Case Note & Summary
The appeals arose from orders of the Calcutta High Court dated 13 August 2021 and 4 October 2021. The appellant and respondent had entered into a development agreement dated 15 June 2015 for property in Muzaffarpur, Bihar, containing an arbitration clause specifying that arbitration proceedings would be held in Kolkata under the Arbitration and Conciliation Act, 1996. Disputes led to the respondent terminating the agreement in April 2019, followed by various proceedings including a petition before RERA in Patna and a Section 9 application in Muzaffarpur. In January 2021, the respondent filed an arbitration petition under Section 11(6) of the Act in the Calcutta High Court for appointment of an arbitrator. The appellant opposed this, filing an affidavit questioning the territorial jurisdiction of the Calcutta High Court, arguing that the agreement was executed and registered in Bihar, the property was in Bihar, no part of cause of action arose in Calcutta, and the Calcutta High Court was not the court as defined in Section 2(1)(e) of the Act. The respondent contended that the designation of Kolkata as the seat conferred jurisdiction. The Calcutta High Court allowed the petition and appointed an arbitrator without deciding the jurisdictional objection, noting that counsel for both parties agreed to the appointment. The appellant filed a review application, arguing that the order disclosed errors as jurisdictional objections were not considered and consent was given without instructions. The High Court dismissed the review, holding that consent could not be withdrawn. The Supreme Court considered whether the Calcutta High Court had jurisdiction to entertain the Section 11 application. The court analyzed that territorial jurisdiction for such applications is determined by the court as defined in Section 2(1)(e) of the Act, which refers to the court having jurisdiction over the subject-matter of the arbitration. The court reasoned that mere designation of a seat in the arbitration clause does not automatically confer jurisdiction on the courts of that seat for appointment purposes, especially when the agreement was executed and registered outside that jurisdiction and the property was situated elsewhere. The court also noted that consent of counsel without instructions cannot confer jurisdiction. The Supreme Court set aside the orders of the Calcutta High Court, holding that it lacked territorial jurisdiction to entertain the application.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Territorial Jurisdiction for Section 11 Application - Arbitration and Conciliation Act, 1996, Section 11(6) and Section 2(1)(e) - Dispute arose from development agreement executed and registered in Bihar for property in Bihar, with arbitration clause specifying Kolkata as seat - Calcutta High Court appointed arbitrator without deciding jurisdictional objection - Supreme Court held that territorial jurisdiction for Section 11 application depends on court as defined in Section 2(1)(e), not merely seat designation; consent of counsel without instructions cannot confer jurisdiction; High Court's order was set aside for lack of jurisdiction (Paras 2-15).
Issue of Consideration
Whether the Calcutta High Court had territorial jurisdiction to entertain the application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator, given that the development agreement was executed and registered in Bihar, the property was situated in Bihar, and no part of cause of action arose within Calcutta High Court's jurisdiction, despite the arbitration clause specifying Kolkata as the seat of arbitration
Final Decision
Supreme Court set aside the orders of Calcutta High Court dated 13 August 2021 and 4 October 2021, holding that Calcutta High Court lacked territorial jurisdiction to entertain the application under Section 11(6) of the Arbitration and Conciliation Act, 1996
Law Points
- Territorial jurisdiction for appointment of arbitrator under Section 11 of Arbitration and Conciliation Act
- 1996 is determined by the court as defined in Section 2(1)(e)
- not merely by seat designation in arbitration clause
- Consent of counsel without instructions does not confer jurisdiction
- Review application should address jurisdictional errors
