Kiran Raj

The Supreme Court of India Bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar has allowed an appeal challenging an order appointing a sole arbitrator by the Punjab and Haryana High Court. The Court held that the agreement between the parties specifying that disputes would be subject to the "exclusive jurisdiction of the Mumbai High Courts located in Mumbai" must be given effect in the context of arbitration proceedings. Consequently, the earlier order appointing an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, passed by the Punjab and Haryana High Court, was set aside. The appellant has been permitted to pursue an already filed application under Section 11 before the Mumbai High Court, and the respondent may contest that application on grounds available in law.

The appeal arose from a dispute between two private entities, where the appellant, a management consultancy firm, was engaged by the respondent. The parties entered into an agreement dated 09 July 2023, containing an arbitration clause. This agreement included Clause 10, which provided that the letter shall be governed by Indian law and that the client submitted to the exclusive jurisdiction of the Mumbai High Courts located in Mumbai concerning any dispute related to the letter or any matters contemplated thereby. The clause further stipulated that in case of any dispute, the parties would appoint a sole arbitrator by mutual consent as per Section 11 of the Arbitration and Conciliation Act, 1996, to resolve disputes amicably before approaching an appropriate court.

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Following the emergence of disputes, the appellant invoked Section 21 of the Act, seeking reference to an arbitral tribunal. The respondent initially replied, stating that they had already appointed a sole arbitrator, a decision objected to by the appellant. Subsequently, the respondent filed an application under Section 11 before the Punjab and Haryana High Court. The appellant opposed the application, contending that the arbitration clause expressly reserved the exclusive jurisdiction of the Mumbai High Court. Despite this, the Punjab and Haryana High Court appointed a sole arbitrator, Mr. V.K. Gupta, District & Sessions Judge (Retired), to adjudicate the dispute, holding that the objection regarding territorial jurisdiction was not sustainable in light of its earlier decision in ARB No. 49 of 2023, M/s I Care Consultancy v. M/s Mahindra and Mahindra Financial Services Limited and others.

The appellant challenged this appointment in the Supreme Court, arguing that Clause 10 of the agreement bound the parties to the jurisdiction of the Mumbai High Court for arbitration-related matters. The respondent defended the High Court's order, citing the definition of "court" under Section 11 of the Act, which, according to them, enabled invoking the jurisdiction of the Punjab and Haryana High Court.

The Supreme Court referred to its earlier decision in Brahmani River Pellets Ltd. v. Kamachi Industries Ltd., where it was recorded: "Where the contract specifies the jurisdiction of the court at a particular place, only such court will have the jurisdiction to deal with the matter and parties intended to exclude all other courts… Since only the Orissa High Court will have the jurisdiction to entertain the petition filed under Section 11(6) of the Act, the impugned order is liable to be set aside."

In the present case, the Court observed that although Clause 10 did not expressly use the terms "seat" or "venue," the mention of "jurisdiction" was in the context of arbitration. The Court stated: "The agreement between the parties that, 'client hereby submits to the exclusive jurisdiction of the Mumbai High Courts located in Mumbai' must be understood in the context of arbitration and therefore the seat of the arbitration must be taken to be Mumbai."

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The Court noted that an application under Section 11 was already pending before the Mumbai High Court. Therefore, in light of the agreement and its interpretation, the appointment of the arbitrator by the Punjab and Haryana High Court could not be sustained.

The Supreme Court allowed the appeal and set aside the judgment and order of the Punjab and Haryana High Court dated 27 September 2024 in ARB-130-2024. The Court directed that the appellant would be entitled to pursue the application filed under Section 11 of the Arbitration and Conciliation Act before the Mumbai High Court. The respondent would have the right to contest the said application on such grounds as may be available to it in law. The matter was disposed of accordingly, and pending applications, if any, stood disposed of.

Advocates Representing the Parties

For the Petitioners: Mr. Dhawal Deshpande, Advocate; Mr. Amir Arsiwala, Advocate-on-Record

For the Respondents: Mr. Rohan Ganpathy, Advocate-on-Record

Case Title: M/s Activitas Management Advisor Private Limited v. Mind Plus Healthcare Private Limited

Case Number: Civil Appeal No(s). of 2025 (@ SLP (C) No. 27714 of 2024)

Bench: Justice Pamidighantam Sri Narasimha, Justice Atul S. Chandurkar