# Hasmukh Prajapati v. Jai Prakash Associates Ltd., Gautam Budh Nagar

- **Citation:** (2022) 4 ILRA 1317
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-02-17
- **Case number:** Matters U/A 227 No. 6890 of 2021
- **Bench:** Siddharth
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/hasmukh-prajapati-v-jai-prakash-associates-ltd-gautam-budh-nagar-48416
- **Pages:** 15

## Headnote

Civil Law - Arbitration and Conciliation
Act, 1996 -Arbitral award passed by sole
arbitrator at New Delhi-proceeding initiated u/s
34 of Act before Commercial Court, District
Gautam Budh Nagar-order challenged-if an
application under Part I made in court-that court
alone will have the jurisdiction over arbitral
proceeding- Application u/s 11 was application
under Part I of the Act,1996-section 42 will be
attracted-Impugned order legal.
Petition dismissed. (E-9)
List of Cases cited:

## Text

_Characters 0–39,940 of 48,878. This is a partial read: ask again with offset=39940 for what follows._

4 All. Hasmukh Prajapati Vs. Jai Prakash Associates Ltd., Gautam Budh Nagar
1317
regulations framed in exercise of powers
conferred by Section 29 of the Legal
Services Authorities Act,
1987, duly
notified
vide
notification
F.No.L/28/09/NALSA.

22. In view of the above, the
impugned award dated 14.05.2016 passed
by
the
Additional
Chief
Judicial
Magistrate/Additional Civil Judge (Senior
Division),
Gautam
Buddh
Nagar,
in
Original Suit No. 1323 of 2011, M/S S.G.
Rockbuild Pvt. Ltd. Vs. Pradeep Kumar
and others, is hereby quashed along with
order dated 13.11.2018 passed by the same
court on the Review Petition No. 04 of
2016 in Original Suit No. 1323 of 2011,
M/S S.G. Rockbuild Pvt. Ltd. Vs. Pradeep
Kumar and others.

23. The petition is accordingly,
allowed.

24. The record of the suit shall be
placed before the competent court for
decision in accordance with law after
giving adequate opportunity of hearing to
the parties. The record shall be placed
before the court concerned on 26.04.2022.
Both the parties are represented before this
Court through their counsels and hence,
they will appear before the trial court
personally or through their counsels on the
next date fixed.
----------

(2022)04ILR A1317
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 17.02.2022

BEFORE

THE HON'BLE SIDDHARTH, J.

Matters U/A 227 No. 6890 of 2021
Hasmukh Prajapati ...Petitioner
Versus
Jai Prakash Associates Ltd., Gautam Budh
Nagar ...Respondent

Counsel for the Petitioner:
Sri Veerendra Kumar Shukla, Sri Vidhu
Prakash Pandey

Counsel for the Respondent:
Sri Anurag Khana (Sr. Adv.), Sri Rohan
Gupta, Ms. Kriti Singh

Civil Law - Arbitration and Conciliation
Act, 1996 -Arbitral award passed by sole
arbitrator at New Delhi-proceeding initiated u/s
34 of Act before Commercial Court, District
Gautam Budh Nagar-order challenged-if an
application under Part I made in court-that court
alone will have the jurisdiction over arbitral
proceeding- Application u/s 11 was application
under Part I of the Act,1996-section 42 will be
attracted-Impugned order legal.
Petition dismissed. (E-9)
List of Cases cited:
1. BGS SGS SOMA JV Vs NHPC Ltd., 2019 0
Supreme (SC) 1350

2. Roger Shashoua Vs Mukesh Sharma & ors.,
(2017) 14 SCC 722

3. Sundaram Finance Limited Vs Abdul Samad &
anr., (2018) 3 SCC 622

4. Mankastu Impex Pvt. Ltd. Vs Air Visual Ltd.,
(2020) 5 SCC 399

5. Mankastu Impex Pvt. Ltd. Vs Airvisual Ltd.,
(2020) 5 SCC 399

6. Shashoua (2009) EWHC 957

7. Bharat Aluminium Co Vs Kaiser Aluminium
Technical 14 Services Inc, (2012) 9 SCC 552

8. Enercon (India) Ltd. & ors. Vs Enercon Gmbh
& anr., (2014) 5 SCC 1.
1318 INDIAN LAW REPORTS ALLAHABAD SERIES
9. Shashoua Principle, 2009 EWHC 957 (Comm)
: (2009) 2 Lloyd's Rep 376

10. Union of India Vs Hardy Exploration &
Production (India) Inc., (2019) 13 SCC 472

11. M/s Inox Renewables Ltd. Vs Jayesh
Electricals Ltd., passed on 13.04.2021 in Civil
Appeal No. 1556 of 2021 arising out of SLP (C)
No. 29161 of 2019)
(Delivered by Hon'ble Siddharth, J.)

1. Heard Sri Vidhu Prakash Pandey,
learned counsel for the petitioner and Sri
Anurag Khanna, learned Senior Advocate
assisted by Sri Rohan Gupta, learned
counsels for the respondent.

2. This petition under Article 227 of
the Constitution of India has been filed
challenging the order dated 18.08.2021
passed by Presiding Officer, Commercial
Court, Gautam Budh Nagar, in Misc.
Application No. 6 of 2020 in Arbitration
Application No. 26 of 2019, Jai Prakash
Associates Ltd. Vs. Hasmukh Prajapati,
preferred u/s 34 of Arbitration and
Conciliation Act, 1996 (arising out of
award dated 16.02.2019 passed by the
Arbitral Tribunal (Sole Arbitrator), New
Delhi, in Arbitration No. 15 of 2018,
Hasmukh
Prajapati
Vs.
Jai
Prakash
Associates Ltd.) partly allowing the claim
of the petitioner.

3. The brief facts of the case are as
follows :-

(i) The petitioner booked an
Apartment No.0301 in Kalypso Court,
Tower No. l, Jaypee Greens Noida,
admeasuring 315.12Sq. mtrs, in terms of
the
Concession
Agreement,
executed
between Yamuna Expressway Industrial
Development
Authority
and
Jaypee
Industries Limited, for the project of
Yamuna
Expressway
Industrial
Development Authority and as per the
standard terms and conditions of the
allotment of the apartment at Jaypee

Greens, respondent was under
obligation to hand over the possession of
constructed apartment to the allottee
maximum within 36 months and additional
grace period of 90 days from the date of its
allotment.

(ii)
The
petitioner
deposited
Rs.18,48,000/- on 17.11.2007 on account of
advance, against booking of said apartment
which has been allotted in favour of
petitioner vide provisional allotment letter
dated 11.02.2008 for a total consideration
of Rs. 1,96,02,400/-, subjcet to standard
terms and conditions and the provisional
allotment letter dated 11.02.2008 has been
partially modified. Accordingly, the details
of consideration has been revised from
Rs.1,96,02,400/- to Rs.1,75,22,560/- and
converted from "InstalIments Linked Plan"
to "Down Payment Plan".

(iii) As per the payment plan, the
petitioner has deposited balance of full
Down
Payment
amount
of
Rs.
1,38,27,527/-
through
Demand
Draft,
issued by GE Money Housing Finance Co.
on 27.08.2008 and balance payment of
Rs.2,99,360/- was made on 09.09.2008 for
booking against unit Ref. No.K0010301 in
Kalypso Court-1, Jaypec Greens, Noida but
even after expiry of 36 months, the
permissible
time
for
handing
over
possession of fully constructed/ ready
apartment, even after passing of 4 years,
the possession of apartment, allotted to the
petitioner, has not been handed over rather
illegal demand notices have been sent by
the respondent.

(iv) Vide letter dated 18.07.2014,
the petitioner has been informed about
delivery of possession of apartment, subject
4 All. Hasmukh Prajapati Vs. Jai Prakash Associates Ltd., Gautam Budh Nagar
1319
to NGT clearance and due to the said
reason, the apartment was not ready for
delivery to its allottee. NGT has restrained
Noida to issue completion certificate and
the said condition finds mention in the
letter dated 18.07.2014 itself.

(v)
As
on
14.04.2015,
the
petitioner's dues became Rs. 3,79,939.53
but still flat was not constructed.

(vi) Vide order dated 02.06.2015,
the petitioner has been informed through
partially
modified
allotment
letter
demanding additional car parking charges
of Rs. 5,00,000/- but the petitioner visited
the office and came to know that a huge
interest has also been imposed on him.

(vii) For waiver of interest on
unpaid amount and delivery of possession
of apartment no. KLP 0301, the petitioner
moved
several
applications
before
respondent
but
it
neither
delivered
possession nor waived the interest on
unpaid
amount
and
ultimately,
the
petitioner has received the offer of
possession of apartment vide a letter on
20.12.2015.

(viii) Petitioner has received letter
for the possession of apartment vide letter
dated 21.04.2016 and after the gap of more
than nine years, respondents have handed
over the possession of the apartment,
booked by the petitioner on 08.06.2007 for
which, the petitioner has taken housing
loan in the year 2008 from N.B.F.C. and
paying the interest at the rate of 13% from
2008 and the respondent has enjoyed the
money deposited by the petitioner for more
than nine years without any cogent and
justifiable reason.

(ix)
Petitioner
preferred
Arbitration Application No.8 of 2017,
"Hasmukh Prajapati Vs.
Jai
Prakash
Associates Ltd" in which, respondent filed
counter affidavit, wherein it has been
admitted that in case of any dispute, arising
between the parties, the place of the
arbitration will be at "New Delhi",
therefore all the proceedings, arising out of
the
arbitration
proceedings,
shall
be
maintainable at New Delhi.

(x) This Court vide order dated
01.02.2018 appointed Hon'ble Mr. Justice
Sunil Ambwani (Retd.), Office B-27 (FF)
Defence Colony, New Delhi, as arbitrator
and the petitioner filed his claim before
sole arbitrator, having its seat at New Delhi
which was registered as Arbitration Case
No. 15 of 2018, Hasmukh Prajapati Vs. Jai
Prakash Associates Ltd. The Tribunal,
having its venue at New Delhi, was pleased
to pass an award dated 16.02.2019 and
partly allowed the claim of the petitioner as
claimed through the Arbitration Case No.15
of 2018.

(xi) Assailing the arbitral award
dated 16.02.2019, passed by Arbitral
Tribunal comprising of Hon'ble Mr. Justice
Sunil Ambwani, delivered at New Delhi,
the respondent preferred an Arbitration
Application No.26 of 2019 (Jai Prakash
Associates Ltd. Vs. Hasmukh Prajapati)
under Section 34 of Arbitration and
Conciliation Act, before Distriet Judge,
Gautam Budh Nagar in which, exceeding
its jurisdiction, the court of District Judge,
Gautam Budh Nagar, proceeded with the
case and issued notice to the petitioner.

(xii) Questioning the legality and
validity of the arbitration proceedings
under Section 34 of the Act, before the
District Judge, Gautam Budh Nagar, the
petitioner filed a Writ-C No.33003 of 2019,
Hasmukh
Prajapati
Vs.
Jai
Prakash
Associates, before this Court. This Court
has directed the petitioner to raise the
objection, regarding the jurisdiction of the
Court to adjudicate the issue raised under
Section 34 of the Act, before the learned
court below itself vide its order dated
17.10.2019.
1320 INDIAN LAW REPORTS ALLAHABAD SERIES

(xiii) In compliance to the order
dated 17.10.2019 of this Court, the
petitioner moved an application being
Paper No.16Ga along with affidavit (17Ga)
in Arbitration Application No. 26 of 2019
(Jai Prakash Associates Vs. Hasmukh
Prajapati) which has been rejected by the
Commercial Court, Gautam Budh Nagar,
by passing the impugned order dated
18.08.2021 (Annexure No. 9 to the
petition).
Hence,
the
petitioner
has
approached this Court against the same
through the present petition.

4. The order dated 18.08.2021 passed
by the Commercial Court, Gautam Budh
Nagar, has been assailed in the present
petition before this Court.

5. The issue to be decided by this
Court is whether the Commercial Court at
Gautam Budh Nagar has jurisdiction to
hear the case u/s 34 of the Arbitration and
Conciliation Act, 1996 regarding the
arbitral award dated 16.02.2019 passed by
sole arbitrator, having its venue at New
Delhi, which has been specified in the
arbitration agreement, but not the seat of
the arbitration. The other issues are
regarding the application of provision of
Section 42 of the Act aforesaid to the
execution of final award after conclusion of
arbitration proceedings in terms of Section
32 of the Act and whether execution
application for enforcement of arbitral
award passed at New Delhi can be filed at
Gautam Budh Nagar which has no
supervisory jurisdiction over the Arbitral
Tribunal.

6. Learned counsel for the petitioner has
submitted that from the perusal of the arbitral
award dated 16.02.2019, it is quite evident
that "Venue of Arbitration" proceedings has
been chosen to be at "New Delhi" by both the
parties and the arbitration clause does not
specifies the "Seat of Arbitration". Thus, in
the absence of the specified "Seat of
Arbitration" in arbitral agreement, the venue
of arbitration will be the juridical seat of
arbitration proceedings and as such, the
impugned proceedings under Section 34 of
the
Arbitration
and
Conciliation
Act,
challenging
the
arbitral
award
dated
16.10.2019, is not maintainable in District-
Gautam Budh Nagar, rather it is maintainable
in the court at Delhi having supervisory
jurisdiction over the Arbitral Tribunal. The
impugned order dated 18.08.2021 and the
proceedings under Section 34 are wholly
illegal and untenable and the same are liable
to be set aside by this Court holding the same
to be without jurisdiction. In support of the
aforesaid
submissions/arguments,
the
petitioner has relied upon the judgment of the
Hon'ble Supreme Court reported as 2019 0
Supreme (SC) 1350, BGS SGS SOMA JV
Versus NHPC Ltd. The relevant paragraph
nos. 98, 99 and 100 relied upon are as follows
:-

98.
We
have
extracted
the
arbitration agreement in the present case (as
contained in Clause 67.3 of the agreement
between the parties) in paragraph 3 of this
judgment. As per the arbitration agreement,
in case a dispute was to arise with a foreign
contractor, clause 67.3(ii) would apply. Under
this sub-clause, a dispute which would
amount to an 'international commercial
arbitration within the meaning of Section
2(1)(f) of the Arbitration Act, 1990, would
have to be finally settled in accordance with
the Arbitration Act, 1990 read with the
UNCITRAL Arbitration Rules, and in case of
any conflict, the

Arbitration Act, 1996, is to
prevail (as an award made under Part I is
considered a domestic award under Section
2(7)
of
the
Arbitration
Act,
1996,
4 All. Hasmukh Prajapati Vs. Jai Prakash Associates Ltd., Gautam Budh Nagar
1321
notwithstanding the fact that it is an award
made in an international commercial
arbitration).
Applying
the
Shashoua
principle delineated above, it is clear that if
the dispute was with a foreign contractor
under Clause 67.3 of the agreement, the
fact that arbitration proceedings shall be
held at New Delhi/Faridabad, India in subclause (vi) of Clause 67.3, would amount to
the designation of either of these places as
the "seat" of arbitration, as a supranational
body of law is to be applied, namely, the
UNCITRAL
Arbitration
Rules,
in
conjunction with the Arbitration Act, 1996.
As
such
arbitration
would
be
an
international commercial arbitration which
would be decided in India, the Arbitration
Act,1996, is to apply as well. There being
no other contra indication in such a
situation, either New Delhi or Faridabad,
India is the designated "seat" under the
agreement, and it is thereafter for the
parties to choose as to in which of the two
places the arbitration is finally to be held.

99. Given the fact that if there were
a dispute between NHPC Ltd. and a foreign
contractor, clause 67.3(vi) would have to be
read as a clause designating the "seat of
arbitration, the same must follow even when
sub-clause (vi) is to be read with sub-clause
(i) of Clause 67.3, where the dispute between
NHPC Ltd. would be with an Indian
Contractor. The arbitration clause in the
present
case
states
that
"Arbitration
Proceedings
shall
be
held
at
New
Delhi/Faridabad, India...", thereby signifying
that all the hearings, including the making of
the award, are to take place at one of the
stated places. Negatively speaking, the clause
does not state that the venue is so that some,
or all, of the hearings take place at the venue;
neither does it use language such as "the
Tribunal may meet", or "may hear witnesses,
experts or parties". The expression "shall be
held" also indicates that the so-called "venue"
is really the "seat" of the arbitral proceedings.
The dispute is to be settled in accordance
with the Arbitration Act, 1996 which,
therefore, applies a national body of rules to
the arbitration that is to be held either at New
Delhi or Faridabad, given the fact that the
present arbitration would be Indian and not
international. It is clear, therefore, that even in
such a scenario, New Delhi/Faridabad, India
has been designated as the "seat" of the
arbitration proceedings.

100. However, the fact that in all
the three appeals before us the proceedings
were finally held at New Delhi, and the
awards were signed in New Delhi, and not
at Faridabad, would lead to the conclusion
that both parties have chosen New Delhi as
the "seat" of arbitration under Section 20(1)
of the Arbitration Act, 1996. This being the
case, both parties have, therefore, chosen
that the Courts at New Delhi alone would
have exclusive jurisdiction over the arbitral
proceedings. Therefore, the fact that a part
of the cause of action may have arisen at
Faridabad would not be relevant once the
"seat" has been chosen, which would then
amount to an exclusive jurisdiction clause
so far as Courts or the "seat" are concerned.

7. He has next submitted that in the
matter of BGS SGS SOMA JV Versus
NHPC Ltd. (supra), it has been held by
the Hon'ble Supreme Court that if both the
parties have chosen the seat of arbitration at
New Delhi, court of Delhi, will have the
exclusive jurisdiction to entertain and hear
the dispute under Section 34 of the Act. It
has been held by the Hon'ble Supreme
Court that once the "Seat" has been chosen,
it would then amount to an exclusive
jurisdiction clause so far as Court of the
Seat is concerned.

8. He has next submitted that in the
case in hand, no seat of arbitration was
1322 INDIAN LAW REPORTS ALLAHABAD SERIES
specified, moreover, the parties agreed
about venue of arbitration to be at New
Delhi
and
accordingly,
the
arbitral
proceedings took place at New Delhi and
award has been passed and signed at New
Delhi. In BGS SGS SOMA JV Versus
NHPC Ltd. (supra), the Hon'ble Supreme
Court has dealt with several judgments
including Roger Shashoua V. Mukesh
Sharma & Ors., (2017) 14 SCC 722 in
which it has been held that if the "Venue of
Arbitration"
is
designated
without
specifying the "Seat of Arbitration" in the
arbitration agreement, the stated "Venue'" is
the "Juridical Seat of Arbitration". Thus the
application
under
Section
34
is
maintainable at New Delhi and the court at
Gautam Buddh Nagar, U.P., India, has got
no jurisdiction to entertain the case under
Section
34
of
the
Arbitration
and
Conciliation Act, 1996.

9. He has also submitted that the
provisions of Section 42 of Arbitration and
Conciliation
Act
provides
that
any
application with respect to an arbitration
agreement can be made to that court alone
which has supervisory jurisdiction over the
Arbitral Tribunal and in no other court. The
language of the aforesaid provision is self
explanatory that it is applicable till the
finalization of the arbitral proceedings and
after termination of the arbitral proceedings
i.e., after pronouncement of the final award
by the Arbitral Tribunal, in terms of Section
32 of the Arbitration and Conciliation Act,
the arbitral proceedings stands terminated.

10. He has further submitted that
Section
36
of
the
Arbitration
and
Conciliation Act provides that the arbitral
award shall be enforced under the relevant
provisions of the Code of Civil Procedure,
1908, in the same manner as if it were a
decree of the court and in the present case
after the pronouncement of the arbitral
award, the arbitration proceedings stands
terminated and hence, the provisions of
Section 42 of Arbitration Act are not
affected, thus, the application for execution
can be filed before any court where the said
decree/award can be executed. Thus, filing
of execution proceedings in the Court at
District- Gautam Budh Nagar is not tenable
in the eyes of law. In support of the
arguments advanced in support of other
issues raised, the petitioner has relied upon
the judgment of Hon'ble Supreme Court in
the case of Sundaram Finance Limited V.
Abdul Samad and another, (2018) 3 SCC
622 (Relevant paragraph nos. 17, 19 and
20). The relevant paragraph nos. 17, 19 and
20 of the aforesaid judgement are as
follows :-

17. However, what has been lost
sight of is Section 32 of the said Act, which
reads as under:

32. Termination of proceedings-
(1) The arbitral proceedings shall be
terminated by the final arbitral award or by
an order of the Arbitral Tribunal under subsection (2).

(2) The Arbitral Tribunal shall
issue an order for the termination of the
arbitral proceedings where- (a) the claimant
withdraws his claim, unless the respondent
objects to b the order and the Arbiral
Tribunal recognises a legitimate interest on
his part in obtaining a final settlement of
the dispute;

(b) the parties agree on the
termination of the proceedings; or (c) the
Arbitral Tribunal finds that the continuation
of the proceedings has for any other reason
become unnecessary or impossible.

(3) Subject to Section 33 and subsection (4) of Section 34, the mandate of
the Arbitral Tribunal shall terminate with
the termination of the arbitral proceedings."
4 All. Hasmukh Prajapati Vs. Jai Prakash Associates Ltd., Gautam Budh Nagar
1323

The aforesaid provision provides
for arbitral proceedings to be terminated by
the final arbitral award. Thus, when an
award is already made, of which execution
is sought, the arbitral proceedings already
stand terminated on the making of the final
award. Thus, it is not appreciated how
Section 42 of the said Act, which deals with
the jurisdiction issue in respect of arbitral
proceedings, would have any relevance. It
does appear that the provisions of the said
Code and the said Act have been mixed up.

19. The Madras High Court in
Kotak Mahindra Bank Ltd. v. Sivakama
Sundaris referred to Section 46 of the said
Code, which spoke of precepts but stopped
at that. In the context of the Code, thus, the
view adopted is that the decree of a civil
court is liable to be executed primarily by
the court, which passes the decree where an
execution application has to be filed at the
first instance. An award under Section 36
of the said Act, is equated to a decree of the
court for the purposes of execution and
only for that purpose. Thus, it was rightly
observed that while an award passed by the
Arbitral Tribunal is deemed to be a decree
under Section 36 of the said Act, there was
no deeming fiction anywhere to hold that
the court within whose jurisdiction the
arbitral award was passed should be taken
to be the court, which passed the decree.
The said Act actually transcends all
territorial barriers.

20. We are, thus, unhesitatingly
of the view that the enforcement of an
award through its execution can be filed
anywhere in the country where such a
decree can be executed and there is no
requirement for obtaining a transfer of the
decree from the court, which would have
jurisdiction over the arbitral proceedings.

11. Learned counsel for the petitioner
has submitted that the "venue" and "place
of
arbitration"
can
not
be
used
interchangeably. In the case in hand the
"Seat
of Arbitration"
has
not
been
designated, only "Venue of Arbitration" has
been agreed by the parties in the arbitration
agreement and entire arbitral proceedings
took place at the said venue. Thus, no
question
of
interchange
arises
and
paragraphs 20 and 21 of the judgment
relied upon by the counsel for respondent
in the case of Mankastu Impex Private
Limited Vs. Air Visual Limited, (2020) 5
SCC 399 has no relevance to the facts of
the case. It is not applicable at all.

12. Learned Senior Counsel for the
respondent has submitted that the Clause
10.6 of the standard terms and conditions
of
allotment/
provisional
allotment
provided as under :

"Governing
Law
and
Jurisdiction:
the
allotment/provisional
allotment shall be governed and interpreted
by and construed in accordance with the
laws of India, without giving effect, if
applicable, to the principles of conflict of
laws, thereof or thereunder and subject to
the provisions of Clause 10.9 hereof, the
Courts of Gautam Budh Nagar, U.P., India,
shall have jurisdiction over all matters
arising
out
of
or
relating
to
this
allotment/provisional allotment."

13. He has further submitted that
further Clause 10.9 of the standard terms
and conditions of allotment/provisional
allotment states as under : "Dispute
Resolution: Any and all disputes arising out
of or in connection with or in relation
hereto shall so far as possible, in the first
instance, be amicably settled between the
Company and the Applicant. In the event of
disputes, claim and/or differences not being
amicably resolved such disputes shall be
1324 INDIAN LAW REPORTS ALLAHABAD SERIES
referred to sole arbitration of a person not
below the rank of General Manager
nominated for the purpose of Chairman of
the Company. The proceedings of the
Arbiration
shall
be
conducted
in
accordance with the provisions of the
Arbitration & Conciliation act, 1996, as
amended from time to time, or any reules
made thereunder. The applicant hereby
gives his consent to the appointment of the
sole arbitator as specified herein above and
waives any objections that he may have to
such appointment or to the award that may
be given by the Arbitrator. The venue of the
arbitration shall be New Delhi, India."

14. He has next submitted that in the
case of Mankastu Impex Private Limited
vs. Airvisual Limited, (2020) 5 SCC 399
at Para 20 it has been held by a three Judge
Bench of the Hon'ble Apex Court that : "It
is well settled that "seat of arbitration" and
"venue of arbitration" cannot be used
interchangeably.
It
has
also
been
established that mere expression "place of
arbitration" cannot be the basis to
determine the intention of the parties that
they have intended that place as the "seat"
of arbitration. The intention of the parties
as to the "seat" should be determined from
other clauses in the agreement and the
conduct of the parties." Therefore, it is
amply clear that seat and venue of
arbitration cannot be used interchangeably
and venue merely refers to a convenient
location selected by the parties to carry out
the arbitration proceedings. Furthermore,
the
''seat'
of
arbitration
should
be
determined from other clauses in the
agreement and the conduct of the parties.

15. He has also submitted that while
Clause 10.6 categorically provides that the
governing law and jurisdiction would be at
Gautam Budh Nagar, the words ''subject to
provisions of clause 10.9' have been used
only to pave the way for the agreement to
provide for the venue of arbitration
proceedings at New Delhi which was a
convenient location to carry out the
arbitration proceedings. It may be noted
that in case, the words in Clause 10.6 -
subject to provisions of Clause 10.9' were
interpreted to mean that the 'seat' of
arbitration would remain at New Delhi,
Clause 10.6, would be rendered completely
nugatory and contradictory, since in that
event, the courts at Gautam Budh Nagar
could
never
have
any
jurisdiction.
Therefore, in the present case, Clause 10.6
of the standard terms and conditions
confers exclusive jurisdiction to the courts
of Gautam Budh Nagar, U.P., and venue of
arbitration which in the present case is New
Delhi, which was merely a convenient
location to carry out the arbitration
proceedings. In the present case, the
petitioner has himself submitted to the
jurisdiction of the Courts in Uttar Pradesh,
at the very first instance, since he had
preferred an application under Section 11
before this Hon'ble Court, pursuant to
which
the
arbitrator
was
appointed.
Execution proceedings have also been filed
by the respondent before the Commercial
Court, Gautam Budh Nagar. Therefore, the
petitioner was always clear that the
jurisdiction was at Gautam Budh Nagar and
not at New Delhi. Furthermore, in case the
argument of the petitioner is accepted and
New Delhi is held to be the 'seat' of
arbitration, it would render the reference
order passed by this Hon'ble Court under
Section 11, without jurisdiction, rendering
the award itself a nullity. Alternatively,
even if it was assumed that New Delhi and
Gautam Buddha Nagar had concurrent
jurisdiction, under Section 42 of the Act,
1996, the Courts at New Delhi would have
no jurisdiction to entertain any subsequent
4 All. Hasmukh Prajapati Vs. Jai Prakash Associates Ltd., Gautam Budh Nagar
1325
applications, since the very first application
under Section 11 had been filed before this
Hon'ble Court. Therefore, Commercial
Court
at
Gautam
Budh
Nagar
has
Jurisdiction to entertain the application
under Section 34, preferred by the
respondent. Hence, the petition lacks merit
and is liable to be dismissed.

16. This petition first of all involves
resolution of a controversy that has gained
considerable importance in arbitration
proceedings regarding the "Venue-Seat"
issue.

17. The juridical seat of arbitration, as
a concept, did not find a place in the
Arbitration Act
of
1940.
Significant
importance was afforded to the juridical
seat of arbitration under the Arbitration and
Conciliation Act, 1996. However, the
jurisdiction of the courts over such arbitral
proceedings remained with the court
exercising original jurisdiction as per
Section 2(1)(e) of the 1996 Act. While
Section 20 of the 1996 Act granted parties
the autonomy to choose the ''place' of
arbitration. It did so in an ambiguous
manner without distinguishing between
''seat'
and
''venue'.
Addressing
the
ambiguity, 246th Law Commission Report
had suggested replacing the words ''place'
for ''seat' or ''venue.' However, these
amendments were not enacted. As a result,
the conflict between the juridical seat and
jurisdiction of the court persisted along
with the confusion pertaining to the
distinction between ''seat' and ''venue'.

18. It is notable that the act does not
defines the term "seat" or "venue". Section
20 of the Act merely defines the "place of
arbitration"
which
is
often
used
interchangeably with the terms "seat" and
"venue". This use of the terms "seat" and
"venue" interchangeably often leads to
controversy which has been resolved at
number of times by the Hon'ble Supreme
Court but it keeps on arising in different
factual sittings of different cases and
becomes subject matter of decisions by the
courts repeatedly.

19. The term "seat" is of utmost
importance as it connotes the situs of
arbitration. The term "venue" is often
confused with the term "seat" but it is more
a place often chosen as convenient location
by the parties to carry out arbitration
proceedings but should not be confused
with "seat". The term "seat" carries more
weight than "venue" or "place".

20. In 2009, the English judgment of
Shashoua (2009) EWHC 957 held that the
seat of arbitration is to have an exclusive
jurisdiction over all proceedings that arise
out of the arbitration. It laid the significant
contrary indicia test as per which a place of
arbitration is a stipulation that such place
shall be the seat of the arbitration and
consequently determine the lex fori in the
absence of any significant contrary indicia.
The position was further confirmed by the
Division Bench of Hon'ble Supreme Court
in the case of Roger Shashoua & Ors v
Mukesh Sharma & Ors (supra).

21. The Bharat Aluminium Co v.
Kaiser Aluminium Technical Services
Inc, (2012) 9 SCC 552 judgment, rendered
by the Hon'ble Supreme Court in 2012,
relied on the principle laid in Shashoua and
acknowledged that the terms ''seat' and
''place' can be used interchangeably. It held
while laying the principle of ''concurrent
jurisdiction' in paragraph 96 of the
judgment that two courts can have
jurisdiction over arbitration applications
viz. (i) courts possessing the subject-
1326 INDIAN LAW REPORTS ALLAHABAD SERIES
matter/cause of action jurisdiction and (ii)
courts where the place/seat of arbitration
was designated. However, the principle of
concurrent jurisdiction was not intended to
replace
the
principle
of
''significant
contrary indicia.' The existence of multiple
venues was only perceived to be a matter of
convenience.

22. The Hon'ble Supreme Court in the
case of BALCO (supra) clarified the legal
position in paragraph no. 96 as under:

Section 2(1)(e) of the Arbitration
Act, 1996 reads as under:

"2. Definitions (1) In this Part,
unless the context otherwise requires -

(a)-(d)

(e) "Court" means the principal
Civil Court of original jurisdiction in a
district, and includes the High Court in
exercise of its ordinary original civil
jurisdiction, having jurisdiction to decide
the questions forming the subject matter of
the arbitration if the same had been the
subject matter of a suit, but does not
include any civil court of a grade inferior to
such principal Civil Court, or any Court of
Small Causes."

We are of the opinion, the term
"subject matter of the arbitration" cannot be
confused with "subject matter of the suit".
The term "subject matter" in Section
2(1)(e) is confined to Part I. It has a
reference and connection with the process
of dispute resolution. Its purpose is to
identify the courts having supervisory
control over the arbitration proceedings.
Hence, it refers to a court which would
essentially be a court of the seat of the
arbitration process. In our opinion, the
provision in Section 2(1)(e) has to be
construed keeping in view the provisions in
Section 20 which give recognition to party
autonomy.
Accepting
the
narrow
construction as projected by the learned
counsel for the appellants would, in fact,
render Section 20 nugatory. In our view, the
legislature
has
intentionally
given
jurisdiction to two courts i.e. the court
which would have jurisdiction where the
cause of action is located and the courts
where the arbitration takes place. This was
necessary as on many occasions the
agreement may provide for a seat of
arbitration at a place which would be
neutral to both the parties. Therefore, the
courts where the arbitration takes place
would be required to exercise supervisory
control over the arbitral process. For
example, if the arbitration is held in Delhi,
where neither of the parties are from Delhi,
(Delhi having been chosen as a neutral
place as between a party from Mumbai and
the other from Kolkata) and the tribunal
sitting in Delhi passes an interim order
under Section 17 of the Arbitration Act,
1996, the appeal against such an interim
order under Section 37 must lie to the
Courts of Delhi being the Courts having
supervisory jurisdiction over the arbitration
proceedings and the tribunal. This would be
irrespective of the fact that the obligations
to be performed under the contract were to
be performed either at Mumbai or at
Kolkata, and only arbitration is to take
place in Delhi. In such circumstances, both
the Courts would have jurisdiction, i.e., the
Court within whose jurisdiction the subject
matter of the suit is situated and the courts
within the jurisdiction of which the dispute
resolution, i.e., arbitration is located.

23. The above observation in BALCO
were
understood
to
give
concurrent
jurisdiction over the arbitral proceedings to
(i)
courts
possessing
the
subjectmatter/cause of action jurisdiction and (ii)
courts where the place/seat of arbitration
was designated.
4 All. Hasmukh Prajapati Vs. Jai Prakash Associates Ltd., Gautam Budh Nagar
1327

24. What ensued post BALCO, was a
clash between the territoriality principle, as
espoused under Section 20 of the 1996 Act
and the cause of action/subject-matter
jurisdiction of the courts, as per Section
2(1)(e) of the 1996 Act.

25. The cases that followed post
BALCO
clarified
that
concurrent
jurisdiction is vested in the courts of seat
and venue, only in case of domestic
arbitrations when the seat of arbitrations is
in India as there is no risk of conflict of
judgments of different jurisdictions, as all
courts in India would follow the Indian
Law as held in Enercon (India) Ltd. and
Ors. v. Enercon Gmbh and Anr., (2014) 5
SCC 1.

26. However, in 2018, there appeared
room for uncertainty as it was noticed that
the Hon'ble Supreme Court had deviated
from
the
Shashoua Principle,
2009
EWHC 957 (Comm) : (2009) 2 Lloyd's
Rep 376 approved by the same court in
BALCO (supra). In the case of Union of
India
v.
Hardy
Exploration
and
Production (India) Inc., (2019) 13 SCC
472, the Hon'ble Supreme Court held that
the parties had Kuala Lumpur as the venue
of arbitration but were silent on the seat.
After
dispute
arose,
the
arbitration
proceedings commenced and the award was
signed at Kuala Lumpur. Thereafter the
appellant sought to challenge the award
under the Act before the Delhi High Court
contending that Delhi was the seat of
arbitration. On appeal the Hon'ble Supreme
Court delivered a judgment deviating from
the Shashoua Principle (supra). The
Court held that the parties had not chosen
the seat of arbitration and noted that the
Tribunal also had not made any findings
with respect to the same. It was observed
that Kuala Lumpur was designated by the
parties as the venue of arbitration and thus
it did not mean that Kuala Lumpur had
become the seat of arbitration. The Court
concluded that a venue could become a seat
of arbitration only if something else is
added to it as a concomitant. Opinion of the
Hon'ble Supreme Court does not appears to
be in consonance with the Shashoua
Principle (supra) approved by the same
court in BALCO (supra).

27. Thereafter in 2019, the Hon'ble
Supreme Court had another occasion to
revisit this issue in BGS SGS SOMA JV
(supra). It is interesting to note that in this
case, the coordinate Bench (3 Judges) had
reiterated the Shashoua Principle (supra)
contrary to the observations made in
Hardy Exploration (supra). The Court
propounded a test and laid down that when
a particular place is designated as the venue
of
arbitration
the
same
should
be
considered to be the seat of arbitration. It
noted that this should be coupled with the
fact that the parties have not made any
other contrary indication that the venue is
not the seat of arbitration. The Court
observed that the decision in Hardy
Exploration (supra) is per incuriam as it
did not follow ratio laid down by the
Constitutional Bench in BALCO (supra)
that wholeheartedly adopted the Shashoua
Principle (supra) in Indian law. It appears
that there is uncertainty whether the
decision
of
the
Court
in
Hardy
Exploration (supra) or BGS SGS SOMA
JV (supra) holds the field, as a concurrent
Bench could not have overruled the
judgment in Hardy Exploration (supra).

28.

In
March
2020,
another
conundrum had arisen before the Hon'ble
Supreme Court in Mankastu Impex (P)
Ltd. v. Airvisual Ltd. (supra). In this case
the arbitration agreement was unique as it
1328 INDIAN LAW REPORTS ALLAHABAD SERIES
did not use the words "seat" or "venue".
The arbitration agreement laid down that
the arbitration would be administered in
Hong Kong and the place of arbitration was
Hong Kong. It also stated that the
governing law was Indian law and that the
courts of New Delhi shall have jurisdiction.
Accordingly when dispute arose, Mankastu
approached the Hon'ble Supreme Court of
India
for
appointment
of
arbitrator
contending that as Indian law was the
governing law and the courts at New Delhi
had jurisdiction therefore New Delhi was
the seat of arbitration. Mankastu relied on
Hardy Exploration (supra). Airvisual
contended as Hong Kong was designated as
the place of arbitration and therefore Hong
Kong was also the seat of arbitration.
Airvisual relied on BGS SGS SOMA JV
(supra) for this purpose.

29. It is interesting to note the method
of inquiry adopted by the Hon'ble Supreme
Court in arriving at its conclusion that
Hong Kong was the seat of arbitration. The
Hon'ble Supreme Court instead of applying
the ratio in Hardy Exploration (supra) or
BGS SGS SOMA JV (supra), employed a
different method of inquiry altogether.
Although, the Hon'ble Supreme Court did
not expressly follow Hardy Exploration
(supra), it appears to have arrived at a
similar conclusion on a different line of
reasoning. The Court held that it would not
be safe to conclude that the place of
arbitration would automatically become the
seat of arbitration without examining other
pertinent indications in the contract to
discern the true intention of the parties. The
Hon'ble Supreme Court observed that since
it
was
agreed
that
the
arbitration
proceedings should be administered in
Hong Kong, thus, seat of arbitration was
Hong Kong.

30. Recently a Division Bench of the
Hon'ble Supreme Court in M/s Inox
Renewables Ltd. v. Jayesh Electricals
Ltd., passed on 13.04.2021 in Civil Appeal
No. 1556 of 2021 arising out of SLP (C)
No. 29161 of 2019) has reiterated the
decision in BGS SGS SOMA JV (supra),
equating the juridical concepts of seat and
venue.