Corporate Laws - Arbitration Act = (1) Whether Gangavaram Port Limited (GPL) is right in contending that Memorandum of Understanding (MoU) dated 11.08.2012 and Original Package No. 4 Tender Document and Corporate Guarantee dated 17.03.2012 executed by Duro Felguera covers all the five split-up Packages awarded to Duro Felguera and FGI and whether there has to be a composite reference/single arbitral tribunal for "International Commercial Arbitration" covering all the five different Packages and also the Corporate Guarantee executed by Duro Felguera? (2) Whether there have to be 'multiple arbitral tribunals' for each of the five different Packages of Work awarded to the foreign company-Duro Felguera and Indian Subsidiary-FGI (one International Commercial Arbitral Tribunal plus four Domestic Arbitral Tribunals) and another one arbitral tribunal for 'international commercial arbitration' under Corporate Guarantee (17.03.2012) executed by the foreign company-Duro Felguera? = 13.The scope of the power under Section 11 (6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. (supra) and Boghara Polyfab (supra). This position continued till the amendment brought about in 2015. After the amendment, all that the Courts need to see is whether an arbitration agreement exists - nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Court’s intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6A) ought to be respected. 14 In the case at hand, there are six arbitrable agreements (five agreements for works and one Corporate Guarantee) and each agreement contains a provision for arbitration. Hence, there has to be an Arbitral Tribunal for the disputes pertaining to each agreement. While the arbitrators can be the same, there has to be six Tribunals - two for international commercial arbitration involving the Spanish Company-M/s Duro Felguera, S.A. and four 44 for the domestic.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
ARBITRATION PETITION NO.30 OF 2016
M/S. DURO FELGUERA, S.A. ........Petitioner
VERSUS
M/S. GANGAVARAM PORT LIMITED ........Respondent
WITH
ARBITRATION PETITION NO.31 OF 2016
T.C.(C) NOS.25/2017, 26/2017, 27/2017 AND 28/2017
J U D G M E N T
BANUMATHI, J.
Arbitration Petition No.30 of 2016 has been filed by M/s Duro Felguera,
S.A. under Section 11(6)(a) read with Sectiion 11(12)(a) of the Arbitration and
Conciliation Act, 1996 (for short, 'the Act') to appoint the nominee arbitrator on
behalf of the respondent (second arbitrator) in terms of sub-clause 20.6 of the
Special Conditions of the Contract with respect to the arbitration arising under
the Contract dated 10.05.2012. T.C. No.25 of 2017, T.C. No.26 of 2017, T.C.
No.27 of 2017 and T.C. No.28 of 2017 have been filed by M/s. Felguera Gruas
India Private Limited (hereinafter referred to as 'the FGI') for appointment of
Domestic Arbitral Tribunal for resolving the dispute pertaining to the contract
1
awarded to FGI. Arbitration Petition No.31 of 2016 has been filed by M/s.
Gangavaram Port Limited (hereinafter referred to as 'the GPL') to appoint an
arbitrator under the Memorandum of Understanding (MoU) dated 11.08.2012
and to constitute a single Arbitral Tribunal by a composite reference for
adjudication of all the disputes between the parties in connection with the
"Works" covered under all the five Package Contracts and the Corporate
Guarantee dated 17.03.2012 executed by Duro Felguera.
2. As the parties and issues in both the arbitration petitions and the
transferred cases are one and the same, both arbitration petitions and the
transferred cases shall stand disposed of by this common order. For
convenience, parties are referred to as per their array in Arbitration Petition
No.30 of 2016.
3. Brief Facts: The Respondent-Gangavaram Port Limited (GPL) developed
a green-field, ultra-modern, all-weather sea-port near Gangavaram Village in
Visakhapatnam District in the State of Andhra Pradesh. This sea-port
commenced operations in the year 2009. The Respondent intended to expand
its facilities in the Port with respect to Bulk Material Handling Systems. This
included Engineering, Design, Procurement of Materials, Manufacturing,
Supply, Erection, Testing and Commissioning of Bulk Material Handling
Systems, as well as all other associated works and integration of the same
with the existing coal handling systems etc. For this purpose, on 08.08.2011,
Gangavaram Port Limited invited a tender/bid. In response to the
2
aforementioned tender dated 08.08.2011, the Spanish Company-Duro
Felguera Plantas Industrials S.A. (since merged with the petitioner) along with
its Indian subsidiary-M/s. Felguera Gruas India Private Limited (FGI) submitted
a Single Bid/Tender-Original Package No.4 Tender Document on 15.11.2011.
This included the Commercial Bid and the Technical Bid. After post-bid
negotiations, the petitioner Duro Felguera and its subsidiary (FGI) were
considered by GPL and Duro Felguera and FGI were selected as "the
Contractors" for the work.
4. After discussion between the parties, Original Package No. 4 TD was
divided into five different and separate Packages, namely, New Package No.
4-F.O.B. Supply of Bulk Material Handling Equipments (awarded to foreign
company-M/s Duro Felguera), Package No. 6-design, manufacture, supply,
installation, erection, testing, commissioning of Bulk Material Handling
Equipments and all other activities related therewith; Package No. 7-Civil
Works and all other activities related therewith; Package No. 8-International
Transportation of Bulk Material Handling Equipments and parts through sea
including insurance and all related activities; Package No. 9-Installation,
Testing and Commissioning of Ship Unloaders and all other activities related
therewith (Packages No.6 to 9 awarded to Indian subsidiary-FGI). Separate
Letters of Award (dated 17.03.2012) for five different Packages were issued
to M/s Duro Felguera, S.A. and the Indian Subsidiary-FGI for the above said
work respectively.
3
5. Five different contracts were entered into on 10.05.2012 for five split-up
Packages with different works viz. namely New Package No. 4 with foreign
company-M/s Duro Felguera and Packages No. 6, 7, 8 and 9 with FGI. Each
of the Packages has special conditions of contract as well as general
conditions of contract. Each one of the Contract/Agreement for works under
split-up Packages contains an arbitration clause namely sub-clause 20.6.
Duro Felguera had also entered into a Corporate Guarantee dated 17.03.2012
guaranteeing due performance of all the works awarded to Duro Felguera and
FGI. The said Corporate Guarantee had its own arbitration clause namely
clause (8).
6. Duro Felguera and FGI have executed a tripartite Memorandum of
Understanding (MoU) with M/s Gangavaram Port Limited (GPL) on
11.08.2012. In the said MoU, Duro Felguera and FGI have agreed to carry out
the works as per the priority of documents listed therein. Case of GPL is that
the MoU dated 11.08.2012 being the latest covers all the five contracts namely
New Package No. 4 awarded to M/s Duro Felguera and Packages No. 6 to 9
awarded to FGI. According to GPL, since MoU refers to original Package No.
4 Tender Document (TD) which contains arbitration clause, the Original
Package No. 4 TD with its arbitration clause shall be deemed to have been
incorporated in the MoU.
7. Case of M/s. Gangavaram Port Limited is that the petitioner-M/s Duro
Felguera, S.A. and its Indian Subsidiary-FGI failed to perform their obligations,
4
including their obligation to attend and rectify faulty works and complete the
pending works etc. Further grievance of GPL is that though the works were
scheduled to be completed at the latest by 16.03.2014, the petitioner-M/s Duro
Felguera, S.A. and its Indian Subsidiary (FGI) caused inordinate delay in
execution of the work and, therefore, GPL was constrained to invoke the Bank
Guarantee on 07.01.2016 given by petitioner-M/s Duro Felguera. GPL had
also issued Notices of Termination dated 31.01.2016 to the Foreign
Company-M/s Duro Felguera and its Indian Subsidiary(FGI). M/s Duro
Felguera, S.A. and its Indian Subsidiary (FGI) issued notice of dissatisfaction
on 04.02.2016 and 07.02.2016 to GPL. Subsequently M/s. Duro Felguera
issued an arbitration notice dated 05.04.2016 for New Package No. 4 Contract
and FGI issued four arbitration notices dated 07.04.2016 for Packages No. 6
to 9 Contracts. Both M/s. Duro Felguera and FGI have separately nominated
Mr. Justice D.R. Deshmukh (Former Judge, Chhattisgarh High Court) as their
nominee arbitrator for each of the five contracts.
8. GPL issued a comprehensive arbitration notice on 13.04.2016 appointing
Mr. Justice M.N. Rao (Former Chief Justice, Himachal Pradesh High Court) as
its nominee arbitrator under sub-clause 20.6 of the conditions of contract
which form part of the "Original Package No. 4 Tender Document". Contention
of GPL is that "Original Package No. 4 (TD) and the Corporate Guarantee by
M/s. Duro Felguera" and the MoU dated 11.08.2012 cover all the five
contracts, namely, New Package No. 4, Package No. 6, Package No. 7,
5
Package No. 8 and Package No. 9 as well as the Corporate Guarantee.
Further case of GPL is that five individual arbitration notices issued by M/s.
Duro Felguera and FGI are untenable and since Duro Felguera-the foreign
company has guaranteed the due performance of the works covered under all
the five packages and there has to be only one single Arbitral Tribunal for
resolving the disputes of "International Commercial Arbitration" arising
between the parties.
9. Mr. Mukul Rohtagi and Mr. Raju Ramachandran, learned Senior Counsel
for M/s Gangavaram Port Limited (GPL) submitted that the split up of the
"Works" into five separate contracts was made only on the basis of the
requests made by the Duro Felguera for convenience of the contractors. It
was contended that all the works are inter-connected and inter-linked and if
there are separate arbitrations for each of the packages, and separate
arbitration for New Package No. 4 and the Corporate Guarantee take place,
then in each arbitration, the respondent party will blame the lapse on the part
of GPL in another Package and thereby attempt to escape liability. It was
urged that the appointment of a single arbitral tribunal, under the MoU and the
Corporate Guarantee will avoid conflicting awards between the parties, huge
wastage of time, resources and expenses; and would be consistent with law
and public policy. The learned Senior Counsel further submitted that MoU was
executed by Duro Felguera and FGI on 11.08.2012 and the contents of MoU
including the priority of the documents referred therein prevail over the
6
contents of the Letters of Award and the Contracts. It was, therefore,
submitted that the arbitration clause covered under sub-clause 20.6 of the
conditions of contract, which forms part of the "Original Package No. 4 Tender
Document" which is incorporated in the MoU shall prevail over the arbitration
clause covered under sub-clause 20.6 of the contract for five packages. It
was further submitted that having regard to the nature of disputes which
extend over each of the Packages and collectively covered the Corporate
Guarantee executed by Duro Felguera under MoU, it would be just and proper
to make a 'composite reference' and have a single arbitral tribunal of
'international commercial arbitration' for settling the dispute arising between
the parties and the same would be consistent with the intention of the parties
and public policy. It was urged that the contract for the "Works" has always
been envisaged by the parties as one composite contract even though the
contracts were split into various Packages and there cannot be multiple
arbitral tribunals for adjudication of disputes between the parties as it would
lead only to complications in settling the disputes and execution of the awards.
10. Mr. Sunil Gupta learned Senior Counsel appearing for Duro
Felguera-Spanish Company submitted that by conscious agreement of the
parties, the Original Package No.4 Tender Document was superseded by five
new Contracts with different works namely New Package No. 4, Packages
No.6, 7, 8 and 9, each of which have special conditions as well as general
conditions of contract. It was further submitted that the Corporate Guarantee
7
dated 17.03.2012 executed by Duro Felguera guaranteeing due performance
of the works awarded to Duro Felguera and FGI has its own separate and
distinct arbitration clause and the same has no connection with the arbitration
clauses (sub-clause 20.6) of the five different contracts for New Package No. 4
and Packages No. 6, 7, 8 and 9. The learned Senior Counsel further
submitted that the MoU dated 11.08.2012 which enlists priority of the
documents to be considered is only to have clarity in carrying out the works
and the MoU cannot override the terms of the contracts for five different
packages including the arbitration clauses contained therein. It was submitted
that the five new split-up Packages followed by five different Letters of Award
and five different contracts were substantially different, independent and
separate in their content and subject matter and there cannot be a 'composite
reference' for efficacious settlement of disputes, it would be just and proper to
have multiple arbitral tribunals and may be by the same arbitrators. The
learned Senior Counsel submitted that so far as New Package No.4 and the
issues pertaining to the Corporate Guarantee executed on 17.03.2012 by Duro
Felguera-the foreign Company, the arbitral tribunal has to be for International
Commercial Arbitration.
11. Reiterating the above submissions, Mr. Singhvi, the learned Senior
Counsel appearing for Indian subsidiary-FGI contended that by conscious
decision and agreement of the parties, Original Package No. 4 (TD) was
superseded and five new TDs with different works namely TD for New
8
Package No. 4 and Packages No. 6, 7, 8 and 9 were brought into existence
and there were separate Letters of Award and five separate contracts for each
one of those split-up packages. It was submitted that each of the contracts
contain special conditions as well as general conditions of contract apart from
the arbitration clause, (sub-clause 20.6), which is relevant for governing the
contractual and arbitral relations between the parties and in case of dispute
arising between the parties under any of the respective contracts or the
Corporate Guarantee, the aggrieved party would have to invoke the respective
arbitration clauses in the respective contracts in question and cannot invoke
the MoU dated 11.08.2012. It was further submitted that the Corporate
Guarantee dated 17.03.2012 was executed by Duro Felguera under which it
had guaranteed the due performance of all the works awarded to Duro
Felguera and FGI and FGI is not a party under the said Corporate Guarantee.
It was further submitted that the MoU dated 11.08.2012 came into existence
long after the Contracts and it does not contain any arbitration clause and MoU
does not intend to alter the nature of the rights, responsibilities and obligations
of the parties arising from the respective contracts and, therefore, for settling
the disputes arising under the Packages No. 6, 7, 8 and 9 awarded to FGI,
there have to be four domestic arbitral tribunals and there cannot be a
'composite reference' by invoking MoU.
12. Considering the facts and circumstances and rival contentions of the
parties, the following points arise for determination:
9
(1) Whether Gangavaram Port Limited (GPL) is right in contending
that Memorandum of Understanding (MoU) dated 11.08.2012
and Original Package No. 4 Tender Document and Corporate
Guarantee dated 17.03.2012 executed by Duro Felguera covers
all the five split-up Packages awarded to Duro Felguera and FGI
and whether there has to be a composite reference/single
arbitral tribunal for "International Commercial Arbitration"
covering all the five different Packages and also the Corporate
Guarantee executed by Duro Felguera?
(2) Whether there have to be 'multiple arbitral tribunals' for each of
the five different Packages of Work awarded to the foreign
company-Duro Felguera and Indian Subsidiary-FGI (one
International Commercial Arbitral Tribunal plus four Domestic
Arbitral Tribunals) and another one arbitral tribunal for
'international commercial arbitration' under Corporate Guarantee
(17.03.2012) executed by the foreign company-Duro Felguera?
13. The Arbitration and Conciliation (Amendment) Act, 2015 (w.e.f.
23.10.2015) has brought in substantial changes in the provisions of the Arbitration
and Conciliation Act, 1996. After the Amendment Act 3 of 2016, as per the
amended provision of sub-section (6A) of Section 11, the power of the court is
confined only to examine the existence of the arbitration agreement. It further
clarifies that the decision of appointment of an arbitrator will be made by the
Supreme Court or the High Court (instead of Chief Justice) and under Section
11(7), no appeal shall lie against such an appointment.
Position prior to Amendment Act 3 of 2016
10
14. Under Section 11(6) of the Arbitration and Conciliation Act, 1996, as it
stood prior to Amendment Act 3 of 2016, on an application made by any of the
parties, the Chief Justice of the High Court appoints an arbitrator for
adjudication. Initially, the line of decisions ruled that the appointment of
arbitrator is an administrative order passed by the Chief Justice. In Konkan
Railway Corporation Limited and Others v. Mehul Construction
Company, (2000) 7 SCC 201, it was held that the powers of the Chief Justice
under Section 11(6) of the Arbitration and Conciliation Act, 1996 are of
administrative nature and that the Chief Justice or his designate does not act
as a judicial authority while appointing an arbitrator. The same view was
reiterated in the subsequent judgment of this Court in Konkan Railway
Corporation Limited and Another v. Rani Construction Private Limited,
(2002) 2 SCC 388.
15. However, in the year 2005, a Constitution Bench of Seven Judges in
SBP and Co. v. Patel Engineering Limited and Another, (2005) 8 SCC 618,
made a departure from the previous judgments and held that the order passed
by the Chief Justice is not administrative but judicial in nature and hence the
same is subject to appeal under Article 136 of the Constitution of India. The
Court further held that in deciding the appointment of an arbitrator, the Chief
Justice could first by way of a preliminary decision decide the court's own
jurisdiction of that matter to entertain the arbitration petition, the existence of a
valid arbitration agreement, the subsistence of a "live claim i.e. the claim that
11
is not barred by limitation".
16. The judgment in SBP and Co. (supra) was further clarified in National
Insurance Company Limited v. Boghara Polyfab Private Limited, (2009) 1
SCC 267, wherein this Court held that while appointing an arbitrator, the
following could be considered:-
"22. Where the intervention of the court is sought for appointment of an Arbitral
Tribunal under Section 11, the duty of the Chief Justice or his designate is defined in
SBP & Co. (2005) 8 SCC 618. This Court identified and segregated the preliminary
issues that may arise for consideration in an application under Section 11 of the Act
into three categories, that is, (i) issues which the Chief Justice or his designate is
bound to decide; (ii) issues which he can also decide, that is, issued which he may
choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to
decide."
The judgments in Shree Ram Mills Ltd. v. Utility Premises (P) Ltd, (2007) 4
SCC 599 and Arasmeta Captive Power Company Private Limited and
Another v. Lafarge India Private Limited, (2013) 15 SCC 414, are on the
same line pertaining to the issues which have to be dealt with by the Chief
Justice or his designate.
Changes brought about by the Arbitration and Conciliation (Amendment) Act,
2015 (Amendment Act 3 of 2016)
17. The language in Section 11(6) of the Act "the Chief Justice or any person
or institution designated by him" has been substituted by "Supreme Court or
as the case may be the High Court or any person or institution designated by
such Court". Now, as per sub-section (6A) of Section 11, the power of the
Court has now been restricted only to see whether there exists an arbitration
agreement. The amended provision in sub-section (7) of Section 11 provides
that the order passed under Section 11(6) shall not be appealable and thus
12
finality is attached to the order passed under this Section. The amended
Section 11 reads as under:-
"11. Appointment of arbitrators.- (1) A person of any nationality may be an
arbitrator, unless otherwise agreed by the parties.
(2) Subject to sub-section (6), the parties are free to agree on a procedure for
appointing the arbitrator or arbitrators.
(3) Failing any agreement referred to in sub-section (2), in an arbitration with three
arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall
appoint the third arbitrator who shall act as the presiding arbitrator.
(4) If the appointment procedure in sub-section (3) applies and-
(a) a party fails to appoint an arbitrator within thirty days from the
receipt of a request to do so from the other party; or
(b) the two appointed arbitrators fail to agree on the third arbitrator
within thirty days from the date of their appointment,
the appointment shall be made, upon request of a party, by *
[the Supreme Court or, as the
case may be, the High Court or any person or institution designated by such Court].
(5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole
arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a
request by one party from the other party to so agree the appointment shall be made, upon
request of a party, by *[the Supreme Court or, as the case may be, the High Court or
any person or institution designated by such Court].
(6) Where, under an appointment procedure agreed upon by the parties,-
(a) a party fails to act as required under the procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach an
agreement expected of them under that procedure; or
(c) a person, including an institution, fails to perform any function
entrusted to him or it under that procedure,
a party may request*[the Supreme Court or, as the case may be, the High Court or any
person or institution designated by such Court] to take the necessary measure, unless
the agreement on the appointment procedure provides other means for securing the
appointment.
*[(6A) The Supreme court or, as the case may be, the High Court, while
considering any application under sub-section (4) or sub-section (5) or sub-section
(6), shall, notwithstanding any judgment, decree or order of any Court, confine to the
examination of the existence of an arbitration agreement.]
*[(6B) The designation of any person or institution by the Supreme Court or,
as the case may be, the High Court, for the purposes of this section shall not be
regarded as a delegation of judicial power by the Supreme Court or the High Court.]
(7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or
sub-section (6) to *[the Supreme Court or, as the case may be, the High Court or the
person or institution designated by such Court is final and no appeal including
Letters Patent Appeal shall lie against such decision].
*[(8) The Supreme Court or, as the case may be, the High Court or the person
or institution designated by such Court, before appointing an arbitrator, shall seek a
disclosure in writing from the prospective arbitrator in terms of sub-section (1) of
section 12, and have due regard to-
(a) any qualifications required of the arbitrator by the agreement
of the parties; and
(b) the contents of the disclosure and other considerations as are
likely to secure the appointment of an independent and
impartial arbitrator.]
(9) In the case of appointment of sole or third arbitrator in an international
commercial arbitration, *[the Supreme Court or the person or institution designated by
that Court] may appoint an arbitrator of a nationality other than the nationalities of the
parties where the parties belong to different nationalities.
*[(10) The Supreme Court or, as the case may be, the High Court, may make
such scheme as the said Court may deem appropriate for dealing with matters
entrusted by sub-section (4) or sub-section (5) or sub-section (6), to it.]
13
(11) Where more than one request has been made under sub-section (4) or
sub-section (5) or sub-section (6) to *[different High Courts or their designates, the High
Court or its designate to whom the request has been first made] under the relevant
sub-section shall alone be competent to decide on the request.
*[(12)(a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and
sub-section (10) arise in an international commercial arbitration, the reference to the
"Supreme Court or, as the case may be, the High Court" in those sub-sections shall
be construed as a reference to the "Supreme Court"; and
(b) where the matters referred to in sub-sections (4), (5), (6), (7), (8) and
sub-section (10) arise in any other arbitration, the reference to "the Supreme Court
or, as the case may be, the High Court" in those sub-sections shall be construed as a
reference to the "High Court" within whose local limits the principal Civil Court
referred to in clause (e) of sub-section (1) of section 2 is situate, and where the High
Court itself is the Court referred to in that clause, to that High Court.]
*[(13) An application made under this section for appointment of an arbitrator
or arbitrators shall be disposed of by the Supreme Court or the High Court or the
person or institution designated by such Court, as the case may be, as expeditiously
as possible and an endeavour shall be made to dispose of the matter within a period
of sixty days from the date of service of notice on the opposite party.
(14) For the purpose of determination of the fees of the arbitral tribunal and
the manner of its payment to the arbitral tribunal, the High Court may frame such
rules as may be necessary, after taking into consideration the rates specified in the
Fourth Schedule.
Explanation.-For the removal of doubts, it is hereby clarified that this
sub-section shall not apply to international commercial arbitration and in arbitrations
(other than international commercial arbitration) in case where parties have agreed
for determination of fees as per the rules of an arbitral institution.]"
*Substituted by Act 3 of 2016 (w.e.f. 23.10.2015)
18. The effect of the Arbitration and Conciliation (Amendment) Act, 2015 in
Section 11 of the Act has been succinctly elucidated in the text book "Law
Relating to Arbitration and Conciliation by Dr. P.C. Markanda", which
reads as under:-
"The changes made by the Amending Act are as follows:
1. The words 'Chief Justice or any person or institution designated by him' shall be
substituted by the words 'the Supreme Court or, as the case may be, the High Court or any
person or institution designated by such Court'. Thus, now it is not only the Chief Justice
who can hear applications under Section 11, the power can be delegated to any judge as
well.
2. As per sub-section (6-A), the power of the Court has now been restricted only to
examination of the existence of an arbitration agreement. Earlier, the Chief Justice had
been given the power to examine other aspects as well, i.e. limitation, whether the claims
were referable for arbitration etc. in terms of the judgments of the Supreme Court in SBP
and Co. v. Patel Engineering Ltd., (2005) 8 SCC 618; and National Insurance Co. Ltd. V.
Boghara Polyfab Pvt. Ltd., (2009) 1 SCC 267. Now all preliminary issues have been left for
the arbitral tribunal to decide in terms of Section 16 of the Act.
3. The Amending Act has categorically provided in sub-section (6-B) that designation
of any person or institution by the Supreme Court or High Court would not be construed as
delegation of judicial power. The order passed by a designated person or institution would
continue to be regarded as a judicial order.
4. It has been provided is sub-section (7) that the order passed under this section shall
not appealable. This change means that finality is attached to the order passed under this
section and it would not be subject to further examination by an appellate court.
5. Sub-section (8) has been amended to bring it in conformity with amended section
12 with regard to ensuring independence and impartiality of the arbitrator. Before appointing
14
any arbitrator, a disclosure in writing has to be obtained in terms of section 12(1) of the Act.
This is to ensure that the appointed arbitrator shall be independent and impartial and also
harmonizes the provisions of sections 11 and 12 of the Act.
6. The Amending Act has introduced sub-section (13) which provides that the disposal
of the application under this section has to be expeditious and endeavour shall be made to
dispose of the application within a period of 60 days from the date of service of notice on
the opposite party. This sub-section would ensure speedy disposal of applications under this
section and all contentious issues have been left to be decided by the arbitral tribunal.
7. For determining the fee structure of the arbitral tribunal, it has been recommended
that the High Courts may frame the necessary rules and for that purpose, a model fee
structure has been provided in the Fourth Schedule of the Amending Act. However, this
sub-section would not be applicable for the fee structure in case of international commercial
arbitrations and domestic arbitrations where the parties have agreed for determination of
fee as per rules of an arbitral institution. This sub-section has been inserted to ensure a
reasonable fee structure since the cost of arbitration has increased manifold due to high
charges being levied on the parties by the arbitral tribunal and other incidental expenses.
[Reference: Law Relating to Arbitration and Conciliation by Dr. P.C. Markanda; Lexis
Nexis, Ninth Edition, Page 460]
19. There is no dispute between the parties that the issue at hand is
governed by the amended provision of sub-section (6A) of Section 11. Even
though Letters of Award are dated 17.03.2012 and five separate contracts
were entered into between the parties on 10.05.2012, the dispute arose
between the parties in 2016 as pointed out earlier, Gangavaram Port Limited
invoked the Bank Guarantee on 07.01.2016 and M/s. Duro Felguera and its
Indian Subsidiary-FGI issued notice of dissatisfaction on 04.02.2016 and
07.02.2016 respectively to Gangavaram Port Limited. M/s. Duro Felguera
issued arbitration notice on 05.04.2016 for contract relating to Package No. 4
and FGI issued four arbitration notices dated 07.04.2016 for contracts relating
to Packages No. 6 to 9. Gangavaram Port Limited also issued an arbitration
notice on 13.04.2016. Since the dispute between the parties arose in 2016, the
amended provision of sub-section (6A) of Section 11 shall govern the issue, as
per which the power of the Court is confined only to examine the existence of
the arbitration agreement.
15
Whether there has to be a Single Arbitral Tribunal for 'International
Commercial Arbitration' or 'Multiple Arbitral Tribunals'?
20. Original Package No.4 Tender Document for Gangavaram Port Limited
Expansion-2011 consisted of "Bulk Material Handling Systems including
Engineering, Design, Procurement of Materials, Manufacturing, Supply
erection, testing and commissioning of bulk material handling systems
including all other associated works and integration of the same with the
existing coal handling systems (Package 4-"Works"). By mutual consent and
agreement of the parties, Original Package No.4 TD was split into five different
Packages-New Package No. 4 [awarded to Duro Felguera (Spanish
Company)] and Packages No. 6, 7, 8 and 9 awarded to its Indian
subsidiary-FGI. Letters of Award dated 17.03.2012 was awarded to Duro
Felguera and FGI for various Packages. Pursuant to Letters of Award, parties
have entered into contract agreement on 10.05.2012. These split-up contracts
have Volume I-Conditions of Contract; Volume II-Employer's Requirement,
Scope of Work, Specifications and Drawings; and Volume III-Schedule of
Prices. Five different Packages, the Letters of Award and the contract awarded
to Duro Felguera and FGI and the Scope of Work and the value thereof, read
as under:
16
THE
CORPORATE GUARANTEE CONTRACT
GPL-DF (Spain) 17.03.2012
Corporate Guarantee
..... .... Arbitration Clause - Cl.8
21. On behalf of GPL, it was repeatedly urged that the works are intrinsically
connected, inseparable, integrated, interlinked and that they are one
composite contract and that they were split up only on the request and
representations given by Duro Felguera and FGI. As discussed earlier, as per
amended provision Section 11 (6A), the power of the Supreme Court or the
High Court is only to examine the existence of an arbitration agreement.
From the record, all that we could see are five separate Letters of Award; five
separate Contracts; separate subject matters; separate and distinct work;
each containing separate arbitration clause signed by the respective parties to
the contract.
17
Package & Parties
(1)
L.O.A.
(2)
Date of Contract & the Scope of Work
(3)
Value/Price
(4)
No.4
GPL-DF (Spain)
17.03.2012
10.5.12
F.O.B. SUPPLY OF BULK MATERIAL HANDLING EQUIPMENTS
USD 26,666,932
No.6
GPL-FGI (India)
17.03.2012
10.5.12
Design, manufacture, supply, installation, erection, testing, commissioning of Bulk
Material Handling Equipments and all other activities related therewith
Rs.208,66,53,657
No.7
GPL-FGI (India)
17.03.2012
10.5.12
22. All the above five contracts awarded to Duro Felguera and FGI have
independent arbitration clauses. Mr. Sunil Gupta and Mr. A.M. Singhvi,
learned Senior Counsel have taken us through the contract agreements in
New Package No. 4 awarded to M/s Duro Felguera and Package No.6 (for
sample) awarded to FGI and submitted that all the five different contracts have
independent arbitration clauses (in sub-clause 20.6). In the contract New
Package No.4 there is a header "Supply of Bulk Material Handling Equipments
and Parts on FOB Basis". Likewise, contract agreement for Package No.6
contains the header "Design, manufacture, supply, installation, erection,
testing commissioning of Bulk Material Handling Equipments and all other
activities related therewith". Various clauses in the Original TD Package No.4
were suitably modified and incorporated in the split-up contract agreements.
Sub-clause 20.6 dealing with arbitration in the original Package No.4 TD has
been reproduced in New Package No.4 and other Packages No. 6 to 9. The
contract for New Package No. 4 which was entered into between M/s. Duro
Felguera and GPL, also contains an arbitration clause, which reads as under:
"Sub-Clause 20.6 - Arbitration
Any dispute in respect of which amicable settlement has not been reached within
the period stated in Sub-Clause 20.5, shall be finally and conclusively settled by
Arbitration under the Arbitration and Conciliation Act, 1996 by appointing two
arbitrators one by each party and a presiding arbitrator to be appointed by the said
arbitrators. Any such arbitration proceeding shall be within the exclusive jurisdiction
of court of law at Hyderabad, India. The place of Arbitration shall be Hyderabad
and the Language of Arbitration shall be English. The Contractor shall continue to
attend to discharge all his obligations under the Contract during pendency of the
Arbitration proceedings."
23. Likewise, the four different contract Packages No. 6, 7, 8 and 9 which
were awarded to FGI for different works also contain an arbitration clause.
18
Sub-clause 20.6 of Package No.6-Design, manufacture, supply, installation,
erection testing, commissioning of Bulk Material Handling Equipments etc.,
reads as under:-
"Sub-Clause 20.6 - Arbitration
Any dispute in respect of which amicable settlement has not been reached within
the period stated in Sub-Clause 20.5, shall be finally and conclusively settled by
Arbitration under the Arbitration and Conciliation Act, 1996 by appointing two
arbitrators one by each party and a presiding arbitrator to be appointed by the said
arbitrators. Any such arbitration proceeding shall be within the exclusive jurisdiction
of court of law at Hyderabad, India. The place of Arbitration shall be Hyderabad
and the Language of Arbitration shall be English. The Contractor shall continue to
attend to discharge all his obligations under the Contract during pendency of the
Arbitration proceedings."
Like Package No. 6, Contract/Agreement pertaining to other packages
awarded to FGI, namely, Packages No.7, 8 and 9 also contain similar
arbitration clause in sub-clause 20.6. The Original Package No. 4 TD split
into five different Packages, each having different works prima facie indicates
the intention of the parties to split-up original Package No. 4 TD into five
different packages, as was discussed above.
24. In the contract agreement, the parties have agreed that the documents
mentioned in clause (2) of the agreement will have priority. Clause (2) of the
agreement in New Package No. 4 awarded to Duro Felguera, reads as under:-
"2.The following documents shall form and be read and construed as part of this
Agreement and shall have the priority one over the other in the following sequence:
(a) this Agreement;
(b) the Letter of Award;
(c) Special Conditions of Contract (Conditions of Particular Applications)
(d) General Conditions of Contract;
(e) the Employer's Requirements, Scope of Work, Specifications and
Drawings;
(f) the Schedule of Prices;
(g) the Tender to the extent annexed herewith."
Similar clauses as to the priority of the documents was incorporated in all other
contract agreements-Packages No. 6, 7, 8 and 9 awarded to Indian subsidiary
19
FGI. In the sequence of documents of clause (2) of the contract agreement
quoted above, the Tender Document is mentioned in the sequence only as (g)
and all other documents or the other documents like Letters of Award, Special
conditions of contract etc. have priority over the same. While so, the terms
contained in Original Package No. 4 TD including the arbitration clause cannot
have priority over the Special Conditions of contract of the split-up contracts.
When the Original Package No. 4 TD has been split-up into five different
Packages, GPL is not right in contending that inspite of split-up of the work, the
Original Package No.4 TD collectively covered all the five Packages. After the
Original Package No. 4 was split into five different contracts, the parties cannot
go back to the Original Package No.4 nor can they merge them into one. We
do not find merit in the submissions of GPL that sub-clause 20.6 of the Original
Package No. 4 TD will still collectively cover all the five Packages to justify
constitution of single Arbitral Tribunal.
25. The foreign company-Duro Felguera had executed a Corporate
Guarantee dated 17.03.2012 guaranteeing the due performance of all the
works awarded to Duro Felguera and FGI. The Corporate Guarantee itself has
its own separate and distinct arbitration clause. The arbitration clause of the
Corporate Guarantee i.e. clause (8) reads as under:
"8. This Corporate Guarantee shall be governed by the Indian Laws. In case of any
disputes, the Parties shall endeavor to settle the same amicably. In case of failure to
settle the disputes amicably, the same shall be finally settled under the Arbitration and
Conciliation Act 1996 of India by appointing two Arbitrators, one by each party and a
Presiding Arbitrator to be appointed by the said Arbitrators. The award of the Arbitrators
shall be final and binding on the Corporate Company and the Employer. Any such
Arbitration proceeding shall be at Hyderabad and within the Jurisdiction of the Court of
Law at Hyderabad, Andhra Pradesh, India.The Arbitration shall be conducted in English
language."
20
26. In the Corporate Guarantee, Duro Felguera has undertaken to ensure
performance of all the works both by Duro Felguera and also the contracts
pertaining to Packages No. 6 to 9 awarded to FGI. Duro Felguera has also
undertaken that in the event of any delay in completion of the works as per the
time stipulated for completion of the contracts, Duro Felguera had undertaken
to compensate for the delay, damages to GPL which will be based on the
overall contract price collectively of all the contracts. The relevant clauses read
as under:-
"1. The Corporate Company hereby guarantees and covenants with the employer
that FGI will perform all its obligations and duties as per package 6 to package 9,
failing which the corporate company shall take over from FGI, as may be demanded
by the employer under this Guarantee, and shall perform or cause to be performed at
its own cost and risk and all the responsibilities, obligations and duties of FGI under
package 6 to Package 9 so far as and to the extent FGI was liable to perform it,
without any additional time and cost implication to the employer, subject to the
employer continuing to meet its own obligations under package 6 to package 9 with
respect to payments, approvals for drawings and other related matters to the
corporate company as if the corporate company were the principal contractor in
place of FGI.
2. In the event of any delay in completion of the works as per the time for completion
of the contracts for the reasons attributable to FGI and/or the corporate company,
such that these delays in turn results in causing overall delay in completion of all or
any one of the contracts, then the corporate company hereby undertakes to
compensate for the delay damages to the employer, which shall be based on the
overall contract price collectively of all the contracts and any other contract that may
be entered into by and between the employer and the corporate company or
FGI.........."
27. Contention of GPL is that as per the Corporate Guarantee, the Spanish
Company has inter alia undertaken to compensate GPL for delay damages,
based on the overall contract price collectively of all the Contracts awarded to
both Duro Felguera and FGI, arising on account of delay in completion of the
works in any one or all of the five Contracts. It is contended that the Spanish
Company is obligated to take over and perform the works at its own costs, risk
and responsibilities, as if it is the Principal Contractor including for the works
21
awarded to the Indian Subsidiary and therefore as per terms of Corporate
Guarantee executed by Duro Felguera, there has to be a single arbitral
tribunal for all the Packages.
28. As per the terms of Corporate Guarantee, it shall cease on issuance of
the performance certificate under all the contracts. Of course, Duro Felguera
has given the Corporate Guarantee for all the five contracts viz., New Package
No.4, Packages No. 6 to 9. Corporate Guarantee executed by Duro Felguera
dated 17.03.2012 also recognizes the split up of the original Package No. 4
Tender Document. As per the terms of the Corporate Guarantee, it is to be
invoked only if breach is established in one of the five contracts. Since the
Corporate Guarantee by itself has a separate arbitration clause, it cannot be
contended that by virtue of the Corporate Guarantee executed by Duro
Felguera, there has to be a 'composite reference' of 'International Commercial
Arbitration' which would cover all the five Packages. The Corporate Guarantee
by Duro Felguera cannot supersede the five split-up contracts and the special
conditions of contract thereon.
29. Duro Felguera and FGI have executed a tripartite Memorandum of
Understanding (MoU) on 11.08.2012 which, according to GPL, covers all the
five contracts namely New Package No. 4, Package No. 6, Package No. 7,
Package No. 8 and Package No. 9. In the said MoU both Duro Felguera and
FGI have agreed to carry out the works as per the priority of the documents
listed therein which includes the Original Package No.4 Tender Document
22
issued and final bid submitted by Duro Felguera and FGI. The relevant portion
of Memorandum of Understanding reads as under:-
"This Memorandum of Understanding (MoU) has been executed at Hyderabad on 11th
August 2012 by and between:
M/s Gangavaram Port Limited.....
And
M/s Duro Felguera Plantas Industries, S.A........,
M/s Felguera Gruas India Private Limited........
(Both DFPI and FGI shall jointly be referred to as the Contractors. The Employer and
the contractors shall collectively be referred to as the Parties. All the captive terms
used if any herein shall have the same meaning ascribed to it in the Contract.)
Whereas the parties have entered into different package contracts for execution of
Bulk Material Handling System under "Original Package 4 Tender Document"
covering ship unloaders, stackers, reclaimers, in-motion wagon loading system,
conveyors, transfer towers, electrical and control works, civil works, etc. and in order
to have more clarity on technical and execution related matters, the parties hereby
agree that the works shall be carried out as per the following priority of documents.
1. Annexure I to the Letter of Award issued for Package 4 Contract.
2. Annexure III to the Letter of Award issued for Package 4, 6, 7, 8, and 9
contracts.
3. Clarifications/Addendum No.1 to 4 (in the descending order) issued by the
Employer to the Original Package 4 Tender Document.
4. The Original Package 4 Tender Document issued by the Employer.
5. Final Technical Bid submitted by the Contractors in response to the Original
Package 4 Tender Document.
The parties undertake to keep this MoU as strictly confidential."
30. Contention of GPL is that Memorandum of Understanding (dated
11.08.2012) collectively covers all the five Packages and MoU shall prevail
over the arbitration clauses contained in five different Packages. In this
regard, reliance was placed upon sub-section (5) of Section 7 of the Act to
contend that since reference is made to Original Package No.4 TD in MoU,
arbitration clause 20.6 must be deemed to have become part of MoU. In
support of their contention, learned Senior Counsel Mr. Mukul Rohatgi and Mr.
Raju Ramchandran appearing for GPL, placed reliance upon Chloro Controls
India Private Ltd. v. Severn Trent Water Purification Inc. and Others
(2013) 1 SCC 641.
23
31. Per contra, the learned Senior Counsel for Duro Felguera and FGI
submitted that merely because MoU refers to Original Package No.4 Tender
Document, such mere reference cannot lead to an inference of arbitration
clause being incorporated as it only depends upon the intention of the Parties.
It was further submitted that the Memorandum of Understanding (MoU) is
merely a supplementary document which was meant to lay down the priority of
documents only to clarify the priority in execution of the work under different
Packages. It was further submitted that MoU was neither intended to alter the
nature of the rights, responsibilities and obligations of the parties involved in
the respective contracts nor does it override the terms of the main contract
including the arbitration clauses in the five different packages.
32. In light of the above contentions, the point falling for consideration is by
virtue of sub-section (5) of Section 7, whether the MoU is to be taken as the
basis for arbitration, justifying the constitution of single arbitral tribunal because
a reference is made to Original Package No.4 TD in Memorandum of
Understanding (MoU).
33. Section 7 (5) of the Arbitration and Conciliation (Amendment) Act, 2015
reads as under:-
“7. Arbitration agreement.—(1) .....
(5) The reference in a contract to a document containing an arbitration
clause constitutes an arbitration agreement if the contract is in writing and
the reference is such as to make that arbitration clause part of the contract.”
As per Section 7(5) of the Act, even though the contract between the parties
does not contain a provision for arbitration, an arbitration clause contained in
24
an independent document will be imported and engrafted in the contract between
the parties, by reference to such independent document in the contract,
if the reference is such as to make the arbitration clause in such document, a
part of the contract. Section 7(5) requires a conscious acceptance of the arbitration
clause from another document, as a part of their contract, before such
arbitration clause could be read as a part of the contract between the parties.
The question whether or not the arbitration clause contained in another document,
is incorporated in the contract, is always a question of construction of
document in reference to intention of the parties. The terms of a contract may
have to be ascertained by reference to more than one document.
34. In M.R. Engineers and Contractors Private Limited v. Som Datt
Builders Limited (2009) 7 SCC 696, the Supreme Court held that even
though the contract between the parties does not contain a provision for
arbitration, an arbitration clause contained in an independent document will
be incorporated into the contract between the parties, by reference, if the
reference is such as to make the arbitration clause in such document, a part
of the contract. In M. R. Engineers and Contractors Private Limited
(supra), this Court held as under:-
13. .......Having regard to Section 7(5) of the Act, even though the contract between the parties
does not contain a provision for arbitration, an arbitration clause contained in an independent
document will be imported and engrafted in the contract between the parties, by reference
to such independent document in the contract, if the reference is such as to make the
arbitration clause in such document, a part of the contract.
.....
22. A general reference to another contract will not be sufficient to incorporate the arbitration
clause from the referred contract into the contract under consideration. There should be a
special reference indicating a mutual intention to incorporate the arbitration clause from another
document into the contract. The exception to the requirement of special reference is
where the referred document is not another contract, but a standard form of terms and condi-
25
tions of trade associations or regulatory institutions which publish or circulate such standard
terms and conditions for the benefit of the members or others who want to adopt the same.
......
24. The scope and intent of Section 7(5) of the Act may therefore be summarised thus:
(i) An arbitration clause in another document, would get incorporated into a contract
by reference, if the following conditions are fulfilled:
(1) the contract should contain a clear reference to the documents containing arbitration
clause,
(2) the reference to the other document should clearly indicate an intention to incorporate
the arbitration clause into the contract,
(3) the arbitration clause should be appropriate, that is capable of application in respect
of disputes under the contract and should not be repugnant to any term of the
contract.
(ii) When the parties enter into a contract, making a general reference to another
contract, such general reference would not have the effect of incorporating the arbitration
clause from the referred document into the contract between the parties. The arbitration
clause from another contract can be incorporated into the contract (where such
reference is made), only by a specific reference to arbitration clause.
(iii) Where a contract between the parties provides that the execution or performance
of that contract shall be in terms of another contract (which contains the terms and conditions
relating to performance and a provision for settlement of disputes by arbitration),
then, the terms of the referred contract in regard to execution/performance alone will
apply, and not the arbitration agreement in the referred contract, unless there is special
reference to the arbitration clause also.
(iv) Where the contract provides that the standard form of terms and conditions of an
independent trade or professional institution (as for example the standard terms and
conditions of a trade association or architects association) will bind them or apply to the
contract, such standard form of terms and conditions including any provision for arbitration
in such standard terms and conditions, shall be deemed to be incorporated by reference.
Sometimes the contract may also say that the parties are familiar with those
terms and conditions or that the parties have read and understood the said terms and
conditions.
(v) Where the contract between the parties stipulates that the conditions of contract
of one of the parties to the contract shall form a part of their contract (as for example
the general conditions of contract of the Government where the Government is a party),
the arbitration clause forming part of such general conditions of contract will apply to
the contract between the parties."
35. Considering the MoU, in light of the above ratio, as pointed out earlier, in
the MoU, Original Package No.4 Tender Document is merely referred only to
have more clarity on technical and execution related matters and the parties
agreed that the works shall be carried out as per the priority of the documents
indicated thereon. Mere reference to Original Package No.4 Tender
Document in the sequence of priority of documents (as serial No.4) indicates
that the documents Original Package No. 4 TD containing arbitration clause
was not intended to be incorporated in its entirety but only to have clarity in
26
priority of the documents in execution of the work. Be it noted that Original
Package No.4 TD occurs as Serial No.4 in sequence, after three other
documents viz...,
"(i) Annexure 1 to the Letter of Award issued for Package No. 4 Contract;
and (ii) Annexure III to the Letter of Award issued for Packages No. 4, 6, 7, 8
and 9 contracts; and (iii) Clarifications/Addendums No.1 to 4 (in the
descending order) issued by the Employer to the Original Package No. 4
Tender Document."
There are a number of contract agreements between the parties - GPL, Duro
Felguera and FGI. It is pertinent to note that MoU dated 11.08.2012 itself does
not contain an arbitration clause. When reference is made to the priority of
documents to have clarity in execution of the work, such general reference to
Original Package No.4 Tender Document will not be sufficient to hold that the
arbitration clause 20.6 in the Original Package No.4 TD is incorporated in the
MoU.
36. The submission of GPL is that since reference to Original Package No.4
TD is made in MoU, the arbitration clause is incorporated in the MoU and
there has to be a 'composite reference' for settling the disputes under different
contracts by constitution of single arbitral tribunal for dealing with the
international commercial arbitration. As discussed earlier, as per the
amended provision of sub-section (6A) of Section 11, the power of the court is
only to examine the existence of arbitration agreement. When there are five
separate contracts each having independent existence with separate
arbitration clauses that is New Package No.4 (with foreign company Duro
Felguera) and Packages No. 6, 7, 8 and 9 [with Indian subsidiary (FGI)] based
27
on MoU and Corporate Guarantee, there cannot be a single arbitral tribunal
for "International Commercial Arbitration".
37. It was submitted that if the request of GPL is accepted and all Packages
are considered under the same reference, they shall be treated as
international commercial arbitrations, then FGI may lose the opportunity of
challenging the award under Section 34(2A) of the Act. In response to the
above submission, GPL offered to concede and submitted that Section 34
(2A) of the Act may be invoked by Indian subsidiary-FGI, though Section
34(2A) is not applicable to international commercial arbitration. Such a
concession is against the provisions and specific mandate of legislature and
cannot be accepted.
38. The Corporate Guarantee dated 17.03.2012 was executed by the
foreign company-Duro Felguera undertaking to compensate for the delay,
damages to the GPL. Since the Corporate Guarantee was by the foreign
company-Duro Felguera which contains separate arbitration clause, there has
to be a separate arbitral tribunal for resolving the disputes arising out of the
said Corporate Guarantee.
39. New Package No. 4 TD- F.O.B. Supply of Bulk Material Handling
28
Equipments USD 26,666,932 has been awarded to the foreign company-Duro
Felguera. Since Duro Felguera is a foreign company, in so far as the contract
awarded to Duro Felguera i.e. New Package No.4 and the dispute arising out
of the Corporate Guarantee executed by the foreign company-Duro Felguera
is concerned, the arbitral tribunal has to be for the international commercial
arbitration.
40. The learned Senior Counsel for GPL relied upon Chloro Controls India
Private Ltd. (supra), to contend that where various agreements constitute a
composite transaction, court can refer disputes to arbitration if all ancillary
agreements are relatable to principal agreement and performance of one
agreement is so intrinsically interlinked with other agreements. Even though
Chloro Controls has considered the doctrine of "composite reference",
"composite performance" etc., ratio of Chloro Controls may not be applicable
to the case in hand. In Chloro Controls, the arbitration clause in the principal
agreement i.e. clause (30) required that any dispute or difference arising
under or in connection with the principal (mother) agreement, which could not
be settled by friendly negotiation and agreement between the parties, would
be finally settled by arbitration conducted in accordance with Rules of ICC.
The words thereon "under and in connection with" in the principal agreement
was very wide to make it more comprehensive. In that background, the
performance of all other agreements by respective parties including third
29
parties/non-signatories had to fall in line with the principal agreement. In such
factual background, it was held that all agreements pertaining to the entire
disputes are to be settled by a "composite reference". The case in hand
stands entirely on different footing. As discussed earlier, all five different
Packages as well as the Corporate Guarantee have separate arbitration
clauses and they do not depend on the terms and conditions of the Original
Package No.4 TD nor on the MoU, which is intended to have clarity in
execution of the work.
41. Duro Felguera being a foreign company, for each of the disputes arising
under New Package No.4 and Corporate Guarantee, International
Commercial Arbitration Tribunal are to be constituted. M/s. Duro Felguera has
nominated Mr. Justice D.R. Deshmukh (Former Judge of Chhattisgarh
High Court) as their arbitrator. Gangavaram Port Limited (GPL) has
nominated Mr. Justice M.N. Rao (Former Chief Justice of Himachal
Pradesh High Court). Alongwith the above two arbitrators Mr. Justice R.M.
Lodha, Former Chief Justice of India is appointed as the Presiding Arbitrator of
the International Commercial Arbitral Tribunal.
42. Package No.6 (Rs.208,66,53,657/-); Package No.7 (Rs.59,14,65,706/-);
Package No.8 (Rs.9,94,38,635/-); and Package No.9 (Rs.29,52,85, 558/-)
have been awarded to the Indian company-FGI. Since the issues arising
30
between the parties are inter-related, the same arbitral tribunal, Justice R.M.
Lodha, Former Chief Justice of India, Justice D.R. Deshmukh, Former
Judge of Chhattisgarh High Court and Justice M. N. Rao, Former Chief
Justice of Himachal Pradesh High Court, shall separately constitute
Domestic Arbitral Tribunals for resolving each of the disputes pertaining to
Packages No.6, 7, 8 and 9.
43. Arbitration Petition No. 30 of 2016 filed by Duro Felguera shall stand
allowed and Arbitration Petition No.31 of 2016 filed by GPL shall stand
disposed of in the same line. Transfer Case No. 25/2017, Transfer Case No.
26/2017, Transfer Case No. 27/2017 and Transfer Case No. 28/2017 filed by
FGI shall also stand disposed of in the above lines. Parties shall bear their
respective costs.
..............................J.
[R. BANUMATHI]
New Delhi;
October 10, 2017
31
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
ARBITRATION PETITION NO. 30 OF 2016
M/S. DURO FELGUERA, S.A. … PETITIONER
VERSUS
M/S. GANGAVARAM PORT LIMITED … RESPONDENT
WITH
ARBITRATION PETITION NO. 31 OF 2016,
T.C. (C) NO. 25 OF 2017,
T.C. (C) NO. 26 OF 2017,
T.C. (C) NO. 27 OF 2017
AND
T.C. (C) NO. 28 OF 2017
J U D G M E N T
KURIAN, J.:
1. While agreeing with the conclusions in the illuminating judgment
of my esteemed sister Banumathi, J., I feel that a few more lines
would add greater lustre to the judgment.
2. What is the effect of the change introduced by the Arbitration
and Conciliation (Amendment) Act, 2015 (hereinafter referred to
as “the 2015 Amendment”) with particular reference to Section
32
11(6) and the newly added Section 11(6A) of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as “the 1996 Act”)
is the crucial question arising for consideration in this case.
3. Section 11(6A) added by the 2015 Amendment, reads as follows:
“11(6A) The Supreme Court or, as the case may
be, the High Court, while considering any
application under sub-section (4) or sub-section
(5) or sub-section (6), shall, notwithstanding any
judgment, decree or order of any Court, confine
to the examination of the existence of an
arbitration agreement.”
(Emphasis Supplied)
From a reading of Section 11(6A), the intention of the
legislature is crystal clear i.e. the Court should and need only look
into one aspect- the existence of an arbitration agreement. What are
the factors for deciding as to whether there is an arbitration
agreement is the next question. The resolution to that is simple - it
needs to be seen if the agreement contains a clause which provides
for arbitration pertaining to the disputes which have arisen between
the parties to the agreement.
4. On the facts of the instant case, there is no dispute that there
are five distinct contracts pertaining to five different works. No
doubt that all the works put together are for the expansion of
facilities at Gangavaram Port. However, the parties took a
33
conscious decision to split the works which led to five separate
contracts and consequently an arbitration clause in each split
contract was retained. The sixth one, namely the Corporate
Guarantee also contains an arbitration clause.
5. The main thrust of the arguments of Mr. Mukul Rohatgi, learned
Senior Counsel, is that the Memorandum of Understanding
(hereinafter referred to as “MoU”) has subsumed all the separate
agreements and therefore and thereafter there can only be one
agreement and, if so, only one Arbitral Tribunal for all the
disputes emanating from the five different agreements and the
Corporate Guarantee. This submission in our view is
misconceived. The whole purpose of the MoU is evident from its
text, the relevant portion of which has been extracted below :-
“Whereas the parties have entered into different
package contracts for execution of Bulk Material
Handling System under “Original Package 4 Tender
Document” covering ship unloaders, stackers,
reclaimers, in-motion wagon loading system,
conveyors, transfer towers, electrical and control
works, civil works, etc. and in order to have more
clarity on technical and execution related matters,
the parties hereby agree that the works shall be
carried out as per the following priority of
documents;
1. Annexure I to the Letter of Award issued for
Package 4 Contract.
2. Annexure III to the Letter of Award issued for
Package 4, 6, 7, 8 and 9 contracts.
34
3. Clarifications/ Addendum No. 1 to 4 (in the
descending order) issued by the Employer to the
Original Package 4 Tender Document.
4. The Original Package 4 Tender Document issued
by the employer.
5. Financial Technical Bid submitted by the
contractors in response to the Original Package 4
Tender Document.”
(Emphasis supplied)
6. It is clear that there is no novation by substitution of all the five
agreements nor is there a merger of all into one. The reference
to Original Package No. 4 Tender Document is only for better
clarity on technical and execution related matters.
7. The above finding is wholly in line with Section 7(5) of the 1996
Act. Section 7 which deals with arbitration agreement reads as
follows :-
“7. Arbitration agreement.—(1) In this Part,
“arbitration agreement” means an agreement by
the parties to submit to arbitration all or certain
disputes which have arisen or which may arise
between them in respect of a defined legal
relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of
an arbitration clause in a contract or in the form of a
separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is
contained in —
35
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other
means of telecommunication including
communication through electronic means which
provide a record of the agreement; or
(c) an exchange of statements of claim and defence
in which the existence of the agreement is alleged by
one party and not denied by the other.
(5) The reference in a contract to a document
containing an arbitration clause constitutes an
arbitration agreement if the contract is in writing and
the reference is such as to make that arbitration
clause part of the contract.”
(Emphasis Supplied)
Section 7(5) deals with incorporation by reference. The words
“the reference is such as to make that arbitration clause part of the
contract” are of relevance. Essentially, the parties must have the
intention to incorporate the arbitration clause. In M.R. Engineers
and Contractors Pvt. Ltd. v. Som Datt Builders Ltd.1
,
Raveendran, J. has dealt with this particular requirement in a
comprehensive manner. To quote:
“14. The wording of Section 7(5) of the Act makes it
clear that a mere reference to a document would
not have the effect of making an arbitration clause
from that document, a part of the contract. The
reference to the document in the contract should be
such that shows the intention to incorporate the
arbitration clause contained in the document, into
the contract. If the legislative intent was to import
an arbitration clause from another document,
merely on reference to such document in the
1
(2009) 7 SCC 696
36
contract, sub-section (5) would not contain the
significant later part which reads: “and the reference
is such as to make that arbitration clause part of the
contract”, but would have stopped with the first part
which reads:
“7. (5) The reference in a contract to a
document containing an arbitration clause
constitutes an arbitration agreement if the
contract is in writing….”
XXX XXX XXX
19. Sub-section (5) of Section 7 merely reiterates
these well-settled principles of construction of
contracts. It makes it clear that where there is a
reference to a document in a contract, and the
reference shows that the document was not
intended to be incorporated in entirety, then the
reference will not make the arbitration clause in the
document, a part of the contract, unless there is a
special reference to the arbitration clause so as to
make it applicable.
XXX XXX XXX
22. A general reference to another contract will not
be sufficient to incorporate the arbitration clause
from the referred contract into the contract under
consideration. There should be a special reference
indicating a mutual intention to incorporate the
arbitration clause from another document into the
contract. The exception to the requirement of
special reference is where the referred document is
not another contract, but a standard form of terms
and conditions of trade associations or regulatory
institutions which publish or circulate such standard
terms and conditions for the benefit of the members
or others who want to adopt the same.
XXX XXX XXX
37
24. The scope and intent of Section 7(5) of the Act
may therefore be summarised thus:
(i) An arbitration clause in another document,
would get incorporated into a contract by
reference, if the following conditions are fulfilled:
(1) the contract should contain a clear
reference to the documents containing
arbitration clause,
(2) the reference to the other document
should clearly indicate an intention to
incorporate the arbitration clause into the
contract,
(3) the arbitration clause should be
appropriate, that is capable of application
in respect of disputes under the contract
and should not be repugnant to any term
of the contract.
(ii) When the parties enter into a contract,
making a general reference to another contract,
such general reference would not have the effect
of incorporating the arbitration clause from the
referred document into the contract between the
parties. The arbitration clause from another
contract can be incorporated into the contract
(where such reference is made), only by a
specific reference to arbitration clause.
( iii) Where a contract between the parties
provides that the execution or performance of
that contract shall be in terms of another contract
(which contains the terms and conditions relating
to performance and a provision for settlement
of disputes by arbitration), then, the
terms of the referred contract in regard to
execution/performance alone will apply,
and not the arbitration agreement in the
referred contract, unless there is special
reference to the arbitration clause also.
38
(iv) Where the contract provides that the
standard form of terms and conditions of an
independent trade or professional institution (as
for example the standard terms and conditions
of a trade association or architects association)
will bind them or apply to the contract, such
standard form of terms and conditions including
any provision for arbitration in such standard
terms and conditions, shall be deemed to be
incorporated by reference. Sometimes the
contract may also say that the parties are
familiar with those terms and conditions or that
the parties have read and understood the said
terms and conditions.
( v) Where the contract between the parties
stipulates that the conditions of contract of one
of the parties to the contract shall form a part of
their contract (as for example the general
conditions of contract of the Government where
the Government is a party), the arbitration
clause forming part of such general conditions
of contract will apply to the contract between
the parties.”
(Emphasis supplied)
8. The detailed analysis of Section 7(5) in M.R. Engineers (supra)
further fortifies our conclusion that the MoU does not incorporate
an arbitration clause.
9. Learned Senior Counsel also contended that for convenience, it
is expedient that a single Arbitral Tribunal is constituted. We are
afraid that this contention also cannot be appreciated. The
parties are free to agree to anything for their convenience but
once such terms are reduced to an agreement, they can resile
39
from them only in accordance with law.
10.Having said that, this being one of the first cases on Section
11(6A) of the 1996 Act before this Court, I feel it appropriate to
briefly outline the scope and extent of the power of the High
Court and the Supreme Court under Sections 11(6) and 11(6A).
11.This Court in S.B.P & Co v. Patel Engineering Ltd and
Another2
overruled Konkan Railway Corpn. Ltd. and others
v. Mehul Construction Co.3 and Konkan Railway Corpn.
Ltd. & another. v. Rani Construction Pvt. Ltd.4
to hold that
the power to appoint an arbitrator under Section 11 is a judicial
power and not a mere administrative function. The conclusion in
the decision as summarized by Balasubramanyan, J. speaking
for the majority reads as follows:
“47. We, therefore, sum up our conclusions as follows:
(i) The power exercised by the Chief Justice of the
High Court or the Chief Justice of India under
Section 11(6) of the Act is not an administrative
power. It is a judicial power.
(ii) The power under Section 11(6) of the Act, in
its entirety, could be delegated, by the Chief
Justice of the High Court only to another Judge of
that Court and by the Chief Justice of India to
another Judge of the Supreme Court.
2
(2005) 8 SCC 618
3
(2000) 7 SCC 201
4
(2002) 2 SCC 388
40
(iii) In case of designation of a Judge of the High
Court or of the Supreme Court, the power that is
exercised by the designated Judge would be that
of the Chief Justice as conferred by the statute.
(iv) The Chief Justice or the designated Judge will
have the right to decide the preliminary aspects
as indicated in the earlier part of this judgment.
These will be his own jurisdiction to entertain the
request, the existence of a valid arbitration
agreement, the existence or otherwise of a live
claim, the existence of the condition for the
exercise of his power and on the qualifications of
the arbitrator or arbitrators. The Chief Justice or
the designated Judge would be entitled to seek
the opinion of an institution in the matter of
nominating an arbitrator qualified in terms of
Section 11(8) of the Act if the need arises but the
order appointing the arbitrator could only be that
of the Chief Justice or the designated Judge.
(v) Designation of a District Judge as the authority
under Section 11(6) of the Act by the Chief Justice
of the High Court is not warranted on the scheme
of the Act.
(vi) Once the matter reaches the Arbitral Tribunal
or the sole arbitrator, the High Court would not
interfere with the orders passed by the arbitrator
or the Arbitral Tribunal during the course of the
arbitration proceedings and the parties could
approach the Court only in terms of Section 37 of
the Act or in terms of Section 34 of the Act.
(vii) Since an order passed by the Chief Justice of
the High Court or by the designated Judge of that
Court is a judicial order, an appeal will lie against
that order only under Article 136 of the
Constitution to the Supreme Court.
(viii) There can be no appeal against an order of
the Chief Justice of India or a Judge of the
Supreme Court designated by him while
41
entertaining an application under Section 11(6) of
the Act.
(ix) In a case where an Arbitral Tribunal has been
constituted by the parties without having
recourse to Section 11(6) of the Act, the Arbitral
Tribunal will have the jurisdiction to decide all
matters as contemplated by Section 16 of the Act.
(x) Since all were guided by the decision of this
Court in Konkan Rly. Corpn. Ltd. v. Rani
Construction (P) Ltd. and orders under Section
11(6) of the Act have been made based on the
position adopted in that decision, we clarify that
appointments of arbitrators or Arbitral Tribunals
thus far made, are to be treated as valid, all
objections being left to be decided under Section
16 of the Act. As and from this date, the position
as adopted in this judgment will govern even
pending applications under Section 11(6) of the
Act.
(xi) Where District Judges had been designated by
the Chief Justice of the High Court under Section
11(6) of the Act, the appointment orders thus far
made by them will be treated as valid; but
applications if any pending before them as on this
date will stand transferred, to be dealt with by the
Chief Justice of the High Court concerned or a
Judge of that Court designated by the Chief
Justice.
(xii) The decision in Konkan Rly. Corpn. Ltd. v.
Rani Construction (P) Ltd is overruled.”
(Emphasis Supplied)
12.This position was further clarified in National Insurance
Company Limited v. Boghara Polyfab Private Limited5
To
quote:
5
(2009) 1 SCC 267
42
“22. Where the intervention of the court is sought
for appointment of an Arbitral Tribunal under
Section 11, the duty of the Chief Justice or his
designate is defined in SBP & Co. This Court
identified and segregated the preliminary issues
that may arise for consideration in an application
under Section 11 of the Act into three categories,
that is, (i) issues which the Chief Justice or his
designate is bound to decide; (ii) issues which he
can also decide, that is, issues which he may
choose to decide; and (iii) issues which should be
left to the Arbitral Tribunal to decide.
22.1. The issues (first category) which the Chief
Justice/his designate will have to decide are:
(a) Whether the party making the application has
approached the appropriate High Court.
(b) Whether there is an arbitration agreement and
whether the party who has applied under
Section 11 of the Act, is a party to such an
agreement.
22.2. The issues (second category) which the Chief
Justice/his designate may choose to decide (or
leave them to the decision of the Arbitral Tribunal)
are:
(a) Whether the claim is a dead (long-barred) claim
or a live claim.
(b) Whether the parties have concluded the
contract/transaction by recording satisfaction of
their mutual rights and obligation or by receiving
the final payment without objection.
22.3. The issues (third category) which the Chief
Justice/his designate should leave exclusively to the
Arbitral Tribunal are:
(i) Whether a claim made falls within
43
the arbitration clause (as for
example, a matter which is reserved
for final decision of a departmental
authority and excepted or excluded
from arbitration).
(ii) Merits or any claim involved in the
arbitration.”
13.The scope of the power under Section 11 (6) of the 1996 Act was
considerably wide in view of the decisions in SBP and Co.
(supra) and Boghara Polyfab (supra). This position continued
till the amendment brought about in 2015. After the
amendment, all that the Courts need to see is whether an
arbitration agreement exists - nothing more, nothing less. The
legislative policy and purpose is essentially to minimize the
Court’s intervention at the stage of appointing the arbitrator and
this intention as incorporated in Section 11 (6A) ought to be
respected.
14. In the case at hand, there are six arbitrable agreements (five
agreements for works and one Corporate Guarantee) and each
agreement contains a provision for arbitration. Hence, there has
to be an Arbitral Tribunal for the disputes pertaining to each
agreement. While the arbitrators can be the same, there has to
be six Tribunals - two for international commercial arbitration
involving the Spanish Company-M/s Duro Felguera, S.A. and four
44
for the domestic.
.…......................J.
(KURIAN JOSEPH)
New Delhi;
October 10, 2017.
45
ITEM NO.1502 COURT NO.4 SECTION XVI -A
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Arbitration Petition No(s). 30/2016
M/S DURO FELGUERA S.A Petitioner(s)
VERSUS
M/S. GANGAVARAM PORT LIMITED Respondent(s)
WITH
ARBIT. Petition No. 31/2016 (XVI -A)
T.C.(C) No. 25/2017 (XVI -A)
T.C.(C) No. 26/2017 (XVI -A)
T.C.(C) No. 27/2017 (XVI -A)
T.C.(C) No. 28/2017 (XVI -A)
Date : 10-10-2017 These petitions were called on for Judgment
today.
Counsel for the
parties Ms. Anitha Shenoy, Adv.
Ms. Rashmi Nandakumar, Adv.
Ms. Sristi Agnihotri, Adv.
Mr. Tarun Dua, AOR
Mr. Faisal Sherwani , AOR
Hon'ble Mrs. Justice R. Banumathi pronounced the reportable
Judgment of the Bench comprising Hon'ble Mr. Justice Kurian Joseph
and Her Lordship.
While agreeing with the conclusions in the Judgment pronounced
by Hon'ble Smt. R. Banumathi, J, Hon'ble Mr. Justice Kurian Joseph
also pronounced the reportable Judgment with concurrent opinion.
The concluding part of the Judgment pronounced by Hon'ble Mrs.
Justice R. Banumathi is as follows :-
“Arbitration Petition No. 30 of 2016 filed by
Duro Felguera shall stand allowed and
46
Arbitration Petition No.31 of 2016 filed by GPL
shall stand disposed of in the same line.
Transfer Case No. 25/2017, Transfer Case No.
26/2017, Transfer Case No. 27/2017 and Transfer
Case No. 28/2017 filed by FGI shall also stand
disposed of in the above lines. Parties shall
bear their respective costs.”
Pending Interlocutory Applications, if any, stand disposed of.
(JAYANT KUMAR ARORA) (RENU DIWAN)
COURT MASTER ASSISTANT REGISTRAR
(Two signed reportable Judgments are placed on the file)
47

No interference in second appeal - suit for injunction - when such findings are neither found to be against the pleadings nor the evidence nor any provisions of law and nor so found perverse to the extent that no judicial person can ever so record. 18) It is not in dispute as now one can say that the respondent's predecessor-in-title was granted Patta in relation to the suit land on payment. It is also not in dispute that the respondent is the grandson of original allottee. It is also not in dispute that the appellant (defendant) though took a stand that the Patta in question was cancelled and money returned but the appellant could not prove it with the aid of any evidence. It is also not in dispute that though the appellant took a stand that the Patta granted to the respondent's predecessor-in-title did not relate to the suit land but of some other land, the appellant also failed to prove even this fact with the 7 aid of any evidence. 19) The aforementioned stand taken by the appellant, in our view, was required to be proved by the appellant because the burden to prove these facts was on them but they failed to prove any of the issues though raised.= In our opinion, the respondent (plaintiff) was able to make out all the three necessary ingredients for grant of permanent injunction with the aid of evidence, namely, the prima facie case, the balance of convenience and the irreparable loss and injury, if the injunction is not granted to him. Since the respondent held a Patta of the suit land, there was a prima facie case in his favour. Secondly, he was also held to be in possession of the suit land and hence the other two ingredients, namely, the balance of convenience and irreparable loss and injury, were also in his favour. It is for these reasons, in our view, the plaintiff was rightly held entitled to claim permanent injunction against the 8 appellant (defendant) in relation to the suit land. 21) We, therefore, find no ground to interfere in any of the factual findings recorded by the two Courts below nor we find any merit in any of the arguments of the learned counsel for the appellant, which were only based on facts and evidence.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.10833 OF 2010
Nagar Palika Raisinghnagar ….Appellant(s)
VERSUS
Rameshwar Lal & Anr. …Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1) This appeal is filed by the defendant against
the final judgment and order dated 03.11.2006
passed by the High Court of Judicature for
Rajasthan at Jodhpur in S.B. Civil Regular Second
Appeal No.70 of 1989 whereby the High Court
dismissed the appeal filed by the defendant and
affirmed the judgment/decree passed by the first
Appellate Court dated 17.04.1989 in Appeal Civil
No. 19 of 1988 arising out of Civil Suit No.28 of
1
1983 decided on 06.09.1988 passed by the Munsif
and Judicial Magistrate, Raisinghnagar.
2) Facts of the case are simple so also the point
involved in the appeal. They, however, need
mention in brief infra.
3) The appellant is Nagar Palika Raisinghnagar
(Rajasthan). The appellant is the defendant
whereas the respondent is the plaintiff in the
aforementioned civil suit out of which this appeal
arises.
4) The dispute relates to a small piece of land
(100x100 sq. ft.) situated at Gaushala Block, Ward
No.10 (earlier known as ‘E Block’), Raisingh Nagar
(hereinafter referred to as “the suit land”).
5) The respondent (plaintiff) claiming to be the
holder and in possession of the suit land on the
strength of Patta issued in favour of his grand father
- Pokhar Ram by the appellant herein way back in
the year 1957 vide Resolution No.7 dated
13.02.1957 filed a suit against the appellant out of
2
which this appeal arises seeking permanent
injunction restraining the appellant from
dispossessing him from the suit land.
6) In substance, the case of the respondent, as
set out in the plaint, was that the appellant - Nagar
Palika had originally allotted the suit land to the
respondent’s grandfather - Pokhar Ram as back as
in 1957 against the payment of consideration which
had duly paid by Pokhar Ram to the appellant vide
receipt No.51 dated 18.03.1957.
7) It was alleged that Pokhar Ram then
constructed his hut on the suit land and continued
to live therein during his lifetime. On his death, the
respondent's father continued to live therein during
his lifetime and then on his death, the respondent
inherited the suit land/hut and continued to remain
in its occupation till the date of filing of the suit.
8) According to the respondent, the need to file
the suit arose because he had some apprehension
that the appellant-Nagar Palika which had taken
3
out a drive to oust some encroachers from the land
belonging to Nagar Palika in the Municipal area may
dispossess the respondent also from the suit land
treating him as an encroacher on the suit land. It
was for this reason, the respondent filed the civil
suit to seek permanent injunction against the
appellant in relation to the suit land on the strength
of Patta already granted in favour of his
predecessor-in-title by the appellant.
9) The appellant filed its written statement.
While denying the respondent's claim, the appellant
inter alia alleged that the respondent's grandfather
was given some other land, that the grant so made
in relation to the said land was cancelled and the
money received was also refunded to him, that the
suit land is a Nagar Palika land and the respondent
with the help of some employees of the Nagar Palika
got the suit land un-authorizedly allotted to him,
and lastly, the suit land is needed for public
purpose.
4
10) Issues were framed. Parties adduced evidence.
The Trial Court, vide judgment dated 06.09.1988,
dismissed the suit. The respondent (plaintiff), felt
aggrieved, filed first appeal before the First Appellate
Court. The First Appellate Court, vide
judgment/decree dated 17.04.1989, allowed the
appeal and while setting aside of the
judgment/decree of the Trial Court decreed the
respondent's suit and accordingly granted
permanent injunction, as prayed by the respondent,
against the appellant in relation to the suit land.
11) The First Appellate Court held that the
respondent's grandfather was granted Patta in
relation to the suit land by the appellant; that the
appellant failed to prove that it was cancelled and
pursuant thereto the respondent's predecessor
refunded the amount, that the Patta granted was in
relation to the suit land, that the respondent was in
possession of the suit land.
5
12) The appellant filed second appeal before the
High Court. The High Court, by impugned
judgment, dismissed the appeal and upheld the
judgment/decree of the First Appellate Court giving
rise to filing of the present appeal by way of special
leave before this Court by the defendant, i.e., Nagar
Palika.
13) Heard Mr. Puneet Jain, learned counsel for the
appellant and Mr. Dushyant Parashar, learned
counsel for the respondent.
14) Having heard the learned counsel for the
parties and on perusal of the record of the case, we
find no merit in the appeal.
15) This is a case, which does not involve any
question of law much less substantial question of
law what to say any question relating to public
importance.
16) When two Courts, namely, First Appellate
Court and the High Court found no merit in the
appeal and confirmed the findings of fact then, in
6
our opinion, such concurrent findings are binding
on this Court.
17) It is more so when such findings are neither
found to be against the pleadings nor the evidence
nor any provisions of law and nor so found perverse
to the extent that no judicial person can ever so
record.
18) It is not in dispute as now one can say that the
respondent's predecessor-in-title was granted Patta
in relation to the suit land on payment. It is also
not in dispute that the respondent is the grandson
of original allottee. It is also not in dispute that the
appellant (defendant) though took a stand that the
Patta in question was cancelled and money returned
but the appellant could not prove it with the aid of
any evidence. It is also not in dispute that though
the appellant took a stand that the Patta granted to
the respondent's predecessor-in-title did not relate
to the suit land but of some other land, the
appellant also failed to prove even this fact with the
7
aid of any evidence.
19) The aforementioned stand taken by the
appellant, in our view, was required to be proved by
the appellant because the burden to prove these
facts was on them but they failed to prove any of the
issues though raised.
20) In our opinion, the respondent (plaintiff) was
able to make out all the three necessary ingredients
for grant of permanent injunction with the aid of
evidence, namely, the prima facie case, the balance
of convenience and the irreparable loss and injury,
if the injunction is not granted to him. Since the
respondent held a Patta of the suit land, there was a
prima facie case in his favour. Secondly, he was
also held to be in possession of the suit land and
hence the other two ingredients, namely, the
balance of convenience and irreparable loss and
injury, were also in his favour. It is for these
reasons, in our view, the plaintiff was rightly held
entitled to claim permanent injunction against the
8
appellant (defendant) in relation to the suit land.
21) We, therefore, find no ground to interfere in
any of the factual findings recorded by the two
Courts below nor we find any merit in any of the
arguments of the learned counsel for the appellant,
which were only based on facts and evidence.
22) This Court cannot appreciate the evidence
again de novo while hearing this appeal. Though it
is not permissible, yet we probe the evidence with a
view to find out any error in the impugned judgment
calling our interference. We, however, find it none.
23) In the light of foregoing discussion, we find no
merit in the appeal, which fails and is accordingly
dismissed.
………...................................J.
[R.K. AGRAWAL]

…...……..................................J.
[ABHAY MANOHAR SAPRE]
New Delhi;
October 10, 2017
9
ITEM NO.1501 COURT NO.2 SECTION XV
(For Judgment)
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No(s). 10833/2010
NAGAR PALIKA RAISINGHNAGAR Appellant(s)
VERSUS
RAMESHWAR LAL & ANR. Respondent(s)
Date : 10-10-2017 This appeal was called on for
pronouncement of judgment today.
For Appellant(s) Ms. Pratibha Jain, AOR
For Respondent(s) Mr. Surya Kant, AOR
Hon'ble Mr. Justice Abhay Manohar Sapre
pronounced the judgment of the Bench
comprising Hon'ble Mr. Justice R.K. Agrawal
and His Lordship.
The appeal is dismissed in terms of the
signed reportable judgment.
Pending application(s), if any, shall
stand disposed of.
(NEETU KHAJURIA)
COURT MASTER
(ASHA SONI)
BRANCH OFFICER
(Signed reportable judgment is placed on the file
10

District Mineral Foundation under the Mines and Minerals (Development and Regulation) Act, 1957= we hold: (i) Merely because the DMFs have been established or are deemed to have been established from a date prior to the issuance of the relevant notifications does not make their operation retrospective. (ii) In any event, the establishment of the DMFs (assuming the establishment is retrospective) from 12th January, 2015 does not prejudicially affect any holder of a mining lease or a prospecting licence-cum-mining lease. (iii) In view of the failure of the Central Government to prescribe the rate on 12th January, 2015 at which contributions are required to be made to the DMF, the contributions to the DMF cannot be insisted upon with effect from 12th January, 2015. Fixing the maximum rate of contribution to the DMF is insufficient compliance with the law laid down by the Constitution Bench in Vatika. (iv) Contributions to the DMF are T.C. (C) Nos.43/2016 etc.etc. Page 33 of 34 required to be made by the holder of a mining lease or a prospecting licence-cum-mining lease in the case of minerals other than coal, lignite and sand for stowing with effect from 17th September, 2015 when the rates were prescribed by the Central Government. (v) Contributions to the DMF are required to be made by the holder of a mining lease or a prospecting licence-cum-mining lease in the case of coal, lignite and sand for stowing with effect from 20th October, 2015 when the rates were prescribed by the Central Government or with effect from the date on which the DMF was established by the State Government by a notification, whichever is later. (vi) The notification dated 31st August, 2016 issued by the Central Government is invalid and is struck down being ultra vires the rule making power of the Central Government under the MMDR Act. We fervently hope the State Governments recognize their responsibilities and utilize the contributions to the District Mineral Funds quickly and for the object for which they have been established, particularly since the amounts involved are huge. We grant time till 31st December, 2017 to those holders of a mining lease or a prospecting licence-cum-mining lease who have not made the full contribution to the District Mineral Funds to pay the T.C. (C) Nos.43/2016 etc.etc. Page 34 of 34 contribution, failing which they will be liable to make the contribution with interest at 15% per annum from the due date. We also make it clear that in the event any holder of a mining lease or a prospecting licence-cum-mining lease has mistakenly made contributions to the District Mineral Fund from a date prior to the date that we have determined, such a holder of a mining lease or a prospecting licencecum-mining lease shall not be entitled to any refund but may adjust the contribution against future contributions, without the benefit of any interest. 49. With the above conclusions, Transfer Petition Nos.74-76/2017 are allowed,

T.C. (C) Nos.43/2016 etc.etc. Page 1 of 34
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
TRANSFERRED CASE (CIVIL) NO. 43 OF 2016
Federation of Indian Mineral Industries & ors. …Petitioners
versus
Union of India & Anr. …Respondents
WITH
W.P. (C) No. 989/2016, W.P. (C) No. 1003/2016, T.C.
(C) No. 51/2016, W.P. (C) No. 1014/2016, W.P. (C)
No.1028/2016, T.C. (C) Nos. 273-275/2017 (arising out
of T.P. (C) Nos. 74-76/2017), W.P. (C) No. 67/2017,
W.P. (C) No. 205/2017, W.P. (C) No. 201/2017, S.L.P.
(C) No. 12099/2017, S.L.P. (C) Nos. 12184-12185/2017,
S.L.P. (C) No.14693/2017, S.L.P. (C) No.16685/2017,
W.P. (C) No. 886/2016, W.P. (C) No. 912/2016, W.P.
(C) No. 27/2017, W.P. (C) No. 112/2017 and W.P.(C)
No. 69/2017.
J U D G M E N T
Madan B. Lokur, J.
1. This batch of petitions (including transfer cases/petitions) relate
to the establishment of the District Mineral Foundation under the Mines
and Minerals (Development and Regulation) Act, 1957 and the
contribution required to be made to the District Mineral Foundation by
T.C. (C) Nos.43/2016 etc.etc. Page 2 of 34
the holder of a mining lease or a prospecting licence-cum-mining lease
in addition to the payment of royalty.
Ordinance of 12th January, 2015
2. On 12th January, 2015 the President promulgated an Ordinance
making several amendments to the Mines and Minerals (Development
and Regulation) Act, 1957 (for short ‗the MMDR Act‘). We are
concerned with only a few of these amendments which are detailed
below:
(i) Section 9 of the Ordinance inserted Section 9B in the
MMDR Act. This section provides that the State
Government shall establish a non-profit trust called the
District Mineral Foundation (for short ‗the DMF‘) in any
district affected by mining operations. The DMF shall
have the object of working for the interest and benefit of
persons and areas affected by mining related operations.
What is of significance is that this provision requires the holder of a
mining lease or a prospecting licence-cum-mining lease, in addition to
payment of royalty, to pay to the DMF concerned an amount equivalent
to a percentage of royalty not exceeding one-third thereof, as may be
prescribed by the Central Government. Section 9B of the MMDR Act,
T.C. (C) Nos.43/2016 etc.etc. Page 3 of 34
as inserted by the Ordinance, reads as follows:
―9B. District Mineral Foundation - (1) In any district
affected by mining related operations, the State Government
shall, by notification, establish a trust, as a non-profit body,
to be called the District Mineral Foundation.
(2) The object of the District Mineral Foundation shall be to
work for the interest and benefit of persons, and areas
affected by mining related operations in such manner as
may be prescribed by the State Government.
(3) The composition and functions of the District Mineral
Foundation shall be such as may be prescribed by the State
Government.
(4) The holder of a mining lease or a prospecting licencecum-mining
lease shall, in addition to the royalty, pay to the
District Mineral Foundation of the district in which the
mining operations are carried on, an amount which is
equivalent to such percentage of the royalty paid in terms of
the Second Schedule, not exceeding one-third of such
royalty, as may be prescribed by the Central Government.‖
(ii) Section 14 of the Ordinance inserted sub-clause
(qqa) in Section 13(2) of the MMDR Act relating to the
power of the Central Government to make rules in respect
of minerals. Clause (qqa) as inserted in the MMDR Act
reads as follows:
―(qqa) the amount of payment to be made to the District
Mineral Foundation under sub-section (4) of section 9B;‖
(iii) Section 15 of the Ordinance inserted sub-section (4)
in Section 15 of the MMDR Act relating to the power of
T.C. (C) Nos.43/2016 etc.etc. Page 4 of 34
the State Governments to make rules in respect of minor
minerals. Sub-section (4) as inserted in Section 15 of the
MMDR Act reads as follows:
―15. Amendment of section 15. – In section 15 of the
principal Act, after sub-section (3), the following subsection
shall be inserted, namely:-
―(4) Without prejudice to sub-sections (1), (2) and subsection
(3), the State Government may, by notification,
make rules for regulating the provisions of this Act for
the following, namely:―
(a) the manner in which the District Mineral Foundation
shall work for the interest and benefit of persons and
areas affected by mining under sub-section (2) of section
9B;
(b) the composition and functions of the District Mineral
Foundation under sub-section (3) of section 9B; and
(c) the amount of payment to be made to the District
Mineral Foundation by concession-holders of minor
minerals under section 15A.‖
(iv) Section 18 of the Ordinance inserted Section 20A in
the MMDR Act relating to the power of the Central
Government to issue directions. It is not necessary to
reproduce the provisions of Section 20A of the MMDR
Act except to say that the section enables the Central
Government to issue appropriate directions to the State
Governments for the conservation of mineral resources, or
T.C. (C) Nos.43/2016 etc.etc. Page 5 of 34
on any policy matter in the national interest, and for the
scientific and sustainable development and exploitation of
mineral resources.
Amendments to the MMDR Act
3. On 27th March, 2015 the Ordinance was replaced by the Mines
and Minerals (Development and Regulation) Amendment Act, 2015
with effect from 12th January, 2015. However, Section 9B and Section
13(2) clause (qqa) were further amended and they now read as follows:
―9B. District Mineral Foundation. – (1) In any district
affected by mining related operations, the State
Government shall, by notification, establish a trust, as a
non-profit body, to be called the District Mineral
Foundation.
(2) The object of the District Mineral Foundation shall
be to work for the interest and benefit of persons, and
areas affected by mining related operations in such
manner as may be prescribed by the State Government.
(3) The composition and functions of the District
Mineral Foundation shall be such as may be prescribed
by the State Government.
(4) The State Government while making rules under
sub-sections (2) and (3) shall be guided by the
provisions contained in article 244 read with Fifth and
Sixth Schedules to the Constitution relating to
administration of the Scheduled Areas and Tribal Areas
and the Provisions of the Panchayats (Extension to the
Scheduled Areas) Act, 1996 and the Scheduled Tribes
and Other Traditional Forest Dwellers (Recognition of
Forest Rights) Act, 2006.
(5) The holder of a mining lease or a prospecting
licence-cum-mining lease granted on or after the date of
commencement of the Mines and Minerals
T.C. (C) Nos.43/2016 etc.etc. Page 6 of 34
(Development and Regulation) Amendment Act, 2015,
shall, in addition to the royalty, pay to the District
Mineral Foundation of the district in which the mining
operations are carried on, an amount which is equivalent
to such percentage of the royalty paid in terms of the
Second Schedule, not exceeding one-third of such
royalty, as may be prescribed by the Central
Government.
(6) The holder of a mining lease granted before the date
of commencement of the Mines and Minerals
(Development and Regulation) Amendment Act, 2015,
shall, in addition to the royalty, pay to the District
Mineral Foundation of the district in which the mining
operations are carried on, an amount not exceeding the
royalty paid in terms of the Second Schedule in such
manner and subject to the categorisation of the mining
leases and the amounts payable by the various categories
of lease holders, as may be prescribed by the Central
Government.‖
―(qqa) the amount of payment to be made to the District
Mineral Foundation under sub-sections (5) and (6) of
section 9B.‖
4. Very broadly, the MMDR Act required the State Government to
establish a District Mineral Foundation and the Central Government
was required to prescribe the rate of contribution to the DMF, provided
the contribution did not exceed one-third of the royalty payable by the
holder of a mining lease or a prospecting licence-cum-mining lease.
Notifications issued
5. On 16th September, 2015 the Central Government, in exercise of
its power under Section 20A of the MMDR Act issued a direction to all
T.C. (C) Nos.43/2016 etc.etc. Page 7 of 34
the State Governments that the notification establishing the DMF shall
state that the DMF shall be deemed to have come into existence with
effect from 12th January, 2015. The direction dated 16th September,
2015 reads as follows:
―No. 16/7/2015 –M.VI (Part)
Government of India
Ministry of Mines
New Delhi, Shastri Bhawan
Dated the 16th September, 2015
ORDER
WHEREAS in terms of the provisions of sub-section (1) of section
9B of the Mines and Minerals (Development and Regulation)
(MMDR) Act, 1957 (67 of 1957), the State Governments shall, by
notification, establish a District Mineral Foundation in every
district in the country affected by mining related operations.
AND WHEREAS the said provision is deemed to have come into
force on the 12th day of January, 2015.
NOW THEREFORE, the Central Government in exercise of the
powers conferred under section 20A of the MMDR Act, 1957, in
the national interest hereby directs the concerned State
Governments that the notification establishing the District Mineral
Foundations shall state that such District Mineral Foundations shall
be deemed to have come into existence with effect from the 12th
day of January, 2015.
(R Sridharan)
Additional Secretary to the Government of India‖
6. It is not necessary for us to examine the validity of the direction
except to note that pursuant thereto, several State Governments did
establish a DMF as per the table below:
T.C. (C) Nos.43/2016 etc.etc. Page 8 of 34
Date of Notification and Establishment of DMF
State Date of Notification Date of Establishment
1 Andhra Pradesh 14.3.2016 14.3.2016
2 Chhattisgarh 22.12.2015 12.1.2015
3 Goa 15.1.2016 12.1.2015
4 Haryana 17.11.2016 12.1.2015
5 Jharkhand 22.3.2016 12.1.2015
6 Karnataka 11.1.2016 12.1.2015
7 Madhya Pradesh 15.5.2015 15.5.2015
8 Maharashtra 1.9.2016 16.9.2015
9 Odisha 18.8.2015 18.8.2015
10 Rajasthan 31.5.2016 12.1.2015
11 Tamil Nadu 19.5.2017 19.5.2017
12 Telangana 21.8.2015 21.8.2015
13 Uttar Pradesh 25.4.2017 12.1.2015
14 West Bengal 3.3.2016 3.3.2016
7. On 17th September, 2015 the Ministry of Mines issued a
notification promulgating the Mines and Minerals (Contribution to
District Mineral Foundation) Rules, 2015.1
In terms of the notification,
the Contribution Rules were deemed to have come into force on 12th
January, 2015. Paragraph 2 of the notification provides, inter alia, for
payment to the DMF an amount of 10% of the royalty payable by the
holder of a mining lease or prospecting licence-cum-mining lease
granted on or after 12th January, 2015 and 30% of the royalty payable in
respect of mining leases granted before 12th January, 2015.
1
The administration of the MMDR Act is with the Ministry of Mines for minerals other than coal, lignite and
sand for stowing
T.C. (C) Nos.43/2016 etc.etc. Page 9 of 34
8. Since the administration of MMDR Act with the Ministry of
Mines is limited to minerals other than coal, lignite and sand for
stowing, it is assumed that the notification did not relate to these three
minerals.
9. The notification dated 17th September, 2015 reads as follows:
―MINISTRY OF MINES
NOTIFICATION
New Delhi, the 17th September, 2015
G.S.R. 715(E).—In exercise of the powers conferred by subsections
(5) and (6) of Section 9B of the Mines and Minerals
(Development and Regulation) Act, 1957 (67 of 1957), the Central
Government hereby makes the following rules specifying the
amount to be paid by holder of a mining lease or a prospecting
licence-cum-mining lease, in addition to the royalty, to the District
Mineral Foundation of the district established by the concerned
State Government by notification, in which the mining operations
are carried on, namely:—
1. Short title and commencement.—(1) These rules may be
called as the Mines and Minerals (Contribution to District Mineral
Foundation) Rules, 2015.
(2) These rules shall be deemed to have come into force on the 12th
day of January, 2015.
2. Amount of contribution to be made to District Mineral
Foundation.—Every holder of a mining lease or a prospecting
licence-cum-mining lease shall, in addition to the royalty, pay to
the District Mineral Foundation of the district in which the mining
operations are carried on, an amount at the rate of —
(a) ten per cent of the royalty paid in terms of the Second Schedule
to the Mines and Minerals (Development and Regulation) Act,
1957 (67 of 1957) (herein referred to as the said Act) in respect
T.C. (C) Nos.43/2016 etc.etc. Page 10 of 34
of mining leases or, as the case may be, prospecting licencecum-mining
lease granted on or after 12thJanuary, 2015; and
(b) thirty per cent of the royalty paid in term of the Second
Schedule to the said Act in respect of mining leases granted
before 12th January, 2015.‖
10. On 20th October, 2015 the Ministry of Coal issued a notification
promulgating the Mines and Minerals (Contribution to District Mineral
Foundation) Rules, 2015.2
The Contribution Rules are deemed to have
come into force on the date of their publication in the Official Gazette.
These rules pertain to payment to the DMF at the same rate and on the
same terms as mentioned in the notification dated 17th September, 2015.
The subject notification, having been issued by the Ministry of Coal,
specifically mentioned that the rules were in respect of coal, lignite and
sand for stowing.
11. What is of significance in the notification dated 20th October,
2015 is paragraph 3 thereof. This provides that the amount payable to
the DMF shall be paid from the date of the notification issued under
Section 9B(1) of the MMDR Act by the State Government establishing
the DMF or the date of coming into force of the Contribution Rules,
whichever is later. The notification dated 20th October, 2015 reads as
follows:
2
The administration of the MMDR Act is with the Ministry of Coal for coal, lignite and sand for stowing.
T.C. (C) Nos.43/2016 etc.etc. Page 11 of 34
―MINISTRY OF COAL
NOTIFICATION
New Delhi, the 20th October, 2015
G.S.R. 792(E).—In exercise of the powers conferred by subsections
(5) and (6) of Section 9B of the Mines and Minerals
(Development and Regulation) Act, 1957 (67 of 1957), the Central
Government hereby makes the following rules in r/o of coal and
lignite and sand for stowing specifying the amount to be paid by
holder of a mining lease or a prospecting licence-cum-mining
lease, in addition to the royalty, to the District Mineral Foundation
of the district established by the concerned State Government by
notification, in which the mining operation are carried on,
namely:—
1. Short title and commencement.—(1) These rules may be
called as the Mines and Minerals (Contribution to District Mineral
Foundation) Rules, 2015.
(2) These rules shall be deemed to have come into force on the
date of their publication in the Official Gazette.
2. Amount of contribution to be made to District Mineral
Foundation.—Every holder of a mining lease or a prospecting
licence-cum-mining lease in respect of coal and lignite and sand
for stowing shall, in addition to the royalty, pay to the District
Mineral Foundation of the district in which the mining operation
are carried on, an amount at the rate of:—
(a) ten per cent of the royalty paid in term of the second schedule
to the Mines and Minerals (Development and Regulation) Act,
1957 (67 of 1957) (herein referred to as the said Act) in respect
of mining lease or, as the case may be, prospecting licencecum-mining
lease granted on or after 12thJanuary, 2015; and
(b) thirty per cent of the royalty paid in term of the Second
Schedule to the said Act in respect of mining lease granted
before 12th January, 2015.
3. Date from which contribution to be made.—The amount
calculated at the rate prescribed in rule 2 shall be paid from the
T.C. (C) Nos.43/2016 etc.etc. Page 12 of 34
date of notification issued under Section 9B(1) of the Act by the
State Government establishing District Mineral Foundation or the
date of coming into force of these rules, whichever is later.‖
12. The Ministry of Coal issued another notification on 31st August,
2016 substituting paragraph 3 of the notification dated 20th October,
2015. The substituted paragraph provided that payment under the
notification dated 20th October, 2015 shall be made to the DMF with
effect from 12th January, 2015. The notification dated 31st August,
2016 reads as follows:
―MINISTRY OF COAL
NOTIFICATION
New Delhi, the 31st August, 2016
G.S.R. 837(E).—In exercise of the powers conferred by subsections
(5) and (6) of section 9B of the Mines and Minerals
(Development and Regulation) Act, 1957, (67 of 1957), the Central
Government hereby makes the following rules in respect of coal,
lignite and sand for stowing, to amend the Mines and Minerals
(Contribution to District Mineral Foundation) Rules, 2015,
namely:-
1. These rules may be called as the Mines and Minerals
(Contribution to District Mineral Foundation) (Amendment) Rules,
2016.
In the Mines and Minerals (Contribution to District Mineral
Foundation) Rules, 2015, for rule 3, the following rule shall be
substituted, namely:-
―3. Date from which contribution to be made. – The
amount calculated at the rate specified in rule 2 shall be
paid with effect from the 12th January, 2015.‖
T.C. (C) Nos.43/2016 etc.etc. Page 13 of 34
Questions raised by the petitioners
13. On the basis of these notifications, the questions raised by
learned counsel for the petitioners are: Firstly, whether the DMFs could
be established with effect from 12th January, 2015? Secondly, whether
contributions to the DMFs were required to be made by the petitioners
at the rate mentioned in both sets of Contribution Rules with effect
from 12th January, 2015? The validity of the notifications was
challenged or was under challenge to this extent depending on their
interpretation and their impact and effect.
(i) The first question
14. In terms of sub-section (1) of Section 9B the State Government is
required to establish a trust as a non-profit body and that trust would be
called the District Mineral Foundation. For establishing the trust the
State Government is required to issue a notification. It is entirely for the
State Government to decide the date from which to set up the trust. The
Central Government has no role to play in this, although a direction was
issued by the Central Government to the State Governments to establish
a trust with effect from 12th January, 2015. But be that as it may, the
State Governments did issue a notification establishing the DMF –
T.C. (C) Nos.43/2016 etc.etc. Page 14 of 34
some with effect from 12th January, 2015 and some with effect from the
date of the notification establishing the DMF.
15. The submission of learned counsel for the petitioners is that the
DMF could not have been established from a retrospective date prior to
the date of the notification.
16. To answer this issue, it is necessary to first of all decide whether
the DMF has in fact been established retrospectively. The learned
Additional Solicitor General submitted that the DMFs were not
established with retrospective effect. His contention was that under
Section 9B of the MMDR Act the DMF could be established with effect
from 12th January, 2015 or any date thereafter. Some States chose to
issue a notification establishing the DMF from an anterior date (12th
January, 2015) while some others did not, notwithstanding the direction
of the Central Government. According to the learned Additional
Solicitor General establishing the DMF from a date anterior to the date
of the notification did not mean that the DMF was established with
retrospective effect. He relied on a decision of the Constitution Bench
of this Court in A. Thangal Kunju Musaliar v. M. Venkitachalam
Potti3
in support of his contention.
3
(1955) 2 SCR 1196
T.C. (C) Nos.43/2016 etc.etc. Page 15 of 34
17. Musaliar advances the case of the learned Additional Solicitor
General. The Constitution Bench acknowledged that the general law is
that a statute comes into force on the day it received the assent of the
competent authority. However that date could be postponed if so
provided in the statute. In Musaliar the statute provided that it was to
come into force on a date notified in the Government Gazette. Since the
statute was passed by the Legislature on 7th March, 1949 it would have
ordinarily come into force on that date but by virtue of Section 1(3) of
the statute, a notification was issued on 26th July, 1949 bringing the
statute into force on 22nd July, 1949 a date obviously later than 7th
March, 1949. The Constitution Bench held that the notification did not
prejudicially affect any vested rights and (by implication) its
retrospective operation could not be looked upon with disfavour.
Moreover, the operation of the statute was not from a date prior to its
passing and so it could not be said to have retrospective operation.
Fixing a date anterior to the date of the notification bringing the statute
into force did not attract the principle of disfavouring retrospective
operation. The Constitution Bench however did not consider the further
submission of the learned Attorney General that the notification was
good to bring the statute into operation from the date of issue of the
T.C. (C) Nos.43/2016 etc.etc. Page 16 of 34
notification. The law laid down by the Constitution Bench is quite
explicit when it was held:
―The reason for which the Court disfavours retroactive
operation of laws is that it may prejudicially affect vested
rights. No such reason is involved in this case. Section 1(3)
authorises the Government to bring the Act into force on such
date as it may, by notification, appoint. In exercise of the power
conferred by this section the Government surely had the power
to issue the notification bringing the Act into force on any date
subsequent to the passing of the Act. There can therefore, be no
objection to the notification fixing the commencement of the
Act on the 22nd July, 1949 which was a date subsequent to the
passing of the Act. So the Act has not been given retrospective
operation, that is to say, it has not been made to commence
from a date prior to the date of its passing. It is true that the
date of commencement as fixed by the notification is
anterior to the date of the notification but that
circumstance does not attract the principle disfavouring the
retroactive operation of a statute. Here there is no question
of affecting vested rights. The operation of the notification
itself is not retrospective. It only brings the Act into operation
on and from an earlier date. In any case it was in terms
authorised to issue the notification bringing the Act into force
on any date subsequent to the passing of the Act and that is all
that the Government did. In this view of the matter, the further
argument advanced by the learned Attorney-General and
which found favour with the Court below, namely, that the
notification was at any rate good to bring the Act into
operation as on and from the date of its issue need not be
considered.‖ (Emphasis supplied by us)
18. The notifications establishing the DMF in the States mentioned
in the table above were issued pursuant to the provisions of Section 9B
of the MMDR Act. The intention of Parliament appears to have been
for the State Governments to establish the DMF with effect from 12th
January, 2015 since its object is to work for the interest and benefit of
T.C. (C) Nos.43/2016 etc.etc. Page 17 of 34
persons and areas affected by mining related operations. The object
being the welfare of those adversely affected by mining operations, the
DMFs ought to have been established on 12th January, 2015. However,
not surprisingly, every State Government took it easy (including to a
lesser extent the State Governments of Madhya Pradesh, Odisha and
Telangana) compelling the Central Government to issue a direction
under Section 20A of the MMDR Act on 16th September, 2015
requiring the State Governments to issue a notification that the DMF
shall be deemed to have come into existence with effect from the 12th
January, 2015.
19. In any event, even assuming that since the DMFs were
established from a date anterior to the date of the notification and
therefore they were established with retrospective effect, their
establishment did not adversely affect anybody‘s vested rights (as will
be seen later). This is crucial. Therefore there can be no real objection
to the operation of the notifications from 12th January, 2015 in view of
the decision in Musaliar. The DMFs were not established from a date
prior to 12th January, 2015 and to that extent cannot be said to have
been established with retrospective effect.
20. Assuming the DMFs were established with retrospective effect –
T.C. (C) Nos.43/2016 etc.etc. Page 18 of 34
is that permissible in law? This question really does not arise in the
view that we have taken following Musaliar but since it was
vehemently argued by learned counsel by citing several decisions, we
briefly give our views.
21. The power to give retrospective effect to subordinate legislation
whether in the form of rules or regulations or notifications has been the
subject matter of discussion in several decisions rendered by this Court
and it is not necessary to deal with all of them – indeed it may not even
be possible to do so. It would suffice if the principles laid down by
some of these decisions cited before us and relevant to our discussion
are culled out. These are obviously relatable to the present set of cases
and are not intended to lay down the law for all cases of retrospective
operation of statutes or subordinate legislation. The relevant principles
are:
(i) The Central Government or the State Government (or any
other authority) cannot make a subordinate legislation having
retrospective effect unless the parent statute, expressly or by
necessary implication, authorizes it to do so. (Hukum Chand v.
Union of India4
and Mahabir Vegetable Oils (P) Ltd. v. State of
4
(1972) 2 SCC 601
T.C. (C) Nos.43/2016 etc.etc. Page 19 of 34
Haryana5
).
(ii) Delegated legislation is ordinarily prospective in nature
and a right or a liability created for the first time cannot be given
retrospective effect. (Panchi Devi v. State of Rajasthan6
).
(iii) As regards a subordinate legislation concerning a fiscal
statute, it would not be proper to hold that in the absence of an
express provision a delegated authority can impose a tax or a fee.
There is no scope or any room for intendment in respect of a
compulsory exaction from a citizen. (Ahmedabad Urban
Development Authority v. Sharadkumar Jayantikumar
Pasawalla7
and State of Rajashtan v. Basant Agrotech (India)
Limited.
8
).
22. A much more erudite, general and broad-based discussion on the
subject is to be found in the Constitution Bench decision in
Commissioner of Income Tax (Central) – I v. Vatika Township
Private Limited9
and we are obviously bound by the conclusions
arrived at therein. It is not at all necessary for us to repeat the
discussion and the conclusions arrived at by the Constitution Bench in
5
(2006) 3 SCC 620
6
(2009) 2 SCC 589
7
(1992) 3 SCC 285
8
(2013) 15 SCC 1
9
(2015) 1 SCC 1
T.C. (C) Nos.43/2016 etc.etc. Page 20 of 34
the view that we have taken except to say that our conclusions do not
depart from the conclusions arrived at by the Constitution Bench.
23. On the facts before us, it is clear that Section 15 of the MMDR
Act empowers the State Government to make rules for regulating the
grant of quarry leases, mining leases or other mineral concessions in
respect of minor minerals and for purposes connected therewith. This
section does not specifically or by necessary implication empower the
State Government to frame any rule with retrospective effect. Also, the
MMDR Act does not confer any specific power on the State
Government to fictionally create the DMF deeming it to be in existence
from a date earlier than the date of the notification establishing the
DMF. Therefore, it must follow that under the provisions of the MMDR
Act that we are concerned with, no State Government has the power to
frame a rule with retrospective effect or to create a deeming fiction,
either specifically or by necessary intendment.
24. Similarly, Section 13 of the MMDR Act does not confer any
specific power on the Central Government to frame any rule with
retrospective effect. Section 9B(5) and (6) read with clause (qqa)
inserted in Section 13(2) of the MMDR Act enable the Central
Government to make rules to provide for the amount of payment to be
T.C. (C) Nos.43/2016 etc.etc. Page 21 of 34
made to the DMF established by the State Government under Section
9B(1) of the MMDR Act. None of these provisions confer any power
on the Central Government to require the holder of a mining lease or a
prospecting licence-cum-mining lease to contribute to the DMF with
retrospective effect. Therefore, even the scope and extent of the rule
making power of the Central Government is limited.
25. In view of the position in law as explained above and the factual
position before us, the notifications issued by the State Governments
must be understood to mean (assuming the DMF could not be
established with effect from 12th January, 2015 by a notification issued
on a later date) that the DMF was established on the date of publication
of each notification. This is reflective of the further submission of the
learned Attorney General in Musaliar that was not considered by the
Constitution Bench. In our opinion this submission can be extrapolated
to the facts of the cases before us and if we do so, we find it well taken.
To the extent possible, the validity of a rule, regulation or notification
should be upheld. It is not obligatory to declare any notification ultra
vires the rule making power of the State Government if its validity can
be saved without doing violence to the law. In these cases, we are of
opinion that it is not obligatory to declare the notifications ultra vires
T.C. (C) Nos.43/2016 etc.etc. Page 22 of 34
the rule making power of the State Governments to the extent of their
establishing the DMF from a retrospective date, since we can save their
validity by reading them as operational from the date of their
publication. In any event, no prayer was made before us for striking
down the establishment of the DMF as such.
26. Therefore our answer to the first question is that the DMFs were
not established retrospectively even though the notifications established
them from a date anterior to the date of the notifications - but not before
the date of the Ordinance. Assuming the DMFs were established with
retrospective effect from 12th January, 2015 it is of no consequence
since the retrospective establishment does not prejudicially affect the
interests of anybody (as will be seen later). In this view of the matter,
the notifications do not violate the law laid down in Musaliar and
Vatika Township. Even otherwise, their validity can be saved by
reading them as operational from the date of publication.
(ii) The second question
27. Learned counsel for the petitioners submitted that assuming the
issue of retrospective operation of the notifications and the
establishment of the DMFs is decided against them, even then the
petitioners cannot be compelled to make the contribution for a period
T.C. (C) Nos.43/2016 etc.etc. Page 23 of 34
prior to the date of the relevant notifications, that is, 17th September,
2015 and 20th October, 2015 (as the case may be). For this purpose,
reliance was placed on M/s Govind Saran Ganga Saran v.
Commissioner of Sales Tax10 and Vatika Township.
28. In Govind Saran this Court was concerned with the taxation of
goods under Sections 14 and 15 of the Central Sales Tax Act, 1956 (the
CST Act) and the assessment made under the Bengal Finance (Sales
Tax) Act, 1941 as applied to the Union Territory of Delhi. Section 15 of
the CST Act reads:
―15. Every sales tax law of a State shall, insofar as it imposes
or authorizes the imposition of a tax on the sale or
purchase of declared goods, be subject to the following
restrictions and conditions, namely:
(a) the tax payable under that law in respect of any
sale or purchase of such goods inside the State
shall not exceed three percent of the sale or
purchase price thereof, and such tax shall not be
levied at more than one stage.‖
This Court noted that Section 15 of the CST Act prescribed the
maximum rate of tax that could be imposed and that such tax shall not
be levied at more than one point. Expanding on these requirements, this
Court observed in paragraph 6 of the Report as follows:
―The components which enter into the concept of a tax are well
known. The first is the character of the imposition known by its
10 1985 (Supp) SCC 205
T.C. (C) Nos.43/2016 etc.etc. Page 24 of 34
nature which prescribes the taxable event attracting the levy,
the second is a clear indication of the person on whom the levy
is imposed and who is obliged to pay the tax, the third is the
rate at which the tax is imposed, and the fourth is the measure
or value to which the rate will be applied for computing the tax
liability. If those components are not clearly and definitely
ascertainable, it is difficult to say that the levy exists in point of
law. Any uncertainty or vagueness in the legislative scheme
defining any of those components of the levy will be fatal to
its validity.‖ (Emphasis supplied by us)
29. After the above observations, this Court primarily dealt with the
absence of specifying the single point at which the tax might be levied
and held that the prerequisite of Section 15 of the CST Act that the tax
shall not be levied at more than one stage had not been satisfied.
Therefore, it quashed the assessment complained of and allowed the
appeal of the assessee.
30. In Vatika Township the Constitution Bench was concerned with
the impact of the proviso appended to Section 113 of the Income Tax
Act, 1961 inserted by the Finance Act.11 The rate of surcharge was not
specified in the proviso nor the date for the levy. The consequence of
this was that some assessing officers were not levying any surcharge
and those who were levying surcharge adopted different dates for the
11 113. Tax in the case of block assessment of search cases.-The total undisclosed income of the block
period, determined under Section 158BC, shall be chargeable to tax at the rate of sixty per cent:
Provided that the tax chargeable under this section shall be increased by a surcharge, if any, levied by any
Central Act and applicable in the assessment year relevant to the previous year in which the search is
initiated under section 132 or the requisition is made under section 132A.
T.C. (C) Nos.43/2016 etc.etc. Page 25 of 34
levy. In this context it was held that the rate at which a tax or for that
matter a surcharge is to be levied is an essential component of the tax
regime. The decision in Govind Saran was referred to by the
Constitution Bench, particularly the passage extracted above. It was
further held: ―It is clear from the above that the rate at which the tax is
to be imposed is an essential component of tax and where the rate is not
stipulated or it cannot be applied with precision, it would be difficult to
tax a person.‖
31. We may also note a similar view expressed in Principles of
Statutory Interpretation by Justice G.P. Singh12 that: ―There are three
components of a taxing statute, viz. subject of the tax, person liable to
pay the tax and the rate at which the tax is levied. If there be any real
ambiguity in respect of any of these components which is not
removable by reasonable construction, there would be no tax in law till
the defect is removed by the legislature.‖
32. In view of the decision of the Constitution Bench of this Court
that the specification of the rate of tax (or any compulsory levy for that
matter) is an essential component of the tax regime, it is difficult to
agree with the learned Additional Solicitor General that specifying the
12 14th edition revised by Justice A.K. Patnaik, former Judge, Supreme Court of India, page 876
T.C. (C) Nos.43/2016 etc.etc. Page 26 of 34
maximum amount of compensation to be paid to the DMF in terms of
Section 9B of the MMDR Act, being an amount not exceeding onethird
of the royalty, satisfies the requirements of law. What is required
by the law is certainty and not vagueness – not exceeding one-third
could mean one-fourth or one-fifth or some other fraction. It is this
uncertainty that is objectionable.
33. Therefore, our answer to the second question is that the
petitioners are not liable to make any contribution to the DMF from 12th
January, 2015.
Crucial date for making the contribution to the DMF
34. What then is the crucial date for making the contribution? There
are two categories of holders of a mining lease or a prospecting licencecum-mining
lease. We will consider the effect of the notifications on
each such category.
Lease holders for minerals other than coal, lignite and sand for
stowing
35. On 17th September, 2015 the Ministry of Mines in the Central
Government issued a notification regarding the contribution to the DMF
in respect of minerals other than coal, lignite and sand for stowing. The
rate at which the contribution was required to be made by the holder of
T.C. (C) Nos.43/2016 etc.etc. Page 27 of 34
a mining lease or a prospecting licence-cum-mining lease is specified in
the notification. Although the notification provides that the contribution
is payable from 12th January, 2015 in view of our conclusion that the
contribution to the DMF cannot be with retrospective effect, it would be
payable only from the date of the notification, that is, 17th September,
2015 even though the DMF was established or deemed to be established
with effect from 12th January, 2015.
36. The further question raised by learned counsel for the petitioners
in this regard was: How can the contribution be made to an entity like
the DMF that was established only on a date subsequent to 17th
September, 2015 (except for the States of Madhya Pradesh, Odisha and
Telangana)? Can the contribution be paid to a non-existent trust?
37. We are afraid this line of questioning does not appeal to us. The
object of the DMF is ―to work for the interest and benefit of persons,
and areas affected by mining related operations‖. The purpose of
Section 9B of the MMDR Act and the object of the DMF are in
furtherance of the cause of social justice for those affected by the
mining related operations – including tribals who may be dislocated or
displaced from their habitat. To deny them a benefit that is rightfully
theirs only because the State Government has been lax in establishing
T.C. (C) Nos.43/2016 etc.etc. Page 28 of 34
the DMF would be doing injustice to them.
38. Additionally, Section 9B of the MMDR Act creates a liability
and only the quantum of the liability remained to be determined. That
determination came on the issuance of the notification of 17th
September, 2015. The fact that it would take time (even more than a
year as in the case of Tamil Nadu and Uttar Pradesh) for the benefit to
reach the affected persons cannot detract from the liability of the
petitioners to contribute nor does it absolve them of their liability to pay
the contribution. The only criticism could be of the tardiness and lack of
concern by State Governments in setting up the DMF in spite of the
direction of the Central Government.
39. In A. Prabhakara Reddy v. State of Madhya Pradesh13 one of
the questions raised was that since the Madhya Pradesh Building and
Other Construction Workers Welfare Board came to be constituted only
on 9th April, 2003 the recovery of cess under the Building and Other
Construction Workers Welfare Cess Act, 1996 with effect from 1st
April, 2003 did not arise. On this basis, the requirement to pay cess
was challenged.
40. This Court rejected the contention and held that after the Cess
13 (2016) 1 SCC 600
T.C. (C) Nos.43/2016 etc.etc. Page 29 of 34
Act and the rules framed thereunder came into effect and the Workers
Welfare Board was constituted and the rate of cess was notified, the
State was under an obligation to collect the cess in respect of on-going
projects. The fact that passing on the benefit to the workers might take
some time had no impact on the liability to pay the cess. It was further
held that: ―Any other interpretation would defeat the rights of the
workers whose protection is the principal aim or primary concern and
objective of the BOCW Act as well as the Cess Act.‖
41. We hold, therefore, that the effective date of payment of
contribution to the DMF in the case of those petitioners who are (or
were) holders of a mining lease or a prospecting licence-cum-mining
lease for minerals other than coal, lignite and sand for stowing would be
17th September, 2015.
Lease holders for coal, lignite and sand for stowing
42. The position with regard to contribution to the DMF by the
holders of a mining lease or a prospecting licence-cum-mining lease for
coal, lignite and sand for stowing is quite different from the situation of
the other holders of a mining lease or a prospecting licence-cum-mining
lease. The reason for this is to be found in the text of paragraph 3 of the
notification of 20th October, 2015 which is very explicit. It provides that
T.C. (C) Nos.43/2016 etc.etc. Page 30 of 34
the contribution, though payable, shall be paid only from the date of the
notification (20th October, 2015) or from the date of establishment of
the DMF in the concerned State, whichever is later. Therefore, only
Madhya Pradesh, Odisha and Telangana would be entitled to the
contribution from holders of a mining lease or a prospecting licencecum-mining
lease from 20th October, 2015 since their DMF was
established much earlier. As far as all other States are concerned, the
holders of a mining lease or a prospecting licence-cum-mining lease
could claim to postpone payment to the DMF till it was established, as
per the notification issued by the State Government.
43. It is true that many notifications establishing the DMF provided
the date of establishment as 12th January, 2015 but as mentioned earlier
the rule making power of the Central Government and the State
Government under the MMDR Act does not permit retrospective
operation of subordinate legislation. It cannot also be said that the
Contribution Rules have retrospective operation by necessary
implication. Even this occasion does not arise. Furthermore, as held
above, the rate at which the contribution was to be paid came to be
notified only on 20th October, 2015. Therefore in view of the law
discussed above, it cannot be said that the contribution should be paid
T.C. (C) Nos.43/2016 etc.etc. Page 31 of 34
by the holders of a mining lease or a prospecting licence-cum-mining
lease with effect from 12th January, 2015.
44. The learned Additional Solicitor General sought to rely on the
subsequent notification dated 31st August, 2016 which substituted
paragraph 3 in the notification of 20th October, 2015 with the
requirement that the contribution ―shall be paid with effect from the 12th
January, 2015.‖ For the same reasons already given by us, such a
retroactive substitution is ultra vires the rule making power of the
Central Government. The notification dated 31st August, 2016 is clearly
beyond the rule making power of the Central Government and must be
struck down and we do so. All that this means is that the notification of
20th October, 2015 remains untouched and must be read and understood
on its plain language. The result is that in respect of coal, lignite and
sand for stowing the holder of a mining lease or a prospecting licencecum-mining
lease shall pay the contribution to the DMF from 20th
October, 2015 or the date of establishing the DMF, whichever is later.
45. Finally, it was submitted by one of the learned counsel that
Section 9B of the MMDR Act was a conditional legislation and that it
could become operative only on the fulfilment of certain conditions. We
cannot agree. Section 9B of the MMDR Act delegates power to the
T.C. (C) Nos.43/2016 etc.etc. Page 32 of 34
State Governments to establish the DMF without any pre-condition.
Similarly, it delegates power to the Central Government to prescribe the
rate at which the contribution should be made to the DMF. This again is
without any pre-condition. In view of this, we are unable to describe
Section 9B of the MMDR Act as a conditional legislation.
Conclusion
46. Having considered the issues raised by the petitioners and by the
learned Additional Solicitor General in different perspectives, we hold:
(i) Merely because the DMFs have been established or are deemed to
have been established from a date prior to the issuance of the relevant
notifications does not make their operation retrospective. (ii) In any
event, the establishment of the DMFs (assuming the establishment is
retrospective) from 12th January, 2015 does not prejudicially affect any
holder of a mining lease or a prospecting licence-cum-mining lease. (iii)
In view of the failure of the Central Government to prescribe the rate on
12th January, 2015 at which contributions are required to be made to the
DMF, the contributions to the DMF cannot be insisted upon with effect
from 12th January, 2015. Fixing the maximum rate of contribution to
the DMF is insufficient compliance with the law laid down by the
Constitution Bench in Vatika. (iv) Contributions to the DMF are
T.C. (C) Nos.43/2016 etc.etc. Page 33 of 34
required to be made by the holder of a mining lease or a prospecting
licence-cum-mining lease in the case of minerals other than coal, lignite
and sand for stowing with effect from 17th September, 2015 when the
rates were prescribed by the Central Government. (v) Contributions to
the DMF are required to be made by the holder of a mining lease or a
prospecting licence-cum-mining lease in the case of coal, lignite and
sand for stowing with effect from 20th October, 2015 when the rates
were prescribed by the Central Government or with effect from the date
on which the DMF was established by the State Government by a
notification, whichever is later. (vi) The notification dated 31st August,
2016 issued by the Central Government is invalid and is struck down
being ultra vires the rule making power of the Central Government
under the MMDR Act.
47. We fervently hope the State Governments recognize their
responsibilities and utilize the contributions to the District Mineral
Funds quickly and for the object for which they have been established,
particularly since the amounts involved are huge.
48. We grant time till 31st December, 2017 to those holders of a
mining lease or a prospecting licence-cum-mining lease who have not
made the full contribution to the District Mineral Funds to pay the
T.C. (C) Nos.43/2016 etc.etc. Page 34 of 34
contribution, failing which they will be liable to make the contribution
with interest at 15% per annum from the due date. We also make it
clear that in the event any holder of a mining lease or a prospecting
licence-cum-mining lease has mistakenly made contributions to the
District Mineral Fund from a date prior to the date that we have
determined, such a holder of a mining lease or a prospecting licencecum-mining
lease shall not be entitled to any refund but may adjust the
contribution against future contributions, without the benefit of any
interest.
49. With the above conclusions, Transfer Petition Nos.74-76/2017
are allowed, Transferred Cases (arising out of Transfer Petition (C)
Nos.74-76/2017), Transferred Cases (C) Nos.43 and 51 of 2016 and the
batch of petitions are disposed of. All other pending applications are
also disposed of.
.......……………………J
(Madan B. Lokur)
...………………………J
(Sanjay Kishan Kaul)
……………………….....J
New Delhi; (Deepak Gupta)
October 13, 2017

corporate law - excise duty.- (i) Whether the Board’s Circular No.495/61/99-CX.3, dated 22.11.1999 exempts payment of excise duty on perfumery compound manufactured by the respondent; and (ii) Whether actual marketing of the perfumery compound is necessary for the levy of excise duty.= It is settled that to hold the product as excisable/dutiable, actual marketing/sale of goods is not necessary- In the instant case, the assessee manufactures agarbathi perfumes (odoriferous compound) by mixing inputs, aromatic chemicals, perfume oil and acids according to the pre-determined formula. It is prepared by the respondents in their Bangalore factory and then transferred to their Mysore factory where finally it is applied on raw agarbathis. In this process of manufacturing the perfumery compounds are capable of 8 being sold in the open market. The odoriferous compound has got a shelf life and capable of being stored/transported/sold and bought by agarbathi industries. As noticed above the assessee had sold certain quantity of perfumery compound to M/s. Tibetan Handicrafts Centre Bylkuppe, Mysore District. Therefore, we are of the view that it is an excisable product falling under Chapter Sub-Heading 3302.90. The counter view taken by the CESTAT cannot be justified. Hence, the appeals are allowed and the orders dated 11.11.2010 passed by the CESTAT are hereby set aside.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURSIDCITON
CIVIL APPEAL NOS. 4822-4825 OF 2015
COMMISSIONER OF CENTRAL EXCISE
& SERVICE TAX, BANGALORE … APPELLANT
VERSUS
M/S KARNATAKA SOAPS & DETERGENTS LTD. … RESPONDENT
J U D G M E N T
S.ABDUL NAZEER, J.
1. These appeals raise two questions, namely:
(i) Whether the Board’s Circular No.495/61/99-CX.3, dated
22.11.1999 exempts payment of excise duty on perfumery
compound manufactured by the respondent; and
(ii) Whether actual marketing of the perfumery compound is
necessary for the levy of excise duty.
2. The respondent is a manufacturer of agarbathi perfumes. The agarbathi
perfumes are odoriferous compound prepared by the respondent in its Bangalore unit
and then transported to its Mysore unit, where it is applied to agarbathis to complete
the process of manufacture of agarbathis. The respondent was paying excise duty
with respect to these odoriferous compounds till March 2001 as this substance is
covered under Chapter Sub-Heading 3302.90 of the First Schedule to the Central
Excise Tariff Act, 1985. The Central Board of Excise and Customs (for short ‘the
2
Board’) issued the aforesaid circular which clarified that the odoriferous substance,
not capable of being bought and sold in the market in the normal course of trade, is
not excisable. The respondent transferred the odoriferous compounds to its Mysore
unit on stock transfer basis. Some part of the compounds was sold to M/s. Tibetan
Handicrafts Centre, Bylkuppe, Mysore District.
3. The Additional Commissioner of Central Excise, Bangalore-III, issued
show-cause notices calling upon the respondent to pay excise duty along with penalty
and interest at the appropriate rates under Sections 11A, 11AB and 11AC of the
Central Excise Act, 1944 (for short ‘the Act’) for the period 2001-2002 to 2006-2007.
These notices were contested by the respondent. The Additional Commissioner
passed orders holding that the Board’s circular dated 22.11.1999 is not applicable to
the respondent and hence the respondent is liable to pay excise duty, penalty and
interest thereon in respect of odoriferous substance prepared by it. These orders were
confirmed by the appellate authority in the appeals filed by the respondent. The
respondent challenged the said orders before the CESTAT, South Zonal Bench,
Bangalore. The CESTAT has allowed the appeals and set aside the said orders to the
extent they uphold the demand of duty, interest thereon and the penalty imposed on
the appellant for which there was no evidence of sale. The Revenue has challenged the
legality and correctness of the said orders in these appeals.
4. Appearing for the Revenue, Sri P.S. Narasimha, learned Additional Solicitor
General, submits that the rate of duty to be paid on the perfumery compounds is
clearly mentioned under Chapter Sub-Heading 3302.90 of the First Schedule to the
3
Central Excise Tariff Act, 1985 and it is on this rate that the respondent used to pay
duty till March, 2001. The respondent is, therefore, not entitled to the benefit under
the ambit of the circular dated 22.11.1999. The respondent does not manufacture
agarbathi as per the general practice which has been contemplated under the circular
dated 22.11.1999. The respondent manufactures perfumery compounds in its
Bangalore unit and then transports them to its Mysore unit where it is finally applied
to raw agarbathis to complete the manufacturing process of agarbathis. In this process
of manufacturing, the perfumery compounds are capable of being sold in the open
market.
5. It is further submitted that CESTAT erroneously devised a test of actual sale of
the odoriferous substance to hold that in the absence of actual sale of such substance,
no excise duty could be levied on the same. It is argued that the respondent has sold
the Venkateshwara Brand agarbathi perfumery compound to Tibetan Handicrafts
Centre vide invoice Nos. 9 and 33 dated 11.5.2004 and 10.8.2004 respectively. The
CESTAT ought to have appreciated that although the final product, i.e. the agarbathi,
is exempted, the intermediate product has got marketability.
6. On the other hand, Ms. L. Charanya, learned counsel appearing for the
respondent-assessee submits that the perfumery compound manufactured by the
respondent and the stock transferred to their Mysore unit for use in particular brands
of agarbathis is non-excisable as per the Board circular dated 22.11.1999. It is further
contended that the perfumery compound manufactured as such, is not marketed by the
respondent. Therefore, it does not attract excise duty. She prays for dismissal of the
4
appeals.
7. We have carefully considered the submissions of the learned counsel for the
parties. The basic issue is with regard to the exciseability of the product, viz.
agarbathi perfume also called as odoriferous compound which is used in manufacture
of agarbathis sold in the market. The Board vide its circular clarified that such
odoriferous compound mixed with dough is not excisable. For better understanding,
the Board’s circular is as under:
“The Board’s Circular No.495/61/99-CX.3 dated
22.11.1999:
Subject: Excisability of Odoriferoous compound/Agarbathi
mix arising during the course of manufacture of Agarbathi –
Regarding.
It has been brought to the notice of the Board that
field formations are demanding duty on the compound
preparation arising during the course of manufacture of
Agarbathi classifying them under Heading 3302.90 of the
Central Excise Tariff as odoriferous compound.
2. The matter has been examined in the Board. The
Agarbathi manufacturing process involves simple mixing
of a few aromatic chemicals with a base oil in a container
in liquid form which is mixed directly with the dough or
applied on Agarbathi in the required proportion and such
dough, mixed with the aromatic compound; is used for
rolling of Agarbathi. The Agarbathi manufacturers
normally carry out the whole process in a continuous
manner in the course of manufacture of Agarbathi.
3. Moreover, each brand of Agarbathi has a different
fragrance which is on account of the different
formulation used by the manufacturers which is specific
to that particular brand. Preparation of such odoriferous
compound, substances applied on the Agarbathi varies
from one Agarbathi manufacturer to another. Such
preparations are not sold by them in the market so as to
5
keep their respective trade secrets. As the constituents,
their proportions and formula of preparation are kept as
secret, such compounds cannot be considered to be
marketable in the commercial parlance.
4. Accordingly, it is clarified that the odoriferous compound
or Agarbathi dough mixed with odoriferous substances,
not being capable of being bought and sold in the market
in the normal course of trade, is not an excisable product
and no duty is therefore, leviable on such compound
arising during the course of manufacture of Agarbathi.”
8. The above circular is issued in the context of dispute with regard to
dutiability/excisability of mixture, viz. aromatic chemicals (perfumes) which is also
classifiable as odoriferous compound, under Central Excise Tariff and comes into
existence during the course of manufacture of agarbathis, in a continuous process, as
an intermediate product. The circular clarifies that odoriferous substances are not
marketable because these products are not sold by manufacturers in order to protect
their trade secret. The circular by way of illustration also stated that the whole process
of manufacturing agarbathi, that is preparation of the odoriferous compounds and their
mixing with the dough or agarbathi is normally carried out in a continuous manner
since the whole process is continuous. These odoriferous substances do not remain
with the manufacturer to be sold in the market.
9. The Central Excise Chapter Heading No. 3302.90 covers all types of mixtures
of odoriferous substances of a kind, used as raw materials in industries. It is clear
from the records that respondent does not manufacture agarbathi as per general
practice which has been contemplated under the circular dated 22.11.1999. The
respondent manufactured perfumery compound in its Bangalore unit and then
6
transported it to Mysore where it is finally applied to raw agarbathis to complete the
manufacturing process of agarbathi. In this process of manufacturing, the perfumery
compound is capable of being sold in the open market. It is not in dispute that
appellant has sold some part of the compound to M/s. Tibetan Handicrafts Centre,
Bylkuppe, Mysore District.
10. Thus, it is evident that the clarification is applicable to the product which comes
into existence, at intermediate stage in the form of paste/dough in a continuous
process of manufacture and not to the manufacture of odoriferous perfume, which is in
liquid form and transported/stored in barrels/drums. The said circular cannot be made
applicable to cases beyond its scope. The circular cannot be equated with that of an
exemption notification but is required to be read within the limited scope of its context
in which it was issued. The circular did not give exemption to products which are
otherwise dutiable. The circular clarifying certain doubts cannot give effect of an
exemption notification. Therefore, it cannot be said that the agarbathi compound
manufactured by the respondent is covered under the aforesaid circular.
11. The next question for consideration is whether actual marketing of the
perfumery compound manufactured by the respondent is necessary for the levy of
excise duty. It is settled that to hold the product as excisable/dutiable, actual
marketing/sale of goods is not necessary. What is required to be proved is that the
capability of marketing the product. Marketability is decisive test for dutiability.
Whether the goods are, in fact, marketed or not is of no relevance. It is also not
necessary that goods in question should be generally available in the market. Even if
7
the goods are available from only one source or from a specified market, makes no
difference so long as they are available for purchasers. (See A.P. State Electricity
Board v. Collector of Central Excise, Hyderabad, (1994) 2 SCC 428.)
12. In Escorts Limited vs. Commissioner of Central Excise, Faridabad, (2015) 9
SCC 109, this Court has held that for excise duty to be chargeable under the
constitutional entry read with Section 3 of the Central Excise Act, two prerequisites
are necessary. First, there must be “manufacture” which is understood to mean the
bringing into existence of a new substance. And secondly, the word “goods”
necessarily means that such manufacture must bring into existence a new substance
known to the market as such which brings in the concept of marketability in addition
to manufacture. ‘Marketability’ is thus essentially a question of fact to be decided on
the facts of each case. There can be no generalisation. The fact that goods are not in
fact marketed is of no relevance. So long as the goods are marketable, they are goods
for the purposes of Section 3 of the Act. It is also not necessary that the goods in
question should be generally available in the market. The marketability of articles
does not depend neither upon the number of purchasers nor is the market confined to
the territorial limits of this country.
13. In the instant case, the assessee manufactures agarbathi perfumes (odoriferous
compound) by mixing inputs, aromatic chemicals, perfume oil and acids according to
the pre-determined formula. It is prepared by the respondents in their Bangalore
factory and then transferred to their Mysore factory where finally it is applied on raw
agarbathis. In this process of manufacturing the perfumery compounds are capable of
8
being sold in the open market. The odoriferous compound has got a shelf life and
capable of being stored/transported/sold and bought by agarbathi industries. As
noticed above, the assessee had sold certain quantity of perfumery compound to M/s.
Tibetan Handicrafts Centre Bylkuppe, Mysore District. Therefore, we are of the view
that it is an excisable product falling under Chapter Sub-Heading 3302.90. The
counter view taken by the CESTAT cannot be justified. Hence, the appeals are allowed
and the orders dated 11.11.2010 passed by the CESTAT are hereby set aside. No
costs.
……………………………J.
(MADAN B. LOKUR)
……………………………J.
(S. ABDUL NAZEER)
……………………………J.
New Delhi; (DEEPAK GUPTA)
OCTOBER 12, 2017.
9
ITEM NO.1501 COURT NO.4 SECTION IV-A
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No(s). 4822-4825/2015
COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX,
BANGALORE Appellant(s)
VERSUS
M/S KARNATAKA SOAPS & DETERGENTS LTD Respondent(s)
Date : 12-10-2017 These appeals were called on for Judgment today.
For Appellant(s) Mr. B. Krishna Prasad, AOR
For Respondent(s) Mr. L. Badri Narayanan, Adv.
Ms. L. Charanya, Adv.
Mr. Aditya Bhattacharya, Adv.
Mr. Victer Das, Adv.
Ms. Apeksha Mehta, Adv.
Mr. M. P. Devanath, AOR
Hon'ble Mr. Justice S. Abdul Nazeer pronounced the reportable
Judgment of the Bench comprising Hon'ble Mr. Justice Madan B.
Lokur, His Lordship and Hon'ble Mr. Justice Deepak Gupta.
The appeals are allowed.
Pending Interlocutory Applications, if any, stand disposed of.
(JAYANT KUMAR ARORA) (SNEH LATA SHARMA)
COURT MASTER COURT MASTER
(Signed reportable Judgment is placed on the file)

Arbitration Act not applies to Eviction suit under Rent Control laws - non-arbitrable disputes - eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes.”= whether the two Courts below were justified in rejecting the application filed by the appellant herein under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) in a pending civil suit filed by the respondent seeking appellant's eviction from the premises in question and for claiming some ancillary reliefs therein.= 26. The Delhi Rent Act, which deals with the cases relating to rent and eviction of the premises, is a special Act. Though it contains a provision (Section 3) by virtue of it, the provisions of the Act do not apply to certain premises but that does not mean 13 that the Arbitration Act, ipso facto, would be applicable to such premises conferring jurisdiction on the arbitrator to decide the eviction/rent disputes. In such a situation, the rights of the parties and the demised premises would be governed by the Transfer of Property Act and the civil suit would be triable by the Civil Court and not by the arbitrator. In other words, though by virtue of Section 3 of the Act, the provisions of the Act are not applicable to certain premises but no sooner the exemption is withdrawn or ceased to have its application to a particular premises, the Act becomes applicable to such premises. In this view of the matter, it cannot be contended that the provisions of the Arbitration Act would, therefore, apply to such premises. In view of foregoing discussion, we find no merit in the appeal, which fails and is accordingly dismissed.

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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 16850 OF 2017
(@ S.L.P.(c) No.27722/2017)
(D.No.21033/2017)
Himangni Enterprises ….Appellant(s)
VERSUS
Kamaljeet Singh Ahluwalia …Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1) Delay condoned. Leave granted.
2) This appeal is filed by the defendant against
the final judgment and order dated 27.07.2016
passed by the High Court of Delhi at New Delhi in
F.A.O. No.344 of 2016 whereby the High Court
dismissed the appeal filed by the appellant herein
and upheld the order dated 11.04.2016 of the
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Additional District Judge-05, South East Dist.,
Saket Courts, New Delhi in C.S. No. 132 of 2016.
3. The question involved in the appeal is short. It
arises on the facts, which lie in a narrow compass.
4. The question, which arises for consideration in
this appeal, is whether the two Courts below were
justified in rejecting the application filed by the
appellant herein under Section 8 of the Arbitration
and Conciliation Act, 1996 (hereinafter referred to
as “the Act”) in a pending civil suit filed by the
respondent seeking appellant's eviction from the
premises in question and for claiming some
ancillary reliefs therein.
5. The appellant is the defendant whereas the
respondent is the plaintiff in a civil suit out of which
this appeal arises.
6. The respondent has filed a suit being C.S. No.
132/2016 against the appellant on 17.08.2015 in
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the Court of ADJ-05, South East Dist., Saket
Courts, New Delhi.
7. The suit is filed essentially to seek appellant's
eviction from Shop No. SF-2 measuring around
317.29 Sq. ft. situated at 2nd floor in a Commercial
Complex known as "Omaxe Square" in Block No.14,
Non-Hierarchy Commercial Center, District Center
Jasola, New Delhi (hereinafter referred to as “the
suit premises") and for recovery of unpaid arrears of
rent and grant of permanent injunction.
8. According to the respondent, the suit premises
was leased out to the appellant vide lease deed
dated 31.08.2010 executed between the appellant
and the respondent's predecessor-in-title for a
period of three years from 07.10.2010. The lease
period stipulated in the lease deed, however, expired
by efflux of time and no fresh lease deed was
executed thereafter between the parties for
extension of the time period. The appellant's
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tenancy was monthly and started from 1st of every
month and ended on the last day of each month.
9. The appellant, on being served with the notice
of the civil suit, filed an application under Section 8
of the Act. According to the appellant, since the suit
was founded on the lease deed dated 31.08.2010,
which contained an arbitration clause (9.8) for
resolving the dispute arising out of the lease deed
between the parties, and when admittedly the
disputes had arisen in relation to the suit premises,
the same were governed by the terms of the lease
deed. It was contended that the civil suit to claim
the reliefs in relation to the suit premises was,
therefore, not maintainable and, in fact, barred and
the remedy of the respondent to get such disputes
resolved is to submit themselves to the jurisdiction
of the arbitrator by taking recourse to the procedure
prescribed in clause 9.8 of the lease deed.
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10. In other words, the contention of the appellant,
in support of their application, was that since the
disputes for which the civil suit is filed arise out of
the lease deed dated 31.08.2010 which contained
an arbitration clause (9.8) for their adjudication
through the arbitrator, the civil suit to get such
disputes decided by the Civil Court was barred.
11. The respondent opposed the application
essentially on two grounds. First, the lease period
initially fixed in the lease deed having come to an
end by efflux of time, such lease deed was no longer
enforceable by the appellant and second, the
disputes, which are subject matter of the civil suit,
are incapable of being referred to an arbitrator. It
was contended that the respondent has, therefore,
rightly filed the civil suit in Civil Court seeking
appellant's eviction from the suit premises and
other ancillary reliefs arising therefrom and the
same has to be tried by the Civil Court.
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12. The Trial Court, vide order dated 11.04.2016,
upheld the objections of the respondent and
dismissed the appellant's application. The
defendant, felt aggrieved, filed appeal before the
High Court.
13. By impugned judgment, the High Court
dismissed the appeal and upheld the order of the
Trial Court giving rise to filing of the special leave to
appeal by the defendant (appellant herein) before
this Court.
14. Heard Ms. Geeta Luthra, learned senior
counsel for the appellant and Mr. Dhruv Mehta,
learned senior counsel for the respondent.
15. Though learned senior counsel for the
appellant (defendant) argued the point involved in
the appeal at great length and also cited several
decisions such as, Anjuman Taraqqi Urdu (Hind)
vs. Vardhaman Yarns & Threads Ltd., ILR(2012) II
Delhi 770, M/s Lovely Obsessions Pvt. Ltd.,
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Gurgaon vs. M/s Sahara India Commercial Corp.
Ltd. Gurgaon, (2012) SCC Online P&H 11449,
Reva Electric Car Company Pvt. Ltd. vs. Green
Mobil, (2012) 2 SCC 93, Harishchandra Hegde vs.
State of Karnataka & Ors., (2004) 9 SCC 780 and
Khadi & Village Industries Commission vs.
Saraswati Ramkrishna Dalmia & Ors., (2013) 3
Mh.L.J. 250 contending that the application filed by
the appellant under Section 8 of the Act should
have been allowed by the Courts below and the
respondent should have been relegated to submit
themselves to the jurisdiction of an arbitrator in
terms of clause 9.8 of the lease deed for
determination of the disputes by the arbitrator
instead of filing the civil suit for their determination
by the Civil Court.
16. In reply, learned senior counsel for the
respondent(plaintiff) supported the impugned
judgment and contended that it does not call for
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any interference and hence the appeal deserves
dismissal.
17. Having heard learned senior counsel for the
parties at length and on perusal of the record of the
case, we find no merit in the appeal.
18. In our considered opinion, the question
involved in the appeal remains no longer res integra
and stands answered by two decisions of this Court
in Natraj Studios (P) Ltd. vs. Navrang Studios &
Another, 1981(1) SCC 523 and Booz Allen &
Hamilton Inc. vs. SBI Home Finance Ltd. & Ors.,
(2011) 5 SCC 532 against the appellant and in
favour of the respondent.
19. So far as Natraj Studio’s case (supra) is
concerned there also, the landlord had filed a civil
suit against the tenant in the Small Causes Court,
Bombay claiming therein the tenant's eviction from
the leased premises. There also, the tenant was
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inducted pursuant to "leave and license" agreement
executed between the landlord and the tenant.
20. The tenant filed an application under Section 8
of the Arbitration Act, 1940 contending therein that
since the "leave and license" agreement contained
an arbitration clause for resolving all kinds of
disputes arising between the parties in relation to
the “leave and license” agreement and the disputes
had arisen between the parties in relation to the
“leave and license” agreement, such disputes could
only be resolved by the arbitrator as agreed by the
parties in the agreement. It was contended that the
civil suit was, therefore, not maintainable and the
disputes for which the suit has been filed be
referred to the arbitrator for their adjudication.
21. This Court (Three Judge Bench) speaking
through Justice O. Chinnappa Reddy rejected the
application filed by the tenant under Section 8 of
the Act and held, inter alia, that the civil suit filed by
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the landlord was maintainable. It was held that the
disputes of such nature cannot be referred to the
arbitrator.
22. This is what Their Lordships held as under:
“24. In the light of the foregoing discussion
and the authority of the precedents, we hold
that both by reason of Section 28 of the
Bombay Rents, Hotel and Lodging House
Rates Control Act, 1947 and by reason of the
broader considerations of public policy
mentioned by us earlier and also in Deccan
Merchants Cooperative Bank Ltd. v.
Dalichand Jugraj Jain, the Court of Small
Causes has and the arbitrator has not the
jurisdiction to decide the question whether
the respondent-licensor landlord is entitled
to seek possession of the two Studios and
other premises together with machinery and
equipment from the appellant-licensee
tenant. That this is the real dispute between
the parties is abundantly clear from the
petition filed by the respondents in the High
Court of Bombay, under Section 8 of the
Arbitration Act seeking a reference to
Arbitration. The petition refers to the notices
exchanged by the parties, the respondent
calling upon the appellant to hand over
possession of the Studios to him and the
appellant claiming to be a tenant or
protected licensee in respect of the Studios.
The relationship between the parties being
that of licensor-landlord and licensee tenant
and the dispute between them relating to the
possession of the licensed demised premises,
there is no help from the conclusion that the
Court of Small Causes alone has the
jurisdiction and the arbitrator has none to
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adjudicate upon the dispute between the
parties.”
23. Yet in another case of Booz Allen & Hamilton
Inc. (supra), this Court (two Judge Bench) speaking
through R.V.Raveendran J. laid down the following
proposition of law after examining the question as to
which cases are arbitrable and which are
non-arbitrable:
“36. The well-recognised examples of
non-arbitrable disputes are: (i) disputes
relating to rights and liabilities which give
rise to or arise out of criminal offences; (ii)
matrimonial disputes relating to divorce,
judicial separation, restitution of conjugal
rights, child custody; (iii) guardianship
matters; (iv) insolvency and winding-up
matters; (v) testamentary matters (grant of
probate, letters of administration and
succession certificate); and (vi) eviction or
tenancy matters governed by special statutes
where the tenant enjoys statutory protection
against eviction and only the specified courts
are conferred jurisdiction to grant eviction or
decide the disputes.”
(emphasis supplied)
24. Keeping in view the law laid down by this
Court in aforementioned two decisions and applying
the same to the facts of this case, we have no
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hesitation to hold that both the Courts below were
right in dismissing the appellant's application filed
under Section 8 of the Act and thereby were
justified in holding that the civil suit filed by the
respondent was maintainable for grant of reliefs
claimed in the plaint despite parties agreeing to get
the disputes arising therefrom to be decided by the
arbitrator.
25. Learned counsel for the appellant, however,
argued that the provisions of the Delhi Rent
Act,1955 are not applicable to the premises by
virtue of Section 3(c) of the Act and hence the law
laid down in the aforementioned two cases would
not apply. We do not agree.
26. The Delhi Rent Act, which deals with the cases
relating to rent and eviction of the premises, is a
special Act. Though it contains a provision (Section
3) by virtue of it, the provisions of the Act do not
apply to certain premises but that does not mean
13
that the Arbitration Act, ipso facto, would be
applicable to such premises conferring jurisdiction
on the arbitrator to decide the eviction/rent
disputes. In such a situation, the rights of the
parties and the demised premises would be
governed by the Transfer of Property Act and the
civil suit would be triable by the Civil Court and not
by the arbitrator. In other words, though by virtue
of Section 3 of the Act, the provisions of the Act are
not applicable to certain premises but no sooner the
exemption is withdrawn or ceased to have its
application to a particular premises, the Act
becomes applicable to such premises. In this view
of the matter, it cannot be contended that the
provisions of the Arbitration Act would, therefore,
apply to such premises.
27. We have gone through the decisions cited by
the learned counsel for the appellant in support of
her contention. Having gone through the same, we
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are of the considered opinion that firstly, some
decisions are rendered by the High Court; Secondly,
remaining decisions are distinguishable on facts
and lastly, in the light of two authoritative decisions
of this Court, which are directly on the point and
continue to hold the field, no reliance can be placed
by the learned counsel for the appellant on any
decision of the High Court. Indeed, any such
decision of the High Court, which has taken view
contrary to the view of this Court, the same stands
overruled. Such is the case here.
28. We, therefore, need not deal with any other
submissions of learned counsel for the appellant
which, in our opinion, really do not arise in the light
of what we have held supra.
29. In view of foregoing discussion, we find no
merit in the appeal, which fails and is accordingly
dismissed.
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30. We accordingly direct the concerned Civil
Court which is seized of the civil suit to proceed
with the trial of the suit on the merits in accordance
with law uninfluenced by any of our observations
made herein, expeditiously.
………...................................J.
[R.K. AGRAWAL]
…...
……..................................J.
[ABHAY MANOHAR SAPRE]
New Delhi;
October 12, 2017