[Abhishek Tiwari is a practising Advocate at the Supreme Court of India and Madhya Pradesh High Court, Jabalpur]
Mahanadi Coalfields Ltd. challenged an arbitral award in December 2021 and learned which court could hear the challenge only in September 2026. A challenge in the wrong court can lose years to a jurisdictional objection. Two decisions of the Supreme Court this year, J&K Economic Reconstruction Agency v. Rash Builders India Pvt. Ltd. and Mahanadi Coalfields Ltd. v. GSCO Infrastructure Pvt. Ltd., were expected to settle where that petition belongs. This post argues that, read together, they settle the position where the parties have named a seat, but adopt two different methods where they have not named a seat, without acknowledging the difference. It argues that Mahanadi should be confined to its unusual facts.
The Designated Seat: Rash Builders
In Rash Builders, decided under the Jammu and Kashmir Arbitration and Conciliation Act, 1997 (“J&K Act”), a statute modelled on the Arbitration and Conciliation Act, 1996, the parties agreed before the tribunal that Srinagar would be the seat and New Delhi the venue. Hearings were held, and the award was signed in New Delhi, which was recorded in the award as the place of arbitration. Consequently, the Jammu and Kashmir High Court returned the petition seeking to set aside the arbitral award under section 34 for want of jurisdiction. However, the Supreme Court reversed it, holding that the seat is fixed by the parties’ agreement, not by a “stray recital” in the award, and that it remains fixed unless the parties expressly agree otherwise.
The result is correct, but one provision goes unmentioned. Section 31(4) of the Act, like its J&K counterpart, requires the award to state the place of arbitration “as determined in accordance with Section 20” and deems the award to have been made there. What the Court called a recital is thus a statutory requirement. A place that departs from the agreed seat is not one so determined, so the deeming fiction never attaches. Yet the Court’s silence leaves open whether such a misstatement is simply to be ignored, or is itself a defect that may be raised in a challenge.
The Undesignated Seat: Mahanadi Coalfields
Rash Builders also restated the two tests for a seat the parties have not named: the “closest and most intimate connection” test from Naviera Amazonica, and the Shashoua principle, under which a designated venue may be read as the seat where the agreement and circumstances so indicate.
Mahanadi presented that situation in its starkest form. The contract had no arbitration clause and the Orissa High Court, with the parties’ consent, appointed a sole arbitrator under section 11(6) without naming a seat or venue. The proceedings took place in Cuttack, and the High Court later treated Cuttack as the seat. The Supreme Court held that neither the place of hearings nor the location of the appointing court makes a seat, a proposition consistent with State of West Bengal v. Associated Contractors and Hindustan Construction Co. Ltd. v. NHPC Ltd..
However, the Court did not identify the seat. It neither applied the closest connection test nor the Shashoua principle, and did not even cite Rash Builders. Instead, it turned to the definition of “Court” in section 2(1)(e), read with section 42, and held that, absent an agreement or a direction in the appointment order, any commercial or district court within the High Court’s territorial jurisdiction (based on where the cause of action arose) could entertain the section 34 petition.
The two decisions thus rest on different premises. For Rash Builders, a missing seat is a gap to be filled by the parties’ intention; for Mahanadi, it vests jurisdiction in the ordinary rules governing civil courts. Both are decisions of benches of equal strength, and neither engages the other. A court facing an agreement silent on the seat has no clear guidance on which to follow.
It may be said that Mahanadi simply returns the position of law to BGS SGS Soma JV v. NHPC Ltd., which recognised that, where no seat is designated, the courts identified by section 2(1)(e) on cause-of-action principles retain jurisdiction, and that a case with no arbitration clause offered little intention to ascertain. The second point is the stronger, and may well justify the result on these facts. It does not explain why the tests restated in Rash Buildersmonths earlier were bypassed without discussion, or which approach governs the more common case of a written clause that names no seat.
Why the Divergence Matters
- The diminishing role of the tribunal under section 20(2): Section 20(2) permits the tribunal to designate the place of arbitration when the parties have not done so. If a missing seat sends the matter straight to section 2(1)(e), that power shrinks, and a seat fixed in a first procedural order without the parties’ recorded consent becomes vulnerable to challenge.
- The breadth of the Mahanadi formulation: Read literally, Mahanadi allows a section 34 petition before any competent court in the State wherever an appointment of arbitrator(s) under section 11 names no seat. On its facts, this caused no difficulty, since the contract was performed at Sundargarh; however, it could lead to forum shopping. The limit lies in section 2(1)(e) itself, which confers jurisdiction only on a court that could have tried the dispute as a suit. Subordinate courts will have to read that limit in, since the judgment does not state it.
- Judicial adoption of an unenacted proposal: The Draft Arbitration and Conciliation (Amendment) Bill, 2024proposed, as one option, linking the seat in domestic arbitrations to the place of performance or of the cause of action. The Bill has yet to be introduced in Parliament. Mahanadi does not adopt that rule, but it moves in the same direction, making the cause of action rather than intention the practical determinant of forum. A default rule of real consequence thus rests on a definition clause rather than a considered legislative choice.
Practical Implications
For contract drafters, the lesson is to use the word “seat”, name a place, and make any exclusive jurisdiction clause expressly subject to the arbitration agreement, given the High Courts’ readiness to treat such clauses as seat designations. “Venue” should never be left to do the work of a seat. Where a clause is silent, parties to a section 11 application should ask the appointing court to specify the seat, a direction Mahanadi treats as decisive. Mahanadishows the cost of not doing so. Petitions filed in 2021 spent nearly five years on a jurisdictional objection before a word was said on the merits. Tribunals fixing the seat in a first procedural order should record the parties’ express consent.
Conclusion
Both the above-mentioned 2026 decisions give full effect to party autonomy where it has been exercised. However, where it has not, the Court has moved from ascertaining intention to applying default jurisdictional rules, without acknowledging the shift or reconciling the two approaches. Consequently, the method for determining a seat the parties never named is unclear. Mahanadi is best confined to its unusual facts: a reference made without any arbitration clause, with no intention to find. Where a written clause merely omits the seat, the tests restated in Rash Builders should continue to govern, with section 2(1)(e) as the last resort rather than the first. Until a larger bench or Parliament resolves that question, precise drafting remains the only reliable safeguard.
– Abhishek Tiwari