Case Note & Summary
The dispute arose from two Tripartite Agreements dated November 2, 2016, executed among Aditya Birla Housing Finance Limited as lender, M/s. Rise Projects Pvt. Ltd. as developer, and Mr. Neeraj Choudhary as borrower, for financing construction of two bungalows in Haryana. The lender filed a commercial arbitration application under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of arbitrator for disputes under those agreements. The developer raised a preliminary objection that the Bombay High Court lacked territorial jurisdiction because it had no presence in Maharashtra, the bungalows were in Haryana, and the agreements were executed in Ghaziabad. The lender relied on six grounds for Bombay jurisdiction: the loan agreement between lender and borrower specified Mumbai as seat, a Section 9 petition had been filed in Bombay, the lender's corporate office was in Mumbai, EMI payments would be routed through NACH in Mumbai, and loan refunds would be realised in a Mumbai bank account. The court examined each ground. It held that the loan agreement was a bipartite agreement between lender and borrower, executed after the tripartite agreements, and the developer had no privity to it; therefore the Mumbai seat could not be imported by reference. The pending Section 9 petition did not make Bombay the Section 42 court because the court first approached must have competent jurisdiction, which had not been established. The court further held that corporate office location, NACH server location, and place of fund realisation were not part of the cause of action and thus irrelevant for territorial jurisdiction. Applying the principle of forum conveniens, the court found that the developer operated in Delhi, the project was in Haryana, and the loan was processed from New Delhi, making Mumbai an inconvenient forum. Consequently, the Bombay High Court held that it lacked territorial jurisdiction to entertain the Section 11 application and refused to appoint an arbitrator. The developer's preliminary objection was upheld.
Headnote
A) Arbitration - Territorial Jurisdiction - Cause of Action - Arbitration and Conciliation Act, 1996, Section 11 - The court considered whether factors like corporate office location, NACH server location, or place of fund realisation form part of cause of action for a refund claim under tripartite agreements. Held that these are incidental facts not required to be proved for judgment and do not constitute cause of action; hence they cannot confer territorial jurisdiction on Bombay High Court (Paras 5-20).
B) Arbitration - Seat and Incorporation by Reference - Arbitration and Conciliation Act, 1996, Sections 7, 11 - The loan agreement dated 21.11.2016 between lender and borrower specified Mumbai seat, but developer was not a party and the tripartite agreements contained no seat and no reference to loan agreement. Following NBCC (2024) 7 SCC 174, a blanket reference would not incorporate arbitration agreement; seat cannot be imported into separate agreement (Paras 8-10).
C) Arbitration - Section 42 Jurisdiction - Arbitration and Conciliation Act, 1996, Section 42 - Lender had filed Section 9 petition in Bombay, but court had not decided territorial jurisdiction and kept it open. Section 42 only applies if the court first approached has competent jurisdiction; Ravi Ranjan and Associated Contractors establish that a court lacking jurisdiction cannot become the Section 42 court (Paras 14-16).
D) Arbitration - Forum Conveniens - Arbitration and Conciliation Act, 1996, Section 11 - Developer based in Delhi, bungalows in Haryana, agreements executed in Ghaziabad, loan processed at New Delhi branch; no connection with Maharashtra. Seat at Mumbai would cause serious inconvenience to defendant; forum conveniens did not support Mumbai even if loan agreement had Mumbai seat (Paras 11-13).
Issue of Consideration
Whether the Bombay High Court has territorial jurisdiction to entertain an application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of arbitrator in disputes under two tripartite agreements dated 02.11.2016, where the Developer has no presence in Maharashtra, the arbitration clause in the tripartite agreements does not specify a seat, and the loan agreement between the lender and borrower specifies Mumbai as seat.
Final Decision
The Bombay High Court held that it lacked territorial jurisdiction to entertain the Section 11 application concerning the Tripartite Agreements. The developer's preliminary objection was upheld; the applicant's reliance on the loan agreement seat, Section 9 petition, corporate office location, NACH server, and place of fund realisation was rejected as not forming part of the cause of action. The court found that the appropriate forum would be where the developer operates and where the cause of action arose, not Mumbai; accordingly, the application under Section 11 was not maintainable before the Bombay High Court and relief of appointment of arbitrator was refused.
Law Points
- Territorial jurisdiction is determined by cause of action
- not incidental locations such as corporate office or payment system servers
- seat of arbitration in a bipartite loan agreement cannot be imported into a tripartite agreement absent incorporation by reference
- Section 42 requires the court first approached to have competent jurisdiction
- forum conveniens favours the place where the defendant operates and where cause of action arises
Case Details
2025 LawText (BOM) (07) 66
Commercial Arbitration Application No. 198 of 2024 with Commercial Arbitration Petition No. 373 of 2024
Somasekhar Sundaresan, J.
Mr. Vishal Maheshwari, Ms. Shrishty Punjabi, Ms. Naira Jeejeebhoy, Ms. Ragini Singh, Ms. Sanjana Salvi, Ms. Priya Rai, Ms. Varsha Madhukar, Ms. Pooja Pandey
Aditya Birla Housing Finance Limited
M/s. Rise Projects Pvt. Ltd.
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Commercial arbitration application under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of arbitrator for disputes arising under two Tripartite Agreements dated November 2, 2016, with a connected Section 9 petition; preliminary objection to territorial jurisdiction.
Remedy Sought
Applicant/Lender sought reference of disputes to arbitration and appointment of arbitrator; Respondent/Developer sought rejection of application for want of territorial jurisdiction.
Filing Reason
Disputes arose over financing of two bungalows in Haryana under tripartite agreements among lender, developer, and borrower; lender claimed developer was obliged to refund amounts disbursed to it; developer objected that Bombay High Court lacked jurisdiction because it had no presence in Maharashtra.
Previous Decisions
Section 9 petition filed in Bombay High Court remained pending with territorial jurisdiction issue kept open; arbitration between lender and borrower under the loan agreement had already been conducted; multiple proceedings involving the same project had been initiated in Delhi High Court.
Issues
Whether Bombay High Court has territorial jurisdiction to entertain Section 11 application under the Tripartite Agreements where Developer has no presence in Maharashtra and agreements do not specify seat.
Whether the Mumbai seat specified in the bipartite loan agreement between lender and borrower can be imported into the tripartite agreements to confer jurisdiction.
Whether the filing of a Section 9 petition in Bombay makes Bombay the exclusive court under Section 42 despite lack of jurisdiction.
Whether corporate office location, NACH server location, and place of fund realisation form part of cause of action for jurisdiction.
Submissions/Arguments
Applicant/Lender argued Bombay High Court has jurisdiction because the loan agreement between lender and borrower specified Mumbai as seat of arbitration; a Section 9 petition was filed in Bombay; the corporate office of lender is in Mumbai; loan funds and EMIs would be realised/routed through Mumbai; and Section 42 would make Bombay the exclusive court for subsequent applications.
Respondent/Developer argued no territorial jurisdiction because developer is based in Delhi with no presence in Maharashtra; bungalows are in Haryana; agreements were executed in Ghaziabad, Uttar Pradesh; loan processing occurred at New Delhi branch; the loan agreement seat is irrelevant because developer is not a party; and the pending Section 9 petition does not confer jurisdiction where none exists.
Ratio Decidendi
Cause of action consists of the bundle of facts that must be proved for a party to succeed; incidental facts like corporate office location, NACH server location, and fund realisation place do not form part of cause of action and cannot confer territorial jurisdiction. An arbitration seat in a bipartite agreement cannot be imported into a separate tripartite agreement absent incorporation by reference; the developer not being party to the loan agreement, the Mumbai seat is irrelevant. Section 42 of the Arbitration and Conciliation Act, 1996 only applies when the court first approached has competent jurisdiction; a court lacking jurisdiction cannot become the Section 42 court. Forum conveniens favours the place where the defendant operates and the cause of action arises, not the plaintiff's convenience or remote financial infrastructure locations.
Judgment Excerpts
The short question that falls for consideration is whether this Court would have territorial jurisdiction at all in the matter. (Para 3)
The loan agreement is a bipartite agreement between the Lender and the Borrower. ... The Developer has no privity to the loan agreement. The seat explicitly stated in the loan agreement is Mumbai, whereas no seat is indicated in the Agreements underlying these proceedings. (Para 8)
the law declared by the Supreme Court is that a blanket reference in one instrument to the import of clauses in another related instrument would not be adequate to incorporate a binding arbitration agreement (Para 9)
For Section 42 to operate and render a Court that is approached first as the only Court before which all subsequent applications may be filed, the Court first approached would necessarily have to be a Court with competent jurisdiction. (Para 15)
The cause of action essentially is that bundle of facts, which if proved or not proved, would lead to a judgement. (Para 17)
Procedural History
Two Tripartite Agreements were executed on November 2, 2016 among Aditya Birla Housing Finance Limited (Lender), M/s. Rise Projects Pvt. Ltd. (Developer), and Mr. Neeraj Choudhary (Borrower) for financing construction of two bungalows in Haryana. A separate loan agreement dated November 21, 2016 between the lender and borrower specified Mumbai as seat of arbitration. Arbitration between the lender and borrower under the loan agreement had already been conducted. The lender filed Commercial Arbitration Petition No. 373 of 2024 under Section 9 of the Arbitration and Conciliation Act, 1996 in the Bombay High Court; the court kept the issue of territorial jurisdiction open. The lender then filed Commercial Arbitration Application No. 198 of 2024 under Section 11 seeking reference of disputes under the Tripartite Agreements to arbitration. The developer raised a preliminary objection that the Bombay High Court lacked territorial jurisdiction. Multiple proceedings had also been initiated in the Delhi High Court for other bungalows in the same project. After hearing arguments on July 8, 2025, the Bombay High Court held that it lacked territorial jurisdiction.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 11, Section 9, Section 42
