TMI Blog2019 (9) TMI 1701X X X X Extracts X X X X X X X X Extracts X X X X ..... d place was preserved as final. In the case of M/S. SWASTIK GASES P. LTD. VERSUS INDIAN OIL CORP. LTD. [ 2013 (7) TMI 642 - SUPREME COURT] , the Supreme Court held that where the ouster is included in an agreement between the parties, it conveys the intention to exclude the jurisdiction of Courts other than those mentioned in the agreement. The Supreme Court also held that absence of the use of words like alone , only , exclusive or exclusive jurisdiction is not decisive, and does not make any material difference in deciding the jurisdiction of a Court. The intention of the parties has to be gathered from the Clauses appearing in the agreement. In view of the aforesaid decisions of the Supreme Court and the principles laid down therein, it clearly emerges that Section 20 (1) and Section 20 (2) of the Arbitration Act, would be applicable to the place where seat/place of arbitration is fixed under the Contract. The venue relates to convenience of parties, and in such a case, Section 20 (3) of the Arbitration Act is applicable - even if there was any element of ambiguity or doubt with respect to intention of the parties regarding exclusivity , the same gets settled by con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant : Abhinav Vashisht, Senior Advocate, Tannishtha Singh, Priya Singh and Akshita Sachdeva, Advocates For the Respondent : Rajesh Sharda, Saket Gogia and Damini K., Advocates JUDGMENT SANJEEV NARULA, J. 1. The present appeal under Section 13(1) of the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Act, 2015 (hereinafter 'Commercial Courts Act') read with Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter 'the Arbitration Act') impugns the judgment dated 5th April 2019 passed by the learned Single Judge in OMP (Coram) No. 140/2019. 2. The petition [O.M.P (COMM) No. 140/2019] was filed under Section 34 of the Arbitration Act, assailing the Arbitral award dated 14th December 2018, passed by the Maharashtra Micro and Small Enterprises Facilitation Council, Konkan Region, Thana (hereinafter MSME Council ). The learned Single Judge dismissed the aforesaid petition on the ground that this Court does not have the territorial jurisdiction to entertain the petition. Since the learned Single Judge has not examined merits of the case and has decided the petition only on the ground of juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons (GPC), has held that this Court lacks territorial jurisdiction to entertain the petition, as under said clauses, no exclusive seat of arbitration has been agreed upon by the parties. It is also observed that since there were certain blanks in the aforesaid Clauses, it cannot be inferred that the parties vested exclusive jurisdiction to the Courts at New Delhi. The decisions in Swastik Gases Pvt. Ltd. v. Indian Oil Corporation Ltd., (2013) 9 SCC 32 and Indus Mobile Distribution Pvt. Ltd. vs. Datawind Innovations Pvt. Ltd. Ors., (2017) 7 SCC 678, were held to be inapplicable to the facts of the present case. Further, while referring to the provisions of the MSME Act, learned Single Judge held that the Courts at Thane, Maharashtra, would have exclusive jurisdiction to entertain the present petition. For ready reference and clarity, the relevant portion of the impugned judgment is reproduced hereunder: 5. I am unable to agree with the submission made by the learned senior counsel for the petitioner for more than one reason. 6. At first, it is seen that Clauses 34 and 35 of the GPC relied upon by the learned senior counsel for the petitioner do not provide for an exclusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub section (2) is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer to it any institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration Conciliation Act, 1996 shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in Sub-Section 7 of the Act. (4) Notwithstanding anything contained in any other law for the time being in force, the Micro and small Enterprises Facilitation Council or the Centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this Section in a dispute between the supplied located within its jurisdiction and a buyer located anywhere in India. (5) Every reference made under this section shall be decided within a period of ninety days from the date of making such a reference. 12. A reading of the above provision would show that the MSME Council, where the supplier is located, shall have jurisdiction in the matter. In exercise of this power, MSME Council a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OCL] or at New Delhi and only the said. Court(s) shall have the jurisdiction to entertain and try any such actions and/or proceedings to the exclusion of all other Courts, provided that nothing herein stated shall be deemed to any wise authorize any party to seek resolution of any dispute(s) otherwise than the recourse to arbitration in accordance with the provisions of the Arbitration clause herein. Provided always that an award rendered in any arbitration proceedings arising out of or in relation to the Contract may be enforced or executed in any other country or jurisdiction including without limitation a. country in which any party against whom the award is to be enforced or executed is and a country in which the assets of any such party are located. (emphasis supplied) Contentions of the Parties 6. Mr. Abhinav Vashisht, learned Senior Counsel appearing on behalf of the Appellant contended that the learned Single Judge has wrongly interpreted Clause 34 35 of GPC. He argued that by keeping blanks in the aforesaid Clause, it implies that the parties agreed to expressly vest exclusive jurisdiction to the Courts at Delhi, as no other place of jurisdiction finds mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds: a) The aforesaid Clauses (34 and 35) do not provide any exclusive seat of arbitration nor vest exclusive jurisdiction to Courts in Delhi. Clause 34 leaves the venue of arbitration as blank or at New Delhi. Therefore, the parties have not decided on an exclusive venue of arbitration in terms of Clause 34 of the GPC. b) Clause 35 of GPC also has blanks, which exhibits that parties could not arrive at a consensus of vesting exclusive jurisdiction to any Court. Merely because an alternate has been given, does not vest exclusive jurisdiction in this Court. c) Swastik Gases Pvt. Ltd. (supra) and Indus Mobile Distribution Pvt. Ltd. (supra) have no application and the transaction between the parties and the documents do not show that any cause of action has arisen in Delhi. d) Clause 18 of MSME Act shows that the jurisdiction of the MSME Council is on the basis of the location of the supplier. In the instant case, the MSME Council at Thane exercised its jurisdiction. The seat of arbitration was at Thane and accordingly in terms of the judgment of Indus Mobile (supra), the Courts at Thane would have the exclusive jurisdiction. e) Any interpretation would be contrary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Apex Court in Nabha Power Ltd. v. Punjab State Power Corporation Ltd. (PSPCL) (2018) 11 SCC 508; followed in Adani Power (Mundra) Ltd. v. Gujarat Electricity Regulatory Commission AIR 2019 SC 3397]. The clauses, to our mind, convey in their meaning, with absolute certainty, the intention of the parties. The problem in interpretation can arise when the intent is not so visible in the obvious expression. Since the name of a State/City is blank, the name of one of the agreed cities [New Delhi] appearing after the conjunction or would convey accord between the parties not to agree on any other place but the one mentioned in the clause. Interpreting the blanks to mean that parties were not ad idem, would amount to disregarding the test of business efficacy. This is because the placeholder that was not filled does not render the clause unworkable. The clause remains legally enforceable. It is also to be noted that filling in the name of another city before conjunction 'or' would have rendered the exclusivity of jurisdiction ambiguous. New Delhi was certainly one of the firmed-up choice of venue and seat, agreed between the parties. Introduction of another place was cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. On the facts of the present case, it is clear that the seat of arbitration is Mumbai and Clause 19 further makes it clear that jurisdiction exclusively vests in the Mumbai courts. Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to seat is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction -- that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Sections 16 to 21 of CPC be attracted. In arbitration law however, as has been held above, the moment seat is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings 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 an exhaustive analysis of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us that the seat of arbitration is Delhi. In this context reference may be had to the judgment of the Supreme Court in Indus Mobile Distribution Private Ltd. v. Datawind Innovations Pvt. Ltd., (2017) 7 SCC 678, the Supreme Court held as follows: 19. A conspectus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. On the facts of the present case, it is clear that the seat of arbitration is Mumbai and Clause 19 further makes it clear that jurisdiction exclusively vests in the Mumbai courts. Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to seat is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction -- that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Sections 16 to 21 of CPC be attracted. In arbitration law however, as has been held above, the moment seat is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would have the jurisdiction to entertain the petition challenging the award passed by the MSME Council. Since the parties agreed to confer exclusive jurisdiction to Courts at New Delhi, notwithstanding the fact that the purchase order in question dated 10th March 2016, was issued by the Petitioner from its Vadodara Office to the Respondent at Navi Mumbai, and even if no cause of action has arisen in Delhi, the Courts of Delhi would have jurisdiction to entertain the petition under Section 34 of the Arbitration Act. This is pertinently because in Indus Mobile (supra) as noted in para 19 of the judgment, the Court has held that Section 16 to 21 of CPC would not be attracted. Thus notwithstanding the fact that cause of action may not have arisen in New Delhi, since the Seat has been agreed to be in Delhi, the courts here would have the jurisdiction to entertain the petition under section 34 of the Arbitration Act. 21. There is yet another aspect, which needs to be dealt with at the present stage. Section 18 of the MSME Act provides that the provisions of the Arbitration and Conciliation Act 1996 shall apply to the dispute between the parties. Learned Single Judge has decided the &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Contract between the parties. However, we are not engaged with the said controversy and, in fact, we had made it clear to the learned counsel for the Appellant, during the course of arguments, that the questions relating to the jurisdiction of the MSME Council to act as an Arbitrator and other similar issues will not be examined by us, as the learned Single Judge has not considered any of those aspects and has decided the objection petition only on the ground of territorial jurisdiction. However, this does not mean that the jurisdiction clause agreed between the parties has to be given a go-by. The overriding effect of the MSME Act, cannot be construed to mean that the terms of the agreement between the parties have also been nullified. Thus, jurisdiction of the MSME Council which is decided on the basis of the location of the supplier, would only determine the 'VENUE', and not the 'SEAT' of arbitration. The 'SEAT' of arbitration would continue to be governed in terms of the arbitration agreement between the parties, which in the present case as per jurisdiction Clause No. 35 is New Delhi. As a result, in terms of the decision of the Supreme Court in I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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