Once a court entertains arbitration-related plea, arbitral award cannot be challenged elsewhere: Delhi High Court

The Delhi High Court has reiterated that once a court is found to have jurisdiction over and entertains an arbitration-related plea, only that court can be approached for all subsequent applications concerning the arbitration including a challenge to the arbitral award [KCA infrastructure v. HDB Financial Services].

A Division Bench of Justices V Kameswar Rao and Vinod Kumar passed the ruling while disagreeing with a Delhi district court's refusal to entertain a plea challenging an arbitral award on the ground that the arbitration was conducted in Chennai.

The High Court found that even though the venue of arbitration was in Chennai, the seat of arbitration remained in Delhi.

Among other aspects, the Bench further noted that in this case, the Delhi court had also earlier entertained and decided on a plea filed under Section 9 (interim measures including the appointment of a receiver) of the Arbitration and Conciliation Act, 1996.

While so, the Court pointed out that Section 42 of the Act bars shifting jurisdiction for subsequent arbitration-related applications, including a challenge under Section 34, to other courts.

The ruling clarifies that a court first seized of an arbitration-related application retains exclusive jurisdiction over the arbitral proceedings.

“Section 42 of the Act contemplates that only one Court shall have control over the arbitral proceedings and all subsequent applications arising out of that agreement and the ensuing arbitral proceedings shall be made in that Court and in no other Court," the Court said, accepting an argument made on this aspect by a party to the case.

The case concerned a loan facility of ₹54.9 lakh extended by HDB Financial Services to M/s KCA Infrastructure for the purchase of construction equipment.

After defaults, HDB invoked an arbitration clause to resolve the dispute. A sole arbitrator passed an arbitral award directing KCA to repay ₹30.92 lakh with 18 per cent interest, and to return the financed vehicle, apart from paying costs.

KCA Infrastructure challenged the award under Section 34 before the Patiala House Commercial Court in Delhi.

However, in August 2022, the District Judge in Delhi dismissed the petition and allowed HDB’s plea under Order VII Rule 10 CPC to return the Section 34 plea. The Delhi court held that only Chennai courts had jurisdiction since the arbitration clause designated Chennai as the venue of arbitration.

KCA challenged this turn of events before the High Court. It argued that HDB had itself earlier filed a Section 9 petition in Delhi seeking the appointment of a receiver over the equipment, thereby submitting to Delhi’s jurisdiction.

In such circumstances, Section 42 of the Arbitration Act made it clear that all subsequent applications - including a Section 34 petition - had to be entertained by the same court.

It was also submitted that the arbitral process violated natural justice since the appellants were denied copies of the claim and opportunity to respond. Further, they argued that Chennai was only a “venue” and not the juridical seat of arbitration.

HDB Financial Services countered that once Chennai was specified in the arbitration clause, it operated as the seat of arbitration and conferred exclusive jurisdiction on courts in Chennai.

HDB's counsel relied on Supreme Court rulings in Indus Mobile Distribution v. Datawind Innovations and Hindustan Construction Company v. NHPC to contend that Delhi courts lacked jurisdiction.

The High Court examined the judgments in BGS SGS Soma JV v. NHPC Ltd. and Arif Azim Co. Ltd. v. Micromax Informatics FZE, to reiterate that a arbitration venue need not always be the seat of arbitration.

A venue is treated as a seat only if three conditions are satisfied: (i) the arbitration clause specifies only one place; (ii) proceedings are anchored there without scope for change; and (iii) there are no contrary indicators suggesting it is merely a venue.

The High Court held that Chennai could not be treated as the seat in this case. The loan agreement had been executed in Delhi, both parties had offices in Delhi, and HDB had itself invoked Delhi jurisdiction under Section 9. These circumstances, the Bench said, were contrary indicators to treating Chennai as the seat.

“Though Chennai has been designated as the venue, the parties have their offices in Delhi, the agreement was executed in Delhi and even the application under Section 9 of the Act was filed by the respondent in Delhi. The only connection that Chennai has to the facts of this case is that the arbitration proceedings were held in Chennai," the Court found.

The High Court also criticised the Delhi District Judge for conflating “venue” with “seat” and for overlooking Section 42, which provides that the court first approached under Part I of the Act retains exclusive supervisory jurisdiction over all subsequent arbitral applications.

By wrongly treating Chennai as the seat, the lower court had deprived KCA of their right to have the award reviewed by the Delhi court that was first seized of the matter, the High Court found.

It proceeded to allow KCA's appeal and restored the Section 34 petition to the file of the Patiala House Commercial Court in Delhi.

The parties have been directed to appear before the District Judge on October 30, 2025 for further proceedings.

KCA was represented by Advocates Manoj Kumar Sahu and Anushree Priya.

HDB was represented by Advocates Amit Sinha, SPM Tripathi, Rahul Poonia and Gaurav Tripathi.

[Read Judgment]