In CIVIL APPEAL NOs. 4130-4131 OF 2022-SC- ‘Seat’ should remain static when it is fixed by Tribunal u/s 20(2) of Arbitration & Conciliation Act, whereas ‘venue’ of arbitration can change and move from ‘seat’ to new location: SC Justices Ajay Rastogi & Sanjiv Khanna [18-05-2022]

Read Judgment:BBR (INDIA) PRIVATE LIMITED Vs. S.P. SINGLA CONSTRUCTIONS PRIVATE LIMITED 

Tulip Kanth

New Delhi, May 20, 2022: While clarifying that the change of venue does not result in change or relocation of the ‘seat of arbitration’, the Supreme Court has held that 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.

While adjudicating upon the issue regarding the shifting of jurisdictional seat of arbitration from Panchkula  to Delhi, owing to the appointment of a new arbitrator, the Division Bench of Justice Ajay Rastogi and Justice Sanjiv Khanna held that  before the application under Section 34 of the Arbitration and Conciliation Act, 1996 was filed, the jurisdictional seat of arbitration had been fixed under Section 20(2) and thereby, the courts having jurisdiction over Panchkula in Haryana would have exclusive jurisdiction.

In this case, the appellant – BBR (India) Private Limited and the respondent – S.P. Singla Constructions Private Limited, had entered into a contract for supplying, installing and undertaking stressing of cable strays for cable stay bridge being constructed by the respondent over the river Ravi in Jammu and Kashmir. When dispute arose and matter was referred to arbitration, the respondent filed an application for interim orders under Section 9 before the Additional District Judge, Panchkula and  appellant filed a petition under Section 34 before the Delhi High Cour thereby invoking the jurisdiction of two different courts.

When the case reached the Punjab & Haryana High Court, the Court held that the courts of Delhi did not have the jurisdiction to entertain the objections under Section 34 of the Act and the courts at Panchkula had jurisdiction to deal with the case. Being aggrieved, the appellants filed this appeal.

Observing that the law of arbitration doesnot visualise repeated or constant shifting of the ‘seat of arbitration’, the Bench asserted, “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.”

The Top Court referred to its judgment in  BGS SGS Soma JV v. NHPC Limited (2020) 4 SCC 224 which explained the non-obstante effect as incorporated in Section 42 to hold that the application made under Part-I must be to a court which has a jurisdiction to decide such application.

The Bench opined that An application under Section 9 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 but 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. The Bench affirmed  that 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. It was also opined that such court would have control over the arbitration proceedings.

Considering that the appellant had moved the Delhi High Court under Section 34 after the tribunal had fixed the jurisdictional seat at Panchkula in Haryana, the Bench held that the appellant couldnot claim that the courts in Delhi would get exclusive jurisdiction in view of Section 42.The Bench said, “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.” Keeping the overall reasoning in view, the Bench dismissed the appeal.