Place Of Residence Of The Arbitrator Would Not Be The Seat Of Arbitration: Telangana High Court

The Single Bench of Justice P. Sree Sudha held that merely because an arbitrator residing in Hyderabad has been appointed, it would not mean that only the Courts at Hyderabad would have the jurisdiction to decide all the matters arising out of arbitration agreement.

Facts

After a dispute arose between the parties, the respondent sent a letter to the petitioner nominating an arbitrator who was residing in Hyderabad. The petitioner replied to its said notice and declined to appoint the arbitrator for the reason that there was no dispute which required the appointment of an arbitrator.

Accordingly, the respondent filed a Suit before the VII Additional District Judge Sangareddy for relief of permanent injunction. Therein the petitioner filed an application under Section 8 of the A&C Act and the parties were referred to arbitration.

Thereafter, the respondent filed an application under Section 9 of the A&C Act before the Principal District Judge, Sangareddy. Consequently, the petitioner filed the transfer petition to transfer the application from the Court at Sangareddy to Court at Hyderabad.

Contention Of The Parties

The petitioner sought the transfer of application on the following grounds:

• The respondent had nominated an arbitrator residing in Hyderabad, therefore, only the Courts in Hyderabad would have the jurisdiction to decide all the matters arising out of the arbitration.
• The nomination of an arbitrator residing in Hyderabad amounted to designating Hyderabad as the Seat of Arbitration.

The respondent countered the submission of the petitioner on the following grounds:

• The petitioner had filed a Section 8 application before the Court at Sangareddy, therefore, in terms of Section 42 of the A&C Act, only the court at Sangareddy would have the jurisdiction to decide all the matters arising out of arbitration.

Analysis By The Court

The Court held that the place of residence of the arbitrator would not determine the seat of arbitration.

The Court rejected the argument of the petitioner that since the respondent had initially nominated an arbitrator residing in Hyderabad, the Court at Hyderabad would have the jurisdiction.

The Court held that merely because a party has nominated an arbitrator who resides in Hyderabad, the same would not designate Hyderabad as the Seat of arbitration in absence of any designation of the seat under the arbitration agreement.

The Court further held that the petitioner had filed a Section 8 application before the Court at Sangareddy consequent to which the parties were referred to arbitration. Therefore, in terms of Section 42 of the A&C Act only that Court would have the jurisdiction.

Accordingly, the Court dismissed the Transfer Petition.

Case Title: M/s S. Square Infra v. Garneni Chalapathi Rao, Transfer Civil Miscellaneous Petition No. 122 of 2022

Citation:2022 LiveLaw (Tel) 54

Date: 21.06.2022

Counsel for the Petitioner: Y Balaji

Counsel for the Respondent: S Sridhar

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