Judgment Name: M/S Sat Kartar Tour N Travels v. Oil and Natural Gas Corporation Limited

Citation: ARB.P. No. 772 of 2021.

Court: The High Court of Delhi

Coram: V. Kameswar Rao, J.

Date: 25th May 2022

Keywords: ONGC, Jurisdiction of Courts, Seat of Arbitration, Arbitral Proceedings, Section 11(6), Arbitration & Conciliation Act.

Overview

Sat Kartar Tour n Travel (Petitioner) entered into a contract for hiring services with ONGC (Respondent), which was subsequently terminated by ONGC. When the Petitioner invoked the Arbitration Clause in the contract, the Respondent appointed a sole Arbitrator without the Petitioner’s consent. Aggrieved by the same, the Petitioner filed a Petition requesting the Delhi High Court to set aside such unilateral appointment under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“Act”). The Court dismissed the Petition positing the lack of competent jurisdiction as it contradicted the seat of arbitration decided by the parties in the contract. It also held that any order passed by an Arbitrator effectuating arbitral proceedings to be held at some other place does not change the seat of arbitration decided by the parties.

Facts

Sat Kartar Tour n Travels, the Petitioner, was awarded a contract by the Respondent and buyer, ONGC, for hiring services of SUV vehicles in November 2020. Soon after, the Petitioner’s representative moved to Bokaro, Jharkhand, to complete the formalities required to mobilize these vehicles. However, in February 2020, the Respondent terminated the contract upon which the Petitioner invoked the Arbitration Clause and asked the Respondent to appoint an Arbitrator within 30 days. The Respondent unilaterally appointed a sole Arbitrator without seeking the prior consent of the Petitioner. Stating this as contrary to the settled law on the matter in Perkins Eastman Architects DPC & And v. HSCC Ltd., the Petitioner invoked Section 11(6) of the Act through a Petition, requesting the Delhi High Court to appoint a sole Arbitrator.

The Respondent objected to the maintainability of such a Petition, arguing that as per the contract, the seat of arbitration would either be the place at which the Respondent placed the contract or the place of the Respondent as decided by him. They also argued that since ONGC’s office was in Bokaro, the contract was placed at and accepted from Bokaro, and the termination was also issued from the same place; therefore, the seat of arbitration should be Bokaro, and the Delhi High Court did not possess the requisite jurisdiction to entertain the Petition.

Issue

Whether the Court reserves the right to set aside the appointment of a sole Arbitrator if there is a contradiction with the seat of arbitration given in the contract?

Decision

I. Jurisdiction of the Delhi High Court to entertain the Petition

On the concerning issue, the Petitioner argued that the Delhi High Court possesses adequate jurisdiction as ONGC comes under the Ministry of Petroleum and Natural Gas (Government of India), which is also based in Delhi. While analyzing this contention, the Court placed reliance on the Arbitration Clause incorporated in the contract. It concluded that the parties had, in fact, agreed upon the place of arbitration to be the place of issuance of the contract or that of the primary buyer and as decided by him. Since the primary buyer, ONGC, is based in Bokaro, Jharkhand, where the contract was placed, only the concerned High Court with jurisdiction over Bokaro is competent to maintain the Petition under Section 11(6) of the Act.

The Court further reiterated the Supreme Court’s judgment given in Brahmani River Pellets Ltd. v. Kamachi Industries Ltd., that if a contract explicitly specifies a court’s jurisdiction at a particular place, only then such court will have jurisdiction with an assumption of the parties’ intention to exclude other courts. Therefore, the absence of words like “exclusive jurisdiction” or “only” does not cause a material difference and is not a decisive factor in determining the Court’s jurisdiction.

II. Power of the Arbitrator to Influence the Seat of Arbitration

The Petitioner had also contended that the learned Arbitrator while conducting proceedings in Noida, had issued an order that all arbitral proceedings were to be held in Delhi or any other place as agreed, and hence the Delhi High Court had the jurisdiction to maintain the Petition. However, the Court ruled that such an Order was issued in light of the COVID-19 situation for the parties’ convenience, without implying a shift in the place of arbitration. Furthermore, referring to BGS SGS SOMA JV v. NHPC Ltd., the Court held that in the absence of “significant contrary indicia” (any terms explicitly highlighting a contrary intention) in the contract, the Arbitrator could not decide anything contrary to what had been decided by the parties.

Conclusion

The Delhi High Court did not find any merit in the Petitioner’s arguments and held it to be non-maintainable before the Court. It subsequently directed the Petitioner to seek appropriate relief before a Court possessing competent jurisdiction. Thus, the Court duly dismissed the Petition as infructuous.

[This case note has been authored by Ishita Agrawal, who is a Junior Editor at Mapping ADR.]