Jharkhand High Court Sets Aside Order Dismissing S.34 Arbitration Application, Rules Ranchi Court Has Jurisdiction Despite Orissa High Court Appointment
Jharkhand High Court Sets Aside Order Dismissing S.34 Arbitration Application, Rules Ranchi Court Has Jurisdiction Despite Orissa High Court Appointment
In a significant ruling, the Jharkhand High Court, dismissing the petitioner’s application under Section 34 of the Arbitration and Conciliation Act, 1996 (‘A&C Act’) for setting aside an arbitral award. The order had been previously dismissed on the ground that the Commercial Court in Ranchi did not have jurisdiction to entertain the application since the sole arbitrator was appointed by the Orissa High Court.
Justice Dwivedi held that the mere fact that the Orissa High Court had appointed the sole arbitrator, with the consent of both parties, did not strip the Ranchi Court of jurisdiction. The Court clarified that the Commercial Court in Ranchi had the right to proceed with the application as the arbitration took place in Ranchi, with the express permission of the Orissa High Court. Additionally, the arbitration agreement stipulated that Ranchi would be both the seat and venue of the arbitration proceedings.
The petitioner, a Central Public Sector Undertaking under the Ministry of Steel, Government of India, was engaged in providing consultancy and engineering services. The respondent, a private limited company involved in manufacturing and civil engineering, had entered into a contract with the petitioner. Disputes arose between the two parties, leading to the respondent filing an application under Section 11(6) of the A&C Act before the Orissa High Court for the appointment of an arbitrator.
The Orissa High Court subsequently appointed the sole arbitrator, and the arbitration proceedings culminated in an award rendered on 26-03-2023. The petitioner sought to challenge the award under Section 34 of the A&C Act before the Commercial Court in Ranchi. However, the respondent contested the jurisdiction of the Ranchi court, arguing that as the application for the appointment of the arbitrator was filed before the Orissa High Court, the courts in Orissa had jurisdiction to hear the matter as per Section 42 of the A&C Act.
In response, the Commercial Court in Ranchi dismissed the petitioner’s application on 30-11-2023.
The Court examined the issue of jurisdiction and the maintainability of the petition under Article 227 of the Constitution. Justice Dwivedi emphasized that judicial interference should only occur in rare cases where there has been a clear miscarriage of justice or a violation of natural justice. The Court also noted that since the petitioner had previously withdrawn an appeal, there was no finality to the matter, making the present petition under Article 227 maintainable.
The Court reasoned that once the parties had agreed to the arbitration taking place in Ranchi, the venue and seat of the arbitration were clearly designated as Ranchi, as per the arbitration agreement. The Court highlighted that both parties had agreed to proceed with the arbitration in Ranchi, which reflected their intention for the proceedings to take place there.
Further, the Court relied on the ruling in BGS SGS SOMA JV v. NHPC Ltd (2020) 4 SCC 234, which stated that when the place of arbitration is designated as the "venue" in the arbitration clause, it is presumed to be the seat of the arbitration unless there are clear indications to the contrary.
The Jharkhand High Court concluded that the Commercial Court in Ranchi had jurisdiction over the matter, as the arbitration proceedings had taken place in Ranchi with the consent of the Orissa High Court, and the seat and venue for arbitration were expressly stated in the agreement. Therefore, the order dated 30-11-2023 was set aside, and the petitioner’s application under Section 34 of the A&C Act was restored for further proceedings in the Ranchi court.
This ruling reinforces the importance of the parties’ agreed-upon seat and venue for arbitration, and affirms the jurisdiction of courts in the location where arbitration proceedings are conducted.
