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Tuesday, March 31, 2015

Arbitration and Conciliation Act, 1996 two courts will have jurisdiction to deal with the matter; one is natural forum, which would have jurisdiction under Section 2 (1) (e) of the aforesaid Act, and another one within whose jurisdiction arbitration takes place. - 2015 S.C.(2012) MSKLAWREPORTS



      Section 2(1)(e) of the Arbitration Act, 1996 reads as under:
   2. Definitions.(1) In this Part, unless the context otherwise
requires 
   (a)-(d)      *       *       *
   (e) Court means the Principal Civil Court of Original
Jurisdiction in a district, and includes the High Court in exercise
of its ordinary original civil jurisdiction, having jurisdiction to
decide the questions forming the subject-matter of the arbitration
if the same had been the subject-matter of a suit, but does not
include any civil court of a grade inferior to such Principal Civil
Court, or any Court of Small Causes;

We are of the opinion, the term subject-matter of the arbitration
cannot be confused with subject-matter of the suit. 
The term
subject-matter in  Section 2(1)(e) is confined to Part I. It has a
reference and connection with the process of dispute resolution.
Its purpose is to identify the courts having supervisory control
over the arbitration proceedings. Hence, it refers to a court
which would essentially be a court of the seat of the
arbitration process. 
In our opinion, the provision in Section
2(1)(e) has to be construed keeping in view the provisions in
Section 20 which give recognition to party autonomy. Accepting
the narrow construction as projected by the learned counsel for
the appellants would, in fact, render Section 20 nugatory. 
In our
view, the legislature has intentionally given jurisdiction to two
courts i.e. the court which would have jurisdiction where the
cause of action is located and the courts where the arbitration
takes place. 
This was necessary as on many occasions the  
agreement may provide for a seat of arbitration at a place which
would be neutral to both the parties. 
Therefore, the courts where
the arbitration takes place would be required to exercise
supervisory control over the arbitral process. For example, if the
arbitration is held in Delhi, where neither of the parties are from
Delhi, (Delhi having been chosen as a neutral place as between a
party from Mumbai and the other from Kolkata) and the tribunal
sitting in Delhi passes an interim order under Section 17 of the
Arbitration Act, 1996, the appeal against such an interim order
under Section 37 must lie to the courts of Delhi being the courts
having supervisory jurisdiction over the arbitration proceedings
and the tribunal. 
This would be irrespective of the fact that the
obligations to be performed under the contract were to be
performed either at Mumbai or at Kolkata, and only arbitration is
to take place in Delhi. 
In such circumstances, both the courts
would have jurisdiction i.e. the court within whose jurisdiction the
subject-matter of the suit is situated and the courts within the
jurisdiction of which the dispute resolution i.e. arbitration is
located. - 2015 S.C.(2012) MSK LAWREPORTS
         

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