TMI Blog2017 (8) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the defendants in the Notice of Arbitration dated 24th January, 2017. - CS (OS) 383/2017 - - - Dated:- 22-8-2017 - Manmohan, J. For the Plaintiff : Mr. Sanjay Jain, ASG with Mr. Sanjeev Narula, CGSC, Mr. Abhishek Ghai, Mr. Anshuamn Upadhyay, Ms. Rhea Verma, Ms. Adrija Thakur and Mr. Ruchir Bhatia, Advocates. For the Defendants : None. JUDGMENT Manmohan, J (oral): I.A.9461/2017 in CS(OS) 383/2017 Keeping in view the averments in the application, plaintiff is exempted from filing the certified copies/originals of documents at this stage. Needless to say, this order is without prejudice to the rights and contentions of the parties. Accordingly, present application stands disposed of. I.A.9462/2017 in CS(OS) 383/2017 Present application has been filed seeking extension of time in filing the court fees. Learned counsel for the plaintiff prays for and is permitted to file the deficient court fees within two weeks. Accordingly, the application stands disposed of. CS(OS) 383/2017 Let the plaint be registered as a suit. Issue summons in the suit to the defendants by all modes including dasti, returnable for 26th October, 2017. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d subsequent notice of arbitration dated 17th April, 2014. While the said arbitration proceedings were pending, the defendants No. 1 and 2 served a notice of dispute dated 15th June, 2015 and notice of arbitration dated 24th January, 2017 upon the plaintiff for resolution of an alleged dispute under the India-UK BIPA primarily in respect of the same income tax demand that VIHBV had identified as protected investment under the India-Netherlands BIPA and which is already under adjudication before the Arbitral Tribunal constituted under BIPA. It is stated in the plaint that though the plaintiff had raised preliminary objections to the jurisdiction of the arbitral tribunal constituted under the India-Netherlands BIPA yet the tribunal vide order dated 19th June, 2017 ruled that the issue of jurisdiction and merits shall be heard together. Learned ASG states that the two claims are based on the same cause of action and seek identical reliefs but from two different tribunals constituted under two different investment treaties against the same hoststate. He contends that the arbitration proceedings now initiated by the defendants is an abuse of law. In support of his contention, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntees, the initiation of multiple proceedings to recover for essentially the same economic harm would entail the exercise of rights for purposes that are alien to those for which these rights were established. Learned ASG for the plaintiff submits that disputes encompassing tax demands raised by a host state are beyond the scope of arbitration provided under the bilateral investment treaty as taxation is a sovereign function and the same can only be agitated before a constitutional court of the host state. He lastly submits that under the constitutional scheme of India, laws passed by the Parliament cannot be adjudicated by an arbitral tribunal and do not fall within the ambit of BIPA or any other international treaty. Having heard the learned counsel for the parties, this court is of the view that the Courts have to exercise great caution, while restraining foreign arbitration and apply the same principle as they apply to the grant of injunctions restraining foreign court proceedings. The Indian Supreme Court in Modi Entertainment Networks v. WSG Cricket Pte. Ltd: (2003) 4 SCC 341, after referring to a large number of foreign judgments, has held that a court of natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants and/or their Investment, are in breach of Articles 3(1), 3(2), 4(1), 4(2) and 5(1) of the Treaty; (b) A permanent injunction enjoining the Respondent (including organs and instrumentalities for which the Respondent is responsible, such as the Income Tax Department or ITA) from enforcing the amendments contained in the Finance Act, 2012 against the Claimants or their Investment by way of the Tax Demands (including any demands for interest and penalties imposed in connection with the Tax Demands), any further demands for taxes, interest and penalties, or otherwise;; (c) alternatively to (b) damages plus interest upon such damages (both pre-award and post-award) at a reasonable commercial rate to be determined by the Tribunal; (d) An order that the Respondent pay the costs of these arbitration proceedings, including the costs of the Tribunal, as well as the legal and other expenses incurred by the Claimants (including but not limited to the fees of their legal counsel, experts and consultants), plus interest thereon (both pre-award and post-award) at a reasonable commercial rate to be determined by the Tribunal; and (e) Any alternative or other relief that ..... 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