JSA successfully represented Instakart Services Private Limited(“Instakart/Lessee”) against Megastone Logiparks Private Limited (“Megastone/Lessor”) in proceedings under Section 11 of Arbitration & Conciliation Act (“Act”) before the Gujarat High Court (“Court”).
The parties had initially entered into a lease deed and subsequently into a maintenance & amenities agreement (“M&A Agreement”), under which Megastone had agreed to provide various services for the leased premises. However, only the lease deed contained a dispute resolution clause through arbitration and the same was absent from the M&A Agreement.
The agreements were eventually terminated by Instakart, pursuant to which disputes had arisen between the parties. Therefore, Instakart filed a petition seeking appointment of Arbitrator for disputes arising both under the lease deed and M&A Agreement.
The Court vide its judgement allowed Instakart’s Petition and appointed an Arbitrator for disputes arising out of both the agreements.
This judgement is significant since Court decided two pertinent questions of law:
1. Territorial Jurisdiction: Whether place of arbitration is treated as the seat or exclusive jurisdiction clause acts as a contrary indicium?
According to the arbitration clause, the arbitration was to be conducted in Bengaluru, but Courts in Ahmedabad had exclusive jurisdiction. Megastone’s counsels relied on various judgments of coordinate benches and argued that parties intended that place of arbitration is to be considered the juridical seat and exclusive jurisdiction clause should be ignored as such clauses are for other proceedings and not arbitration proceedings. However, the Court accepted Instakart’s contention and held that that where a place is designated as venue and exclusive jurisdiction has been given to court of another place, the latter is a clear contra indicia that prevents venue from being the seat of arbitration.
2. Whether disputes under M&A Agreement are arbitrable under group company doctrine?
The Court held that despite M&A Agreement not having an arbitration clause, the disputes under the said agreement are arbitrable under group company doctrine. It was further held that performance of the lease deed (mother agreement) and M&A agreement (ancillary agreement) are co-terminus. Therefore, Court extended the dispute resolution clause of the lease deed to the M&A Agreement as well.
Our Disputes Team Comprised Partner – Dheeraj Nair and Manish Jha, Senior Associate – Angad Baxi, Associate – Tabish Samdani and Aishna Jain.