TMI Blog2017 (7) TMI 1093X X X X Extracts X X X X X X X X Extracts X X X X ..... g to any award made on arbitration agreements governed by the law of India. The courts in India have jurisdiction, and has also determined that Gautam Budh Nagar has no jurisdiction and the petition Under Section 34 has to be filed before the Delhi High Court. Once the courts in India have no jurisdiction, the aforesaid conclusions are to be nullified and we so do. Appeal allowed - decided in favor of appellant. - CIVIL APPEAL NOS. 2841-2843 OF 2017 (@ S.L.P. (Civil) Nos. 22616-22618 of 2016) - - - Dated:- 4-7-2017 - Dipak Misra and R. Banumathi, JJ. For The Appellant : Ms. Mukti Chowdhary, AOR For The Respondent : Ms. Sneha Kalita, AOR 1. Though innumerable facts have been graphically stated in the petitions seeking leave to appeal as well as in the written note of submissions, yet regard being had to the centrality of the controversy, we shall refer to the facts which are absolutely necessary for adjudication of the lis in question. It may be stated that the High Court has narrated the facts in detail on various aspects, for it was deciding a writ petition and a petition preferred Under Section 34 of the Arbitration and Conciliation Act, 1996 (for brevity, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition and the petition filed Under Section 34 of the Act in Delhi High Court should be heard together by one court and accordingly, we transfer the writ petition from Allahabad and accordingly it is ordered that the writ petition be transferred to the High Court of Delhi and be heard by the same learned Judge who is hearing the petition Under Section 34 of the Act. The Registrar (Judicial) is directed to send a copy of this order to the Registrar (Judicial) of the High Court of Allahabad for transmitting the record to the High Court of Delhi. A copy of the order be sent to the Registrar General of the High Court of Delhi. The learned Chief Justice of the High Court of Delhi is requested to nominate a Judge who will hear the writ petition as well as the application preferred Under Section 34 of the Act. The nominated judge, we request, should to dispose both the matters by the end of November 2015. Let the matter be listed for further hearing on 08.12.2015. 3. It is worthy to mention that extension of time was sought for by the parties and was granted. Before the High Court the Appellant took the stand that the application Under Section 34 was not maintainable since Part I of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration that vests jurisdiction in courts situate at London. It is his further submission that mere stipulation in the arbitration Clause that the proceedings shall be in accordance with Rules of Conciliation and Arbitration of the International Chambers of Commerce, Paris is not to be interpreted that the parties had intended not to be governed by Part I of the Act. It is assiduously propounded by him that the Constitution Bench in BALCO has not approved the judgment in Shashoua and the view expressed by the two-Judge Bench in Enercon (India) Ltd. (supra) to that effect is per incuriam. That apart, the principle laid down in National Thermal Power Corporation v. Singer Co. (1992) 3 SCC 551 which deals with various aspects relating to covenants of the contract is applicable. It is argued by him that Shashoua arose from an anti-suit injunction and views expressed therein are tentative and, therefore, cannot earn the status of a precedent. Lastly, it is urged by him that as the Appellants had approached the Courts in India, they have waived their right to contest the issue of jurisdiction. 8. To appreciate the controversy, it is necessary to take note of the fact that the agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished by the requesting party. Any such measure shall take the form of an order, giving reasons, or of an award, as the Arbitral Tribunal considers appropriate. 2. Before the file is transmitted to the Arbitral Tribunal, and in appropriate circumstances even thereafter, the parties may apply to any competent judicial authority for interim or conservatory measures. The application of a party to a judicial authority for such measures or for the implementation of any such measures ordered by an Arbitral Tribunal shall not be deemed to be an infringement or a waiver of the arbitration agreement and shall not affect the relevant powers reserved to the Arbitral Tribunal. Any such application and any measures taken by the judicial authority must be notified without delay to the Secretariat. The Secretariat shall inform the Arbitral Tribunal thereof. 10. After so stating, the Court analysed Article 23 of the International Chamber of Commerce Rules and noted that the said Rules permit parties to apply to a competent judicial authority for interim and conservatory measures and, therefore, in such cases an application could be made Under Section 9 of the Act. Eventual conclusion th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provision of Part I by express or implied agreement and unless there is an express or implied exclusion, the whole of Part I would apply. The Court, in the said case, adverted to the agreement in question and eventually expressed the view that the clauses in the agreement neither expressly nor impliedly excluded the applicability of Part I of the Act. 13. In Indtel Technical Services (P) Ltd. v. W.S. Atkins Rail Ltd. (2008) 10 SCC 308, the designated Judge was called upon to decide the issue of appointment of an arbitrator. The Clause that pertained to settlement of disputes read as follows: 6. ...13. Settlement of disputes 13.1. This agreement, its construction, validity and performance shall be governed by and constructed in accordance with the laws of England and Wales; 13.2. Subject to Clause 13.3 all disputes or differences arising out of, or in connection with, this agreement which cannot be settled amicably by the parties shall be referred to adjudication; 13.3. If any dispute or difference under this agreement touches or concerns any dispute or difference under either of the sub-contract agreements, then the parties agree that such dispute or difference her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-seated international commercial arbitration, no application for interim relief would be maintainable Under Section 9 or any other provision, as applicability of Part I of the Arbitration Act, 1996 is limited to all arbitrations which take place in India. Similarly, no suit for interim injunction simpliciter would be maintainable in India, on the basis of an international commercial arbitration with a seat outside India. 196. We conclude that Part I of the Arbitration Act, 1996 is applicable only to all the arbitrations which take place within the territory of India. 17. After expressing so, the Court took note of the fact that the Bhatia International (supra) has been followed by all the High Courts as well as by this Court on numerous occasions and, in fact, judgment rendered on 10.01.2008 in Venture Global Engineering (supra) had followed the ratio laid down in Bhatia International (supra). The Constitution Bench, as is manifest, declared the principles stated by it to be applicable prospectively to all the arbitration agreements executed from the date of the delivery of the judgment. 18. After the said judgment was delivered, the issue arose before this Court whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time when they entered into the contract. The High Court further held that to hold that the agreement contained in Article 33 would envisage the matters other than procedure of arbitration proceedings would be to rewrite the contract. The High Court also held that the question of arbitrability of the claim or dispute cannot be examined solely on the touchstone of the applicability of the law relating to arbitration of any country but applying the public policy under the laws of the country to which the parties have subjected the contract to be governed. Therefore, according to the High Court, the question of arbitrability of the dispute is not a pure question of applicable law of arbitration or lex arbitri but a larger one governing the public policy. 20. After so stating, the two-Judge Bench referred to Articles 32.1 and 32.2 that dealt with the applicable law and various other aspects from which it was perceivable that parties had agreed that juridical seat or legal place of arbitration for the purpose initiated under the claimants' notice of arbitration would be London. The Court posed the question whether such stipulations excluded the applicability of the Part I o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to London only on agreement of the parties without there being a corresponding amendment in the PSC. This plea was accepted. It was held that seat of arbitration cannot be changed by mere agreement of parties. In para 21 of the judgment, it was observed as follows: 21. Though, it may appear repetitive, we deem it necessary to mention that as per the terms of agreement, the seat of arbitration was Kuala Lumpur. If the parties wanted to amend Article 34.12, they could have done so only by a written instrument which was required to be signed by all of them. Admittedly, neither was there any agreement between the parties to the PSC to shift the juridical seat of arbitration from Kuala Lumpur to London nor was any written instrument signed by them for amending Article 34.12. Therefore, the mere fact that the parties to the particular arbitration had agreed for shifting of the seat of arbitration to London cannot be interpreted as anything except physical change of the venue of arbitration from Kuala Lumpur to London. 48. The other issue considered by this Court in Videocon Industries Ltd. was as to whether a petition Under Section 9 of the Arbitration Act, 1996 would be maintaina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WLR 102 : 2012 EWCA Civ 638 : 2012 WL 14764 are fully applicable to the facts and circumstances of this case. The conclusion reached by the High Court would lead to the chaotic situation where the parties would be left rushing between India and England for redressal of their grievances. The provisions of Part I of the Arbitration Act, 1996 (Indian) are necessarily excluded; being wholly inconsistent with the arbitration agreement which provides 'that arbitration agreement shall be governed by English law'. Thus the remedy for the Respondent to challenge any award rendered in the arbitration proceedings would lie under the relevant provisions contained in the Arbitration Act, 1996 of England and Wales. Whether or not such an application would now be entertained by the courts in England is not for us to examine, it would have to be examined by the court of competent jurisdiction in England. 25. It is patent from the law enunciated in the aforesaid decision is that stipulations in the agreement are required to be studiedly analysed and appropriately appreciated for the purpose of arriving at whether there is express or implied exclusion and further meaning of the term seat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so that, by agreeing to the seat, the parties agreed that any challenge to an interim or final award was to be made only in the courts of the place designated as the seat of the arbitration. Although, 'venue' was not synonymous with 'seat', in an arbitration Clause which provided for arbitration to be conducted in accordance with the Rules of the ICC in Paris (a supranational body of rules), a provision that 'the venue of arbitration shall be London, United Kingdom' did amount to the designation of a juridical seat....... In Paragraph 54, it is further observed as follows (Shashoua case): There was a little debate about the possibility of the issues relating to the alleged submission by the claimants to the jurisdiction of the High Court of Delhi being heard by that court, because it was best fitted to determine such issues under Indian Law. Whilst I found this idea attractive initially, we are persuaded that it would be wrong in principle to allow this and that it would create undue practical problems in any event. On the basis of what I have already decided, England is the seat of the arbitration and since this carries with it something akin to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follow the proper law of the contract as a whole, namely, New York law, rather than follow from the law of the seat of the arbitration, namely, England. The fact that the arbitration itself was governed by English procedural law did not mean that it followed that the arbitration agreement itself had to be governed by English law. The proper law of the arbitration agreement was that law with which the agreement had the most close and real connection; if the insurance policy was governed by New York law, the law with which the arbitration agreement had its closest and most real connection was the law of New York. It would then follow that, if New York law permitted a challenge for manifest disregard of the law, the court in England should not enjoin such a challenge. 29. The finding of the Court of Appeal on the said submission which has been noted by the Constitution Bench is as under: 112. ...16. I shall deal with Mr. Hirst's arguments in due course but, in my judgment, they fail to grapple with the central point at issue which is whether or not, by choosing London as the seat of the arbitration, the parties must be taken to have agreed that proceedings on the award shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclusion of the High Court is contrary to the observations made in Shashoua which have been approvingly quoted by this Court in BALCO in para 110. On the facts of the case, the Court held that the seat of the arbitration was in England and accordingly entertained the challenge to the award. 32. In Reliance Industries Limited (2014) 7 SCC 603, a two-Judge Bench referred to the decision by the Court of Appeal in C v. D (supra) and opined that it has been specifically approved by the Constitution Bench in BALCO and reiterated in Enercon (India) Ltd. (supra). The Court reproduced the conclusions of the learned Judge who delivered the judgment in C v. D (supra). 33. In Enercon (India) Ltd. (supra), the Court referred to the decision in Shashoua where Cooke, J., analyzing the SHA, had opined: 26. The Shareholders Agreement provided that the venue of arbitration shall be London, United Kingdom whilst providing that the arbitration proceedings should be conducted in English in accordance with ICC Rules and that the governing law of the Shareholders Agreement itself would be the laws of India. It is accepted by both parties that the concept of the seat is one which is fundamental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Mr. Salve as an arbitrator, in its application to the ICC, the Defendant said that the fact that the present arbitration is an English seated ICC arbitration is undisputed. Accordingly ICC Rules shall be paramount in adjudicating the present challenge. Further, the curial seat of arbitration being London, settled propositions of English law shall also substantially impinge upon the matter. This position is taken without prejudice to the first Respondent's declared contention that the law of the arbitration agreement is Indian law, as also that the substantive law governing the dispute is Indian law . 34. London arbitration is a well known phenomenon which is often chosen by foreign nationals with a different law, such as the law of New York, governing the substantive rights of the parties. This is because of the legislative framework and supervisory powers of the courts here which many parties are keen to adopt. When therefore there is an express designation of the arbitration venue as London and no designation of any alternative place as the seat, combined with a supranational body of Rules governing the arbitration and no other significant contrary indicia, the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... body of rules). It was also noted by Cooke, J. that the parties have not simply provided for the location of hearings to be in London... 36. Placing reliance on Reliance Industries Limited and Enercon (India) Ltd. (supra), submission of Mr. Rakesh Dwivedi, learned senior Counsel for the Appellants-Roger Shashoua and Ors. is that the Court has already returned a finding in their favour that the Courts in London, the seat of arbitration, will have jurisdiction and not the courts in India. 37. Mr. Chidambaram, learned senior Counsel, in this regard contends that the interim order passed by the English Court in Shashoua is not binding on the Respondent and is against the settled principles of law in India. According to him, the observations by the English Court holding that When therefore there is an express designation of the arbitration venue as London and no designation of any alternative place as the seat, combined with a supernational body of Rules governing the arbitration and no other significant contrary indicia, the inexorable conclusion is, to my mind, that London is the juridical seat and English law the curial law is contrary to the principles stated in Bhatia Inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt are cited at the Bar. We think that the inviolable recourse is to apply the earliest view as the succeeding ones would fall in the category of per incuriam. 39. In Fibre Boards Private Limited, Bangalore (supra), the two-Judge Bench referred to a passage from G.P. Singh's Principles of Statutory Interpretation, 12th Edition and thereafter referred to the principles stated in State of Orissa v. M.A. Tulloch and Co. (1964) 4 SCR 461 : AIR 1964 SC 1284 and Rayala Corporation (P) Ltd. v. Director of Enforcement (1969) 2 SCC 412. In the said case, the Court followed the principle stated in M.A. Tulloch (supra) and not the one enunciated in Rayala Corporation (P) Ltd. (supra). The submission of Mr. Chidambaram is that as the principle laid down in Shashoua has really not been approved in BALCO and, therefore, the view expressed in Enercon (India) Ltd. to that extent deserves to be treated as per incuriam. 40. In this regard, we may usefully refer to the decision in State of U.P. v. Synthetics and Chemicals Ltd. (1991) 4 SCC 139, wherein a two-Judge Bench of this Court held that one particular conclusion of a Bench of seven-Judges in Synthetics and Chemicals Ltd. and Ors. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbined with a supranational body of Rules governing the arbitration and no other significant contrary indicia, the inexorable conclusion is that London is the juridical seat and English law the curial law. 43. In BALCO the Constitution Bench referred to Shashoua and reproduced certain paragraphs from the same. To appreciate the controversy from a proper perspective, we have already reproduced paragraph 54 of the said judgment which has succinctly stated the proposition. 44. It has to be borne in mind that the larger Bench gave emphasis on the aforesaid facts and further took note of the fact that the said judgment had relied upon C v. D (supra). Thereafter, as is manifest, the larger Bench has adverted to in detail the judgment in C v. D (supra). That apart, the Court has referred to Union of India v. McDonnell Douglas Corporation (1993) 2 Lloyd's Rep 48 and Naviera Amazonica Peruana S.A. v. Compania International de Seguros del Peru (1988) 1 Lloyd's Rep 116 (CA) and concluded thus: 115. Upon consideration of the entire matter, it was observed in Sulame Rica case1 that - In these circumstances it is clear to me that the law with which the agreement to arbitrate ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondon. In spite of Dr. Singhvi's seemingly attractive submission to convince us, we decline to entertain the notion that India would not be the natural forum for all remedies in relation to the disputes, having such a close and intimate connection with India. In contrast, London is described only as a venue which Dr. Singhvi says would be the natural forum. 124. In Shashoua, such an expression was understood as seat instead of venue, as the parties had agreed that the ICC Rules would apply to the arbitration proceedings. In Shashoua, the ratio in Naviera and Braes Doune has been followed. In this case, the Court was concerned with the construction of the shareholders' agreement between the parties, which provided that the venue of the arbitration shall be London, United Kingdom . It provided that the arbitration proceedings should be conducted in English in accordance with the ICC Rules and that the governing law of the shareholders' agreement itself would be the law of India.... 46. Proceeding further the Court approved the Shashoua's principle and referred to McDonnell Douglas Corporation (supra) where in the principles stated in Naviera Amazonica Peruana S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritorial link between the arbitration itself and the law of the place in which that arbitration is legally situated.... The choice of seat also has the effect of conferring exclusive jurisdiction to the courts wherein the seat is situated. Here the Bombay High Court accepts that the seat carries with it, usually, the notion of exercising jurisdiction of the courts where the seat is located. 49. After so stating, the two-Judge Bench proceeded to state that the conclusion of the High Court was contrary to the observations made in Shashoua which have been approvingly quoted by this Court in BALCO in para 110. 50. We had earlier extracted extensively from the said judgment, as we find, the Court after adverting to various aspects, has categorically held that the High Court had not followed Shashoua principle. The various decisions referred to in Enercon (India) Ltd. (supra), the analysis made and the propositions deduced leads to an indubitable conclusion that Shashoua principle has been accepted by Enercon (India) Ltd. (supra). It is also to be noted that in BALCO, the Constitution Bench has not merely reproduced few paragraphs from Shashoua but has also referred to other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992) 4 SCC 363 would be absolutely apt: 39. ...It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration and treat it to be complete 'law' declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings.... 54. In this context, we recapitulate what the Court had said in Ambica Quarry Works v. State of Gujarat and Ors. (1987) 1 SCC 213: 18. ...The ratio of any decision must be understood in the background of the facts of that case. It has been said long time ago that a case is only an authority for what it actually decides, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 009) 5 SCC 694. According to the learned senior Counsel, in such a situation the judgment cannot bind the parties. 58. First we shall deal with principle laid down in the aforesaid authority. In the said case, the Court was dealing with the precedential value of the authorities in Kapila Hingorani (I)2 and Kapila Hingorani (II)3. In that context, the Court said that a precedent is a judicial decision containing a principle, which forms an authoritative element termed as ratio decidendi and an interim order which does not finally and conclusively decide an issue cannot be a precedent. It further observed that any reasons assigned in support of such non-final interim order containing prima facie findings, are only tentative and any interim directions issued on the basis of such prima facie findings are temporary arrangements to preserve the status quo till the matter is finally decided, to ensure that the matter does not become either infructuous or a fait accompli before the final hearing. Dealing with the decisions in Kapila Hingorani (II) (supra), the Court opined that the observations and directions in said case were interim in nature based on tentative reasons, restricted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any hesitation, we reject the said submission. 60. The other ground of attack is that the Appellants had themselves approached the courts in India and, therefore, by their own conduct applicability of Part I has been accepted by the Appellants and the right to raise the issue of jurisdiction has been waived. 61. Mr. Dwivedi, learned senior Counsel appearing for the Appellants submits that mere filing of an application Under Section 34 of the Act will not clothe the court with the jurisdiction which it does not inherently have. It is his further submission that it is settled principle of law that consent cannot confer jurisdiction. He has commended us to the authorities in Videocon Industries Ltd. (supra), Kanwar Singh Saini v. High Court of Delhi (2012) 4 SCC 307, Jagmittar Sain Bhagat v. Director, Health Services, Haryana (2013) 10 SCC 136, Zuari Cement Ltd. v. Regional Director, Employees' State Insurance Corporation (2015) 7 SCC 690 and United Commercial Bank Ltd. v. Workmen AIR 1951 SC 230. We have already reproduced paragraph 33 from the Videocon Industries Ltd. (supra) in a different context. 62. In Kanwar Singh Saini (supra), this Court has laid down that conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rued in accordance with the laws of India. 67. It is submitted by Mr. Dwivedi, learned senior Counsel appearing for the Appellants that the nature of the language employed in the aforesaid clauses clearly lay the postulate that the arbitration shall be carried only in London and the seat of arbitration shall be in London. Apart from relying upon the decision in Enercon (India) Ltd. (supra) for the said purpose, he has copiously referred to the Rules of Conciliation and Arbitration of the International Chambers of Commerce. Per contra, Mr. Chidambaram would submit that the arbitration agreement clearly lays down with regard to the venue and as has been held by this Court, venue cannot be equated with the seat/place of arbitration. As we perceive, the Clause relating to the arbitration stipulates that the arbitral proceedings shall be in accordance with the ICC Rules. There is a Clause in the SHA that the governing law of SHA would be laws of India. The aforesaid agreement has already been interpreted by the English Courts to mean that the parties have not simply provided for the location of hearing to be in London. 68. It is worthy to note that the arbitration agreement is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made, the form and object of the contract, the place of performance, the place of residence or business of the parties, reference to the courts having jurisdiction and such other links are examined by the courts to determine the system of law with which the transaction has its closest and most real connection. And again: 44. It is important to recall that in the instant case the parties have expressly stated that the laws applicable to the contract would be the laws in force in India and that the courts of Delhi would have exclusive jurisdiction in all matters arising under this contract . They have further stated that the contract shall in all respects be construed and governed according to Indian laws . These words are wide enough to engulf every question arising under the contract including the disputes between the parties and the mode of settlement. It was in Delhi that the agreement was executed. The form of the agreement is closely related to the system of law in India. Various Indian enactments are specifically mentioned in the agreement as applicable to it in many respects. The contract is to be performed in India with the aid of Indian workmen whose conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eory of concurrent jurisdiction was expressly given a go-by with the dropping of Section 9(b) of the Foreign Awards Act, while enacting Part II of the Arbitration Act, 1996, which repealed all the three earlier laws and put the law of arbitration into one statute, albeit in four different parts. 71. We respectfully concur with the said view, for there is no reason to differ. Apart from that, we have already held that the agreement in question having been interpreted in a particular manner by the English courts and the said interpretation having gained acceptation by this Court, the inescapable conclusion is that the courts in India have no jurisdiction. 72. In view of the aforesaid analysis, we allow the appeals and set aside the judgment of the High Court of Delhi that has held that courts in India have jurisdiction, and has also determined that Gautam Budh Nagar has no jurisdiction and the petition Under Section 34 has to be filed before the Delhi High Court. Once the courts in India have no jurisdiction, the aforesaid conclusions are to be nullified and we so do. In the facts and circumstances of the case, there shall be no order as to costs. 73. Hon'ble Mr. Justice ..... X X X X Extracts X X X X X X X X Extracts X X X X
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