substantial prejudice. (Paras 8, 10, 18-20)
C) Arbitration Law - Conduct of Parties - Section 20 of the Arbitration and Conciliation Act, 1996 - The court noted that the petitioner had not cooperated with earlier arbitrators, leading to difficulties in conducting proceedings at Dhule. The arbitrator's decision to change venue to Aurangabad was reasonable given the history of non-cooperation and the convenience of the parties. (Paras 17-20)
Issue of Consideration
Whether the sole Arbitrator had jurisdiction to change the venue of arbitration from the agreed place (Regional Headquarter Commissioner, D.M.C., Dhule) to Aurangabad, and whether the High Court should interfere under Article 226/227 of the Constitution of India.
Final Decision
The petition is dismissed. The impugned order dated 16/06/2024 passed by the sole Arbitrator fixing the venue of arbitration at Aurangabad is upheld. The Arbitrator is directed to proceed with the arbitration at Aurangabad.
Law Points
- Section 20 of the Arbitration and Conciliation Act
- 1996 distinguishes between seat and venue of arbitration
- parties' agreement on place of arbitration under Section 20(1) refers to seat
- arbitrator has discretion under Section 20(3) to choose venue unless otherwise agreed
- High Court's power under Article 226/227 is sparingly exercised in arbitration matters
- change of venue does not alter seat of arbitration.
Case Details
2024 LawText (BOM) (10) 154
Writ Petition No.7735 of 2024
Mr. S. B. Yawalkar h/f Mr. N. N. Desale for petitioner; Mr. Amol K. Gawali for respondent
Dhule Municipal Commissioner, Dhule Municipal Corporation
M/s Borse Borthers Engineers and Contractors Pvt. Ltd.
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Nature of Litigation
Writ petition under Article 226 and 227 of the Constitution of India challenging an interim order of the sole Arbitrator fixing the venue of arbitration at Aurangabad.
Remedy Sought
Petitioner sought quashing of the Arbitrator's order dated 16/06/2024 fixing venue at Aurangabad and direction to conduct arbitration at Regional Headquarter Commissioner, D.M.C., Dhule.
Filing Reason
Petitioner contended that the Arbitrator had no jurisdiction to change the venue from the agreed place under Clause 19.3(b) of the agreement.
Previous Decisions
Earlier orders dated 19/07/2021 in Arbitration Application No.07/2021 appointing arbitrator, 15/12/2022 substituting arbitrator in Arbitration Application No.24/2022, and 21/03/2024 in Arbitration Application No.01/2024 mandated that place of arbitration shall be as per Clause 19.3(b).
Issues
Whether the Arbitrator had jurisdiction to change the venue of arbitration from the agreed place under Clause 19.3(b) to Aurangabad.
Whether the High Court should interfere under Article 226/227 with the Arbitrator's interim order on venue.
Submissions/Arguments
Petitioner: The agreed venue under Clause 19.3(b) is Regional Headquarter Commissioner, D.M.C., Dhule; arbitrator cannot change it without mutual agreement; Section 20(1) mandates parties' agreement on place; Section 20(2) applies only if no agreement; Section 20(3) allows meeting elsewhere but not change of venue; earlier High Court orders mandated venue as per clause; change causes prejudice.
Respondent: Clause 19.3(b) refers to seat of arbitration under Section 20(1), not venue; arbitrator has discretion under Section 20(3) to choose venue; no agreement on venue; earlier arbitrators faced difficulties at Dhule; parties had consented to venue at Nashik earlier; no prejudice caused; High Court should not interfere.
Ratio Decidendi
Under Section 20 of the Arbitration and Conciliation Act, 1996, the parties' agreement on the place of arbitration under sub-section (1) refers to the seat of arbitration, not the venue. Sub-section (3) gives the arbitral tribunal discretion to meet at any place for hearings unless otherwise agreed by the parties. Clause 19.3(b) of the agreement, which states 'place of arbitration shall be Regional Headquarter Commissioner, D.M.C. but by agreement of the Parties, the arbitration hearing, if required, can be held elsewhere from time to time', indicates that the parties agreed on the seat but not on a fixed venue for hearings. Therefore, the arbitrator had the discretion to change the venue to Aurangabad, considering the difficulties faced earlier and the convenience of the parties. The High Court's power under Article 226/227 is sparingly exercised in arbitration matters and does not warrant interference in this case as there is no grave illegality or jurisdictional error.
Judgment Excerpts
Perusal of the impugned order indicates that the objection has been raised on behalf of the Dhule Municipal Corporation regarding the venue of arbitration being at Aurangabad.
Upon considering Section 20 of the Arbitration and Conciliation Act, along with Clause 19.3 (b) of the agreement, the Arbitrator has observed that, in the present matter, there is no agreement between the parties concerning the venue of the meetings.
The first issue before this Court is whether the arbitration proceedings can be conducted at Aurangabad in the instant case.
Procedural History
The dispute arose from an agreement dated 02/09/2013 between the parties. Arbitration proceedings commenced, and earlier arbitrators were appointed by the High Court: first arbitrator Mr. R.W. Nikam conducted proceedings at Nashik but refused to continue; second arbitrator Hon'ble Justice Mr. Sangitrao S. Patil also refused due to non-cooperation. Subsequently, a new sole arbitrator was appointed, who passed the impugned order on 16/06/2024 fixing venue at Aurangabad. The petitioner challenged this order by filing Writ Petition No.7735 of 2024 before the Bombay High Court, which was heard and dismissed on 15/10/2024.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 20
- Constitution of India: Article 226, Article 227
