TMI Blog2017 (12) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... the assets of the respondent are available within the jurisdiction of this Court. The Court would have territorial jurisdiction if the monies/the bank accounts are located within the jurisdiction of the Court. The legislature would not envisage a situation that a party can invoke jurisdiction of the Court to enforce a monetary award under Section 47 and 49 of the Act, however, for any relief of the nature Section 9 interalia contemplates the jurisdiction of the same Court would not be available. This would create a complete incongruity in giving effect to the provisions of Section 9 in a situation as in the present case and defeat the legislative intent. In the above circumstances, the submissions as urged on behalf of the respondent that the petitioner cannot seek a relief in respect of the bank account at Pune, also cannot be accepted, as the definition of ‘Court’ under ‘Explanation’ to Section 47 would confer jurisdiction on this High Court as the assets/bank accounts of the respondent are situated within the jurisdiction of this Court and not the principal Civil Court of original jurisdiction, as provided in the pre-amended provisions. Significantly now both the amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroversy envelopes under the following factual matrix: (i) The petitioner in this petition has invoked Section 9 of the Act read with Section 151 of the Code of Civil Procedure,1908 (for short the CPC ) seeking interim reliefs, to secure the award amounts, which would entail to its benefit in the international commercial arbitration held between the petitioner Trammo DMCC (formerly known as Transammonia DMCC) as the claimant and the respondent. The arbitral awards were made and published in London, being (a) First Interim Final Award dated 4 December 2015 (as amended on 4 July 2016), (b) the First Costs Award dated 5 February 2016 as amended on 16 February 2016 and 4 July 2016; and (c) the Costs of Costs Award dated 10 March 2016 (as amended on 4 July 2016); (d) second Interim Final Award dated 20 September 2016; (e) third Interim Final Award dated 25 November 2016 (as amended on 14 December 2016). Under these Awards, the petitioner has claims to be entitled and the respondent liable to pay to the petitioner, an amount of US $ 16,427,310.80 and GB 606,628.29. (ii) It is not in dispute that the arbitral awards are foreign awards as defined under Section 44 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the appropriate Court. ( iv) The case of the petitioner is that as per the respondents disclosure of immovable assets and the bank accounts, as filed before the Delhi High Court, there are monies lying in four bank accounts within the territorial jurisdiction of this Court. The averments in regard to the bank accounts in Mumbai and as to the territorial jurisdiction of this Court are set out in paragraph 31 and paragraph 38 of the petition. Paragraph 38 reads thus: 38. This Hon ble Court has original jurisdiction to decide this matter and is the proper court because the Respondent has property within the territorial jurisdiction of this Hon ble Court, ini the form of monies lying in the following Banks: ( i) State Bank of Hyderabad, Mumbai (A/c.No.52119479899); ( ii) IDBI Bank, Mumbai (A/c. No.4103000067102); ( iii) IDBI Bank, Mumbai (A/c.No.133103000000268); and ( iv) ICICI Bank Limited, Pune (A/c. No.147505000039) Furthermore, Arbitration Petition (L) No.340 of 2017 for enforcement and execution of the Monetary Awards has also been filed by the Petitioner in this Hon ble Court. (v) On behalf of the Petitioner it is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act is the Court defined under Section 2(1)(e) of the Act. Section 9 is contained in Part I of the Act. In the case of sections under Part I, the applicable definitions are contained in Section 2(1) of the Act which begins with the word In this Part, unless the context otherwise requires . The term Court appearing in Section 9 of the Act is therefore, to be understood as per Section 2(1)(e) of the Act. Section 2(1)(e)(ii) of the Act is applicable to international commercial arbitration held in India and outside. As also Section 9 is applicable to both, domestic and international arbitration. (ii) The proviso to Section 2(2) as incorporated by the 2015 Amendment Act which makes the provisions of Section 9, 27, 37(1)(a) and 37(3) of Part I of the Act applicable to international commercial arbitration taking place outside India, also does not provide for any special or different definition of Court . The legislative intent is to retain the reference to Court under Section 9 to the definition of the Court under Section 2(1) (e) to even international commercial arbitration taking place outside India. (iii) The petitioner s contention that for the purpose of a Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 9, 27, 37(1)(a) and 37(3) in respect of foreign seated arbitrations. An order passed by a jurisdictional Court in India would have effect throughout the territories of India. (iv) It is then submitted that there would be incongruity if the definition of Court under Section 47 is applied to the proceedings under Section 9 of the Act. Incongruity is as under: (a) The same would do violence to the express language of the sections and the legislative intent behind the 2015 amendments. (b) Different Courts would have jurisdiction with respect to proceedings under Section 9, prior to and subsequent to the rendering of the foreign award. (c) The petitioner has no answer as to what would be the proper Court for proceedings under Sections 27, 37(1)(a) and 37(3) of the Act, which too have been made applicable to international commercial arbitrations seated outside India. Orders under Section 27 are generally orders issued in personam such as summoning a witness and are not dependent upon where the assets or monies of the respondent in a given case, may be located. In a given factual matrix, if the interpretation as being made by the petitioner is accepted, it would cause g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction to hear a suit on the subject matter of the arbitration and consequently an appeal would lie to this Court. The courts in Pune, however, would have no jurisdiction as no part of the cause of action has arisen therein nor is the principal office of the respondent located therein, as required under Section 20 of the Code of Civil Procedure. Merely having a purported subordinate office in Pune is not sufficient to confer jurisdiction on Pune Courts and consequently upon this Court. To support this contention, a reliance is placed on the decision of the Supreme Court in the case Jindal Vijaynagar Steel Vs. Jindal Praxair Oxygen Co.Ltd . (2006)11 SCC 521 4. Petitioner s contentions on the Respondent s objections (i) This petition under Section 9 of the Act praying for interim measures to secure the amounts awarded to the petitioner, pending execution of the monetary foreign awards, is maintainable, in a Court in India, in respect of the foreign award, to which Part II of the Act applies, in view of insertion of proviso to Section 2(2) of the Act as introduced by 2015 Amendment Act. (ii) To support the contention that this court has territorial jurisdiction to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition should have been filed at Hyderabad where its registered office and all its main properties are located, is not an answer to the question whether this Court has jurisdiction to decide the present Section 9 application. The fact that Andhra Pradesh High Court may also have jurisdiction does not mean that this Court has no jurisdiction. (vii) As regards the objection on behalf of the respondent that Section 2(1)(e)(ii) is contained in PartI and does not apply to foreign seated arbitrations, it is submitted that this Court has jurisdiction to entertain and decide the Enforcement Petition being the Court as defined in the Explanation to Section 47 of the Act. This submission is sought to be supported by the petitioners relying on the decision in Bharat Aluminium Company Vs. Kaiser Aluminium Technical Services (supra) (Balco Judgment), wherein the Supreme Court in paragraph 97 refers to the Court under the Explanation to Section 47, to mean a High Court within whose jurisdiction the assets/person is located against which/whom the enforcement of the foreign award is sought. (viii) The petitioner then rely on the decision of the Supreme Court in the case Brace Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard is preferred under section 34 of the Act in a court as defined under S.2(1)(e) of the Act). On the other hand, an Award to which Part II of the Act applies, constitutes a cause of action in favour of the Claimant and is not deemed to be a decree, until the court is satisfied that the foreign award is enforceable. (Section 49 of the Act). (xiv) A foreign award imposes a duty or an obligation on the respondent to pay the amount awarded. In such a case, a party could institute a suit in India on the basis of the foreign award, in which event, the original cause of action which resulted in the award would be irrelevant. Similarly, for the purposes of Section 9, the court under section 2(1)(e) of the Arbitration Act in the context of a foreign award would be the court having jurisdiction for enforcement of the Award. The original cause of action is irrelevant. In such a case, a court within whose jurisdiction there are assets of the respondent would be the court also under section 2(1)(e) of the Act. This interpretation is also supported by the decisions referred to above. (xv) The Court must reject the respondents submission that this Court has no jurisdiction in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial arbitrations which take place outside India, is a court as defined under Section 2(1)(e) or as defined in the Explanation to Section 47 of the Act. Discussion and Conclusion 6. The controversy thus arises revolving around the provisions of Section 2(1)(e) of the Act which defines Court , Proviso to Section 2(2) which interalia makes applicable the provisions of Section 9 falling in Part I to international commercial arbitration and the Explanation below Section 47 of the Act which also defines Court for the purposes of Part II of the Act dealing with foreign awards. It would be appropriate to extract the said provisions. Section 2(1)(e), Section 2(2) Section 9 and Section 47 read thus: 2. Definitions(1) In this Part, unless the context otherwise requires, . ( e) Court means ( i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subjectmatter of the arbitration if the same had been the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nteralia makes applicable the provisions of Section 9 to international commercial arbitration even if the place of arbitration is outside India, and the arbitral award made or to be made in such place is enforceable and recognized under the provisions of Part II of the Act. The genesis for the legislature to bring about the said amendment is the recommendations of the Law Commission in its 246th Report . To appreciate the background surrounding the legislative consideration, it would be profitable to refer to paragraphs 38 to 41 of the 246th Report of the Law Commission which concern Judicial interventions in foreign seated arbitrations which reads thus: JUDICIAL INTERVENTIONS IN FOREIGN SEATED ARBITRATIONS 38. Section 2(2) of the Arbitration and Conciliation Act, 1996 (the Act ), contained in Part I of the Act, states that This Part shall apply where the place of arbitration is in India. In comparison, Article 1(2) of the UNCITRAL Model Law provides: The provisions of this Law, except articles 8, 9, 35 and 36, apply only if the place of arbitration is in the territory of this State. The central issue, therefore, that was before the two judge Bench of the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be inapplicable. Even if Part I was expressly included it would only mean that the parties have contractually imported from the Arbitration Act, 1996, those provisions which are concerned with the internal conduct of their arbitration and which are not inconsistent with the mandatory provisions of the [foreign] Procedural Law/Curial Law. The same cannot be used to confer jurisdiction on an Indian Court. However, the decision in BALCO was expressly given prospective effect and applied to arbitration agreements executed after the date of the judgment. 41.While the decision in BALCO is a step in the right direction and would drastically reduce judicial intervention in foreign arbitrations, the Commission feels that there are still a few areas that are likely to be problematic. ( i) Where the assets of a party are located in India, and there is a likelihood that that party will dissipate its assets in the near future, the other party will lack an efficacious remedy if the seat of the arbitration is abroad. The latter party will have two possible remedies, but neither will be efficacious. First, the latter party can obtain an interim order from a foreign Court or the arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Court of a grade inferior to such High Court, or in cases involving grant of interim measures in respect of arbitrations outside India, the High Court exercising jurisdiction over the court having jurisdiction to grant such measures as per the laws of India, and includes the High Court in exercise of its ordinary original civil jurisdiction. [NOTE: This is to solve the problem of conflict of jurisdiction that would arise in cases where interim measures are sought in India in case of arbitrations seated outside India. This also ensures that in International Commercial Arbitrations, jurisdiction is exercised by the High Court, even if such High Court does not exercise ordinary original civil jurisdiction.] (vi) Also insert the following proviso Provided that, subject to an express agreement to the contrary, the provisions of sections 9, 27, 37 (1)(a) and 37 (3) shall also apply to international commercial arbitration even if the seat of arbitration is outside India, if an award made, or that which might be made, in such place would be en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, 2003. The said Bill was referred to the Department-related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice for examination and Report. The said Committee, submitted its Report to the Parliament on 4th August, 2005, wherein the Committee recommended that since many provisions of the said Bill were contentious, the Bill may be withdrawn and a fresh legislation may be brought after considering its recommendations. Accordingly, the said Bill was withdrawn from the Rajya Sabha. 3. On a reference made again in pursuance of the above, the Law Commission examined and submitted its 246th Report on Amendments to the Arbitration and Conciliation Act, 1996 in August, 2014 and recommended various amendments in the Act. The proposed amendments to the Act would facilitate and encourage Alternative Dispute Mechanism, especially arbitration, for settlement of disputes in a more user-friendly, cost effective and expeditious disposal of cases since India is committed to improve its legal framework to obviate in disposal of cases. 4. As India has been ranked at 178 out of 189 nations in the world in contract enforcement, it is high time that urgent ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt would be required to be considered. Clause (ii) of sub-section 2(1)(e) in defining Court in case of international commercial arbitration provides the Court to mean High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming subject matter of arbitration, if the same had been the subject matter of a suit ... . This definition applied in the context of the proviso to sub-section (2) of Section 2, which inter alia makes applicable the provisions of Section 9 to international commercial arbitrations, brings about an unworkable effect, in precluding a party holding an award to approach the court in view of the court lacking jurisdiction going by the wordings in Section 2(1)(e)(ii) of the Act, to the effect that it shall be the High Court having jurisdiction to decide the question forming the subject matter of the arbitration. This for the reason that when the award is pronounced the words subject matter of the arbitration if the same had been the subject matter of the suit , as used in Section 2(1)(e)(ii) would lose their relevance, inasmuch as that it is a situation where there is no claimant/plaintiff and/or a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction of the Court to try and entertain the suit. A revision application filed before the High Court against the said order came to be allowed holding that the Civil Court lacked territorial jurisdiction. The Supreme Court considering the provisions of Section 5(1) of the Foreign Awards (Recognition and Enforcement) Act,1961 which provided that any person interested in a foreign award may apply to any court having jurisdiction over the subject-matter of the award that the award be filed in court. and section 6 which provided that where the court is satisfied that the foreign award is enforceable under the said Act, it shall order the award to be filed and shall proceed to pronounce judgment according to the award, held that as the vessel was already sold by the first and the second respondents to the third respondent and by the third respondent to the fourth respondent, it was no more the asset of the first and the second respondent and the award cannot be executed there against, as also the Civil Court at Bhavnagar had no jurisdiction to enforce the maritime lien. The contention as urged on behalf of the appellant that the subject matter of the award was money, and that the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enforcement will not be chosen by or on behalf of the parties. It will depend upon the circumstances of each particular case. Whether it becomes necessary to enforce an international award, the position is different. The first step is to determine the country or countries in which enforcement is to be sought. In order to reach this decision the party seeking enforcement needs to locate the State or States in which the losing party has (or is likely to have) assets available to meet the award. 14. 15. It was then submitted by Dr. Ghosh that the subject-matter of the award was money and the first and second respondents had money in the jurisdiction of the Bhavnagar court in the form of part of the purchase price of the said vessel payable to them by the third and fourth respondents. 16. This being an award for money its subject-matter may be said to be money, just as the subject-matter of a money-decree may be said to be money. 17. The appellant s application to the Bhavnagar court stated, as reproduced above, that the first and second respondents had no assets within the jurisdiction of Bhavnagar court or elsewhere in India. However, having reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and subject matter of award as appearing in the definition of court under Section 2(1)(e) and the Explanation to Section 47 respectively, held that in regard to an award for money the subject matter can be said to be money and the petition for enforcement of the foreign award can be filed in the court where the party may have money. It was held that if the party had a foreign award in its favour, it can seek to enforce the award in any part of the country where it is sought to be enforced as long as money is available or suit for recovery of money can be filed. The Court in paragraphs 6 to 9 held thus:- 6. We then come to the issue as to the meaning of the expression subject matter of the Award and whether that would mean also subject matter of the arbitration proceedings. This is important because under Section 2(e) the expression with reference to the expression Court means the subject matter of the arbitration. The subject matter of the arbitration would include contracts. The subject matter of an Award cannot include a contract as adjudication in respect of the claims under the contract has been done and has resulted into an award. The subject matter of the Award the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arbitration could be the foreign country. Merely because in the instant case, the contract was entered into in India cannot result in a different interpretation. The expression as the explanation itself permits forum hunting if that expression can be used. After considering all these provisions a similar view was taken in Arbitration Petition Lodg. No. 427 of 2001 in the case of Naval Gent Marline Ltd. v. Shivnath Rai Harnarain (I) Ltd. and Ors., decided on 5th July, 2001 in which at the ad interim stage, apart from other issues, the issue as to the meaning of the expression subject matter of the award was in issue and has been similarly answered. (emphasis supplied) 16. The position in law which can be derived from the aforesaid decisions is that the Award as held by the petitioner being a money award, the subject matter of the award is money and thus, the proceedings for enforcement of the award can be filed in the court where the respondent have money. The petitioner in holding a foreign award can certainly seek to enforce the award in any part of the country where the award can be sought to be enforced as long as the money is available or the suit for recover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent at Mumbai, the principles of contextual interpretation of Section 2(1)(e)(ii) would be required to be adopted considering the opening words of Section 2(1) In this Part, unless the context otherwise requires-- and adverting to this principle of interpretation it would be required to be held that the Court as defined under the explanation to Section 47, would be the appropriate court when the petitioner is seeking interim reliefs under Section 9 of the Act pending the enforcement of the foreign award. 18. The above interpretation would be well supported by considering the law laid down by the Supreme Court in this regard. It is well settled that the statutory definitions will be required to be read subject to the qualification expressed in the definition clauses, which create them. In Whirlpool Corpn. v. Registrar of Trade Marks [1998] 8 SCC 1, the Supreme Court held that there may be sections in the Act where the meaning may have to be departed from on account of the subject or context in which the words have used and that this would be to give effect to the opening sentence in the definition section namely unless there is anything repugnant in the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receiver. 97. However, when the question arises as to the meaning of a certain provision in a statute, it is not only legitimate but proper to read that provision in its context. The legal principle is that all statutory definitions have to be read subject to the qualification variously expressed in the definition clause which created them and it may be that even where the definition is exhaustive inasmuch as the word defined is said to mean a certain thing, it is possible for the word to have some what different meaning in different sections of the Act depending upon the subject or context. That is why all definitions in statutes generally begin with the qualifying words unless there is anything repugnant to the subject or context . [See Whirlpool Crporation v. Registrar of Trade Marks, Mumbai and others, (1998) 8 SCC 1; Garhwal Mandal Vikas Nigam Ltd. v. Krishna Travel Agency, (2008) 6 SCC 732 and National Insurance Co. Ltd. v. Deepa Devi, (2008) 1 SCC 414 ] . 98. Accordingly the word supply contained in Section 23 refer to supply to consumers only in the context of Section 23 and not to supply to licensees. On the other hand, in Section 86(1)(a) supply refers to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of this Court. As clearly seen from observations in paragraph 97 of the Bharat Aluminium Co. (supra), then in Brace Transport Corpn. of Monrovia, Bermuda (supra), Wireless Developers Inc. (supra), and Tata International Ltd. (supra), the Court would have territorial jurisdiction if the monies/the bank accounts are located within the jurisdiction of the Court. The legislature would not envisage a situation that a party can invoke jurisdiction of the Court to enforce a monetary award under Section 47 and 49 of the Act, however, for any relief of the nature Section 9 interalia contemplates the jurisdiction of the same Court would not be available. This would create a complete incongruity in giving effect to the provisions of Section 9 in a situation as in the present case and defeat the legislative intent. 21. Further from a bare reading of the definition of Court in clause (ii) of Section 2(1)(e) as incorporated by the 2015 Amendment Act, it is clear that it interalia speaks in relation to international commercial arbitration, the High Court having ordinary original civil jurisdiction, which would have jurisdiction to decide the questions forming the subject matter of the ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign award and seeking recourse to Section 9 of the Act, cannot be left without an effective remedy, in a situation akin to the facts in the present case. This interpretation in my opinion suffices and fulfills the legislative intent in making Section 9 interalia available in enforcement of foreign awards. 23. In the above circumstances, the submissions as urged on behalf of the respondent that the petitioner cannot seek a relief in respect of the bank account at Pune, also cannot be accepted, as the definition of Court under Explanation to Section 47 would confer jurisdiction on this High Court as the assets/bank accounts of the respondent are situated within the jurisdiction of this Court and not the principal Civil Court of original jurisdiction, as provided in the pre-amended provisions. Significantly now both the amended provisions namely Section 2(1)(e) and Explanation to Section 47 respectively confer jurisdiction only on the concerned High Court. Thus, the reliance on behalf of the respondent on the judgment of the Supreme Court in the case Jindal Vijayanagar Steel (supra) in the facts of the present case is unfounded. 24. In view of the above deliberation, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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