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M/S Ravi Ranjan Developers Pvt. Ltd. vs Aditya Kumar Chatterjee

SLP (C) · 2022 INSC 1299Decided 24 Mar 2022
SLP (C) Nos. 17397-17398 of 2021
Indira Banerjee · A.S. Bopanna

Background

A developer (Ravi Ranjan Developers) and a landowner (Aditya Kumar Chatterjee) signed a Development Agreement in 2015 for property in Muzaffarpur, Bihar, which contained an arbitration clause stating that "the sitting of the said Arbitral Tribunal shall be at Kolkata." After a dispute arose and the landowner terminated the agreement, various proceedings were filed in Bihar (before RERA and the Muzaffarpur District Court), but the landowner also filed an application before the Calcutta High Court asking it to appoint an arbitrator. The developer objected that Calcutta had no jurisdiction since the property, the agreement's execution, and the parties' business were all in Bihar. The Calcutta High Court nonetheless appointed an arbitrator (recording that the developer's counsel had "agreed"), and later refused to review that order.

Decision Breakdown

The Supreme Court held that a defect of jurisdiction cannot be cured by a lawyer's consent, and can be challenged at any stage. On the core legal question, it clarified the difference between the "seat" of arbitration (which fixes exclusive court jurisdiction) and the mere "venue" for hearings: simply naming Kolkata as the place where the tribunal would "sit" only fixed a hearing venue, it did not make Kolkata the legal seat of arbitration or hand jurisdiction to the Calcutta High Court. Since the property, the agreement's execution and registration, the parties' residence/business, and the cause of action were all outside Calcutta's jurisdiction, the Calcutta High Court had no power to appoint an arbitrator. The Supreme Court set aside the Calcutta High Court's orders and, since arbitral sittings were nonetheless to occur in Kolkata, itself appointed a mutually agreed retired judge as the sole arbitrator.

Lesson Learnt

In an arbitration clause, merely naming a city as the place where hearings will be held does not automatically make that city the legal "seat" of arbitration or give its courts jurisdiction: parties should state clearly whether a named location is meant as the seat (which fixes which court can supervise the arbitration) or just a convenient venue for sittings.

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

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