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The Delhi High Court today allowed the appeal by Antrix Corporation Ltd against the judgment of a Single Judge Bench which had held that Antrix’s petitions before the Bangalore City Civil Court, in relation to the arbitration dispute with Devas, were not maintainable.
Antrix had approached the Bangalore City Civil Court challenging the arbitral award in favour of Devas, rendered by the tribunal constituted by the International Chamber of Commerce (ICC). Devas, in turn, had challenged the Bangalore City Civil Court’s jurisdiction to entertain Antrix’s application.
The Single Judge Bench of the Delhi High Court, in the impugned judgment, had held that Antrix’s petitions under Section 9 and 34 of the Arbitration Act before the Bangalore court were not maintainable and listed the matter for hearing on merits. Antrix was also directed to file its balance sheets. Thereafter, Antrix approached the Division Bench.
Appearing for Antrix, Senior Advocate C Aryama Sundaram argued that the Section 9 petition of Antrix, which is still pending before the Bangalore City Civil Court, was a petition prior to the Section 9 petition filed by Devas before the Single Judge of the High Court. Thus, the latter petition was barred by the operation of Section 42 of the Arbitration Act.
Section 42 states that where with respect to an arbitration agreement any application under has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court.
It was further argued that it was undeniable that the Bangalore court in the present case had jurisdiction since the cause of action arose there, and further, Devas’ registered office was also in Bangalore.
Appearing for Devas Multimedia Pvt Ltd, Senior Advocate Rajiv Nayyar argued that Section 42 was inapplicable to the present case, as Antrix’s Section 9 petition before the Bangalore court was not maintainable, and as correctly held by the impugned order, barred in law.
It was urged that the petition before this court is an abuse of the process of law and Antrix has indulged in forum shopping, disentitling it to any relief.
The Division Bench of Justices S Ravindra Bhat and Yogesh Khanna observed that three issues arise from the appeal:
With regard to the first issue, the Court stated that if the impugned judgment is accepted, the effect would be to denude the Bangalore court of jurisdiction. The Court observed that,
“It was contended- and correctly, in this court’s opinion that whereas a court acts within jurisdiction in deciding whether it has or does not have jurisdiction over a cause of a matter, the declaration by it about the lack of jurisdiction of another court, based on the appreciation of the matter before the latter court is undeniably an adverse order.”
The Court therefore held that the appeal is maintainable under Section 37 of the Arbitration Act and Section 13 of the Commercial Courts Act.
Regarding the second issue, the Court observed that only if the parties had designated the seat as New Delhi and also provided an exclusive forum selection clause in favour of the courts at New Delhi, could it be said that the High Court would have exclusive jurisdiction over all applications filed under the Arbitration Act.
The Court held that it cannot be said that the courts in Delhi have exclusive competence to entertain applications under the Arbitration Act in the present dispute. The jurisdiction of the courts where the cause of action arises, which in this case, is the Bangalore City Civil Court, cannot be said to have been excluded.
With regard to the last question, the Court observed that there is a difference between the existence of jurisdiction and the exercise (whether or not erroneous) of such jurisdiction.
“the mandate of the law and the principle of comity of courts would require that that other court which is seized of the dispute first, in accordance with Section 42, decide on the application – and whether it is vexatious or an abuse of the process of law.
This also because were the petition filed before the other court adjudicated to be bona-fide, then the bar under Section 42 would be operative and would serve to exclude the jurisdiction of the present court.”
The Court held that since there is nothing in law which causes this Court to find that the Bangalore City Civil Court inherently lacks jurisdiction over the arbitration proceedings, it must be held that Section 42 applies and the Bangalore City Civil Court being first seized of Antrix’s Section 9 petition, must be allowed to first decide that petition. Depending on the outcome and findings, all subsequent applications may have to be made in that court alone.
Lawyers for Antrix Corporation
Senior Advocates CA Sundaram and Gourab Banerji, along with Samvad Partners’ Dispute Resolution Partner Arjun Krishnan. Advocates Aakanksha Kaul, Ankur Singh, Saket Sikri and Sahil Jagotra.
Lawyers for Devas Multimedia
Senior Advocates Rajiv Nayyar, Sandeep Sethi, and Ciccu Mukhopadhyay, along with Shardul Amarchand Mangaldas lawyers Omar Ahmad, Saurabh Seth, Vikram Shah and Sumer Dev Seth.