Sanchayita Lahkar

The High Court of Madras Single Bench of Justice Abdul Quddhose dismissed three connected arbitration-related applications, holding that the Court lacked territorial jurisdiction to entertain them. The Court determined that the entirety of the cause of action occurred in Maharashtra and the contract itself designated Mumbai as the venue of arbitration. It stated that, despite a clause inconsistently naming Chennai courts as having jurisdiction, such a reference was either an error or repugnant to the earlier, clear jurisdictional allocation to Mumbai. Accordingly, the Court directed the applicant to seek relief from the appropriate court in Mumbai.

The Court found no merit in the applicant's reliance on Section 42 of the Arbitration and Conciliation Act, 1996, since the application for appointment of an Advocate Commissioner had not been finally disposed of and the Court had never affirmed jurisdiction at any prior stage. Stating that consent to such an appointment was made to facilitate inspection, not to concede jurisdiction, the Court concluded that it was devoid of the authority to proceed further.

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Consequently, the interim injunction, application for appointment of an Advocate Commissioner, and the application seeking appointment of an Arbitrator were all dismissed. The applicants were granted liberty to seek appropriate remedies before Mumbai courts.

The dispute arose out of a contract dated 23.08.2020 between the applicant, M/s. TSR Films Private Limited, Chennai, and the respondent, M/s. New Pride Multiplex, Maharashtra. The applicant sought interim relief, the appointment of an Advocate Commissioner, and the appointment of an Arbitrator through three separate applications: O.A. No. 414 of 2024, Arb.Appln. No. 286 of 2024, and Arb.O.P. (Com.Div.) No. 537 of 2024 respectively.

The respondent raised a preliminary objection challenging the territorial jurisdiction of the Madras High Court. It was submitted that no part of the cause of action had arisen in Chennai or within Tamil Nadu. The contract was signed in Sangli, Maharashtra, and the stamp paper used was purchased in Mumbai. The respondent's registered office was in Sangli, and the obligations under the agreement did not require performance in Chennai.

The respondent further submitted that, although the arbitration clause contained a reference to the Chennai courts having exclusive jurisdiction, this was a typographical error. They stated that the contract stated the venue of arbitration to be "Mumbai only" and that the agreement would be governed by the courts in Mumbai. Accordingly, it was argued that the Madras High Court lacked jurisdiction to entertain any applications arising from the contract.

The applicant argued that the respondent had previously consented to the appointment of an Advocate Commissioner by the Madras High Court in connection with the Section 9 application, thereby triggering Section 42 of the Arbitration and Conciliation Act, 1996. The applicant submitted that once a court has been approached under Part I of the Act, only that court has jurisdiction over subsequent applications.

The respondent countered that the appointment of the Advocate Commissioner was made solely on the suggestion of the Court to ensure a neutral inspection and was not indicative of a concession on jurisdiction. They reiterated that their position had consistently been that the Madras High Court lacked jurisdiction, and this was recorded in the counter affidavits.

The applicant also referred to the arbitration clause, specifically Clause 15 of the contract. The clause stated that the agreement would be governed by the courts in Mumbai and also mentioned that the "Courts at Chennai alone shall have the sole and exclusive jurisdiction." The applicant relied on the latter part to support the jurisdiction of the Madras High Court.

However, the respondent maintained that the reference to Chennai was a mistake and that, under established principles of contractual interpretation, ambiguities should be resolved against the party who drafted the contract. Since the applicant had drafted the contract, the clause should be interpreted in favour of the respondent.

The contract documents, physical verification reports, legal notices exchanged, and the suit filed in Sangli Civil Court by the respondent all pointed to Maharashtra as the location where the cause of action arose. The Court noted these as undisputed facts in paragraphs 8(a) to 8(h) of the judgment.

 “This Court need not go into the merits of the respective claims made by the applicant and the respondent if this Court finds that this Court lacks territorial jurisdiction to decide these applications.”

The Court noted that the contract was neither executed in Tamil Nadu nor did it contemplate any obligations to be performed there. The stamp paper was purchased in Mumbai, the respondent’s office was in Sangli, and the location in the physical verification report was Sangli. The applicant’s notice replying to the respondent’s legal notice and other related documents also originated from Maharashtra.

“The opening sentence of the arbitration clause makes it clear that the agreement will be governed by the Courts in Mumbai and will be governed by the laws in India.”

Referring to Clause 15, the Court observed: “However, contradicting the opening sentence of the arbitration clause, the later part of the arbitration clause discloses that Courts at Chennai alone shall have the sole and exclusive jurisdiction.”

The Court found this contradiction untenable: “A decision of the Hon'ble Apex Court in Bharat Sher Singh Kalsia Vs. State of Bihar... makes it clear that if there is a repugnancy between the earlier and later clauses of a deed... the later clause is to be rejected.”

It further recorded: “Since the order passed by this Court appointing an Advocate Commissioner is not a final order and since this Court did not decide the jurisdiction issue earlier... the applicant’s reliance on Section 42 of the Act is unsustainable.”

On the principle of "contra proferentem," the Court recorded: “If a clause is ambiguous, it should be interpreted against the interests of the party who drafted it.”

“The surrounding circumstances, which are supported by documents... makes it clear that the intention of the parties was only to fix the seat of the arbitration at Mumbai alone.”

 “For the foregoing reasons, this Court lacks territorial jurisdiction to decide these applications and accordingly, O.A.No.414 of 2024, Arb.Appln.No.286 of 2024 and Arb.O.P(Com.Div.) No.537 of 2024 are dismissed.”

“However, liberty is granted to the applicant to approach Mumbai Courts if they so desire for redressal of their grievance against the respondent.”

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The Court held that consent to the Advocate Commissioner's appointment did not confer jurisdiction: “Even if the parties agree to the order, the lack of jurisdiction cannot be waived or cured.”

“An order passed by a Court without jurisdiction is considered nullity, meaning it is not binding and it has no legal effect.”

Hence, the reliance on Section 42 was not accepted: “The applicant cannot exploit the ambiguity with reference to court’s jurisdiction found in the later part of the arbitration clause.”

Advocates Representing the Parties:

For the Applicant: Mr. Dhanaram Ramachandran for M/s. D.R. Law Chambers

For the Respondent: Ms. S.P. Arthi and Mr. M.S. Niranjhan

Case Title: M/s. TSR Films Private Limited v. M/s. New Pride Multiplex

Neutral Citation: 2025: MHC:1305

Case Numbers: O.A.No.414 of 2024, Arb.Appln.No.286 of 2024, Arb.O.P.(Com.Div.) No.537 of 2024

Bench: Justice Abdul Quddhose

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