Case: M/s KINGS CHARIOT v. Mr. TARUN WADHWA (ARB.P. 421/2024)
Date: 21st May, 2024
Tarun Wadhwa (Respondent) contracted M/s Kings Chariot (Petitioner) for internal development work of a hotel in Guna, Madhya Pradesh. Their contract included an arbitration clause but lacked specifics on the arbitration’s seat or venue, merely stating that disputes were subject to Delhi’s jurisdiction.
After disputes arose, the Petitioner approached the Delhi High Court under Section 11(5) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator, relying on the contract’s Delhi jurisdiction clause. The Respondent contended that the Delhi High Court lacked jurisdiction and the Petition did not disclose any cause of action.
The High Court of Delhi, through Hon’ble Justice Ms. Neena Bansal Krishna, observed that the contract for interior works of the Respondent’s hotel was signed and executed in Madhya Pradesh, and the Respondent conducts business in Madhya Pradesh. All work was conducted by the Respondent in Madhya Pradesh, making it clear that only the courts of Madhya Pradesh have jurisdiction, inter-alia, for appointing the arbitrator.
The Court reaffirmed that parties cannot confer jurisdiction on a court that inherently lacks it, citing the Supreme Court’s decision in Ravi Ranjan Developers Pvt. Ltd. vs. Aditya Kumar Chatterjee [2022, SCC Online SC 568].
Key learnings emerging from Delhi High Court’s decision:
– Jurisdiction Can’t Be Conferred by Contract: Parties cannot grant jurisdiction to a court that inherently lacks it.
– Specify Arbitration Seat and Venue: Clearly specifying the seat and venue of arbitration in a contract is a recognized exception to the general rule laid down in the Ravi Ranjan Developers case. When specified, Sections 16 to 20 (Place of suing) of the Code of Civil Procedure, 1908 (CPC) do not strictly apply.
– CPC Guidelines Apply Otherwise: In the absence of a specified arbitration venue and/or seat, jurisdiction must be determined according to CPC Sections 16-20.
This Judgment underscores the critical need for clarity in arbitration agreements regarding jurisdiction, venue and seat.
