TMI Blog2011 (9) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... Package: ABD-II/C-8, for upgradation to Four Laning of Jhansi-Lakhnadon Section, KM 297 to KM 351 of NH 26 in the State of Madhya Pradesh. The total contract amount was Rs. 2,19,01,16,805/-. On 13th August, 2006, SSY entered into a Sub- Contract with the Appellant Company for carrying out the work in question. The Work Order of the entire project was granted to the Appellant by the Respondent on back-to-back basis. Clause 13 of the Agreement entered into between the Respondent and the Appellant provided that 92% of all payments for 2 the work done received by the Respondent from NHAI, would be passed on to the Appellant. Clauses 27 and 28 provided for arbitration and the governing law agreed to was the Arbitration and Conciliation Act, 1996. On 31st October, 2006, the Appellant furnished a Performance Bank Guarantee for Rs. 6,05,00,000/- to the Respondent and it also invested about 88.15 crores in the project. Three more Bank Guarantees, totaling Rs. 5,00,00,000/-, for release of mobilization advance were also furnished by the Appellant on 29th May, 2009. On 22 nd September, 2009, the Respondent Company issued a notice of termination of the Agreement, inter alia, on the ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,5,7,8,10,19,20,21,22,23 and 32, as listed in Annexure A (Machinery Details) of the Claimant s Application dated 5 June 2010. 2. The respondent is restrained from creating any third party interest in, or otherwise selling, leasing or charging, the PME or other assets presently located at the work site and/or the camp site and which are owned by the respondent, without the permission of this Tribunal. 3(i). The claimant is permitted to use the aggregates, which have been identified in Annexure D (engineer s Statement of Materials at Site for September 2009) of the Claimant s Application dated 5 June 2010 as a total quantity of 274,580 cubic metres, for the carrying out of the works in accordance with the terms and conditions of the Main Agreement and the Agreement dated 13 August, 2006 between the parties. 3(ii) The respondent is to give the Claimant access to the aggregate stockpiles where the abovementioned quantity of material is currently held. The above interim orders are made with the objective of enabling the construction work on the project to continue while the disputes between the parties are resolved in these arbitration proceedings (ref. Terms or Reference dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and a sum of Rs. 7.20 crores had already been deducted by the respondent towards the repayment of the Arab Bank Loan for the said PMEs. Ms. Malhotra submitted that it was incorrect to say that the Project was stopped because of the Stay Order passed by this Court as the respondent had further subcontracted the work to Khara and Tarakunde Infrastructure Pvt. Ltd., Ramdin Ultratech Pvt. Ltd. and others. Ms. Malhotra contended that apart from the Hotmix Plant and Crusher all the remaining PMEs had been removed by the respondent after the passing of the order 29th June, 2010. 9. On the question of the applicable law in respect of the arbitral proceedings, Ms. Malhotra contended that the Arbitration and Conciliation Act, 1996, enacted in India is the applicable law of arbitration. Ms. Malhotra submitted that in terms of the Agreement arrived at between the parties, it is only the Indian laws to which the Agreement would be subjected. She pointed out that Clause 28 of the Agreement provides that the Agreement would be subject to the laws of India and that during the period of arbitration, the performance of the Agreement would be carried out without interruption and in accordance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the decision of this Court in Bhatia International Vs. Bulk Trading S.A. [(2002) 4 SCC 105], which was reiterated in Venture Global Engg. Vs. Satyam Computer Services Ltd. [(2008) 4 SCC 190] and Citation Infowares Ltd. Vs. Equinox Corporation [(2009) 7 SCC 220], it has been clearly held that where the operation of Part I of the 1996 Act is not expressly excluded by the arbitration clause, the said Act would apply. In any event, in the instant case, Clause 28 of the Agreement expressly provides that the Agreement would be subject to the laws of India and that during the period of arbitration the parties to the Agreement would carry on in accordance with the terms and conditions contained therein. Accordingly, on account of the application of Part I of the 1996 Act, the International Arbitration Act, 2002 of Singapore would have no application to the facts of this case, though, the conduct of the proceedings of arbitration would be governed by the SIAC Rules. 13. Ms. Malhotra urged that the High Court had erred in coming to the conclusion that since under Clause 27 of the Agreement, the parties had agreed that the arbitral proceedings would be conducted in accordance with the SIAC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of arbitration the parties to the Agreement would carry on, in accordance with the terms and conditions contained therein. Accordingly, it is the Arbitration and Conciliation Act, 1996, which would be the proper law or the law governing the arbitration. 16. Ms. Malhotra submitted that apparently there was a misconception in the minds of the learned Judges of the High Court as to the concept of the proper law , of the Arbitration Agreement and the Curial Law governing the conduct and procedure of the reference. Ms. Malhotra submitted that while the proper law of the Arbitration Agreement governs the law which would be applicable in deciding the disputes referred to arbitration, the Curial law is the law which governs the procedural aspect of the conduct of the arbitration proceedings. It was urged that in the instant case while the proper law of the arbitration would be the Arbitration and Conciliation Act, 1996, the Curial law would be the SIAC Rules of Singapore. Ms. Malhotra submitted that the said difference in the two concepts had been considered by this Court in Sumitomo Heavy Industries Ltd. Vs. ONGC [(1998) 1 SCC 305] and NTPC Vs. Singer [(1992) 3 SCC 551], i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailing which the aforesaid authority would be entitled to exercise all its rights under the main agreement and even to terminate the same with immediate effect. Mr. Routray submitted that on account of the failure of the appellant to live up to its commitments, the respondent who had suffered heavy financial loss and damages on account of such breach, issued notice of termination on 22nd September, 2009, pursuant to Clause 23.2 of the Agreement. 20. Thereafter, the parties entered into settlement talks, as provided for in Clause 26 of the Agreement and signed the minutes of the meeting dated 28th September, 2009. The settlement talks between the parties having failed, the respondent/claimant, invoked Clause 27 of the Agreement for reference of the disputes to arbitration in accordance with the Singapore International Arbitration Centre Rules (SIAC Rules). The respondent/claimant filed a Statement of Claim on 16th August, 2010, before the Sole Arbitrator, Mr. Graham Easton, claiming a sum of Rs. 221,36,91,097/- crores from the appellant. Both the parties filed applications before the learned Arbitrator seeking interim relief under Rule 24 of the SIAC Rules on 5th June, 2010. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly or, in any case, impliedly also adopted Rule 32 of the said Rules which categorically indicates that the law of arbitration under the said Rules would be the International Arbitration Act, 2002, of Singapore. The Special Leave Petition, out of which the present appeal arises, has been filed by the appellant against the said order dated 31st August, 2010. 23. Mr. Routray further submitted that the parties had, inter alia, agreed that the seat of arbitration would be Singapore and that the arbitration proceedings would be continued in accordance with the SIAC Rules, as per Clause 27.1 of the Agreement. It was also agreed that the proper law of the agreement/contract dated 13 th August, 2006, between the appellant and the respondent would be the Indian law and the proper law of the arbitration would be the Singapore law. 24. Mr. Routray submitted that an application under Section 9 of the 1996 Act was filed before the District Court on 30th December, 2009, prior to the date of invocation of the arbitration proceedings and before the Curial law, i.e., the Singapore law, became operative. On the said application, the District Judge by his order dated 10th March, 2010, directed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d laid down the proposition that even if the arbitration was governed by the law of another country, it would not entitle the objector to mount a challenge to the Award in a country other than the seat of arbitration. It is not necessary to refer to the said judgments for a decision in this case. 28. Mr. Routray submitted that the decision of this Court in NTPC Vs. Singer (supra) relates to the applicability of the Indian Arbitration Act, 1940, and the Foreign Awards (Recognition and Enforcement) Act, 1961, to a foreign award sought to be set aside in India under the provisions of the 1940 Act. It was submitted that the said decisions have no relevance to the question raised in the present case which raises the question as to whether the Indian Courts would have jurisdiction to entertain an appeal under Section 37 of the 1996 Act against an interim order of the Arbitral Tribunal, despite the parties having expressly agreed that the seat of arbitration would be in Singapore and the Curial law of the arbitration proceedings would be the laws of Singapore. Once again referring to the decision in the NTPC case, Mr. Routray submitted that in paragraph 46 of the judgment, this Court ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules which would govern the arbitration proceedings along with the procedural law, which is the law of Singapore. 31. In order to appreciate the controversy that has arisen regarding the applicability of the provisions of Part I of the Arbitration and Conciliation Act, 1996, to the proceedings being conducted by the Arbitrator in Singapore in accordance with the SIAC Rules, it would be necessary to look at the arbitration clause contained in the agreement entered into between the parties on 13th August, 2006. Clause 27 of the Agreement provides for arbitration and reads as follows : 27. Arbitration. 27.1 All disputes, differences arising out of or in connection with the Agreement shall be referred to arbitration. The arbitration proceedings shall be conducted in English in Singapore in accordance with the Singapore International Arbitration Centre (SIAC) Rules as in force at the time of signing of this Agreement. The arbitration shall be final and binding. 27.2 The arbitration shall take place in Singapore and be conducted in English language. 27.3 None of the Party shall be entitled to suspend the performance of the Agreement merely by reason of a dispute and/or a disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, as far as the present arbitral proceedings, which are being conducted in Singapore, are concerned. 36. In Bhatia International (supra), wherein while considering the applicability of Part I of the 1996 Act to arbitral proceedings where the seat of arbitration was in India, this Court was of the view that Part I of the Act did not automatically exclude all foreign arbitral proceedings or awards, unless the parties specifically agreed to exclude the same. 37. As has been pointed out by the learned Single Judge in the order impugned, the decision in the aforesaid case would not have any application to the facts of this case, inasmuch as, the parties have categorically agreed that the arbitration proceedings, if any, would be governed by the SIAC Rules as the Curial law, which included Rule 32, which categorically provides as follows : Where the seat of arbitration is Singapore, the law of the arbitration under these Rules shall be the International Arbitration Act (Cap. 143A, 2002 Ed, Statutes of the Republic of Singapore) or its modification or reenactment thereof. 38. Having agreed to the above, it was no longer available to the appellant to contend that the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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