Activitas Management Advisor Private Limited Vs Mind Plus Healthcare Private Limited (Supreme Court of India)
Summary: The Supreme Court considered whether the Punjab and Haryana High Court could appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 when Clause 10 of the management consultancy agreement dated 9 July 2023 gave the Mumbai High Courts exclusive jurisdiction over disputes connected with the agreement. Activitas Management Advisor Private Limited had been engaged by Mind Plus Healthcare Private Limited. Their contract provided for Indian governing law, appointment of a sole arbitrator by consent and exclusive jurisdiction of Mumbai courts, but did not expressly identify an arbitration seat or venue.
After the dispute arose, Activitas invoked arbitration under Section 21. Mind Plus initially claimed to have appointed a sole arbitrator and subsequently sought appointment under Section 11 before the Punjab and Haryana High Court. Activitas objected to that court’s territorial jurisdiction. The respondent argued that its registered office was in Ludhiana, the agreement was electronically executed, ₹15,34,000 was paid through its bank account and services were delivered electronically. Relying on I Care Consultancy v. Mahindra and Mahindra Financial Services, the High Court rejected the objection and appointed a retired District and Sessions Judge as arbitrator by order dated 27 September 2024.
The Supreme Court relied upon Brahmani River Pellets Ltd. v. Kamachi Industries Ltd. and held that the exclusive jurisdiction clause must be read in the context of the parties’ agreement to arbitrate. Although Clause 10 omitted the words ‘seat’ and ‘venue’, its reference to exclusive jurisdiction of Mumbai courts indicated that Mumbai was the juridical seat of arbitration. The designation of the seat determines supervisory court jurisdiction and prevents another High Court from appointing an arbitrator contrary to the agreed jurisdiction.
The appeal was allowed and the Punjab and Haryana High Court’s appointment order in ARB-130-2024 was set aside. The Supreme Court recorded that Activitas had already filed a Section 11 application before the Bombay High Court and permitted it to pursue that application. Mind Plus remained free to oppose it on grounds available in law. The Supreme Court did not decide the underlying consultancy claims or itself appoint an arbitrator.
Cases Discussed
- Brahmani River Pellets Ltd. v. Kamachi Industries Ltd. — Relied upon by Supreme Court for exclusion of other courts by contractual jurisdiction designation.
- Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited and Others, 2017 SCC OnLine SC 442 — Cited before Punjab and Haryana High Court concerning seat and exclusive supervisory jurisdiction.
- M/s I Care Consultancy v. M/s Mahindra and Mahindra Financial Services Limited and Others, ARB No.49 of 2023, decided 6 August 2024 — Relied upon by Punjab and Haryana High Court
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Leave granted.
2. This appeal arises out of the judgment and order dated 27.09.2024 passed by the High Court of Punjab and Haryana at Chandigarh in ARB-130-2024, whereby the High Court allowed the application filed by the respondent under Section 11 of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act’).
3. Appellant, a management consultancy firm was engaged by the respondent. The agreement that the appellant and the respondent have entered into on 09.07.2023 has an arbitration clause and it also provides that “client hereby submits to the exclusive jurisdiction of the Mumbai High Courts located in Mumbai in connection with any dispute related to this letter or any of the matters contemplated thereby”. Clause 10 of the Agreement is as under:
“10. Governing Law-This Letter shall be governed by and construed in accordance with Indian Law.
Client hereby submits the exclusive jurisdiction of the Mumbai High Courts located in Mumbai in connection with any dispute related to this letter or any of the matters contemplated hereby. In case, any dispute arises between the parties with respect to above-mentioned agreement. Parties hereby agree to appoint sole Arbitrator by consent of either parties as per section 11 of Arbitration and Conciliation Act 1996, and can amicably resolve their dispute as per the procedure laid down in Arbitration and Conciliation Act 1996 before approaching appropriate court for the same.”
4. For resolution of disputes, the appellant invoked Section 21 and sought reference of the dispute to an Arbitral Tribunal. The respondent initially replied stating that they have already appointed a person as a sole arbitrator and this was objected to by the appellant. Thereafter the appellant came to know that the respondent proceeded to file an application under Section 11 of the Act before the Punjab and Haryana High Court. Appellant appeared and opposed the said application on the ground that the arbitration clause specifically reserves the exclusive jurisdiction of Mumbai High Court. However, the Punjab and Haryana High Court proceeded to appoint an arbitrator. The relevant portion of the order passed by the High Court is as follows:
“5. In view of judgment dated 06.08.2024 passed by this Court in ARB No.49 of 2023, M/s I Care Consultancy v. M/s Mahindra and Mahindra Financial Services Limited and others, the objection of the respondent qua territorial jurisdiction is not
6. Conditions to invoke power conferred by Section 11(6) of 1996 Act stand satisfied, thus, I hereby appoint a sole Arbitrator to adjudicate the dispute between the parties.
7. Mr. V.K. Gupta, District & Sessions Judge (Retired), residing at House No. 70, Punjab Judges Enclave, Sector 77, Mohali -140308, Mobile No. 7696572387 is hereby appointed as a Sole Arbitrator to adjudicate the dispute between the parties, subject to compliance of statutory requirements. The learned Arbitrator is requested to comply with mandate of Section 12 of 1996 Act before proceeding further.”
5. Mr. Dhawal Deshpande, learned counsel appearing on behalf of the appellant, made his solitary argument that the arbitration between the parties must be as per clause 10 of the contract, agreeing to submit to the exclusive jurisdiction of the Mumbai High Court.
6. Mr. Rohan Ganpathy on the other hand sought to sustain the order passed by the High Court on the grounds that courts, as defined under Section 11 of the Act enables his client to invoke jurisdiction of Punjab and Haryana High Court.
7. Brahmani River Pellets Ltd. v. Kamachi Industries Ltd.1, this Court observed that:
“18. 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…
19… Since only the Orissa High Court will have the jurisdiction to entertain the petition filed under Section 11 (6) of the Act, the impugned order is liable to be set aside. “
8. Though clause 10 does not use the expression ‘seat’ or ‘venue’, we are of the opinion that the ‘jurisdiction’ is mentioned in the context of resolution of the disputes through arbitration and as such the agreement between the parties that, “client hereby submits to the exclusive jurisdiction of the Mumbai High Courts located in Mumbai” must be understood in the context of arbitration and therefore the seat of the arbitration must be taken to be Mumbai.
9. We are informed that the appellant has already filed an application under Section 11 before the Mumbai High Court the same is pending consideration.
10. In view of the above, we allow the appeal, set aside the judgment and order passed by the High Court in ARB-130-2024 dated 27.09.2024. The appellant will be entitled to pursue his application under Section 11 of the Arbitration and Conciliation Act and the respondent is equally entitled to contest the said application on such grounds as may be available to it in law.
11. With these directions, the appeal stands allowed and disposed of accordingly.
1. Leave granted.
2. The Civil Appeal is allowed in terms of the Signed Order.
3. Pending application(s), if any, shall stand disposed of.
