BGS SGS Soma JC v. NHPC Ltd.
The Petitioner and Respondent entered into a contract for construction of a hydropower project in Assam and Arunachal Pradesh. They signed an agreement where Clause 67 of the agreement provided for dispute resolution. Under this clause in case of a dispute the arbitration proceedings shall be held in at New Delhi or Faridabad and the language of communication and documentation shall be English. A dispute arose between the parties and arbitration proceedings were initiated. 71 sittings of arbitration proceedings took place at New Delhi between August 2011 and August 2016. A unanimous arbitral award in favour of the petitioner was delivered by the arbitration tribunal. The Respondent under Section 34 of the Arbitration and Conciliation Act, 1996 filed an application seeking to set aside the award before the Court at Faridabad. Following this, the Petitioner filed an application seeking a return of the petition and challenging the Award for presentation before the court at New Delhi. The Special Commercial Court at Gurugram allowed the application of the Petitioner and returned the challenge petition before the court at New Delhi. Subsequent to this the Respondent filed an appeal under Section 37 of the Act before the Punjab & Haryana High Court. A judgement in favour of the respondent was passed by the High Court. The High Court held that the appeal filed was maintainable. Further, it was ruled that New Delhi was just a convenient venue where arbitral proceedings took place and not the seat of the arbitration proceedings. The High Court stated that Faridabad courts are liable to exercise jurisdiction on the matter as the cause of action had arisen in Faridabad. The Petitioner filed a special leave petition before the Supreme Court.
Whether Court appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 before the High was maintainable?
Whether the seat of the designation was New Delhi or Faridabad?
Whether the term “seat” is similar to exclusive jurisdiction?
The Supreme Court relied on previous judgements and stated that under Section 37 of the Arbitration Act appeals shall be maintainable only pursuant to the grounds constituted in sub-clauses 1(a) – (c) and from no others.
The Supreme Court observed that under section 13 of the Commercial Courts Act does not provide an independent right of appeal, but merely provides the forum for such an appeal. It was held that the order of the Commercial Court did not provide for a refusal to set aside an arbitral award and just provided that the Commercial Court does not have jurisdiction to rule a challenge to the Award. Thus the Supreme Court held that the appeal filed before the High Court was not maintainable under Section 37 of the Arbitration Act.
The High Court relied on Supreme Court's decision in BALCO and Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited and Ors. and observed that the arbitration provision in the present case indicates the venue of arbitration proceedings and not the seat of arbitration. The Supreme Court after reading paragraphs 75, 76, 96, 110, 116, 123 and 194 of BALCO held that when parties have chosen the seat of arbitration, such a selection would give limited jurisdiction the courts at the seat of arbitration for the reasons for between time requests and difficulties to Award.
The Supreme Court observed that Section 42 of the Arbitration Act provides the supervisory jurisdiction over all arbitral proceedings in one court exclusively. Under this clause, an application must be made to a Court which has the jurisdiction to decide such an application. When a seat has been designated, the courts at the seat alone would have jurisdiction and all further applications must be made to the same Court under Section 42 of the Arbitration Act. It was further held that when a seat has not been designated and only a convenient venue has been designated by the arbitration agreement, there may be various courts where a part of the cause of action may have arisen. An application for interim relief before the commencement of arbitration under Section 9 of the Arbitration Act may then be preferred in any court where a part of the cause of action has arisen as the parties / arbitral tribunal has not determined the seat yet. In such a case, the earliest court before which an application has been made would be deemed the court having exclusive jurisdiction and all further applications must lie before this court by virtue of Section 42 of the Arbitration Act.
Further, the Supreme Court relied on Roger Shashoua & Ors. v. Mukesh Sharma, an English decision in order to rule that t when there is a name of a venue for arbitration proceedings, then the term “arbitration proceedings” indicates that the venue should be considered as the seat of arbitration proceedings. Further, the expression “shall be held” at a particular venue would refer that the arbitral proceedings to a particular place and indicate that such a place is the seat of arbitral proceedings. This signifies that there is no relevant contrary indication to state that the venue is merely a place and not the seat and would indicate that a venue has indeed been designated the “seat” of arbitral proceedings. the Supreme Court ruled that though the venue of the arbitration in the agreement had been designated as New Delhi/Faridabad however, as there was no other contrary indication, the Supreme Court held that either New Delhi or Faridabad can be designated seat under the arbitration agreement and it was up to the parties to select where the arbitration will be held. The Supreme Court ruled that the parties chose New Delhi as the seat of the arbitration under Section 20 of the Arbitration Act.. 
because all the arbitral proceedings were held in New Delhi and the final award was also signed in New Delhi. Thus the judgement of the High Court was dismissed and it was held that the petition under Section 34 of the Act shall be heard in the courts in New Delhi. 
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.