RIVER PELLETS LIMITED versus KAMACHI INDUSTRIES LIMITED on 25 July 2019

SUPREME COURT REPO[2019] 9 S.C.. 1140RTS

[2019] 9 S.C.R.

BRAHMANI RIVER PELLETS LIMITED

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v.

KAMACHI INDUSTRIES LIMITED

(Civil Appeal No.5850 of 2019)

BJULY 25, 2019

[R. BANUMATHI AND A.S. BOPANNA, JJ.]

Arbitration and Conciliation Act, 1996 – ss.2(1)(e), 2(2), 11(6),and 20 – Appellant entered into an agreement with the respondentfor sale of 40,000 WMT (Wet Metric Tonne) of Iron Ore Pellets onCFOB terms – Dispute arose regarding the price and payment terms– Respondent claimed damages alleging that it had to procure theIron Ore Pellets from other sources at higher rates– Appellant deniedliability to pay damages – Respondent filed petition u/s.11(6) beforethe Madras High Court for appointment of the sole arbitrator –DAppellant challenged the jurisdiction of the High Court on theground that the parties agreed that Seat of arbitration will beBhubaneswar and therefore, only the Orissa High Court hasexclusive jurisdiction to appoint the arbitrator – High Court videimpugned order appointed former judge of the Madras High Courtas the sole arbitrator – On appeal, held: As per s.2(2), Part-I wouldEapply to all arbitration where the place of arbitration is in India –s.2(1)(e) defines “court” with reference to Part-I of the Act andwould govern the place of arbitration – Further, u/s.2(1)(e), if the“subject-matter of the suit” is situated within the arbitral jurisdictionof two or more courts, the parties can agree to confine theFjurisdiction in one of the competent courts – Under s.20, partiesare free to agree on the place of arbitration – Party autonomy hasto be construed in the context of parties choosing a court whichhas jurisdiction out of two or more competent courts havingjurisdiction – Where the contract specifies the jurisdiction of thecourt at a particular place, only such court will have the jurisdictionGto deal with the matter – In the present case, the parties agreed thatthe “venue” of arbitration shall be at Bhubaneswar – Consideringthe agreement of the parties having Bhubaneswar as the venue ofarbitration, the intention of the parties is to exclude all other courts H

– Non-use of words like “exclusive jurisdiction”, “only”,“exclusive”, “alone” is not decisive and does not make any materialdifference – When the parties agreed to have the “venue” ofarbitration at Bhubaneswar, the Madras High Court erred inassuming the jurisdiction u/s.11(6) – Since only Orissa High Courtwill have the jurisdiction to entertain the petition filed u/s.11(6),the impugned order is set aside – Parties at liberty to approach theOrissa High Court seeking appointment of the arbitrator.

Words & Expressions– “Seat”, “Venue” – Discussed –Arbitration and Conciliation Act, 1996.

Allowing the appeal, the Court

HELD: 1.1 As per Section 2(2) of the Arbitration andConciliation Act, 1996, Part-I would apply to all arbitration wherethe place of arbitration is in India. Section 2(1)(e) of the Act defines“court” with reference to Part-I of the Act and would govern theplace of arbitration. [Para 9] [1147-A]

1.2 In BALCO, the court highlighted the distinction betweenthe “Seat” and “Venue” in the context of Section 20(3) of theAct. Section 20(3) of the Act allows the parties to hold meetings,proceedings and hearings at any place agreed by the parties. InBALCO, the court has held that in an international commercialarbitration “seated” in India, parties may by mutual agreement,hold arbitral proceedings outside India. This, however, would nothave the effect of changing the Seat of arbitration which wouldcontinue to remain in India. The court then envisages a situationwhere the arbitration agreement designates a foreign Seat andalso selects Arbitration Act, 1996 as the law applicable to theconduct of arbitration proceedings and in such circumstances,hearing of the arbitration conducted at the venue fixed by theparties would not have the effect of changing the Seat of arbitrationwhich would remain in India. [Para 11] [1147-D-F]

1.3 Section 2(1)(e) of the Act defines the “Court” withreference to the term “subject-matter of the suit”. As per Section2(1)(e) of the Act, if the “subject-matter of the suit” is situatedwithin the arbitral jurisdiction of two or more courts, the parties AB

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Acan agree to confine the jurisdiction in one of the competentcourts. In para (96) of BALCO, the Supreme Court held that theterm “subject-matter” in Section 2(1)(e) of the Act is to identifythe court having supervisory control over the arbitral proceedings.The Supreme Court held that the provisions in Section 2(1)(e) ofthe Act has to be read in conjunction with Section 20 of the ActBwhich give recognition to the autonomy of the parties as to “placeof arbitration”. [Para 12] [1148-G-H; 1149-A-B]

1.4 As per Section 20 of the Act, parties are free to agreeon the place of arbitration. Party autonomy has to be construedin the context of parties choosing a court which has jurisdictionCout of two or more competent courts having jurisdiction. Thishas been made clear in the three-Judges Bench decision inSwastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. [Paras 13] [1150- C-D]

1.5 Where the contract specifies the jurisdiction of theDcourt at a particular place, only such court will have the jurisdictionto deal with the matter and parties intended to exclude all othercourts. In the present case, the parties have agreed that the“venue” of arbitration shall be at Bhubaneswar. Considering theagreement of the parties having Bhubaneswar as the venue ofEarbitration, the intention of the parties is to exclude all othercourts. As held in Swastik, non-use of words like “exclusivejurisdiction”, “only”, “exclusive”, “alone” is not decisive anddoes not make any material difference. When the parties haveagreed to have the “venue” of arbitration at Bhubaneswar, theMadras High Court erred in assuming the jurisdiction underFSection 11(6) of the Act. Since only Orissa High Court will havethe jurisdiction to entertain the petition filed under Section 11(6)of the Act, the impugned order is liable to be set aside. In theresult, the impugned order of the Madras High Court is set asideand this appeal is allowed. The parties are at liberty to approachGthe Orissa High Court seeking for appointment of the arbitrator.[Paras 16-18] [1153-G-H; 1154-A-C]

Bharat Aluminium Co. v. Kaiser Aluminium TechnicalServices Inc. (2012) 9 SCC 552 : [2012] 12 SCR 327

– followed.

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BRAHMANI RIVER PELLETS LTD. v.KAMACHI INDUSTRIES LTD.

Indus Mobile Distribution Private Limited v. DatawindInnovations Private Limited and Others(2017) 7 SCC678 : [2017] 4 SCR 744;Swastik Gases (P) Ltd. v.Indian Oil Corpn. Ltd. (2013) 9 SCC 32 : [2013] 7SCR 581 – relied on.

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Union of India v. Hardy Exploration and Production(India) Inc.(2018) 7 SCC 374 :[2018] 5 SCR 662;Bhatia International v. Bulk Trading S.A. and Another(2002) 4 SCC 105 : [2002] 2 SCR 411; Enercon (India)Limited and Others v. Enercon GMBH and Another(2014) 5 SCC 1 : [2014] 2 SCR 855; Reliance IndustriesLimited and Another v. Union of India(2014) 7 SCC603 : [2014] 6 SCR 456 – referred to.

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CIVIL APPELLATE JURISDICTION: Civil Appeal No.5850 of2019.

From the Judgment and Order dated 02.11.2018 of the High Courtof Judicature at Madras in O.P. No.398 of 2018.

Ratan K. Singh, Suraj Prakash, Mrinal Litoria, Rajat Bhardwaj,Ms. Priyanka Solanki, Advs. for the Appellant.

S. Santanam Swaminadhan, Mrs. Aarthi Rajan, Advs. for theRespondent.

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AThe Judgment of the Court was delivered by

R. BANUMATHI, J.

1. Leave granted.

2. Whether the Madras High Court could exercise jurisdictionBunder Section 11(6) of the Arbitration and Conciliation Act, 1996 despitethe fact that the agreement contains the clause that venue of arbitrationshall be Bhubaneswar, is the question falling for consideration in thisappeal.

3. Brief facts which led to filing of this appeal are as under:-

CThe appellant entered into an agreement with the respondent forsale of 40,000 WMT (Wet Metric Tonne) of Iron Ore Pellets on FOBterms and payment was to be made by Letter of Credit in Bhubaneswar.The loading port was Dhamra Port, Bhadrak, Odisha and destinationwas Chennai/Ennore Ports, Tamil Nadu. Dispute arose between theDparties regarding the price and payment terms and the appellant did notdeliver the goods to the respondent. The respondent claimed for damagesalleging that it had to procure the Iron Ore Pellets from other sources athigher rates. The appellant denied any liability to pay damages on theground that contract was later modified and that the respondent breachedthe material terms of the contract and this led to the dispute between theEparties.

4. Clause 18 of the agreement between the parties contains anarbitration clause which reads as under:- “18. Arbitration shall be under Indian Arbitration and ConciliationLaw 1996 and the Venue of Arbitration shall be Bhubaneswar.”F

5. The respondent on 07.10.2016 invoked arbitration clause. Theappellant did not agree for the appointment of the arbitrator. Hence, therespondent filed petition being OP No.398 of 2018 under Section 11(6)of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) beforethe Madras High Court on 24.01.2018 for appointment of sole arbitrator.GThe appellant contested the petition challenging the jurisdiction of theMadras High Court on the ground that the parties have agreed that Seatof arbitration be Bhubaneswar and therefore, only the Orissa High Court has exclusive jurisdiction to appoint the arbitrator. The Madras HighCourt vide impugned order appointed a former judge of the MadrasHigh Court as the sole arbitrator by holding that mere designation of“Seat” by parties does not oust the jurisdiction of other courts other thanat the Seat of arbitration. The High Court held that in absence of anyexpress clause excluding jurisdiction of other courts, both the MadrasHigh Court and the Orissa High Court will have jurisdiction over thearbitration proceedings. Challenging the impugned order, the appellanthas preferred this appeal.

6. The learned counsel for the appellant submitted that when theparties have agreed for a place/venue for arbitration, it gets the status ofSeat which is the juridical Seat and therefore only, the Orissa High Courtwill have the jurisdiction under the Act. The learned counsel submittedthat the Madras High Court erred in assuming jurisdiction under Section11(6) of the Act despite Bhubaneswar being the Seat of arbitration. Inthis regard, reliance was placed upon Indus Mobile Distribution PrivateLimited v. Datawind Innovations Private Limited and others(2017)7 SCC 678, Union of India v. Hardy Exploration and Production(India) Inc.(2018) 7 SCC 374 and other judgments. It was contendedthat the High Court erred in holding that clause (18) of the agreementdoes not outst the jurisdiction of the courts other than the courts at theSeat of arbitration at Bhubaneswar. The learned counsel submitted thatthe High Court erred in not applying the ratio of Indus Mobile whereinthe Supreme Court held that in case of domestic arbitration where theparties have agreed at the Seat of arbitration, the said court will haveexclusive jurisdiction.

7. Per contra, the learned counsel for the respondent submittedthat since cause of action arose at both the places i.e. Bhubaneswar andChennai, both Madras High Court as well as Orissa High Court willhave supervisory jurisdiction. Reliance was placed upon para No. (96)of Bharat Aluminium Co. v. Kaiser Aluminium Technical ServicesInc. (2012) 9 SCC 552. It was submitted that in domestic arbitration,unless the parties tie themselves to an exclusive jurisdiction of the courtin the agreement, mere mention of “venue” as a place of arbitration willnot confer exclusive jurisdiction upon that court. It was urged that apartfrom mere mention of “venue” as place of arbitration, there should be AB

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Aother concomitant circumstances like use of words “alone”, “exclusive”,“only” etc. or other circumstances, then only the jurisdiction of the othercourt which otherwise would have had jurisdiction would stand excluded.Taking us through the impugned order, the learned counsel for therespondent submitted that mere expression “venue of arbitration shallbe Bhubaneswar will have no special significance” and the HighBCourt rightly exercised its jurisdiction under Section 11 (6) of the Act inappointing the arbitrator.

8. We have carefully considered the submissions of both the partiesand perused the impugned order and the judgments relied upon by theparties.C

9. As per Section 2(2) of the Act, arbitrations which take place inIndia are governed by Part-I of the Act. The “court” which will havejurisdiction to decide the questions forming the subject matter of arbitrationis the “court” as defined by Section 2(1)(e) of the Act which reads asunder:- D

2. Definitions. – (1) In this Part, unless the context otherwiserequires,- ……

(e) “Court” means –

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(i) in the case of an arbitration other than international commercialarbitration, the principal Civil Court of original jurisdiction in adistrict, and includes the High Court in exercise of its ordinaryoriginal civil jurisdiction, having jurisdiction to decide the questionsforming the subject-matter of the arbitration if the same had beenthe subject-matter of a suit, but does not include any Civil Courtof a grade inferior to such principal Civil Court, or any Court ofSmall Causes; F

(ii) in the case of international commercial arbitration, the HighCourt in exercise of its ordinary original civil jurisdiction, havingjurisdiction to decide the questions forming the subject-matter ofthe arbitration if the same had been the subject-matter of a suit,and in other cases, a High Court having jurisdiction to hear appealsfrom decree or courts subordinate to that High Court.

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As per Section 2(2) of the Act, Part-I would apply to all arbitrationwhere the place of arbitration is in India. Section 2(1)(e) of the Actdefines “court” with reference to Part-I of the Act and would governthe place of arbitration.

10. In BALCO,the issue arose before the Constitution Bench wasas to whether in international commercial arbitrations whose juridical orlegal Seat of arbitration was outside India whether the provisions ofPart-I of the Act would be applicable for grant of relief as held in BhatiaInternational v. Bulk Trading S.A. and another (2002) 4 SCC 105.The Constitution Bench in BALCO held that “if the legal or juridicalseat of arbitration is outside India, then Part-I of the Arbitrationand Conciliation Act, 1996 shall be inapplicable to such arbitrations;and even in case a clause in the arbitration agreement purports toapply Part-I of the 1996 Act to an arbitration where the juridicalseat of arbitration is outside India, Part-I shall be inapplicable tothe extent inconsistent with the arbitration law of the seat ofarbitration.”[1]

11. In BALCO, the court highlighted the distinction between the“Seat” and “Venue” in the context of Section 20(3) of the Act. Section20(3) of the Act allows the parties to hold meetings, proceedings andhearings at any place agreed by the parties. In BALCO, the court hasheld that in an international commercial arbitration “seated” in India,parties may by mutual agreement, hold arbitral proceedings outside India.This, however, would not have the effect of changing the Seat ofarbitration which would continue to remain in India. The court thenenvisages a situation where the arbitration agreement designates a foreignSeat and also selects Arbitration Act, 1996 as the law applicable to theconduct of arbitration proceedings and in such circumstances, hearingof the arbitration conducted at the venue fixed by the parties would nothave the effect of changing the Seat of arbitration which would remainin India. In para (100), the Supreme Court held as under:- “100. True, that in an international commercial arbitration, havinga seat in India, hearings may be necessitated outside India. Insuch circumstances, the hearing of the arbitration will be conductedat the venue fixed by the parties, but it would not have the effectof changing the seat of arbitration which would remain in India.

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The legal position in this regard is summed up by Redfern andHunter, The Law and Practice of International CommercialArbitration (1986) at p. 69 in the following passage under theheading “The Place of Arbitration”:

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This, in our view, is the correct depiction of the practicalconsiderations and the distinction between “seat” [Sections 20(1)and 20(2)] and “venue” [Section 20(3)]. We may point out herethat the distinction between “seat” and “venue” would be quitecrucial in the event, the arbitration agreement designates a foreigncountry as the “seat”/”place” of the arbitration and also selectsthe Arbitration Act, 1996 as the curial law/law governing thearbitration proceedings. It would be a matter of construction ofthe individual agreement to decide whether:

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(i) the designated foreign “seat” would be read as in fact onlyproviding for a “venue”/”place” where the hearings would beheld, in view of the choice of the Arbitration Act, 1996 as beingthe curial law, OR

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(ii) the specific designation of a foreign seat, necessarilycarrying with it the choice of that country’s arbitration/curiallaw, would prevail over and subsume the conflicting selectionchoice by the parties of the Arbitration Act, 1996.

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Only if the agreement of the parties is construed to provide forthe “seat”/”place” of arbitration being in India — would Part I ofthe Arbitration Act, 1996 be applicable. If the agreement is heldFto provide for a “seat”/”place” outside India, Part I would beinapplicable to the extent inconsistent with the arbitration law ofthe seat, even if the agreement purports to provide that theArbitration Act, 1996 shall govern the arbitration proceedings.”

12. As pointed out earlier, Section 2(1)(e) of the Act defines the“Court” with reference to the term “subject-matter of the suit”. As perGSection 2(1)(e) of the Act, if the “subject-matter of the suit” is situatedwithin the arbitral jurisdiction of two or more courts, the parties canagree to confine the jurisdiction in one of the competent courts. In para(96) of BALCO, the Supreme Court held that the term “subject-matter”

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in Section 2(1)(e) of the Act is to identify the court having supervisorycontrol over the arbitral proceedings. The Supreme Court held that theprovisions in Section 2(1)(e) of the Act has to be read in conjunctionwith Section 20 of the Act which give recognition to the autonomy of theparties as to “place of arbitration”. The observations in para No. (96) inBALCO pertaining to arbitrations governed by Part-I of the Act i.e. wherethe “place of arbitration” in India read as under:-

“96. …….We are of the opinion, the term “subject-matter ofthe arbitration” cannot be confused with “subject-matter ofthe suit”. The term “subject-matter” in Section 2(1)(e) is confinedto Part I. It has a reference and connection with the process ofdispute resolution. Its purpose is to identify the courts havingsupervisory control over the arbitration proceedings. Hence, itrefers to a court which would essentially be a court of the seat ofthe arbitration process. In our opinion, the provision in Section2(1)(e) has to be construed keeping in view the provisions inSection 20 which give recognition to party autonomy. Acceptingthe narrow construction as projected by the learned counsel forthe appellants would, in fact, render Section 20 nugatory. In ourview, the legislature has intentionally given jurisdiction to two courtsi.e. the court which would have jurisdiction where the cause ofaction is located and the courts where the arbitration takes place.This was necessary as on many occasions the agreement mayprovide for a seat of arbitration at a place which would be neutralto both the parties. Therefore, the courts where the arbitrationtakes place would be required to exercise supervisory control overthe arbitral process. For example, if the arbitration is held in Delhi,where neither of the parties are from Delhi, (Delhi having beenchosen as a neutral place as between a party from Mumbai andthe other from Kolkata) and the tribunal sitting in Delhi passes aninterim order under Section 17 of the Arbitration Act, 1996, theappeal against such an interim order under Section 37 must lie tothe courts of Delhi being the courts having supervisory jurisdictionover the arbitration proceedings and the tribunal. This would beirrespective of the fact that the obligations to be performed underthe contract were to be performed either at Mumbai or at Kolkata,and only arbitration is to take place in Delhi. In such circumstances, AB

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Aboth the courts would have jurisdiction i.e. the court within whosejurisdiction the subject-matter of the suit is situated and the courtswithin the jurisdiction of which the dispute resolution i.e. arbitrationis located.”

The above observations in para No. (96) is in the context that onBmany occasions, agreement may provide for a seat of arbitration at aplace which would be neutral to both the parties. In such circumstances,it was observed that the two courts would have jurisdiction that is thecourt within whose jurisdiction “subject-matter” of the suit is situatedand the court within the jurisdiction of which the dispute resolution i.e.the “venue” of arbitration is located.C

13. As per Section 20 of the Act, parties are free to agree on theplace of arbitration. Party autonomy has to be construed in the contextof parties choosing a court which has jurisdiction out of two or morecompetent courts having jurisdiction. This has been made clear in thethree-Judges Bench decision in Swastik Gases (P) Ltd. v. Indian OilDCorpn. Ltd. (2013) 9 SCC 32. In the said case, respondent-Indian OilCorporation Limited appointed M/s. Swastik Gases (P) Ltd. situated atJaipur, Rajasthan as their consignment agent. The dispute arose betweenthe parties as huge quantity of stock of lubricants could not be sold bythe applicant and they could not be resolved amicably. In the said matter,Eclause 18 of the agreement between the parties provided that theagreement shall be subject to the jurisdiction of the courts at Kolkata.The appellant-Swastik invoked clause 18 – arbitration clause and filedapplication under Section 11(6) of the Act before the Rajasthan HighCourt for appointment of arbitrator. The respondent contested theapplication made by Swastik inter alia by raising the plea of lack ofFterritorial jurisdiction of the Rajasthan High Court in the matter. Theplea of Indian Oil Corporation was that the agreement has been madesubject to jurisdiction of the courts at Kolkata and Rajasthan High Courtlacks the territorial jurisdiction in dealing with the application under Section11(6) of the Act. The designated judge held that Rajasthan High CourtGdid not have territorial jurisdiction to entertain the application underSection 11(6) of the Act and gave liberty to Swastik to file the arbitrationapplication in Calcutta High Court which order came to be challengedbefore the Supreme Court. Pointing out that the words like “alone”,“only”, “exclusive” or “exclusive jurisdiction” have not been used in the agreement and use of such words is not decisive and non-use of suchwords does not make any material difference as to the intention of theparties by having clause 18 of the agreement that the courts at Kolkatashall have the jurisdiction, the Supreme Court held as under:- “31. In the instant case, the appellant does not dispute that partof cause of action has arisen in Kolkata. What appellant says isthat part of cause of action has also arisen in Jaipur and, therefore,the Chief Justice of the Rajasthan High Court or the designateJudge has jurisdiction to consider the application made by theappellant for the appointment of an arbitrator under Section 11.Having regard to Section 11(12)(b) and Section 2(e) of the 1996Act read with Section 20(c) of the Code, there remains no doubtthat the Chief Justice or the designate Judge of the RajasthanHigh Court has jurisdiction in the matter. The question is, whetherparties by virtue of Clause 18 of the agreement have agreed toexclude the jurisdiction of the courts at Jaipur or, in other words,whether in view of Clause 18 of the agreement, the jurisdiction ofthe Chief Justice of the Rajasthan High Court has been excluded?

32. For answer to the above question, we have to see the effectof the jurisdiction clause in the agreement which provides that theagreement shall be subject to jurisdiction of the courts at Kolkata.It is a fact that whilst providing for jurisdiction clause in theagreement the words like “alone”, “only”, “exclusive” or “exclusivejurisdiction” have not been used but this, in our view, is not decisiveand does not make any material difference. The intention of theparties—by having Clause 18 in the agreement—is clear andunambiguous that the courts at Kolkata shall have jurisdiction whichmeans that the courts at Kolkata alone shall have jurisdiction. It isso because for construction of jurisdiction clause, like Clause 18in the agreement, the maximexpressio unius est exclusio alteriuscomes into play as there is nothing to indicate to the contrary.This legal maxim means that expression of one is the exclusion ofanother. By making a provision that the agreement is subject tothe jurisdiction of the courts at Kolkata, the parties have impliedlyexcluded the jurisdiction of other courts.Where the contractspecifies the jurisdiction of the courts at a particular place andsuch courts have jurisdiction to deal with the matter, we think that A

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an inference may be drawn that parties intended to exclude allother courts. A clause like this is not hit by Section 23 of theContract Act at all. Such clause is neither forbidden by law nor itis against the public policy. It does not offend Section 28 of theContract Act in any manner.

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33. The above view finds support from the decisions of this Courtin Hakam Singh v. Gammon India Limited (1971) 1 SCC 286,A.B.C. Laminart Private Limited v. A.B.C. Agencies (1989) 2SCC 163, R.S.D.V. Finance Corporation Private Limited v. ShreeVallabh Glass Works Limited (1993) 2 SCC 130, AngileInsulations v. Davy Ashomore India Limited (1995) 4 SCC 153,Shriram City Union Finance Corporation Limited v. RamaMishra (2002) 9 SCC 613, Hanil Era Textiles Limited v.Puromatic Filters Private Limited (2004) 4 SCC 671 and BalajiCoke Industry Private Limited v. Maa Bhagwati Coke GujaratPrivate Limited (2009) 9 SCC 403.” [underlining added]

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14. In Swastik, the Supreme Court held that clause like (18) ofthe agreement will not be hit by Section 23 of the Contract Act and it isnot forbidden by law nor it is against public policy. It was so held that asper Section 20 of the Act, parties are free to choose the place of arbitration.This “party autonomy” has to be construed in the context of choosing aEcourt out of two or more courts having competent jurisdiction underSection 2(1)(e) of the Act.

15. The inter-play between “Seat” and “place of arbitration” cameup for consideration in the case of Indus Mobile Distribution (P) Ltd.v. Datawind Innovations (P) Ltd. and others (2017) 7 SCC 678.FAfter referring to BALCO, Enercon (India) Limited and others v.Enercon GMBH and another (2014) 5 SCC 1 and Reliance IndustriesLimited and another v. Union of India (2014) 7 SCC 603 and alsoamendment to the Act pursuant to the Law Commission Report, speakingfor the Bench Justice Nariman held as under:- “18. The amended Act, does not, however, contain the aforesaidamendments, presumably because the BALCO (2012) 9 SCC 552judgment in no uncertain terms has referred to “place” as “juridicalseat” for the purpose of Section 2(2) of the Act. It further madeit clear that Sections 20(1) and 20(2) where the word “place” is G

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used, refers to “juridical seat”, whereas in Section 20(3), the word“place” is equivalent to “venue”. This being the settled law, it wasfound unnecessary to expressly incorporate what the ConstitutionBench of the Supreme Court has already done by way ofconstruction of the Act.

19. A conspectus of all the aforesaid provisions shows that themoment the seat is designated, it is akin to an exclusive jurisdictionclause. On the facts of the present case, it is clear that the seat ofarbitration is Mumbai and Clause 19 further makes it clear thatjurisdiction exclusively vests in the Mumbai courts. Under the LawofArbitration, unlike the Code of Civil Procedure which appliesto suits filed in courts, a reference to “seat” is a concept by whicha neutral venue can be chosen by the parties to an arbitrationclause. The neutral venue may not in the classical sense havejurisdiction — that is, no part of the cause of action may havearisen at the neutral venue and neither would any of the provisionsof Sections 16 to 21 of CPC be attracted. In arbitration lawhowever, as has been held above, the moment “seat” is determined,the fact that the seat is at Mumbai would vest Mumbai courtswith exclusive jurisdiction for purposes of regulating arbitralproceedings arising out of the agreement between the parties.

20. It is well settled that where more than one court has jurisdiction,it is open for the parties to exclude all other courts. For anexhaustive analysis of the case law, see Swastik Gases (P) Ltd.v. Indian Oil Corpn. Ltd. (2013) 9 SCC 32 This was followed ina recent judgment in B.E. Simoese Von Staraburg Niedenthal v.Chhattisgarh Investment Ltd. (2015) 12 SCC 225 Having regardto the above, it is clear that Mumbai courts alone have jurisdictionto the exclusion of all other courts in the country, as the juridicalseat of arbitration is at Mumbai. This being the case, the impugnedjudgment is set aside. …...” [underlining added]

16. Where the contract specifies the jurisdiction of the court at aparticular place, only such court will have the jurisdiction to deal with thematter and parties intended to exclude all other courts. In the presentcase, the parties have agreed that the “venue” of arbitration shall be atBhubaneswar. Considering the agreement of the parties having A

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ABhubaneswar as the venue of arbitration, the intention of the parties isto exclude all other courts. As held in Swastik, non-use of words like“exclusive jurisdiction”, “only”, “exclusive”, “alone” is not decisive anddoes not make any material difference.

17. When the parties have agreed to have the “venue” ofBarbitration at Bhubaneswar, the Madras High Court erred in assumingthe jurisdiction under Section 11(6) of the Act. Since only Orissa HighCourt will have the jurisdiction to entertain the petition filed under Section11(6) of the Act, the impugned order is liable to be set aside.

18. In the result, the impugned order of the Madras High Court inCOP No.398 of 2018 dated 02.11.2018 is set aside and this appeal isallowed. The parties are at liberty to approach the Orissa High Courtseeking for appointment of the arbitrator.

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Appeal allowed.

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