Jharkhand High Court: The present petition was filed under Article 227 of Constitution to quash the order dated 30-11-2023, whereby the application filed by petitioner under Section 34 of Arbitration and Conciliation Act, 1996 (‘A&C Act’) was dismissed, on the ground that since sole arbitrator was appointed by Orissa High Court, the Commercial Court, Ranchi did not have the jurisdiction to proceed with the application for setting aside the award.
Sanjay Kumar Dwivedi, J., stated that merely because with consent of parties, the arbitrator was appointed by the Orissa High Court, that could not be a ground that Ranchi court was not having jurisdiction, as Section 11 application was not decided by the Court. The Court stated that the Court at Ranchi did have the jurisdiction as the arbitration proceeding took place at Ranchi with the permission of the Orissa High Court and the seat and venue in the agreement was also at Ranchi. Further, the Court stated that both the parties had agreed to go for the arbitration at Ranchi, which clearly suggested that the intention was there that the proceeding would be conducted at Ranchi. Thus, the Court set aside the order dated 30-11-2023.
Background
The petitioner submitted that it was a Central Public Sector Undertaking, operating under the aegis of Ministry of Steel, Government of India and was engaged in the business of providing consultancy and engineering services. It was further submitted that the respondent was a private limited company incorporated under the provisions of the Companies Act, 1956 and was engaged in the business of manufacturing, construction and civil/mechanical engineering.
The petitioner submitted that certain disputes had arisen between the petitioner and respondent regarding the contract that was entered into between the parties. Thereafter, the respondent filed an application under Section 11(6) of the A&C Act, before the Orissa High Court, for appointment of the arbitrator. The Orissa High Court appointed the sole arbitrator. Subsequently, the sole arbitrator proceeded with the arbitral proceedings and rendered his award on 26-03-2023, which was impugned under Section 34 of A&C Act, before the Commercial Court, Ranchi (‘Ranchi court’).
The petitioner submitted that the respondent appeared before the Ranchi court and challenged the maintainability of the application on the ground that the since the application for appointment of arbitrator was before Orissa High Court, therefore as per Section 42 of A&C Act, courts in Orissa would have the jurisdiction to hear the matters. Thus, vide order dated 30-11-2023, the petitioner’s application was dismissed.
Analysis, Law, and Decision
Regarding maintainability of the present petition, the Court stated that undoubtedly, it was prudent for a Judge to not exercise discretion to allow judicial interference beyond the procedure established under the enactment. This power needed to be exercised in exceptional rarity, wherein, one party was left remediless or a clear ‘bad faith’ shown by one of the parties. The High Court could interfere, when there had been a patent perversity in the orders of tribunals and courts subordinate to it or where there had been a gross and manifest failure of justice, or the basic principles of nature justice was flouted.
Since the petitioner had earlier moved an appeal and the same was dismissed as withdrawn, there was no finality in the appeal and the petitioner had found out remedy under Article 227 of the Constitution. The Court stated that the parties could not be allowed to be remediless and therefore, the petition under Article 227 of the Constitution was maintainable.
The Court stated that once the seat was chosen by the parties in terms of contract/agreement, the place of the Court was having jurisdiction. Merely because with consent of parties, the arbitrator was appointed by the Orissa High Court, that could not be a ground that Ranchi court was not having jurisdiction, as Section 11 application was not decided by the Court. The intention of both the parties where to go for arbitration, was Ranchi and the proceeding after permission of the High Court was also conducted at Ranchi and in the agreement, the seat was also said to be at Ranchi. Thus, Ranchi court had jurisdiction.
The Court relied on BGS SGS SOMA JV v. NHPC Ltd, (2020) 4 SCC 234 and stated that whenever designation of the place of arbitration in arbitration clause as being “venue” of arbitration proceeding was there, the expression “arbitration proceeding” would make it clear that “venue” was really the seat of arbitral proceeding. However, the same will have different impact if there were contrary indicia and, in that context, the stated venue was merely a venue and not a seat of the arbitration proceeding.
Thus, the Court stated that the Court at Ranchi did have the jurisdiction as the arbitration proceeding took place at Ranchi with the permission of the Orissa High Court and the seat and venue in the agreement was also at Ranchi. Further, the Court stated that both the parties had agreed to go for the arbitration at Ranchi, which clearly suggested that the intention was there that the proceeding would be conducted at Ranchi. The law in this regard was well settled and, as such, the order dated 30-11-2023, was set aside and it was held that Ranchi court had the jurisdiction. The petition filed by the petitioner under Section 34 of the A&C Act was restored to the court concerned, who would proceed and decide the same, in accordance with law.
[MECON Ltd. v. K.C.S. (P) Ltd., 2025 SCC OnLine Jhar 376, decided on 04-02-2025]
Advocates who appeared in this case :
For the Petitioner: Shresth Gautam, Advocate and Yogendra Yadav, Advocate.
For the Respondent: Suvendu Kumar Ray, Advocate and Bhaskar Kumar, Advocate.
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