The Delhi High Court has delivered a pivotal clarification on the distinction between seat and venue in arbitration, reinforcing that supervisory jurisdiction over arbitral proceedings hinges on the juridical seat, not the physical location of hearings. This ruling restores the legislative intent behind Section 42 of the Arbitration and Conciliation Act, 1996, and prevents procedural technicalities from derailing substantive adjudication.
Background & Facts
The Dispute
The appellant, Arun Mehrotra, entered into a civil construction contract with the respondent, Kishan Lal, for work on a property located in Janakpuri, Delhi. Disputes arose over defective work, non-performance, and unpaid dues. The respondent initiated arbitration seeking payment of Rs. 22,06,778.90, which the arbitrator awarded. The appellant challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, before the District Court, Dwarka, asserting that the cause of action arose at the property site within its territorial jurisdiction.
Procedural History
- 2012: Construction contract executed between parties
- 2016: Respondent filed ARB.P. No. 655/2016 seeking reference to arbitration
- 2016: Court directed arbitration under DIAC Rules, but did not designate seat
- 2018: Arbitrator passed award in favor of respondent
- 2023: Appellant filed Section 34 petition before District Court, Dwarka
- 2023: District Judge dismissed petition solely on ground of lack of territorial jurisdiction
- 2026: Appeal filed before Delhi High Court under Section 37(1)(c)
Relief Sought
The appellant sought setting aside of the arbitral award on merits and requested that the District Court, Dwarka, be permitted to adjudicate the Section 34 petition on its substantive grounds.
The Legal Issue
The central question was whether the District Court, Dwarka, had territorial jurisdiction to entertain a Section 34 petition challenging an arbitral award when the arbitration was conducted at DIAC, Siri Fort, New Delhi, but the seat of arbitration was not expressly designated.
Arguments Presented
For the Appellant
The appellant contended that:
- The arbitration clause stipulated "subject to Delhi jurisdiction only," indicating an intention to exclude courts outside Delhi
- The property forming the subject matter of the dispute was located in Dwarka, making it a place where a substantial part of the cause of action arose
- The respondent had submitted to the jurisdiction of the Dwarka Courts by filing an application under Section 29A(3) for extension of time to deliver the award
- Such conduct attracted the bar under Section 42, which vests exclusive supervisory jurisdiction in the court first approached
- Reliance was placed on BGS SGS SOMA JV v. NHPC Ltd. to argue that in absence of a designated seat, jurisdiction lies with courts where part of the cause of action arises
For the Respondent
The respondent argued that:
- The arbitration proceedings were conducted at DIAC, Siri Fort, New Delhi, which falls outside the territorial jurisdiction of the Dwarka Courts
- The District Judge correctly applied Cinepolis and BBR (India), which held that the place of arbitration constitutes the seat
- No objection to jurisdiction was raised by the appellant during the arbitration, and thus the challenge under Section 34 was not maintainable before Dwarka Courts
The Court's Analysis
The Delhi High Court undertook a rigorous doctrinal analysis of the distinction between seat and venue, emphasizing that the two concepts are legally distinct. The Court held that the mere conduct of arbitral hearings at DIAC, Siri Fort, does not equate to a designation of seat. The arbitration clause’s phrase "subject to Delhi jurisdiction only" was interpreted as an expression of the parties’ intent to exclude courts outside Delhi, but not to designate a specific judicial district within Delhi as the seat.
"In the absence of an agreed or determined seat, the legal position laid down by the Supreme Court in BGS SGS SOMA JV v. NHPC Ltd. becomes applicable. Courts where a part of the cause of action has arisen may exercise jurisdiction."
The Court distinguished Cinepolis and BBR (India), noting that in both cases, the seat was either expressly agreed upon or determined by the arbitral tribunal. Here, no such designation existed. The Court further held that the respondent’s filing of a Section 29A(3) application before the Dwarka Courts constituted a clear submission to its jurisdiction, thereby triggering Section 42, which mandates exclusive supervisory control by the court first approached.
The Court emphasized that Section 42 exists to prevent multiplicity of proceedings and conflicting rulings. Dismissing the petition on a hyper-technical view of venue would frustrate the legislative objective of expeditious dispute resolution under the A&C Act.
The Verdict
The appellant won. The Delhi High Court held that Section 42 of the Arbitration and Conciliation Act, 1996 vests exclusive supervisory jurisdiction in the court first approached where a part of the cause of action arises, in the absence of a designated seat. The Impugned Order was set aside, and the District Court, Dwarka, was directed to decide the Section 34 petition on its merits.
What This Means For Similar Cases
Seat Must Be Expressly Agreed or Determined
- Practitioners must now scrutinize arbitration clauses for explicit language designating seat (e.g., "seat shall be Delhi"), not merely venue
- Vague phrases like "subject to Delhi jurisdiction" or "arbitration in Delhi" are insufficient to establish seat unless context confirms exclusive intent
- Where seat is ambiguous, jurisdiction defaults to courts where cause of action arises
Section 42 Bars Jurisdictional Challenges After Submission
- Filing any application under Part I (e.g., Section 9, Section 29A, Section 34) before a court constitutes submission to its jurisdiction
- Once submitted, parties cannot later challenge jurisdiction on grounds of venue
- This applies even if the court is not the physical venue of arbitration
Venue Is Irrelevant for Supervisory Jurisdiction
- Arbitration hearings may be held anywhere - courts in Mumbai, Bangalore, or Chennai - without affecting supervisory jurisdiction
- The only determinative factor is the seat, or, in its absence, the court first approached where cause of action arose
- Practitioners must file Section 34 petitions in the court with the strongest nexus to the dispute, not merely the arbitral venue
