Case Brief M/s Ravi Ranjan Developers Pvt. Ltd v. Aditya Kumar Chatterjee
- Fiducia Legal
- May 4, 2022
- 4 min read
Abhishek Bhushan Singh
Case: M/s Ravi Ranjan Developers Pvt. Ltd v. Aditya Kumar Chatterjee
Citation: SLP(C) No. 17397-17398/2021
Court: Supreme Court of India
Bench: Justice Indira Banerjee, Justice AS Bopanna
Date of Judgement: 24.03.2022
A High Court cannot hear an application for the appointment of an arbitrator if no part of the cause of action arose within its territorial jurisdiction.
Facts of the Case:
M/s Ravi Ranjan Developers Pvt. Ltd. ("Appellant") and Aditya Kumar Chatterjee ("Respondent") entered into a Development Agreement for the development of the property in Muzaffarpur, Bihar, on June 15, 2015. The contract said that any disputes would be resolved through Arbitration. The Arbitral Proceedings were to be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996, and the tribunal's sitting would be in Kolkata, according to the Agreement.
A dispute emerged between the parties as a result of significant differences, and on April 24, 2019, the Respondent terminated the Agreement; however, the Appellant rejected this termination. As a result, the Respondent served notice on the Appellant, using the Agreement's Arbitration Clause.
The Respondent filed a petition in the Calcutta High Court for the appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act.
The Calcutta High Court appointed a sole Arbitrator entirely disregarding the Appellant's affidavit objecting to the Court's geographical jurisdiction. The Appellant then filed a review petition against the impugned order, which the Calcutta High Court later dismissed in an order dated October 4, 2021. Aggrieved by the decision Appellant filed an appeal in the Supreme Court.
Issues:
Whether the Calcutta High Court had jurisdiction to entertain the application filed by the Respondent and appoint an Arbitrator?
Laws Applied:
Section 2(1)(e) of the Arbitration and Conciliation Act 1996
Section 2(2) of the Arbitration and Conciliation Act 1996
Section 9 of the Arbitration and Conciliation Act 1996
Section 11 of the Arbitration and Conciliation Act 1996
Section 11(6) of the Arbitration and Conciliation Act 1996
Section 17 of the Arbitration and Conciliation Act 1996
Section 42 of the Arbitration and Conciliation Act 1996
Contentions made by the Applicant:
The Appellant contended that the order issued by the Court without jurisdiction might be challenged at any point of the proceedings, regardless of any agreement granted by any party, citing the case of Kiran Singh and Ors. v. Chaman Paswan and Ors[1].
They strongly challenged the jurisdiction of the Calcutta High Court and stated that the Court's definition must be understood in accordance with Section 2(1)(e) of the Arbitration and Conciliation Act,
The Appellant also argued that the Court could exercise jurisdiction if the Respondent willingly resides or has purchased property within the Court's local jurisdiction. The Court can also hear a case if the cause of action occurred within its jurisdiction. Based on these considerations, it was argued that in this case, the parties registered and executed the Agreement in Muzaffarpur, which was outside the jurisdiction of the Calcutta High Court, and hence the Court could not exercise its jurisdiction.
Finally, the Appellant maintained that the Respondent could not invoke the jurisdiction of the Calcutta High Court because of Section 42 of the Arbitration and Conciliation Act.
Contentions made by the Respondent:
The Respondent stated that the Arbitrator was appointed with the Appellant's cooperation and that the Appellant could not question the appointment.
The Respondent also argued that as the seat of the Arbitration, the Calcutta High Court had proper authority to hear the case under Section 11(6) of the Arbitration and Conciliation Act.
The Respondent argued that once a seat of Arbitration is designated in an Arbitration Agreement, the Court of the seat has exclusive jurisdiction and supervisory power over all disputes arising out of or in connection with the Arbitration Agreement, citing the case of Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited and Ors[2]. On this basis, it was argued that because Calcutta was selected as the Arbitration's seat, the Calcutta High Court would have exclusive and geographical jurisdiction in the case.
The decision of the Court:
The Supreme Court observed that the development agreement was admittedly executed and registered outside the jurisdiction of the Calcutta High Court, and it pertains to the development of property in Bihar, which is again outside the jurisdiction of the Calcutta High Court. Furthermore, no party conducts business within the jurisdiction of the Calcutta High Court. The Supreme Court also dismissed Chhatterjee's argument that the Calcutta High Court had geographical jurisdiction to select the Arbitrator because the seat was in Calcutta (Kolkata). The Supreme Court noted that Calcutta (Kolkata) was only intended to be the 'venue' for arbitration sittings. The Supreme Court also noted that Respondent had previously sought interim protection under the Arbitration Act from the District Court in Muzaffarpur, Bihar, rather than a court in Kolkata, and is thus barred from claiming that the parties had agreed to give the Calcutta High Court exclusive jurisdiction. As a result, the SC ruled that the Calcutta High Court lacked authority to appoint an arbitrator, therefore the High Court decision was quashed and a new arbitrator was appointed.
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