M/S RAVI RANJAN DEVELOPERS PVT. LTD V. ADITYA KUMAR CHATTERJEE

COURT: Supreme Court of India

CORAM : Justice Indira Banerjee, Justice AS Bopanna

DATE OF JUDGMENT: 24 March 2022

FACTS

M/s Ravi Ranjan Developers Pvt. Ltd. (“Appellant”) and Aditya Kumar Chatterjee (“Respondent”) entered into a Development Agreement for the development of the property in Muzaffarpur, Bihar, on June 15, 2015. The contract said that any disputes would be resolved through Arbitration. The Arbitral Proceedings were to be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996, and the tribunal’s sitting would be in Kolkata, according to the Agreement.

A dispute emerged between the parties as a result of significant differences, and on April 24, 2019, the Respondent terminated the Agreement; however, the Appellant rejected this termination. As a result, the Respondent served notice on the Appellant, using the Agreement’s Arbitration Clause.

The Respondent filed a petition in the Calcutta High Court for the appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act.

The Calcutta High Court appointed a sole Arbitrator entirely disregarding the Appellant’s affidavit objecting to the Court’s geographical jurisdiction. The Appellant then filed a review petition against the impugned order, which the Calcutta High Court later dismissed in an order dated October 4, 2021. Aggrieved by the decision Appellant filed an appeal in the Supreme Court.

ISSUES RAISED:

Whether the Calcutta High Court had jurisdiction to entertain the application filed by the Respondent and appoint an Arbitrator?

JUDGMENT:

The Supreme Court observed that the development agreement was admittedly executed and registered outside the jurisdiction of the Calcutta High Court, and it pertains to the development of property in Bihar, which is again outside the jurisdiction of the Calcutta High Court. Furthermore, no party conducts business within the jurisdiction of the Calcutta High Court. The Supreme Court also dismissed Chhatterjee’s argument that the Calcutta High Court had geographical jurisdiction to select the Arbitrator because the seat was in Calcutta (Kolkata). The Supreme Court noted that Calcutta (Kolkata) was only intended to be the ‘venue’ for arbitration sittings. The Supreme Court also noted that Respondent had previously sought interim protection under the Arbitration Act from the District Court in Muzaffarpur, Bihar, rather than a court in Kolkata, and is thus barred from claiming that the parties had agreed to give the Calcutta High Court exclusive jurisdiction. As a result, the SC ruled that the Calcutta HC lacked authority to appoint an arbitrator, therefore the HC decision was quashed and a new arbitrator was appointed.

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