Isabella Mariam

The High Court of Delhi, Single Bench of Justice Jasmeet Singh, dismissed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, for appointment of an arbitrator, holding that it lacked territorial jurisdiction. The Court found that Clause 14 of the parties’ Acceptance Letter conferred exclusive jurisdiction on the courts at Ahmedabad, thereby constituting Ahmedabad as the seat of arbitration. It observed that even in the absence of the express word “seat,” an arbitration clause specifying exclusive jurisdiction is sufficient to establish supervisory control of that court over arbitral proceedings.

The petitioner filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an Arbitrator for disputes arising from a Work Order/Acceptance Letter dated 21.10.2021. The petitioner is a private limited company engaged in the field of mechanical, electrical and air-conditioning industry. Respondent No. 1 is a private limited company in construction and allied services, acting through its Director, respondent No. 2.

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The respondents accepted the petitioner’s quotation through an Acceptance Letter dated 21.10.2021 for HVAC work at Uttarakhand Bhawan, Chanakyapuri, New Delhi, for a contract value of Rs. 2,85,93,782 plus GST. Clause 14 of the Acceptance Letter contained an arbitration clause stating that the subcontract and all other matters would be subject to the jurisdiction of the court in Ahmedabad only, with the Managing Director of HPL as the final authority for arbitration.

Disputes subsequently arose. Respondent No. 1 invoked arbitration by letter dated 29.08.2024, requesting its Managing Director to appoint a sole arbitrator. The petitioner responded on 09.09.2024, objecting to appointment by respondent No. 2 and suggesting three independent names. These names were rejected by respondents on 14.10.2024. The petitioner then filed the present petition before the Delhi High Court.

The respondents raised an objection to jurisdiction, submitting that Clause 14 conferred exclusive jurisdiction on the court at Ahmedabad. They relied on judgments including Swastik Gases Pvt. Ltd. v. Indian Oil Corporation Ltd. (2013) 9 SCC 32, B.E. Simoese Von Staraburg Niedenthal v. Chhattisgarh Investment Ltd. (2015) 12 SCC 225, Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. (2017) 7 SCC 678, and Brahmani River Pellets Ltd. v. Kamachi Industries Ltd. (2020) 5 SCC 462.

The petitioner submitted that the Delhi High Court had jurisdiction as the Acceptance Letter was issued and accepted in New Delhi, the respondents had GST registration in Delhi, pre-contract discussions and finalization occurred in Delhi, and the entire work was executed at Uttarakhand Niwas, Chanakyapuri, New Delhi. The petitioner argued that since the cause of action arose in Delhi, this Court was competent under Section 20 of the Code of Civil Procedure, 1908.

The Court observed: “The law is well settled that even in absence of the express term ‘seat’ in the arbitration clause/agreement, the Court which is granted the exclusive jurisdiction will be deemed to have supervisory jurisdiction over the arbitral proceedings i.e., will be the seat of the arbitration”.

It referred to the Supreme Court decision in M/S Activitas Management Advisor Private Limited v. Mind Plus Healthcare Private Limited and recorded: “Though clause 10 does not use the expression ‘seat’ or ‘venue’, we are of the opinion that the ‘jurisdiction’ is mentioned in the context of resolution of the disputes through arbitration and as such the agreement between the parties… must be understood in the context of arbitration and therefore the seat of the arbitration must be taken to be Mumbai”.

The Court stated: “Clause No. 14 of the Acceptance Letter i.e. the arbitration clause, expressly holds that any differences arising out of or in connection with the Acceptance Letter will be subject to the ‘jurisdiction’ of Court at Ahmedabad only. Although Clause No. 14 does not explicitly use the term ‘seat’, the use of the word ‘jurisdiction’ in the arbitration clause clearly stipulates the parties’ intention to submit to the exclusive jurisdiction of Court at Ahmedabad only. Therefore, in view of the clear wording of Clause No. 14, Ahmedabad stands constituted as the seat of arbitration”.

On the petitioner’s argument, the Court stated: “As regards the contention raised by the petitioner that since the cause of action has arisen in New Delhi, this Court has the jurisdiction to entertain the present petition by relying on Section 20 of CPC, the same is meritless. The law is clear on the aspect that parties have right to select a neutral seat of arbitration, irrespective of the place of cause of action or fulfillment of contractual obligations, as observed by the Hon’ble Supreme Court in Indus Mobile Distribution”.

It also observed: “Additionally, when arbitration clause provides exclusive jurisdiction, the concept of cause of action becomes irrelevant”.

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The Court stated: “In view of the settled law as observed above, irrespective of the fact where the cause of action has arisen, since the seat of arbitration is Ahmedabad, as mutually agreed by the parties via Clause No. 14, such agreement overrides the place of cause of action and thereby, only Court at Ahmedabad will have the supervisory jurisdiction over the arbitral proceedings”.

“In view of the above discussion, this Court does not have the territorial jurisdiction to entertain the present petition. The petition is dismissed on the ground of lack of territorial jurisdiction, along with pending applications, if any.”

Advocates Representing the Parties:
For the Petitioners: Mr. Jittin Dua, Advocate
For the Respondents: Ms. Ratna Vora, Advocate; Ms. Nazi Parveen, Advocate; Mr. Miren Priyadarshi, Advocate

Case Title: SNS Engineering Pvt. Ltd. v. M/S Hariom Projects Pvt. Ltd. and Anr.

Neutral Citation: 2025: DHC:7868

Case Number: ARB. P. 2130/2024

Bench: Justice Jasmeet Singh