Allahabad HC Dismisses Arbitration Petition for Lack of Jurisdiction | Venue Construed as Seat in Absence of Contrary Indicia Under Arbitration Clause
Sanchayita Lahkar
The High Court of Judicature at Allahabad, Lucknow Bench, Single Bench of Justice Jaspreet Singh dismissed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, on the ground that it lacked territorial jurisdiction to appoint an arbitrator. The petitioner sought appointment of a sole arbitrator pursuant to a terminated dealership agreement. The Court noted that the franchisee agreement between the parties provided for arbitration proceedings to be held in Mumbai and further contained an exclusive jurisdiction clause in favour of the courts at Mumbai.
The Court held that the language of the arbitration clause, read together with the exclusive jurisdiction clause, indicated a clear intention of the parties to designate Mumbai as the seat of arbitration. The Court observed that "Mumbai was agreed as to be the 'seat' of arbitration and the parties had agreed to anchor all the arbitral proceedings in Mumbai." On this basis, the Court concluded that only the courts at Mumbai had jurisdiction to entertain applications concerning the arbitration, including appointment of the arbitral tribunal. Consequently, the petition was dismissed as not maintainable, with liberty to the petitioner to approach the appropriate forum in Mumbai.
The petitioner approached the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator to adjudicate disputes arising from a franchisee agreement dated 18.01.2018. The franchisee arrangement was originally entered into between the petitioner and Essar Oil Ltd., which was later restructured, and M/s. Nayara Energy Ltd. assumed operational control. The petitioner alleged that he had invested over Rs. 1.5 crores for establishing a petrol pump under the franchise model.
It was the petitioner's case that Essar Oil Ltd., being a bulk supplier to State-controlled petroleum entities, engaged in conduct which resulted in the price of petrol at Essar outlets being higher than government-owned outlets. Allegedly, this created an unfair commercial environment for the petitioner’s outlet. The petitioner stated that without following the due process prescribed in the agreement, M/s. Nayara Energy Ltd. unilaterally terminated the dealership on 18.08.2023.
The petitioner invoked the arbitration clause by sending a letter dated 18.09.2023 to the respondent, suggesting the name of a former High Court judge to act as the sole arbitrator. The petitioner claimed that the respondent failed to respond, necessitating the filing of the petition before the High Court’s Lucknow Bench.
The respondent objected to the maintainability of the petition on the ground of lack of territorial jurisdiction. It was contended that, as per Clause 21 of the franchisee agreement, the arbitration proceedings were to be held in Mumbai. Clause 22 further provided that the agreement would be subject to the exclusive jurisdiction of courts at Mumbai.
The respondent relied on the Supreme Court judgment in Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. (2017) 7 SCC 678 to argue that once a seat of arbitration is agreed upon, it confers exclusive jurisdiction upon the courts at that place.
In reply, the petitioner contended that Mumbai was referred to only as the "venue" and not as the "seat" of arbitration. It was argued that Clause 22 pertained to non-arbitrable disputes and that no part of the cause of action had arisen in Mumbai. The petitioner stated that Amethi, where the dealership was located, fell within the territorial jurisdiction of the Lucknow Bench, and therefore, this Court was competent to entertain the petition.
The petitioner relied on judgments including State of West Bengal v. Associated Contractors (2015) 1 SCC 32, and two Delhi High Court decisions: Aarka Sports Management Pvt. Ltd. v. Kalsi Buildcon Pvt. Ltd. and Faith Constructions v. N.W.G.E.L. Church.
The Court examined Clauses 21 and 22 of the franchisee agreement. Clause 21 provided that disputes shall be referred to arbitration and stated: "The arbitration proceedings shall be held in Mumbai and shall be conducted in the English language." Clause 22 read: "This agreement will be governed by and construed in accordance with the laws of India and shall be subject to the exclusive jurisdiction of the courts at Mumbai only."
The Court observed that “the arbitration proceedings shall be held in Mumbai” indicated that the parties intended Mumbai to be the location where the arbitration would be anchored. This interpretation, the Court noted, was reinforced by the use of the term “exclusive jurisdiction” in Clause 22.
The Court referred to the Supreme Court judgement in Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. (2017) 7 SCC 678, which held: “The moment the seat is designated, it is akin to an exclusive jurisdiction clause.” It also cited BGS SGS Soma JV v. NHPC Ltd. (2020) 4 SCC 234, where the Supreme Court stated: “Wherever there is an express designation of a ‘venue’ and no other place is mentioned as seat, that venue becomes the juridical seat of arbitration.”
The Court stated that when the arbitration clause names only one place, even if called a “venue,” and there are no contrary indications, that place must be treated as the seat. It recorded: “In the instant agreement, the parties had clearly agreed that the arbitration will be held at Mumbai… coupled with the fact that in clause 22, it vested exclusive jurisdiction to the Courts at Mumbai.”
Referring to the test laid down by the Supreme Court in Arif Azeem Company Ltd. v. Micromax Informatics FZE (2024 SCC OnLine SC 3212), the Court reiterated that three conditions must be met for the venue to be construed as the seat: i) only one place is designated; ii) arbitral proceedings are anchored there; iii) no contrary indicia exist. The Court stated: “All these three conditions stand satisfied in the present case.”
On this basis, the Court concluded that “Mumbai was agreed as to be the ‘seat’ of arbitration and the parties had agreed to anchor all the arbitral proceedings in Mumbai and there is no other clause or contrary indicators.” Consequently, the High Court held that it lacked jurisdiction under Section 11(6) of the Act.
The Court issued the following directive: “For the aforesaid reasons, this Court is of the clear view that the instant petition is not maintainable before this Court at Lucknow, hence it is dismissed, leaving it open for the petitioner to approach the jurisdictional High Court at Mumbai.”
The Court also rejected reliance on the decisions cited by the petitioner. It noted that the Delhi High Court’s judgement in Faith Constructions did not consider the Supreme Court’s binding precedents in Indus Mobile and BGS SGS Soma. Similarly, the judgment in Aarka Sports Management was found to be against the ratio of the Supreme Court’s later judgements.
Advocates Representing the Parties:
For the Petitioner: Shri Pratham Mehrotra, Shri Manish Mehrotra, Shri Girish Chandra Sinha, Shri Dhirendra Singh, Shri Mayank Sinha
For the Respondent: Shri Kumar Ayush
Case Title: Devi Prasad Mishra v. M/s Nayara Energy Ltd.
Neutral Citation: 2025: AHC-LKO:41684
Case Number: Civil Misc. Arbitration Application No. 2 of 2024
Bench: Justice Jaspreet Singh
