M/S RAVI RANJAN DEVELOPERS PVT. LTD versus ADITYA KUMAR CHATTERJEE on 24 March 2022

[2022] 15 S.C.R. 1117

M/s RAVI RANJAN DEVELOPERS PVT. LTD

v.

ADITYA KUMAR CHATTERJEE

(Civil Appeal Nos. 2394-2395 of 2022)

MARCH 24, 2022

[INDIRA BANERJEE AND A. S. BOPANNA, JJ.]

Arbitration and Conciliation Act, 1996 – ss. 2(1)(e), 9, 11(6)& 42 - Arbitration Agreement - Seat of Arbitration - Jurisdiction ofHigh Court - Appellant and respondent entered into a Developmentagreement for development of property situated at Muzaffarpur inBihar - The agreement contains Arbitration clause which providesKolkata as the place of Arbitral Tribunal - As the dispute arose,respondent terminated the said Development Agreement -Respondent moved an arbitration petition in the Calcutta High Courtu/s 11(6) of the Act for appointment of Arbitrator - The appellantobjected the territorial jurisdiction of the Calcutta High Court -High Court allowed the Arbitration Petition and appointed a retiredjudge as Sole Arbitrator - There was no finding by the High Courtwith regard to its jurisdiction - On appeal, held: The DevelopmentAgreement was admittedly executed and registered outside thejurisdiction of the Calcutta High Court – The suit pertains toimmovable property situated in Bihar - No part of the cause of actionhad arisen within the territorial jurisdiction of the Calcutta HighCourt - Section 11(6) of the Act has to be harmoniously read withSection 2(1)(e) of the A&C Act - An application under Section 11(6)of the Act for appointment of an Arbitrator/Arbitral Tribunal cannotbe moved in any High Court in India, irrespective of its territorialjurisdiction - The parties cannot, by consent, confer jurisdictionon a Court which inherently lacked jurisdiction - The parties neveragreed to submit to the jurisdiction of Calcutta High Court in respectof disputes, nor did the parties agree upon Kolkata as the seat ofarbitration – Parties to the arbitration agreement only agreed thatthe sittings of the Arbitral Tribunal would be in Kolkata – Kolkatawas only the venue for sittings of the Arbitral Tribunal – CalcuttaHigh Court inherently lacks jurisdiction to entertain the applicationof the Respondent under Section 11(6) of the Arbitration Act.

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1118SUPREME COURT REPORTS

AAllowing the appeals, the Court

HELD: 1.1 In the present case, no suit could have beenfiled in any Court over which the Calcutta High Court exercisesjurisdiction, since as stated above, the suit admittedly pertainsto immovable property situated at Muzaffarpur in Bihar, outsideBthe territorial jurisdiction of the Calcutta High Court andadmittedly, no part of the cause of action had arisen within theterritorial jurisdiction of the Calcutta High Court. The Appellantwho would be in the position of Defendantin a suit, neither residesnor carries on any business within the jurisdiction ofthe CalcuttaHigh Court. [Para 25][1129-E-G]C

1.2 Of course, under Section 11(6), an application forappointment of an Arbitrator necessarily has to be moved in theHigh Court, irrespective of whether the High Court has thejurisdiction to decide a suit in respect of the subject matter ofarbitration and irrespective of whether the High Court at all hasDoriginal jurisdiction to entertain and decide suits. As such, thedefinition of Court in Section 2(1)(e) of the A&C Act would notbe applicable in the case of a High Court exercising jurisdictionunder Section 11(6) of the A&C Act to appoint an Arbitrator/Arbitral Tribunal. At the same time, an application under SectionE11(6) of the A&C Act for appointment of an Arbitrator/ArbitralTribunal cannot be moved in any High Court in India, irrespectiveof its territorial jurisdiction. Section 11(6) of the A&C Act has tobe harmoniously read with Section 2(1)(e) of the A&C Act andconstrued to mean, a High Court which exercisessuperintendence/supervisory jurisdiction over a Court within theFmeaning of Section 2(1)(e) of the A&C Act. It could never havebeen the intention of Section 11(6) of the A&C Act that arbitrationproceedings should be initiated in any High Court in India,irrespective of whether the Respondent resided or carried onbusiness with in the jurisdiction of that High Court, andGirrespective of whether any part of the cause of action arose withinthe jurisdiction of that Court, to put an opponent at a disadvantageand steal a march over the opponent. [Para 26-28][1129-G-H;1130-A-D]

1.3. Section 42 cannot possibly have any application to anHapplication under Section 11(6), which necessarily has to be made before a High Court, unless the earlier application was also madein a High Court. In the instant case, the earlier application underSection 9 was made in the District Court at Muzaffarpur and notin the High Court of Judicature at Patna. An application underSection 11(6) of the A&C Act for appointment of Arbitrator, couldnot have been made in the District Court of Muzaffarpur.Therefore, Section 42 is not attracted. [Para 32][1131-C-D]

1.4 It can never be an absolute general proposition of law,that where an arbitration agreement says that the place ofarbitration is Faridabad/Delhi and proceedings under Part I ofthe A&C Act are also validly initiated in Faridabad, the Court inFaridabad would, notwithstanding Section 42 of the A&C Act,lose its jurisdiction, just because arbitration is later conducted inDelhi and Award is made in Delhi. This Court has perused theDevelopment Agreement. The contention of the Respondent inthe Affidavit in Opposition, that the parties to the arbitrationagreement had agreed to submit to the jurisdiction of CalcuttaHigh Court, is not correct. The parties to the arbitrationagreement only agreed that the sittings of the Arbitral Tribunalwould be in Kolkata. Kolkata was the venue for holding thesittings of the Arbitral Tribunal. [Paras 42 & 43][1133-E-H]

2. It is well settled that, when two or more Courts havejurisdiction to adjudicate disputes arising out of an arbitrationagreement, the parties might, by agreement, decide to refer alldisputes to any one Court to the exclusion of all other Courts,which might otherwise have had jurisdiction to decide thedisputes. The parties cannot, however, by consent, conferjurisdiction on a Court which inherently lacked jurisdiction. Inthis case, the parties, as observed above did not agree to refertheir disputes to the jurisdiction of the Courts in Kolkata. It wasnot the intention of the parties that Kolkata should be the seat ofarbitration. Kolkata was only intended to be the venue forarbitration sittings. Accordingly, the Respondent himselfapproached the District Court at Muzaffarpur, and not a Court inKolkata for interim protection under Section 9 of the A&C Act.The Respondent having himself invoked the jurisdiction of theDistrict Court at Muzaffarpur, is estopped from contending that AB

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Athe parties had agreed to confer exclusive jurisdiction to theCalcutta High Court to the exclusion of other Courts. Neither ofthe parties to the agreement construed the arbitration clause todesignate Kolkata as the seat of arbitration. We are constrainedto hold that Calcutta High Court inherently lacks jurisdiction toentertain the application of the Respondent under Section 11(6)Bof the Arbitration Act. The High Court should have decided theobjection raised by the Appellant, to the jurisdiction of theCalcutta High Court, to entertain the application under Section11(6) of A&C Act, before appointing an Arbitrator. [Paras 47 &48][1135-B-F]CBharat Aluminium Company v. Kaiser Aluminium (2012)9 SCC 552 : [2012] 12 SCR 327 - followed.

Kiran Singh and Ors. v. Chaman Paswan andOrs.[1955] SCR 117; Union of India v. HardyExploration and Production (India) Inc. (2019) 13 SCCD472 : [2018] 13 SCR 379; Mankastu Impex PrivateLimited v. Airvisual Limited (2020) 5 SCC 399 : [2020]4 SCR 565 - relied on.

Indus Mobile Distribution Private Limited v. DatawindInnovations Private Limited and Ors. (2017) 7 SCC 678E: [2017] 4 SCR 744; Hindustan Construction CompanyLimited v. NHPC Limited and Anr. (2020) 4 SCC 310;BGS SGS Soma JV v. NHPC Limited (2020) 4 SCC 234: [2019] 17 SCR 742 - referred to.

Case Law Reference

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[1955] SCR 117

[2017] 4 SCR 744(2020) 4 SCC 310[2019] 17 SCR 742

G[2012] 12 SCR 327[2018] 13 SCR 379[2020] 4 SCR 565

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CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.2394-2395 of 2022.

From the Judgment and Order dated 13.08.2021 of the High Courtat Calcutta in A.P. No.46 of 2021/Order dated 04.10.2021 in R.V.W.No.14 of 2021 in A.P. No.46 of 2021 and G.A. No.1 in R.V.W. No.14 of2021 in Arb. P. No.46 of 2021.

Ajit Kumar Sinha, Sr. Adv., Dr. Maurya Vijay Chandra, AbhishekRitabh Shukla, Naveen Soni, Prem Prakash, Advs. for the Appellant.

Sanjay Ghosh, Sr. Adv., Rajiv Ranjan Mishra, Partho Ganguly,Saurabh, Naman Jain, Narender Kumar Verma, Advs. for theRespondent.

The Judgment of the Court was delivered by INDIRA BANERJEE, J.

Leave granted.

2. These appeals are against an order dated 13[th] August 2021passed by the Calcutta High Court, allowing the Arbitration Petition No.46/2021 filed by the Respondent under Section 11(6) of the Arbitration andConciliation Act, 1996 (hereinafter referred to as the ‘A&C Act’), forappointment of an Arbitrator and also an order dated 4[th] October 2021passed by the High Court, rejecting an application made by the Appellantfor review of the said order dated 13[th] August 2021, being R.V.W.O.No.14/2021.

3. The Appellant and the Respondent entered into a DevelopmentAgreement dated 15[th] June 2015 for development of property situatedat Muzaffarpur in Bihar measuring about 12 Kaithas and 11 Dhurs, morefully described in the said Development Agreement, outside the jurisdictionof Calcutta High Court. The said Development Agreement executedand registered in Muzaffarpur in Bihar, contains an arbitration clause,which is set out hereinbelow for convenience:

“37. That in case of any dispute or difference between theparties arising out of and relating to this developmentagreement, the same shall be settled by reference of thedisputes or differences to the Arbitrators appointed by boththe parties and such Arbitration shall be conducted underthe provisions of the Indian Arbitration and Conciliation Act,1996 as amended from time to time and the sitting of the saidArbitral Tribunal shall be at Kolkata.”

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A4. Differences and disputes arose in relation to the saidDevelopment Agreement, giving rise to various proceedings betweenthe parties. On 24[th] April 2019, the Respondent terminated the saidDevelopment Agreement. The Appellant has not accepted the terminationof the said Development Agreement.B5. On 15[[th]] May 2019, the Appellant filed a petition before the A

B5. On 15[[th]] May 2019, the Appellant filed a petition before theReal Estate Regulatory Authority, (referred to in short as ‘RERA’) atPatna, which was registered as RERA Case No.56/377/2019. Soonthereafter, on 17[th] August 2019, the Respondent filed a petition underSection 9 of the A&C Act in the Court of the District Judge, Muzaffarpurseeking interim protection in respect of the property in question.C

6. On 1[st] October 2019, the Respondent filed a complaint beforethe Muzaffarpur Municipal Corporation alleging that the building beingconstructed by the Appellant was in violation of the sanctioned buildingplan and seeking stoppage of construction. The Muzaffarpur MunicipalCorporation dismissed the complaint on 22[nd] January 2020.D

7. The Respondent appealed to the Bihar Building MunicipalTribunal. The appeal is stated to be pending. Soon thereafter, theRespondent sent notice to the Appellant invoking the arbitration clauseunder the Development Agreement. The notice was sent to the registeredoffice of the Appellant at Patna in Bihar, outside the jurisdiction of theECalcutta High Court. In November, 2020, the Respondent moved anarbitration petition being A.P. No.2020 in the Calcutta High Court underSection 11 sub-section (6) of the A&C Act for appointment of Arbitrator.The application was, however, withdrawn for technical reasons.

8. On 15[th] January 2021, the Respondent filed a second arbitrationFpetition under Section 11 sub-section (6) of the A&C Act being A.P.No.46/2021 in the Calcutta High Court. The Appellant filed an Affidavitin Opposition questioning the territorial jurisdiction of the Calcutta HighCourt to decide the application under Section 11(6) of the ArbitrationAct.G9. In the Affidavit in Opposition, the Appellant contended :

“a)There is no valid or enforceable or existing Arbitrationclause between the parties for reference of the disputesto Arbitration in terms of the said clause.

b)…

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c)This Hon’ble Court has no territorial jurisdiction to tryentertain and determine the instant application as theagreement between the Petitioner and the Respondenthas been executed and registered in the office of theDistrict Registrar, Muzaffarpur, in the district of Bihar.

d)The subject matter of the agreement is for developmentand construction to be carried out of all that piece andparcel of land situated within the limits of MuzaffarpurMunicipal Corporation, Bihar, outside the jurisdictionof this Hon’ble Court.

e)No part of the cause of action for filing the presentapplication has arisen within the jurisdiction of thisHon’ble Court and by reasons whereof the this Hon’bleCourt has no territorial jurisdiction to try entertain anddetermine the present application.

f)The building plan of the property in question has beenduly sanctioned by the Muzaffarpur MunicipalCorporation for construction of a property atMuzaffarpur. The disputes covered by the presentreference relates to an immoveable construction of animmovable property in Muzaffarpur. This Hon’ble Courthas no territorial jurisdiction to try entertain ordetermine the present application as this Hon’ble Courtis not a court within the meaning of Section 2(i)(e) ofthe Arbitration and Conciliation Act, 1996. This Hon’bleCourt is not the designated High Court for appointingan arbitrator in accordance with and in true scope andambit of Section 11 of the Act of 1996.

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h)The subject matter of the present application is sub-judice before the Real Estate Regulatory Authority,Muzaffarpur under RERA Case No.56/377/2019 andthe same is pending adjudication and by reasonswhereof this Hon’ble Court has no jurisdiction to tryentertain or determine the present application.

i)It is submitted that mere place of sitting mentioned inan Arbitration agreement stating that the Arbitration A

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will be held in Kolkata does not confer any jurisdictionon this Hon’ble Court to try entertain and determinethe instant application. No part of the cause of actionhas arisen within the jurisdiction of this Hon’ble Courtand by reasons whereof this Hon’ble Court has nojurisdiction to try entertain and determine the presentapplication.”

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10. The Respondent duly filed an Affidavit in Reply. In the Affidavitin Reply, the Respondent has merely denied that the Calcutta High Courtlacks territorial jurisdiction to entertain or decide the application underSection 11(6) of the A&C Act. It is admitted that the DevelopmentCAgreement is in respect of property situated at Muzaffarpur in Bihar,outside the jurisdiction of Calcutta High Court. It is also admitted thatthe Development Agreement was executed and registered in the Stateof Bihar, outside the jurisdiction of Calcutta High Court. It was contendedthat the Calcutta High Court exercises jurisdiction over the place agreedDupon as the seat of arbitration, and would thus have jurisdiction toentertain the Arbitration proceedings. Paragraph 5-E of the Affidavit inReply is set out hereinbelow for convenience :- “5-E It is submitted that though the agreement was executedoutside the jurisdiction of this Hon’ble Court and the propertyEin question is also located outside the Jurisdiction of thisHon’ble Court but as the Arbitration agreement contained inthe said development agreement where parties have agreedto submit to the Jurisdiction of this Hon’ble Court thereby,fixing it at Kolkata, then this Hon’ble Court has jurisdictionto try and entertain the instant lis. It is submitted that where aFseat is designated in an agreement, the courts of the seat alonehave jurisdiction which would require that all applicationsarising out of the arbitral agreement needs to be filed in theCourt having jurisdiction over the seat of Arbitration, andthat Court also will have jurisdiction to try the ArbitrationGpetition. The Hon’ble Courts of this country have made itclear that the moment a seat is designated by agreementbetween the parties, it is akin to an exclusive jurisdictionclause, which would then vest the courts at the ‘seat’ withexclusive jurisdiction for the purposes of regulating arbitralproceedings arising out of the agreement between the parties.

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M/s RAVI RANJAN DEVELOPERS PVT. LTD v. ADITYAKUMAR CHATTERJEE [INDIRA BANERJEE, J.]

Whenever there is the designation of a place of Arbitration inan arbitration clause as being the ‘venue’ of the Arbitrationproceedings, the expression “Arbitration proceedings” wouldmake it clear that the ‘venue’ is really the ‘seat’ of the arbitralproceedings, as the aforesaid expression does not includejust one or more individual or particular hearing. In view ofthe aforesaid development of law, there is no confusion withregard to what the seat of Arbitration and venue of Arbitrationmean. There is no shadow of doubt that the Arbitration clausehas to be read in a holistic manner so as to determine thejurisdiction of the Court. That apart, if there is mention ofvenue and something else is appended thereto, depending onthe nature of the prescription, the Court can come to aconclusion that there is implied exclusion.”

11. On 13[th] August 2021, the Calcutta High Court allowed theArbitration Petition and appointed a retired judge of the Calcutta HighCourt as Sole Arbitrator. Mr. Ajit Kumar Sinha, learned Senior Counselappearing on behalf of the Appellant submitted that even though theAppellant had opposed the application under Section 11(6) of the A&CAct, objecting to the territorial jurisdiction of the Calcutta High Court,the Calcutta High Court did not decide the objection. There is no findingby the Calcutta High Court with regard to its jurisdiction. The order ofthe High Court reads:- “1. The present application has been filed under Section11(6)(a) of the Arbitration and Conciliation Act, 1996 forappointment of the arbitrator for settlement of the disputesbetween the parties.

2. At the time of hearing it was not disputed by the learnedCounsel appearing for the parties that there is a validarbitration clause in the development agreement.

3. Learned counsel for both the parties have agreed to appoint... to resolve the disputes sought to be raised by both theparties. Accordingly, ... is appointed as arbitrator to settlethe disputes between the parties.

4. The present application is accordingly disposed of.”

12. Mr. Sinha submitted that Counsel appearing on behalf of theAppellant in the Calcutta High Court gave consent without instructions AB

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Afrom the Appellant. Be that as it may, the Calcutta High Court did notadjudicate the issue of territorial jurisdiction raised by the Appellant in itsAffidavit in Opposition filed in the High Court.

13. On or about 30[th] September 2021, the Appellant filed anapplication for review of the final order dated 13[th] August 2021. In theBapplication for review, the Appellant took the following grounds:

“I FOR THAT the order dated 13[th] August, 2021 discloseserror apparent on the face of records and mistake inasmuchas the objections of the petitioner pertaining to the Hon’bleCourt not having jurisdiction in the matter and the objectionsCregarding non-arbitrability of the disputes involved, have notbeen considered by this Hon’ble Court.

II. For THAT the order dated 13[th] August, 2021 discloses errorapparent on the face of records, mistake inasmuch as theHon’ble Court lacked jurisdiction to entertain the petitionerDsince the Hon’ble High Court at Patna had to be approachedunder section 11 of the Arbitration and Conciliation Act, 1996.

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VII. FOR THAT the order dated 13[th] August, 2021 proceedingon concession of counsel which is contrary to the petitionersEinstructions discloses error apparent on the face of record.

VIII. FOR THAT the petitioner has not instructed counsel toconcede and has to the contrary instructed counsel to opposethe petition and therefore consent, if any, counsel is withoutjurisdiction and void and the order dated 13[th] August, 2021Fproceeding on the basis of the same, discloses error apparenton the face of record.

IX. FOR THAT there has no consent given by the petitionerand the order dated 13[th] August, 2021 proceeding on the basisof the consent, discloses error apparent on the face ofGrecords.”

14. By the order dated 4[th] October 2021, the High Court dismissedthe review application, which is also impugned in this Court. The HighCourt held that consent given by learned Counsel could not be permittedto be withdrawn.

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15. The question before this Court is, whether the Calcutta HighCourt at all had jurisdiction to entertain the application filed by theRespondent and appoint an Arbitrator. Mr. Sanjay Ghosh, learned SeniorCounsel appearing on behalf of the Respondent, argued with force, thatthe initial order of appointment of Arbitrator was passed by the Court byconsent. The Appellant appeared in the arbitration proceedings. In otherwords, the Appellant acquiesced to the reference of the disputes to theArbitrator appointed by the High Court.

16. The Appellant did not accept the order of the Calcutta HighCourt. After the High Court appointed the Arbitrator, the Appellant fileda review application, taking objection to the jurisdiction of the High Court,which was rejected. On the same day i.e. 4[th] October 2021, the Arbitratorpassed an interim order restraining the Appellant from creating any thirdparty interest in the property.

17. The minutes of the proceedings before the learned Arbitratorappointed by the Calcutta High Court does not indicate that the Appellantwillingly submitted to arbitration by the learned Arbitrator. The Appellantonly agreed to the fees of the Arbitrator appointed by the High Court.This Court cannot be oblivious to practical realities, such asembarrassment of Counsel to oppose the fees of an Arbitrator whohappens to be a former Judge of the High Court.

18. Mr. Sinha rightly argued that an order without jurisdiction canbe questioned at any time at any stage irrespective of any consent thatmay have been given by the Counsel, which the Appellant asserts, waswithout instructions of the Appellant.

19. In Kiran Singh and Ors. v. Chaman Paswan and Ors.[1], afour Judge Bench of this Court held that it is a fundamental principle,well-established, that a decree passed by a Court without jurisdiction isa nullity, and that its invalidity could be set up whenever and wherever itis sought to be enforced or relied upon, even at the stage of executionand even in collateral proceedings. A defect of jurisdiction, whether it ispecuniary or territorial, or whether it is in respect of the subject matterof the action, strikes at the very authority of the Court to pass any decree,and such a defect cannot be cured even by consent of the parties.

1 (1955) SCR 117 : AIR 1954 SC 340

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A20. The question in this case is, whether the Calcutta High Courthad territorial jurisdiction to pass the impugned orders. The answer tothe question has to be in the negative for the reason that the DevelopmentAgreement was admittedly executed and registered outside the jurisdictionof the High Court of Calcutta, the agreement pertains to development ofproperty located in Muzaffarpur outside jurisdiction of the Calcutta HighBCourt. The Appellant has its registered office in Patna outside thejurisdiction of Calcutta High Court. The Appellant has no establishmentand does not carry on any business within the jurisdiction of the CalcuttaHigh Court. As admitted by the Respondent, no part of the cause ofaction had arisen within the jurisdiction of Calcutta High Court.

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(e) “Court” means— (i) in the case of an arbitration otherthan international commercial arbitration, the principal CivilECourt of original jurisdiction in a district, and includes theHigh Court in exercise of its ordinary original civiljurisdiction, having jurisdiction to decide the questionsforming the subject-matter of the arbitration if the same hadbeen the subject-matter of a suit, but does not include anyFCivil Court of a grade inferior to such principal Civil Court,or any Court of Small Causes; (ii) in the case of internationalcommercial arbitration, the High Court in exercise of itsordinary original civil jurisdiction, having jurisdiction todecide the questions forming the subject-matter of thearbitration if the same had been the subject- matter of a suit,Gand in other cases, a High Court having jurisdiction to hearappeals from decrees of courts subordinate to that HighCourt;

22. As argued by Mr. Sinha, the word ‘Court’ has been defined, incase of an arbitration other than international commercial arbitration, to H

mean the principal Civil Court of original jurisdiction in a district andwould include the High Court in exercise of its ordinary original jurisdiction,having jurisdiction to decide the questions forming the subject matter ofthe arbitration, if the same had been the subject matter of the suit, but itdoes not include any Civil Court of a grade inferior to such principal CivilCourt or any Court of small causes.

23. Subject to the pecuniary or other limitations prescribed by anylaw, suits for recovery of immovable property or determination of anyother right to or interest in an immovable property or compensation forwrong to immovable property, is to be instituted in the Court, within thelocal limits of whose jurisdiction, the property is situated. Certain specificsuits relating to immovable property can be instituted either in the Courtwithin the limits of whose jurisdiction the property is situated, or in theCourt within the local limits of whose jurisdiction the Defendant actuallyor voluntarily resides or carries on business.

24. All other suits are to be instituted in a Court, within the locallimits of whose jurisdiction the Defendant voluntarily resides or carrieson business. Where there is more than one Defendant, a suit may beinstituted in the Court within whose jurisdiction any of the Defendantsvoluntarily resides or carries on business. A suit may also be instituted ina Court within whose jurisdiction the cause of action arises either whollyor in part.

25. In the present case, no suit could have been filed in any Courtover which the Calcutta High Court exercises jurisdiction, since as statedabove, the suit admittedly pertains to immovable property situated atMuzaffarpur in Bihar, outside the territorial jurisdiction of the CalcuttaHigh Court and admittedly, no part of the cause of action had arisenwithin the territorial jurisdiction of the Calcutta High Court. The Appellantwho would be in the position of Defendant in a suit, neither resides norcarries on any business within the jurisdiction of the Calcutta High Court.

26. Of course, under Section 11(6), an application for appointmentof an Arbitrator necessarily has to be moved in the High Court,irrespective of whether the High Court has the jurisdiction to decide asuit in respect of the subject matter of arbitration and irrespective ofwhether the High Court at all has original jurisdiction to entertain anddecide suits. As such, the definition of Court in Section 2(1)(e) of the A

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AA&C Act would not be applicable in the case of a High Court exercisingjurisdiction under Section 11(6) of the A&C Act to appoint an Arbitrator/Arbitral Tribunal.

27. At the same time, an application under Section 11(6) of theA&C Act for appointment of an Arbitrator/Arbitral Tribunal cannot beBmoved in any High Court in India, irrespective of its territorial jurisdiction.Section 11(6) of the A&C Act has to be harmoniously read with Section2(1)(e) of the A&C Act and construed to mean, a High Court whichexercises superintendence/supervisory jurisdiction over a Court withinthe meaning of Section 2(1)(e) of the A&C Act.

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28. It could never have been the intention of Section 11(6) of theA&C Act that arbitration proceedings should be initiated in any HighCourt in India, irrespective of whether the Respondent resided or carriedon business within the jurisdiction of that High Court, and irrespective ofwhether any part of the cause of action arose within the jurisdiction ofDthat Court, to put an opponent at a disadvantage and steal a march overthe opponent.

29. Mr. Sinha also relied on Section 42 of the A&C Act set outhereinbelow:

29. Mr. Sinha also relied on Section 42 of the A&C Act set outhereinbelow:

“42. Jurisdiction.— Notwithstanding anything containedEelsewhere in this Part or in any other law for the time beingin force, where with respect to an arbitration agreement anyapplication under this Part has been made in a Court, thatCourt alone shall have jurisdiction over the arbitralproceedings and all subsequent applications arising out ofFthat agreement and the arbitral proceedings shall be made inthat Court and in no other Court.”

30. Mr. Sinha emphasized on Section 42 of the A&C Act to arguethat an earlier application for interim protection having been moved atthe District Court at Muzaffarpur, the Respondent could not have invokedGthe jurisdiction of the Calcutta High Court.

31. There could be no doubt, as argued by Mr. Sinha, that Section42 of the A&C Act is mandatory. The Section has obviously been enactedto prevent the parties from being dragged into proceedings in differentCourts, when more than one Court has jurisdiction. Where with respectH

to any arbitration agreement, any application under Part I of the A&CAct has been made in a Court, that Court alone would have jurisdictionover the arbitral proceedings and all subsequent applications arising outof that agreement, and the arbitral proceedings, would have to be madein that Court and in no other Court, unless, of course, the Court in whichthe first application had been instituted, inherently lacked jurisdiction toentertain that application. The Section which starts with a non obstanteclause, is binding irrespective of any other law for the time being inforce, and irrespective of any other provision in Part I of the A&C Act.

32. However, Section 42 cannot possibly have any application toan application under Section 11(6), which necessarily has to be madebefore a High Court, unless the earlier application was also made in aHigh Court. In the instant case, the earlier application under Section 9was made in the District Court at Muzaffarpur and not in the High Courtof Judicature at Patna. An application under Section 11(6) of the A&CAct for appointment of Arbitrator, could not have been made in the DistrictCourt of Muzaffarpur. Therefore, Section 42 is not attracted.

33. In the Affidavit in Reply filed in the High Court, the Respondentcontended that the parties to the Arbitration Agreement had agreed tosubmit to the jurisdiction of Calcutta High Court. The ArbitrationAgreement entered into by the parties clearly states that the seat and/orthe place of the Arbitral Tribunal shall be Kolkata.

34. Mr. Sanjay Ghosh, learned Senior Counsel appearing on behalfof the Respondents submitted that the Calcutta High Court had theterritorial jurisdiction to entertain the application under Section 11(6) ofthe A&C Act as the seat of arbitration was Kolkata.

35. In support of his argument that the Calcutta High Court hadexclusive jurisdiction to entertain and decide the application under Section11(6) filed by the Respondent, Mr. Ghosh cited Indus Mobile DistributionPrivate Limited v. Datawind Innovations Private Limited and Ors.[2],Hindustan Construction Company Limited v. NHPC Limited andAnr.[3] and BGS SGS Soma JV v. NHPC Limited[4]and argued thatonce a seat of arbitration is designated, the clause designating the seat 2 (2017) 7 SCC 678

3 (2020) 4 SCC 310

4 (2020) 4 SCC 234

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Aof arbitration becomes an exclusive jurisdiction clause, as a result ofwhich, only the Courts within whose territorial limits, the seat is locatedwould have jurisdiction to the exclusion of all other Courts.

36. In Indus Mobile Distribution Private Limited (supra), thisCourt referred to and relied upon the dictum of a Constitution Bench ofBthis Court in Bharat Aluminium Company v. Kaiser Aluminium[5] andheld that once the seat of arbitration had been fixed, that would be in thenature of an exclusive jurisdiction clause, binding the parties to specificCourts which alone could exercise supervisory powers over thearbitration. In Bharat Aluminium Company (supra) what was in issueCbefore the Constitution Bench was the meaning of the expression “placeof arbitration” in the context of Section 2(2) of the A&C Act, which asamended by Act 33 of 2019 is set out hereinbelow:

“(2) This Part shall apply where the place of arbitration is inIndia.

D3[Provided that subject to an agreement to the contrary, theprovisions of Sections 9, 27 and 4[clause (b)] of sub-section(1) and sub-section (3) of Section 37 shall also apply tointernational commercial arbitration, even if the place ofarbitration is outside India, and an arbitral award made orEto be made in such place is enforceable and recognised underthe provisions of Part II of this Act.]”

37. The question before the Constitution Bench was whether ofPart-I of the A&C Act applied to arbitrations, where the place ofarbitration was outside India.F

38. As observed by the Constitution Bench, Section 2(2) of theA&C Act places a threshold limitation on the applicability of Part-I,where the place of arbitration is not in India. The Constitution Bench ineffect and substance drew a distinction between venue and place ofarbitration, as contemplated in Section 20 and held that only if theGagreement of the parties was construed to provide for seat/place ofarbitration in India, would Part-I of the 1996 Act be applicable. If theseat/place were outside India, Part-I would not apply, even though thevenue of a few sittings may have been in India, or the cause of actionmay have arisen in India.H5 (2012) 9 SCC 552

39. The judgment of this Court in BGS SGS Soma JV (supra)cited by Mr. Sanjay Ghosh, was also rendered in the context of Section2(2) of the A&C Act and the applicability of Part I of the A&C Act to aninternational commercial arbitration, where the seat of arbitration wasnot in India.

40. In Hindustan Construction Company Limited (supra), thisCourt held that once the seat of arbitration is designated, the sameoperates as an exclusive jurisdiction clause and only Courts within whosejurisdiction the seat was located, would have jurisdiction to the exclusionof all other Courts. In the facts and circumstances of that case thisCourt found that Courts at New Delhi alone would have jurisdiction forthe purpose of challenge to the Award.

41. It is well settled that a judgment is a precedent for the issue oflaw that is raised and decided. The judgment has to be construed in thebackdrop of the facts and circumstances in which the judgment hasbeen rendered. Words, phrases and sentences in a judgment, cannot beread out of context. Nor is a judgment to be read and interpreted in themanner of a statute. It is only the law as interpreted by in an earlierjudgment, which constitutes a binding precedent, and not everything thatthe Judges say.

42. It can never be an absolute general proposition of law, thatwhere an arbitration agreement says that the place of arbitration isFaridabad/Delhi and proceedings under Part I of the A&C Act are alsovalidly initiated in Faridabad, the Court in Faridabad would,notwithstanding Section 42 of the A&C Act, lose its jurisdiction, justbecause arbitration is later conducted in Delhi and Award is made inDelhi.

43. This Court has perused the Development Agreement. Thecontention of the Respondent in the Affidavit in Opposition, that theparties to the arbitration agreement had agreed to submit to the jurisdictionof Calcutta High Court, is not correct. The parties to the arbitrationagreement only agreed that the sittings of the Arbitral Tribunal would bein Kolkata. Kolkata was the venue for holding the sittings of the ArbitralTribunal.

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A44. In Union of India v. Hardy Exploration and Production(India) Inc.[6]a three Judge Bench of this Court held that the sittings atvarious places are relatable to venue. It cannot be equated with the seatof arbitration or place of arbitration, which has a different connotation.

45. In Mankastu Impex Private Limited v. Airvisual Limited[7]Ba three Judge Bench of which one of us (Hon. A.S. Bopanna, J) was amember, held:

“19. The seat of arbitration is a vital aspect of any arbitrationproceedings. Significance of the seat of arbitration is that itdetermines the applicable law when deciding the arbitrationCproceedings and arbitration procedure as well as judicialreview over the arbitration award. The situs is not just aboutwhere an institution is based or where the hearings will beheld. But it is all about which court would have the supervisorypower over the arbitration proceedings. In Enercon (India)DLtd. v. Enercon GmbH [Enercon (India) Ltd. v. Enercon GmbH,(2014) 5 SCC 1 : (2014) 3 SCC (Civ) 59] , the Supreme Courtheld that : (SCC pp. 43 & 46, paras 97 & 107)

“[T]he location of the seat will determine the courts thatwill have exclusive jurisdiction to oversee the arbitrationEproceedings. It was further held that the seat normallycarries with it the choice of that country’s arbitration/curiallaw.”

20. It is well settled that “seat of arbitration” and “venue ofarbitration” cannot be used interchangeably. It has also beenFestablished that mere expression “place of arbitration” cannotbe the basis to determine the intention of the parties that theyhave intended that place as the “seat” of arbitration. Theintention of the parties as to the “seat” should be determinedfrom other clauses in the agreement and the conduct of theparties.”G

46. In this case, the Development Agreement provided that thesittings of the Arbitral Tribunal would be conducted in Kolkata. Asobserved above, the parties never agreed to submit to the jurisdiction of 6 (2019) 13 SCC 472

H7 (2020) 5 SCC 399

Calcutta High Court in respect of disputes, nor did the parties agreeupon Kolkata as the seat of arbitration. Kolkata was only the venue forsittings of the Arbitral Tribunal.

47. It is well settled that, when two or more Courts have jurisdictionto adjudicate disputes arising out of an arbitration agreement, the partiesmight, by agreement, decide to refer all disputes to any one Court to theexclusion of all other Courts, which might otherwise have had jurisdictionto decide the disputes. The parties cannot, however, by consent, conferjurisdiction on a Court which inherently lacked jurisdiction, as argued byMr. Sinha.

48. In this case, the parties, as observed above did not agree torefer their disputes to the jurisdiction of the Courts in Kolkata. It was notthe intention of the parties that Kolkata should be the seat of arbitration.Kolkata was only intended to be the venue for arbitration sittings.Accordingly, the Respondent himself approached the District Court atMuzaffarpur, and not a Court in Kolkata for interim protection underSection 9 of the A&C Act. The Respondent having himself invoked thejurisdiction of the District Court at Muzaffarpur, is estopped fromcontending that the parties had agreed to confer exclusive jurisdiction tothe Calcutta High Court to the exclusion of other Courts. Neither of theparties to the agreement construed the arbitration clause to designateKolkata as the seat of arbitration. We are constrained to hold thatCalcutta High Court inherently lacks jurisdiction to entertain the applicationof the Respondent under Section 11(6) of the Arbitration Act. The HighCourt should have decided the objection raised by the Appellant, to thejurisdiction of the Calcutta High Court, to entertain the application underSection 11(6) of A&C Act, before appointing an Arbitrator.

49. These appeals are therefore, allowed and the impugned ordersof appointment of Arbitrator and dismissal of the review application areset aside. The appointment of the learned Arbitrator is set aside on theground that the order of his appointment is without jurisdiction and inview of the objection to his appointment raised by the Appellant. It ismade absolutely clear that this order is not to be construed as anyaspersion on the learned Arbitrator appointed by the Calcutta High Court,or the manner in which he has conducted the proceedings so far.

50. Since the meetings of the Arbitral Tribunal are to be held inKolkata, this Court deems it appropriate to appoint Justice Bhaskar AB

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ABhattacharya, Former Chief Justice of the High Court of Gujarat asSole Arbitrator, to decide the disputes between the parties. The partieshave consented to the appointment of Justice Bhaskar Bhattarcharya.

51. The status quo with regard to the property in question shallbe maintained for a period of 15 days from today to enable the respectiveBparties to approach the learned Arbitrator under Section 17 of the A&CAct, for interim relief in accordance with law.

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Ankit Gyan

(Assisted by : Rahul Rathi, LCRA)

Appeals allowed.

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