13 April 2021| Inox Renewables v Jayesh Electricals | Civil Appeal No. 1556 of 2021 | RF Nariman & Hrishikesh Roy JJ

The arbitration clause in a purchase order between Inox’s predecessor and Jayesh provided that “[T]he venue of the arbitration shall be Jaipur [State of Rajasthan].” Later, Inox bought the business of its predecessor. The business transfer agreement (to which Jayesh was not a party) provided that the seat of the arbitration would be at Vadodara [State of Gujarat]. In a dispute that arose from the purchase order, the tribunal made a finding on the seat. It said that “the parties have mutually agreed, irrespective of a specific clause a to the venue at Jaipur, that the place of the arbitration would be at Ahmedabad [State of Gujarat].”

However, the commercial Court at Ahmedabad, relying on the purchase order’s clause, returned Inox’s set-aside petition saying it did not have the jurisdiction. The High Court (in a petition under Article 227 of the Constitution) affirmed the finding.

Setting aside, the Supreme Court sent the matter back to the Ahmedabad court. It gave the following reasons:

1. The tribunal’s finding shows that the parties “specifically shifted the venue/place of arbitration from Jaipur to Ahmedabad.” The shift is with reference to Section 20 (1) ACA and not Section 20 (3) ACA as it has been made clear that Jaipur as a venue is gone, and Ahmedabad is the seat designated by the parties, not merely a venue to hold meetings.
2. BGS SGS Soma v. NHPC Ltd., (2020) 4 SCC 234 shows that the moment the seat is chosen, it is akin to an exclusive jurisdiction clause.
3. Videocon Industries v. Union of India, (2011) 6 SCC 161 had a specific clause that authorised an amendment only by a written instrument signed by the parties. There is no such clause in this case.
4. So, the parties may change the seat of arbitration by mutual agreement, which the arbitrator in his award records. And, no challenge has been made to it by either party.

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