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Supreme Court of India
Hindustan Construction Company … vs Nhpc Ltd on 4 March, 2020Author: Rohinton Fali Nariman
Bench: Rohinton Fali Nariman, S. Ravindra Bhat, V. Ramasubramanian
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
TRANSFER PETITION (C) NO. 3053 OF 2019
HINDUSTAN CONSTRUCTION COMPANY LTD Petitioner(s)
VERSUS
NHPC LTD & ANR. Respondent(s)
WITH
CIVIL APPEAL No. 1987/2020
(Arising out of Special Leave Petition (C) No. 402/2020)
TRANSFER PETITION (C) No. 7/2020
TRANSFER PETITION (C) No. 10/2020
J U D G M E N T
R.F. Nariman, J.
SPECIAL LEAVE PETITION (C) NO. 402/2020:
1) Leave granted.
2) We have heard learned counsel appearing for the parties.
3) By an order dated 14.11.2019 passed by the learned Additional
District Judge-cum-Presiding Judge, Special Commercial Court at
Gurugram in Arbitration Case No. 252 of 2018, the learned Judge on
construing the arbitration clause in the agreement between the
parties arrived at the finding that the seat of arbitration was at
Signature Not Verified
Digitally signed by
SUSHMA KUMARI
BAJAJ
New Delhi.
Date: 2020.03.07
11:31:53 IST
Reason:
Yet, by virtue of Bharat Aluminium Company and Ors. vs.
Kaiser Aluminium Technical Services, Inc. and Ors. (2012) 9 SCC 552
since both Delhi as well as the Faridabad Courts would have
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jurisdiction as the contract was executed between the parties at
Faridabad, and part of the cause of action arose there, and since
the Faridabad Court was invoked first on the facts of this case,
Section 42 of the Arbitration Act would kick in as a result of
which the Faridabad Court would have jurisdiction to decide all
other applications.
4) This Court in Civil Appeal No. 9307 of 2019 entitled BGS SGS
Soma JV vs. NHPC Ltd. delivered a judgment on 10.12.2019 i.e.
after the impugned judgment was delivered, in which reference was
made to Section 42 of the Act and a finding recorded thus:
“61. Equally incorrect is the finding in Antrix
Corporation Ltd. (supra) 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
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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. “
5) This was made in the backdrop of explaining para 96 of the
Balco (supra), which judgment read as a whole declares that once
the seat of arbitration is designated, such clause then becomes an
exclusive jurisdiction clause as a result of which only the courts
where the seat is located would then have jurisdiction to the
exclusion of all other courts.
6) Given the finding in this case that New Delhi was the chosen
seat of the parties, even if an application was first made to the
Faridabad Court, that application would be made to a court without
jurisdiction. This being the case, the impugned judgment is set
aside following BGS SGS Soma JV (supra), as a result of which it is
the courts at New Delhi alone which would have jurisdiction for the
purposes of challenge to the Award.
7) As a result of this judgment, the Section 34 application that
has been filed at Faridabad Court will stand transferred to the
High Court of Delhi at New Delhi. Any objections taken on the
ground that such objection filed under Section 34 is out of time
hence cannot be countenanced. The appeal is disposed of
accordingly.
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TRANSFER PETITION (C) NOS. 3053/2019, 7/2020 & 10/2020:
8) On the facts of each of these cases, the finding of the courts
is that the seat has been designated as New Delhi. This being the
case and in consonance with our judgment in BGS SGS Soma JV
(supra), we transfer these Section 34 petitions to the High Court
of Delhi at New Delhi.
9) The transfer petitions are allowed in the afore-stated terms.
IA No. 34078/2020 in T.P. (C) No. 3053/2019 and IA No. 34079/2020
in T.P. (C) No. 10/2020:
10) Status quo as of today will operate for a period of eight
weeks from today. In the meanwhile, once the transferred cases are
properly instituted in the Delhi High Court, it will be open for
the respondents to move petitions under Section 36 of the
Arbitration Act, which will then be disposed of on their own
merits.
11) IAs stand disposed of accordingly.
…………………….. J.
(ROHINTON FALI NARIMAN)
…………………….. J.
(S. RAVINDRA BHAT)
…………………….. J.
(V. RAMASUBRAMANIAN)
New Delhi;
March 04, 2020.
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