Brahmani River Pellets Ltd. v. Kamachi Industries Ltd.
Brahmani River Pellets Ltd (appellant) entered into an agreement with Kamachi Industries Ltd (respondent) for the sale of iron ore pellets. The loading the port was in Orissa and the place of destination port was in Chennai. The dispute arose between the parties regarding the terms of payment and delivery of goods and the appellant did not deliver goods to the respondent. The respondent claimed damages as he had allegedly bought goods from other sources at a higher rate. However, the appellant denied liability on the ground that the contract was modified later and due to the respondent breaching the terms of the contract dispute arose between the parties. The respondent invoked the arbitration clause. The clause is of the agreement of the parties was:-
“Arbitration shall be under Indian Arbitration and Conciliation Law 1996 and the Venue of Arbitration shall be Bhubaneswar.”
However, the appellant did not agree to the appointment of an arbitrator. A petition was filed by the respondent under s.11(6)of the Arbitration and Conciliation Act, 1996[i] before the Madras High Court for the appointment of a sole arbitrator. However, this petition was contested by the appellant on the grounds that Madras court cannot exercise its jurisdiction in this case since the parties have agreed on the fact that the venue of arbitration would be Bhubaneswar. The Madras High Court, however, held that it had jurisdiction over this matter as there is no clause that expressly ousts the jurisdiction of the other courts. This order was appealed before the Supreme Court.
Whether the parties in their agreement have ousted the jurisdiction of other courts except for the “venue” court over the arbitration proceedings?
The Supreme Court stated that under s.2(1) of the act if the subject matter of the suit falls within arbitral jurisdiction of two or more courts then the parties can decide to restrict its jurisdiction to one particular court. The court upheld that the specification of the party to hold jurisdiction in a particular court indicates the intention of the party to oust all other courts to deliver jurisdiction in this particular matter. It was noted that by specifying ‘Bhubaneshwar’ the parties have intended to oust all other courts from jurisdiction except that in Bhubaneshwar by mentioning the word ‘venue’. The reference to the word ‘venue’ was considered as the designation of a seat and Bhubaneshwar was determined as the seat of arbitration. Thus it was held that an error was made by the Madras High Court by exercising its jurisdiction in appointing an arbitrator and in this particular matter only Odisha High Court can exercise its jurisdiction. The impugned order of Madras High Court was dismissed and the appeal was allowed. The parties were at the liberty to seek Odisha High Court for appointing an arbitrator.
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.