{"id":322374,"date":"2024-05-17T17:00:30","date_gmt":"2024-05-17T11:30:30","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=322374"},"modified":"2024-05-22T18:08:27","modified_gmt":"2024-05-22T12:38:27","slug":"dhc-rejects-petition-for-arbitration-due-to-lack-of-jurisdiction-legal-news","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2024\/05\/17\/dhc-rejects-petition-for-arbitration-due-to-lack-of-jurisdiction-legal-news\/","title":{"rendered":"\u2018Seat of arbitration is the place where arbitral proceedings are anchored\u2019; Delhi High Court rejects petition filed u\/s 34 of Arbitration Act"},"content":{"rendered":"<div style=\"text-align: justify; line-height: 150%;\">\n<p style=\"margin-bottom: 3%;\"><span style=\"font-weight: bold;\">Delhi High Court:<\/span> In a petition under Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001544939\" target=\"_blank\" rel=\"noopener\">34<\/a> of the <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002726958\" target=\"_blank\" rel=\"noopener\">Arbitration and Conciliation Act, 1996<\/a> (&#8216;Arbitration Act&#8217;) filed to challenge an arbitral award passed by the District Level Micro and Small Enterprises Facilitation Council, Pathankot (&#8216;Facilitation Council&#8217;) constituted under the <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002942157\" target=\"_blank\" rel=\"noopener\">Micro, Small and Medium Enterprises Development Act, 2006<\/a> (&#8216;MSME Act&#8217;), a Single Judge Bench of Prateek Jalan, J. rejected the petition while stating that the circumstances of the case do not suggest that the seat of arbitration was at any place other than the venue.<\/p>\n<p style=\"font-weight: bold;\">Background<\/p>\n<p style=\"margin-bottom: 3%;\">The respondent was a registered medium enterprise under the <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002942157\" target=\"_blank\" rel=\"noopener\">MSME Act<\/a>. It entered into an agreement dated 21-01-2016 with Delhi Tourism and Transportation Development Corporation (DTTDC), the petitioner, for construction of a bus depot at Kharkhari Nahar Village, New Delhi.<\/p>\n<p style=\"margin-bottom: 3%;\">After a few disputes arose between the parties, the respondent claimed payment of its alleged dues under the agreement before the Facilitation Council, because of which, the jurisdiction of the Federation Council was invoked under Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001546080\" target=\"_blank\" rel=\"noopener\">18<\/a> of the <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002942157\" target=\"_blank\" rel=\"noopener\">MSME Act<\/a>. The conciliation proceedings were adopted by the Facilitation Council which were closed on 15-10-2020 and the reference was taken up for arbitration. By the impugned award, the Facilitation Council awarded a sum of Rs. 4,11,55,845\/- to the respondent.<\/p>\n<p style=\"margin-bottom: 3%;\">The respondent objected to the territorial jurisdiction of the present Court to entertain this petition by mentioning that since Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001546080\" target=\"_blank\" rel=\"noopener\">18(4)<\/a> of the <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002942157\" target=\"_blank\" rel=\"noopener\">MSME Act<\/a> vests jurisdiction in a Facilitation Council to act as an arbitrator or conciliator in disputes between suppliers located within its jurisdiction and a buyer located anywhere in India, Pathankot would be the seat of arbitration proceedings.<\/p>\n<p style=\"margin-bottom: 3%;\">DTTDC relied on an exclusive jurisdiction clause contained in Article 7 of an &#8216;Integrity Pact&#8217;, which formed part of the tender documents. It was contended that because of this clause in the agreement, jurisdiction was conferred upon the Courts in Delhi too.<\/p>\n<p style=\"font-weight: bold;\">Analysis and Decision<\/p>\n<p style=\"margin-bottom: 3%;\">The Court stated that in the present matter, two questions required consideration:<\/p>\n<p style=\"font-weight: bold;\">I. Whether the agreement between the parties contained an exclusive jurisdiction clause for the present petition.<\/p>\n<p style=\"margin-bottom: 3%;\">The Court noted that the General Conditions of Contract did not contain an exclusive jurisdiction clause and the seat of arbitration was also not stipulated. However, Clause 25 provided that the venue of the arbitration &#8220;shall be such place as may be fixed by the arbitrator in his sole discretion&#8221;.<\/p>\n<\/li>\n<p style=\"margin-bottom: 3%;\">Further, the Court noted that the dispute-resolution mechanism under the main agreement and the integrity pact were intended to be entirely different since Clause 7(5) of the pact stated that disputes and differences arising under the pact and questions thereof, shall not be subject to arbitration.<\/p>\n<p style=\"margin-bottom: 3%;\">After properly interpreting the contractual terms, the Court stated that the parties did not expressly provide for the seat of the arbitration under the Agreement, and only provided that the venue would be at the discretion of the arbitrator. The Court referred to <span style=\"font-style: italic;\">Indian Oil Corporation Ltd.<\/span> v. <span style=\"font-style: italic;\">FEPL Engineering (P) Ltd.<\/span>, <a href=\"http:\/\/www.scconline.com\/DocumentLink\/iPXr4M1K\" target=\"_blank\" rel=\"noopener\">2019 SCC OnLine Del 10265<\/a> wherein the Division Bench held that the present Court had the jurisdiction to entertain the petition under Section 34 of the Arbitration Act, due to an exclusive jurisdiction clause contained in the agreement. This judgment was subsequently followed in <span style=\"font-style: italic;\">IRCON International Ltd.<\/span> v. <span style=\"font-style: italic;\">Pioneer Fabricators Pvt. Ltd.<\/span>, <a href=\"http:\/\/www.scconline.com\/DocumentLink\/TgLr65k4\" target=\"_blank\" rel=\"noopener\">2023 SCC OnLine Del 1811<\/a>.<\/p>\n<p style=\"margin-bottom: 3%;\">Further, the Court stated that both the above judgments were on the basis that the exclusive jurisdiction clause would not be overridden by the conferment of jurisdiction upon a particular MSME Facilitation Council, which is why it was concluded that there was no exclusive jurisdiction clause present. The Court also stated that the above judgments were not applicable in the present case.<\/p>\n<p style=\"font-weight: bold;\">II. Whether the seat of arbitration was, in any event, in Delhi.<\/p>\n<p style=\"margin-bottom: 3%;\">The Court stated that it was settled law that the seat of arbitration proceedings is to be determined based on connection with the arbitral proceedings, and not with the cause of action for the underlying disputes.<\/p>\n<\/li>\n<p style=\"margin-bottom: 3%;\">Further, the Court reiterated that in the absence of any significant contrary indicia, &#8220;the inexorable conclusion is that the stated venue is actually the juridical seat of the arbitral proceeding&#8221;, as was said by the Supreme Court in <span style=\"font-style: italic;\">BGS SGS SOMA JV<\/span> v. <span style=\"font-style: italic;\">NHPC<\/span>, <a href=\"http:\/\/www.scconline.com\/DocumentLink\/6Yib4090\" target=\"_blank\" rel=\"noopener\">(2020) 4 SCC 234<\/a>.<\/p>\n<p style=\"margin-bottom: 3%;\">The Court stated that it found no reason to depart from the general principle that the seat of arbitration was at the place where the arbitration was conducted since the proceedings were admittedly conducted exclusively in Pathankot and the award was also made there.<\/p>\n<p style=\"margin-bottom: 3%;\">Thus, the Court held that it did not have the jurisdiction to entertain the petition, which is why the same was rejected.<\/p>\n<p style=\"margin-bottom: 3%;\">[<span style=\"font-weight: bold; color: #632423;\">Delhi Tourism &amp; Transportation Development Corpn. v. Satinder Mahajan, <a href=\"http:\/\/www.scconline.com\/DocumentLink\/ZoyvUUpy\" target=\"_blank\" rel=\"noopener\">2024 SCC OnLine Del 3206<\/a>, Decided on 01-05-2024<\/span>]<\/p>\n<hr\/>\n<p>Advocates who appeared in this case :<\/p>\n<p style=\"margin-left: 18pt;\"><span style=\"font-weight: bold;\">For Petitioner &#8212;<\/span> Advocate Suresh Tripathy, Advocate Puja Dewan, Advocate Uday Seth<\/p>\n<p style=\"margin-left: 18pt;\"><span style=\"font-weight: bold;\">For Respondent &#8212;<\/span> Advocate Sameer Chandwani, Advocate Parivesh Singh<\/p>\n<h3 style=\"color: #000080;\">Buy Arbitration and Conciliation Act, 1996 &nbsp; <a href=\"https:\/\/www.ebcwebstore.com\/product_info.php?products_id=382\" target=\"_blank\" rel=\"noopener\">HERE<\/a><\/h3>\n<p style=\"margin-bottom: 3%;\"><a href=\"https:\/\/www.ebcwebstore.com\/product_info.php?products_id=382\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/arbitration-and-conciliation-act-1996-191x300.png\" alt=\"arbitration and conciliation act, 1996\" width=\"191\" height=\"300\" class=\"aligncenter size-large wp-image-294803\" srcset=\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/arbitration-and-conciliation-act-1996-191x300.png 191w, https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/arbitration-and-conciliation-act-1996-38x60.png 38w, https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/arbitration-and-conciliation-act-1996.png 620w\" sizes=\"auto, (max-width: 191px) 100vw, 191px\" \/><\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p style=\"font-style: italic;\">The Delhi High Court says that the seat of the arbitration is to be determined based on arbitral proceedings and not with cause of action for underlying disputes.<\/p>\n","protected":false},"author":67011,"featured_media":314886,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[41950,3226,2543,3686,68799,15551,30034],"class_list":["post-322374","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-highcourts","tag-arbitral-proceedings","tag-arbitration","tag-Delhi_High_Court","tag-Jurisdiction","tag-justice-prateek-jalan","tag-seat-of-arbitration","tag-venue"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 (Yoast SEO v26.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>&#039;Seat of arbitration is the place where arbitral proceedings are anchored\u2019; 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Ltd. under Section 34 of the Arbitration Act, 1996 challenging an award passed by the Facilitation Council for Arbitration constituted under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) on grounds of territorial jurisdiction\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/11\/Bombay-High-Court-1.png?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]},{"id":350259,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/06\/10\/msme-arbitrations-seat-party-autonomy-legislative-prescription\/","url_meta":{"origin":322374,"position":1},"title":"MSME Arbitrations and the Seat of Arbitration: A Contest between Party Autonomy and Legislative Prescription","author":"Editor","date":"June 10, 2025","format":false,"excerpt":"by Milind Sharma*, Abhisaar Bairagi**, and Ausaf Ayyub***","rel":"","context":"In &quot;Experts Corner&quot;","block_context":{"text":"Experts Corner","link":"https:\/\/www.scconline.com\/blog\/post\/category\/experts_corner\/"},"img":{"alt_text":"MSME arbitrations and seat of arbitration","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/06\/MSME-arbitrations-and-seat-of-arbitration.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/06\/MSME-arbitrations-and-seat-of-arbitration.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/06\/MSME-arbitrations-and-seat-of-arbitration.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/06\/MSME-arbitrations-and-seat-of-arbitration.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":203997,"url":"https:\/\/www.scconline.com\/blog\/post\/2018\/10\/20\/change-of-venue-different-from-change-of-seat-of-arbitration-exercise-of-jurisdiction-under-section-34-ac-act-declined-for-seat-being-at-london-del-hc\/","url_meta":{"origin":322374,"position":2},"title":"Change of &#8216;venue&#8217; different from change of &#8216;seat&#8217; of Arbitration; exercise of jurisdiction under Section 34 A&#038;C Act declined for &#8216;seat&#8217; being at London: Del HC","author":"Bhumika Indulia","date":"October 20, 2018","format":false,"excerpt":"Delhi High Court:\u00a0A Single Judge Bench comprising of Navin Chawla, J., declined to exercise jurisdiction in entertaining a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 holding the\u00a0seat\u00a0Arbitration to be in London. The petition was filed under Section 34 in a matter arising out of a\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":273278,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/09\/08\/delhi-high-court-amendment-application-being-rejected-as-belated-does-not-constitute-interim-award-susceptible-to-challenge-under-s-34-arbitration-conciliation-act-1996\/","url_meta":{"origin":322374,"position":3},"title":"Delhi High Court: Amendment application being rejected as &#8216;belated&#8217; does not constitute interim award susceptible to challenge under S 34 Arbitration &#038; Conciliation Act, 1996","author":"Editor","date":"September 8, 2022","format":false,"excerpt":"\u00a0 \u00a0 Delhi High Court: In a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, (\u2018A&C Act') challenging an order passed wherein the arbitrator rejected an application filed by the petitioner for amendment of the statement of claim, Prateek Jalan, J. dismissed the petition as non-maintainable\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Delhi High Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/delhi_high_court.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/delhi_high_court.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/delhi_high_court.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/delhi_high_court.jpg?resize=700%2C400&ssl=1 2x, 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