News & Update

Home > News & Update

news Detail

Delhi High Court Rules: Arbitration Jurisdiction Must Be Based on Substantial Cause of Action, Not Incidental Factors

By : Divyanshu Lakwad
30 Mar 2025

The Delhi High Court, in ๐‘ญ๐’‚๐’Š๐’•๐’‰ ๐‘ช๐’๐’๐’”๐’•๐’“๐’–๐’„๐’•๐’Š๐’๐’๐’” ๐’—๐’”. ๐‘ต.๐‘พ.๐‘ฎ.๐‘ฌ.๐‘ณ ๐‘ช๐’‰๐’–๐’“๐’„๐’‰ (๐‘จ๐‘น๐‘ฉ.๐‘ท. 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 ๐—ท๐˜‚๐—ฟ๐—ถ๐˜€๐—ฑ๐—ถ๐—ฐ๐˜๐—ถ๐—ผ๐—ป ๐—ฑ๐—ฒ๐—ฝ๐—ฒ๐—ป๐—ฑ๐˜€ ๐—ผ๐—ป ๐˜„๐—ต๐—ฒ๐—ฟ๐—ฒ ๐˜๐—ต๐—ฒ ๐—ฟ๐—ฒ๐˜€๐—ฝ๐—ผ๐—ป๐—ฑ๐—ฒ๐—ป๐˜ ๐—ฟ๐—ฒ๐˜€๐—ถ๐—ฑ๐—ฒ๐˜€ ๐—ผ๐—ฟ ๐—ฐ๐—ผ๐—ป๐—ฑ๐˜‚๐—ฐ๐˜๐˜€ ๐—ฏ๐˜‚๐˜€๐—ถ๐—ป๐—ฒ๐˜€๐˜€ ๐—ฎ๐—ป๐—ฑ ๐˜„๐—ต๐—ฒ๐—ฟ๐—ฒ ๐˜๐—ต๐—ฒ ๐—ฐ๐—ฎ๐˜‚๐˜€๐—ฒ ๐—ผ๐—ณ ๐—ฎ๐—ฐ๐˜๐—ถ๐—ผ๐—ป ๐—ฎ๐—ฟ๐—ถ๐˜€๐—ฒ๐˜€.

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 i๐—ป๐˜€๐—ถ๐—ด๐—ป๐—ถ๐—ณ๐—ถ๐—ฐ๐—ฎ๐—ป๐˜ ๐—ณ๐—ฎ๐—ฐ๐˜๐—ผ๐—ฟ๐˜€, ๐˜€๐˜‚๐—ฐ๐—ต ๐—ฎ๐˜€ ๐—บ๐—ฎ๐—ถ๐—ป๐˜๐—ฎ๐—ถ๐—ป๐—ถ๐—ป๐—ด ๐—ฎ ๐—ฏ๐—ฎ๐—ป๐—ธ ๐—ฎ๐—ฐ๐—ฐ๐—ผ๐˜‚๐—ป๐˜ ๐—ถ๐—ป ๐—ฎ ๐—ฑ๐—ถ๐—ณ๐—ณ๐—ฒ๐—ฟ๐—ฒ๐—ป๐˜ ๐—น๐—ผ๐—ฐ๐—ฎ๐˜๐—ถ๐—ผ๐—ป, ๐—ฑ๐—ผ ๐—ป๐—ผ๐˜ ๐—ฐ๐—ผ๐—ป๐˜๐—ฟ๐—ถ๐—ฏ๐˜‚๐˜๐—ฒ ๐˜๐—ผ ๐˜๐—ต๐—ฒ ๐—ฎ๐—ฐ๐—ฐ๐—ฟ๐˜‚๐—ฎ๐—น ๐—ผ๐—ณ ๐—ฎ ๐—ฐ๐—ฎ๐˜‚๐˜€๐—ฒ ๐—ผ๐—ณ ๐—ฎ๐—ฐ๐˜๐—ถ๐—ผ๐—ป. It held that the agreement was executed in Odisha, the construction work was carried out there, and the respondentโ€™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.

Follow mentblue for your mentorship needs & mentblue-news for more such legal updates!

๐—๐—ผ๐—ถ๐—ป mentblue ๐—–๐—ผ๐—บ๐—บ๐˜‚๐—ป๐—ถ๐˜๐˜†.
๐—ช๐—ต๐—ฎ๐˜๐˜€๐—”๐—ฝ๐—ฝ : https://lnkd.in/g9gBHk9j
๐—ง๐—ฒ๐—น๐—ฒ๐—ด๐—ฟ๐—ฎ๐—บ : https://t.me/mentblue

Related News & Updates

News Card Img
Supreme Court: No Absolute Bar on High Court Quashing FIR at Early Investigation Stage
01 Apr 2025

The Supreme Court has reaffirmed that High Courts can quash FIRs at the nascent stage of investigation under Section 482 CrPC/ Section 528 BNSS if the allegations do not disclose a prima facie offence. In a recent judgment, the Court quashed an FIR against Congress MP Imran Pratapgarhi, stating that the case was a clear abuse of the legal process.

Read More
News Card Img
Indian Courts Have Jurisdiction Despite Foreign Arbitration Venue, Rules Supreme Court
26 Mar 2025

In a significant ruling, the Supreme Court of India in Disortho S.A.S. v. Meril Life Sciences Pvt. Ltd. held that Indian courts have jurisdiction to appoint an arbitrator even if the arbitration venue is in a foreign country, provided the contract specifies Indian law as the governing law.

Read More
News Card Img
Collegium Recommends Transfer of Justice Yashwant Varma Amid Cash Recovery Allegations
25 Mar 2025

The Supreme Court Collegium has recommended the transfer of Justice Yashwant Varma from the Delhi High Court back to the Allahabad High Court, his parent institution. This decision follows reports of a significant amount of unaccounted cash discovered at Justice Varma's official residence after a fire incident. Firefighters, responding to the blaze, reportedly found substantial cash in various rooms of his bungalow.

Read More