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Friday, May 30, 2014

Arbitration and conciliation Act - Despite of criminal proceedings and Despite of allegations of fraud and void etc., the arbitration proceedings can be initiated to resolve the disputes as per agreement - Disputes arose between Switzer land company and common wealth games2010 organisation about payment of tail end payments - so many correspondences were made by the petitioner/ company - Respondent failed to pay the amount as CBI cases were registered against Kalmadi and others - due corruption etc., and agreement treated as void - Apex court held that efforts were made to amicably put a “closure to the agreement”. I, therefore, do not find any merit in the submission of the respondent that the petition is not maintainable for non-compliance with Clause 38.3 of the Dispute Resolution Clause. and further held that As a pure question of law, I am unable to accept the very broad proposition that whenever a contract is said to be void-ab-initio, the Courts exercising jurisdiction under Section 8 and Section 11 of the Arbitration Act, 1996 are rendered powerless to refer the disputes to arbitration.= Swiss Timing Limited …Petitioner Versus Organising Committee, Commonwealth Games 2010, Delhi. ….Respondent = 2014(May.Part) http://judis.nic.in/supremecourt/filename=41548

    Arbitration and conciliation Act - Despite of criminal proceedings and Despite of allegations of fraud and void etc., the arbitration proceedings can be initiated to resolve the disputes as per agreement - Disputes arose  between Switzer land company and  common wealth games 2010 organisation  about payment of tail end payments - so many correspondences were made by the petitioner/ company - Respondent failed to pay the amount as CBI cases were registered against Kalmadi and others - due corruption etc., and agreement treated as void - Apex court held that efforts  were  made  to  amicably  put  a  “closure  to   the agreement”.  I, therefore, do not  find  any merit in the submission of the respondent that  the  petition is not maintainable for non-compliance with  Clause  38.3  of the Dispute Resolution Clause. and further held that As a pure question of law, I am unable to accept the very broad proposition that whenever a contract  is  said  to be  void-ab-initio,  the  Courts  exercising  jurisdiction  under Section 8 and Section 11 of the Arbitration  Act,  1996  are rendered powerless to refer the disputes to  arbitration.=

The  respondents  have  raised   two   preliminary
        objections, which are as follows:-
           (i)    The  petitioner  has  not   followed   the   dispute
                 resolution mechanism as  expressly  provided  in  the
                 agreement dated 11th March, 2010.   No  efforts  have
                 been made by the petitioner to seek resolution of the
                 dispute as provided under Clause 38.   On  the  other
                 hand, the respondent through numerous  communications
                 invited the petitioner for amicable resolution of the
                 dispute.  The  respondent  relies  on  communications
                 dated  3rd  January,  2011,                       9th
                 January,     2011,      10th      January,      2011,
                      1st February, 2011 and   2nd February, 2011.


           (ii)  The contract stands vitated and is void ab initio  in
                 view of Clauses 29, 30 and 34 of the Agreement  dated
                 11th  March,  2010.  Hence,  the  petitioner  is  not
                 entitled to any payment whatsoever in respect of  the
                 contract and is  liable  to  reimburse  the  payments
                 already made. Therefore, there is no basis to  invoke
                 arbitration clause.
                 The respondent points out that a combined reading  of
                 Clause  29  and  Clause  34  would  show   that   the
                 petitioner had warranted that it will never engage in
                 corrupt, fraudulent, collusive or coercive  practices
                 in connection with  the  agreement.   The  petitioner
                 would be liable to indemnify the  Respondent  against
                 all losses suffered or incurred as a  result  of  any
                 breach of the agreement or any  negligence,  unlawful
                 conduct or wilful  misconduct.   The  respondent  may
                 terminate the agreement whenever it  determines  that
                 the  petitioner   had   engaged   in   any   corrupt,
                 fraudulent,  collusive  or   coercive   practice   in
                 connection with the agreement.  The respondent  seeks
                 to establish the aforesaid  non-liability  clause  on
                 the basis of registration of Criminal Case  being  CC
                 No.  22  of  2011  under  Section  120-B,  read  with
                 Sections 420, 427, 488 and 477 IPC and Section  13(2)
                 read with  Section  13(1)(d)  of  the  Prevention  of
                 Corruption  Act  against  Suresh  Kalmadi,  the  then
                 Chairman  of  the  Organising  Committee  and   other
                 officials of the respondent alongwith some  officials
                 of the petitioner, namely Mr. S.  Chianese,  Sales  &
                 Marketing Manager, Mr.  Christophe  Bertaud,  General
                 Manager and Mr. J. Spiri, Multi Sports Events & Sales
                 Manager.


     9. It is further the case of the  respondent  that  due  to  the
        pendency of the criminal proceedings in the trial court,  the
        present petition ought not to be entertained.   In  case  the
        arbitration  proceeding  continues  simultaneously  with  the
        criminal  trial,  there  is  real   danger   of   conflicting
        conclusions  by  the  two  fora,   leading   to   unnecessary
        confusion.
. I am unable to agree with the submission made by the  learned
        counsel for  the  respondent  that  the  petitioner  has  not
        satisfied  the  condition  precedent   under   Clause   38.3.
              A perusal of the correspondence placed on the record of
        the petition clearly shows that not only the  petitioner  but
        even the ambassadors of  the  various  governments  had  made
        considerable efforts to resolve the issue without  having  to
        take recourse to formal arbitration.  It  is  only  when  all
        these efforts failed, that the petitioner communicated to the
        respondent its intention to commence  arbitration  by  letter
        /notice dated 22nd April, 2013.  This was preceded by letters
        dated 4th February, 2011, 14th March, 2011  and  20th  April,
        2011 which clearly reflect the efforts made by the petitioner
        to resolve  disputes  through  discussions  and  negotiations
        before sending the notice invoking arbitration clause.


    16. It is  evident  from  the  counter  affidavit  filed  by  the
        respondents that the disputes have arisen between the parties
        out of or relating to the agreement dated 11th  March,  2010.
        On the one hand, the respondent disputes the claims  made  by
        the petitioner and on the  other,  it  takes  the  plea  that
        efforts  were  made  to  amicably  put  a  “closure  to   the
        agreement”.  I, therefore, do not  find  any
        merit in the submission of the respondent that  the  petition
        is not maintainable for non-compliance with  Clause  38.3  of
        the Dispute Resolution Clause.


    17. The second preliminary objection raised by the respondent  is
        on the ground that the contract stands vitiated and is  void-
        ab-initio in view of Clauses 29, 30 and 34 of  the  agreement
        dated 11th March, 2010.  I am of the considered opinion  that
        the aforesaid preliminary objection is without any substance.
         Under Clause 29, both sides have given  a  warranty  not  to
        indulge in corrupt  practices  to  induce  execution  of  the
        Agreement.  Clause 34 empowers the  Organising  Committee  to
        terminate the contract after deciding that the  contract  was
        executed in breach of the undertaking given in Clause  29  of
        the Contract.  These are allegations which will  have  to  be
        established in a proper forum on the basis of  the  oral  and
        documentary evidence, produced by the parties, in support  of
        their respective claims. The objection taken is to the manner
        in which the grant of the contract was manipulated in  favour
        of the petitioner.  The  second  ground  is  that  the  rates
        charged by the petitioner were exorbitant. Both these  issues
        can  be  taken  care  of  in  the  award.  Certainly  if  the
        respondent is able to produce  sufficient  evidence  to  show
        that the similar services could  have  been  procured  for  a
        lesser price, the arbitral tribunal would take the same  into
        account  whilst  computing  the  amounts   payable   to   the
        petitioner.  As a pure question of law, I am unable to accept
        the very broad proposition that whenever a contract  is  said
        to be  void-ab-initio,  the  Courts  exercising  jurisdiction
        under Section 8 and Section 11 of the Arbitration  Act,  1996
        are rendered powerless to refer the disputes to  arbitration.

As noticed earlier, the petitioners  have  already  nominated
        Hon’ble Mr. Justice S.N. Variava, Former Judge of this Court,
        having his office at Readymoney Mansion, 2nd floor,  Next  to
        Akbarallys,       Veer       Nariman       Road,        Fort,
        Mumbai – 400 001, as their arbitrator.   I  hereby  nominate.
        Hon’ble Mr. Justice B.P. Singh, Former Judge of  this  Court,
        R/o A-7, Neeti Bagh, 3rd Floor, New Delhi – 110 049,  as  the
        second Arbitrator and Hon’be Mr. Justice Kuldip Singh, Former
        Judge of this Court, R/o H.No. 88, Sector 10A,  Chandigarh  –
        160 010,  as  the  Chairman  of  the  Arbitral  Tribunal,  to
        adjudicate the disputes that have arisen between the parties,
        on such terms and conditions as they deem fit and proper.


    38. The Registry is directed to communicate  this  order  to  the
        Chairman of the Arbitral Tribunal, as well as, to the  Second
        Arbitrator to enable them to enter  upon  the  reference  and
        decide the matter as expeditiously as possible.


    39. The Arbitration Petition is accordingly allowed with no order
        as to costs.

Therefore,  in  my
        opinion, the judgment in N. Radhakrishnan  (supra)  does  not
        lay down the correct law and can not be relied upon.  
It must also notice here that the Petitioners relied upon  an
        earlier order of  this  court  in  the  case  of  M/s  Nussli
        (Switzerland) Ltd. (supra).  The  aforesaid  order,  however,
        seems to have been passed on a consensus between the  learned
        counsel for the parties. The decision of this Court  in  M/s  Nussli  (Switzerland)  Ltd.
      (supra) has not laid down any law.
   2014(May.Part) http://judis.nic.in/supremecourt/filename=41548                                                        
SURINDER SINGH NIJJAR
  REPORTABLE


                        IN THE SUPREME COURT OF INDIA
                         CIVIL ORIGINAL JURISDICTION


                     ARBITRATION PETITION NO. 34 OF 2013
      Swiss                       Timing                       Limited
      …Petitioner
                             Versus
      Organising Committee,
      Commonwealth Games 2010, Delhi.                 ….Respondent




                              J U D G E M E N T


      SURINDER SINGH NIJJAR,J.
     1.  This  is  a  petition  under   Section   11(4)   read   with
        Section 11(6) of the Arbitration and Conciliation  Act,  1996
        (hereinafter referred to as “the Arbitration  Act”),  with  a
        prayer to appoint the nominee arbitrator  of  the  Respondent
        and  to  further  constitute  the   arbitral   tribunal,   by
        appointing the presiding arbitrator in  order  to  adjudicate
        the disputes that have arisen between the parties.


     2. The relevant facts as set out in the Arbitration Petition are
        as under:-
     3. The Petitioner is a company duly incorporated under the  laws
        of Switzerland, having its registered  office  in  Corgémont,
        Switzerland.  The respondent  is  the  Organising  Committee,
        Commonwealth Games, 2010. It is a  society  registered  under
        the Societies Registration Act, 1860 (hereinafter referred to
        as “the Organising Committee”), established for  the  primary
        purpose  of   planning,   organising   and   delivering   the
        Commonwealth Games, 2010 Delhi (hereinafter  referred  to  as
        “Commonwealth Games”) and having its registered office in New
        Delhi, India.


     4.    The    petitioner    entered     into     an     agreement
               dated  11th  March,  2010  with  the  respondent   for
        providing   timing,   score   and   result   systems    (“TSR
        systems/services”) as well as supporting services required to
        conduct the Commonwealth Games.  According to the petitioner,
        Clause 11.1 of the aforesaid agreement stipulated  the  fees,
        as set out  in  Schedule  3,  which  shall  be  paid  to  the
        petitioner for performance of the  obligations  contained  in
        the agreement.  The aforesaid Schedule 3 gives details of the
        amounts which  were  to  be  paid,  in  instalments,  by  the
        Organising Committee.   The service  provider/Petitioner  was
        to submit monthly tax invoices, detailing the payments to  be
        made by the Organising Committee.  These invoices were to  be
        paid within 30 days of the end of the month in which the  tax
        invoices were received  by  the  Organising  Committee.   All
        payments were to be made in Swiss Francs, unless the  parties
        agree otherwise in writing.  Clause 11.5 provides that on the
        date of the agreement, the service provider must provide  the
        Performance Bank Guarantee to  the  Organising  Committee  to
        secure  the  performance  of  its   obligations   under   the
        agreement.  Certain other obligations are enumerated  in  the
        other clauses, which are not necessary to be noticed for  the
        purposes of the decision of the present petition.


     5.  It  is  also  noteworthy  that  in  consideration   of   the
        petitioner’s services as stipulated  in  the  agreement,  the
        petitioner was to receive a total amount of CHF  24,990,000/-
        (Swiss Francs Twenty Four Million  Nine  Hundred  and  Ninety
        Thousand only). It was  also  provided  in  Schedule  3  that
        payment of the 5% of the total service fees was  to  be  made
        upon completion of the Commonwealth Games.  Accordingly,  the
        petitioner sent the invoice No.  33574  dated  27th  October,
        2010 for the payment  of  CHF  1,249,500  (Swiss  Francs  One
        Million Two Hundred Forty Nine Thousand Five  Hundred  only).
        This represents the remaining 5% which was to  be  paid  upon
        completion       of       the       Commonwealth        Games
        on 27th October, 2010.  The petitioner had also paid  to  the
        Organising   Committee   a    sum    of    Rs.    15,00,000/-
            (INR 1.5 million) as Earnest  Money  Deposit  (EMD),  for
        successfully completing the TSR services as provided  in  the
        agreement.


     6. According to the  petitioner,  the  respondent  defaulted  in
        making the payment without any justifiable reasons.  Not only
        the amount was not paid to  the  petitioner,  the  respondent
        sent a letter dated 15th December, 2010 asking the petitioner
        to extend the Bank Guarantee till 31st  January,  2011.   The
        petitioner informed the respondent that  the  Bank  Guarantee
        had already been terminated and released on completion of the
        Commonwealth Games in October, 2010.  It is also the case  of
        the petitioner that there is  no  provision  in  the  service
        agreement   for   extension   of    the    Bank    Guarantee.
                   The  petitioner  reiterated  its  claim  for   the
        aforesaid amount.  Through letter dated 26th  January,  2011,
        the petitioner  demanded repayment of Rs. 15 lakhs  deposited
        as EMD.  Instead of making the payment to the petitioner  and
        other companies, the respondent  issued  a  Press  Communiqué
             on 2nd February, 2011 declaring that  part  payments  to
        nine foreign vendors, including  the  petitioner,  have  been
        withheld  for  “non-performance  of   the   contract”.    The
        petitioner is said to have protested  against  the  aforesaid
        communiqué through letter dated 4th February,  2011.  It  was
        reiterated that the petitioner had  satisfactorily  performed
        the obligations in the service agreement of 11th March, 2010.
         Since the respondent was disputing its liability to pay  the
        amounts, the petitioner served a formal Dispute  Notification
        on  the  respondent  under               Clause  38  of   the
        agreement.


     7. The petitioner further points out that on 7th February, 2011,
        the respondent called  upon  the  petitioner  to  fulfil  its
        alleged outstanding obligations under the agreement including
        handing  over  of  the  Legacy  Boards,  completion  of   the
        formalities of  the  material,  which  were  required  to  be
        shipped out and to fulfil certain other requirements  as  set
        out in its earlier e-mails in order to prepare the “agreement
        closure report”. The respondent also stated  that  they  were
        not addressing the issue of invoking the  Dispute  Resolution
        Clause as  they  were  interested  in  settling  the  dispute
        amicably. The petitioner pleads that the respondent failed in
        its commitment for payments towards services  rendered,   not
        only  towards  the  petitioner   but   also   towards   other
        international companies  from  Australia,  Belgium,  England,
        France, Germany,  Italy,  the  Netherlands  and  Switzerland,
        which had provided various services to the respondent at  the
        Commonwealth Games.  It also appears that collective  letters
        were  written  on  behalf  of  various   companies   by   the
        ambassadors  of  the  concerned  countries,  to  the  Finance
        Minister of India indicating the default in payments  of  the
        amounts due. The petitioners, therefore, claim that they were
        left  with  no  alternative  but  to  invoke  arbitration  as
        provided under Clause 38.6 of the agreement.  The petitioners
        have nominated the arbitrator on its  behalf  namely  Justice
        S.N. Variava, former Judge of the Supreme Court of India.   A
        notice to this effect was served on the respondent through  a
        communication dated 22nd April, 2013.  Since no response  was
        received a reminder was issued on 29th May, 2013.  Upon  such
        failure, the petitioners have filed the present petition.


     8. In the counter  affidavit  all  the  averments  made  by  the
        petitioners have been denied, as being incorrect in facts and
        in  law.   The  respondents  have  raised   two   preliminary
        objections, which are as follows:-
           (i)    The  petitioner  has  not   followed   the   dispute
                 resolution mechanism as  expressly  provided  in  the
                 agreement dated 11th March, 2010.   No  efforts  have
                 been made by the petitioner to seek resolution of the
                 dispute as provided under Clause 38.   On  the  other
                 hand, the respondent through numerous  communications
                 invited the petitioner for amicable resolution of the
                 dispute.  The  respondent  relies  on  communications
                 dated  3rd  January,  2011,                       9th
                 January,     2011,      10th      January,      2011,
                      1st February, 2011 and   2nd February, 2011.


           (ii)  The contract stands vitated and is void ab initio  in
                 view of Clauses 29, 30 and 34 of the Agreement  dated
                 11th  March,  2010.  Hence,  the  petitioner  is  not
                 entitled to any payment whatsoever in respect of  the
                 contract and is  liable  to  reimburse  the  payments
                 already made. Therefore, there is no basis to  invoke
                 arbitration clause.
                 The respondent points out that a combined reading  of
                 Clause  29  and  Clause  34  would  show   that   the
                 petitioner had warranted that it will never engage in
                 corrupt, fraudulent, collusive or coercive  practices
                 in connection with  the  agreement.   The  petitioner
                 would be liable to indemnify the  Respondent  against
                 all losses suffered or incurred as a  result  of  any
                 breach of the agreement or any  negligence,  unlawful
                 conduct or wilful  misconduct.   The  respondent  may
                 terminate the agreement whenever it  determines  that
                 the  petitioner   had   engaged   in   any   corrupt,
                 fraudulent,  collusive  or   coercive   practice   in
                 connection with the agreement.  The respondent  seeks
                 to establish the aforesaid  non-liability  clause  on
                 the basis of registration of Criminal Case  being  CC
                 No.  22  of  2011  under  Section  120-B,  read  with
                 Sections 420, 427, 488 and 477 IPC and Section  13(2)
                 read with  Section  13(1)(d)  of  the  Prevention  of
                 Corruption  Act  against  Suresh  Kalmadi,  the  then
                 Chairman  of  the  Organising  Committee  and   other
                 officials of the respondent alongwith some  officials
                 of the petitioner, namely Mr. S.  Chianese,  Sales  &
                 Marketing Manager, Mr.  Christophe  Bertaud,  General
                 Manager and Mr. J. Spiri, Multi Sports Events & Sales
                 Manager.


     9. It is further the case of the  respondent  that  due  to  the
        pendency of the criminal proceedings in the trial court,  the
        present petition ought not to be entertained.   In  case  the
        arbitration  proceeding  continues  simultaneously  with  the
        criminal  trial,  there  is  real   danger   of   conflicting
        conclusions  by  the  two  fora,   leading   to   unnecessary
        confusion.


    10. I have heard the learned counsel for the parties.


    11. The submissions made in  the  petition  as  well  as  in  the
        counter affidavit have  been  reiterated  before  me  by  the
        learned counsel.  I  have  given  due  consideration  to  the
        submissions made by the learned counsel for the parties.


    12. The learned counsel for the  petitioners  has  relied  on  an
        unreported Order of this Court  dated  11th  April,  2012  in
                    M/s  Nussli  (Swtizerland)  Ltd.  Vs.  Organizing
        Commit. Commonwealth  Game.  2010,  wherein  the  dispute  in
        almost  identical  circumstances  have   been   referred   to
        arbitration.


    13. On the other hand, learned counsel  for  the  respondent  has
        relied on a judgment of this Court in  N.  Radhakrishnan  Vs.
        Maestro Engineers & Ors.[1]  He has  also  relied  upon  Guru
        Granth Saheb Sthan Meerghat Vanaras Vs. Ved Prakash & Ors.[2]
        Reliance is also placed on  India  Household  and  Healthcare
        Ltd. Vs. LG Household and Healthcare Ltd.[3]

    14. The procedure for Dispute Resolution  has  been  provided  in
        Clause 38 of the agreement, which is as under:-
           “38.  Dispute Resolution


           38.1  If a dispute arises between the parties out of or relating
           to this Agreement (a “Dispute”), any party  seeking  to  resolve
           the  Dispute  must  do  so  strictly  in  accordance  with   the
           provisions of this clause.  Compliance with  the  provisions  of
           this clause is a condition precedent to seeking a resolution  of
           the Dispute at the arbitral tribunal constituted  in  accordance
           with this clause 38.


           38.2  During a Dispute, each party must continue to perform  its
           obligations under this Agreement.


           38.3  A party seeking to resolve the  Dispute  must  notify  the
           existence and nature of the Dispute to  the  other  party  (“the
           Notification”).  Upon receipt of the  Notification  the  Parties
           must use their respective reasonable endeavours to negotiate  to
           resolve the Dispute by discussions  between  Delhi  2010  (or  a
           person it nominates) and the Service Provider (or  a  person  it
           nominates).  If the Dispute has  not  been  resolved  within  10
           Business Days of receipt of  the  Notification  (or  such  other
           period as agreed in writing by the  parties)  then  the  parties
           must refer the Dispute to the Chairman of  Delhi  2010  and  the
           Chief Executive  Officer  or  its  equivalent)  of  the  Service
           Provider.


           38.4  If the Dispute has not been settled within 5 Business Days
           of referral under Clause 38.3, the Dispute shall be  settled  by
           arbitration in accordance with the following clauses.


           38.5  For any dispute arising after 31 July, 2010, the  relevant
           period in clause 38.3 is 48 hours and  the  relevant  period  in
           clause 38.4 is 24 hours.


           38.6 The Dispute shall be referred to a tribunal  consisting  of
           three Arbitrators, one to be nominated by each party,  with  the
           presiding Arbitrator to be  nominated  by  the  two  arbitrators
           nominated by the parties.   The  Arbitrators  shall  be  retired
           judges of the Supreme Court or High Courts of  India.   However,
           the Presiding Arbitrator shall be a retired Supreme Court Judge.


           38.7   The  place  of  arbitration  shall  be  New  Delhi.   All
           arbitration  proceedings  shall  be  conducted  in  English   in
           accordance  with  the  provisions   of   the   Arbitration   and
           Conciliation Act, 1996 as amended from time to time.


           38.8  The arbitration award will be final and binding  upon  the
           parties, and each party will bear its own costs  of  arbitration
           and equally share the fees of the arbitral tribunal  unless  the
           arbitral tribunal decides otherwise.


           38.9  This clause 38 will not affect each party’s rights to seek
           interlocutory relief in a court of competent jurisdiction.”


    15. I am unable to agree with the submission made by the  learned
        counsel for  the  respondent  that  the  petitioner  has  not
        satisfied  the  condition  precedent   under   Clause   38.3.
              A perusal of the correspondence placed on the record of
        the petition clearly shows that not only the  petitioner  but
        even the ambassadors of  the  various  governments  had  made
        considerable efforts to resolve the issue without  having  to
        take recourse to formal arbitration.  It  is  only  when  all
        these efforts failed, that the petitioner communicated to the
        respondent its intention to commence  arbitration  by  letter
        /notice dated 22nd April, 2013.  This was preceded by letters
        dated 4th February, 2011, 14th March, 2011  and  20th  April,
        2011 which clearly reflect the efforts made by the petitioner
        to resolve  disputes  through  discussions  and  negotiations
        before sending the notice invoking arbitration clause.


    16. It is  evident  from  the  counter  affidavit  filed  by  the
        respondents that the disputes have arisen between the parties
        out of or relating to the agreement dated 11th  March,  2010.
        On the one hand, the respondent disputes the claims  made  by
        the petitioner and on the  other,  it  takes  the  plea  that
        efforts  were  made  to  amicably  put  a  “closure  to   the
        agreement”.                   I, therefore, do not  find  any
        merit in the submission of the respondent that  the  petition
        is not maintainable for non-compliance with  Clause  38.3  of
        the Dispute Resolution Clause.


    17. The second preliminary objection raised by the respondent  is
        on the ground that the contract stands vitiated and is  void-
        ab-initio in view of Clauses 29, 30 and 34 of  the  agreement
        dated 11th March, 2010.  I am of the considered opinion  that
        the aforesaid preliminary objection is without any substance.
         Under Clause 29, both sides have given  a  warranty  not  to
        indulge in corrupt  practices  to  induce  execution  of  the
        Agreement.  Clause 34 empowers the  Organising  Committee  to
        terminate the contract after deciding that the  contract  was
        executed in breach of the undertaking given in Clause  29  of
        the Contract.  These are allegations which will  have  to  be
        established in a proper forum on the basis of  the  oral  and
        documentary evidence, produced by the parties, in support  of
        their respective claims. The objection taken is to the manner
        in which the grant of the contract was manipulated in  favour
        of the petitioner.  The  second  ground  is  that  the  rates
        charged by the petitioner were exorbitant. Both these  issues
        can  be  taken  care  of  in  the  award.  Certainly  if  the
        respondent is able to produce  sufficient  evidence  to  show
        that the similar services could  have  been  procured  for  a
        lesser price, the arbitral tribunal would take the same  into
        account  whilst  computing  the  amounts   payable   to   the
        petitioner.  As a pure question of law, I am unable to accept
        the very broad proposition that whenever a contract  is  said
        to be  void-ab-initio,  the  Courts  exercising  jurisdiction
        under Section 8 and Section 11 of the Arbitration  Act,  1996
        are rendered powerless to refer the disputes to  arbitration.




    18. However, the respondent has placed  strong  reliance  on  the
        judgment of this Court in N. Radhakrishnan (supra).  In  that
        case, disputes had  arisen  between  the  appellant  and  the
        respondent, who were partners in  a  firm  known  as  Maestro
        Engineers.  The  appellant  had  retired   from   the   firm.
        Subsequently, the appellant alleged that he continued to be a
        partner.   The  respondent  filed  a  Civil  Suit  seeking  a
        declaration that the appellant is not a partner of the  firm.
        In this  suit,  the  appellant  filed  an  application  under
        Section 8 of the Arbitration Act  seeking  reference  of  the
        dispute to the arbitration.  The plea  was  rejected  by  the
        trial court and the High Court in Civil Revision.  This Court
        also rejected the prayer of the appellant  for  reference  of
        the dispute to arbitration. This  Court  found  that  subject
        matter of the dispute was within the ambit of the arbitration
        clause. It was held as under :

           “14. The learned counsel for the respondents further argued that
           the subject-matter of the suit being OS No. 526 of  2006  was  a
           different one and it was not within the ambit of the arbitration
           clause of the partnership  deed  dated  7-4-2003  and  that  the
           partnership  deed  had  ceased  to  exist  after  the  firm  was
           reconstituted due to the alleged retirement  of  the  appellant.
           Therefore, the trial court was justified in  not  referring  the
           matter to the arbitrator.


              15. The appellant had on the other hand  contended  that  the
           subject-matter  of  the  suit  was  within  the  ambit  of   the
           arbitration clause since according to him the dispute related to
           his retirement and the settlement  of  his  dues  after  he  was
           deemed to have retired according to the respondents. Further, it
           was his contention that the partnership deed dated 6-12-2005 was
           not a valid one as it was not  framed  in  compliance  with  the
           requirements under the Partnership  Act,  1932.  Therefore,  the
           argument of the respondents that the subject-matter of the  suit
           did not fall within the ambit of the arbitration clause  of  the
           original partnership deed dated 7-4-2003 cannot be sustained. We
           are in agreement with the contention of the  appellant  to  this
           effect.


              16. It is clear from a perusal of the  documents  that  there
           was  a  clear  dispute  regarding  the  reconstitution  of   the
           partnership firm and the subsequent deed framed to that  effect.
           The dispute was relating to the continuation of the appellant as
           a partner of the  firm,  and  especially  when  the  respondents
           prayed for a declaration to the effect that  the  appellant  had
           ceased to be a partner of the firm after his  retirement,  there
           is no doubt in our mind that the dispute  squarely  fell  within
           the purview of the arbitration clause of  the  partnership  deed
           dated 7-4-2003.  Therefore,  the  arbitrator  was  competent  to
           decide the matter relating to the existence of the original deed
           and its validity to that effect. Thus, the contention  that  the
           subject-matter of the suit before the  Ist  Additional  District
           Munsiff Court at  Coimbatore  was  beyond  the  purview  of  the
           arbitration clause, cannot be accepted.”




    19. Having found that the subject matter of the suit  was  within
        the jurisdiction of the arbitration, it  was  held  that  the
        disputes can not  be  referred  to  arbitration.  This  Court
        approved the finding of the High Court that  since  the  case
        relates to allegations of fraud and serious  malpractices  on
        the part of the respondents, such a  situation  can  only  be
        settled in court through furtherance of detailed evidence  by
        either parties and such a situation can not be properly  gone
        into  by  the  arbitrator.   In  my  opinion,  the  aforesaid
        observations runs counter to the ratio of the law  laid  down
        by this Court in Hindustan Petroleum Corpn. Ltd. Vs. Pinkcity
        Midway Petroleums[4], wherein  this  Court  in  Paragraph  14
        observed as follows:
           “If in an agreement between the parties before the civil  court,
           there is a clause for arbitration, it is mandatory for the civil
           court to refer the dispute to an arbitrator. In the instant case
           the existence of an arbitral clause in the agreement is accepted
           by both the parties as also by the courts below.  Therefore,  in
           view of the mandatory language of Section  8  of  the  Act,  the
           courts below ought to have referred the dispute to arbitration.”




    20. In my opinion, the observations in Hindustan Petroleum Corpn.
        Ltd. (supra) lays down the correct law.  Although,  reference
        has  been  made  to  the   aforesaid   observations   in   N.
        Radhakrishnan  (supra)   but   the   same   have   not   been
        distinguished.  A Two Judge Bench of this Court in  P.  Anand
        Gajapathi Raju & Ors. Vs. P.V.G. Raju (Dead) &  Ors.[5],  had
        earlier considered the scope of the provisions  contained  in
        Section 8 and observed as follows:-


           “8. In the matter before us, the  arbitration  agreement  covers
           all the disputes between the parties in the  proceedings  before
           us and even more than that. As already  noted,  the  arbitration
           agreement satisfies the requirements of Section  7  of  the  new
           Act. The language of Section 8 is peremptory. It is,  therefore,
           obligatory for the Court to refer the parties to arbitration  in
           terms [pic]of their arbitration agreement. Nothing remains to be
           decided in the original action or the appeal arising  therefrom.
           There is no  question  of  stay  of  the  proceedings  till  the
           arbitration proceedings conclude and the award becomes final  in
           terms of  the  provisions  of  the  new  Act.  All  the  rights,
           obligations and remedies of the parties would now be governed by
           the new Act including the right  to  challenge  the  award.  The
           court to which the party shall have recourse  to  challenge  the
           award would be the court as defined in clause (e) of  Section  2
           of the new Act and not the court to which an  application  under
           Section 8 of the new Act is made. An application before a  court
           under Section 8 merely brings to the  court’s  notice  that  the
           subject-matter of the action before it is the subject-matter  of
           an arbitration agreement. This would not be such an  application
           as contemplated under Section 42 of the Act as the court  trying
           the action may or may not have had jurisdiction to try the  suit
           to start with or be the competent court within  the  meaning  of
           Section 2(e) of the new Act.”




    21. This judgment was not even brought to the notice of the Court
        in N. Radhakrishnan (supra).  In my opinion, judgment  in  N.
        Radhakrishnan  (supra)  is  per  incuriam  on  two   grounds:
        Firstly, the judgment  in  Hindustan  Petroleum  Corpn.  Ltd.
        (supra) though referred has not been distinguished but at the
        same time is not followed also.  The  judgment  in  P.  Anand
        Gajapathi Raju & Ors. (supra) was not  even  brought  to  the
        notice of this Court.  Therefore, the same has  neither  been
        followed nor considered.  Secondly, the  provision  contained
        in Section 16 of the Arbitration  Act,  1996  were  also  not
        brought to the  notice  by  this  Court.   Therefore,  in  my
        opinion, the judgment in N. Radhakrishnan  (supra)  does  not
        lay down the correct law and can not be relied upon.


    22. As noticed above, the attention of this Court was  not  drawn
        to the provision contained in Section 16 of  the  Arbitration
        Act, 1996 in the case of N. Radhakrishnan (supra). Section 16
        provides that the Arbitral Tribunal  would  be  competent  to
        rule  on  its  own  jurisdiction  including  ruling  on   any
        objection  with  regard  to  existence  or  validity  of  the
        arbitration agreement.  The Arbitration Act  emphasises  that
        an arbitration clause which forms part of a contract shall be
        treated as an agreement independent of the other terms of the
        contract.   It  further  provides  that  a  decision  by  the
        Arbitral Tribunal that the contract is null  and  void  shall
        not entail  ipso  jure  the  invalidity  of  the  arbitration
        clause.  The aforesaid provision came up for consideration by
        this Court in Today Homes  &  Infrastructure  Pvt.  Ltd.  Vs.
        Ludhiana Improvement Trust & Anr.[6]


    23. In the aforesaid case, the designated Judge of the  Punjab  &
        Haryana High Court had  refused  to  refer  the  disputes  to
        arbitration.  The High Court had accepted the plea that since
        the underlying contract  was  void,  the  arbitration  clause
        perished  with  it.  The  judgment  of  the  High  Court  was
        challenged in this Court, by filing a Special Leave Petition.
        Before this Court it was submitted by the appellant that  the
        High Court treated the application under Section 11(6) of the
        Arbitration Act as if it was  deciding  a  suit  but  without
        adducing evidence. Relying on SBP & Co. Vs. Patel Engineering
        Ltd., it was submitted that the High Court was only  required
        to conduct a preliminary enquiry as to whether  there  was  a
        valid arbitration agreement; or whether it was a stale claim.
        On the other hand, it was submitted by the  respondents  that
        once the High Court had found the main agreement to be  void,
        the contents thereof including  the  arbitration  clause  are
        also rendered void.


    24.  This  Court  rejected  the  aforesaid  submission   of   the
        respondents with the following observations :
           “13. We have  carefully  considered  the  submissions   made  on
           behalf of the respective parties and we are  of  the  view  that
           the  learned  designated  Judge  exceeded  the  bounds  of   his
           jurisdiction, as  envisaged in SBP & Co. (supra). In  our  view,
           the learned designated Judge was not  required  to  undertake  a
           detailed scrutiny of the merits and  de-  merits  of  the  case,
           almost as if he was deciding a suit. The learned Judge was  only
           required to decide such preliminary issues such as  jurisdiction
           to  entertain  the  application,  the  existence  of   a   valid
           arbitration agreement, whether a live claim existed or not,  for
           the purpose of appointment of an  arbitrator.  By  the  impugned
           order, much more than what is contemplated under  Section  11(6)
           of the 1996 Act was sought to be decided, without  any  evidence
           being adduced by the parties. The issue
           regarding the continued existence of the arbitration  agreement,
           notwithstanding the main agreement itself being  declared  void,
           was considered by the 7-Judge Bench in SBP & Co. (supra) and  it
           was held that an arbitration agreement could  stand  independent
           of the main agreement and did  not  necessarily  become  otiose,
           even if the main agreement, of which it is a part,  is  declared
           void.




           14. The same reasoning was adopted by a member  of   this  Bench
           (S.S. Nijjar, J.), while deciding the case of Reva Electric  Car
           Company Private Limited Vs.  Green  Mobil  [(2012)  2  SCC  93],
           wherein the provisions of Section 16(1) in the backdrop  of  the
           doctrine of kompetenz kompetenz were considered and it was inter
           alia held that under Section 16(1),  the  legislature  makes  it
           clear that while considering any objection with  regard  to  the
           existence  or  validity  of  the  arbitration   agreement,   the
           arbitration clause, which formed part of the contract, had to be
           treated as an agreement independent of the other  terms  of  the
           contract. Reference  was  made  in  the  said  judgment  to  the
           provisions of Section 16(1)(b) of the 1996 Act,  which  provides
           that even if the arbitral tribunal concludes that  the  contract
           is null and void, it should not result, as a matter of  law,  in
           an automatic invalidation of the arbitration clause. It was also
           held  that  Section  16(1)(a)  of  the  1996  Act  presumes  the
           existence of a valid arbitration clause and mandates the same to
           be treated as an agreement independent of the other terms of the
           contract. By virtue of Section 16(1)(b) of  the  1996  Act,  the
           arbitration clause continues to be enforceable,  notwithstanding
           a declaration that the contract was null and void.


    25. Keeping in view  the  aforesaid  observations  made  by  this
        Court, I see no reason to accept the submission made  by  the
        learned counsel for the respondents  that  since  a  criminal
        case  has  been  registered  against  the  Chairman  of   the
        Organising  Committee  and  some  other  officials   of   the
        petitioner, this Court would have no jurisdiction to  make  a
        reference to arbitration.


    26.  As  noticed  above,  the  concept  of  separability  of  the
        arbitration clause/agreement from the underlying contract has
        been statutorily recognised by this country under Section  16
        of the Arbitration Act, 1996.  Having provided for resolution
        of disputes through arbitration, parties can not be permitted
        to avoid arbitration, without satisfying the  Court  that  it
        will be just and in the interest of all the  parties  not  to
        proceed with the arbitration.  Section 5 of  the  Arbitration
        Act provides that  the  Court  shall  not  intervene  in  the
        arbitration process except in accordance with the  provisions
        contained in Part I of the Arbitration Act.  This  policy  of
        least interference in arbitration proceedings recognises  the
        general principle that the  function  of  Courts  in  matters
        relating to arbitration is to support arbitration process.  A
        conjoint reading of Section 5 and Section 16  would  make  it
        clear that all matters including the issue as to whether  the
        main  contract  was  void/voidable   can   be   referred   to
        arbitration.  Otherwise, it would be a handy  tool  available
        to the unscrupulous parties to avoid arbitration, by  raising
        the bogey of the underlying contract being void.


    27. I am of the opinion that whenever a plea is  taken  to  avoid
        arbitration on the ground that  the  underlying  contract  is
        void, the Court is required to ascertain the true  nature  of
        the defence.  Often, the  terms  “void”  and  “voidable”  are
        confused and  used  loosely  and  interchangeably  with  each
        other.  Therefore, the Court ought to  examine  the  plea  by
        keeping in mind the  relevant  statutory  provisions  in  the
        Indian Contract Act, 1872,  defining  the  terms  “void”  and
        “voidable”.  Section 2,  the  interpretation  clause  defines
        some of the relevant terms as follows:-
           “2(g)       An agreement not enforceable by law is  said  to  be
                 void;

           2(h)  An agreement enforceable by law is a contract;

           2(i)  An agreement which is enforceable by law at the option  of
                 one or more of the parties thereto, but not at  the  option
                 of the other or others, is a voidable contract;

           2(j)  A contract which ceases to be enforceable by  law  becomes
                 void when it ceases to be enforceable.”



           The aforesaid clauses clearly delineate  and  differentiate
      between  term  “void”  and  “voidable”.   Section  2(j)  clearly
      provides as to when a voidable contract would reach the stage of
      being void.  Undoubtedly, in cases, where the Court can come  to
      a conclusion that the contract is  void  without  receiving  any
      evidence, it  would  be  justified  in  declining  reference  to
      arbitration but such cases would be  few  and  isolated.   These
      would be cases where the Court can  readily  conclude  that  the
      contract is void upon  a  meaningful  reading  of  the  contract
      document itself.  Some examples of where a contract may fall  in
      this category would be :-
           (a)   Where a contract is entered into by a person, who has
                 not attained the age of majority (Section 11);
           (b)   Where both the parties are under a mistake  as  to  a
                 matter   of   fact   essential   to   the   agreement
                    (Section 19);
           (c)   Where the consideration or object of the contract  is
                 forbidden by law or is of  such  a  nature  that,  if
                 permitted, it would defeat the provisions of any  law
                 or where the object of the contract is to indulge  in
                 any immoral activity or would be  opposed  to  public
                 policy.  Glaring examples of this would  be  where  a
                 contract is entered  into  between  the  parties  for
                 running a prostitution racket, smuggling drugs, human
                 trafficking and any other activities falling in  that
                 category.
           (d)   Similarly, Section 30 renders wagering  contracts  as
                 void.  The only exception to this is betting on horse
                 racing.  In the circumstances noted above, it may not
                 be necessary  for  the  Court  to  take  any  further
                 evidence apart from  reading  the  contract  document
                 itself.  Therefore,  whilst  exercising  jurisdiction
                 under Section 11(6) of the Arbitration Act, the Court
                 could decline to make a reference to  arbitration  as
                 the contract would be patently void.


    28. However, it would not be possible  to  shut  out  arbitration
        even in cases where the defence taken is that the contract is
        voidable.  These would be cases which are covered  under  the
        circumstances narrated in Section 12 – unsoundness  of  mind;
        Section 14 – absence of free consent, i.e. where the  consent
        is said to  be  vitiated  as  it  was  obtained  by  Coercion
        (Section 15), Undue Influence (Section  16),  Fraud  (Section
        17) or Misrepresentation (Section 18).  Such a contract  will
        only become void when the party claiming lack of free consent
        is able to prove the same and thus rendering  contract  void.
        This indeed is the provision contained in Section 2(j) of the
        Indian Contract Act.   In  exercising  powers  under  Section
        11(6) of the Arbitration Act, the Court has to keep  in  view
        the provisions contained in Section 8 of the Arbitration Act,
        which provides that a reference to arbitration shall be  made
        if a party applies not later than when submitting  his  first
        statement on the substance  of  the  dispute.   In  contrast,
        Section 45 of the aforesaid Act permits the Court to  decline
        reference to arbitration in case the  Court  finds  that  the
        agreement is null and void, inoperative or incapable of being
        performed.


    29. To shut out arbitration at the initial  stage  would  destroy
        the very purpose for  which  the  parties  had  entered  into
        arbitration.  Furthermore,  there  is  no  inherent  risk  of
        prejudice to any of the parties in permitting arbitration  to
        proceed simultaneously to the criminal  proceedings.   In  an
        eventuality where ultimately an award is rendered by arbitral
        tribunal, and the criminal proceedings result  in  conviction
        rendering the underlying contract void, necessary plea can be
        taken  on  the  basis  of  the  conviction  to   resist   the
        execution/enforcement of the award. Conversely, if the matter
        is not referred to arbitration and the  criminal  proceedings
        result in an acquittal and thus leaving little or  no  ground
        for  claiming  that  the  underlying  contract  is  void   or
        voidable, it would have  the  wholly  undesirable  result  of
        delaying the arbitration. Therefore, I am of the opinion that
        the Court ought to act with caution and circumspection whilst
        examining  the  plea  that  the  main  contract  is  void  or
        voidable.   The  Court  ought   to   decline   reference   to
        arbitration only where the Court  can  reach  the  conclusion
        that the contract is void on  a  meaningful  reading  of  the
        contract document  itself  without  the  requirement  of  any
        further proof.


    30. In the present case, it is pleaded that the manner  in  which
        the  contract  was  made  between  the  petitioner  and   the
        respondent was investigated by the CBI.  As  a  part  of  the
        investigation, the CBI had seized all the original  documents
        and the record from  the  office  of  the  respondent.  After
        investigation, the criminal case CC No.22 of  2011  has  been
        registered, as noticed earlier. It is  claimed  that  in  the
        event the Chairman of the Organising Committee and the  other
        officials who manipulated the grant of contract in favour  of
        the respondent are found guilty in  the  criminal  trial,  no
        amount  would be payable to  the  petitioner.  Therefore,  it
        would be appropriate to await the decision  of  the  criminal
        proceedings before the arbitral tribunal is constituted to go
        into the alleged disputes between the parties. I am unable to
        accept the aforesaid submission made by the  learned  counsel
        for the respondents, for the reasons stated in  the  previous
        paragraphs. The balance of  convenience  is  tilted  more  in
        favour of permitting the arbitration proceedings to  continue
        rather than to bring the same to a grinding halt.


    31. I must also notice here that  the  defence  of  the  contract
        being void is now-a-days taken routinely along with the other
        usual grounds, to avoid/delay reference to arbitration. In my
        opinion, such ground needs to be  summarily  rejected  unless
        there is clear indication that the defence has  a  reasonable
        chance of success.  In the present case, the plea  was  never
        taken till the present petition  was  filed  in  this  Court.
        Earlier,  the  respondents  were  only  impressing  upon  the
        petitioners to supply  certain  information.   Therefore,  it
        would be  appropriate,  let  the  Arbitral  Tribunal  examine
        whether there is any substance  in  the  plea  of  fraud  now
        sought to be raised by the respondents.


    32. The Respondent also relied on the judgment of this  Court  in
        India Household and  Healthcare  Ltd.  (supra),  wherein  the
        application under section 11 (6) of the Arbitration  Act  was
        dismissed. This case, however, will not come in  the  way  of
        referring the matter  to  arbitration  since  it  is  clearly
        distinguishable from the present case.   In  India  Household
        and  Healthcare  Ltd.  (supra),  the   substantive/underlying
        contract containing the arbitration clause was  entered  into
        by the parties on 08.05.2004. This  agreement,  however,  was
        preceded by  a  Memorandum  of  Understanding  (“MoU”)  dated
        1.11.2003. It was contended by the Respondent that  both  the
        Agreement and  the  MoU  are  vitiated  by  fraud  which  was
        fructified by a criminal conspiracy hatched between officials
        representing the  Petitioner  and  Respondent  therein.  This
        Court also  noticed  that  the  concerned  officials  of  the
        Respondent  had  been  convicted  and  sentenced  to  undergo
        imprisonment by the Korean Criminal Court. The said  MoU  was
        also contended by the Respondent to be  in  contravention  of
        the laws of Korea. It was further noticed that the Respondent
        filed a suit in the Madras High Court against the Petitioner,
        whereby the High Court vide interim  order  dated  06.10.2005
        issued an injunction and thereby  restrained  the  Petitioner
        therein to act directly or indirectly on the basis of MoU and
        the Agreement dated  08.05.2004,  and  to  derive  any  other
        benefit based upon the said MoU and the license agreement  in
        any manner whatsoever. This interim order, the court noticed,
        was confirmed by an order dated 21.01.2006; against which  no
        appeal was filed by the Petitioner. The Court, relying upon A
        Treatise on Law Governing Injunctions by Spelling and  Lewis,
        concluded  that  this  injunction  order  having   not   been
        challenged by the Petitioner has become final and  also  that
        this  order  restrains  the  invocation  of  the  arbitration
        agreement contained in Agreement dated 08.05.2004. Therefore,
        the Court  declined  to  refer  the  matter  to  arbitration.
        Another factor that weighed  with  Court  in  dismissing  the
        Petition, it appears, is that the Petitioner did not  conform
        to the procedure concerning  appointment  of  the  Arbitrator
        before filing the Petition under Section 11 (6).


    33. This  case  is  clearly  distinguishable  and  hence  is  not
        applicable into the facts and circumstances  of  the  present
        case because of the following  reasons:  Firstly,  there  has
        been no conviction in the present case, though the trial  has
        been going on against the  officials  of  both  the  parties.
        Secondly,  there  is  no  injunction  or  any   other   order
        restraining the  Petitioner  from  invoking  the  Arbitration
        Clause. Lastly, all the conditions precedent for invoking the
        arbitration clause have been satisfied by the Petitioner,  as
        observed earlier.
    34. The respondent had relied on the judgment of  this  Court  in
        Guru Granth Saheb Sthan Meerghat Vanaras Vs.  Ved  Prakash  &
        Ors.[7]  This judgment reiterates the normal rule  which  was
        stated by the Constitution Bench of this Court in M.S.Sheriff
        Vs.  State  of  Madras  in  relation  to   the   simultaneous
        prosecution of the criminal proceeding with the  civil  suit.
        In the aforesaid case, the Constitution Bench had observed as
        follows:-
           “14. … It was said that the simultaneous  prosecution  of  these
           matters will embarrass the accused. … but we can  see  that  the
           simultaneous prosecution of the present criminal proceedings out
           of which this appeal arises and the civil suits  will  embarrass
           the accused. We have therefore  to  determine  which  should  be
           stayed.


           15. As between the civil and the criminal proceedings we are  of
           the  opinion  that  the  criminal  matters   should   be   given
           precedence. There is some difference  of  opinion  in  the  High
           Courts of India on this point. No hard-and-fast rule can be laid
           down but we do not consider that the possibility of  conflicting
           decisions in  the  civil  and  criminal  courts  is  a  relevant
           consideration. The law envisages such  an  eventuality  when  it
           expressly refrains from making the decision of one court binding
           on the other, or  even  relevant,  except  for  certain  limited
           purposes,  such  as  sentence  or  damages.  The  only  relevant
           consideration here is the likelihood of embarrassment.


           16. Another factor which weighs with us is  that  a  civil  suit
           often drags on for years and it is undesirable that  a  criminal
           prosecution should wait till everybody concerned  has  forgotten
           all about the crime. The public interests demand  that  criminal
           justice should be swift and sure;  that  the  guilty  should  be
           punished while the events are still fresh in the public mind and
           that the innocent should be absolved as early as  is  consistent
           with a fair and impartial trial. Another reason is  that  it  is
           undesirable to let things slide till memories have grown too dim
           to trust.


           This,  however,   is   not   a   hard-and-fast   rule.   Special
           considerations obtaining in any particular case might make  some
           other course more expedient and just.  For  example,  the  civil
           case or the other criminal proceeding may be so near its end  as
           to make it inexpedient to stay it in order to give precedence to
           a prosecution ordered under Section 476. But in this case we are
           of the view that the civil  suits  should  be  stayed  till  the
           criminal proceedings have finished.”


    35. The purpose of  the  aforesaid  solitary  rule  is  to  avoid
        embarrassment to  the  accused.  In  contrast,  the  findings
        recorded by the arbitral tribunal in its award would  not  be
        binding  in  criminal  proceedings.   Even   otherwise,   the
        Constitution Bench in the aforesaid  case  has  clearly  held
        that no hard and fast  rule  can  be  laid  down  that  civil
        proceedings in all matters ought to be stayed  when  criminal
        proceedings are also pending. As I have indicated earlier  in
        case the award is made in favour of  the  petitioner  herein,
        the respondents will be at liberty to resist the  enforcement
        of the same on the ground of subsequent conviction of  either
        the Chairman or the officials of the contracting parties.


    36. It must also notice here that the Petitioners relied upon  an
        earlier order of  this  court  in  the  case  of  M/s  Nussli
        (Switzerland) Ltd. (supra).  The  aforesaid  order,  however,
        seems to have been passed on a consensus between the  learned
        counsel for the parties. This is evident from  the  following
        observations in the aforesaid order:
           “In view of the aforesaid order, learned senior counsel for both
           the parties have agreed that the parties have  agreed  that  the
           matter ought to be referred to Arbitration. However,  Mr.  Gopal
           Subramaniam,  learned   senior   counsel   appearing   for   the
           Respondent, submits that serious issued would  arise  which  are
           currently under investigation of the CBI, which  may  ultimately
           culminate into certain conclusions which  could  result  in  the
           invalidation of the contract from inception.


           He has, however, very fairly  stated  that  there  would  be  no
           impediment for the arbitral Tribunal to look into all the issues
           including the allegations which are  pending  with  the  CBI  in
           investigation.


           I am of the opinion that the  submission  made  by  the  learned
           senior counsel is in accordance with the law settled,  not  only
           by this Court, but in other jurisdictions  also  concerning  the
           international commercial arbitrations.”


           The  aforesaid  excerpt  clearly  shows  that   Mr.   Gopal
      Subramaniam, had very fairly agreed to proceed with arbitration.
      The decision of this Court  in  M/s  Nussli  (Switzerland)  Ltd.
      (supra) has not laid down any law.


    37. As noticed earlier, the petitioners  have  already  nominated
        Hon’ble Mr. Justice S.N. Variava, Former Judge of this Court,
        having his office at Readymoney Mansion, 2nd floor,  Next  to
        Akbarallys,       Veer       Nariman       Road,        Fort,
        Mumbai – 400 001, as their arbitrator.   I  hereby  nominate.
        Hon’ble Mr. Justice B.P. Singh, Former Judge of  this  Court,
        R/o A-7, Neeti Bagh, 3rd Floor, New Delhi – 110 049,  as  the
        second Arbitrator and Hon’be Mr. Justice Kuldip Singh, Former
        Judge of this Court, R/o H.No. 88, Sector 10A,  Chandigarh  –
        160 010,  as  the  Chairman  of  the  Arbitral  Tribunal,  to
        adjudicate the disputes that have arisen between the parties,
        on such terms and conditions as they deem fit and proper.


    38. The Registry is directed to communicate  this  order  to  the
        Chairman of the Arbitral Tribunal, as well as, to the  Second
        Arbitrator to enable them to enter  upon  the  reference  and
        decide the matter as expeditiously as possible.


    39. The Arbitration Petition is accordingly allowed with no order
        as to costs.


                                                               ……………………………J.
                                                     [Surinder Singh Nijjar]
      New Delhi;
      May 28, 2014
 [pic]
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[1]    (2010) 1 SCC 72
[2]    (2013) 7 SCC 622
[3]    2007 (5) SCC 510
[4]    (2003) 6 SCC 503
[5]    (2000) 4 SCC 539
[6]    2013 (7) SCALE 327: 2013 (2) Arb. LR 241 (SC)
[7]    (2013) 7 SCC 622

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