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Hindustan Construction Company Ltd v. NHPC Ltd

Transfer Petition (Civil) · 2020 INSC 272Decided 4 Mar 2020
Transfer Petition (Civil) No. 3053 of 2019
Justice Rohinton Fali Nariman · Justice S. Ravindra Bhat · Justice V. Ramasubramanian

Background

Parties to construction/infrastructure arbitration agreements had their "seat" (the designated legal home) of arbitration fixed at New Delhi, but applications challenging the arbitral awards under Section 34 of the Arbitration Act had been filed at the Faridabad court instead, which had initially been held to have jurisdiction based on an older interpretation of the law. Meanwhile, a separate Supreme Court bench decided in BGS SGS Soma JV vs. NHPC Ltd. (10.12.2019) that once a seat of arbitration is fixed, only the courts of that seat have exclusive jurisdiction, overruling the earlier approach. These connected transfer petitions and an appeal asked the Court to resolve which court's jurisdiction should prevail.

Decision Breakdown

Applying its own recent ruling in BGS SGS Soma JV, the Court held that since New Delhi had been designated as the seat of arbitration in each case, only the Delhi courts had jurisdiction to decide challenges to the awards: a court at Faridabad, even if a cause of action arose there, could not exercise jurisdiction once a seat had been fixed elsewhere. The Court set aside the finding that Faridabad had jurisdiction, transferred the pending Section 34 applications to the Delhi High Court, ruled that the transferred parties could not raise a limitation (time-bar) objection on account of the transfer, and granted eight weeks of status quo to allow the cases to be properly re-filed in Delhi.

Lesson Learnt

Once parties to an arbitration agreement fix a "seat" of arbitration, that seat's courts have exclusive jurisdiction over all arbitration-related challenges, filing in a different court where part of the dispute arose will not work once a seat has been designated.

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

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