Failure to raise plea of jurisdiction during arbitral proceedings results in Waiver: SC

The SC on April 29, 2020 {QUIPPO CONSTRUCTION EQUIPMENT LIMITED v. JANARDAN NIRMAN PVT. LIMITED} held that it was possible for the respondent to raise submissions that arbitration pertaining to each of the agreements be considered and dealt with separately. It was held that it was also possible for him to contend that in respect of the agreement where the venue was agreed to be at Kolkata, the arbitration proceedings be conducted accordingly. It was held by the Court that considering the facts that the respondent failed to participate in the proceedings before the Arbitrator and did not raise any submission that the Arbitrator did not have jurisdiction or that he was exceeding the scope of his authority, the respondent must be deemed to have waived all such objections. 

The SC Bench, comprising of Justice U U Lalit & Justice Sanjiv Khanna, observed that in the present case the arbitration in question is a domestic and an institutional arbitration where CIAA was empowered to and did nominate the Arbitrator. It was held that it is not as if there were completely different mechanisms for appointment of Arbitrator in each of the agreements. It was held that the only distinction is that according to one of the agreements the venue was to be at Kolkata. It was held by the Court that the specification of “place of arbitration” may have special significance in an International Commercial Arbitration, where the “place of arbitration” may determine which curial law would apply. However, in the present case, the applicable substantive as well as curial law would be the same.

POINT UNDER CONSIDERATION

In the present case, it was held by the District Court at Alipore, in the petition u/s 34 of the Arbitration and Conciliation Act, 1996 (for short “the Act”) filed by the respondent herein:  after careful scrutiny of the case record as well as the observation of the Hon’ble Apex Court. It finds that the arbitration award was passed at New Delhi and accordingly the Court of New Delhi has the jurisdiction to entertain the application u/s 34 of the Arbitration and Conciliation Act. This Court has no jurisdiction. So, the present case is bad for want of jurisdiction. The petition u/s 34 was accordingly dismissed by the District Court at Alipore - which order was set aside by the Calcutta High Court in petition u/s 37 of the Act. That order of the HC was subject matter of present case before the SC.

It was held by the SC that in the circumstances, it is clear that: (i) Though each of the four agreements provided for arbitration, the award rendered by the Arbitrator was a common award; and (ii) In one of the agreements the venue was stated to be Kolkata and yet the proceedings were conducted at Delhi; However, at no stage, the aforesaid objections were raised by the respondent before the Arbitrator and the respondent let the arbitral proceedings conclude and culminate in an ex-parte award. Therefore, the question that arose before the SC was whether the respondent could be said to have waived the right to raise any of the aforesaid objections. It was held by the SC that in the said circumstances the respondent has waived the right to raise any of the said objections, including, regarding Venue of arbitration can only be at Kolkata.

The SC held that the respondent is now precluded from raising any submission or objection as to the venue of arbitration, the conclusion drawn by the Court at Alipore while dismissing the petition u/s 34 of the Act was quite correct and did not call for any interference. It was held that the High Court was in error in setting aside said Order. The Court allowed the appeal, setting aside the Judgment and Order under appeal and restored the Order dated 13.08.2018 passed by the Court at Alipore u/s 34 of the Act.