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REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

TRANSFER PETITION (C) NO. 3053 OF 2019

HINDUSTAN CONSTRUCTION COMPANY LTD                 Petitioner(s)

                               VERSUS

NHPC LTD & ANR.                                    Respondent(s)

WITH

CIVIL APPEAL No. 1987/2020  (Arising out of Special Leave Petition (C) No. 402/2020)

TRANSFER PETITION (C) No. 7/2020  

TRANSFER PETITION (C) No. 10/2020  

J U D G M E N T

R.F. Nariman, J.

SPECIAL LEAVE PETITION (C) NO. 402/2020:

1) Leave granted.

2) We have heard learned counsel appearing for the parties.  

3) By an order dated 14.11.2019 passed by the learned Additional

District  Judge-cum-Presiding  Judge,  Special  Commercial  Court  at

Gurugram in Arbitration Case No. 252 of 2018, the learned Judge on

construing  the  arbitration  clause  in  the  agreement  between  the

parties arrived at the finding that the seat of arbitration was at

New Delhi.  Yet, by virtue of Bharat Aluminium Company and Ors. vs.

Kaiser Aluminium Technical Services, Inc. and Ors. (2012) 9 SCC 552

since  both  Delhi  as  well  as  the  Faridabad  Courts  would  have

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jurisdiction as the contract was executed between the parties at

Faridabad, and part of the cause of action arose there, and since

the Faridabad Court was invoked first on the facts of this case,

Section 42 of the Arbitration Act would kick in as a result of

which the Faridabad Court would have jurisdiction to decide all

other applications.   

4) This Court in Civil Appeal No. 9307 of 2019 entitled BGS SGS

Soma  JV vs.  NHPC  Ltd.  delivered  a  judgment  on  10.12.2019  i.e.

after the impugned judgment was delivered, in which reference was

made to Section 42 of the Act and a finding recorded thus:

“61.  Equally incorrect  is the  finding in  Antrix Corporation  Ltd.  (supra) that  Section  42  of  the Arbitration Act, 1996 would be rendered ineffective and  useless.   Section  42  is  meant  to  avoid conflicts in jurisdiction of Courts by placing the supervisory  jurisdiction  over  all  arbitral proceedings in connection with the arbitration in one Court exclusively.  This is why the section begins with a non-obstante clause, and then goes on to  state  “…where  with  respect  to  an  arbitration agreement any application under this Part has been made  in  a  Court…”  It  is  obvious  that  the application made under this part to a Court must be a  Court  which  has  jurisdiction  to  decide  such application. The subsequent holdings of this Court, that where a seat is designated in an agreement, the  Courts  of  the  seat  alone  have  jurisdiction, would require that all applications under Part I be made only in the Court where the seat is located, and that Court alone then has jurisdiction over the arbitral  proceedings  and  all  subsequent applications arising out of the arbitral agreement. So read, Section 42 is not rendered ineffective or useless. Also, where it is found on the facts of a particular case that either no “seat” is designated by agreement, or the so-called “seat” is only a convenient  “venue”,  then  there  may  be  several Courts where a part of the cause of action arises that may have jurisdiction.  Again, an application under Section 9 of the Arbitration Act, 1996 may be preferred before a court in which part of the cause of action arises in a case where parties have not agreed  on  the  “seat”  of  arbitration,  and  before

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such “seat” may have been determined, on the facts of  a  particular  case,  by  the  Arbitral  Tribunal under Section 20(2) of the Arbitration Act, 1996. In both these situations, the earliest application having been made to a Court in which a part of the cause of action arises would then be the exclusive Court under Section 42, which would have control over  the  arbitral  proceedings.  For  all  these reasons, the law stated by the Bombay and Delhi High  Courts  in  this  regard  is  incorrect  and  is overruled. “

5) This was made in the backdrop of explaining para 96 of the

Balco (supra), which judgment read as a whole declares that once

the seat of arbitration is designated, such clause then becomes an

exclusive jurisdiction clause as a result of which only the courts

where  the  seat  is  located  would  then  have  jurisdiction  to  the

exclusion of all other courts.

6) Given the finding in this case that New Delhi was the chosen

seat of the parties, even if an application was first made to the

Faridabad Court, that application would be made to a court without

jurisdiction.  This being the case, the impugned judgment is set

aside following BGS SGS Soma JV (supra), as a result of which it is

the courts at New Delhi alone which would have jurisdiction for the

purposes of challenge to the Award.   

7) As a result of this judgment, the Section 34 application that

has been filed at Faridabad Court will stand transferred to the

High Court of Delhi at New Delhi.  Any objections taken on the

ground that such objection filed under Section 34 is out of time

hence  cannot  be  countenanced.   The  appeal  is  disposed  of

accordingly.

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TRANSFER PETITION (C) NOS. 3053/2019, 7/2020 & 10/2020:

8) On the facts of each of these cases, the finding of the courts

is that the seat has been designated as New Delhi.  This being the

case  and  in  consonance  with  our  judgment  in  BGS  SGS  Soma  JV

(supra), we transfer these Section 34 petitions to the High Court

of Delhi at New Delhi.

9) The transfer petitions are allowed in the afore-stated terms.  

IA No. 34078/2020 in T.P. (C) No. 3053/2019 and IA No. 34079/2020

in T.P. (C) No. 10/2020:

10) Status  quo as of today will operate for a period of eight

weeks from today.  In the meanwhile, once the transferred cases are

properly instituted in the Delhi High Court, it will be open for

the  respondents  to  move  petitions  under  Section  36  of  the

Arbitration  Act,  which  will  then  be  disposed  of  on  their  own

merits.

11) IAs stand disposed of accordingly.

  .......................... J.    (ROHINTON FALI NARIMAN)

  .......................... J.         (S. RAVINDRA BHAT)

  .......................... J.         (V. RAMASUBRAMANIAN)

New Delhi; March 04, 2020.