Cherian Varkey Construction Co. Pvt. Ltd. v. KEF Infrastructure India Pvt. Ltd. (taken over by Katera India Pvt. Ltd.)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.NAGARESH** **FRIDAY, THE 18[TH] DAY OF NOVEMBER 2022/27TH KARTHIKA, 1944** **AR NO. 104 OF 2022** ## **PETITIONER:** **CHERIAN VARKEY CONSTRUCTION CO.PVT.LTD 5FLOOR, ALPHA PLAZA, KP VALLON ROAD, KADAVANTHARA, KOCHI, KERALA, PIN – 682020 REPRESENTED BY ITS DIRECTOR, MR.REJI.M.CHERIAN** **BY ADVS. SRI.A.DINESH RAO SRI.LEVYANN XAVIER** ## **OPPOSITE PARTY:** **M/S.KEF INFRASTRUCTURE INDIA PVT.LTD NO.34 GROUND FLOOR, EMBASSY DIAMANTE, VITTAL MALLYA ROAD, BANGALORE, PIN-560 001 (TAKEN OVER BY) KATERA INDIA (PVT.LTD), C/O. KATERRA DESIGN, #3790,7TH MAIN,HAL, II STAGE, INDIRA NAGAR, BANGALORE, KARNATAKA, PIN – 560038** **BY ADVS. SMT.PREEJA V.P. SRI.PREMCHAND R.NAIR(K/002451/1999) SRI.GEORGE BRISTON(K/2488/1999) SRI.V.P.PRASANTH(K/605/2009) SMT.ANUJA S. NAIR(K/001555/2022) SRI.SHIBU B.S(K/001060/2021)** **THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 18.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** A.R. No.104/2022 : 2 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## A.R. No.104 of 2022 ````````````````````````````````````````````````````````````` _Dated this the 18[th] day of November, 2022_ ## **O R D E R** ~ ~ ~ ~ ~ ~ The applicant is a construction Company which was awarded the contract for piling work of GEM School at Smart City in Kochi, by the Opposite Party-Company. The applicant states that the construction work was completed by the applicant and the school is now functioning in the building. Payment of ₹17,64,098/- is due to the applicant from the Opposite Party, since the last more than four and a half years. The Opposite Party is not honoring the Bill in spite of repeated requests. 2. There is thus a dispute between the applicant and the Opposite Party. The agreement contemplates resolution of disputes by Arbitration. Notice of arbitration sent by the A.R. No.104/2022 : 3 : applicant is not responded to positively. Hence, the applicant has filed this Arbitration Request invoking Section 11(6) of the Arbitration and Conciliation Act, 1996. 3. The Opposite Party resisted the request filing a counter affidavit. There is no amount due payable to the applicant, contends the Opposite Party. Under the agreement, arbitration proceedings can be resorted to only if the dispute is not settled amicably. The applicant has not strived for an amicable settlement in the matter. 4. Arbitration proceedings, if any, is to be conducted at Bangalore, contended the Opposite Party. The request is barred by limitation. At any rate, no arbitrable dispute has arisen, warranting resolution invoking the Arbitration and Conciliation Act, 1996, urged the Opposite Party. 5. The existence of Annexure-A work order dated 09.04.2016 is admitted by the applicant and the Opposite Party. The execution of work by the applicant pursuant to Annexure-A is not disputed. The defence of the Opposite Party is that there is no due payable to the applicant by the A.R. No.104/2022 : 4 : Opposite Party. The applicant controverted the same. Therefore, obviously there is a dispute. 6. The arbitration clause in Annexure-A reads as follows: Arbitration : In the event of any dispute arising between KEF and the contractor during the execution or after the completion or abandonment of the Work order or after the termination (whether by breach or in any other manner), then either party shall give to other party a notice in writing of such dispute or difference and the same shall be discussed and resolved amicably within 15 days. In case if not settled amicably, the matter shall be referred for arbitration which shall be conducted in Bangalore. Either party shall give at least 15 days' notice to the other in case arbitration is to be initiated. Arbitration shall be in English and shall be conducted in conformity with the Arbitration and Conciliation Act, 1996 or any statutory amendment or re-enactment thereto. 7. The existence of the afore arbitration clause in Annexure-A is also not disputed by the Opposite Party. The Opposite Party would but argue that since the place of arbitration is agreed as Bangalore, the High Court of Kerala has no jurisdiction to entertain an application under Section 11(6) of the Arbitration and Conciliation Act, 1996. A.R. No.104/2022 : 5 : 8. On the issue, the counsel for the applicant relied on the judgment of the Apex Court in _**Ravi Ranjan Developers Pvt. Ltd. (M/s) v. Aditya Kumar Chatterjee** [2022 KHC 6341]_ and urged that when a venue for holding arbitral proceedings is agreed to by the parties to an agreement, the venue cannot be treated as seat of arbitration. Intention of the parties is of utmost importance. 9. The counsel for the Opposite Party, on the other hand, relied on the judgment of the Apex Court in _**BALCO v. Kaiser Aluminium Technical Services Inc.** [(2012) 9 SCC 552]_ and argued that Section 20 of the Act, 1996 recognises autonomy of the parties as to ''place of arbitration'' and since the parties here have opted Bangalore as place of arbitration, no other courts have jurisdiction in this matter. 10. Relying on the judgment of the Apex Court in _**BGS SGS SOMA JV v. NHPC** [(2020) 4 SCC 234]_ , the counsel for the Opposite Party pointed out that where, under the agreement, only hearings are to take place in the ''venue'', it may lead to the conclusion that other things being equal, the A.R. No.104/2022 : 6 : venue so stated is not the ''seat'' of arbitral proceedings. But, in the present case, there is unequivocal consensus between the parties that the place of arbitration should be Bangalore, contended the counsel for the Opposite Party. 11. The counsel for the Opposite Party argued that the Hon'ble Apex Court in BBR (India) Private Limited v. S.P. Singla Constructions Private Limited (Civil Appeal Nos.41304131 of 2022) has held that the place where the Arbitral Tribunal holds arbitration proceedings would, by default, be the venue of arbitration and consequently the 'seat of arbitration'. In this case, the parties have agreed that arbitration proceedings shall be conducted in Bangalore and consequently, Bangalore should be the seat of arbitration, contended the counsel for the Opposite Party. 12. I have heard the learned counsel for the petitioner and the learned counsel appearing for the Opposite Party. 13. The seat of arbitration is a vital aspect of any arbitration proceedings. Significance of the seat of arbitration is that it determines the applicable law and A.R. No.104/2022 : 7 : competent courts. The location of the seat will determine the courts that will have exclusive jurisdiction to oversee arbitration proceedings. 14. It is by now well settled that ''seat of arbitration'' and ''venue of arbitration'' cannot be used interchangeably. The intention of the parties as to the ''seat'' should be determined from other clauses in the agreement and the conduct of the parties. In this case, the office of the applicant is situated at Kochi, Kerala and the office of the Opposite Party is at Bangalore, Karnataka. The agreement pertains to work that is carried out in Kerala. The cause of action arose in Kerala. 15. The arbitration clause in the agreement states that arbitration shall be conducted in Bangalore. The question is whether the term ''shall be conducted in Bangalore'' amounts to agreeing Bangalore as the seat / place of arbitration or whether Bangalore is only intended to be the venue of arbitration. A.R. No.104/2022 : 8 : ## 16. The respondent relied on paragraph 82 of the judgment in _**BGS SGS SOMA JV**_ (supra) which reads as ## follows: 82. On a conspectus of the aforesaid judgments, it may be concluded that whenever there is the designation of a place of arbitration in an arbitration clause as being the "venue" of the arbitration proceedings, the expression "arbitration proceedings" would make it clear that the "venue" is really the "seat" of the arbitral proceedings, as the aforesaid expression does not include just one or more individual or particular hearing, but the arbitration proceedings as a whole, including the making of an award at that place. This language has to be 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 may lead to the conclusion, other things being equal, that the venue so stated is not the "seat" of arbitral proceedings, but only a convenient place of meeting. Further, the fact that the arbitral proceedings "shall be held" at a particular venue would also indicate that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby, that that place is the seat of the arbitral proceedings. This, coupled with there being no other significant contrary indicia that the stated venue is merely a "venue" and not the "seat" of the arbitral proceedings, would then conclusively show that such a clause designates a "seat" of the arbitral proceedings. In an international context, if a supranational body of rules is to govern the arbitration, this would further be an indicia that "the venue", so stated, would be the seat of the arbitral proceedings. In a national context, this would be replaced by the Arbitration Act, 1996 as applying to the "stated venue", which then becomes the "seat" for the purposes of arbitration. A.R. No.104/2022 : 9 : The Apex Court held that if a venue is agreed upon, it would further be an indicia that 'the venue' so stated would be 'the seat' of arbitral proceedings. 17. It has to be noted that the case _**BGS SGS SOMA JV**_ (supra) dealt with an issue of international arbitration. Yet, the Apex Court held that agreeing to a venue of arbitration, would be only an indicia to hold that the venue would be the seat of arbitration also. 18. The judgment in BBR (India) Private Limited (supra) was not a case of international arbitration. It was a case where the second arbitrator who was appointed to decide the arbitration case consequent to the recusal of the first arbitrator, shifted the venue from Panchkula in Haryana to Delhi. The Apex Court held that Panchkula is the seat of arbitration. The Apex Court held as follows: The appellant had moved the Delhi High Court under Section 34 of the Act after the arbitral tribunal vide the order dated 5[th] August 2014 had fixed the jurisdictional 'seat' at Panchkula in Haryana. Consequently, the appellant cannot, based on fastest finger first principle, claim that the courts in Delhi get exclusive jurisdiction in view of Section 42 of the Act. The reason is simple that A.R. No.104/2022 : 10 : before the application under Section 34 was filed, the jurisdictional 'seat' of arbitration had been determined and fixed under sub-section (2) to Section 20 and thereby, the courts having jurisdiction over Panchkula in Haryana, have exclusive jurisdiction. The courts in Delhi would not get jurisdiction as the jurisdictional 'seat of arbitration' is Panchkula and not Delhi. The judgment in BBR (India) Private Limited (supra) therefore is of no assistance to the Opposite Party. 19. In this case, the cause of action in respect of the dispute arose in Kochi. The arbitration clause only states that the arbitration shall be conducted in Bangalore. The agreement does not provide that Bangalore shall be the seat / place of arbitration. Considering Annexure-A agreement in its totality, the consensus of the parties at the most can be to make Bangalore, the venue of arbitration proceedings. As the cause of action mainly arose in Kochi and as Annexure-A agreement does not in any manner indicate that the parties to the agreement had decided to make Bangalore the seat / place of arbitration, I find that Kochi is the seat of arbitration. A.R. No.104/2022 : 11 : 20. The Arbitration Request is therefore allowed and the following orders are passed: (i) Advocate Gracious Kuriakose, Nambiaparambil, Shenoy Road, Kaloor-682 017 is appointed as the sole Arbitrator, to arbitrate upon the disputes that have arisen between the applicant and the Opposite Party arising out of Annexure-A. (ii) The learned Arbitrator is at liberty to rule on his own jurisdiction, if the parties raise such a dispute. (iii) The Registry is directed to communicate a copy of this order to the learned Arbitrator within a period of ten days from today and to obtain a Statement of Disclosure from the learned Arbitrator as provided under Section 11(8) read with Section12(1) of the Act. (iv) Once the Disclosure Statement is obtained from the learned Arbitrator, the Registry shall issue the certified copy of this order to the learned Arbitrator, with a copy of the said statement appended to it, retaining the original of the same by this Court. (v) The fees of the learned Arbitrator shall be governed by the Fourth Schedule of the Act. (vi) The learned Arbitrator shall decide the manner in which the fees and expenses of the arbitration proceeding has A.R. No.104/2022 : 12 : to be paid by the parties. (vii) The parties will appear before the learned Arbitrator on such date and place as decided by the learned Arbitrator. (viii) All contentions of the parties are left open to be raised before the learned Arbitrator. Sd/- **N. NAGARESH, JUDGE** aks/16.11.2022 A.R. No.104/2022 : 13 : ## **APPENDIX OF AR 104/2022** ## **PETITIONER'S ANNEXURES** |**Annexure1**|**ANNEXURE A - TRUE COPY OF THE WORK**| |---|---| ||**ORDER DATED 9.04.2016**| |**Annexure2**|**ANNEXURE B- TRUE COPY OF THE**| ||**COMMUNICATION DATED 11/07/2018**| |**Annexure3**|**ANNEXURE C- TRUE COPY OF THE**| ||**COMMUNICATION DATED 08/06/2019**| |**Annexure4**|**ANNEXURE D- TRUE COPY OF THE POSTAL**| ||**ACKNOWLEDGEMENT CARD FOR HAVING**| ||**RECIEVED ANNEXURE C**| |**Annexure5**|**ANNEXURE E- TRUE COPY OF THE NOTICE**| ||**DATED 22/05/2020**| |**Annexure6**|**ANNEXURE F- TRUE COPY OF THE**| ||**COMMUNICATION DATED 12TH FEB 2022**| |**Annexure7**|**ANNEXURE G- TRUE COPY OF THE**| ||**ACKNOWLEDGEMNT CARD EVIDENCING RECEIPT**| ||**OF ANNEXURE F**| |**Annexure A(7)**|**COPY OF WORK ORDER DATED 9.4.2016**| ||**ISSUED TO THE APPLICANT.**| ## **OPPOSITE PARTY’S ANNEXURES : NIL**