Supreme Court: when seat of Arbitration is changed with mutual agreement of parties award cannot be challenged by either parties

Special Civil Application was filed by Inox Renewables Ltd. against order of Commercial Court, Ahmedabad which was dismissed, holding that the courts at Jaipur, Rajasthan would be the courts in which Section 34 petition could be filed.

A slump sale of the entire business of GFL took place in favour of the Appellant. Agreement was executed between Appellant & GFL to which Respondent was not a party. agreement clearly stated for arbitration as a dispute resolution mechanism.

When the issue arose between the parties the case was taken for arbitration. Respondent was awarded as sum of Rs. 38,97,150/- plus Rs. 31,32,650 as interest on awarded amount from 10th March, 2017 till date of award plus Rs. 2,81,000/- as quantified costs. Future interest was awarded at 15% from the date of award till the date of payment. 

A Section 34 petition was filed by the Appellant in Ahmedabad which was resisted by Respondent referring to the business transfer agreement & stating that the courts at Vadodara alone have jurisdiction. Commercial Court at Ahmedabad vide judgment and order dated 25th April, 2019, accepted the case of the Respondent by referring to clauses 9.11 & 9.12 of business transfer agreement & stated that courts at Vadodara alone would have exclusive jurisdiction, Ahmedabad courts not being vested with such jurisdiction.

High Court referred to arbitration clause contained in the purchase order as well as what it termed as the “exclusive jurisdiction clause” After which HC appointed a retired judge as arbitrator where parties mutually agreed for Jaipur as the venue which was mutually shifted to Ahmedabad.

Later when award was passed in favour of Jayesh Electricals, Inox Renewables filed case in HC stating that it does not has jurisdiction. When high Court dismissed the matter, appeal was made in Supreme Court.

Justices Rohinton Fali Nariman & Hrishikesh Roy after hearing matter stated execution proceedings on condition that Appellant shall deposit an amount of Rs 40,00,000/- in this Court, which has been so deposited. This deposit will now be transferred to appropriate forum at Ahmedabad by which the Section 34 petition will be decided. Execution proceedings shall remain stayed till disposal of the Section 34 petition unless the appropriate forum at Ahmedabad varies this interim order.

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