Arbitration application dismissed on grounds of territorial jurisdiction

Uttaranchal High Court: An application for appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, was dismissed by a Single Judge Bench comprising of Sudhanshu Dhulia, J., holding that the property in question was in Delhi and thus the present application was barred by want of territorial jurisdiction.

A contract was executed between the applicant and the respondent at Delhi for lending out hydraulic compressors installed at various sites in Delhi. The agreement had an arbitration clause and as a dispute arose between the parties, the applicant gave an arbitration notice to the respondent. Since the respondent failed to comply with the notice, the applicant filed the instant application. The respondent objected as to the maintainability of the application on grounds of jurisdiction as the contract was executed in Delhi, parties resided in Delhi, and also the said hydraulic compressors were installed in Delhi.

The Court observed that cause of action is a bundle of facts. The Court perused provisions of the Transfer of Property Act as well as the General Clauses Act to hold that the hydraulic compressors were permanently fastened to earth and therefore, they were an immovable property. The applicant relied on Section 20 of CPC to contend that as the office of the applicant was registered at Haridwar, the courts in Uttarakhand have jurisdiction in the matter. However, the High Court dismissed the contention holding that Section 20 is subject to the provisions of Sections 15-19 of CPC. Only if the case does not fall within the purview of Sections 15-19, then Section 20 comes into play. The Court finally held that as the property was situated in Delhi, therefore, in light of Section 16 of CPC, the courts having jurisdiction to decide the matter were the courts at Delhi. Consequently, the arbitration application was dismissed. [Sri Hanuman Trust v. Indian Compressor Ltd., 2018 SCC OnLine Utt 211, dated 26-03-2018]

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