J And K Economic Reconstruction Agency vs Rash Builders India Private Limited

CIVIL APPEAL No. OF 2026 (@ SLP (C) No. OF 2026) (@ DIARY No.44792 OF 2025)

J&K ECONOMIC RECONSTRUCTION AGENCY ... APPELLANT

VERSUS

RASH BUILDERS INDIA PRIVATE LIMITED … RESPONDENT

JUDGMENT

ALOK ARADHE, J.

1. Delay condoned.

2. Leave granted.

3. The present appeal presents an occasion to revisit the settled

distinction between the seat and venue of arbitration, and

consequent determination of supervisory jurisdiction of the

courts. The appeal arises from an order directing return of a Signature Not Verified

petition under Section 34 of Jammu & Kashmir Arbitration Digitally signed by Jayant Kumar Arora Date: 2026.04.16 11:35:36 IST Reason:

and Conciliation Act, 1997 (Act).

1 FACTS: -

4. The facts giving rise to the present appeal are undisputed and

may be briefly stated. The appellant, Jammu and Kashmir

Economic Reconstruction Agency (JKERA) is a society

registered under the Societies Registration Act, 1941

functioning as a special purpose vehicle for execution of

externally aided infrastructure projects. The respondent is a

contractor engaged by the appellant for execution of four

infrastructure road projects namely, (i) Kralgund-Ashpora-

Qaziabad Road Project (Kralgund Project) (ii) Handwara-

Zachaldara-Waddur Road Project (Handwara Project) (iii)

Hubdipora-Kadar-Qaimoh Road Project (Hubdipora Project) and

(iv) Shahdra-Kamalkote Road Project (Shahdra Project) in the

State of Jammu & Kashmir. The agreements between the

parties were executed on 31.03.2008.

5. Disputes having arisen between the parties regarding the

contractual claims, the respondent invoked the arbitration, by

issuing a notice on 18.04.2014, in terms of Arbitration clause

contained in the agreements. The respondent thereafter filed

four separate applications on 12.06.2014 under Section 11 of

2 the Act before the High Court of Jammu & Kashmir and

Ladakh at Srinagar (High Court) for appointment of sole

arbitrator for each project. By an order dated 30.07.2015, the

High Court, appointed Mr. Javed Ahmad Kawoosa, former

District and Sessions Judge as sole arbitrator.

6. The appellant challenged the said order by filing Civil Appeal

Nos.14167-14170 of 2015. By an order dated 07.12.2015, this

Court, having regard to the value of the contracts, modified the

High Court order and appointed Mr. Justice S.S. Nijjar, former

Judge of this Court as the sole arbitrator in substitution of the

previously appointed arbitrator.

7. By an order dated 26.03.2016, the Arbitral Tribunal, with the

consent of the parties fixed Srinagar as seat of arbitration and

New Delhi as the venue. Upon the demise of sole arbitrator, on

26.03.2021, the High Court in exercise of powers under

Sections 14 and 15 of the Act vide order dated 17.09.2021

appointed Mr. Justice Amitava Roy, a former Judge of this

Court, as the sole arbitrator to continue proceedings from the

stage left by the previous arbitrator. The arbitral award was

delivered on 15.01.2024 at New Delhi. The applications under

3 Section 33 of the Act filed by the appellant, were subsequently

decided by an order dated 12.03.2024.

8. The appellant filed a petition under Section 34 of the Act before

the High Court seeking to set aside the arbitral award dated

15.01.2024 and order dated 12.03.2024 in so far it related to

Shahdra Project. The respondent raised a preliminary objection

regarding the territorial jurisdiction.

9. By an order dated 08.07.2024, the High Court returned the

petition, holding that since the arbitration proceedings were

conducted and the award was rendered at New Delhi, the

courts at New Delhi alone had jurisdiction.

SUBMISSIONS: -

10. Learned counsel for the appellant contended that by an order

dated 26.03.2016, with the consent of the parties, the

arbitrator had fixed the seat of arbitration at Srinagar and the

same could be altered only by mutual agreement. It is

submitted that where the seat and venue differ, the seat

determines the supervisory jurisdiction, hence the courts at

Srinagar alone possess jurisdiction under Section 34 of the

Act.

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11. Learned counsel for the respondent, on the other hand,

submitted that appellant had also approached High Court of

Delhi by filing petitions under Section 34 of the Act and

thereafter has filed the Special Leave Petition. It is contended

that arbitral award recorded New Delhi as the place of

arbitration for all intents and purposes, and parties may alter

seat by mutual consent. Therefore, the appeal is liable to be

dismissed. In support of the aforesaid submissions, reliance

has been placed on the decisions of this Court 1.

CASE LAW AND THE LEGAL PRINCIPLES: -

12. The distinction between the seat and venue of arbitration

though, firmly embedded in arbitral jurisprudence, continues

to give rise to jurisdictional errors. The present appeal

exemplifies one such instance, necessitating judicial correction.

The core issue is whether, despite an express designation of

Srinagar as seat of arbitration, the conduct of proceedings and

rendering of the award at New Delhi would confer jurisdiction

upon courts at New Delhi. In order to answer this question, it

1 Inox Renewables Ltd. v. Jayesh Electricals Ltd.; (2023) 3 SCC 733, BBR (India) Private Limited v. S.P. Singla Constructions Private Limited; (2023) 1 SCC 693, BGS SGS SOMA JV v. NHPC Ltd.; (2020) 4 SCC 234 and Mankastu Impex (Pvt.) Ltd. v. Airvisual Ltd.; (2020) 5 SCC 399

5 becomes necessary to revisit the well-settled principles

governing the concept of juridical seat of arbitration.

13. A Constitution Bench of this Court 2, recognised that arbitration

is anchored to the seat or place chosen by the parties, and that

the law of that seat governs the arbitration. It was observed

that Section 20 of the Arbitration and Conciliation Act, 1996

embodies party autonomy in the choice of seat, while also

permitting, under sub-section (3), the holding of hearings at a

place convenient to the parties. The distinction is both

deliberate and doctrinal: while the seat determines jurisdiction

and applicable law, the venue is merely a matter of convenience

for conducting proceedings.

14. A two-Judge Bench of this Court3 while placing reliance on the

“closest and most intimate connection” test involved in English

jurisprudence4, held that seat of arbitration is juridical home of

arbitration and where the agreement of the parties is clear,

such designation must be given full effect. Even in cases of

ambiguity, the seat is to be determined by identifying the place

2 Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552.

3 Enercon (India) Ltd. & Ors. v. Enercon GMBH & Anr.; (2014) 5 SCC 1. 4 Naviera Amazonica Peruana S.A. v. Compania Internacional de Seguros del Peru (1988) 1 Lloyd’s Rep 116 (CA).

6 with the closest and most intimate connection to the

arbitration.

15. Another two-Judge Bench of this Court 5 authoritatively

expounded the concept of the “juridical seat” and held that the

designation of a seat of arbitration is akin to an exclusive

jurisdiction clause. It was observed that the expression

“subject-matter of arbitration” in Section 2(1)(e) of the Act is not

to be confused with the subject-matter of the suit, but rather

refers to the process of dispute resolution, thereby identifying

the court which exercises supervisory jurisdiction over the

arbitral proceedings. It was further held that once a seat is

designated, it operates as the centre of gravity of the arbitration

and vests exclusive jurisdiction in the courts of that place for

all matters arising out of the arbitration, including challenges

to the arbitral award. The designation of a seat, therefore, is not

a matter of mere form, but carries with it significant legal

consequences.

16. The aforesaid principle has been affirmed by a three-Judge

Bench of this Court6 and it has been held that the moment the

seat is designated, it operates as an exclusive jurisdiction 5 Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. & Ors.; (2017) 7 SCC 678 6 BGS SGS Soma JV v. NHPC Ltd.; (supra) 7 clause, irrespective of whether any part of the cause of action

has arisen there. Arbitration law, in this respect, departs from

the Code of Civil Procedure, permitting parties to choose a

neutral seat which may have no connection with the underlying

dispute, yet vests exclusive jurisdiction in the Courts of that

place.

17. A three-Judge Bench of this Court7 held that once the seat of

arbitration is designated, such clause becomes the exclusive

jurisdiction clause as a result of which only the courts where

the seat is located would have jurisdiction to the exclusion of

all other courts. Recently, another three-Judge Bench of this

Court8 reaffirmed the principle that seat remains the judicial

anchor, determining both the applicable law and the

supervisory jurisdiction.

18. Thus, the principles governing the distinction between the seat

and venue of the arbitration, and the jurisdictional

consequences that follow, may be summarised as under: -

(i) The seat of arbitration constitutes the juridical home or

legal place of arbitration. It determines the curial law

7 Hindustan Construction Co. Ltd. v. NHPC Ltd. & Anr.; (2020) 4 SCC 310; See also: Mankastu Impex Pvt. Ltd. v. Airvisual Ltd. (supra) and BBR (India) Pvt.

Ltd. v. S.P. Singla Constructions Pvt. Ltd. (supra). 8 Arif Azam Co. Ltd. v. Micromax Informatics FZE; (2025) 9 SCC 750. 8 governing the arbitral process and identifies the Court

having supervisory control over the arbitration.

(ii) Once the seat is designated by agreement of the parties,

the courts of that place alone have exclusive jurisdiction

to entertain all proceedings arising out of the arbitration,

including challenges to the award. The designation of the

seat operates akin to an exclusive jurisdiction clause,

excluding all other courts – even those where the cause of

action may have arisen.

(iii) The venue is merely a geographical location chosen for

convenience for holding hearings, examination of

witnesses, or meetings of the arbitral tribunal. It does not

confer jurisdiction and does not, by itself, alter or

determine the seat. The arbitral tribunal is free to conduct

proceedings at locations different from the seat without

affecting the juridical seat.

(iv) The mere fact that arbitral proceedings are conducted or

the award is rendered at a particular place does not confer

jurisdiction on courts of that place if it is different from

the designated seat. The seat remains fixed unless

expressly altered by agreement of the parties. 9

(v) Where the seat is not expressly designated, courts

determine it by applying:

(a) the closest and most intimate connection test,

identifying the place most closely connected with the

arbitration (based on the Naviera Amazonica

principle); and

(b) in appropriate cases, construing the venue as the

seat where the agreement and surrounding

circumstances indicate such intention (as reflected

in the Shashoua principle9).

(vi) The intention of the parties, as discerned from the

arbitration agreement and surrounding circumstances, is

the paramount factor in determining the seat. Once such

intention is expressed-either expressly or by necessary

implication-it must be given full effect by Courts.

APPLICATION TO FACTS: -

19. In the backdrop of aforesaid well-settled legal principles, we

may advert to the facts of the case in hand. In the instant

case, the sole arbitrator by an order dated 26.03.2016 had

fixed the seat of arbitration as Srinagar and venue of

9 Shashoua v. Sharma 2009 EWHC 957 (COMM).

10 arbitration as New Delhi. The relevant extract of the order

dated 26.03.2016 reads as under: -

“…In the order dated 16.01.2016 the direction that the seat of arbitration shall be Srinagar and that the venue shall be New Delhi has been inadvertently omitted. Please note that on agreement of the parties seat of Arbitration shall be at Srinagar and Venue shall be at New Delhi.”

20. In the present case, not only have the parties expressly agreed

upon Srinagar as seat of arbitration, but even the surrounding

circumstances reinforce this conclusion. The contracts are

executed in the State of Jammu & Kashmir and the works were

to be carried out within the said State. The arbitration

proceedings were initiated in the State of Jammu and Kashmir

and the High Court had appointed the arbitrator. These factors

as well as the ‘closest and most intimate connection test’

unmistakably anchors the arbitration at Srinagar.

21. The contention of the respondent that arbitral award records

New Delhi as place of arbitration and is therefore determinative

of the seat cannot be accepted. The seat of arbitration is

governed by the agreement of the parties and not by any stray

recital in the award. Once the seat of arbitration is fixed, it

11 remains immutable unless altered by an express agreement. In

the absence of any agreement, the designation of Srinagar as

seat of the arbitration continues to hold the field.

22. The High Court ought to have appreciated that Srinagar was

consciously designated as the seat of arbitration. Once such a

designation was made, the legal consequence that inexorably

follows is that courts at Srinagar alone would have supervisory

jurisdiction over the arbitral proceeding. The mere fact that

arbitral tribunal for reasons of convenience, conducted

proceeding at New Delhi or rendered the award at that place

does not and cannot, alter the juridical seat of arbitration

23. The approach adopted by the High Court, if upheld, would have

the effect of rendering the concept of juridical seat otiose, and

would introduce uncertainty in arbitration proceeding by

allowing the place of hearing or the place where the award is

signed to determine the jurisdiction. Such a consequence

would be contrary to principles of party autonomy and legal

certainty that underly the Arbitration and Conciliation Act,

1996.

CONCLUSION: -

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24. For the foregoing reasons, the impugned order returning the

application filed by the appellant under Section 34 of the Act

cannot be sustained. The court at Srinagar being the court of

seat of arbitration, alone possesses the jurisdiction to entertain

and decide the challenge to the arbitral award. It was stated at

the Bar that after the impugned order, the appellant had filed

four separate petitions under Section 34 of the Act before High

Court of Delhi. Needless to state that the appellant shall be at

liberty to withdraw the petition under Section 34 of the Act

relating to Shahdra Project and the fate of remaining three

petitions shall abide by this decision.

25. In the result, impugned order dated 08.07.2024 passed by the

High Court is quashed and set aside. The proceeding under

Section 34 of the Act shall stand restored. The High Court shall

consider and decide the same on its own merits, with due

expedition. The appeal is allowed. There shall be no order as to

costs.

…..…….……………….………….……….J. [PAMIDIGHANTAM SRI NARASIMHA]

…..…….……………….………….……….J. [ALOK ARADHE] NEW DELHI;

APRIL 15, 2026.

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