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General Manager East Coast Railway Rail Sadan & Anr. vs Hindustan Construction Co. Ltd.

Civil Appeal · 2022 INSC 743Decided 22 Jul 2022
Civil Appeal No. 4747 of 2022
M.R. Shah · B.V. Nagarathna

Background

A construction contractor and the East Coast Railway had a contract dispute. The contractor first went to a court in Visakhapatnam under Section 9 of the Arbitration and Conciliation Act to seek an interim order stopping the Railway from encashing a bank guarantee. Later, when the contractor wanted an arbitrator appointed after disputing the validity of the arbitral tribunal the Railway had constituted, it filed a fresh application under Section 11(6) of the Act, but this time before the Orissa High Court at Cuttack, not before the Andhra Pradesh High Court connected to Visakhapatnam. The Railway objected that only the Andhra Pradesh High Court had jurisdiction, but the Orissa High Court still went ahead and appointed an arbitrator, reasoning that since the Railway did not oppose having an arbitrator in principle, there was no point sending the contractor elsewhere.

Decision Breakdown

The Supreme Court held that Section 42 of the Arbitration and Conciliation Act is a strict rule: once any application under Part I of the Act (such as the earlier Section 9 application) is made in a particular court, that same court alone has jurisdiction over all subsequent applications relating to the same arbitration agreement, and no other court can entertain them. Since the contractor had already approached the court at Visakhapatnam (within Andhra Pradesh's jurisdiction) first, only the Andhra Pradesh High Court could hear the later Section 11(6) application, not the Orissa High Court. The fact that the Railway did not oppose appointing an arbitrator in principle could not itself create jurisdiction where none existed. The Supreme Court therefore quashed the Orissa High Court's order appointing the arbitrator, but allowed the contractor to file a fresh Section 11(6) application before the Andhra Pradesh High Court within four weeks, directing that it be decided promptly on its merits, with no order as to costs.

Lesson Learnt

Under Section 42 of the Arbitration Act, once a party approaches a particular court for any relief connected to an arbitration agreement, all later arbitration-related applications on that same agreement must go to that same court: parties cannot pick a different, more convenient court later, even if the other side does not strongly object.

Official source (sci.gov.in)View Judgment (PDF)

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