Vasudev Garg and Ors. Vs. Embassy Commercial Projects (Whitefield) Private Limited and Ors. - (High Court of Delhi) (31 Oct 2023)

Principles of Section 20 of CPC do not apply to the arbitration proceedings

MANU/DE/7309/2023

Arbitration

Present petition is filed by the Petitioner under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim relief from this Court to restrain the Respondents from carrying out any construction/development activity based on the illegal Modified Development Plan dated 27th October, 2022; unilateral appointment of Alotech as Co-developer; unilateral amendment of development schedule and budget of Whitefield project and doing anything which shall be detrimental to the interests of both the Petitioners and the project.

The facts show Mumbai is indicated as a place of arbitration in Clause 17.1 of agreement. It does not say Mumbai and Delhi, both shall be the places of arbitration, hence there is no confusion qua the place of arbitration. Further, there is no contrary indicator in the agreement that any other place other than Mumbai shall have the jurisdiction in case of arbitration. Interestingly, clause 21.3 is made subject to clause 17.1. Thus, even if there is conflict amongst clauses 17.1 and 21.3; then clause 17.1 shall prevail. Clause 17.1 is in line with Section 20(1) of the Arbitration and Conciliation Act, hence there is no chance of any misunderstanding.

The crux is when as per clause 17.1,the parties have agreed to conduct arbitration as per SIAC at Mumbai, then their intention to designate Mumbai as a seat of arbitration is evident from clause 17.1; reinforced as per clause 21.3. There exists no contrary indication to designate any other seat of arbitration. The cause of action has no relevance in the facts and circumstances and hence only the Courts at Mumbai shall have supervisory jurisdiction.

In Talwar Auto Garages Private Limited vs. VE Commercial Vehicles Limited, it was held only such Courts shall have the jurisdiction under Section 11 of Arbitration and Conciliation Act where the seat of arbitration is located.

Therefore, to conclude, Clause 21.3, cannot be construed to infer any intention that Delhi also, apart from Mumbai, was meant to be seat of arbitration. It is now a settled law that principles of Section 20 of Code of Civil Procedure, 1908 (CPC) do not apply to the arbitration proceedings, hence accrual of cause of action, howsoever trivial or significant, would not make Delhi a seat of arbitration.The petition lacks Delhi jurisdiction and is thus liable to be dismissed.

Tags : JURISDICTION CLAUSE APPLICABILITY