Case Note & Summary
The appeal arose from a judgment of a learned Single Judge of the Bombay High Court dated 23 January 2013, which held that the Bombay High Court had no jurisdiction to entertain a petition under Section 34 of the Arbitration and Conciliation Act, 1996. The appellant, Vachaspati Sharma, and the respondent, India Cements-Capital and Finance Limited, had entered into a lease agreement dated 25 March 2000 for a trailer and a tractor. The agreement contained an arbitration clause (Clause 33) which provided for reference to arbitration under the Arbitration Act, 1940. The respondent initially filed a petition under Section 9 of the 1996 Act in the Madras High Court. Subsequently, the appellant filed a Section 9 petition before the Bombay High Court, which was withdrawn after the respondent's petition was also withdrawn. Later, the appellant filed proceedings under Section 11 of the 1996 Act before the Bombay High Court, and an arbitrator was appointed. The arbitrator passed an award, against which the appellant filed a petition under Section 34 before the Bombay High Court. The learned Single Judge held that the Bombay High Court lacked jurisdiction because the seat of arbitration was in Chennai, as evidenced by the parties' earlier invocation of the Madras High Court's jurisdiction for interim relief. The Division Bench, in appeal, upheld this decision, reasoning that under Section 2(4) of the 1996 Act, the provisions of the 1996 Act apply to arbitration agreements entered into before the Act came into force, and the jurisdiction under Section 34 is determined by the seat of arbitration. Since the parties had submitted to the jurisdiction of the Madras High Court for interim relief, the seat of arbitration was impliedly in Chennai, and thus the Bombay High Court had no jurisdiction. The appeal was dismissed.
Headnote
A) Arbitration Law - Jurisdiction under Section 34 - Seat of Arbitration - Section 2(4), Section 2(1)(e), Section 34 of the Arbitration and Conciliation Act, 1996 - The court held that the jurisdiction to entertain a petition under Section 34 of the 1996 Act is determined by the seat of arbitration, not by the location of the arbitration clause or the subject matter of the agreement. Since the lease agreement did not specify a seat, and the parties had previously invoked the jurisdiction of the Madras High Court for interim relief under Section 9, the seat of arbitration was impliedly in Chennai, and thus the Bombay High Court lacked jurisdiction. (Paras 3-7)
Issue of Consideration
Whether the Bombay High Court has jurisdiction to entertain a petition under Section 34 of the Arbitration and Conciliation Act, 1996, when the arbitration clause in the lease agreement refers to the Arbitration Act, 1940, and the seat of arbitration is not specified in the agreement.
Final Decision
The appeal is dismissed. The order of the learned Single Judge holding that the Bombay High Court lacks jurisdiction to entertain the Section 34 petition is upheld.
Law Points
- Jurisdiction under Section 34 of the Arbitration and Conciliation Act
- 1996 is determined by the seat of arbitration
- not the location of the arbitration clause or the subject matter of the agreement
- Section 2(4) of the 1996 Act applies to arbitration agreements entered into before the 1996 Act came into force
- Section 2(1)(e) of the 1996 Act defines 'Court' as the court having jurisdiction over the subject matter of the arbitration if it were a suit
- but the seat of arbitration is the decisive factor for jurisdiction under Section 34
Case Details
2013 LawText (BOM) (09) 57
Appeal (L) No.210 of 2013 in Arbitration Petition No.909 of 2011
Dr. D.Y. Chandrachud, M.S. Sonak
Mr. C.M. Jadhav i/by Mahesh Menon & Co. for Appellant, Mr. Manish Bohra i/by A.S. Khan & Associates for Respondent
India Cements-Capital and Finance Limited
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Nature of Litigation
Appeal against order of learned Single Judge holding that Bombay High Court lacks jurisdiction to entertain petition under Section 34 of Arbitration and Conciliation Act, 1996.
Remedy Sought
Appellant sought to set aside the order of the learned Single Judge and to have the Section 34 petition heard on merits by the Bombay High Court.
Filing Reason
The learned Single Judge held that the Bombay High Court had no jurisdiction to entertain the Section 34 petition because the seat of arbitration was in Chennai.
Previous Decisions
Learned Single Judge of Bombay High Court dated 23 January 2013 held that Bombay High Court lacks jurisdiction to entertain Section 34 petition.
Issues
Whether the Bombay High Court has jurisdiction to entertain a petition under Section 34 of the Arbitration and Conciliation Act, 1996, when the arbitration clause refers to the Arbitration Act, 1940, and the seat of arbitration is not specified in the agreement.
Submissions/Arguments
Appellant argued that the arbitration clause referred to the Arbitration Act, 1940, and therefore the 1996 Act did not apply, and the jurisdiction should be determined by the subject matter of the agreement, which was in Bombay.
Respondent argued that under Section 2(4) of the 1996 Act, the provisions of the 1996 Act apply to arbitration agreements entered into before the Act came into force, and the jurisdiction under Section 34 is determined by the seat of arbitration, which was in Chennai as evidenced by the parties' earlier invocation of the Madras High Court's jurisdiction.
Ratio Decidendi
Under Section 2(4) of the Arbitration and Conciliation Act, 1996, the provisions of the 1996 Act apply to arbitration agreements entered into before the Act came into force. The jurisdiction to entertain a petition under Section 34 is determined by the seat of arbitration, not by the location of the arbitration clause or the subject matter of the agreement. Since the parties had previously invoked the jurisdiction of the Madras High Court for interim relief under Section 9, the seat of arbitration was impliedly in Chennai, and thus the Bombay High Court lacked jurisdiction.
Judgment Excerpts
The learned Single Judge has come to the conclusion that this Court has no jurisdiction to entertain the petition under Section 34.
Under Section 2(4) of the 1996 Act, the provisions of the 1996 Act apply to arbitration agreements entered into before the Act came into force.
The jurisdiction under Section 34 is determined by the seat of arbitration.
Procedural History
The respondent filed a Section 9 petition in the Madras High Court. The appellant filed a Section 9 petition in the Bombay High Court, which was withdrawn. The appellant then filed a Section 11 petition in the Bombay High Court, leading to appointment of an arbitrator. The arbitrator passed an award. The appellant filed a Section 34 petition in the Bombay High Court. The learned Single Judge held that the Bombay High Court lacked jurisdiction. The appellant appealed to the Division Bench.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 2(4), Section 2(1)(e), Section 9, Section 11, Section 34
- Arbitration Act, 1940:
