Jurisdiction Clause In Umbrella Agreement Prevails Over Later Contract: Delhi High Court

The Delhi High Court has recently ruled that when an umbrella agreement fixes a venue in one city but expressly confers jurisdiction on courts in another, the jurisdiction clause will prevail unless the parties clearly alter the juridical seat for the entire transaction.

Dismissing two petitions filed by Ansal Housing Limited seeking interim relief under the Arbitration and Conciliation Act, 1996, Justice Harish Vaidyanathan Shankar ruled that courts at Meerut, and not Delhi, had territorial jurisdiction.

Explaining the principle, the Court observed, “Where the umbrella agreement consciously designates a venue in one city and subjects itself to the jurisdiction of courts in another, the latter cannot be eclipsed absent a clear and unequivocal stipulation altering the juridical seat for the entire transaction"

The dispute arose from a Meerut-based development project structured through three agreements: a Memorandum of Understanding dated April 4, 2012, a Consortium Agreement dated February 20, 2014, and a Joint Development Agreement dated August 14, 2014.

The MoU stated that the “venue of Arbitration will be New Delhi” and further provided that it was “subject to jurisdiction of Courts at Meerut.” The Consortium Agreement did not designate any seat of arbitration.

The later Joint Development Agreement, executed between Ansal Housing and the respective respondents, SS Infrastructures Pvt. Ltd. and Kamal Consultants Pvt. Ltd., provided that “the place of Arbitration shall be Delhi only.”

Following termination of the JDA on account of disputes, Ansal Housing approached the Delhi High Court seeking interim relief. Prayers included restraint against the joint developers from acting on the termination and dealing with the project land.

Counsel for Ansal Housing argued that the designation of Delhi as the “place of arbitration” in the Joint Development Agreement, along with the word “only,” fixed Delhi as the juridical seat.

It was contended that once a seat is designated, courts at that place exercise supervisory jurisdiction over arbitration proceedings.

The court, however, examined the contractual framework as a whole. It described the MoU as the “principal and governing instrument” and held,

"The MoU, being the principal and governing instrument, must take precedence in determining jurisdiction. The stipulation therein conferring jurisdiction upon the Courts at Meerut cannot be diluted by the subsequent JDA, which is limited in scope and parties.”

Emphasising that the Joint Development Agreement could not be read in isolation, the Court observed, “To permit the Petitioner to isolate the JDA from its contractual moorings and to invoke Clause 19 of the JDA as the sole determinant of jurisdiction would be to permit fragmentation of a composite transaction, thereby unsettling the contractual equilibrium consciously crafted by the parties.”

Holding that it lacked territorial jurisdiction, the Court dismissed both petitions while granting liberty to the petitioner to pursue remedies before the competent court.

For Petitioner (Ansal Housing Limited): Senior Advocate J. Sai Deepak, Advocates Sonal Kumar Singh, Suarj Raj Kesherwani, Yashvardhan Singh Gohil and B. Sidhi Pramodh Rayudu.