Case Note & Summary
The revision petitioner, Waterbury Farrel, a division of Magnum Integrated Technologies Inc., Canada, filed Arb.O.P.No.103 of 2019 before the Principal District Judge, Salem under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) challenging an arbitral award dated 28.02.2019. The first respondent, Steel Authority of India Limited (SAIL), Salem Steel Plant, filed I.A.No.3 of 2020 under Order VII Rule 10 of the Code of Civil Procedure, 1908 (CPC) seeking return of the petition for presentation before the court of competent jurisdiction at New Delhi, on the ground that the seat of arbitration was New Delhi. The learned Principal District Judge allowed the application by order dated 02.12.2021, permitting the petitioner to re-present the petition before the New Delhi court within three months. Aggrieved, the petitioner filed the present civil revision petition under Article 227 of the Constitution of India. The petitioner contended that Clause 10.1 of the contract provided that courts at Salem/Chennai shall have exclusive jurisdiction, and that a prior application under Section 9 of the A&C Act had been filed at Salem without any jurisdictional objection. The petitioner argued that the venue of arbitration at New Delhi did not constitute the seat, relying on BGS SGS Soma JV v. NHPC Limited and BBR (India) Private Limited v. S.P. Singla Constructions Private Limited. The first respondent argued that the seat was New Delhi and that Section 42 did not apply because the Section 9 application was filed before the amendment to Section 2(1)(e). The High Court analyzed the contract clauses and the legal position. It held that the exclusive jurisdiction clause in the contract was clear and that the prior Section 9 filing at Salem attracted Section 42 of the A&C Act, which mandates that all subsequent applications be filed in the same court. The court distinguished the cases cited by the first respondent and set aside the impugned order, allowing the revision petition. The court directed the Principal District Judge, Salem to proceed with the Section 34 petition on its merits.
Headnote
A) Arbitration Law - Jurisdiction - Section 42 of Arbitration and Conciliation Act, 1996 - Exclusive Jurisdiction Clause - Where a contract contains an exclusive jurisdiction clause in favour of courts at Salem/Chennai, and a prior application under Section 9 was filed at Salem, the same court retains jurisdiction over all subsequent applications under the Act, including a Section 34 petition, by virtue of Section 42. The venue of arbitration at New Delhi does not override the exclusive jurisdiction clause or the effect of Section 42. (Paras 2-5) B) Arbitration Law - Seat vs. Venue - Designation of Venue - The mere designation of a venue for arbitration does not automatically make it the seat if there are contrary indicia, such as an exclusive jurisdiction clause in the contract. The Supreme Court in BGS SGS Soma JV v. NHPC Limited held that venue should not be construed as seat if there are contrary indicia. (Paras 2-4) C) Civil Procedure - Return of Plaint - Order VII Rule 10 CPC - The court below erred in allowing the application for return of the Section 34 petition for presentation before New Delhi courts, as the exclusive jurisdiction clause and prior Section 9 filing conferred jurisdiction on Salem courts. The order was set aside. (Paras 1, 5)
Issue of Consideration
Whether the Principal District Judge, Salem had jurisdiction to entertain the Section 34 petition under the Arbitration and Conciliation Act, 1996, given the exclusive jurisdiction clause in the contract and the prior filing of a Section 9 application at Salem.
Final Decision
The High Court allowed the civil revision petition, set aside the order dated 02.12.2021 in I.A.No.03 of 2020 in Arb.OP.No.103 of 2019, and directed the Principal District Judge, Salem to proceed with the Section 34 petition on its merits.
Law Points
- Exclusive jurisdiction clause prevails over venue designation
- Section 42 of A&C Act applies when prior application filed before a court
- venue not equivalent to seat if contrary indicia exist
