Mere Conduct Of Arbitral Proceedings Can't Per Se Determine Juridical Seat Of Arbitration: Supreme Court
The Supreme Court was considering an appeal challenging the judgment whereby it was held that the petition under Section 34 of the Arbitration and Conciliation Act was not maintainable.
While explaining the distinction between “seat” and “venue” of arbitration, the Supreme Court has held that the mere conduct of arbitral proceedings can not, per se determine the juridical seat of arbitration.
The Apex Court was considering an appeal challenging the judgment passed by the High Court whereby it was held that the petition under Section 34 of the Arbitration and Conciliation Act, 1996 filed by the Appellants was not maintainable.
The Division Bench of Justice Sanjay Kumar and Justice Sanjeev Sachdeva held, "As per the Appellants, the arbitral proceedings were held at Cuttack only for the sake of convenience of the Arbitrator. Nothing to the contrary has been pointed out by learned senior counsel for the Respondent. Thus, mere conduct of arbitral proceedings could not per se determine the juridical seat of arbitration."
Factual Background
A tender was issued in 2012 by the Appellants for hiring of HEMM (Shovel, Drill, Dozer etc.) for transfer and transportation of materials in various strata, including drilling, excavation, dumping, spreading, dozing and other allied works in specified areas of dumping as per the instructions of the project officer/management of Kulda OCP, Basundhara – Garjanbahal areas of MCL at Sundargarh. The Respondent was the successful bidder, and accordingly, a contract was executed between the parties. The agreement did not contain any arbitration clause. A completion certificate was issued by the Project Officer of the Appellants. However, during and after the execution of the work, certain disputes arose between the parties in relation to various claims under the contract. Aggrieved thereby, the Respondent approached the Orissa High Court.
By a common order, the High Court appointed a Sole Arbitrator under Section 11(6) of the Act to adjudicate the disputes between the parties. The arbitration proceedings commenced by the Arbitrator and the proceedings were held at Cuttack. The Sole Arbitrator passed a common Arbitral Award in favour of the Respondent. The Appellants filed separate petitions under Section 34 seeking setting aside the arbitral award. The Respondent filed a Miscellaneous Application under Section 151 of the Code of Civil Procedure seeking rejection of the petitions filed by the Appellants under Section 34, raising preliminary objections to the maintainability of the proceedings.
This application was dismissed by the District Judge, pursuant to which the subject Writ Petition was filed by the Respondent before the Orissa High Court. By the impugned order, the High Court allowed the Writ Petition and dismissed the petition filed under Section 34, holding the same to be non-maintainable for want of jurisdiction and also on the ground that the petition was filed beyond the period of limitation.
Reasoning
The Bench explained the distinction between “seat” and “venue” of arbitration by stating, “While ‘Seat’ determines the Courts exercising supervisory jurisdiction over the arbitration proceedings, ‘Venue’ merely denoted the physical location where the sitting are held. In the absence of any express designation of Cuttack as the seat, the High Court clearly erred in treating the venue of the arbitration as the seat.”
The Bench held that the High Court had clearly erred in also holding the ‘Seat’ as Cuttack because the disputes were referred to the Arbitrator by the High Court, which has its seat at Cuttack. “Merely because the seat of the High Court is at Cuttack would not confer jurisdiction on the District or Commercial courts at Cuttack. The High Court has clearly erred in restricting the jurisdiction of the High Court to the District within the territory of which the High Court is physically situated, i.e. Cuttack”, it stated.
“A High Court of a State exercises jurisdiction over the entire State and as such all the Commercial Courts/District Courts (where no commercial Court has been set up) within the territorial jurisdiction of the High Court would have jurisdiction to entertain a petition under section 34 of the Act, unless there is an agreement of the parties to the contrary or a specific determination of a ‘Seat’ in the order of appointment or any such stipulation/direction by the Court", the Bench further added.
Thus, allowing the appeal, the Bench restored the Petition under Section 34 of the Act, filed by the Appellants on the file of the District Judge, Sundargarh.
Cause Title: Mahanadi Coalfields Ltd. & Ors. v. M/S GSCO Infrastructure Pvt. Ltd. (Neutral Citation: 2026 INSC 1038)