It is interesting to note that even though the law governing the arbitration agreement was not specified, yet this Court held, having regard to various circumstances, that the seat of arbitration would be London and therefore, by necessary implication, the ratio of Bhatia International would not apply. 20. The last paragraph of Bharat Aluminium’s judgment has now to be read with two caveats, both emanating from paragraph 32 of Bhatia International itself – that where the Court comes to a determination that the juridical seat is outside India or where law other than Indian law governs the arbitration agreement, Part-I of the Arbitration Act, 1996 would be excluded by necessary implication. Therefore, even in the cases governed by the Bhatia principle, it is only those cases in which agreements stipulate that the seat of the arbitration is in India or on whose facts a judgment cannot be reached on the seat of the arbitration as being outside India that would continue to be governed by the Bhatia principle. Also, it is only those agreements which stipulate or can be read to stipulate that the law governing the arbitration agreement is Indian law which would continue to be governed by the Bhatia rule.On the facts in the present case, it is clear that this Court has already determined both that the juridical seat of the arbitration is at London and that the arbitration agreement is governed by English law. This being the case, it is not open to the Union of India to argue that Part-I of the Arbitration Act, 1996 would be applicable. A Section 14 application made under Part-I would consequently not be maintainable. It needs to be mentioned that Shri Ranjit Kumar’s valiant attempt to reopen a question settled twice over, that is by dismissal of both a review petition and a curative petition on the very ground urged before us, must meet with the same fate. His argument citing the case of Mathura Prasad Bajoo Jaiswal v. Dossibai N.B. Jeejeebhoy, (1970) 1 SCC 613, that res judicata would not attach to questions relating to jurisdiction, would not apply in the present case as the effect of clause 34.2 of the PSC raises at best a mixed question of fact and law and not a pure question of jurisdiction unrelated to facts. Therefore, both on grounds of res judicata as well as the law laid down in the judgment dated 28.5.2014, this application under Section 14 deserves to be dismissed. It is also an abuse of the process of the Court as has rightly been argued by Dr. Singhvi. It is only after moving under the UNCITRAL Arbitration Rules and getting an adverse judgment from the Permanent Court of Arbitration dated 10.06.2013 that the present application was filed under Section 14 of the Arbitration Act two days later i.e. on 12.6.2013. Viewed from any angle therefore, the Delhi High Court judgment is correct and consequently this Special Leave Petition is dismissed.

                                                                  REPORTABLE








                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

               SPECIAL LEAVE PETITION (CIVIL) NO.11396 OF 2015


UNION OF INDIA                    …PETITIONER

                                   VERSUS

RELIANCE INDUSTRIES LIMITED
& ORS.                                 …RESPONDENTS



                        J U D G M E N T

R.F. Nariman, J.

The present case arises as a sequel to this Court’s  decision  delivered  on
28th May, 2014 in Reliance  Industries  Limited  and  another  v.  Union  of
India, (2014) 7 SCC 603.



A brief résumé of the facts that led to the judgment of this Court  on  28th
May, 2014 are as follows:-

Two Production Sharing Contracts (hereinafter referred  to  as   “PSC”)  for
the Tapti and Panna Mukta Fields were executed between  Reliance  Industries
Limited, the Union of India, Enron Oil and Gas India Limited and  the  ONGC.
The relevant clauses of the PSCs insofar  as  they  are  applicable  to  the
present controversy are as follows:-



“ARTICLE 32: APPLICABLE LAW AND LANGUAGE OF THE CONTRACT



32.1  Subject to the provisions of Article 33.12,  this  Contract  shall  be
governed and interpreted in accordance with the laws of India.



32.2   Nothing  in  this  Contract  shall  entitle  the  Government  or  the
Contractor to exercise the rights, privileges and powers conferred  upon  it
by this Contract in a manner which will contravene the laws of India.



ARTICLE 33: SOLE EXPERT, CONCILIATION AND ARBITRATION



33.9  Arbitration proceedings shall be  conducted  in  accordance  with  the
arbitration rules of the United Nations Commission  on  International  Trade
Law (UNCITRAL) of 1985 except that in the  event  of  any  conflict  between
these rules and the provisions of this Article 33, the  provisions  of  this
Article 33 shall govern.

…

33.12  The venue  of conciliation or  arbitration  proceedings  pursuant  to
this Article, unless the Parties otherwise agree, shall be  London,  England
and shall be conducted in the English Language.  The  arbitration  agreement
contained in this Article 33 shall be  governed  by  the  laws  of  England.
Insofar as practicable, the Parties shall continue to  implement  the  terms
of this Contract notwithstanding the initiation of arbitral proceedings  and
any pending claim or dispute.

34.2  This Contract shall not be amended, modified, varied  or  supplemented
in any respect except  by  an  instrument  in  writing  signed  by  all  the
Parties,  which  shall  state  the  date  upon  which   the   amendment   or
modification shall become effective.”





3.    It needs to be mentioned that the  PSCs  were  amended  to  substitute
Enron Oil & Gas India Limited  with  BG  Exploration  and  Production  India
Limited on 10.1.2005.  Since certain disputes and differences arose  between
the Union of India and Reliance Industries Limited  sometime  in  2010,  the
Union of India invoked  the  arbitration  clause  and  appointed  Mr.  Peter
Leaver, QC as Arbitrator.  Reliance  Industries  Limited  appointed  Justice
B.P. Jeevan Reddy as Arbitrator and Mr. Christopher Lau SC was appointed  as
Chairman of the Tribunal.   On  14.9.2011,  the  Union  of  India,  Reliance
Industries Limited and BG Exploration and Production India  Limited,  agreed
to change the seat of arbitration to London, England  and  a  final  partial
consent award was made and duly signed by the parties to  this  effect.   On
12.9.2012, the Arbitral Tribunal passed a final partial award  which  became
the subject matter of a Section 34 petition filed in the  Delhi  High  Court
by the Union of  India,  dated  13.12.2012.   The  Delhi  High  Court  by  a
judgment and order dated 22.3.2013 decided  that  the  said  petition  filed
under Section 34 was maintainable.  This Court in a detailed judgment  dated
28.5.2014 reversed the Delhi High Court.   Since  this  judgment  in  effect
determines the controversy raised in the present SLP,  it  is  important  to
set it out in some detail.  After stating the facts and the  contentions  of
both parties, this Court held:

“Before we analyse the submissions made by the learned  Senior  Counsel  for
both the parties, it would be appropriate to notice the various factual  and
legal points on which the parties are agreed. The controversy  herein  would
have to be decided on the basis of the law declared by this Court  in Bhatia
International [(2002) 4 SCC 105] . The parties are agreed  and  it  is  also
evident  from  the  final  partial  consent  award  dated   14-9-2011   that
the juridical seat (or legal place) of arbitration for the purposes  of  the
arbitration initiated under the claimants' notice of arbitration  dated  16-
12-2010 shall be London, England. The parties are also agreed that  hearings
of the notice of arbitration may take place at Paris, France,  Singapore  or
any other location the Tribunal considers may  be  convenient.  It  is  also
agreed by the parties that the  terms  and  conditions  of  the  arbitration
agreement in Article 33 of the PSCs shall remain in full  force  and  effect
and be applicable to the arbitration proceedings.
The essential dispute between the parties is as to whether  Part  I  of  the
Arbitration Act, 1996 would  be  applicable  to  the  arbitration  agreement
irrespective of the fact that the seat of arbitration is outside  India.  To
find a conclusive answer to the issue as to whether applicability of Part  I
of the Arbitration Act, 1996 has been excluded, it  would  be  necessary  to
discover the intention of the parties. Beyond this parties  are  not  agreed
on any issue.
We are  also  of  the  opinion  that  since  the  ratio  of  law  laid  down
in Balco [Balco v. Kaiser Aluminium Technical Services Inc.,  (2012)  9  SCC
552 : (2012) 4 SCC (Civ) 810] has been made prospective in operation by  the
Constitution Bench itself, we are bound by the decision  rendered  in Bhatia
International [(2002) 4 SCC 105] . Therefore, at the  outset,  it  would  be
appropriate to reproduce the relevant ratio of Bhatia  International [(2002)
4 SCC 105] in para 32 which is as under: (SCC p. 123)

“32. To conclude, we hold that the provisions of Part I would apply  to  all
arbitrations  and  to  all  proceedings   relating   thereto.   Where   such
arbitration is held in India the provisions of  Part  I  would  compulsorily
apply and parties are free to deviate only to the extent  permitted  by  the
derogable provisions  of  Part  I.  In  cases  of  international  commercial
arbitrations held out of India provisions of Part I would apply  unless  the
parties by agreement,  express  or  implied,  exclude  all  or  any  of  its
provisions. In that case the laws or  rules  chosen  by  the  parties  would
prevail. Any provision, in Part I, which is contrary to or excluded by  that
law or rules will not apply.”

In view of the aforesaid, it would be  necessary  to  analyse  the  relevant
articles of the PSC, to discover the real intention of  the  parties  as  to
whether the provisions of the Arbitration Act, 1996 have been  excluded.  It
must, immediately,  be  noticed  that  Articles  32.1  and  32.2  deal  with
applicable law and language of the contract as is evident from  the  heading
of the article which is “Applicable  law  and  language  of  the  contract”.
Article 32.1 provides for the proper  law  of  the  contract  i.e.  laws  of
India. Article  32.2  makes  a  declaration  that  none  of  the  provisions
contained in the  contract  would  entitle  either  the  Government  or  the
contractor to exercise the rights, privileges and powers conferred  upon  it
by the contract in a manner which would contravene the laws of India.
Article 33 makes a very detailed provision with regard to the resolution  of
disputes through arbitration. The two articles do not  overlap—one  (Article
32) deals with the proper law of the contract, the other (Article 33)  deals
with ADR i.e. consultations between the parties; conciliation; reference  to
a sole expert  and  ultimately  arbitration.  Under  Article  33,  at  first
efforts should  be  made  by  the  parties  to  settle  the  disputes  among
themselves (Article 33.1). If these efforts fail, the parties  by  agreement
shall refer the dispute to a sole expert (Article 33.2). The provision  with
regard to constitution of the Arbitral Tribunal provides that  the  Arbitral
Tribunal shall consist of three arbitrators  (Article  33.4).  This  article
also provides that each party shall appoint one arbitrator. The  arbitrators
appointed by the parties shall appoint the third arbitrator.  In  case,  the
procedure under Article 33.4 fails, the aggrieved  party  can  approach  the
Permanent  Court  of  Arbitration  at  The  Hague  for  appointment  of   an
arbitrator (Article 33.5). Further, in case  the  two  arbitrators  fail  to
make the  appointment  of  the  third  arbitrator  within  30  days  of  the
appointment of the second arbitrator, again the  Secretary  General  of  the
Permanent Court of Arbitration at The Hague may, at the  request  of  either
party appoint the third arbitrator. In the face of this, it is difficult  to
appreciate the  submission  of  the  respondent  Union  of  India  that  the
Arbitration Act, 1996 (Part  I)  would  be  applicable  to  the  arbitration
proceedings. In the event, the Union of India intended to  ensure  that  the
Arbitration Act, 1996 shall apply to the  arbitration  proceedings,  Article
33.5 should have  provided  that  in  default  of  a  party  appointing  its
arbitrator, such arbitrator may, at  the  request  of  the  first  party  be
appointed by the Chief  Justice  of  India  or  any  person  or  institution
designated by him. Thus, the Permanent Court of  Arbitration  at  The  Hague
can be approached for the appointment of the arbitrator, in case of  default
by any of the parties. This, in our opinion, is  a  strong  indication  that
applicability of the Arbitration Act, 1996 was excluded by  the  parties  by
consensus. Further, the arbitration  proceedings  are  to  be  conducted  in
accordance with the Uncitral Rules, 1976 (Article 33.9). It is  specifically
provided that  the  right  to  arbitrate  disputes  and  claims  under  this
contract shall survive the termination of this contract (Article 33.10).
The article which provides the basis of the controversy  herein  is  Article
33.12 which provides that venue of the arbitration shall be London and  that
the arbitration agreement shall be governed  by  the  laws  of  England.  It
appears, as observed earlier, that by a final  partial  consent  award,  the
parties have agreed that the juridical seat (or legal place of  arbitration)
for the purposes of arbitration initiated under  the  claimants'  notice  of
arbitration dated 16-12-2010 shall be London, England.
We are of the opinion, upon a meaningful reading of the  aforesaid  articles
of the PSC, that the proper law of the contract is Indian  law;  proper  law
of the arbitration agreement is the law of England.  Therefore,  can  it  be
said as canvassed by the respondents, that applicability of the  Arbitration
Act, 1996 has not been excluded?” [at paras 36 - 42]





4.    The Court went on to state in paragraph 45 that it is too late in  the
day to contend  that  the  seat  of  arbitration  is  not  analogous  to  an
exclusive jurisdiction clause and then went on to hold as follows:-

“In our opinion, these observations in Sulamerica case [(2013) 1 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.” [at para 57]



It ultimately concluded:



“We are also unable to agree with the submission of Mr  Ganguli  that  since
the issues involved herein relate to the public policy of India, Part  I  of
the Arbitration Act, 1996 would be applicable. Applicability of  Part  I  of
the Arbitration Act, 1996 is not dependent on the  nature  of  challenge  to
the award. Whether or not the award is challenged on the  ground  of  public
policy, it would have to satisfy the precondition that the Arbitration  Act,
1996 is applicable to the arbitration agreement. In our  opinion,  the  High
Court has committed a jurisdictional error in holding  that  the  provisions
contained in Article 33.12 are relevant only for the  determination  of  the
curial law applicable to the proceedings. We have  already  noticed  earlier
that the parties by agreement have provided that the juridical  seat of  the
arbitration shall be in London. Necessary amendment has also  been  made  in
the PSCs, as recorded by the final partial consent  award  dated  14-9-2011.
It is  noteworthy  that  the  Arbitration  Act,  1996  does  not  define  or
mention juridical seat. The term “juridical  seat”  on  the  other  hand  is
specifically  defined  in  Section  3  of  the  English   Arbitration   Act.
Therefore, this would clearly indicate that the parties understood that  the
arbitration  law  of  England  would  be  applicable  to   the   arbitration
agreement.



In view of the aforesaid, we are unable to uphold the conclusion arrived  at
by the Delhi High Court that the applicability of the Arbitration Act,  1996
to the arbitration agreement in the present case has not been excluded.



 In view of the above, we hold that:



The petition filed by respondents under Section 34 of the  Arbitration  Act,
1996 in the Delhi High Court is not maintainable.



We further overrule and set aside the conclusion of  the  High  Court  that,
even though the arbitration agreement would  be  governed  by  the  laws  of
England and that the juridical seat of arbitration would be in London,  Part
I of the Arbitration Act would still be applicable  as  the  laws  governing
the substantive contract are Indian laws.



In  the  event  a  final  award  is  made  against   the   respondent,   the
enforceability of the same in India can be resisted on the ground of  public
policy.



The conclusion of the High Court that in the event, the award is  sought  to
be enforced outside India, it would leave the  Indian  party  remediless  is
without any basis  as  the  parties  have  consensually  provided  that  the
arbitration agreement will be governed by the English  law.  Therefore,  the
remedy against the award will have  to  be  sought  in  England,  where  the
juridical seat  is  located.  However,  we  accept  the  submission  of  the
appellant that since the substantive law governing the  contract  is  Indian
law, even the courts in England, in case the  arbitrability  is  challenged,
will have to decide the issue by applying Indian law viz. the  principle  of
public policy, etc. as it prevails in Indian law.



In view of the above, the  appeal  is  allowed  and  the  impugned  judgment
[(2013) 199 DLT 469] of the High Court is set aside.” [at paras 74 - 77]”



5.    Continuing the narration of facts, the present SLP  arises  out  of  a
judgment dated 3.7.2014 whereby  the  Delhi  High  Court  has  dismissed  an
application filed under Section 14 of the Arbitration and Conciliation  Act,
1996, dated 12.6.2013, on  the  ground  that  this  Court’s  judgment  dated
28.5.2014 having held that Part-I  of  the  Arbitration  Act,  1996  is  not
applicable, such petition filed under Section 14 would not be  maintainable.




6.    It needs further to be pointed out that a review petition against  the
said judgment dated 28.5.2014 was dismissed  on  31.7.2014  and  a  curative
petition filed thereafter was also dismissed.



7.    Shri Ranjit Kumar, learned Solicitor General of  India  argued  before
us that the partial consent award dated 14.9.2011 was  without  jurisdiction
in that it was contrary to clause 34.2 of the PSC which stated that the  PSC
can only be amended if all the parties thereto by an  agreement  in  writing
amend it.  Since ONGC which was a party to the PSC  had  not  done  so,  the
said final partial consent award was without jurisdiction.  This  being  so,
the  seat  of  the  arbitration   cannot  be   said   to   be   London   and
clause  33.12  of  the  PSC  which made  the  “venue” London would  continue
to govern.  Since the arbitration clause contained in the PSC  is  prior  to
12.9.2012, the judgment in Bhatia  International  v.  Bulk  Trading  S.A.  &
Anr., (2002) 4  SCC  105  would  govern  and  consequently  Part  I  of  the
Arbitration Act,  1996  would  be  applicable.   He  also  stated  that  the
judgment delivered on 28.5.2014 would not stand in his  way  notwithstanding
that a review petition and a curative petition had already  been  dismissed.
This was because, according to him, the issue  raised  being  jurisdictional
in nature, the doctrine of res judicata would have no application.  He  went
on to read various provisions of the UK Arbitration  Act,  1996  to  further
buttress his submission.



8.     Dr.  A.M.  Singhvi,  learned  senior  counsel,  on  the  other   hand
vehemently opposed the arguments of Shri  Ranjit  Kumar,  learned  Solicitor
General of India.  According to him,  the  judgment  dated  28.5.2014  being
final inter partes binds the parties both by way of res judicata  and  as  a
precedent. According to him, the judgment unequivocally holds  that  on  the
very facts of this case Part-I of the Arbitration Act, 1996  would  have  no
application.  He further went on to demonstrate that the Union of India  had
already availed of the very remedy sought under Section 14 and  had  invited
a decision of the Permanent Court of Arbitration dated  10.6.2013  by  which
its objections to the appointment of Mr. Peter  Leaver  as  Arbitrator  were
already rejected.



9.    We have heard learned counsel for the  parties.   In  order  to  fully
appreciate the contention raised by the learned Solicitor General of  India,
it is necessary to delve into the history  of  the  law  of  arbitration  in
India. Prior to the 1996 Act, three Acts governed the law of Arbitration  in
India – the Arbitration (Protocol and  Convention)  Act,  1937,  which  gave
effect to the Geneva Convention, the  Arbitration  Act,  1940,  which  dealt
with domestic awards, and the Foreign Awards (Recognition  And  Enforcement)
Act, 1961 which gave effect to the New York Convention  of  1958  and  which
dealt with challenges to awards made which were foreign awards.



10.   In National Thermal Power Corporation v. Singer Company, (1992) 3  SCC
551, this Court while construing Section 9(b)  of  the  Foreign  Awards  Act
held that where an arbitration agreement was governed by the law  of  India,
the Arbitration Act, 1940 alone would apply and not the Foreign Awards  Act.
 The arbitration clause in Singer’s case read as follows:-



“Sub-clause 6 of Clause 27 of the General Terms deals  with  arbitration  in
relation to an Indian contractor and sub-clause 7 of the said  clause  deals
with arbitration in respect of a foreign contractor.  The  latter  provision
says:



“27.7  In  the  event  of  foreign  contractor,  the  arbitration  shall  be
conducted by three arbitrators, one each to be nominated by  the  owner  and
the  contractor  and  the  third  to  be  named  by  the  President  of  the
International Chamber of  Commerce,  Paris.  Save  as  above  all  rules  of
conciliation and arbitration of the International Chamber of Commerce  shall
apply to such arbitrations. The  arbitration  shall  be  conducted  at  such
places as the arbitrators may determine.”



In respect of an Indian contractor, sub-clause 6.2 of Clause  27  says  that
the arbitration shall be conducted at  New  Delhi  in  accordance  with  the
provisions of the Arbitration Act, 1940. It reads:



“27.6.2  The  arbitration  shall  be  conducted  in  accordance   with   the
provisions  of  the  Indian  Arbitration  Act,   1940   or   any   statutory
modification thereof. The venue of arbitration shall be New Delhi, India.”



The General Terms further provide:



“[T]he contract shall in all respects be construed  and  governed  according
to Indian laws.” (32.3).



The formal agreements which the parties executed on August 17, 1982  contain
a specific provision for settlement of disputes. Article 4.1 provides:



“4.1. Settlement of Disputes.—It is specifically agreed by and  between  the
parties that all the differences or disputes arising out of the contract  or
touching the subject-matter of the contract, shall be decided by process  of
settlement and arbitration as specified in Clauses 26.0 and  27.0  excluding
27.6.1 and 27.6.2., of the General Conditions of the Contract.” [at para 4]





11.   Notwithstanding that the award in that case was a foreign award,  this
Court held that since the substantive law of the  contract  was  Indian  law
and since the arbitration clause was part of the contract,  the  arbitration
clause would be governed  by  Indian  law  and  not  by  the  Rules  of  the
International Chamber of Commerce.  This being the case, it  was  held  that
the mere fact that the venue chosen by the ICC Court for the conduct of  the
arbitration proceeding was London does not exclude the operation of the  Act
which dealt with domestic awards i.e. the Act of  1940.   In  a  significant
sentence, the Court went on to hold:-

“…Nevertheless, the jurisdiction exercisable by the English courts  and  the
applicability of the laws of that country  in  procedural  matters  must  be
viewed as concurrent and consistent with the jurisdiction of  the  competent
Indian courts and the operation of Indian laws  in  all  matters  concerning
arbitration insofar as the main contract as well as that which is  contained
in the arbitration clause are governed by the laws of India.” [at para 53]





12.   It can be seen that this Court in Singer’s case did  not  give  effect
to the difference between the substantive law of the contract  and  the  law
that governed the arbitration.  Therefore, since a construction  of  Section
9(b) of the Foreign Awards Act led to the aforesaid  situation  and  led  to
the doctrine of  concurrent  jurisdiction,  the  1996  Act,  while  enacting
Section 9(a) of the  repealed  Foreign  Awards  Act,  1961,  in  Section  51
thereof, was careful enough to omit Section 9(b) of the 1961 Act  which,  as
stated hereinabove, excluded the Foreign Awards Act  from  applying  to  any
award made on arbitration agreements governed by the law of India.



13.   This being  the  case,  the  theory  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.



14.   However, this Court in Bhatia International v.  Bulk  Trading  S.A.  &
Anr.,  (2002)  4  SCC  105,  resurrected   this   doctrine   of   concurrent
jurisdiction by holding, in paragraph 32, that even where  arbitrations  are
held outside India, unless the parties agree to exclude the  application  of
Part-I of the Arbitration  Act,  1996,  either  expressly  or  by  necessary
implication, the courts in India will exercise concurrent jurisdiction  with
the court in the country in  which  the  foreign  award  was  made.   Bhatia
International was in the context of a Section 9 application made under Part-
I of the 1996 Act by the respondent in  that  case  for  interim  orders  to
safeguard the assets of the Indian company in case a foreign  award  was  to
be executed in India against it.  The reductio ad absurdum of this  doctrine
of concurrent jurisdiction came to be felt in a most poignant  form  in  the
judgment of Venture Global Engineering v. Satyam Computer  Services  Ltd.  &
Anr., (2008) 4 SCC 190, by which this Court held that a foreign award  would
also be considered as a domestic award and the challenge procedure  provided
in Section 34 of the Part-I of the Act of 1996 would therefore apply.   This
led to a situation where the  foreign  award  could  be  challenged  in  the
country in which it is made; it could also be  challenged  under  Part-I  of
the 1996 Act in India; and could be refused to be  recognised  and  enforced
under Section 48  contained in Part II of the 1996 Act.



15.   Given this state of the law, a 5-Judge Bench of this Court  in  Bharat
Aluminium Company Ltd. v. Kaiser Aluminium Technical Services, Inc.,  (2012)
9 SCC, overruled both Bhatia International and Venture  Global  Engineering.
But in so overruling these judgments, this Court went on to hold:

“The judgment in Bhatia International [(2002) 4 SCC  105]  was  rendered  by
this Court on  13-3-2002.  Since  then,  the  aforesaid  judgment  has  been
followed by all the High Courts  as  well  as  by  this  Court  on  numerous
occasions. In fact, the judgment  in Venture  Global  Engineering [(2008)  4
SCC 190] has been rendered on  10-1-2008  in  terms  of  the  ratio  of  the
decision in Bhatia International [(2002) 4 SCC 105] . Thus, in order  to  do
complete justice, we hereby order, that the law now declared by  this  Court
shall apply  prospectively,  to  all  the  arbitration  agreements  executed
hereafter.” [at para 197]




16.   It will thus be seen that facts like  the  present  case  attract  the
Bhatia International principle of concurrent jurisdiction  inasmuch  as  all
arbitration agreements entered into before 12.9.2012, that is  the  date  of
pronouncement of Bharat Aluminium Company’s judgment, will  be  governed  by
Bhatia International.

17.   It is important to note that in paragraph 32 of  Bhatia  International
itself this Court has held that Part-I of the  Arbitration  Act,  1996  will
not apply  if  it  has  been  excluded  either  expressly  or  by  necessary
implication.  Several judgments of this  Court  have  held  that  Part-I  is
excluded by necessary implication if it is found that  on  the  facts  of  a
case either the juridical seat of the arbitration is outside  India  or  the
law governing the arbitration agreement is a  law  other  than  Indian  law.
This is now well settled by a  series  of  decisions  of  this  Court  [see:
Videocon Industries Ltd. v. Union of India & Anr., (2011) 6 SCC  161,  Dozco
India Private Limited v. Doosan Infracore  Company  Limited,  (2011)  6  SCC
179,  Yograj  Infrastructure  Limited  v.   Ssang   Yong   Engineering   and
Construction Company Limited, (2011) 9 SCC 735), the very judgment  in  this
case reported in Reliance Industries Limited v. Union  of  India,  (2014)  7
SCC 603, and a recent judgment in Harmony Innovation Shipping Ltd. v.  Gupta
Coal India Ltd. & Anr., (decided on 10th March, 2015  in  Civil  Appeal  No.
610 of 2015)].

18.   In fact, in Harmony’s case, this Court,  after  setting  out  all  the
aforesaid judgments,  set  out  the  arbitration  clause  in  that  case  in
paragraph 32 as follows:

“In view of the aforesaid propositions laid  down  by  this  Court,  we  are
required to scan the tenor of the clauses  in  the  agreement  specifically,
the arbitration clause in appropriate perspective. The said clause  read  as
follows:
“5. If any dispute or difference should arise under  this  charter,  general
average/arbitration in London to apply, one to be appointed by each  of  the
parties hereto, the third by the two so chosen, and their decision  or  that
of any two of them, shall be final and binding, and this agreement may,  for
enforcing the same, be made a rule  of  Court.  Said  three  parties  to  be
commercial men who are the members of the  London  Arbitrators  Association.
This contract is to be governed and construed according to English Law.  For
disputes where total amount claim  by  either  party  does  not  exceed  USD
50,000 the arbitration should be conducted in accordance with  small  claims
procedure of the Page 33 33 London Maritime  Arbitration  Association.”  [at
para 32]



It then held:

“Coming to the stipulations in the present arbitration clause, it  is  clear
as day that if any dispute or difference  would  arise  under  the  charter,
arbitration in London to apply; that the arbitrators are  to  be  commercial
men who are members of London Arbitration Association; the  contract  is  to
be construed and governed by English Law; and that  the  arbitration  should
be conducted, if the claim is for a lesser sum,  in  accordance  with  small
claims procedure of the London Maritime Arbitration  Association.  There  is
no other provision in the agreement that any  other  law  would  govern  the
arbitration clause.” [at para 41]
“Thus, interpreting the clause in question on the bedrock of  the  aforesaid
principles it is vivid that the intended effect  is  to  have  the  seat  of
arbitration at  London.  The  commercial  background,  the  context  of  the
contract and the circumstances of the  parties  and  in  the  background  in
which the contract was entered into, irresistibly lead  in  that  direction.
We are not impressed by the submission that by such interpretation  it  will
put the respondent in an  advantageous  position.  Therefore,  we  think  it
would be appropriate to interpret the clause that it is a proper  clause  or
substantial clause and not a  curial  or  a  procedural  one  by  which  the
arbitration proceedings are to be conducted and hence, we  are  disposed  to
think that the seat of arbitration will be at London.
Having  said  that  the  implied  exclusion   principle   stated   in Bhatia
International (supra) would be applicable, regard being had  to  the  clause
in the agreement, there is no need  to  dwell  upon  the  contention  raised
pertaining to the addendum,  for  any  interpretation  placed  on  the  said
document would not make any difference to the ultimate  conclusion  that  we
have already arrived at.” [at paras 46 and 47]

19.   It is interesting to note that even  though  the  law   governing  the
arbitration agreement was not specified, yet this Court held, having  regard
to various circumstances, that the seat of arbitration would be  London  and
therefore, by necessary  implication,  the  ratio  of  Bhatia  International
would not apply.
20.   The last paragraph of Bharat Aluminium’s judgment has now to  be  read
with two caveats, both emanating from paragraph 32 of  Bhatia  International
itself – that where the Court comes to a determination  that  the  juridical
seat is outside India or  where  law  other  than  Indian  law  governs  the
arbitration  agreement,  Part-I  of  the  Arbitration  Act,  1996  would  be
excluded by necessary implication.  Therefore, even in  the  cases  governed
by the Bhatia  principle,  it  is  only  those  cases  in  which  agreements
stipulate that the seat of the arbitration is in India or on whose  facts  a
judgment cannot be reached on the seat of the arbitration as  being  outside
India that would continue to be governed by the Bhatia principle.  Also,  it
is only those agreements which stipulate or can be read  to  stipulate  that
the law governing the  arbitration  agreement  is  Indian  law  which  would
continue to be governed by the Bhatia rule.
21.   On the facts in the present case, it is  clear  that  this  Court  has
already determined both that the juridical seat of  the  arbitration  is  at
London and that the arbitration agreement is governed by English law.   This
being the case, it is not open to the Union of India to  argue  that  Part-I
of the Arbitration Act, 1996 would be applicable.  A Section 14  application
made under Part-I would consequently not be maintainable.  It  needs  to  be
mentioned that Shri Ranjit Kumar’s valiant  attempt  to  reopen  a  question
settled twice over, that is by dismissal of both a  review  petition  and  a
curative petition on the very ground urged before us,  must  meet  with  the
same fate. His argument citing the case of Mathura Prasad Bajoo  Jaiswal  v.
Dossibai N.B. Jeejeebhoy, (1970) 1 SCC 613, that  res  judicata   would  not
attach to questions  relating  to  jurisdiction,  would  not  apply  in  the
present case as the effect of clause 34.2 of the PSC raises at best a  mixed
question of fact and law and not a pure question of  jurisdiction  unrelated
to facts.  Therefore, both on grounds of res judicata as  well  as  the  law
laid down in the judgment dated 28.5.2014, this  application  under  Section
14 deserves to be dismissed.  It is also an abuse  of  the  process  of  the
Court as has rightly been argued by Dr. Singhvi.  It is  only  after  moving
under the UNCITRAL Arbitration Rules and getting an  adverse  judgment  from
the Permanent  Court  of  Arbitration  dated  10.06.2013  that  the  present
application was filed under Section 14  of  the  Arbitration  Act  two  days
later i.e. on 12.6.2013.  Viewed from any angle therefore,  the  Delhi  High
Court judgment is correct and consequently this Special  Leave  Petition  is
dismissed.
                                       ……………………J.

                                       (A.K. Sikri )





                                       ……………………J.

                                       (R.F. Nariman)

New Delhi;

September 22, 2015.

Sanction is necessary as the alleged offence is said to be done while exercising their official duties - No offence is also made out against the accused - proceedings are labile to be quashed= The above decisions reiterate the well-settled principles that while exercising inherent jurisdiction under Section 482 Cr.P.C., it is not for the High Court to appreciate the evidence and its truthfulness or sufficiency inasmuch as it is the function of the trial court. High Court’s inherent powers, be it, civil or criminal matters, is designed to achieve a salutary public purpose and that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. If the averments in the complaint do not constitute an offence, the court would be justified in quashing the proceedings in the interest of justice. 24. Second appellant-Dr. S.V. Joshi was the Associate Director. Third appellant Dr. G. Sunderarajan was the Director of ARCI and both of them were acting in their official capacity. Appellants No. 2 and 3 neither acted in their personal capacity nor stood to receive any personal monetary benefits from the transfer of said technology. Appellants No.2 and 3 were representatives of ARCI which is a grant-in-aid research and development institute under the Ministry of Science and Technology, Government of India and hence previous sanction as mandated under Section 197 Cr.P.C. must have been obtained before proceeding against them as their act was only in discharge of their official duties. In this regard, our attention was drawn to a communication from Ministry of Science and Technology indicating that for initiating criminal proceeding against appellants No. 2 and 3, permission is required and the said communication reads as under: “ ….. They have both been appointed by the Government of India and are governed by all rules and regulations of the Government of India…. It is further stated that we have examined all the actions taken by Dr. G. Sundararajan and S.V. Joshi in relation to the activities pertaining to the Technology Transfer Agreement dated 18/06/1999 between ARCI and M/s Nimra Cerglass, Hyderabad and are of firm view that these actions were taken by the above officers while discharging their official duty in good faith and in the best interest of ARCI. Therefore, for initiating criminal proceeding against Dr. G. Sundararajan and Dr. S.V.Joshi, Government of India permission is required.” The alleged acts of the appellants No. 2 and 3 were committed while acting in discharge of their official duties, sanction from the competent authority was necessary before initiating the criminal prosecution against them. Since we have held that from the averments in the complaint, the essential ingredients of dishonest intention is not made out, we are not inclined to further elaborate upon this point. 25. As per the terms of the technology transfer agreement, ARCI has to conduct performance guarantee tests and in those tests when ARCI was unsuccessful in achieving the targeted specifications, ARCI cannot be said to have acted with dishonest intention to cheat the respondent. Appellants- ARCI is a structure of Scientists, Team Leader and Associate Director and it is the team leader who actually executes the project, the job of Associate Director and Director is to monitor/review progress of the project. Appellants No.2 and 3 who were the Associate Director and Director of ARCI respectively were only monitoring the progress of the project cannot be said to have committed the offence of cheating. In the facts of the present case, in our view, the allegations in the complaint do not constitute the offence alleged and continuation of the criminal proceeding is not just and proper and in the interest of the justice, the same is liable to be quashed. 26. In the result, the impugned order is set aside and this appeal is allowed. The criminal proceedings against appellants No.1 to 3 in CC No. 840 of 2008 on the file of II Metropolitan Magistrate at Cyberabad, is quashed.

                                                   

            REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                       CRIMINAL APPELLATE JURISDICTION

                      CRIMINAL APPEAL NO. 2128  OF 2011

INTERNATIONAL ADVANCED RESEARCH
CENTRE FOR POWDER METALLURGY
AND NEW MATERIALS (ARCI) & ORS.                      ...Appellants

                                   Versus

NIMRA CERGLASS TECHNICS (P) LTD.
& ANR.                                                                               ...Respondents
                               J U D G M E N T

R. BANUMATHI, J.


This appeal has been  preferred  assailing  the  judgment  dated  17.03.2009
passed by the High Court of Andhra Pradesh in Criminal Petition  No.7901  of
2008 dismissing the petition filed  by  the  appellants  under  Section  482
Cr.P.C., thereby declining  to  quash  the  criminal  proceedings  initiated
against the appellants in   CC No. 840/2008 under  Sections
419 and 420 IPC.
2.          Brief facts which led to the filing of this case are as  under:-
The respondent-complainant is a  private  limited  company  engaged  in  the
manufacturing and  marketing  of  scientific  devices  and  equipments.  The
respondent  filed   complaint   against   appellant-International   Advanced
Research Centre for Powder Metallurgy and New Materials (for  short  ‘ARCI’)
and its officers  i.e.  appellant  No.2-S.V.Joshi,  Associate  Director  and
appellant No.3-G.Sunderarajan, Director alleging that  the  appellants  have
represented that ARCI possessed of technology for  manufacture  of  extruded
ceramic honeycombs which is used in manufacturing  of  catalytic  converters
which  are  used  in  automobiles  for  controlling   emission.    On   that
representation, the respondent entered into an  agreement  dated  18.06.1999
with ARCI for transfer  of  technology  for  the  manufacturing  process  of
extruded  ceramic  honeycombs  inclusive  of  transfer  of   extrusion   die
fabrication technology which  is  an  integral  part  of  the  manufacturing
process for a consideration of rupees ten lakhs in instalments exclusive  of
royalty amount on the sales which would have been generated on the basis  of
products manufactured and  marketed  by  the  respondent  on  the  basis  of
technology. The respondent had alleged that in pursuance of  the  agreement,
the respondent was permitted to establish its  industrial  unit  within  the
campus of ARCI at Balapur, Hyderabad  for  the  purpose  of  installing  and
commissioning production of preferred technology and  for  which  respondent
spent around rupees one crore thirty lakhs  for  purchasing  and  installing
the comprehensive machinery. The respondent alleged that after having  taken
number of trial runs for  testing  the  efficacy  of  the  extruded  ceramic
honeycombs in the function organized  by  ARCI  in  May  2003,  attended  by
higher officials, the technology was  handed  over  to  the  respondent  and
accordingly the respondent was induced into remitting the  third  instalment
of rupees two lakhs in addition to  the  amount  already  paid.   Respondent
states that he was informed that the initial trial  runs  conducted  by  the
Scientists of ARCI succeeded and the appellants  thus,  handed  over  a  few
samples of the final product which were subsequently displayed  at  a  joint
programme launched at Hyderabad.  As a result, respondent  spent  an  amount
of rupees fifteen lakhs for  procuring  raw  materials  in  anticipation  of
commencing commercial production in the  belief  that  the  final  perfected
technology is in its hands. The respondent further alleged that after  three
years, the respondent was informed vide letter bearing  No.ARCI/AD/2006-2007
dated  23.10.2006  addressed  to  Technology  Information,  Forecasting  and
Assessment Council (TIFAC)  that  the  targeted  specification  of  the  end
product could not be  achieved.   The  respondent  alleged  that  scientists
working in ARCI had not perfected the honeycomb  technology  sufficient  for
commencing commercial production and by their false representations  induced
the respondent to spend huge amount and thus appellants  have  committed  an
offence of cheating.
3.    The respondent lodged a criminal complaint on  06.11.2007  before  the
court of the II Metropolitan Magistrate  Cyberabad  seeking  prosecution  of
the appellants for the offences punishable under  Sections  405,  415,  418,
420 IPC read with Sections  34  and  120B  IPC.   After  investigation,  the
investigating officer submitted final report dated 28.01.2008  stating  that
the dispute is purely of civil nature and  that  no  offence  was  made  out
against the appellants and the same may be accepted and the case be  treated
as closed. On protest petition filed by the respondent, the Magistrate  took
cognizance of the case for offences under Sections  419  and  420  IPC  read
with  Section  34  IPC  vide  order  dated  11.11.2008.   Aggrieved  by  the
summoning order issued by the II  Metropolitan  Magistrate,  Cyberabad,  the
appellants filed petition under Section 482 Cr.P.C. before  the  High  Court
to quash the proceedings in CC No. 840 of 2008 and the same  was  dismissed,
which is under challenge in this appeal.
4.           Contention  at  the  hands  of  the  appellants  is  that  when
Technology Transfer Agreement dated 18.06.1999 was entered into,  NIMRA  was
fully aware of ARCI’s honeycomb technology and second and  third  appellants
were involved in the process of developing the technology  wholly  in  their
capacity as Associate Director  and  Director  of  ARCI  and  there  was  no
dishonest intention on  their  part  to  cheat  the  respondent.  Taking  us
through various clauses in  the  technology  transfer  agreement,  Mr.  Raju
Ramachandran, learned Senior Counsel  submitted  that  the  said  technology
transfer  agreement  provides  for  a  contingency  that  if  the   targeted
specifications are not achieved, then ARCI is liable to pay damages  to  the
tune of twenty percent of the lump-sum technology transfer fee charged.   It
was contended that the case is purely of a civil nature and for the  alleged
breach of contract, arbitral proceedings  have  already  commenced  and  the
criminal prosecution is clear abuse of process of law.
5.          Reiterating the above submissions,  Mr.  Manoj  Sharma,  learned
counsel for the appellant No.2 contended  that  in  the  year  1999,  second
appellant was not in the ARCI campus and the second appellant was  appointed
as the Associate Director and entrusted the responsibility  of  heading  the
technology transfer activities of ARCI only in April 2005 and  no  dishonest
intention could be ascribed  to  the  second  appellant  in  his  individual
capacity.
6.           Mr.  Mushtaq  Ahmad,  learned  counsel  for   respondent   No.1
submitted that the appellants made false representation  to  the  respondent
that ARCI was possessed of  proved  ceramic  honeycomb  technology  and  the
appellants conspired and induced the respondent to enter into agreement  and
based on the assurance of the appellants, respondent  spent  huge  money  in
purchasing and installing comprehensive machinery  in  its  industrial  unit
set up in ARCI campus and only  in  the  year  2006,  by  the  letter  dated
23.10.2006, second appellant intimated  that  ceramic  honeycomb  technology
has  failed  and  the  facts  and  circumstances  clearly  show   that   the
representation was a fraudulent right from inception.
7.          We have carefully considered the rival contentions  and  perused
the impugned order and the material on record.
8.          ARCI, a grants-in-aid research and development  institute  under
the Ministry of Science and Technology, Government  of  India,  carries  out
research work for the development of a number of scientific products  to  be
used in various fields.  As a  part  of  its  scientific  development,  ARCI
developed a process for extruded  ceramic  honeycombs.   The  said  extruded
ceramic  honeycombs  were  found  suitable  for  manufacture  of   catalytic
converters which are used in vehicles for controlling the pollution  in  the
emission of vehicles and extruded gases.  ARCI is  said  to  have  held  the
intellectual property rights for the know-how i.e. the process for  extruded
ceramic honeycombs and extrusion die fabrication technology.
9.          ARCI entered into a technology transfer agreement on  18.06.1999
with respondent  to  transfer  the  know-how  related  to  the  process  for
extruded ceramic honeycombs as per the specifications indicated  thereon  in
the annexure to the agreement. The agreement details the modalities  of  the
terms and conditions for  the  grant  of  licence  by  ARCI  and  NIMRA  for
utilizing the said know-how and the rights and obligations  of  the  parties
and the financial arrangements between them.  As  per  Article  2.5  of  the
agreement,  NIMRA  has  seen  ceramic  honeycombs  as   per   specifications
indicated thereon and felt that they could  be  a  substitute  for  imported
honeycombs for manufacture of catalytic  converter  automotive  application.
Further Article 2.6 of the agreement  provides  that  NIMRA  had  made  some
preliminary evaluation of ARCI honeycomb samples and found that the  ceramic
honeycombs may be suitable  for  manufacture  of  catalytic  converters  for
automobile application.
10.         Contention at the hands of respondent is that ARCI  had  already
developed and possessed know-how for extruded  ceramic  honeycombs.  Article
2.2  of  technology  transfer  agreement  suggests   that   ARCI   has   the
intellectual property rights for  the  know-how  of  the  ceramic  honeycomb
technology and the extrusion die fabrication technology.  It  was  contended
that the intellectual property rights could not  have  been  given  to  ARCI
unless the Centre developed the process  hundred  percent  successfully  and
without such cent percent success appellants should not  have  entered  into
an agreement  for  transfer  of  the  technology.    Further  contention  of
respondent   is  that  believing  the  representation  of  the   appellants,
respondent established an industrial unit within the Balapur Campus  of  the
Centre and in this regard spent an amount of rupees  one  crore  and  thirty
lakhs  for  purchasing  and  installing  comprehensive  machinery.   It   is
submitted that in the month  of  May  2003  officials  of  ARCI  convened  a
convention  for  trial  run  and  they  assured  the  respondent  that   the
technology was a proved one and was  fully  developed  and  believing  their
assurances,  respondent  spent  rupees  fifteen  lakhs  for  procuring   raw
materials  and  three  years  thereafter,  second  appellant  informed   the
respondent that the targeted specification of the end project could  not  be
achieved and the  second  appellant  marked  a  copy  of  the  letter  dated
23.10.2006 addressed to TIFAC that the  ceramic  honeycombs  technology  has
failed and act of the appellants made out a case  of  cheating  and  rightly
Magistrate has taken cognizance of the matter.
11.         Learned counsel for the respondent  further  submitted  that  in
the letter addressed to TIFAC dated 23.10.2006, appellant No. 2 stated  that
targeted specification of the end product could  not  be  achieved  implying
that  the  so-called  perfect  honeycomb  technology  which  the  appellants
asserted to be having was in fact, an imperfect  technology.    Drawing  our
attention to the official website of ARCI, it was submitted  that  the  ARCI
submitted an application for patent  registration  only  on  03.07.2001  and
patent was granted on 13.01.2006 and  while  so,  Article  2.2  of  transfer
technology agreement mentioning that  ARCI  has  the  intellectual  property
rights for the know-how and the  extrusion  die  fabrication  technology  is
false and the appellants made a false representation to the respondent  that
ARCI  was  having  intellectual  property  rights   for   extruded   ceramic
honeycombs and the Magistrate has rightly taken  cognizance  of  the  matter
for the offence punishable under Sections 419 and 420 IPC.
12.         The legal position is well-settled that when  a  prosecution  at
the initial stage is asked to be quashed, the test  to  be  applied  by  the
court is, as to whether uncontroverted allegations as made in the  complaint
establish the offence.   The High Court being superior court  of  the  State
should refrain from analyzing the materials which are yet to be adduced  and
seen in their true perspective.   The  inherent  jurisdiction  of  the  High
Court under Section  482  Cr.P.C.  should  not  be  exercised  to  stifle  a
legitimate prosecution. Power under  Section  482  Cr.P.C.  is  to  be  used
sparingly only in rare cases.  In a catena of cases, this  Court  reiterated
that the powers of quashing criminal proceedings should  be  exercised  very
sparingly and quashing a complaint  in  criminal  proceedings  would  depend
upon facts and circumstances of each case.   Vide State of  Haryana  &  Ors.
vs. Bhajan Lal & Ors., 1992 Supp.(1) SCC 335; State of T.N. vs.  Thirukkural
Perumal, (1995) 2 SCC 449; and Central  Bureau  of  Investigation  vs.  Ravi
Shankar Srivastava, IAS & Anr. (2006) 7 SCC 188.
13.         In the light of the well-settled principles, it is  to  be  seen
whether the  allegations  in  the  complaint  filed  against  ARCI  and  its
officers for the alleged failure to develop extruded  ceramic  honeycomb  as
per specifications disclose offences punishable under Sections 419  and  420
IPC.   It is to be seen that whether the averments  in  the  complaint  make
out a case to constitute an offence of cheating.  The essential  ingredients
to attract Section 420 IPC are: (i) cheating; (ii) dishonest  inducement  to
deliver property or to make, alter  or  destroy  any  valuable  security  or
anything which is sealed or signed or is capable of being converted  into  a
valuable security and (iii) mens rea of the accused at the  time  of  making
the inducement.  The  making  of  a  false  representation  is  one  of  the
essential ingredients to constitute the offence of  cheating  under  Section
420 IPC.  In order to bring a case for the offence of cheating,  it  is  not
merely sufficient to prove that a false representation had been  made,  but,
it is further necessary to prove that the representation was  false  to  the
knowledge of the accused and was made in order to deceive the complainant.
14.         Distinction between mere breach of  contract  and  the  cheating
would depend upon the intention of  the  accused  at  the  time  of  alleged
inducement.  If it is established that the  intention  of  the  accused  was
dishonest at the very time when  he  made  a  promise  and  entered  into  a
transaction with the complainant to part with his property  or  money,  then
the liability is criminal and the  accused  is  guilty  of  the  offence  of
cheating.   On  the  other  hand,  if  all  that  is  established   that   a
representation made by the accused has subsequently not been kept,  criminal
liability cannot be foisted on the accused and  the  only  right  which  the
complainant acquires is the remedy for breach of contract in a civil  court.
 Mere breach of contract  cannot  give  rise  to  criminal  prosecution  for
cheating unless fraudulent or dishonest intention is shown at the  beginning
of the transaction.  In S.W. Palanitkar & Ors. vs. State  of  Bihar  &  Anr.
(2002) 1 SCC 241, this Court held as under:
“21 ……In order to constitute  an  offence  of  cheating,  the  intention  to
deceive should be in existence at the time when the inducement was made.  It
is necessary to show that a person had fraudulent or dishonest intention  at
the time of making  the  promise,  to  say  that  he  committed  an  act  of
cheating. A mere failure to keep up promise subsequently cannot be  presumed
as an act leading to cheating.”

The above view in Palanitkar’s case was referred to and followed  in  Rashmi
Jain vs. State of Uttar Pradesh & Anr. (2014) 13 SCC 553.
15.         Various  clauses  in  the  agreement  indicate  that  technology
transfer agreement 1999 was only  experimental  in  nature  and  ARCI  shall
endeavour to achieve the performance  as  per  the  specifications.  In  the
agreement, there was no commitment on the part of ARCI to  provide  extruded
ceramic honeycombs as per expected specifications.  Article 12  which  deals
with performance guarantee suggests that  ARCI  is  to  conduct  performance
test  and  shall  endeavour  to  achieve  product  quality/specification  as
mentioned in annexure I of the agreement.  We may usefully refer to  Article
12.2 to 12.6 of the agreement which read as under:
“12.2  When all guarantee figures as set forth in Article 12.1 are  achieved
during  the  performance  guarantee  test,  then  ARCI  shall  be   released
thereafter from any liability for the performance  guarantee  of  the  know-
how.

12.3  In the event of failure  to  achieve  the  performance  as  agreed  in
Article 12.1 in the  first  performance  test,  ARCI  shall  make  necessary
rectification and another performance test will be conducted.

12.4  In the event of failure  to  achieve  the  guarantee  figures  in  the
second performance test, ARCI may at its option either  (I)  make  necessary
rectification so that another performance test can be conducted or  pay  the
liquidated damages equal to  20% of the  lump-sum  technology  transfer  fee
charged.

12.5  When the liquidated damages are paid by ARCI as specified  in  Article
12.4, the performance guarantee shall be deemed to have  been  fulfilled  as
ARCI shall be relieved from any liability or the performance guarantee.

12.6   If for reasons not attributable to ARCI,  the  performance  guarantee
figures are not attained during the performance  test,  both  parties  shall
discuss and agree upon measures to be taken.”


16.         By reading of the  above  clauses  in  the  technology  transfer
agreement, it is seen that the development of technology ceramic  honeycombs
by ARCI was  experimental.  Terms  and  conditions  of  technology  transfer
agreement  clearly  suggest  that  the  Centre  is  to  conduct  performance
guarantee to achieve the product quality/specification of  extruded  ceramic
honeycombs as mentioned in annexure-1 of the technology  transfer  agreement
and make necessary rectification, if required.  The agreement provides  that
in  the  event  of  failure  to  achieve  the  guarantee  figures   as   per
specification even after second  performance  test,  option  given  to  ARCI
either to conduct another performance test or  pay  the  liquidated  damages
equal to twenty percent on the lump-sum  technology  transfer  fee  charged.
As per the terms and conditions of the agreement, ARCI  had  the  option  to
conduct performance test to achieve the quality/specifications and  when  it
could not achieve these specifications, it cannot be said  that  ARCI  acted
with dishonest intention to cheat the respondent  attracting  the  essential
ingredients of Section 420 IPC.
17.         Two important aspects are relevant to  be  noted  to  hold  that
criminal  liability  cannot  be  foisted  on   the   appellants.    Firstly,
satisfaction of NIMRA as to  suitability  of  ceramic  honeycombs.   As  per
Article 2.5 of the technology transfer agreement,  NIMRA  felt  that  ARCI’s
honeycombs could be a substitute for imported honeycombs for manufacture  of
catalytic converters automotive application.  Further, as seen from  Article
2.6, NIMRA made some preliminary evaluation of  the  honeycomb  samples  and
found that the  ceramic  honeycombs  may  be  suitable  for  manufacture  of
catalytic converters for automobile  application.  Secondly,  as  seen  from
Article 2.8  of  technology  transfer  agreement  1999,  NIMRA  had  earlier
entered into an agreement with ARCI on 28.05.1997 to optimize the wash  coat
and catalyst coating by NIMRA on  ARCI’s  substrate  to  achieve  conversion
efficiency on two samples for two vehicles Maruti 800cc  and  Ceilo  1500cc.
As per the said agreement, ARCI paid rupees  six  lakhs  fifty  thousand  to
respondent for optimization process to  achieve  conversion  efficiency  and
the said agreement was further extended vide amendment dated 06.05.1999.  It
is seen that NIMRA first  approached  ARCI  for  co-operation  and  received
money from ARCI for developing part of  the  technology  and  finally  NIMRA
opted for developing part of the technology by itself  rather  than  jointly
transfer to a third party as provided for in 1997  agreement.  No  dishonest
intention could be attributed to the appellants  as  is  apparent  from  the
fact that NIMRA  earlier  had  collaboration  with  ARCI  and  ARCI  put  in
sufficient efforts by conducting repeated performance guarantee tests.
18.           Respondent   mainly   relied   upon   the    letter    bearing
No.ARCI/AD/2006-2007 dated 23.10.2006 to contend that  what  appellant  No.2
conveyed was that the so-called  perfect  honeycomb  technology  which  they
asserted to be having, was in fact, an imperfect technology and thus act  of
the appellants amounted to  cheating.  By  perusal  of  the  letter  bearing
No.ARCI/AD/2005-2006 dated 05.04.2006,  it  is  seen  that  the  Centre  was
trying their best efforts to improve the wall thickness uniformity and  they
are expecting to accomplish all experimentation necessary for  the  purpose.
In the letter bearing No.ARCI/AD/2006-2007  dated  23.10.2006  addressed  to
Technology Information, Forecasting & Assessment Council  (TIFAC),  copy  of
which was marked to NIMRA states that targeted specifications could  not  be
achieved despite ARCI’s best efforts. The  said  letter  further  states  as
under:-
“ …ARCI has already conveyed to NIMRA that ARCI may not be able to meet  the
specifications as presently targeted. ARCI had further  indicated  to  NIMRA
very clearly that it would write to TIFAC requesting  short-closure  of  the
project for the above reasons. However, Mr. Khaja has  dissuaded  ARCI  from
taking such a step, indicating that he does  not  want  the  project  to  be
termed as a failure and carry the image  of  not  fully  repaying  the  loan
amount received from TIFAC. Mr. Khaja has also indicated to ARCI that  Nimra
Cerglass would, therefore, like to make one final  effort  to  commercialize
the product despite the existing departure from the specifications. For  the
purpose, Mr. Khaja has proposed to modify the canning process,  involving  a
flexible mat suitable for canning  honeycomb  substrates  with  warpage,  to
explore the possibility  of  utilizing  the  currently  developed  honeycomb
structures….”

Thus, it is clear that before the said letter was sent  to  TIFAC,  all  the
details were discussed and well within the  knowledge  of  NIMRA  and  NIMRA
proposed for modification of the canning process and evidently there was  no
dishonest intention on the part of the appellants and no criminal  liability
could be attributed to the appellants.
19.         It is also pertinent to  note  that  Article  21  of  technology
transfer  agreement  dated  18.06.1999  contains  arbitration   clause.   On
30.12.2007, the respondent invoked arbitration as provided in  Article  21.1
of the technology transfer agreement and Dr. T. Ramasamy  (sole  arbitrator)
was appointed. On  06.02.2008,  respondent  filed  an  Arbitration  Petition
No.42/2008 under sub-section (2) of Section 14  of  the  Arbitration     and
Conciliation  Act before  the  High  Court  of  Andhra  Pradesh  praying  to
substitute Dr. T. Ramasamy alleging that he is known to appellant No.3.   In
view of objection raised by the respondent, Dr. T. Ramasamy recused  himself
from hearing the matter.  Subsequently, ARCI filed an  Arbitration  Petition
No.78/2008 before the High Court of Delhi for appointment of an  independent
arbitrator  to  resolve  the  existing  disputes  between   ARCI   and   the
respondent. The said arbitration petition was dismissed as withdrawn  by  an
order dated 08.07.2008.  It was submitted at the  Bar  that  an  independent
arbitrator was in fact appointed to resolve disputes between  ARCI  and  the
respondent and arbitrator has passed the award which again  is  the  subject
matter of challenge before the High Court.
20.         By analysis of terms and conditions  of  the  agreement  between
the parties, the dispute between the parties appears to be purely  of  civil
nature.  It is settled legal proposition that criminal liability should  not
be imposed in disputes of civil nature. In Anil Mahajan vs. Bhor  Industries
Ltd. & Anr. (2005) 10 SCC 228, this Court held as under:-
“6. ……..A distinction has  to  be  kept  in  mind  between  mere  breach  of
contract and the offence of cheating. It depends upon the intention  of  the
accused at the time of inducement. The subsequent conduct is  not  the  sole
test. Mere breach of contract cannot give rise to criminal  prosecution  for
cheating unless fraudulent, dishonest intention is shown  at  the  beginning
of the transaction.
7.   …..
8.  The substance  of  the  complaint  is  to  be  seen.  Mere  use  of  the
expression “cheating” in the complaint is of no consequence. Except  mention
of the words “deceive”  and  “cheat”  in  the  complaint  filed  before  the
Magistrate and “cheating” in the complaint filed before  the  police,  there
is no averment about the deceit, cheating or  fraudulent  intention  of  the
accused at the time of entering into MOU wherefrom it can be  inferred  that
the accused had the intention to deceive the complainant to  pay….  We  need
not go into the question of the difference of the amounts mentioned  in  the
complaint which is much more than what is mentioned in the notice  and  also
the defence of the accused and the stand taken in reply  to  notice  because
the complainant’s own case is that over rupees three  crores  was  paid  and
for  balance,  the  accused  was  giving  reasons  as   above-noticed.   The
additional reason for not going into these aspects is that a civil  suit  is
pending inter se the parties for the amounts in question.”

21.         In M/s Indian Oil  Corporation  vs.  NEPC  India  Ltd.  &  Ors.,
(2006) 6 SCC 736,  this  court  observed  that  civil  liability  cannot  be
converted into criminal liability and held as under:-
“13. While on this issue, it is  necessary  to  take  notice  of  a  growing
tendency in business circles to convert purely civil disputes into  criminal
cases. This is obviously on account of a  prevalent  impression  that  civil
law remedies are time consuming and do not adequately protect the  interests
of lenders/creditors. Such a tendency is seen  in  several  family  disputes
also, leading to irretrievable breakdown  of  marriages/families.  There  is
also an impression that  if  a  person  could  somehow  be  entangled  in  a
criminal prosecution, there is a  likelihood  of  imminent  settlement.  Any
effort to settle civil  disputes  and  claims,  which  do  not  involve  any
criminal offence, by applying pressure through criminal  prosecution  should
be deprecated and discouraged. In G. Sagar Suri v. State of  U.P.  (2000)  2
SCC 636 this Court observed: (SCC p. 643, para 8)
“It is to be seen if a matter, which is essentially of a civil  nature,  has
been given a cloak of criminal  offence.  Criminal  proceedings  are  not  a
short cut of other remedies available  in  law.  Before  issuing  process  a
criminal court has to exercise a great deal of caution. For the  accused  it
is a serious matter. This Court has laid certain principles on the basis  of
which the High Court is to exercise its jurisdiction under  Section  482  of
the Code. Jurisdiction under this section has to  be  exercised  to  prevent
abuse of the process of any  court  or  otherwise  to  secure  the  ends  of
justice.”

14. While no one with a legitimate cause or grievance  should  be  prevented
from  seeking  remedies  available  in  criminal  law,  a  complainant   who
initiates or persists  with  a  prosecution,  being  fully  aware  that  the
criminal proceedings are unwarranted and his remedy lies only in civil  law,
should himself  be  made  accountable,  at  the  end  of  such  misconceived
criminal proceedings, in accordance with law. One positive step that can  be
taken by the courts, to curb  unnecessary  prosecutions  and  harassment  of
innocent parties, is to exercise their power under  Section  250  CrPC  more
frequently, where they discern malice or frivolousness or  ulterior  motives
on the part of the complainant. Be that as it may.”


22.         Learned counsel for the respondent submitted  that  any  defence
to be taken by the appellants is to be raised  only  during  the  course  of
trial and is not to be raised in the initial stage of the  prosecution.   In
support of his contention, the learned counsel placed reliance upon  Trisuns
Chemical Industry vs. Rajesh Agarwal & Ors. (1999) 8 SCC 686;  Rajesh  Bajaj
vs. State NCT of Delhi and Ors. (1999) 3  SCC  259;  P.  Swaroopa  Rani  vs.
M.Hari Narayana Alias Hari Babu (2008) 5 SCC 765 and Iridium  India  Telecom
Ltd. vs. Motorola Incorporated & Ors. (2011) 1 SCC 74.  Learned counsel  for
the  respondent  further  submitted  that  when  the  Magistrate  has  taken
cognizance of an offence and the power of the High  Court  to  interfere  is
only to a limited extent, the High Court cannot substitute its view for  the
summoning order passed by the Magistrate. In  support  of  this  contention,
learned counsel placed reliance upon the decisions of this  Court  in  Fiona
Shrikhande vs. State of Maharashtra & Anr. (2013) 14 SCC 44;  Bhushan  Kumar
& Anr. vs. State (NCT) of Delhi & Anr. (2012) 5 SCC  424  and  Smt.  Nagawwa
vs. Veeranna Shivalingappa Konjalgi & Ors. (1976) 3 SCC 736.
23.         The above decisions reiterate the well-settled  principles  that
while exercising inherent jurisdiction under Section 482 Cr.P.C., it is  not
for the High Court to  appreciate  the  evidence  and  its  truthfulness  or
sufficiency inasmuch as it  is  the  function  of  the  trial  court.   High
Court’s inherent powers, be it, civil or criminal matters,  is  designed  to
achieve a salutary public purpose and that a court proceeding ought  not  to
be permitted to degenerate into a weapon of harassment  or  persecution.  If
the averments in the complaint do  not  constitute  an  offence,  the  court
would be justified in quashing the proceedings in the interest of justice.
24.         Second appellant-Dr. S.V.  Joshi  was  the  Associate  Director.
Third appellant Dr. G. Sunderarajan was the Director of  ARCI  and  both  of
them were acting in their official capacity. Appellants No. 2 and 3  neither
acted in their personal capacity nor stood to receive any personal  monetary
benefits from the transfer of said technology. Appellants No.2  and  3  were
representatives of ARCI which is a  grant-in-aid  research  and  development
institute under the Ministry of Science and Technology, Government of  India
and hence previous sanction as mandated under Section 197 Cr.P.C. must  have
been obtained before proceeding against  them  as  their  act  was  only  in
discharge of their official duties.   In  this  regard,  our  attention  was
drawn to a communication from Ministry of Science and Technology  indicating
that for initiating criminal proceeding against  appellants  No.  2  and  3,
permission is required and the said communication reads as under:
“ ….. They have both been appointed by  the  Government  of  India  and  are
governed by all rules and regulations of the Government of India….

It is further stated that we have examined all the actions taken by  Dr.  G.
Sundararajan and S.V. Joshi in relation to the activities pertaining to  the
Technology Transfer Agreement dated 18/06/1999 between ARCI  and  M/s  Nimra
Cerglass, Hyderabad and are of firm view that these actions  were  taken  by
the above officers while discharging their official duty in good  faith  and
in the best interest of ARCI.

Therefore, for initiating criminal proceeding against  Dr.  G.  Sundararajan
and Dr. S.V.Joshi, Government of India permission is required.”


The alleged acts of the appellants No. 2 and 3 were committed  while  acting
in  discharge  of  their  official  duties,  sanction  from  the   competent
authority was necessary before initiating the criminal  prosecution  against
them.  Since we have held that from the  averments  in  the  complaint,  the
essential ingredients of dishonest intention is not made  out,  we  are  not
inclined to further elaborate upon this point.
25.         As per the terms of the technology transfer agreement, ARCI  has
to conduct performance guarantee tests and in  those  tests  when  ARCI  was
unsuccessful in achieving the targeted specifications, ARCI cannot  be  said
to have acted with dishonest intention to cheat the respondent.  Appellants-
ARCI is a structure of Scientists, Team Leader and  Associate  Director  and
it is the team  leader  who  actually  executes  the  project,  the  job  of
Associate Director  and  Director  is  to  monitor/review  progress  of  the
project.  Appellants  No.2  and  3  who  were  the  Associate  Director  and
Director of ARCI respectively were  only  monitoring  the  progress  of  the
project cannot be said to have committed the offence  of  cheating.  In  the
facts of the present case, in our view, the allegations in the complaint  do
not  constitute  the  offence  alleged  and  continuation  of  the  criminal
proceeding is not just and proper and in the interest of  the  justice,  the
same is liable to be quashed.
26.         In the result, the impugned order is set aside and  this  appeal
is allowed.  The criminal proceedings against appellants No.1  to  3  in  CC
No. 840 of 2008 on the file of II Metropolitan Magistrate at  Cyberabad,  is
quashed.

                                                                 ………………………J.
                                                    (J.S. KHEHAR)

                                                                 ………………………J.
                                                   (R. BANUMATHI)
New Delhi;
September 22, 2015



-----------------------
24

Whether there is a dispute and whether there is necessary to appoint arbitrator - invoking Bank Guarantee without intimation and without justifiable cause is a good ground to say that there is a dispute= by invoking the bank guarantee without any justifiable reason and without giving any prior intimation to the petitioner company, the respondent company committed breach of the terms of the contract =I am of the view, that there is a dispute between the parties which requires to be resolved by an Arbitrator under the provisions of the Act. 11. There is no dispute to the effect that there is a clause with regard to arbitration in the contract which had been entered into between the parties on 24.12.2007. The arbitration clause incorporated in the contract reads as under: “33.0 Arbitration. 33.1 Where any dispute is not resolved as provided for in the preceding clause 32.1 then such dispute shall be referred to and settled by arbitration under and in accordance with the provisions of the rules applicable in land of Law. The Award shall be final and binding upon the Supplier and Purchaser. The place of arbitration shall be Paris. 33.2 During settlement of disputes and arbitration proceedings, unless otherwise agreed in writing both Supplier and Purchaser shall be obliged to carry out their respective obligations under the Contract.” 12. As there was a dispute with regard to quality of material supplied, some letters were exchanged between the parties and the representatives of both the parties had also met for the purpose of resolving their disputes but unfortunately, the disputes with regard to quality of the material supplied could not be resolved and ultimately the respondent company had to invoke the bank guarantee. 13. In the aforestated circumstances, it cannot be said that there is no dispute between the parties and therefore, in my opinion, an Arbitrator is required to be appointed as per the provisions of Section 11(6) of the Act. 14. In view of the aforestated circumstances, Mr. Justice A.P. Shah, former Chief Justice of High Court of Delhi, having his office at F-15, Hauz Khas Enclave, New Delhi-110016, is appointed as an arbitrator and the place of arbitration shall be Delhi. Remuneration to be paid shall be fixed by the learned Arbitrator. The parties to the litigation have agreed to the above appointment and they have also agreed that they would request the learned Arbitrator to complete the arbitral proceedings preferably within six months and they shall extend their cooperation to the learned Arbitrator so that the proceedings can be concluded at an early date. 15. Intimation of this order be forwarded to the learned Sole Arbitrator by the Registry of this Court. The Arbitration Petition is allowed in the aforesaid terms.No Costs.

                                                   NON-REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                         CIVIL ORIGINAL JURISDICTION

                     ARBITRATION PETITION NO. 8 OF 2014



M/s. TBEA Shenyang Transformers
Group Co. Ltd.                                     …Petitioner


                                   Versus



M/s. Alstom Projects India Ltd.                    …Respondent



                               J U D G M E N T




ANIL R. DAVE, J.





1.  This is a  petition  under  the  provisions  of  Section  11(6)  of  the
Arbitration and Conciliation Act, 1996  (hereinafter  referred  to  as  “the
Act”).


2. By virtue of this  petition,  the  petitioner  company,  incorporated  in
Republic of China, has prayed that an  Arbitrator  be  appointed  so  as  to
arbitrate the dispute which the  petitioner   company  is  having  with  the
respondent company, incorporated under the provisions of the Companies  Act,
1956, in India.


3.     According  to  the  learned  counsel  appearing  for  the  petitioner
company, the petitioner company had entered into a  contract  on  24.12.2007
with the respondent company for supply of  Transformers  and  certain  other
electrical equipments which were necessary for the  purpose  of  setting  up
Transformers.  The said Transformers  were  to  be  supplied  for  Chuzachen
Project at Sikkim.


4.    According to the respondent company, there were some  defects  in  the
material supplied by the petitioner company and when the said  defects  were
brought to the notice of the petitioner company, the petitioner company  had
agreed to replace the defective parts.  It is pertinent to note that a  bank
guarantee  had  also  been  furnished  by  the  petitioner  company  to  the
respondent company  which  was  to  be  invoked  in  certain  circumstances.
According to the learned  counsel  appearing  for  the  petitioner  company,
though there was no reason for invocation of  the  bank  guarantee,  without
giving any intimation to the  petitioner  company,  the  respondent  company
invoked the bank guarantee on 22.06.2013.


5.     In  the  aforestated  circumstances,  the  petitioner   company   was
constrained to file an application  under  Section  9  of  the  Act  in  the
District Court at Vadodra, State of Gujarat, but the  said  application  had
been dismissed on 02.09.2013.


6.    Being aggrieved by the order, whereby an application under  Section  9
of the Act had been rejected, the  petitioner  company  had  approached  the
High Court of Gujarat at Ahmedabad.  The said appeal filed before  the  High
Court had also been dismissed on  27.09.2013  and  being  aggrieved  by  the
order passed by the High Court dismissing the  appeal,  the  petitioner  had
filed Special  Leave  Petition   before  this  Court  which  had  also  been
dismissed on 07.10.2013 as this Court did not  find  any  infirmity  in  the
order of the High Court.


7.     In  view  of  the  aforestated  background,  mainly  on  account   of
invocation of the bank guarantee, the petitioner company, according  to  the
learned counsel appearing for the petitioner, has approached this Court  for
appointment of an Arbitrator as per the provisions of Section 11(6)  of  the
Act.


8.    The  learned  counsel  appearing  for  the  petitioner-company  mainly
submitted that by  invoking  the  bank  guarantee  without  any  justifiable
reason and without giving any prior intimation to  the  petitioner  company,
the respondent company committed breach of the terms of the  contract.   The
learned counsel also drew my attention  to  the  contents  of  the  contract
entered into between the parties on 24.12.2007 and  submitted  that  in  the
aforesaid circumstances an Arbitrator be appointed by  this  Court  so  that
the dispute which has arisen between the parties can be resolved by  way  of
arbitration under the provisions of the Act.


9.    On the other hand, the learned counsel appearing for  the  respondent-
company submitted that, in fact, there is no  dispute  between  the  parties
and there is no reason for appointment of an Arbitrator.  He submitted  that
the application filed under Section 9 of the Act by the  petitioner  company
had been rejected and the said order of rejection  had  been  confirmed  not
only by the High Court, but also by this Court.  The fact  that  no  interim
protection was granted  denotes  that  there  was  no  dispute  which  would
require appointment of an arbitrator. He further submitted that by  invoking
the bank guarantee and by encashing the amount  payable  to  the  respondent
company, the issue with regard to  invocation  of  the  bank  guarantee  has
become infructuous and there cannot be any  dispute  on  the  said  subject.
Thus, the learned counsel appearing for the respondent submitted  that  this
is not a case where an Arbitrator should be appointed as per the  provisions
of the Act.


10.   Upon hearing the learned counsel for the  parties  and  going  through
the provisions of the contract, I am of the view, that there  is  a  dispute
between the parties which requires to be resolved  by  an  Arbitrator  under
the provisions of the Act.
11.   There is no dispute to the effect that there is a clause  with  regard
to arbitration in the contract which  had  been  entered  into  between  the
parties on 24.12.2007.  The arbitration clause incorporated in the  contract
reads as under:

“33.0 Arbitration.


33.1   Where any dispute is not resolved as provided for  in  the  preceding
clause  32.1  then  such  dispute  shall  be  referred  to  and  settled  by
arbitration under and  in  accordance  with  the  provisions  of  the  rules
applicable in land of Law.  The Award shall be final and  binding  upon  the
Supplier and Purchaser.  The place of arbitration shall be Paris.


33.2  During settlement of  disputes  and  arbitration  proceedings,  unless
otherwise agreed in writing both Supplier and Purchaser shall be obliged  to
carry out their respective obligations under the Contract.”





12.   As there was a dispute with regard to quality  of  material  supplied,
some letters were exchanged between the parties and the  representatives  of
both the parties had also met for the purpose of  resolving  their  disputes
but unfortunately, the disputes with  regard  to  quality  of  the  material
supplied could not be resolved and ultimately the respondent company had  to
invoke the bank guarantee.


13.   In the aforestated circumstances, it cannot be said that there  is  no
dispute between the parties and therefore, in my opinion, an  Arbitrator  is
required to be appointed as per the provisions of Section 11(6) of the  Act.



14.   In view of the  aforestated  circumstances,  Mr.  Justice  A.P.  Shah,
former Chief Justice of High Court of Delhi,  having  his  office  at  F-15,
Hauz Khas Enclave, New Delhi-110016, is appointed as an arbitrator  and  the
place of arbitration shall be Delhi.   Remuneration  to  be  paid  shall  be
fixed by the learned Arbitrator.  The parties to the litigation have  agreed
to the above appointment and they have also agreed that they  would  request
the learned Arbitrator  to  complete  the  arbitral  proceedings  preferably
within six months and they shall extend their  cooperation  to  the  learned
Arbitrator so that the proceedings can be concluded at an early date.

15.   Intimation of this order be forwarded to the learned  Sole  Arbitrator
by the Registry of this Court.

 16. The Arbitration Petition is allowed in the aforesaid terms. No costs.

                                                               ……………………………J.
                                                             [Anil R. Dave]
New Delhi;
September 21, 2015.