Clarifying the principles governing territorial jurisdiction under the Arbitration and Conciliation Act, 1996, the Supreme Court of India has held that the mere conduct of arbitral proceedings at a location for administrative convenience, or the fact that an arbitrator was appointed by a High Court situated there, does not make that place the juridical seat of arbitration. A bench comprising Justice Sanjay Kumar and Justice Sanjeev Sachdeva set aside an Orissa High Court judgment that had dismissed Mahanadi Coalfields Ltd.’s challenge under Section 34 of the Act as non-maintainable and time-barred, restoring the petition before the District Judge, Sundargarh for expeditious disposal.
Background of the Case
The dispute arose out of a tender issued on November 7, 2012, by the appellants, Mahanadi Coalfields Ltd. (MCL), for hiring heavy earth-moving machinery (HEMM) for transfer and transportation of materials at the Kulda Open Cast Project, Basundhara Garjanbahal areas in Sundargarh. The respondent, M/s GSCO (Gurmeet Singh and Company) Infrastructure Pvt. Ltd., emerged as the successful bidder, and a contract was executed between the parties. Notably, the contract contained no arbitration clause.
Following completion of the assigned scope of work on June 29, 2016, a completion certificate was issued on July 3, 2016. However, disputes subsequently arose over contractual claims, leading the respondent to approach the High Court of Orissa at Cuttack by filing writ petitions. On March 25, 2019, the High Court, recording the mutual consent of the parties, appointed Justice M.M. Das (Retd.) as the Sole Arbitrator under Section 11(6) of the Act. While the respondent challenged this referral before the Supreme Court and subsequently filed review and recall petitions before the High Court, those petitions were eventually dismissed as withdrawn.
The sole arbitrator conducted proceedings at Cuttack and delivered a common arbitral award in favour of the respondent on October 25, 2021. MCL subsequently challenged the award on December 8, 2021, by filing petitions under Section 34 of the Act before the District Court, Sundargarh.
The respondent filed an application under Section 151 of the Code of Civil Procedure seeking rejection of MCL’s Section 34 petitions on two preliminary grounds: first, that the petitions were barred by limitation under Section 34(3); and second, that the District Judge, Sundargarh lacked territorial jurisdiction because the seat of arbitration was at Cuttack.
After the District Judge dismissed this application on March 6, 2024, the respondent moved the High Court of Orissa under Articles 226 and 227 of the Constitution. By an order dated June 20, 2025, the High Court allowed the writ petition and dismissed MCL’s Section 34 petitions, holding that Cuttack was the juridical seat because the Section 11(6) appointment was made by the High Court seated at Cuttack, triggering Section 42 of the Act. The High Court further held that the petitions were barred by limitation. Aggrieved by this decision, MCL appealed to the Supreme Court.
Arguments of the Parties
Before the Supreme Court, the learned Attorney General appearing for MCL submitted that the Section 34 objection petitions were filed on December 8, 2021, well within the three-month statutory period from the arbitral award dated October 25, 2021. On this issue, Senior Counsel appearing for the respondent fairly conceded that the High Court’s finding regarding limitation was erroneous.
On the question of jurisdiction, the Attorney General argued that the entire cause of action substantially arose in Sundargarh, where the contract work was executed. He drew attention to Clause 12 of the General Terms and Conditions and Clause 40 of the eTender Notice, both of which stipulated that disputes would be subject to the jurisdiction of the court within whose territorial jurisdiction the work was executed. Furthermore, under a State Law Department Circular dated November 13, 2020, no separate Commercial Court had been established for Sundargarh, meaning the District Judge, Sundargarh remained the competent court of original jurisdiction under Section 2(1)(e) of the Act. MCL maintained that the arbitration hearings took place at Cuttack merely for the administrative convenience of the arbitrator.
Court’s Analysis and Observations
The Supreme Court first addressed the issue of limitation, confirming that the High Court’s finding was contrary to the admitted record since the Section 34 petitions had been lodged well within the prescribed three-month window.
Examining the jurisdictional question, the Court underscored the fundamental distinction between the “seat” and the “venue” of an arbitration. The bench observed:
“There is a distinction between “seat” and “venue” of arbitration. While ‘Seat’ determines the Courts exercising supervisory jurisdiction over the arbitration proceedings, ‘Venue’ merely denoted the physical location where the sitting are held. In the absence of any express designation of Cuttack as the seat, the High Court clearly erred in treating the venue of the arbitration as the seat.”
The Court noted that the appointment order dated March 25, 2019, did not specify any seat or venue, nor was there any agreement between the parties designating Cuttack as the seat. The bench held that decisions in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO), Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd., and BGS SGS Soma JV v. NHPC Ltd. did not assist the respondent, because no seat had been expressly designated or agreed upon.
The Supreme Court firmly rejected the reasoning that an appointment under Section 11 by the High Court vests exclusive jurisdiction in the courts located where the High Court physically sits:
“Merely because the seat of the High Court is at Cuttack would not confer jurisdiction on the District or Commercial courts at Cuttack. The High Court has clearly erred in restricting the jurisdiction of the High Court to the District within the territory of which the High Court is physically situated, i.e. Cuttack.”
Addressing the broader scope of territorial jurisdiction within a State, the bench held:
“A High Court of a State exercises jurisdiction over the entire State and as such all the Commercial Courts/District Courts (where no commercial Court has been set up) within the territorial jurisdiction of the High Court would have jurisdiction to entertain a petition under section 34 of the Act, unless there is an agreement of the parties to the contrary or a specific determination of a ‘Seat’ in the order of appointment or any such stipulation/direction by the Court.”
Decision
Finding the High Court’s order unsustainable, the Supreme Court allowed the appeal and set aside the judgment dated June 20, 2025. The Section 34 petitions filed by MCL were restored to the file of the District Judge, Sundargarh, with directions to decide the matter expeditiously and in accordance with law.
Case Title: Mahanadi Coalfields Ltd & Ors. v. M/s GSCO (Gurmeet Singh and Company) Infrastructure Pvt. Ltd.
Case No.: Civil Appeal No. of 2026 (@ Special Leave Petition (C) No. 21375 of 2025)
Bench: Justice Sanjay Kumar and Justice Sanjeev Sachdeva
Date: September 23, 2026
