The Madras High Court on May 7, 2020 in the case of Geo Foundations and Structures Private Limited ("Petitioner") vs. Tata Projects Limited ("Respondent"), decided upon the issue that whether it is open to parties to an arbitration agreement to exclude all other courts from exercising jurisdiction when more than one court has jurisdiction to adjudicate the disputes arising out of an arbitration agreement.
Facts of the case:
The dispute arose out of abandonment of a work order bearing no. SBU T&D/Manipuri-Bara 1B/1583 and execution of word order bearing no. SBU T&D/Manipuri-Bara 1B/1543 by the Petitioner. Consequently, the Petitioner demanded payment from the Respondent within a stipulated time and also, called upon the Respondent to concur upon appointing an independent and impartial arbitrator. However, since no response came from the Respondent, the instant petition under section 11(6) of the Arbitration and Conciliation Act, 1996 was filed.
Clause 41.3 and clause 45.1 of the General Conditions of Contract (“GCC”) enumerated an arbitration clause which stated that:
“41.3 The venue for Arbitration shall be Hyderabad, India or any other place that TPL at its sole discretion, may determine and the language of the arbitration shall be in English.
…
45.1 The work order issued by TPL to the Contractor shall be construed in accordance with and governed by the laws of India and in the event of any litigation, the jurisdiction of the Contract shall be that of the courts at Hyderabad, India.”
Arguments:
The Petitioner contended that:
The Respondent contended that:
Decision by the court:
The court noted that a perusal of clause 45.1 in the GCC reveals that the place of the arbitration would be at Hyderabad and the jurisdiction of the contract shall be that of the courts at Hyderabad, India. Further, the court also stated that if more than one court has jurisdiction, it is open to the parties to exclude all other courts and that the parties can determine the seat of arbitration by agreement.
The Madras High Court thus, held that:
“15…..merely because the contract said to have been signed in Chennai and the part of the cause of action arose at Chennai, when the parties agreed to have arbitration at Hyderabad and also agreed to submit to the jurisdiction of the courts in Hyderabad such clause implies that they have excluded other courts. Such a view of the matter, this Court is of the view that once the parties agreed to have the proceedings at Hyderabad as per Clause 45.3 of General Conditions of Contract, only High Court of Telangana alone has jurisdiction. Accordingly, this Court has no territorial jurisdiction to entertain the petition. The Petitioner is at liberty to approach High Court of Telangana as per the General Conditions of Contract for appointment of Arbitrator.” (emphasis supplied)
This update has been contributed by Arka Majumdar (Partner) and Kunal Dey (Associate).
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