Factual Background and Procedural History
The present case arose from a dispute between SNS Engineering Pvt. Ltd. (“the petitioner”) and M/s Hariom Projects Pvt. Ltd. & Anr. (“the respondents”) concerning the execution of HVAC works for the construction of Uttarakhand Bhawan at Chanakyapuri, New Delhi.
The respondents, engaged in construction services, approached the petitioner for air-conditioning services. Following negotiations, the petitioner’s quotation dated 6 October 2021 was accepted by the respondents through an Acceptance Letter dated 21 October 2021, fixing the contract value at ₹2.85 crore plus GST. This Acceptance Letter contained an arbitration clause (Clause 14), which provided that disputes would be subject to the jurisdiction of courts in Ahmedabad only, with the Managing Director of Hariom Projects as the final authority for arbitration decisions.
Disputes arose over payments, leading respondent no. 1 to invoke arbitration through a letter dated 29 August 2024, requesting its Managing Director to appoint a sole arbitrator. The petitioner objected, arguing that a neutral arbitrator must be appointed by consent or by the court, and proposed three names, which were rejected by the respondents.
Consequently, SNS Engineering filed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 before the Delhi High Court, seeking appointment of an arbitrator. Meanwhile, the respondents also filed a parallel Section 11(6) petition before the Gujarat High Court.
Identification of Legal Issues
The Court primarily addressed one central legal issue:
- Whether the Delhi High Court had territorial jurisdiction to entertain a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, when the arbitration clause conferred exclusive jurisdiction on the courts in Ahmedabad.
This required interpretation of Clause 14 of the Acceptance Letter and the interplay between “seat of arbitration” and territorial jurisdiction.
Arguments of the Parties
Respondents’ Submissions
The respondents contended that the Delhi High Court lacked jurisdiction as Clause 14 explicitly conferred exclusive jurisdiction on courts in Ahmedabad. Hence, all arbitral proceedings, including the appointment of the arbitrator, must be under the supervisory jurisdiction of courts at Ahmedabad.
They relied upon several authoritative precedents:
- Swastik Gases (P) Ltd. v. Indian Oil Corporation Ltd., (2013) 9 SCC 32
- B.E. Simoese Von Staraburg Niedenthal v. Chhattisgarh Investment Ltd., (2015) 12 SCC 225
- Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd., (2017) 7 SCC 678
- Brahmani River Pellets Ltd. v. Kamachi Industries Ltd., (2020) 5 SCC 462
These judgments collectively establish that where an arbitration clause confers exclusive jurisdiction upon a particular court, that court alone constitutes the seat of arbitration.
Petitioner’s Submissions
The petitioner countered that since the entire cause of action—including contract negotiations, acceptance, execution, and billing—occurred in New Delhi, the Delhi High Court possessed jurisdiction under Section 20 of the Code of Civil Procedure, 1908.
The petitioner highlighted that:
- The Acceptance Letter was issued and accepted in New Delhi.
- The project site was located in New Delhi.
- The respondents maintained a GST registration and office in New Delhi.
Hence, the Delhi High Court was competent to entertain the petition.
Court’s Analysis and Reasoning
Justice Jasmeet Singh undertook a comprehensive examination of the jurisdictional implications of Clause 14 and the established jurisprudence on arbitration “seat” determination.
- Exclusive Jurisdiction Equals Seat of Arbitration
The Court reaffirmed that even where an arbitration clause does not expressly use the word “seat”, the court designated with exclusive jurisdiction is deemed to be the seat of arbitration. Reliance was placed on the Supreme Court’s recent decision in Activitas Management Advisor Pvt. Ltd. v. Mind Plus Healthcare Pvt. Ltd. (SLP (C) No. 27714/2024, decided on 5 August 2025), which held that a clause conferring exclusive jurisdiction on Mumbai courts impliedly established Mumbai as the seat of arbitration. - Application of Precedents
The Court reiterated the legal position from Indus Mobile Distribution and Brahmani River Pellets, holding that once a seat is designated—expressly or impliedly—it carries the same effect as an exclusive jurisdiction clause. Therefore, even if no part of the cause of action arose in Ahmedabad, only Ahmedabad courts would have supervisory control over the arbitral process. - Rejection of the Petitioner’s Reliance on Section 20 CPC
The Court held that Section 20 CPC principles (based on cause of action) do not apply in arbitration matters governed by the 1996 Act. The concept of “seat” overrides territorial cause-of-action considerations. As observed in G.R. Builders v. Metro Speciality Hospitals Pvt. Ltd., 2023:DHC:7050, the seat determines jurisdiction for Section 11 petitions—not where the dispute or contract performance occurred. - Party Autonomy
The Court emphasized party autonomy, a cornerstone of arbitration law, permitting parties to select a neutral jurisdiction as their arbitral seat, regardless of the physical location of contractual performance or disputes. - Interpretation of Clause 14
Clause 14, by using the expression “jurisdiction of courts in Ahmedabad only”, unequivocally indicated the parties’ intent to confer exclusive jurisdiction on Ahmedabad courts. Consequently, Ahmedabad was held to be the seat of arbitration.
Final Conclusion and Holding
The Delhi High Court held that it lacked territorial jurisdiction to entertain the petitioner’s Section 11(6) petition. Since the arbitration clause vested exclusive jurisdiction in Ahmedabad, only the courts at Ahmedabad could regulate the arbitral proceedings and appoint an arbitrator.
Accordingly, the petition was dismissed for want of territorial jurisdiction, along with all pending applications.
FAQs:
1. What does “seat of arbitration” mean in Indian arbitration law?
The “seat of arbitration” is the legal jurisdiction that governs the arbitration proceedings. It determines which court has supervisory control, regardless of where hearings physically take place.
2. Can parties choose a court that has no connection to the dispute as the seat of arbitration?
Yes. Under Indian law, parties enjoy autonomy to select a neutral seat of arbitration, even if no part of the cause of action arises there, as affirmed in Indus Mobile Distribution v. Datawind Innovations.
3. Does the mention of exclusive jurisdiction in a contract automatically fix the arbitration seat?
Yes. If an arbitration clause specifies that only certain courts have jurisdiction, it is interpreted as establishing that location as the arbitration seat, even without expressly using the word “seat.”
4. Can a court outside the arbitration seat appoint an arbitrator under Section 11 of the Arbitration Act?
No. Only the court at the seat of arbitration has jurisdiction to entertain applications under Section 11(6) for appointment of an arbitrator.
5. Does cause of action influence jurisdiction in arbitration matters?
No. Once the seat of arbitration is identified, the concept of “cause of action” under the Code of Civil Procedure becomes irrelevant. The seat alone determines jurisdiction for arbitral proceedings.
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