SCHLUMBERGER ASIA SERVICE LTD. & ORS. vs OIL & NATURAL GAS CORPORATION LIMITED

2024-04-30 Information

* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 31st January, 2024
% Pronounced on: 30th April, 2024

+ O.M.P. (COMM) 175/2017

1. SCHLUMBERGER ASIA SERVICE LTD.

18/F Edinburgh Tower,
The Land Mark, 15, Queens Road,
Central Hong Kong ….. Petitioner No. 1

2. SCHLUMBERGER SOLUTIONS PVT LTD.

37, Rajpur Road,
Dehradun, Uttarakhand ….. Petitioner No. 2

3. DOWELL SCHLUMBERGER INTERNATIONAL INC.

Floors 9, 10, 11 Scotia Plaza Building
Federico Boyd Avenue, 51, Street
P.O. Box 0816- 3356,
Panama -5 ….. Petitioner No. 3
Through: Mr. Sanjeev Puri, Senior Advocate with Mr. Rohit Puri, Mrs. K. Puri Bahl & Ms. Pragya Puri, Advocates.

versus

OIL & NATURAL GAS CORPORATION LIMITED

Jeevan Bharti, Tower -II, 124,
Connaught Circus,
New Delhi -110001 ….. Respondent
Through: Mr. Varun K. Chopra & Mr. Mehul Sharma, Advocates.

CORAM:
HON’BLE MS. JUSTICE NEENA BANSAL KRISHNA

J U D G M E N T
NEENA BANSAL KRISHNA, J.
1. The present Petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act, 1996) has been filed on behalf of the petitioners against the Award dated 23.12.2016, whereby the Claim Nos. 1, 2 and 4 of the petitioner (who was the claimant in the Arbitral proceedings) as well as the entire Counter-Claim of the respondent has been dismissed by the majority Award. The petition has been filed to challenge the dismissal of the Claim Nos. 1, 2 and 4 of the petitioner.
2. A preliminary objection has been taken on behalf of the respondent in its Reply, that this Court does not have the territorial jurisdiction to entertain the present petition as the seat of arbitration is at Dehradun, Uttarakhand. Reference has been made to Clause 28(12) of the Contract and Paragraph-29.4 of the Award dated 23.12.2016 to state that as the contract was awarded at Dehradun, it is the seat of Arbitration. It is asserted that in order to save costs, the hearings were held at New Delhi, but the same is merely a venue and not the seat of Arbitration.
3. The petitioner in its Written Submissions has however, asserted that New Delhi was the seat of Arbitration and this Court has jurisdiction to entertain the present petition.
4. Reliance has been placed on the case of Ravi Ranjan Developers Pvt Ltd. vs. Aditya Kumar Chatterjee MANU/SC/0428/2022, Kush Raj Bhatia vs. Dlf Power and Services Ltd. MANU/DE/3937/2022, Kush Raj Bhatia vs. Dlf Power and Services Ltd. 297 (2023) DLT 684, India Infoline Finance Limited vs. Harshad Horji Thakkar MANU/DE/0798/2019, CVS Insurance and Investments vs. Vipul IT Infrasoft Pvt. Ltd. MANU/DE/5065/2017, Emkay Global Financial Services Ltd. vs. Girdhar Sondhi (2018) 9 SCC 49, Radha Sundar Dutta vs. Mohd. Jahadur Rahim and Ors. (1959) 1 SCR 1309 to explain the concept of seat and venue in this regard.
5. The Respondent in its Written Submissions has asserted that there is a conflict between the Arbitration Clause i.e. 28(12) which provides for the seat of the Arbitration to be Dehradun and clause 27 of the Agreement which confers exclusive jurisdiction to be at New Delhi.
6. Reference has been made to the case of Mankastu Impex Private Limited vs. Airvisual Limited 2020 (5) SCC 399, My Preferred Transformation and Hospitality Pvt. Ltd. vs. Sumithra Inn 2021 SCC Online Del 1536, CARS24 Services Pvt. Ltd, vs. Cyber Approach Workspace LLP, 2020 SCC Online Del 1720 Hunch Circle Private Limited v. Furturetimes Technology India Pvt. Ltd., 2022 SCC OnLine Del 361 to point out the approach to be taken in cases where there is a conflict between the exclusive jurisdiction clause and seat of arbitration.
7. Reference has also been made to the case of Raman Deep Singh Taneja v. Crown Realtech Private Limited 2017 SCC OnLine Del 11966, to assert that mere vesting of exclusive jurisdiction in all matters connected with the Agreement between the parties, would not result in conferment of Section 34 jurisdiction on this Court, in the absence of specific conferment of jurisdiction in the Agreement.
8. Thus, it is asserted that in the present case, the seat of the arbitration i.e. Dehradun shall have the exclusive jurisdiction over Subject-Matter of arbitration.
9. Submissions heard on the aspect of territorial jurisdiction and the Written Submissions also perused.
10. The short question for consideration before this Court is whether this Court has territorial jurisdiction to entertain the present petition.
11. The controversy in regard to the jurisdiction has arisen from the observation of the majority Arbitrators in Paragraph-29.4 of the Award dated 23.12.2016, wherein by referring to Clause 28 (12) of the Contract dated 28.07.2010, it is held that since the Contract was awarded at Dehradun, Uttarakhand, it shall remain the place of arbitration and held so for the purpose of Section 20(2) of the Act, 1996. Relying on this finding of the Arbitral Tribunal, the respondent has raised an objection in regard to the territorial jurisdiction of this Court to entertain the present petition.
12. Before considering the facts, it would be pertinent to first understand the distinction between the seat and venue of the arbitration for the purpose of jurisdiction.
13. The controversy about the “seat” and “venue” has been arising frequently since, the Act 1996 does not specifically use either word vis., seat or venue but uses the word place. The term Seat is of utmost importance as it connotes the situs of arbitration. The term Venue though often confused with the term Seat, is a place chosen as convenient location by the parties to carry out the arbitration proceedings, but it should not be confused with Seat. The term Seat carries more weight than Venue or place.
14. In the case of Bharat Aluminium Co. vs. Kaiser Aluminium Techincal; Serivce, Inc., (2012) 9 SCC 552, the Constitution Bench of the Supreme Court observed that Section 2 (1)(e) of the Act 1996 only defines the Court, the Act 1996 has to be construed keeping in mind Section 20 of the Act 1996, which gives recognition to party-autonomy. The legislature has intentionally vested jurisdiction with two courts, i.e., the court which would have the jurisdiction where the cause of action arose, and the courts where the arbitration takes place. This was necessary as on many occasions, most of the Agreements provide for a seat of arbitration at a place which would be mutual to both the Parties. Therefore, the Courts, where the arbitration takes place, would be required to exercise supervisory control over the arbitration proceedings.
15. In the BSG SGS Soma JV. v. NHPC Ltd. (2020) 4 SCC 234, following the Roger Shashoua v. Mukesh Sharama (2009) EWHC 957, the Apex Court laid down the test for determination of the seat which reads as under
It will thus be seen that wherever there is an express designation of a venue and no designation of any alternation place as the seat, combined with a supranational body of rules governing the arbitration and no other significant contrary indicia, the inexorable conclusion is that the stated venue is actually the juridical seat of the arbitral proceedings.

16. In the above judgment of BGS Soma (Supra) to ascertain the real intent of the parties and determine whether the use of the words arbitration proceedings shall be held at New Delhi/Faridabad was indicative of the seat, the Court gave special emphasis on the words arbitration proceedings to hold that the usage of this phrase encompasses the arbitration proceedings as a whole. The connotation of arbitration proceedings was read in conjunction with the words shall be held at which signified the intention of the parties to anchor the proceedings at the decided place, which is not restricted to individual or particular hearings, and hence constituted the seat. This expression was contrasted with language such as tribunals are to meet or have witnesses, experts or the parties’ where only hearings are to take place in the venue which clearly leads to the conclusion that the venue is not the seat in such cases. Hence, the stated venue is the seat of the arbitration unless there are clear indicators that the place named is a mere venue or a meeting place of convenience, and not the seat. The Apex Court thus, held that the reference to place/venue in the Agreement ipso facto, designated the seat in absence of contrary indicia.
17. Thus, the venue is the seat of arbitration in absence of contrary indicia.
18. For the purpose of determination of seat in the present case, the relevant Clause of the Agreement dated 28.07.2010 may be considered. Clause 27 deals with the jurisdiction and reads as under: –
27. JURISDICTION AND APPLICALE LAW: –
This agreement including all matter connected with this Agreement, shall be governed by the laws of India (both substantive and procedural) for the time being in force and shall be subject to exclusive jurisdiction of the Indian Court (the place where the CONTRACT is signed in India). Foreign companies, operating in India or entering into Joint ventures in India, shall have to obey the law of the Land and there shall be no compromise or excuse for the ignorance of the Indian legal system in any way.

19. Likewise, Clause 28 (12) provides for Arbitration which reads as under: –

28. ARBITRATION: –

Sub-Clause 12: –

The Arbitration shall be held at the place from where the contract has been awarded. However, parties to the contract can agree for a different place for the convenience of all concerned.

20. It is not in dispute that the entire proceedings have been held by the Arbitral Tribunal at New Delhi and the Award has also been rendered at New Delhi. Sub-Clause 12 of Clause 28 of the Contract dated 28.07.2010 provides for the arbitration to be held at the place from where the contract has been awarded. However, the second part of the sub-clause also provides that the parties may agree upon a different place for the convenience of all concerned. As the parties agreed that New Delhi shall be the place of the Arbitration for convenience and decided to conduct the hearings at New Delhi, it was the venue of the arbitration, about which there is no dispute.
21. The question for determination is the Seat of arbitration for which the first part of the sub-clause becomes relevant which provides that The Arbitration shall be held at the place from where the contract has been awarded.
22. A bare perusal of the Contract dated 28.07.2010 shows that the Contract, the Integrity Pact along with other documents clearly mention that the Contract have been signed at New Delhi. The confusion apparently has arisen because Mr. P.K. Bhowmik is from the Branch Office of ONGC, Dehradun, Uttarakhand. The address of Mr. P.K. Bhowmik, who has also signed the Contract, has been mentioned as that of Dehradun, but that does not imply that the Contract was signed at Dehradun as has been erroneously held by the Arbitral Tribunal. It is evident that the Contract was signed at New Delhi, a fact which has not been disputed even by the respondent in its Reply to the Claim before the Arbitral Tribunal. Thus, the Contract dated 28.07.2010 having been signed at New Delhi, jurisdiction is conferred upon the Courts in New Delhi.
23. Pertinently, it has been asserted by the Claimant in Paragaphs-6 and 7 of its Statement of Claim that the Contract was signed at New Delhi. Interestingly, the respondent herein in the corresponding Paragraph of its Reply has stated that the contents of these paragraphs are correct, thereby admitting that the Contract was signed at New Delhi. The respondent has taken a somersault to claim that the Agreement was not signed at New Delhi in the Reply to the present Petition, which is factually incorrect.
24. Thus, New Delhi was the venue and the seat of the Arbitration proceedings.
25. The Co-ordinate Bench of this Court in Reliance Infrastructure Ltd. v. Madhyanchal Vidyut Vitran Nigam Ltd., 2023 SCC OnLine Del 4894 observed that a generic jurisdiction clause in an Agreement would not supersede or override the supervisory jurisdiction of the Courts, and held as under:-
32. On a conspectus of the aforesaid judgments, the position of law that emerges is that when the contract contains an arbitration clause that specifies a venue, thereby anchoring the arbitral proceedings thereto, then the said venue is really the seat of arbitration. In such a situation the courts having supervisory jurisdiction over the said seat shall exercise supervisory jurisdiction over the arbitral process, notwithstanding that the contract contains a clause seeking to confer exclusive jurisdiction on a different court.
33. In the present case, the relevant clause in the LOA purporting to confer “exclusive jurisdiction” is a generic clause, and does not specifically refer to arbitration proceedings. For this reason, the same also does not serve as a “contrary indicia” to suggest that that Delhi is merely the “venue” and not the “seat” of Arbitration. As such, the same cannot be construed or applied so as to denude the jurisdiction of the Courts having jurisdiction over the “seat” of Arbitration.

26. Therefore, where the “exclusive jurisdiction” is a generic clause and does not specifically refer to arbitration proceedings, it is the seat or place of arbitration that Court would have jurisdiction to entertain the application under Section 34 of the Act, 1996.
27. It is already established that the Contract dated 28.07.2010 was signed at New Delhi and the same was the seat of Arbitration. Therefore, it is this Court which has the jurisdiction to entertain the present petition in accordance with Clause 28 of the Contract. The preliminary objection taken to the jurisdiction of this Court to entertain the present petition under Section 34 of the Act, is without merit and is hereby rejected.
28. List for arguments on the merits of the petition on 27.09.2024.

(NEENA BANSAL KRISHNA)
JUDGE

APRIL 30, 2024
S.Sharma

O.M.P. (COMM) 175/2017 Page 1 of 9