Delhi Only Venue, Bhopal Court Has Jurisdiction In Beyond Malls–Century 21 Dispute: MP High Court

The Madhya Pradesh High Court has recently held that since Beyond Malls LLP and Century 21 Malls Pvt Ltd had agreed that courts where the leased property is located would have jurisdiction, and Century 21 first approached the Bhopal court for interim relief, the Bhopal court alone would have authority over all subsequent arbitration proceedings.

A Division Bench of Justice Vivek Rusia and Justice Pradeep Mittal observed, “Therefore, in view of the above and as per clause 17.9 of the Agreement, instead the parties have also chosen the court at Bhopal to have jurisdiction and for arbitration proceedings, Delhi as the place for the convenience of the parties, the respondent first approached the Court at Bhopal by way of application under section 9 of the Act of 1996. So, therefore, by virtue of section 42 of the Act of 1996, the Court at Bhopal alone shall have the jurisdiction to decide the application under section 34 of the Act of 1996."

The court said that holding arbitration proceedings in New Delhi did not shift jurisdiction. It found that Delhi was chosen only as a convenient place to conduct hearings and not as the legal seat of arbitration.

The dispute arose from a lease of a commercial mall in Bhopal by Century 21 Malls to Beyond Malls LLP. The agreement stated that arbitration proceedings would be held in New Delhi while also requiring the parties to submit to courts where the property is located.

Century 21 first approached a Bhopal court seeking interim protection before arbitration began. An arbitrator was later appointed by the Delhi High Court, and proceedings were conducted in Delhi.

An interim award dated June 10, 2021 was passed in favour of Century 21. Beyond Malls challenged that award before the Commercial Court in Bhopal, which declined to hear it on the ground that it lacked territorial jurisdiction.

Beyond Malls argued that the contract tied jurisdiction to Bhopal since the property was situated there, and that Delhi was only a convenient venue. It said that once Century 21 had approached the Bhopal court first, that court alone could deal with all subsequent proceedings.

Century 21 opposed the appeal, arguing that it was not maintainable and that Beyond Malls had participated in proceedings in Delhi without objection, amounting to waiver. It also argued that although it had first moved the Bhopal court for interim relief, an application for appointment of an arbitrator had been pursued before the Delhi High Court, and therefore courts in Delhi would have jurisdiction.

The High Court rejected the objection on maintainability, holding that refusal to consider a challenge to an award on jurisdictional grounds amounts to refusing to set aside the award. It then examined the agreement and held that the clause referring to New Delhi only fixed the venue of arbitration and did not alter jurisdiction.

The Bench recorded, “So, only in respect of the venue of the arbitration proceedings, the place at Delhi was settled under clause 17.9 of the agreement. But, so far as the applicable laws and jurisdiction are concerned, as agreed by the parties by virtue of clauses 17.15.1 to 17.15.3, the parties agreed to submit themselves to the jurisdiction of the Court where the leased property is located, waiving any other jurisdiction to which they may be entitled. So far as the seat and jurisdiction of the Court is concerned, the parties have agreed and submitted themselves to the jurisdiction of the Court at Bhopal, because admittedly the properties in question are situated at Bhopal"

Addressing the argument based on proceedings in Delhi, the court said what matters is which court was first approached in relation to the arbitration.

It noted, “But the fact is clear that the first application was filed before the District Court at Bhopal. So, therefore, under section 42 of the Act of 1996, the Commercial Court, Bhopal will have the jurisdiction. The respondent has wrongly raised an objection and the learned Court has wrongly rejected the application.”

The High Court set aside the Commercial Court's order and restored the proceedings in Bhopal, holding that it had wrongly declined jurisdiction.