Under the Arbitration Clause, the parties may only depart from the provisions of the jurisdiction once: Madras High Court
The Madras High Court has recently held that the parties under a contract can deviate from the terms of the jurisdiction only once under the Arbitration Clause. The matter was between Andal Dorairaj & Ors. versus M/s. Rithwik Infor Park Pvt. Ltd. & Ors. (C.R.P. (PD) Nos.1641, 1647 & 1648 of 2022) and (C.M.P.Nos.8183, 8220 & 8208 of 2022) and was presided over by Hon’ble Ms. Justice R.N. Manjula.
FACTS OF THE CASE:
A Joint Development Agreement was signed by the respondent M/s. Hanudev Info Park P. Ltd. and the petitioner Andal Dorairaj. As a result of disagreements between the parties, the petitioner triggered the arbitration provision and applied to the Madras High Court for the appointment of an arbitrator under Section 11(6) of the A&C Act. The respondents petitioned the Madras High Court for the appointment of a new arbitrator in accordance with Section 11 of the A&C Act after the High Court’s sole arbitrator’s appointment failed to conclude the proceedings within the allotted time. As a result, the High Court appointed an Arbitrator.
The respondent then filed a second plea with the Madras High Court asking for the appointment of a sole arbitrator and the termination of the arbitrator’s appointment. This petition was granted by the court. After then, the respondent challenged the jurisdiction of the Arbitral Tribunal in a preliminary objection, which the Arbitrator dismissed. The respondents brought an appeal under Section 37 of the A&C Act before the Madras High Court in response to this, but the court dismissed the case.
Thereafter the sole award which was awarded by the arbitrator was also challenged under an application. Although Coimbatore was designated as the arbitration site under the arbitration clause, the petitioner Andal Dorairaj argued before the High Court that the parties had waived their preference for Coimbatore by their subsequent actions.
The Court agreed with the petitioner’s argument that the Principal District Court in Coimbatore is the only court mentioned in Section 14(2) of the A&C Act. As a result, the respondents waived Coimbatore’s jurisdiction by starting proceedings under the A&C Act to end the Arbitrator’s mandate before the Madras High Court rather than the Coimbatore courts.
The Bench further noted that the respondents had submitted a preliminary objection before the Arbitral Tribunal questioning its jurisdiction, which the Arbitral Tribunal had rejected, and that in response, the respondents had filed an appeal before the Madras High Court according to Section 37 of the A&C Act.
The Court held that the parties cannot later insist on adherence to the jurisdiction clause found in the arbitration agreement if they have chosen not to object during the earlier instances when the jurisdiction clause was waived, even though it was decided that if the parties have chosen to deviate from the terms of the agreement, the said terms would be waived by conduct.
Finally, the Court granted the revision petition and instructed the Principal District Court in Coimbatore to return the respondent’s Section 34 petition so that it might be brought to the proper court.
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JUDGMENT REVIEWED BY ADITI PRIYADARSHI