Matter: Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar Chatterjee.
Order dated: 24 March 2022
Summary:
Ravi Ranjan Developers Pvt. Ltd. (“RR Developers”) and Aditya Kumar Chhatterjee (“Chhaterjee”) entered into a development agreement for development of a property situated in the state of Bihar. The said development agreement executed and registered in Bihar contained an arbitration clause that all disputes between the parties arising out of and relating to the development agreement would be referred to arbitration under the provisions of the Arbitration Act “and the sitting of the said Arbitral Tribunal shall be at Kolkata.” Differences and disputes arose in relation to the development agreement, giving rise to various proceedings between the parties and eventually Chhatterjee filed a petition in Calcutta HC for appointment of an arbitrator. This application was challenged by RR Developers questioning the territorial jurisdiction of the Calcutta HC as no part of the cause of action arose within the territorial jurisdiction of the Calcutta HC. On the other hand, Chhaterjee contended that though the development agreement was executed in Bihar and the property in question is also located outside the jurisdiction of the Calcutta HC, but as the parties have agreed to submit to the jurisdiction of Calcutta HC in the arbitration agreement contained in the said development agreement, Calcutta HC had jurisdiction to try and entertain the case.
The issue under consideration before the SC was whether the Calcutta HC at all had the jurisdiction to entertain the application filed by Chhaterjee and appoint an arbitrator. The SC observed that the development agreement was admittedly executed and registered outside the jurisdiction of the Calcutta HC, and it pertains to development of property in Bihar which is again outside the jurisdiction of the Calcutta HC. Further, neither of the parties carry out any business within the jurisdiction of the Calcutta HC. SC also rejected the contention of Chhatterjee that Calcutta HC had the territorial jurisdiction to appoint the arbitrator as the seat was Calcutta (Kolkata). The SC noted that Calcutta (Kolkata) was only intended to be the ‘venue’ for arbitration sittings. SC also noted that earlier, Chhaterjee himself had approached the District Court at Muzaffarpur, Bihar and not a court in Kolkata for interim protection under the Arbitration Act and is therefore estopped from contending that the parties had agreed to confer exclusive jurisdiction to the Calcutta HC. Therefore, SC held that the Calcutta HC had no jurisdiction to appoint an arbitrator, and accordingly quashed the HC order and appointed a new arbitrator.
