Section 42 of the Arbitration Act – Interplay of two clauses on jurisdiction and seat of arbitration

In this case, the relevant provision of clause 32 of the Dealership Agreement dated 1.4.2017 in respect of dispute resolution and jurisdiction is as follows:-

“…..The seat of arbitration shall always be at Delhi.   The courts of Indore shall have exclusive jurisdiction in all matters arising under this Agreement.’

In the above context, the question arose as to which court would exercise jurisdiction over arbitral proceedings.

What is interesting to note that the High Court of Madhya Pradesh appointed the Arbitral Tribunal vide order dated 13.5.2020, after rejecting the objection to its territorial jurisdiction.  SLP against the said order was dismissed in limine by the Supreme  Court.

However, the Section 34 petition challenging the Arbitral Award dated 31.12.2022 was filed in the High Court of Delhi.    The respondent has taken objection to the said petition on the ground of jurisdiction.

The High Court of Delhi has overruled the objection, distinguished the judgment of the M.P.High Court and held that it has territorial jurisdiction to deal with the said petition.  Section 42 of the AA would apply where the Court which is initially approached must possess jurisdiction.   Section 42 cannot apply to perpetuate the erroneous exercise of jurisdiction by a forum which is coram non judice.

HELD that the distinction between the venue of arbitration and the seat of arbitration and the situs of the court which could exercise curial jurisdiction over the arbitral proceedings where the venue and seat of arbitration, fixed by the contract, fall within the territorial jurisdiction of different Courts, is no longer res integra.  The dismissal of SLP against the decision of MP High Court was not on merits.