The Hon’ble Delhi High Court in Delhi Tourism and Transportation Development Corporation vs M/S Satinder Mahajan, O.M.P. (COMM) 337/2021, the Hon’ble Delhi High Court observed that in the absence of an exclusive jurisdiction clause specifying the seat of arbitration in the arbitration agreement, the seat of arbitration will be considered to be where the arbitration was conducted.
Facts
In brief, the respondent, a medium enterprise in Pathankot, Punjab, had a contract with the petitioner, Delhi Tourism and Transportation Development Corporation, to build a bus depot in New Delhi. Disputes arose, and the respondent claimed dues under the contract via the Facilitation Council under the MSME Act. Despite objections from the petitioner, the council proceeded with arbitration and awarded the respondent approximately Rs. 4.12 crore. The proceedings and award took place in Pathankot.
Submissions by Parties
Respondents
The respondents objected to the territorial jurisdiction of the DHC hearing a petition against an arbitral award. They argued that according to Section 18(4) of the MSME Act, the Facilitation Council where the supplier is located has jurisdiction over disputes, and as the respondent invoked arbitration in Pathankot, it’s the appropriate venue.
Petitioner
The petitioner submitted that that the DHC has jurisdiction to hear the petition under Section 34 of the Arbitration Act due to an exclusive jurisdiction clause in the “Integrity Pact” of the Agreement. He cites judgments to support the claim that even if arbitration is conducted outside Delhi, jurisdiction for challenging the award lies with the court specified in the contract. Additionally, he contends that even without an exclusive jurisdiction clause, the seat of arbitration is Delhi because the cause of action for the dispute occurred there.
Observations Made by the DHC
The Hon’ble DHC observed that the Agreement between the parties included an arbitration clause, but it effectively lacked an exclusive jurisdiction clause or any specification of the arbitration seat, leaving the venue to the arbitrator’s discretion.
The Court observed that though the petitioner argued for an exclusive jurisdiction clause in the Integrity Pact, however the court was unable to found to specifically state “seat” of the arbitration in New Delhi.
Additionally, the court after reviewing previous judgments as cited by the petitioner on jurisdiction under the Arbitration Act but deems them inapplicable due to the absence of an exclusive jurisdiction clause in the Agreement. Addressing the seat of arbitration, the court determined it as Pathankot, where proceedings occurred and the award was issued, aligning with the legislative intent of the MSME Act.
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