In SLP (C) No. 17397-17398 of 2021- SC- Application pertaining to appointment of Arbitrator cannot be instituted before HC if cause of action arose beyond territorial jurisdiction of same HC: Apex Court Justices Indira Banerjee & A.S. Bopanna[24-03-2022]

Read Order: M/S RAVI RANJAN DEVELOPERS PVT. LTD v. ADITYA KUMAR CHATTERJEE

Mansimran Kaur

New Delhi, April 1, 2022: The Apex Court recently observed that an application under Section 11 (6) of the Arbitration and Conciliation Act for the appointment of an Arbitrator cannot be instituted before any High without considering the fact that the cause of action arose within the territorial jurisdiction of the said High Court 

A Bench comprising Justices Indira Banerjee and A S Bopanna was dealing with a Special Leave Petition against an order of the Calcutta High Court, allowing an Arbitration Petition under Section 11 (6) of the Arbitration and Conciliation Act, 1966 for appointment of an Arbitrator. 

The question of law raised in the appeal was whether the Calcutta High Court had jurisdiction to entertain the application when no part of the cause of action arose within the jurisdiction of the Calcutta High Court.

In the present case, the Development agreement was executed and registered outside the jurisdiction of the High Court of Calcutta. The agreement was in relation to a development of property in Muzzafarpur which is pertinently outside the Jurisdiction of the Calcutta High Court. Moreover, the Appellant has its registered office in Patna, which is again outside the Jurisdiction of the Calcutta High Court.

The Apex Court outright rejected the submission of the Calcutta High Court stating that it is very well within the jurisdictional limits to entertain the application that was filed before it, reason being that the seat of Arbitration is in Kolkata. The Court observed that parties had no intention to refer their disputes to the jurisdiction of the Courts in Kolkata. Kolkata was not to be even the seat of arbitration for the parties. The fact was simply this that Kolkata was the venue for the arbitration sittings. 

Moreover the Respondent approached the Muzzafarpur District Court and not the Court in Kolkata for seeking interim protection. It is also pertinent to note that the Respondent himself invoked the jurisdiction of the District Court at Muzzafarpur and hence by law of estoppels cannot contend that the parties had conceded to the exclusive jurisdiction of the Calcutta High Court. Also no clause in the agreement indicates that the parties had the intention to choose the seat of Arbitration at Kolkata. 

Thus the Court was of the view that the Calcutta High Court was vividly beyond the jurisdiction to entertain the application for the appointment of an Arbitrator under Section 11(6) of the Arbitration Act. 

“It could never have been the intention of Section 11(6) of the Arbitration and Conciliation Act that arbitration proceedings should be initiated in any High Court of India, irrespective of the fact whether the Respondent resided or carried on business within the jurisdiction of that High Court, and irrespective of whether any part of the cause of action arose within the jurisdiction of that Court, to put an opponent at a disadvantage and steal a march over the opponent,” the bench said.