A machinery-rental dispute raised a challenge to the agreed Hyderabad arbitration seat and proceedings there for interim relief. The Court upheld Hyderabad's exclusive jurisdiction and dismissed the writ as not maintainable against the Hyderabad civil court or the private company in this commercial dispute.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
Page No.# 1/18
GAHC040010502021
THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) (ITANAGAR BENCH)
Case No. : WP(C) 358/2021
1:Lishi Yapu W/o Mr Biyuram Waghe R/o E 132. A Sector, LEGI Complex, Naharlagun, Naharlagun Circle, Papumpare, Arunachal Pradesh. Pin 791110
VERSUS
1:The State of Telangana and 3 Ors.
Represented by the Chief Secretary Government of Telangana, Block C, 3rd Floor, Telangana, Secretariat, Khairatabad, Hyderabad 500022
2:The Secretary to Govt. Legal Affairs Legislative Affairs and Justice Law Department Room Nos. 317 (Peshi) 314 (OP) A Block III Floor T.S. Secretariat Buildings Hyderabad Pin 500004
3:The Court of the Honourable III Additional Chief Judge City Civil Court At Hyderabad represented by its Presiding Officer City Civil Court Purna Haveli Chatta Bazar Hyderabad 500002
4:DBR Infrastructure Private Limited A company incorporated under the Companies Act 1956
Page No.# 2/18
having its Registered office at H. No. 8-2-601/4/3/4/A Plot No 221 3rd Floor Panchavati Colony Road No 10 Banjara Hills Hyderabad 5600034. Telangan
Advocate for the Petitioner : K K Mahanta
Advocate for the Respondent : Parswajyoti Das Nair
BEFORE
HON’BLE MR. JUSTICE KALYAN RAI SURANA
For the petitioner : Mr. K.M. Mahanta, Advocate. For respondent no.4 : Mr. P.D. Nair, Advocate. Date of hearing : 04.05.2022. Date of judgment : 11.05.2022.
JUDGMENT AND ORDER
(CAV)
Heard Mr. K.M. Mahanta, learned counsel for the petitioner and also heard Mr. P.D. Nair, learned counsel for the respondent no. 4. None appears on call for the respondent nos. 1 and 2. It may be mentioned that by order dated 03.11.2021, no notice was issued on respondent no. 3, being a Court.
Page No.# 3/18 equipment and vehicles for carrying out construction of road at a location at Seppa in the State of Arunachal Pradesh. In the agreement, it has been mentioned that the agreement was made in Hyderabad and the said agreement contains arbitration clause, thereby providing that the seat and venue of the arbitration would be at Hyderabad.
Page No.# 4/18 this Court, which is retained on record. In support of their submissions, the learned counsel for the petitioner had placed reliance of the following cases, viz., (i) BGS SGS Soma v. N.H.P.C., (2020) 4 SCC 234; (ii) Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. & Ors., (2017) 7 SCC 678; (iii) State of U.P. v. Associated Contractors, (2015) 1 SCC 32; (iv) Bharat Aluminum Co. Ltd. v. Kaiser Aluminum Technical Service Inc., (2012) 9 SCC 552; (v) A.B.C. Laminart Pvt. Ltd. V. Andhra Pradesh Agencies, Salem, (1989) 2 SCC 163; (vi)Globe Transport Corporation v. Triveni Engineering Works, (1983) 4 SCC 707; (vii) Hakam Singh v. Gammon India Ltd., AIR 1971 SC 740.
Page No.# 5/18
12 to 14 of the said agreement dated 12.12.2020, which is as follows:-
“12. ENTIRE AGREEMENT:
14.1 In case of any dispute or difference arising between the parties regarding the meaning, construction, interpretation, breach or fulfillment or
Page No.# 6/18 non-fulfillment of the terms and obligations of these presents or of any clause or condition thereof, the same shall be referred to the decision and arbitration of two arbitrators, one to be nominated by each party which arbitrators shall before taking upon themselves the burden of reference, appoint an umpire. The submission shall be deemed to be a submission to arbitration within the meaning of Arbitration and Conciliation Act, 1996 or any statutory modification thereof. The seat and venue of arbitration shall be Hyderabad, Telengana, India and the language of the arbitration shall be English. The award of the Arbitrator or Arbitrators, as the case may be shall be final and binding on the parties. (emphasis by Court).”
On seat and venue of arbitration:
Page No.# 7/18 amendment of this agreement is binding unless the same is in writing duly signed by the parties. The petitioner has not pleaded any date, time and venue when the signatories to the agreement dated 12.12.2020 had agreed to have the clause providing Hyderabad as the venue and seat of arbitration altered to a purported “neutral” venue. At this stage, notwithstanding that there is no evidence regarding oral agreement to have the venue and seat of arbitration changed, the Court is inclined to refer to the principles of Section 92 of the Evidence Act, 1872, which provides for “exclusion of evidence of oral evidence”. Therefore, in the absence of any document in writing, there is absence of any material before the Court, based on which it can be accepted that the parties had any written or oral agreement to have a neutral venue for arbitration. Therefore, it is unacceptable that the parties had verbally agreed to have the place and seat of arbitration at Naharlagun. The said plea, thus, miserably fails.
2 . Definitions.—(1) In this Part, unless the context otherwise requires—
( e ) “Court” means—
( i ) in the case of an arbitration other than international commercial arbitration, 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
Page No.# 8/18 grade inferior to such principal civil court, or any Court of Small Causes; ( ii )in the case of international commercial arbitration, 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, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court;
( 2 ) Scope.—This part shall apply where the place of arbitration is in India:
Provided that subject to an agreement to the contrary, the provisions of Sections 9, 27 and clause (a) of sub-section (1) and sub-section (3) of Section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognised under the provisions of Part II of this Act.
20 . Place of arbitration.—( 1 ) The parties are free to agree on the place of arbitration.
( 2 ) Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the Arbitral Tribunal having regard to the circumstances of the case, including the convenience of the parties.
( 3 ) Notwithstanding sub-section (1) or sub-section (2), the Arbitral Tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, good or other property.
58. Equally, the ratio of the judgment in Indus Mobile Distribution (P) Ltd. (supra), is contained in paras 19 and 20. Two separate and distinct reasons are given in Indus Mobile Distribution (P) Ltd. for arriving at the conclusion that the courts at Mumbai alone would have jurisdiction. The first reason, which is independent of the second, is that as the seat of the arbitration was designated as Mumbai, it would carry with it the fact that courts at Mumbai alone would have jurisdiction over the arbitration process. The second reason given was that
Page No.# 9/18 in any case, following the Hakam Singh v. Gammon (India) Ltd., (1971) 1 SCC 286, principle, where more than one court can be said to have jurisdiction, the agreement itself designated the Mumbai courts as having exclusive jurisdiction. It is thus wholly incorrect to state that Indus Mobile Distribution (P) Ltd. has a limited ratio decidendi contained in para 20 alone, and that para 19, if read by itself, would run contrary to the 5-Judge Bench decision in B ALCO v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552.
59. Equally incorrect is the finding in Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd., 2018 SCC OnLine Del 9338, that Section 42 of the Arbitration Act, 1996 would be rendered ineffective and useless. Section 42 is meant to avoid conflicts in jurisdiction of courts by placing the supervisory jurisdiction over all arbitral proceedings in connection with the arbitration in one court exclusively. This is why the section begins with a non obstante clause, and then goes on to state “…where with respect to an arbitration agreement any application under this part has been made in a court…” It is obvious that the application made under this part to a court must be a court which has jurisdiction to decide such application. The subsequent holdings of this court, that where a seat is designated in an agreement, the courts of the seat alone have jurisdiction, would require that all applications under Part I be made only in the court where the seat is located, and that court alone then has jurisdiction over the arbitral proceedings and all subsequent applications arising out of the arbitral agreement. So read, Section 42 is not rendered ineffective or useless. Also, where it is found on the facts of a particular case that either no “seat” is designated by agreement, or the so-called “seat” is only a convenient “venue”, then there may be several courts where a part of the cause of action arises that may have jurisdiction. Again, an application under Section 9 of the Arbitration Act, 1996 may be preferred before a court in which part of the cause of action arises in a case where parties have not agreed on the “seat” of arbitration, and before such “seat” may have been determined, on the facts of a particular case, by the Arbitral Tribunal under Section 20(2) of the Arbitration Act, 1996. In both these situations, the earliest application having been made to a court in which a part of the cause of action arises would then be the exclusive court under Section 42, which would have control over the arbitral proceedings. For all these reasons, the law stated by the Bombay and Delhi High Courts in this regard is incorrect and is overruled.
61. It will thus be seen that wherever there is an express designation of a “venue”, and no designation of any alternative place as the “seat”, combined with a supranational body of rules governing the arbitration, and no other significant contrary indicia, the inexorable conclusion is that the stated venue is actually the juridical seat of the arbitral proceeding.
97. Given the fact that if there were a dispute between NHPC Ltd. and a
Page No.# 10/18 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 subclause (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 .”
Page No.# 11/18
Page No.# 12/18 and venue of the arbitration as per agreement dated 12.12.2020 is at Hyderabad, but merely because (i) the agreement was signed by the petitioner at Hyderabad, and (ii) equipment, machinery, vehicles etc. are lying at Seppa, the juridical seat of arbitration either at Tezpur or at Seppa. Therefore, the Court finds no reason to burden this order with the discussion of cases not relevant to the point.
Maintainability of this writ petition:
Page No.# 13/18 been able to demonstrate that the Courts at Hyderabad would have the juridical seat of arbitration proceeding, which includes empowering Courts at Hyderabad to entertain an application for interim relief as provided for under Section 9 of the Arbitration and Conciliation Act, 1996. Moreover, in the case of Radhey Shyam (supra), the Full Bench (3-Judge Bench) of the Supreme Court of India had held that no writ would lie to challenge judicial orders if such orders were otherwise amenable to statutory appeal and revision. The relevant paragraphs are quoted below:-
19 . Another Bench of three Judges in Sadhana Lodh v. National Insurance Co. Ltd., (2003) 3 SCC 524 considered the question whether remedy of writ will be available when remedy of appeal was on limited grounds. This Court held: (SCC p. 527, para 6)
“6. The right of appeal is a statutory right and where the law provides remedy by filing an appeal on limited grounds, the grounds of challenge cannot be enlarged by filing a petition under Articles 226/227 of the Constitution on the premise that the insurer has limited grounds available for challenging the award given by the Tribunal. Section 149(2) of the Act limits the insurer to file an appeal on those enumerated grounds and the appeal being a product of the statute it is not open to an insurer to take any plea other than those provided under Section 149(2) of the Act [see National Insurance Co. Ltd. v. Nicolletta Rohtagi, (2002) 7 SCC 456]. This being the legal position, the petition filed under Article 227 of the Constitution by the insurer was wholly misconceived. Where a statutory right to file an appeal has been provided for, it is not open to the High Court to entertain a petition under Article 227 of the Constitution. Even if where a remedy by way of an appeal has not been provided for against the order and judgment of a District Judge, the remedy available to the aggrieved person is to file a revision before the High Court under Section 115 of the Code of Civil Procedure.Where remedy for filing a revision before the High Court under Section 115 CPC has been expressly barred by a State enactment, only in such case a petition under Article 227 of the Constitution would lie and not under Article 226 of the Constitution. As a matter of illustration, where a trial court in a civil suit refused to grant temporary
Page No.# 14/18 injunction and an appeal against refusal to grant injunction has been rejected, and a State enactment has barred the remedy of filing revision under Section 115 CPC, in such a situation a writ petition under Article 227 would lie and not under Article 226 of the Constitution. Thus, where the State Legislature has barred a remedy of filing a revision petition before the High Court under Section 115 CPC, no petition under Article 226 of the Constitution would lie for the reason that a mere wrong decision without anything more is not enough to attract jurisdiction of the High Court under Article 226 of the Constitution.”
29. Accordingly, we answer the question referred as follows:
29.3. Contrary view in Surya Dev Rai v. Ram Chander Rai, (2003) 6 SCC 675 is overruled .”
Page No.# 15/18 ratio of the case of Radhey Shyam (supra), the Court is inclined to hold that the respondent no. 3 Court, i.e. Court of III Additional Chief Judge, City Civil Court, Hyderabad, being not under the supervisory control of this Court, neither the proceedings before it, being Arb. O.P. No. 44/2021, can be quashed by this Court, nor any order passed by the said learned Court is amenable to writ jurisdiction of this Court. Therefore, the present writ petition would not be maintainable on facts and in law. In this case, as it has been held that the seat and venue of arbitration is at Hyderabad and therefore, the supervisory control would vest with the High Court of Telengana, under whose jurisdiction, the said Court is situated.
“ 14. On the basis of the authorities it is clear that the Supreme Court and the High Courts have power to issue writs, including a writ of prohibition. A writ of prohibition is normally issued only when the inferior court or tribunal (a) proceeds to act without or in excess of jurisdiction, (b) proceeds to act in violation of the rules of natural justice, (c) proceeds to act under law which is itself ultra vires or unconstitutional, or (d) proceeds to act in contravention of fundamental rights. The principles, which govern the exercise of such power, must be strictly observed. A writ of prohibition must be issued only in rarest of rare cases. Judicial discipline of the highest order has to be exercised whilst issuing such writs. It must be remembered that the writ jurisdiction is original jurisdiction distinct from appellate jurisdiction. An appeal cannot be allowed to be disguised in the form of a writ. In other words, this power cannot be allowed to be used “as a cloak of an appeal in disguise”. Lax use of such a power would impair the dignity and integrity of the subordinate court and could also lead to chaotic consequences. It would undermine the confidence of the subordinate court. It was not even argued that there was total lack of jurisdiction in the civil court. It could not be denied that the civil court, before which the suit was pending, had powers to decide on the maintainability of
Page No.# 16/18 the suit and to decide on questions of its jurisdiction. The civil court had jurisdiction to decide whether the suit was barred by Section 14 of the said Act or on the principles of res judicata/estoppel. Thus unless there was some very cogent or strong reason the High Court should not have prevented the court of competent jurisdiction from deciding these questions. In other words, the High Court should not usurp the jurisdiction of the civil court to decide these questions. In the impugned judgment no reason, much less a cogent or strong reason, has been given as to why the civil court could not be allowed to decide these questions. The impugned judgment does not state that the civil court had either proceeded to act without or in excess of jurisdiction or that it had acted in violation of the rules of natural justice or that it had proceeded to act under law which was ultra vires or unconstitutional or proceeded to act in contravention of the fundamental rights. The impugned judgment does not indicate as to why the High Court did not consider it expedient to allow the civil court to decide on questions of maintainability of the suit or its own jurisdiction. The impugned judgment does not indicate why the civil court be not allowed to decide whether the suit was barred by virtue of Section 14 of the said Act or on the principles of res judicata/estoppel. To be remembered that no fundamental right is being violated when a court of competent jurisdiction is deciding, rightly or wrongly, matters before it.
16. We have considered the rival submissions. It is not possible to accept Mr. Mishra's submission that this Court should quash the interim orders. Those orders are not before this Court and this Court cannot blindly quash the orders passed by courts of competent jurisdiction without even looking into the orders. Even presuming, without so holding, that the suit is not maintainable by virtue of Section 14 of the said Act or on the principles of res judicata/estoppel in our view the High Court should have permitted the civil court, which was competent to decide these questions to do so. At the most the High Court could have directed the civil court to decide these issues as preliminary issues. In our view the correct course is to set aside the impugned judgment and direct the civil court to decide the question of maintainability of the suit in view of Section 14 of the said Act and/or its jurisdiction to entertain the suit as also the question whether the suit is barred by the principle of res judicata as preliminary issues. We see no substance in the apprehension that in deciding the preliminary issues the civil court will not keep in mind judgments of this Court (set out hereinabove) pertaining to maintainability of the suit once patta is granted under the said Act. Undoubtedly, the civil court would see whether in effect the suit is for purposes of setting aside or modifying the decisions taken in the earlier round of litigation .”
Page No.# 17/18 accepted that Hyderabad was not a neutral venue for arbitration, then for example, if one of the contracting parties are at Delhi and Kolkata respectively, by the neutral venue concept proposed by the learned counsel for the petitioners, the venue and seat of arbitration cannot be at either of the two cities. In another example, if both the contracting parties are of the same city, say Delhi, then by the same proposition, the venue and seat of arbitration necessarily has to be at a place other than the said city. This was never the legislative intention while enacting the Arbitration and Conciliation Act, 1996. Therefore, as the agreement provides that the seat and venue of arbitration would be at Hyderabad, the arbitration as well as application for interim relief under Section 9 of the said Act would have to be initiated at Hyderabad.
Page No.# 18/18
between the petitioner and the respondent no. 4, being commercial in nature, writ would not lie against the respondent no. 4.
JUDGE
Comparing Assistant
3 issues framed by the court
Did the agreed Hyderabad seat confer exclusive arbitral jurisdiction despite execution elsewhere and the equipment's location in Arunachal Pradesh?
Could this Court quash proceedings before a Hyderabad civil court under Article 226?
Was a writ maintainable against the private company in this commercial rental dispute?
Colour shows how this judgement treated each authority
BGS SGS Soma v. N.H.P.C.Relied on¶55
BGS SGS Soma v. N.H.P.C., (2020) 4 SCC 234 · Who else cites this
Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. & Ors.Applied¶66
Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. & Ors., (2017) 7 SCC 678 · Who else cites this
State of U.P. v. Associated ContractorsDistinguished¶67
State of U.P. v. Associated Contractors, (2015) 1 SCC 32 · Who else cites this
Bharat Aluminum Co. Ltd. v. Kaiser Aluminum Technical Service Inc.Distinguished¶67
Bharat Aluminum Co. Ltd. v. Kaiser Aluminum Technical Service Inc., (2012) 9 SCC 552 · Who else cites this
A.B.C. Laminart Pvt. Ltd. V. Andhra Pradesh Agencies, SalemDistinguished¶67
A.B.C. Laminart Pvt. Ltd. V. Andhra Pradesh Agencies, Salem, (1989) 2 SCC 163 · Who else cites this
Globe Transport Corporation v. Triveni Engineering WorksDistinguished¶67
Globe Transport Corporation v. Triveni Engineering Works, (1983) 4 SCC 707 · Who else cites this
Hakam Singh v. Gammon India Ltd.Distinguished¶67
Hakam Singh v. Gammon India Ltd., AIR 1971 SC 740 · Who else cites this
Inox Renewables Ltd. V. Jayesh Electricals Ltd.Referred¶27
Inox Renewables Ltd. V. Jayesh Electricals Ltd., 2021 SCC OnLine 448 · Who else cites this
Radhey Shyam & Anr. V. Chhabi Nath & Ors.Followed¶84
Radhey Shyam & Anr. V. Chhabi Nath & Ors., (2015) 5 SCC 423 · Who else cites this
Thirumala Tirupati Devasthanam & Anr. V. Thallappaka Ananthacharyulu & Ors.Relied on¶85
Thirumala Tirupati Devasthanam & Anr. V. Thallappaka Ananthacharyulu & Ors., (2003) 8 SCC 134 · Who else cites this
Oil and Natural Gas Commission v. Utpal Kumar BasuReferred¶27
Oil and Natural Gas Commission v. Utpal Kumar Basu
State of Rajasthan & Ors. v. M/s. Swaika Properties & Anr.Referred¶27
State of Rajasthan & Ors. v. M/s. Swaika Properties & Anr.
Naresh Shridhar Mirjakar v. State of MaharashtraRelied on¶70
Naresh Shridhar Mirjakar v. State of Maharashtra, AIR 1967 SC 1 · Who else cites this
4 provisions across 3 enactments
Lishi Yapu
The State of Telangana
The Secretary to Govt. Legal Affairs Legislative Affairs and Justice Law Department
The Court of the Honourable III Additional Chief Judge City Civil Court At Hyderabad
DBR Infrastructure Private Limited
Kalyan Rai Surana
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
