The Supreme Court Bench of Justices R. Banumathi and A.S. Bopanna has held Madras HC’s assumption of jurisdiction erroneous in Brahmani River Pellets Limited v Kamachi Industries Limited on 25th July, 2019.
Facts
Dispute arose between the contracting parties regarding the price and payment terms of Iron Ore Pellets and Brahmani RPL, situated in Orissa did not deliver the goods to Kamachi IL, situated in Tamil Nadu. Kamachi claimed for damages alleging that it had to procure the Iron Ore Pellets from other sources at higher rates. Brahmani denied any liability to pay damages on the ground that contract was later modified and that Kamachi breached the material terms of the contract. Kamachi invoked arbitration clause. Brahmani did not agree for the appointment of the arbitrator. Kamachi approached the Madras HC under Section 11(6) of the Arbitration Act for the appointment of an arbitrator. The arbitration clause however mentioned Bhubaneswar as the seat of arbitration.
High Court’s impugned judgement
Madras HC ruled that mere agreement on Seat of arbitration does not exclude the jurisdiction of courts outside such seat. The High Court held that in absence of any express clause excluding jurisdiction of other courts, both the Madras High Court and the Orissa High Court will have jurisdiction over the arbitration proceedings.
Aggrieved, Brahmani appealed in Supreme Court challenging the impugned judgement.
Supreme Court’s Final Judgement
Supreme Court has said that where the contract specifies the jurisdiction of the court at a particular place, only such court will have the jurisdiction to deal with the matter and parties intended to exclude all other courts. SC heavily relied on its 2013 ruling in Swastik Gases v Indian Oil where it was said that whilst providing for jurisdiction clause in the agreement the words like “alone”, “only”, “exclusive” or “exclusive jurisdiction” have not been used but this, in our view, is not decisive and does not make any material difference.
It is so because for construction of jurisdiction clause in an arbitration agreement, the maxim expressio unius est exclusio alterius comes into play as there is nothing to indicate to the contrary. This legal maxim means that expression of one is the exclusion of another. By making a provision that the agreement is subject to the jurisdiction of the courts at Bhubaneswar, the parties have implicitly excluded the jurisdiction of other courts. The Bench has thus set aside the judgement of the Madras High Court as it erred in assuming jurisdiction under Section 11(6) of the Act