2003 (4) TMI 408 - HC - Companies Law

Issues Involved:
1. Challengeability of the arbitrator's order on the place of arbitration under section 20 of the Arbitration and Conciliation Act, 1996.
2. Jurisdiction of the Delhi High Court versus the Chennai High Court.
3. Interpretation and application of sections 20 and 42 of the Arbitration and Conciliation Act, 1996.
4. Agreement between parties regarding the place of arbitration.
5. Competence of the arbitrator to decide the place of arbitration.
6. Applicability of section 8 of the Act regarding jurisdiction.

Issue-wise Detailed Analysis:

1. Challengeability of the Arbitrator's Order on the Place of Arbitration:
The primary issue was whether the order passed by the arbitrator regarding the place of arbitration is challengeable under section 20 of the Arbitration and Conciliation Act, 1996. The court noted that the decision on the place of arbitration is significant and can be challenged at the stage when the decision is taken, rather than waiting for the final award. The court emphasized that forcing a party to wait for the final award to challenge the venue would be counterproductive and unfair, especially in cases involving international arbitration or different countries.

2. Jurisdiction of the Delhi High Court versus the Chennai High Court:
The court examined whether the Delhi High Court had jurisdiction over the matter. It concluded that the Delhi High Court had jurisdiction based on section 2(1)(e) of the Act and section 20 of the CPC, as the registered offices of both parties were in New Delhi. The court also noted that an application under section 8 of the Act, filed before the Chennai High Court, did not confer jurisdiction to the Chennai High Court under section 42 of the Act.

3. Interpretation and Application of Sections 20 and 42 of the Arbitration and Conciliation Act, 1996:
The court discussed the interpretation of sections 20 and 42 of the Act. Section 20 allows parties to agree on the place of arbitration, and failing such agreement, the arbitral tribunal determines the place. Section 42 pertains to the jurisdiction of the court once an application under the Act is made. The court clarified that an application under section 8 is not considered an application under section 42, as it does not seek substantive relief under the arbitration agreement.

4. Agreement Between Parties Regarding the Place of Arbitration:
The court scrutinized whether the parties had agreed to change the venue of arbitration from New Delhi to Chennai. It found no evidence that the parties had agreed to change the venue. The court noted that the agreement before the Division Bench of the Madras High Court only pertained to the appointment of a common arbitrator and not the venue of arbitration.

5. Competence of the Arbitrator to Decide the Place of Arbitration:
The court held that the arbitrator did not have the jurisdiction to decide the place of arbitration when the parties had already agreed on New Delhi as the venue in their arbitration agreement. The arbitrator's decision to change the venue to Chennai was deemed beyond his authority and against the terms of the agreement.

6. Applicability of Section 8 of the Act Regarding Jurisdiction:
The court reiterated that an application under section 8 is merely for seeking a stay of civil suits in favor of arbitration and does not confer jurisdiction under section 42 of the Act. The Supreme Court's view in P. Anand Gajapathi Raju v. P.V.G. Raju was cited to support this interpretation.

Conclusion:
The petition was allowed, and the arbitrator's order was set aside. The arbitration proceedings were directed to be conducted in New Delhi as per the original agreements. If the appointed arbitrator could not conduct the proceedings in New Delhi, the parties were given the liberty to choose another common arbitrator or approach the court for a new appointment.

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