RIVER PELLETS LIMITED versus KAMACHI INDUSTRIES LIMITED

Citation: [2019] 9 S.C.R. 1140 · Decided: 25-07-2019 · Supreme Court of India · Bench: R. BANUMATHI, A.S. BOPANNA · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 7 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
1140
SUPREME COURT REPORTS
[2019] 9 S.C.R.
         BRAHMANI RIVER PELLETS LIMITED
v.
 KAMACHI INDUSTRIES LIMITED
(Civil Appeal No.5850 of 2019)
JULY 25, 2019
[R. BANUMATHI AND A.S. BOPANNA, JJ.]
Arbitration and Conciliation Act, 1996 – ss.2(1)(e), 2(2), 11(6),
and 20 – Appellant entered into an agreement with the respondent
for sale of 40,000 WMT (Wet Metric Tonne) of Iron Ore Pellets on
FOB terms – Dispute arose regarding the price and payment terms
– Respondent claimed damages alleging that it had to procure the
Iron Ore Pellets from other sources at higher rates– Appellant denied
liability to pay damages – Respondent filed petition u/s.11(6) before
the Madras High Court for appointment of the sole arbitrator –
Appellant challenged the jurisdiction of the High Court on the
ground that the parties agreed that Seat of arbitration will be
Bhubaneswar and therefore, only the Orissa High Court has
exclusive jurisdiction to appoint the arbitrator – High Court vide
impugned order appointed former judge of the Madras High Court
as the sole arbitrator – On appeal, held: As per s.2(2), Part-I would
apply to all arbitration where the place of arbitration is in India –
s.2(1)(e) defines “court” with reference to Part-I of the Act and
would govern the place of arbitration – Further, u/s.2(1)(e), if the
“subject-matter of the suit” is situated within the arbitral jurisdiction
of two or more courts, the parties can agree to confine the
jurisdiction in one of the competent courts – Under s.20, parties
are free to agree on the place of arbitration – Party autonomy has
to be construed in the context of parties choosing a court which
has jurisdiction out of two or more competent courts having
jurisdiction – Where the contract specifies the jurisdiction of the
court at a particular place, only such court will have the jurisdiction
to deal with the matter –  In the present case, the parties agreed that
the “venue” of arbitration shall be at Bhubaneswar – Considering
the agreement of the parties having Bhubaneswar as the venue of
arbitration, the intention of the parties is to exclude all other courts
[2019]  9 S.C.R. 1140
   1140
A
B
C
D
E
F
G
H
1141
– Non-use of words like “exclusive jurisdiction”, “only”,
“exclusive”, “alone” is not decisive and does not make any material
difference – When the parties agreed to have the “venue” of
arbitration at Bhubaneswar, the Madras High Court erred in
assuming the jurisdiction u/s.11(6) – Since only Orissa High Court
will have the jurisdiction to entertain the petition filed u/s.11(6),
the impugned order is set aside – Parties at liberty to approach the
Orissa High Court seeking appointment of the arbitrator.
Words & Expressions – “Seat”, “Venue” – Discussed –
Arbitration and Conciliation Act, 1996.
Allowing the appeal, the Court
HELD: 1.1 As per Section 2(2) of the Arbitration and
Conciliation Act, 1996, Part-I would apply to all arbitration where
the place of arbitration is in India. Section 2(1)(e) of the Act defines
“court” with reference to Part-I of the Act and would govern the
place of arbitration. [Para 9] [1147-A]
1.2 In BALCO, the court highlighted the distinction between
the “Seat” and “Venue” in the context of Section 20(3) of the
Act. Section 20(3) of the Act allows the parties to hold meetings,
proceedings and hearings at any place agreed by the parties.  In
BALCO, the court has held that in an international commercial
arbitration “seated” in India, parties may by mutual agreement,
hold arbitral proceedings outside India. This, however, would not
have the effect of changing the Seat of arbitration which would
continue to remain in India. The court then envisages a situation
where the arbitration agreement designates a foreign Seat and
also selects Arbitration Act, 1996 as the law applicable to the
conduct of arbitration proceedings and in such circumstances,
hearing of the arbitration conducted at the venue fixed by the
parties would not have the effect of changing the Seat of arbitration
which would remain in India. [Para 11] [1147-D-F]
1.3 Section 2(1)(e) of the Act defines the “Court” with
reference to the term “subject-matter of the suit”.  As per Section
2(1)(e) of the Act, if the “subject-matter of the suit” is situated
within the arbitral jurisdiction of two or more courts, the parties
 BRAHMANI RIVER PELLETS LTD.  v.
KAMACHI INDUSTRIES LTD.
A
B
C
D
E
F
G
H
1142
SUPREME COURT REPORTS
[2019] 9 S.C.R.
can agree to confine the jurisdiction in one of the competen

Excerpt shown. Read the full judgment & AI analysis in Lexace.