BBR (INDIA) PRIVATE LIMITED VS S.P. SINGLA CONSTRUCTIONS PRIVATE LIMITED

BBR (INDIA) PRIVATE LIMITED VS S.P. SINGLA CONSTRUCTIONS PRIVATE LIMITED


Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले


REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
 CIVIL APPEAL NOS. 4130-4131 OF 2022
(ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NOS. 30019-30020 OF 2019)
BBR (INDIA) PRIVATE LIMITED ..... APPELLANT
VERSUS
S.P. SINGLA CONSTRUCTIONS
PRIVATE LIMITED ..... RESPONDENT
J U D G M E N T
SANJIV KHANNA, J.
Leave granted.
2. The short and interesting issue which arises in the present
appeals is – whether conducting the arbitration proceedings at
Delhi, owing to the appointment of a new arbitrator,1
 would shift
the ‘jurisdictional seat of arbitration’ from Panchkula in Haryana,
the place fixed by the first arbitrator2
 for the arbitration
proceedings?
3. Before we refer to the statutory provisions and the case law
precedents, facts in brief, relevant to decide the aforesaid
1 Mr. Justice (Retd) T.S. Doabia
2 Mr. Justice (Retd.) N.C. Jain
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 1 of 28
question, are required to be stated. The appellant – BBR (India)
Private Limited, and the respondent – S.P. Singla Constructions
Private Limited, had entered into a contract dated 30th June 2011,
under which the appellant was required to supply, install and
undertake stressing of cable strays for the 592 metre long cable
stay bridge being constructed by the respondent over the river
Ravi at Basouli, Jammu and Kashmir. Letter of intent dated 30th
June 2011 issued under the contract had an arbitration clause for
resolution of disputes by a sole arbitrator, which reads thus:
“Dispute Resolution and Arbitration
Save where the decision of the contractor is final and
binding on the subcontract any dispute difference
arising between the contractor and sub-contractor
relating to any matter. In first instance shall be
attempted to be resolved by the arbitration of the sole
arbitrator to be appointed by the managing director of
S.P. Singla Constructions Pvt. Ltd.
This letter of intent is being issued to you in two
original you are requested return one original duty
signed in token of your acceptance, which shall
constitute a valid agreement for the work till such time
a formal agreement is signed between you and us.”
4. The arbitration clause is silent and does not stipulate the seat or
venue of arbitration. The contract and letter of intent were
executed at Panchkula in Haryana. The corporate office of the
respondent is also located at Panchkula. However, the registered
office of the appellant is located in Bengaluru, Karnataka.
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 2 of 28
5. As disputes arose between the parties, the matter was referred to
arbitration, and Mr. Justice (Retd.) N.C. Jain was appointed as the
sole arbitrator. In the first sitting held on 5th August 2014, the
arbitral tribunal held that the venue of the proceedings would be
H.No. 292, Sector-6, Panchkula, Haryana. The respondent was
not present at the proceedings and had submitted a written
request for an adjournment, which request was accepted. Neither
party had objected to the place of arbitration proceedings as fixed
by the arbitral tribunal. Arbitration proceedings were thereafter
held at H.No. 52, Sector-8A, Chandigarh, on 16th December 2014,
where the parties were directed to complete the pleadings, and
the matter was adjourned for the framing of issues on 22nd
February 2015. In the proceedings held on 29th May 2015, Mr.
Justice (Retd.) N.C. Jain recused recording that he did not want to
continue as the arbitrator for personal reasons. The records
received thus far would be handed over to the new arbitrator.
Pleadings were completed by then.
6. Thereupon, Mr. Justice (Retd.) T.S. Doabia took over as the sole
arbitrator and recorded his consent in this regard in the first
procedural order dated 30th June 2015. The order stated that the
venue of the proceedings would be Delhi. Apparently, the
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 3 of 28
appellant was not present and accordingly, the respondent was
directed by the arbitral tribunal to take steps to intimate the
appellant.
7. The next order dated 18th July 2015 mentions that the parties had
filed the claim petition and the statement of defence along with the
counterclaim before Mr. Justice (Retd.) N.C. Jain. Rejoinder had
also been filed before the previous arbitrator. The parties were
directed to file their evidence by way of affidavits for which
timelines were fixed. The records from the previous arbitrator were
required to be collected by the respondent and placed before the
new arbitrator.
8. Thereafter, hearings were held, witnesses were cross-examined,
and the arguments were addressed by the parties at Delhi. The
order dated 22nd January 2016, states that the award would be
pronounced on 29th January 2016 at the address at New Delhi and
that the parties should send their representatives, failing which,
the award would be sent by email followed by a signed copy
through post.
9. The award was signed and pronounced at Delhi on 29th January
2016, whereunder the respondent was awarded a sum of
Rs.3,35,86,577/- with interest at the rate of 15% per annum.
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 4 of 28
10. Thereafter, two proceedings were initiated. The respondent filed
an application for interim orders under Section 93
 of the Arbitration
and Conciliation Act, 19964
 before the Additional District Judge,
Panchkula, on 7th May 2016. The appellant filed a petition under
Section 345
 of the Act before the Delhi High Court on 28th April
3 9. Interim measures, etc., by Court.—
(1) A party may, before or during arbitral proceedings or at any time after the making of the
arbitral award but before it is enforced in accordance with section 36, apply to a court—
(i) for the appointment of a guardian for a minor or person of unsound mind for the purposes
of arbitral proceedings; or
(ii) for an interim measure of protection in respect of any of the following matters, namely:—
(a) the preservation, interim custody or sale of any goods which are the subject-matter of the
arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subjectmatter of the dispute in arbitration, or as to which any question may arise therein and authorising for
any of the aforesaid purposes any person to enter upon any land or building in the possession of any
party, or authorising any samples to be taken or any observation to be made, or experiment to be
tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the Court to be just and
convenient, and the Court shall have the same power for making orders as it has for the purpose of,
and in relation to, any proceedings before it.
(2) Where, before the commencement of the arbitral proceedings, a Court passes an order
for any interim measure of protection under sub-section (1), the arbitral proceedings shall be
commenced within a period of ninety days from the date of such order or within such further time as
the Court may determine.
(3) Once the arbitral tribunal has been constituted, the Court shall not entertain an
application under sub-section (1), unless the Court finds that circumstances exist which may not
render the remedy provided under section 17 efficacious.
4 For short, “the Act”.
5 34. Application for setting aside arbitral award.—
(1) Recourse to a Court against an arbitral award may be made only by an application for
setting aside such award in accordance with sub-section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if—
(a) the party making the application furnishes proof that—
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it
or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an
arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms
of the submission to arbitration, or it contains decisions on matters beyond the scope of the
submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be
separated from those not so submitted, only that part of the arbitral award which contains decisions
on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance
with the agreement of the parties, unless such agreement was in conflict with a provision of this Part
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 5 of 28
2016. Thus, the appellant and respondent invoked the jurisdiction
of two different courts. Resultantly, the question of the
‘jurisdictional seat of arbitration’ assumes importance, which must
be appropriately answered.
11. The petition filed by the respondent under Section 9 of the Act
before the Additional District Judge, Panchkula, was dismissed
vide order dated 14th December 2016, on the ground of lack of
territorial jurisdiction, inter alia, recording that the jurisdiction to
from which the parties cannot derogate, or, failing such agreement, was not in accordance with this
Part; or
(b) the Court finds that—
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law
for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1.—For the avoidance of any doubt, it is clarified that an award is in conflict with
the public policy of India, only if,—
(i) the making of the award was induced or affected by fraud or corruption or was in violation
of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.—For the avoidance of doubt, the test as to whether there is a contravention
with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial
arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent
illegality appearing on the face of the award: Provided that an award shall not be set aside merely on
the ground of an erroneous application of the law or by reappreciation of evidence.
(3) An application for setting aside may not be made after three months have elapsed from
the date on which the party making that application had received the arbitral award or, if a request
had been made under section 33, from the date on which that request had been disposed of by the
arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient
cause from making the application within the said period of three months it may entertain the
application within a further period of thirty days, but not thereafter.
(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate
and it is so requested by a party, adjourn the proceedings for a period of time determined by it in
order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such
other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral
award
(5) An application under this section shall be filed by a party only after issuing a prior notice
to the other party and such application shall be accompanied by an affidavit by the applicant
endorsing compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any event,
within a period of one year from the date on which the notice referred to in sub-section (5) is served
upon the other party.
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 6 of 28
entertain the application vests solely with the Delhi High Court,
where a prior petition under Section 34 had been filed, and was
pending. The petition under Section 9, being a subsequent
petition, would be barred under Section 42 of the Act.
12. However, this order has been set aside by the High Court of
Punjab and Haryana vide order dated 14th October 2019, with the
finding that the courts of Delhi do not have the jurisdiction to
entertain the objections under Section 34 of the Act. To this effect,
the High Court of Punjab and Haryana has recorded that the
agreement between the parties was silent as to ‘the seat’ of the
arbitration proceedings, and the second arbitrator Mr. Justice
(Retd.) T.S. Doabia, vide his first order dated 30th June 2015, had
not determined Delhi to be the ‘seat of arbitration’. Relying on the
decision of this Court in State of West Bengal and Others v.
Associated Contractors,
6
 the High Court held that the courts at
Panchkula had jurisdiction to deal with the case. The review
application filed by the appellant was dismissed vide order dated
8
th November 2019.
13. These orders, passed by the High Court of Punjab and Haryana,
have been assailed before us by the appellant in these appeals.
6 (2015) 1 SCC 32
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 7 of 28
By order dated 9th January 2020, notice was issued in the present
appeals.
14. Section 2 (1) (e) of the Act, which defines the term ‘court’; Section
20 on the ‘place of arbitration’; as well as Section 42 read thus:
“2. Definitions.—(1) In this Part, unless the context
otherwise requires,—
xx xx xx
(e) “Court” means— (i) in the case of an arbitration
other than international commercial arbitration, the
principal Civil Court of original jurisdiction in a district,
and includes the High Court in exercise of its ordinary
original civil jurisdiction, having jurisdiction to decide
the questions forming the subject-matter of the
arbitration if the same had been the subject-matter of
a suit, but does not include any Civil Court of a grade
inferior to such principal Civil Court, or any Court of
Small Causes;”
xx xx xx
“20. (1) The parties are free to agree on the place of
arbitration.
(2) Failing any agreement referred to in sub-section
(1), the place of arbitration shall be determined by the
arbitral tribunal having regard to the circumstances of
the case, including the convenience of the parties.
(3) Notwithstanding sub-section (1) or sub-section (2),
the arbitral tribunal may, unless otherwise agreed by
the parties, meet at any place it considers appropriate
for consultation among its members, for hearing
witnesses, experts or the parties, or for inspection of
documents, goods or other property.
xx xx xx
42. Jurisdiction.— Notwithstanding anything contained
elsewhere in this Part or in any other law for the time
being in force, where with respect to an arbitration
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 8 of 28
agreement any application under this Part has been
made in a Court, that Court alone shall have
jurisdiction over the arbitral proceedings and all
subsequent applications arising out of that agreement
and the arbitral proceedings shall be made in that
Court and in no other Court.”
15. Interpretation of the term ‘court’, as defined in sub-clause (e) to
sub-section (1) of Section 2 of the Act, had come up for
consideration before a Constitutional Bench of five Judges in the
case of Bhartiya Aluminium Company v. Kaiser Aluminium
Technical Services Inc,
7
 which decision had examined the
distinction between ‘jurisdictional seat’ and ‘venue’ in the context
of international arbitration, to hold that the expression ‘seat of
arbitration’ is the centre of gravity in arbitration. However, this
does not mean that all arbitration proceedings must take place at
‘the seat’. The arbitrators at times hold meetings at more
convenient locations. Regarding the expression ‘court’, it was
observed that Section 2(2) of the Act does not make Part-I
applicable to arbitrations seated outside India. The expressions
used in Section 2(2)8
 of the Act do not permit an interpretation to
hold that Part-I would also apply to arbitrations held outside the
7 (2012) 9 SCC 552; BALCO case, for short.
8 See paragraph 20 below. By Act 3 of 2016 proviso to Section 2(2) of the Act has been inserted with
retrospective effect from 23rd October 2015, and the provision as substituted/ameded by Act 33 of
2019 for clause(a), now reads-
“(2) This Part shall apply where the place of arbitration is in India:
Provided that subject to an agreement to the contrary, the provisions of sections 9,
27 and clause (b) of sub-section (1) and sub-section (3) of section 37 shall also apply to
international commercial arbitration, even if the place of arbitration is outside India, and an
arbitral award made or to be made in such place is enforceable and recognised under the
provisions of Part II of this Act.”
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 9 of 28
territory of India. Noticing the above interpretation, a three Judges
Bench of this Court in BGS SGS Soma JV v. NHPC Limited9 has
observed that the expression ‘subject to arbitration’ used in clause
(e) to sub-section (1) of Section 2 of the Act cannot be confused
with the ‘subject matter of the suit’. The term ‘subject matter of the
suit’ in the said provision is confined to Part-I. The purpose of the
clause is to identify the courts having supervisory control over the
judicial proceedings. Hence, the clause refers to a court which
would be essentially a court of ‘the seat’ of the arbitration process.
Accordingly, clause (e) to sub-section (1) of Section 2 has to be
construed keeping in view the provisions of Section 20 of the Act,
which are, in fact, determinative and relevant when we decide the
question of ‘the seat of an arbitration’. This interpretation
recognises the principle of ‘party autonomy’, which is the edifice of
arbitration. In other words, the term ‘court’ as defined in clause (e)
to sub-section (1) of Section 2, which refers to the ‘subject matter
of arbitration’, is not necessarily used as finally determinative of
the court's territorial jurisdiction to entertain proceedings under the
Act. In BGS SGS Soma (supra), this Court observed that any
other construction of the provisions would render Section 20 of the
Act nugatory. In view of the Court, the legislature had given
9 (2020) 4 SCC 224
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 10 of 28
jurisdiction to two courts: the court which should have jurisdiction
where the cause of action is located; and the court where the
arbitration takes place. This is necessary as, on some occasions,
the agreement may provide the ‘seat of arbitration’ that would be
neutral to both the parties. The courts where the arbitration takes
place would be required to exercise supervisory control over the
arbitral process. The ‘seat of arbitration’ need not be the place
where any cause of action has arisen, in the sense that the ‘seat
of arbitration may be different from the place where obligations
are/had to be performed under the contract. In such
circumstances, both the courts should have jurisdiction, viz., the
courts within whose jurisdiction ‘the subject matter of the suit’ is
situated and the courts within whose jurisdiction the dispute
resolution forum, that is, where the arbitral tribunal is located.
16. Turning to Section 20 of the Act, sub-section (1) in clear terms
states that the parties can agree on the place of arbitration. The
word ‘free’ has been used to emphasise the autonomy and
flexibility that the parties enjoy to agree on a place of arbitration
which is unrestricted and need not be confined to the place where
the ‘subject matter of the suit’ is situated. Sub-section (1) to
Section 20 gives primacy to the agreement of the parties by which
they are entitled to fix and specify ‘the seat of arbitration’, which
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 11 of 28
then, by operation of law, determines the jurisdictional court that
will, in the said case, exercise territorial jurisdiction. Sub-section
(2) comes into the picture only when the parties have not agreed
on the place of arbitration as ‘the seat’.10 In terms of sub-section
(2) of Section 20 the arbitral tribunal determines the place of
arbitration. The arbitral tribunal, while doing so, can take into
regard the circumstances of the case, including the convenience
of the parties. Sub-section (3) of Section 20 of the Act enables the
arbitral tribunal, unless the parties have agreed to the contrary, to
meet at any place to conduct hearing at a place of convenience in
matters, such as consultation among its members, for the
recording of witnesses, experts or hearing parties, inspection of
documents, goods, or property.
17. Relying upon the Constitutional Bench decision in BALCO
(supra), in BGS SGS Soma (supra), it has been held that subsection (3) of Section 20 refers to ‘venue’ whereas the ‘place’
mentioned in sub-section (1) and sub-section (2) refers to the
‘jurisdictional seat’. To explain the difference, in BALCO (supra), a
case relating to international arbitration, reference was made to
several judgments, albeit the judgment in Shashoua v. Sharma11
10 Section 20(2) also applies when ‘the seat’ as mentioned in the agreement is only a convenient
venue.
11 (2009) EWHC 957 (Comm.)
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 12 of 28
was extensively quoted to observe that an agreement as to the
‘seat of arbitration’ draws in the law of that country as the curial
law and is analogous to an exclusive jurisdiction clause.12 The
parties that have agreed to ‘the seat’ must challenge an interim or
final award only in the courts of the place designated as the ‘seat
of arbitration’. In other words, the choice of the ‘seat of arbitration’
must be the choice of a forum/court for remedies seeking to attack
the award.
18. The aforesaid principles relating to international arbitration have
been applied to domestic arbitrations. In this regard, we may refer
to paragraph 38 of BGS SGS Soma (supra), which reads as
under:
“38. A reading of paras 75, 76, 96, 110, 116, 123 and
194 of BALCO would show that where parties have
selected the seat of arbitration in their agreement,
such selection would then amount to an exclusive
jurisdiction clause, as the parties have now indicated
that the courts at the “seat” would alone have
jurisdiction to entertain challenges against the arbitral
award which have been made at the seat. The
example given in para 96 buttresses this proposition,
and is supported by the previous and subsequent
paragraphs pointed out hereinabove.
The BALCO judgment, when read as a whole, applies
the concept of “seat” as laid down by the English
judgments (and which is in Section 20 of the
Arbitration Act, 1996), by harmoniously construing
Section 20 with Section 2(1)(e), so as to broaden the
definition of “court”, and bring within its ken courts of
the “seat” of the arbitration.”
12 Court of appeal decision in C v. D, 2007 EWCA Civ 1282 (CA).
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 13 of 28
19. The Court in BGS SGS Soma (supra), then proceeded to
examine the contention whether paragraph 96 of BALCO (supra),
which speaks of concurrent jurisdiction of the courts, that is, the
jurisdiction of courts where the cause of action has arisen wholly
or partly, and the courts within the jurisdiction in which the dispute
resolution forum – arbitration is located, to observe and elucidate
the legal position:
“40. Para 96 of BALCO case is in several parts. First
and foremost, Section 2(1)(e), which is the definition of
“court” under the Arbitration Act, 1996 was referred to,
and was construed keeping in view the provisions in
Section 20 of the Arbitration Act, 1996, which give
recognition to party autonomy in choosing the seat of
the arbitration proceedings. Secondly, the Court went
on to state in two places in the said paragraph that
jurisdiction is given to two sets of courts, namely, those
courts which would have jurisdiction where the cause
of action is located; and those courts where the
arbitration takes place. However, when it came to
providing a neutral place as the “seat” of arbitration
proceedings, the example given by the five-Judge
Bench made it clear that appeals under Section 37 of
the Arbitration Act, 1996 against interim orders passed
under Section 17 of the Arbitration Act, 1996 would lie
only to the courts of the seat — which is Delhi in that
example — which are the courts having supervisory
control, or jurisdiction, over the arbitration
proceedings. The example then goes on to state that
this would be irrespective of the fact that the
obligations to be performed under the contract, that is
the cause of action, may arise in part either at Mumbai
or Kolkata. The fact that the arbitration is to take place
in Delhi is of importance. However, the next sentence
in the said paragraph reiterates the concurrent
jurisdiction of both courts”.
20. BGS SGS Soma (supra) extensively refers to the judgment of this
Court in Indus Mobile Distribution Private Limited v. Datawind
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 14 of 28
Innovations Private Limited and Others,
13 which decision refers
to the legislative history of Section 2(1)(e) and Section 20 of the
Act and the recommendations of the 246th Law Commission
Report, 2014. These recommendations, it is observed, were not
implemented in consonance with the decision in BALCO (supra),
which, in no uncertain terms, refers to the ‘place’ as the
‘jurisdictional seat’ for the purpose of clause (e) to sub-section (2)
of Section 2 of the Act. This judgment was subsequently followed
in Brahmani River Pellets Limited v. Kamachi Industries
Limited.
14 It may, however, be noted that clause (e) to sub-section
(1) of Section 2 was amended by inserting sub-clause (ii)15 with
the specific objective to solve the problem of conflict of jurisdiction
that would arise in cases where interim measures are sought in
India in cases of arbitration seated outside India. In the context of
domestic arbitrations it must be held that once the ‘seat of
arbitration’ has been fixed, then the courts at the said location
alone will have exclusive jurisdiction to exercise the supervisory
powers over the arbitration. The courts at other locations would
not have jurisdiction, including the courts where cause of action
13 (2017) 7 SCC 678
14 (2020) 5 SCC 462
15 (ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary
original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the
arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having
jurisdiction to hear appeals from decrees of courts subordinate to that High Court;
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 15 of 28
has arisen. As observed above and held in BGS SGS Soma
(supra), and Indus Mobile (supra),16 the moment the parties by
agreement designate ‘the seat’, it becomes akin to an exclusive
jurisdiction clause. It would then vest the courts at ‘the seat’ with
exclusive jurisdiction to regulate arbitration proceedings arising
out of the agreement between the parties.
21. The Court in BGS SGS Soma (supra) has also dealt with the
situation where the parties have not agreed on or have not fixed
the jurisdictional ‘seat of arbitration’, and has laid down the
following test to determine the ‘seat of arbitration’ which would
determine the location of the court that would exercise supervisory
jurisdiction. The test is simple and reads:
“61. It will thus be seen that wherever there is an
express designation of a “venue”, and no designation
of any alternative place as the “seat”, combined with a
supranational body of rules governing the arbitration,
and no other significant contrary indicia, the inexorable
conclusion is that the stated venue is actually the
juridical seat of the arbitral proceeding.”
For formulating the test reference was made to several
Indian and foreign judgments to emphasise that where the parties
had failed to choose the ‘jurisdictional seat’17 which would be
16 In Indus Mobile Distribution (P) Ltd., the Court after clearing the air on the meaning of Section 20
of the Arbitration Act, 1996 made it clear that the moment a seat is designated by agreement
between the parties, it is akin to an exclusive jurisdiction clause, which would then vest the courts at
the “seat” with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the
agreement between the parties.
17 BGS SGS Soma (supra) case also examines and explains case law where the courts have held
that so called ‘seat’ mentioned in the agreement is convenient ‘venue’ an aspect with which we are
not concerned in the present case.
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 16 of 28
governing the arbitral proceedings, the proceedings must be
considered at any rate prima facie as being governed and subject
to jurisdiction of the court where the arbitration is being held, on
the ground that the said court is most likely to be connected with
the proceedings.18 Accordingly, in BGS SGS Soma (supra), the
law as applicable, where the parties by agreement have not fixed
the jurisdictional ‘seat’, is crystallised as under:
“82. On a conspectus of the aforesaid judgments, it
may be concluded that whenever there is the
designation of a place of arbitration in an arbitration
clause as being the “venue” of the arbitration
proceedings, the expression “arbitration proceedings”
would make it clear that the “venue” is really the “seat”
of the arbitral proceedings, as the aforesaid
expression does not include just one or more
individual or particular hearing, but the arbitration
proceedings as a whole, including the making of an
award at that place. This language has to be
contrasted with language such as “tribunals are to
meet or have witnesses, experts or the parties” where
only hearings are to take place in the “venue”, which
may lead to the conclusion, other things being equal,
that the venue so stated is not the “seat” of arbitral
proceedings, but only a convenient place of meeting.
Further, the fact that the arbitral proceedings “shall be
held” at a particular venue would also indicate that the
parties intended to anchor arbitral proceedings to a
particular place, signifying thereby, that that place is
the seat of the arbitral proceedings. This, coupled with
there being no other significant contrary indicia that
the stated venue is merely a “venue” and not the
“seat” of the arbitral proceedings, would then
conclusively show that such a clause designates a
“seat” of the arbitral proceedings. In an international
context, if a supranational body of rules is to govern
the arbitration, this would further be an indicia that “the
venue”, so stated, would be the seat of the arbitral
proceedings. In a national context, this would be
18 See the principle culled out by Dicey and Morris on the Conflict of Laws, 11th Edition.
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 17 of 28
replaced by the Arbitration Act, 1996 as applying to the
“stated venue”, which then becomes the “seat” for the
purposes of arbitration.”
22. BGS SGS Soma (supra) also refers to decision of this Court in
Union of India v. Hardy Exploration and Production (India)
Inc.,
19
 which had held that the choice of the venue of arbitration did
not imply that it had become the ‘seat of arbitration’ and that the
venue could not by itself assume the status of ‘the seat’; instead a
venue could become ‘the seat’ only if “something else is added to it
as a concomitant”. According to BGS SGS Soma (supra), the
reasoning given in Hardy Exploration (supra) is per incuriam as it
contradicts the ratio and law laid down in BALCO (supra). Hence,
BGS SGS Soma (supra) holds that it would be correct to hold that
while exercising jurisdiction under sub-section (2) of Section 20 of
the Act, an arbitrator is not to pass a detailed or a considered
decision. The place where the arbitral tribunal holds the arbitration
proceedings would, by default, be the venue of arbitration and
consequently the ‘seat of arbitration’.
23. When we turn to the facts of the present case, if the arbitration
proceedings were held throughout in Panchkula, there would have
been no difficulty in holding that Delhi is not the jurisdictional ‘seat’.
19 (2019) 13 SCC 472 – In this case the parties had not chosen the seat of arbitration and the
arbitral tribunal had also not determined the seat of arbitration. Therefore it was held that the choice
of Kuala Lumpur as the venue of arbitration did not imply that Kuala Lumpur had become the seat of
arbitration.
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 18 of 28
But that was not to be, as on recusal of Mr. Justice (Retd.) N.C.
Jain and post the appointment of Mr. Justice (Retd.) T.S.Doabia
arbitration proceedings were held at Delhi. In the context of the
present case and noticing the first order passed by the arbitral
tribunal on 5th August 2014 stipulating that the place of the
proceedings would be Panchkula in Haryana and in the absence of
other significant indica on application of Section 20(2) of the Act,
the city of Panchkula in Haryana would be the jurisdictional ‘seat’ of
arbitration. As ‘the seat’ was fixed vide the order dated 5th August,
2014, the courts in Delhi would not have jurisdiction.
24. The appellant, however, contends that on the appointment of the
new arbitrator, namely, Mr. Justice (Retd.) T.S. Doabia, and
thereupon the venue being fixed at Delhi, the jurisdictional ‘seat of
arbitration’ had changed from Panchkula in Haryana to Delhi.
Reliance in this regard is placed upon the decision of this Court in
Inox Renewables Ltd v. Jayesh Electricals Ltd.,
20 in which the
‘seat of arbitration’ fixed by the parties was Jaipur, but the courts
at Ahmedabad had entertained the challenge to the award. The
appellant submits that the courts at Ahmedabad had exercised
jurisdiction, which was upheld on the ground that the arbitration
proceedings were conducted in Ahmedabad. Thus the ‘seat of
20 (2019) SCC OnLine SC 2036
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 19 of 28
arbitration’ changed and had got relocated from Jaipur to
Ahmedabad. This, in the context of the decision in Inox
Renewables Ltd (supra), is undoubtedly correct, but the aforesaid
decision cannot be read as a precept in cases governed by subsection (2) of Section 20 of the Act. Inox Renewables (supra) was
a case governed under sub-section (1) of Section 20 of the Act,
that is, where parties by the agreement had fixed the jurisdictional
‘seat’ at Jaipur, Rajasthan, but thereafter, by mutual consent, had
decided to change the venue of proceedings to Ahmedabad prior
to the commencement of the arbitration. This evidently resulted in
the decision of this Court accepting that the jurisdictional ‘seat of
arbitration’ was Ahmedabad. This decision would apply in case the
parties, by consent, agree mutually that the ‘seat of arbitration’
would be located at a particular place. The said exercise would be
in terms of sub-section (1) of Section 20 of the Act, which
endorses and emphasises on party autonomy and choice that
determines the ‘seat of arbitration’. It would not apply when the
arbitrator fixes ‘the seat’ in terms of sub-section (2) of Section 20
of the Act. Once the arbitrator fixes ‘the seat’ in terms of subsection (2) of Section 20 of the Act, the arbitrator cannot change
‘the seat’ of the arbitration, except when and if the parties mutually
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 20 of 28
agree and state that the ‘seat of arbitration’ should be changed to
another location, which is not so in the present case.
25. There are good reasons why we feel that subsequent hearings or
proceedings at a different location other than the place fixed by
the arbitrator as the ‘seat of arbitration’ should not be regarded
and treated as a change or relocation of jurisdictional ‘seat’. This
would, in our opinion, lead to uncertainty and confusion resulting
in avoidable esoteric and hermetic litigation as to the jurisdictional
‘seat of arbitration’. ‘The seat’ once fixed by the arbitral tribunal
under Section 20(2), should remain static and fixed, whereas the
‘venue’ of arbitration can change and move from ‘the seat’ to a
new location. Venue is not constant and stationary and can move
and change in terms of sub-section (3) to Section 20 of the Act.
Change of venue does not result in change or relocation of the
‘seat of arbitration’.
26. It is highly desirable in commercial matters, in fact in all cases,
that there should be certainty as to the court that should exercise
jurisdiction. We do not think the law of arbitration visualises
repeated or constant shifting of the ‘seat of arbitration’. In fact,
sub-section (3) of Section 20 specifically states and draws a
distinction between the venue of arbitration and the ‘seat of
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 21 of 28
arbitration’ by stating that for convenience and other reasons, the
arbitration proceedings may be held at a place different than the
‘seat of arbitration’, which location is referred to the venue of
arbitration. If we accept this contention of the appellant, we would,
as observed in the case of C v. D (supra), create a recipe for
litigation and (what is worse) confusion which was not intended by
the Act. The place of jurisdiction or ‘the seat’ must be certain and
static and not vague or changeable, as the parties should not be
in doubt as to the jurisdiction of the courts for availing of judicial
remedies. Further, there would be a risk of parties rushing to the
courts to get first hearing or conflicting decisions that the law does
not contemplate and is to be avoided.
27. A secondary contention to support the said plea on the ground
that the courts where arbitration proceedings are being conducted
should be given supervisory powers, on in-depth consideration,
must be rejected as feeble when we juxtapose the unacceptable
practicable consequences that emerge. Exercise of supervisory
jurisdiction by the courts where the arbitration proceedings are
being conducted is a relevant consideration, but not a conclusive
and determinative factor when the venue is not ‘the seat’. ‘The
seat’ determines the jurisdiction of the courts. There would be
situations where the venue of arbitration in terms of sub-section
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 22 of 28
(3) of Section 20 would be different from the place of the
jurisdictional ‘seat’, and it is equally possible majority or most of
the hearing may have taken place at a venue which is different
from the ‘seat of arbitration’. Further, on balance, we find that the
aspect of certainty as to the court's jurisdiction must be given and
accorded priority over the contention that the supervisory courts
located at the place akin to the venue where the arbitration
proceedings were conducted or substantially conducted should be
preferred.
28. At this stage, we must also deal with the appellant's argument that
substantive proceedings were held in Delhi and, therefore, it
would be the ‘seat of arbitration’. The proceedings before the first
arbitration at Panchkula, Haryana, were restricted to filing of
pleadings and documents. On deeper consideration, this
argument should be rejected for the reasons recorded above, as it
will lead to confusion and uncertainty. The legal question raised in
the present case must be answered objectively and not
subjectively with reference to the facts of a particular case.
Otherwise, there would be a lack of clarity and consequent mix-up
about the courts that would exercise jurisdiction. There could be
cases where the arbitration proceedings are held at different
locations, but the ‘seat of arbitration’, as agreed by the parties or
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 23 of 28
as determined by the arbitrator, may be different, and at that place
– ‘the seat’, only a few hearings or initial proceedings may have
been held. This would not matter and would not result in shifting of
the jurisdictional ‘seat’. Arbitrators can fix the place of residence,
place of work, or in case of recusal, arbitration proceedings may
be held at two different places, as in the present case. For clarity
and certainty, which is required when the question of territorial
jurisdiction arises, we would hold that the place or the venue fixed
for arbitration proceedings, when sub-section (2) of Section 20
applies, will be the jurisdictional ‘seat’ and the courts having
jurisdiction over the jurisdictional ‘seat’ would have exclusive
jurisdiction. This principle would have exception that would apply
when by mutual consent the parties agree that the jurisdictional
‘seat’ should be changed, and such consent must be express and
clearly understood and agreed by the parties.
29. We have quoted Section 42 of the Act. Section 42 was also
examined in BGS SGS Soma (supra) and the view expressed by
the Delhi High Court in Antrix Corpn. Ltd. v. Devas Multimedia
(P) Ltd.21 was overruled observing that the Section 42 is meant to
avoid conflicts of jurisdiction of courts by placing the supervisory
jurisdiction over all arbitration proceedings in connection with the
21 (2018) SCC OnLine Del 9338
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 24 of 28
arbitration proceedings with one court exclusively. The aforesaid
observation supports our reasoning that once the jurisdictional
‘seat’ of arbitration is fixed in terms of sub-section (2) of Section
20 of the Act, then, without the express mutual consent of the
parties to the arbitration, ‘the seat’ cannot be changed. Therefore,
the appointment of a new arbitrator who holds the arbitration
proceedings at a different location would not change the
jurisdictional ‘seat’ already fixed by the earlier or first arbitrator.
The place of arbitration in such an event should be treated as a
venue where arbitration proceedings are held.
30. We would now reproduce paragraph 59 of the judgment in BGS
SGS Soma (supra), which examines Section 42 of the Act and
reads as under:
“59. Equally incorrect is the finding in Antrix Corpn.
Ltd. that Section 42 of the Arbitration Act, 1996 would
be rendered ineffective and useless. Section 42 is
meant to avoid conflicts in jurisdiction of courts by
placing the supervisory jurisdiction over all arbitral
proceedings in connection with the arbitration in one
court exclusively. This is why the section begins with
a non obstante clause, and then goes on to state “…
where with respect to an arbitration agreement any
application under this part has been made in a
court…” It is obvious that the application made under
this part to a court must be a court which has
jurisdiction to decide such application. The subsequent
holdings of this court, that where a seat is designated
in an agreement, the courts of the seat alone have
jurisdiction, would require that all applications under
Part I be made only in the court where the seat is
located, and that court alone then has jurisdiction over
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 25 of 28
the arbitral proceedings and all subsequent
applications arising out of the arbitral agreement. So
read, Section 42 is not rendered ineffective or useless.
Also, where it is found on the facts of a particular case
that either no “seat” is designated by agreement, or
the so-called “seat” is only a convenient “venue”, then
there may be several courts where a part of the cause
of action arises that may have jurisdiction. Again, an
application under Section 9 of the Arbitration Act, 1996
may be preferred before a court in which part of the
cause of action arises in a case where parties have
not agreed on the “seat” of arbitration, and before such
“seat” may have been determined, on the facts of a
particular case, by the Arbitral Tribunal under Section
20(2) of the Arbitration Act, 1996. In both these
situations, the earliest application having been made
to a court in which a part of the cause of action arises
would then be the exclusive court under Section 42,
which would have control over the arbitral
proceedings. For all these reasons, the law stated by
the Bombay and Delhi High Courts in this regard is
incorrect and is overruled.”
31. We have already referred to the first few sentences of the
aforementioned paragraph and explained the reasoning in the
context of the present case. The paragraph BGS SGS Soma
(supra) also explains the non-obstante effect as incorporated in
Section 42 to hold that it is evident that the application made
under Part-I must be to a court which has a jurisdiction to decide
such application. Where ‘the seat’ is designated in the agreement,
the courts of ‘the seat’ alone will have the jurisdiction. Thus, all
applications under Part-I will be made in the court where ‘the seat’
is located as that court would alone have jurisdiction over the
arbitration proceedings and all subsequent proceedings arising
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 26 of 28
out of the arbitration proceedings. The quotation also clarifies that
when either no ‘seat’ is designated by an agreement, or the socalled ‘seat’ is only a convenient venue, then there may be several
courts where a part of the cause of action arises that may have
jurisdiction. An application under Section 9 of the Act may be
preferred before the court in which a part of cause of action arises
in the case where parties had not agreed on the ‘seat of
arbitration’. This is possible in the absence of an agreement fixing
‘the seat’, as an application under Section 9 may be filed before
‘the seat’ is determined by the arbitral tribunal under Section 20(2)
of the Act. Consequently, in such situations, the court where the
earliest application has been made, being the court in which a part
or entire of the cause of action arises, would then be the exclusive
court under Section 42 of the Act. Accordingly, such a court would
have control over the arbitration proceedings.22
32. Section 42 is to no avail as it does not help the case propounded
by the appellant, as in the present case the arbitrator had fixed the
jurisdictional ‘seat’ under Section 20(2) of the Act before any party
had moved the court under the Act, being a court where a part or
whole of the cause of action had arisen. The appellant had moved
the Delhi High Court under Section 34 of the Act after the arbitral
22 We are not examining and are not required to decide the question- whether there is a difference
between the expression ‘court’ and the ‘Chief Justice or his nominee’ in the present case.
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 27 of 28
tribunal vide the order dated 5
th August 2014 had fixed the
jurisdictional ‘seat’ at Panchkula in Haryana. Consequently, the
appellant cannot, based on fastest finger first principle, claim that
the courts in Delhi get exclusive jurisdiction in view of Section 42
of the Act. The reason is simple that before the application under
Section 34 was filed, the jurisdictional ‘seat’ of arbitration had
been determined and fixed under sub-section (2) to Section 20
and thereby, the courts having jurisdiction over Panchkula in
Haryana, have exclusive jurisdiction. The courts in Delhi would not
get jurisdiction as the jurisdictional ‘seat of arbitration’ is
Panchkula and not Delhi.
33. In view of the aforesaid discussion and reasons, we do not find
any merit in the present appeals, and the same are dismissed
without any order as to costs.
......................................J.
(AJAY RASTOGI)
…...................................J.
(SANJIV KHANNA)
NEW DELHI;
MAY 18, 2022.
Civil Appeals a/o. of SLP (C) Nos.30019-20 of 2019 Page 28 of 28

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