Case Note & Summary
The dispute involved a petition under Section 11 of the Arbitration and Conciliation Act, 1996 filed by M/s.SEPC Limited, Chennai, seeking appointment of an arbitrator to resolve disputes arising from a Memorandum of Understanding dated 20.06.2016 with M/s.Ace Technologies and Infrastructure Limited, Mumbai. The MoU contained an arbitration clause providing for resolution of disputes by a sole arbitrator, to be appointed on mutual agreement within 30 days, failing which following the Act. The petitioner invoked arbitration by notice dated 29.11.2024 under Section 21; the respondent did not reply. The petitioner filed the present petition before Madras High Court. The respondent raised two main objections: territorial jurisdiction, arguing that the MoU was entered into only at Mumbai so no part of cause of action arose in Chennai; and maintainability, claiming that the respondent had already approached NCLT with an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the petitioner. The petitioner countered that the MoU was signed by the petitioner at Chennai, the petitioner has its office at Chennai, part payments were made from Chennai bank account, and the arbitration clause did not specify seat, thus part of cause of action arose within Madras High Court jurisdiction. The petitioner relied on Alchemist Ltd. v. State Bank of Sikkim to argue that even a small fraction of cause of action suffices. The respondent relied on Ravi Ranjan Developers Pvt Ltd v. Aditya Kumar Chatterjee and Prashanth Kumar Parashar v. Sumit Singla to argue that only Bombay High Court had jurisdiction. The court, per Abdul Quddhose J., analyzed undisputed facts: arbitration clause did not specify seat, petitioner's office in Chennai, petitioner signed MoU at Chennai, and part payments were made from Chennai. The court distinguished Ravi Ranjan and Prashanth Kumar because in those cases no part of cause of action arose within the court's jurisdiction, whereas here multiple factors connected the dispute to Chennai. The court applied Section 20(c) CPC, which allows suit where cause of action wholly or in part arises. It held that when seat of arbitration is not fixed, the part of cause of action doctrine applies. The court also referred to Union of India v. Hardy Exploration and Production (India) Inc, noting that parties cannot confer jurisdiction on a court inherently lacking jurisdiction, but here the court inherently had jurisdiction due to part cause arising at Chennai. The court concluded that Madras High Court had territorial jurisdiction to entertain the Section 11 petition. The respondent's objection based on NCLT proceedings was noted but the provided judgment excerpt does not contain a separate detailed analysis of that objection. The final operative direction on appointment of arbitrator is not present in the available text, but the court's reasoning strongly supports allowing the petition and appointing an arbitrator.
Headnote
A) Arbitration - Appointment of Arbitrator - Existence of arbitration agreement and invocation - Arbitration and Conciliation Act, 1996, Section 11, Section 21 - The MoU dated 20.06.2016 contained an arbitration clause requiring disputes to be resolved by a sole arbitrator. Petitioner invoked arbitration by notice dated 29.11.2024 and respondent did not reply. Held that the arbitration clause existed and was validly invoked, subject to territorial jurisdiction. (Paras 2-3) B) Civil Procedure - Territorial Jurisdiction - Part of cause of action - Code of Civil Procedure, 1908, Section 20(c) - The court considered whether Madras High Court had jurisdiction when MoU was concluded at Mumbai but petitioner signed at Chennai, had office at Chennai, and made part payments from Chennai. Held that even a small fraction of cause of action confers territorial jurisdiction, and these facts constituted part of cause of action within the court's jurisdiction. (Paras 9-12, 14, 18) C) Arbitration - Seat of Arbitration - Absence of seat specification - Arbitration and Conciliation Act, 1996, Section 2(1)(e), Section 11(6) - Where arbitration clause did not stipulate seat, part of cause of action doctrine under Section 20(c) CPC applied to determine jurisdiction. Court distinguished Ravi Ranjan Developers and Prashanth Kumar Parashar where no part of cause arose. Held that High Court of Madras had jurisdiction over petition under Section 11 because part of cause arose at Chennai. (Paras 9-16) D) Arbitration - Jurisdiction of High Court - Harmonious construction of Section 11(6) and Section 2(1)(e) - Arbitration and Conciliation Act, 1996, Section 2(1)(e), Section 11(6) - Respondent relied on Supreme Court in Ravi Ranjan to argue that Section 11(6) must be read with Section 2(1)(e), meaning only High Court having supervisory jurisdiction over court where subject matter could be filed. Court distinguished facts and held that since part of cause of action arose at Chennai, Madras High Court had jurisdiction. (Paras 7, 10, 16) E) Insolvency and Bankruptcy - Maintainability - Effect of pending NCLT proceedings - Insolvency and Bankruptcy Code, 2016, Section 9 - Respondent contended petition not maintainable due to its Section 9 IBC application before NCLT against petitioner. The court noted the objection but the available excerpt did not separately analyze it; held that Section 11 petition could be entertained on jurisdiction grounds. (Para 4)
Issue of Consideration
Whether Madras High Court has territorial jurisdiction to entertain a petition under Section 11 of the Arbitration and Conciliation Act, 1996 when the MoU was concluded at Mumbai but petitioner signed at Chennai, had office at Chennai, and made part payments from Chennai, and whether the petition is maintainable despite pending NCLT proceedings under Section 9 IBC.
Final Decision
The Madras High Court held that it had territorial jurisdiction to entertain the Section 11 petition because a part of cause of action arose at Chennai, based on petitioner's office location, signature at Chennai, and part payments from Chennai. It rejected the respondent's objection that only Bombay High Court had jurisdiction and distinguished Ravi Ranjan and Prashanth Kumar. The respondent's NCLT Section 9 objection was noted but not separately analyzed in the available excerpt. The final operative direction on appointment of arbitrator is not included in the supplied text.
Law Points
- Even a small fraction of cause of action confers territorial jurisdiction
- Section 20(c) CPC applies when seat of arbitration not fixed
- Section 11(6) Arbitration Act to be read with Section 2(1)(e)
- parties cannot confer jurisdiction on court inherently lacking jurisdiction
- part payments from jurisdiction and signing at jurisdiction constitute material part of cause of action
