Quippo Construction Equipment Ltd. v. Janardan Nirman Pvt. Ltd., C.A No. 2378 of 2020: Supreme Court of India (decided on 29 April 2020)
- The disputes pertain to four different agreements executed between the parties. Three agreements designated New Delhi as the venue for arbitration, whereas one agreement stated “arbitration in Kolkata”.
- Quippo invoked arbitration in 2012 and arbitrator was appointed to conduct arbitration in Delhi. Janardan denied existence of agreement and filed civil Suit in Trial Court, Sealdah in Kolkata seeking permanent injunction restraining the Quippo from relying on the arbitration clauses in the agreements. In Section 8 Application r/w Section 5 of the Arbitration Act filed by Quippo, in the said Suit, the Trial Court referred the matter to arbitration.
- While challenge was pending before ADJ, Sealdah, the arbitration continued ex-parte in Delhi. A common award was passed by the tribunal ex parte in favour of Quippo.
- Janardan challenged the award under Section 34 in the Calcutta High Court which was dismissed on the question of maintainability. Another petition was filed by Janardan in the District Court, Alipore under Section 34 contending that one of the agreements designated Kolkata as the place of arbitration.
- The ADJ had subsequently dismissed the appeal being not maintainable. The revisions preferred by Janardan in the Calcutta High Court were also dismissed for not being maintainable. However, the High Court reserved the rights of Janardan to agitate all the issues within the ambit of Section 34, in the proceedings pending before the DJ, Alipore. Janardan had approached the Supreme Court, but was dismissed.
- Section 34 Petition before DJ, Alipore was subsequently dismissed. The Court held that since the award was passed in Delhi, only the Delhi Courts have jurisdiction to entertain Section 34 petition. This order was challenged in Revision before Calcutta High Court which was eventually dismissed being not being maintainable as the remedy of appeal under Section 37 of the Act was available.
- Thereafter, Janardan filed an Appeal in the Calcutta High Court which was allowed vide judgement dated 14.02.2019. The said order was challenged by Quippo in the Supreme Court.
Whether Janardan has waived the right to raise any of the objections as to the venue of arbitration?
The Court examined the amplitude and applicability of Section 4 of Arbitration Act, which states that a party who knows that any provision of Part I from which the parties may derogate, or any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.
The Court relied on a three Judge bench decision in Narayan Prasad Lohia vs. Nikunj Kumar Lohia and others, (2002) 3 SCC 572 in which stipulation in Section 10 that number of Arbitrators “shall not be an even number” was found to be a derogable provision and since no objections were raised to the composition of the arbitral tribunal, as provided in Section 16, the concerned respondents were deemed to have waived their right to object.
In the instant case, Janardan did not raise objection as to seat at any stage before the arbitrator and had let the arbitral proceedings conclude and culminate in an ex parte award. Janardan could have raise submissions that arbitration pertaining to each of the agreements be considered and dealt with separately. It could also contend that in respect of the agreement where the venue was agreed to be at Kolkata, the arbitration be conducted accordingly. Considering the facts that the Janardan failed to participate in the arbitration and did not raise any submission that the Arbitrator did not have jurisdiction or that he was exceeding the scope of his authority, it must be deemed to have waived all such objections. Hence, Janardan is now precluded from raising any submission or objection as to the venue of arbitration.
The Court distinguished the facts in Duro Felguera S.A. vs. Gangavaram Port Limited, (2017) 9 SCC 729 (relied on by Janardan), wherein there were six arbitral agreements and each one of them was subject matter of independent reference to arbitration. While the Court in Duro had not accepted composite reference to arbitration, it was an international commercial arbitration whereas the present case is a domestic arbitration. The Court in this case observed that the specification of a ‘place’ of arbitration may have special significance in an “international commercial arbitration”, where the place of arbitration may determine which curial law would apply. However, in the present case, the applicable substantive as well as curial law would be the same i.e., Indian law.
The Supreme Court upheld the decision of Alipore Court and set aside the High Court judgement.
The Court simply applied the principle of waiver prescribed in Section 4, for not having raised the jurisdictional objection as to the venue of arbitration in the arbitration.
However, an observation that ‘place’ of arbitration has only significance in ICA may not be a correct approach. The Arbitration Act allows the parties to choose ‘venue’ different from ‘place’ which has significance from the perspective of Court’s supervisory power being the ‘seat’ of arbitration. In the given case, if the objection was raised by Janardan in the arbitration, it was possible to construe that the ‘place’ of arbitration in that particular agreement (out of four) was Kolkata given the language in the agreement and especially when courts in Kolkata were agreed to have exclusive jurisdiction.