The Delhi High Court, in a significant ruling, clarified that when an arbitration agreement does not specify a seat or venue, jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996 (A&C Act), is determined by Sections 16 to 20 of the Civil Procedure Code, 1908 (CPC). The decision was rendered by Justice Manoj Kumar Ohri while addressing the territorial jurisdiction issue in an arbitration dispute.

Case Background

The dispute arose from an agreement dated 06.07.2022 between Faith Constructions (Petitioner) and N.W.G.E.L Church (Respondent). The agreement pertained to the construction of the Bishop's Residence Ground Floor Building in Sundergarh, Odisha. Clause 9 of the agreement provided for arbitration in case of disputes.

The petitioner alleged that the respondent failed to complete the work on time and defaulted on payments. Consequently, arbitration was invoked through a notice dated 08.07.2024 under Section 21 of the A&C Act.

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Respondent's Arguments:

• The arbitration agreement was silent on the seat or venue of arbitration.
• Arbitration should take place in Rajgangpur, Odisha, where the construction work occurred.
• The agreement was executed and notarized in Odisha.
• Payments were received in proportion to the work done in Odisha.
• The respondent’s principal place of business is in Odisha.
• Jurisdiction should be determined as per Section 2(1)(e) of the A&C Act and Sections 16-20 of CPC.

Petitioner's Arguments:

• Part of the cause of action arose in Delhi.
• The petitioner's business was based in Delhi.
• Partial payments were credited to the petitioner's bank account in Delhi.
• Bills and invoices were raised from the Delhi office.
• The unilateral appointment of the Sole Arbitrator by the respondent in Odisha was invalid as per Supreme Court precedents.

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The court analyzed whether it had the territorial jurisdiction to entertain the petition under Section 11 of the A&C Act.

• "When the arbitration agreement does not mention a specific seat or venue, jurisdiction is determined by where the cause of action arises and where the respondent resides or conducts business."
• Section 2(1)(e) of the A&C Act must be interpreted in conjunction with CPC Sections 16-20 to ascertain jurisdiction.
• The Supreme Court, in Ravi Ranjan Developers (P) Ltd. v. Aditya Kumar Chatterjee (2022), ruled that Section 11(6) petitions cannot be filed in any High Court irrespective of territorial jurisdiction.
• "A High Court can only entertain a petition if it exercises supervisory jurisdiction over a court falling within Section 2(1)(e) of the A&C Act."

The court emphasized that jurisdiction depends on the material and integral facts that constitute the cause of action:

• "Cause of action comprises significant facts that establish rights and obligations between parties."
• "Incidental or trivial facts, such as where a bank deposit was made, do not confer jurisdiction."
• The Alchemist Ltd. v. State Bank of Sikkim (2007) ruling reaffirmed that only substantial and relevant facts determine jurisdiction.

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The Delhi High Court ruled that no part of the cause of action arose in Delhi. Therefore, it dismissed the petition for lack of territorial jurisdiction.

Case Title: FAITH CONSTRUCTIONS versus N.W.G.E.L CHURCH

Case Number: ARB.P. 1318/2024

Judgment Date: 20/03/2025

For Petitioner: Mr. Rajeev M. Roy, and Mr. P. Srinivasan, Advocates.

For Respondent: Ms. Susmita Mahala, Advocate.