The Delhi High Court, in 𝑭𝒂𝒊𝒕𝒉 𝑪𝒐𝒏𝒔𝒕𝒓𝒖𝒄𝒕𝒊𝒐𝒏𝒔 𝒗𝒔. 𝑵.𝑾.𝑮.𝑬.𝑳 𝑪𝒉𝒖𝒓𝒄𝒉 (𝑨𝑹𝑩.𝑷. 1318/2024), ruled that when an arbitration agreement does not specify a seat or venue, the court's jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996, must be determined based on Sections 16 to 20 of the Civil Procedure Code, 1908. The ruling, delivered by Justice Manoj Kumar Ohri on March 20, 2025, emphasized that 𝗷𝘂𝗿𝗶𝘀𝗱𝗶𝗰𝘁𝗶𝗼𝗻 𝗱𝗲𝗽𝗲𝗻𝗱𝘀 𝗼𝗻 𝘄𝗵𝗲𝗿𝗲 𝘁𝗵𝗲 𝗿𝗲𝘀𝗽𝗼𝗻𝗱𝗲𝗻𝘁 𝗿𝗲𝘀𝗶𝗱𝗲𝘀 𝗼𝗿 𝗰𝗼𝗻𝗱𝘂𝗰𝘁𝘀 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗮𝗻𝗱 𝘄𝗵𝗲𝗿𝗲 𝘁𝗵𝗲 𝗰𝗮𝘂𝘀𝗲 𝗼𝗳 𝗮𝗰𝘁𝗶𝗼𝗻 𝗮𝗿𝗶𝘀𝗲𝘀.
The dispute arose from an agreement dated July 6, 2022, for construction work in Odisha. The petitioner alleged a breach of contract by the respondent and invoked arbitration. The respondent contended that since the agreement did not specify the arbitration seat or venue, the jurisdiction should be in Rajgangpur, Odisha, where the project was executed. The petitioner argued that part of the cause of action arose in Delhi, as payments were received in a Delhi-based bank account and invoices were raised from Delhi.
The court reaffirmed that i𝗻𝘀𝗶𝗴𝗻𝗶𝗳𝗶𝗰𝗮𝗻𝘁 𝗳𝗮𝗰𝘁𝗼𝗿𝘀, 𝘀𝘂𝗰𝗵 𝗮𝘀 𝗺𝗮𝗶𝗻𝘁𝗮𝗶𝗻𝗶𝗻𝗴 𝗮 𝗯𝗮𝗻𝗸 𝗮𝗰𝗰𝗼𝘂𝗻𝘁 𝗶𝗻 𝗮 𝗱𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝘁 𝗹𝗼𝗰𝗮𝘁𝗶𝗼𝗻, 𝗱𝗼 𝗻𝗼𝘁 𝗰𝗼𝗻𝘁𝗿𝗶𝗯𝘂𝘁𝗲 𝘁𝗼 𝘁𝗵𝗲 𝗮𝗰𝗰𝗿𝘂𝗮𝗹 𝗼𝗳 𝗮 𝗰𝗮𝘂𝘀𝗲 𝗼𝗳 𝗮𝗰𝘁𝗶𝗼𝗻. It held that the agreement was executed in Odisha, the construction work was carried out there, and the respondent’s principal place of business was in Odisha. Given these considerations, the court ruled that the material cause of action arose outside Delhi's territorial jurisdiction and dismissed the petition. This decision reinforces the principle that arbitration jurisdiction must be based on substantial and integral facts rather than incidental connections.
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