Mukta Agriculture Ltd. Versus Radhegovindkripa Developers Pvt. Ltd.

The Arbitration Agreement between the parties can be found at Clause 21 of the MOU
“21. If any question or difference or claim or dispute arises between the parties hereto touching
these presents or the construction thereof as to the rights, duties or obligations of the parties
hereto or as to any matter arising out of or connected with the subject matter of these presents,
the same shall be referred to the arbitration to be held at Mumbai.
The Respondents raised objection to oppose the entertainment of the present Application filed
under Section 11 of the Arbitration Act:— The first contention raised by the the Respondent was
that this Court (Bombay Court) does not have jurisdiction to entertain the above Application in
view of the fact that clause 28 of the MOU conferred exclusive jurisdiction on the Courts at
Chittorgarh in relation to all suits and proceedings in connection with the said MOU and hence,
this Court will have no jurisdiction. According to the agreement between the parties the
arbitration shall be held at Mumbai. They also submitted that merely because the arbitration is
“to be held at Mumbai” does not mean that the seat of arbitration will be in Mumbai. At the
highest it would be mean that the venue of the arbitration would be in Mumbai. If this be the
case, then this Court would have no jurisdiction to entertain the above Application under Section
11 of the Arbitration Act.
The Respondents submitted that the agreement has to read as a whole and only when there is 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 and they contended that in the present case, there was clearly a
significant contrary indicia in the MOU (namely clause 28 thereof) which would indicate that
Mumbai was only a convenient “venue” for holding the arbitration proceedings and not the
“seat” of arbitration.
JUDGEMENT-
The Hon’ble judge contended that once the arbitration clause specifically states that the disputes
“shall be referred to the arbitration to be held at Mumbai”, the same would clearly indicate that
the parties intended to anchor the arbitral proceedings at Mumbai, signifying thereby, that
Mumbai is the seat of the arbitral proceedings. The judge is supported by a decision of the
Supreme Court in the case of BGS SGS SOMA JV v. NHPC LIMITED.

The judge disagrees with the aforesaid submission. Clause 28 of the MOU reads thus: “28. The
Courts at Chittorgarh shall have exclusive jurisdiction to try all suits or proceedings, matters or
things in connection with this MOU”. It was held that this clause is not a significant contrary
indicia to come the conclusion that Mumbai was only a convenient “venue” and not the “seat” of
the arbitration. According to the judge, because once the arbitration is “to be held in Mumbai”, it
means that the arbitration proceedings as a whole are to be held in Mumbai including the passing
of the Award. If the Award has to be passed in Mumbai, then, there is no question of contending
that Mumbai is only a convenient “venue” and not the “seat” of arbitration. Once the Award is to
be passed at Mumbai then this would lead to the irresistible conclusion that the parties agreed
and intended to anchor the “seat” of the arbitration proceedings in Mumbai. the proposition that
once a “seat” is designated, then it is only those Courts in which the “seat” is situate, would have
exclusive jurisdiction over the arbitral proceedings.

MY PREFERRED TRANSFORMATION & HOSPITALITY PVT. LTD. Vs. SUMITHRA INN

(ARB.P. 269 of 2020)

Facts of the case-

M/s. Alcott Town Planners Pvt. Ltd. (“Alcott”) and Sumithra Inn (“Respondent”) executed a
Management Services Agreement (“MSA”) on October 29, 2018. As per Articles 10.1 and 10.3
of the MSA, the place of arbitration was New Delhi, and the courts at New Delhi were also
conferred with exclusive jurisdiction to deal with all disputes arising out of the MSA. Clause
10.1 of the MSA was amended on March 7, 2019, and the courts at Bengaluru were given the
“exclusive jurisdiction” to deal in all matters arising out of this Agreement, while the place of
arbitration still remained to be New Delhi.

Alcott transferred its rights under the MSA to its group company, My Preferred Transformation
& Hospitality Pvt. Ltd. (“Petitioner”) with effect from June 1, 2019. The Respondent did not
hand over the possession of the property to the Petitioner within the time stipulated in the MSA,
which forced the Petitioner to send a legal notice to the Respondent. In response, the Respondent
terminated the MSA and sent a reply notice invoking the arbitration clause in the MSA. The
Petitioner responded to the Reply Notice on December 31, 2019, nominating Hon’ble Mr. Justice
Kurian Joseph, a retired Judge of the Supreme Court, to be the sole arbitrator to arbitrate the
dispute.

The Respondent communicated the name of Sri P. Ravindranath, a retired Additional Director
General, CPWD, to be the sole arbitrator to arbitrate on the dispute between the parties. In its
letter, the Respondent reiterated that the courts at Bengaluru would have exclusive jurisdiction to
decide all matters arising out of the arbitration as the “exclusive jurisdiction” was on the
Bangalore courts. The Respondent filed a petition under Section 11(6) of the Arbitration and
Conciliation Act, 1996 (“Arbitration Act”) before the High Court of Karnataka, for appointing an
arbitrator as both the parties failed to agree on a single arbitrator.

As per the Petitioner, for all matters relating to Arbitration, the sole jurisdiction is with the courts
at the seat of arbitration. Based on this contention, the Petitioner filed the application before the
Delhi High Court, under Section 11(6) of the Arbitration Act, for the appointment of an
arbitrator.

Reasoning & Judgment:

The Hon’ble Court heard the arguments of both the parties. From the arguments of the parties,
the Court pointed out that when it comes to “Seat of Arbitration” and “Exclusive Jurisdiction”
clauses, there can be four scenarios, namely, agreements which contained (i) only a “seat of
arbitration” clause; (ii) only an “exclusive jurisdiction” clause; (iii) a seat of arbitration clause
and an exclusive jurisdiction clause, and both clauses conferring jurisdiction on the same court;
and (iv) a seat of arbitration clause and an exclusive jurisdiction clause with the clauses
conferring jurisdiction on different courts. The Court examined this fourth category in a detailed
manner, as the facts of the case squarely fit into this category.

The Delhi Court held that the courts located at the seat of arbitration has the jurisdiction to deal
with all matters arising out of arbitration, unless there is a specific clause which stipulates that all
dispute related matters including “those issues related to arbitration will be dealt by another
court”. The Delhi High Court observed that a clause which merely states “exclusive jurisdiction
in all matters arising out of the MSA” vests with the courts at Bengaluru, will not result in
conferment of Section 11 jurisdiction on the High Court of Karnataka. Since no such specific
conferment was provided in the MSA, the Delhi High Court held that the right to appoint
arbitrators under Section 11 will vest with the Delhi High Court, and not with the High Court of
Karnataka. The Delhi High Court appointed G. S. Sistani, a retired Judge of the Delhi High
Court, as the Sole Arbitrator to arbitrate on the disputes between the parties.