M/S. Agrawal Structure Mills Private Limited Vs M/S. Punjab National Bank

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(Arbitration Appeal No. 2 of 2020)

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2025:CGHC:1746-DB

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NAFR

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HIGH COURT OF CHHATTISGARH AT BILASPUR ARBITRATION APPEAL NO. 2 OF 2020

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M/s. Agrawal Structure Mills Private Limited, through: its Director Shri Anil Kumar Agrawal, S/o Shri Madan Lal Agrawal, Corporate Office: Near Krishna Talkies, Samta Colony, Raipur, Tehsil and District Raipur, Chhattisgarh.

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... Appellant(s)

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Versus

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1. M/s. Punjab National Bank, Main Branch, Moti Bagh Chowk, Raipur, Tehsil and District Raipur, Chhattisgarh 492001.

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2. M/s. State Bank of India, Corporate Account Group, 58 Shrimali Society, Navarangpura, Ahemdabad, Gujarat 380009.

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3. M/s. Adani Enterprises Limited, Adani House, Near Mithakhali Circle, Navarangpura, Ahmedabad, Gujarat 389009.

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... Respondent(s)

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For Appellant	:-	Mr. Rahul Kumar, Advocate.
For Respondent No.1	:-	Mr. Yogesh Netam, Advocate, on behalf of Mr. Harshwardhan Agrawal, Advocate.
For Respondent No.2	:-	Mr. Ghanshyam Patel, Advocate.
For Respondent No.3	:-	Mr. Kshtij Sharma, Advocate.

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Division Bench

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Hon'ble Shri Justice Sanjay K. Agrawal Hon'ble Shri Justice Radhakishan Agrawal

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(Arbitration Appeal No. 2 of 2020)

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Judgment on Board [10-01-2025]

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Sanjay K. Agrawal, J.

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1. Invoking appellate jurisdiction of this Court under Section 37 of the Arbitration and Conciliation Act, 1996 (‘the Act’ for short), the Appellant herein has preferred this appeal calling in question the legality, validity and correctness of the Order dated 12.12.2019 passed by the Commercial Court (District Level), Nava Raipur, Raipur, by which the preliminary objection raised on behalf of Respondent No.3 herein has been allowed and the application of the Appellant filed under Section 9 of the Act was rejected holding that the Court at Raipur has no jurisdiction to entertain the application under Section 9 of the Act and the Courts at New Delhi would have the jurisdiction to hear the said application.

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2. Briefly summarized the facts of the case are that an application under Section 9 of the Act was preferred by the Appellant before the Commercial Court praying that Respondent No.3 be restrained from raising any claim relating to their invoices raised on 17.12.2018 and further they be also restrained from committing breach of obligation of Agreement dated 4.12.2018.

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(Arbitration Appeal No. 2 of 2020)

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3. A preliminary objection was raised by Respondent No.3 stating that the application under Section 9 of the Act is not maintainable as per relevant Clauses 17 and 18 of the General Conditions of Contract (“GCC” for short) annexed to the Agreement and as per Clause 18, the venue and seat of arbitration shall be at New Delhi and the Courts in Delhi will have exclusive jurisdiction. Once the parties have decided for the seat of arbitration to be New Delhi, it operates as an exclusive jurisdiction clause conferring the Courts at New Delhi with the power to supervise the arbitration process. Thus, the Respondent No.3, relying upon the decision of the Supreme Court in the matter of Indus

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Mobile Distribution (P) Ltd. v. Datawind

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Innovations (P) Ltd. 1, prayed for the application under Section 9 of the Act to be rejected.

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4. Appellant filed their reply stating that the Commercial Court at Raipur does have the jurisdiction to entertain the application under Section 9 of the Act.

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5. However, the learned Commercial Court passed the impugned Order dated 12.12.2019 holding that since the parties have already agreed on their venue and seat of arbitration to be at New Delhi, the Courts at

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1 (2017) 7 SCC 678

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4/10

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(Arbitration Appeal No. 2 of 2020)

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Delhi would have the exclusive jurisdiction over any dispute arising under the contract documents and thus proceeded to reject the application of the Appellant filed under Section 9 of the Act as not maintainable.

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6. It is this Order dated 12.12.2019 passed by the learned Commercial Court which has been put to challenge by the Appellant in the present appeal.

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7. Learned Counsel appearing for the Appellant submits

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that the learned Commercial Court is absolutely unjustified in rejecting their application under Section 9 of the Act as not maintainable, as the GCC has not been signed by the parties and as such the Agreement would not be applicable. Therefore, the learned Commercial Court ought to have entertained the application under Section 9 of the Act and decided the same on merits.

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8. Learned Counsel appearing for Respondent No.3 would support the impugned Order and submit that the application under Section 9 of the Act has rightly been rejected by the learned Commercial Court, as the Appellant and Respondent No.3 have entered into an Agreement dated 4.12.2018 and the recital of the

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5/10

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(Arbitration Appeal No. 2 of 2020)

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Agreement would clearly show that the parties have agreed upon to extend the GCC as a part of the Agreement and as such by reference and necessary implication the terms of the GCC stood incorporated as the part of the Agreement. Thus, prayed for the appeal to be dismissed being devoid of merits. To support his submissions, he relies upon the decisions of the Supreme Court rendered in the matters of

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Giriraj Garg v. Coal India Ltd. and Others 2, BGS SGS Soma JV v. NHPC Ltd. 3 and NBCC (India) Ltd. v. Zillion Infraprojects Pvt. Ltd. 4.

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9. I have heard learned Counsels for parties, considered their rival submissions and also perused the record of the case with utmost care and circumspection.

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10. The Appellant, along with the memo of appeal, has filed the application under Section 9 of the Act which they had filed before the learned Commercial Court. The Agreement dated 4.12.2018 is also annexed as Annexure A-1, the averments of which clearly depict that the parties have agreed that all the terms and conditions of the GCC shall be applicable to the Agreement entered into between the parties. Clauses

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2 (2019) 5 SCC 192

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3 (2020) 4 SCC 234

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4 (2024) 7 SCC 174

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(Arbitration Appeal No. 2 of 2020)

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17 and 18 of the GCC annexed with the Agreement state as under:-

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“17. Governing Law and Jurisdiction

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The Contract Documents shall be governed by and construed in accordance with the laws of India and subject to Clause 18 below, the courts at Delhi shall have exclusive jurisdiction over any dispute arising under the Contract Documents.

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18. Dispute Resolution

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In the event of any dispute, claim, question or difference of opinion arising or occurring between the parties in relation to anything or any matter arising out of or under the terms of this Agreement (“ Dispute ”), either Party may refer the Dispute for arbitration by a sole arbitrator within ten (10) days from the date on which such Party notifies the other Party of the existence of a Dispute in writing (“ Arbitration Notice ”) and submit such Dispute to arbitration under the provisions of the Arbitration and Conciliation Act, 1996 ( Arbitration Act ). The sole arbitrator shall be jointly and mutually appointed by the Parties to the Dispute within thirty (30) days of the date of the Arbitration Notice.

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The venue and seat of arbitration shall be New Delhi and arbitration proceedings shall be conducted in English Language. The awards and orders passed by such sole arbitrator shall be final and binding upon the Parties. ”

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11. A bare perusal of above-referred Clause 18 of the GCC

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would show that the venue and seat of arbitration shall be at New Delhi and arbitration proceedings

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(Arbitration Appeal No. 2 of 2020)

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shall be conducted in English language and the awards and orders passed by such sole arbitrator shall be final and binding upon the parties. As such, the GCC is part of the Agreement arrived at between the parties.

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12. Learned Commercial Court, after noticing that the seat of arbitration proceedings shall be at New Delhi, held that Clause 18 of the GCC annexed to the Agreement between the parties is exclusive jurisdiction clause and the clause containing venue and seat of arbitration at New Delhi, confers the Courts at Delhi to have exclusive jurisdiction over any dispute arising under the contract documents and the said clause has unambiguous and specific procedure to hear the application under Section 9 of the Act.

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13. In this regard, the decision of the Supreme Court rendered in the matter of BGS SGS Soma JV (supra) would be profitable to notice, wherein their Lordships have in paragraph 38 held as under:-

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“38. A reading of paras 75, 76, 96, 110, 116, 123 and 194 of BALCO⁵ would show that where parties have selected the seat of arbitration in their agreement, such selection would then amount to an exclusive jurisdiction clause, as the parties have now

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5 BALCO v. Kaiser Aluminium Technical Services Inc. , (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810

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(Arbitration Appeal No. 2 of 2020)

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indicated that the courts at the “seat” would alone have jurisdiction to entertain challenges against the arbitral award which have been made at the seat. The example given in para 96 buttresses this proposition, and is supported by the previous and subsequent paragraphs pointed out hereinabove. The BALCO² judgment, when read as a whole, applies the concept of “seat” as laid down by the English judgments (and which is in Section 20 of the Arbitration Act, 1996), by harmoniously construing Section 20 with Section 2(1)( e ), so as to broaden the definition of “court”, and bring within its ken courts of the “seat” of the arbitration⁶ . ”

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14. Similarly, in the matter of Indus Mobile Distribution

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(P) Ltd. v. Datawind Innovations (P) Ltd. 7, which

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was referred to in BGS SGS Soma JV (supra), it has been held in paragraphs 19 and 20 as under:-

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“19. A conspectus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. On the facts of the present case, it is clear that the seat of arbitration is Mumbai and Clause 19 further

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6 Section 3 of the English Arbitration Act, 1996 defines “seat” as follows:

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“ 3. The seat of the arbitration .— In this Part “ the seat of the arbitration ” means the juridical seat of the arbitration designated—

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( a ) by the parties to the arbitration agreement, or

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( b ) by any arbitral or other institution or person vested by the parties with powers in that regard, or

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( c ) by the Arbitral Tribunal if so authorised by the parties,

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or determined, in the absence of any such designation, having regard to the parties' agreement and all the relevant circumstances.”

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It will be noticed that this section closely approximates with Section 20 of the Indian Arbitration Act, 1996. The meaning of “Court” is laid down in Section 105 of the English Arbitration Act, 1996 whereby the Lord Chancellor may, by order, make provision allocating and specifying proceedings under the Act which may go to the High Court or to county courts.

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7 (2017) 7 SCC 678 : (2017) 3 SCC (Civ) 760

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(Arbitration Appeal No. 2 of 2020)

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makes it clear that jurisdiction exclusively vests in the Mumbai courts. Under the law of arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to “seat” is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction — that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Sections 16 to 21 of the Code of Civil Procedure be attracted. In arbitration law however, as has been held above, the moment “seat” is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties.

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20. It is well settled that where more than one court has jurisdiction, it is open for the parties to exclude all other courts. For an exhaustive analysis of the case law, see Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd.⁸ This was followed in a recent judgment in B.E. Simoese Von Staraburg Niedenthal v. Chhattisgarh Investment Ltd.⁹ Having regard to the above, it is clear that Mumbai courts alone have jurisdiction to the exclusion of all other courts in the country, as the juridical seat of arbitration is at Mumbai. This being the case, the impugned judgment¹⁰ is set aside. The injunction confirmed by the impugned judgment will continue for a period of four weeks from the date of pronouncement of this judgment, so that the respondents may take necessary steps under

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8 (2013) 9 SCC 32 : (2013) 4 SCC (Civ) 157

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9 (2015) 12 SCC 225 : (2016) 1 SCC (Civ) 427

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10 Datawind Innovations (P) Ltd. v. Indus Mobile Distribution (P) Ltd. , 2016 SCC OnLine Del 3744 : (2016) 158 DRJ 391

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(Arbitration Appeal No. 2 of 2020)

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Section 9 in the Mumbai Court. Appeals are disposed of accordingly. ”

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15. A careful perusal of the finding recorded by the Commercial Court would show that in view of Clause 18 of the GCC, the arbitration proceedings between the parties shall be conducted in English language and the seat of arbitration shall be at New Delhi and that is the exclusive jurisdiction clause. In that view of the matter, we are of the considered opinion that the Commercial Court is justified in holding that it has no jurisdiction to adjudicate the application under Section 9 of the Act in view of the exclusive jurisdiction clause in the contract agreement i.e. Clause 18 of the GCC and further justified in rejecting the application as not maintainable, which is absolutely in accordance with law.

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16. Accordingly, the Arbitration Appeal deserves to be and the same is hereby dismissed. However, this will not bar the Appellant to file application for interim relief, if any, before the Arbitration Tribunal.

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17. No order as to costs.

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Sd/- Sd/-

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(Sanjay K. Agrawal)

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(Sanjay K. Agrawal) (Radhakishan Agrawal) Judge Judge

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sharad

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Digitally signed SHARAD by SHARADKUMAR YADAV KUMARYADAV Date:2025.01.1515:14:15 +0530

M/S. Agrawal Structure Mills Private Limited v. M/S. Punjab National Bank

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M/S. Agrawal Structure Mills Private Limited v. M/S. Punjab National Bank

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