No ‘Contra-Indicia’ To Un-Seat Venue: Calcutta High Court Reiterates The Law On Seat & Venue In Arbitral Proceedings.

The Calcutta High Court has held that the venue for arbitration, as decided by the parties under their contractual agreement would automatically be the seat for arbitration, in the absence of any ‘contra-indicia.’

In rejecting jurisdictional objections on its competence to entertain an application under Section 34 of the Arbitration & Conciliation Act, 1996 (“A & C Act”) upon noting that Clause 16 of the Contract between the parties had designated Kolkata to be the venue of arbitration and the Court in the City of Kolkata to have exclusive jurisdiction a single-bench of Justice Moushumi Bhattacharya held:

The parties accepted this agreement to be the final agreement. The fact that venue would be construed as the juridical seat of the arbitration has also been judicially settled where the seat is not specified. There is hence no contra indicia to un-seat the arbitration from the Court in the city of Kolkata which is the High Court at Calcutta. The respondent has not presented any contrary indicia to show that the cause of action has arisen elsewhere and would consequently divest this Court of jurisdiction.”

Brief facts

An application had been filed by the award-debtor Damodar Valley Corporation (“DVC”) for setting aside of an arbitral award passed in 2021.

The award-holder BLA had subsequently an application for the petition to be returned under Section 34 of the Arbitration act on the ground that the Calcutta HC would not have jurisdiction to entertain the petition filed by DVC for setting aside of the award.

Counsel for the BLA argued that the HC was not “Court” within the meaning of Section 2(1)(e) of the Arbitration Act and that the agreement executed between both parties under Clause 32 had designated Alipore Court to have exclusive jurisdiction under the Contract of 20.03.2018.

Counsel argued that merely by agreeing for the venue to be Kolkata, the parties had only agreed on the place where the tribunal would meet or schedule its hearings.

Counsel for the DVC opposed the return of the application to the Alipore court, and argued that under the forum selection clause in the contractual agreement, the Court in the City of Kolkata shall have exclusive jurisdiction.

It was argued that the clause relied on by BLA did not designate either the seat or the venue and that the BLA had accepted a subsequent contractual agreement dated 30.04.2018 as the final contract between the parties for appointment of arbitrator.

It was submitted that the agreements between the parties contained no significant ‘contra-indicia’ to suggest that the venue decided in the agreement was only meant to be a convenient place for the sitting of the tribunal.

Findings of the Court

In looking into the arguments advanced by the parties, the Court observed the agreement between the parties dated 30.04.2018 had bestowed exclusive jurisdiction on the Court in Kolkata, which would have primacy over the New Alipore Court under the earlier agreement.

It was further observed that Clause 33 of the earlier Contract, which aspires to be the arbitration clause, does not designate either the seat or the venue of the arbitration.

In the absence of the same, the Court looked at Clause 16 of the agreement of 30.04.2018 which provided for a 2-tier mechanism for dispute resolution.

It was noted that clause 16 did provide for the ‘venue’ of arbitration to be at Kolkata, and that according to the DVC, the venue being in Kolkata would tantamount to the seat also being at Kolkata.

Seat and Venue- not antithetical to each other

In delving through numerous Apex court judgements on similar subject matters, the Court relied on Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited; (2017) 7 SCC 678 and reiterated that the word “place” would designate the “juridical seat” for the purpose of section 2(2) of the 1996 Act and that designating a seat for arbitration would tantamount to “conferring exclusive jurisdiction to the Courts at the Seat.”

In further relying on the case of BGS SGS Soma JV v. NHPC Limited (2020) 4 SCC 234 the Bench noted that the Supreme Court had reiterated that wherever there existed an express designation of “venue” without specifying any alternative place as the “seat” without any contrary indication in the agreement or the conduct of parties, the stated venue would be “construed as the juridical seat of the arbitral proceeding.”

In deciding the present case, the Bench noted that according to the ratio in BGS SGS Soma “the Court in the City of Kolkata” would also be read as the “juridical seat” of arbitration.

Court interpreted the expression “City of Calcutta” as under Section 2(3) of the City Civil Court Act, 1953, to mean the area comprised within the local limits of the ordinary civil jurisdiction of the High Court at Calcutta.

Therefore, the Calcutta High Court would be the designated seat of the arbitration agreement which consequently would confer exclusive jurisdiction on this Court to determine and adjudicate all disputes arising out of the arbitration agreement, it was held.

Law does not support return of present Arbitration Petition

The Bench noted that according to various Supreme Court precedents the selection of an arbitration seat would be akin to an exclusive jurisdiction clause and the courts at the seat “alone” would have jurisdiction to entertain challenges against the arbitral award.

In relying on the Supreme Court decision in the case of Brahmani River Pellets Limited v. Kamachi Industries Limited; (2020) 5 SCC 462 it was reiterated that the moment parties designate the seat, the Courts at the seat would be vested with the exclusive jurisdiction to regulate arbitration proceedings as opposed to the court where the cause of action may have arisen.

Therefore, the Bench held that BLA’s argument that the Calcutta High Court would be denuded of jurisdiction to try the present application in absence of any cause of action having arisen or accrued within the territorial jurisdiction of the Court, must be negated.

No contra-indicia to un-seat the Venue in this case

The Court looked at Section 20 of the Arbitration Act which defined the “place” of arbitration and held that under the aforesaid section, parties were given free reign to decide where the arbitration will be anchored coupled with the freedom to decide where to hold the sittings as a matter of convenience.

It was observed that in cases where no specific designation of the seat had been made, the Courts had endeavoured to locate the seat based on “indicia apparent from the conduct of parties to fix the seat at a particular place or to dislocate the seat based on any contrary indication shown by the parties.”

In the present case Clause 16 of the agreement had designated Kolkata to be the venue and the Court in Kolkata to have exclusive jurisdiction, and the Court observed that both parties had accepted this agreement as the final agreement.

There is hence no contra indicia to un-seat the arbitration from the Court in the city of Kolkata which is the High Court at Calcutta, it was held.

In conclusion it was held that the decisions relied on by BLA were distinguishable both on facts as well as legal premise, and that the High Court at Calcutta would be competent to try and entertain the application under Section 34 of the Arbitration Act. Accordingly, the present application was dismissed.

Citation: 2023 LiveLaw (Cal) 325

Case: Damodar Valley Corporation v BLA Projects Pvt Ltd

Case No: GA 2 of 2022 in AP 473 of 2021

Counsel For the petitioner : Mr. Ratnanko Banerji, Sr. Adv. Mr. Kanishk Kejriwal, Adv. Mr. Amit Meharia, Adv. Ms. Paramita Banerjee, Adv.

Counsel For the respondent : Mr. Jaydip Kar, Sr. Adv. Mr. Debdeep Sinha, Adv. 

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