wps­7804.09 & 7636.09
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.7804 OF 2009
WITH
WRIT PETITION NO.7636 OF 2009
1 Enercon (India) Ltd. ]
a company incorporated and ]
existing under the laws of  ]
India and having its ]
registered office at Plot No. ]
33, Daman­ Patalia, ]
Bhimpore, Daman­396 210 ]
India ]
]
2 Yogesh J. Mehra ]
being Indian Inhabitant ]
residing at 101, Hare ]
Krishna, Residency Society, ]
J.V.P.D. Scheme, North ]
South Road No.8, Vile Parle (W) ]
Mumbai 400 049 ]
]
3 Ajay J. Mehra ]
being Indian Inhabitant ]
residing at 101, Hare ]
Krishna, Residency Society, ]
J.V.P.D. Scheme, North ]
South Road No.8, Vile Parle (W) ]
Mumbai 400 049 ]..... Petitioners.
Versus
1 Enercon GmbH ]
a company duly ]
incorporated and existing ]
under the law of Germany ]
and having its registered ]
office at Dreekamp 5, ]
D26605, Aurich, Germany. ]
]
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2 Wobben Properties GmbH ]
a company duly ]
incorporated and existing ]
under the laws of Germany ]
and having its office at  ]
Dreekamp­5 D26605, ]
Aurich, Germany. ]..... Respondents.
Dr.Veerendra   Tulzapurkar,   Senior   Advocate,   with   Mr.Virag   Tulzapurkar,
Senior Advocate, with Mr.Nikhil  Sakhardande, Ms.Sonali Mathur & Ms.
Swagata Naik  i/by M/s. AZB & Partners  for  the Petitioners  in both  the
Petitions.
Mr. S.U.Kamdar, Senior Advocate with Mr. Zubin Behramkamdin, Ms.Naira
Variava­Jejeebhoy, Mr.Rohan Cama, Mr. Vivek Vashi, Ms.Anusha Jegadeesh,
Ms.Devika Deshmukh, and Ms.Kanika Sharma  i/by Bharucha & Partners
for the Respondents in Writ Petition No.7804 of 2009.
Mr.   Navroze   Seervai,   Senior   Advocate   with   Mr.   Zubin   Behramkamdin,
Ms.Naira Variava­Jejeebhoy, Mr.Rohan Cama, Mr. Vivek Vashi, Ms.Anusha
Jegadeesh, Ms.Devika Deshmukh, and Ms.Kanika Sharma i/by Bharucha &
Partners for the Respondents in Writ Petition No.7636 of 2009.
CORAM : R. M. SAVANT, J.
Judgment Reserved on :­ 6
th
 August 2012.
Judgment Pronounced on :­ 5
th
 October 2012.
JUDGMENT :­
1 The   above   Writ   Petitions   have   been   filed   invoking   the   Writ
Jurisdiction   of   this   Court     under   Article   227   of   the   Constitution   of   India
challenging the order dated 27
th
  August 2009 passed by the learned District
Judge,   Daman   by   which   order   the   Appeals   being   Misc.   Civil   Appeal
Nos.1/2009, 2/2009, 3/2009 and 4/2009 came to be allowed and resultantly
the order passed by  the Trial Court dated 9
th
  January 2009 came  to be set
aside, resulting in the Application filed under Section 45 of the Arbitration and
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Conciliation Act, 1996 being allowed in terms of prayer clause 28(a) thereof,
and  the  Injunction Application of  the Petitioners above­named, who are  the
original Plaintiffs, came to be rejected.
2 The issue that arises in the above Petitions is therefore in two parts
viz. Whether  the parties are  to be  referred  to arbitration, and Whether  the
Petitioners are entitled to an anti­suit injunction in the facts and circumstances
of the present case. The impugned order is therefore also in two parts; first
part   deals   with   the   aspect   of   whether   the   parties   are   to   be   referred   to
arbitration, and second part is, whether the Petitioners are entitled to an anti­
suit   injunction.     Since   both   the   Petitions   involve   common   facts   and   are
interconnected, the same are, therefore, heard together.
For the sake of brevity the Arbitration and Conciliation Act, 1996
of India and, the Arbitration and Conciliation Act, 1996 of England would be
referred to as the “Indian Arbitration Act” and “English Arbitration Act”.
FACTUAL MATRIX :­
3 The Petitioner No.1 herein carries on business of manufacturing
and marketing of  the Wind Turbine Generators (WTG's) and components in
India, and is also in the business of setting up wind power projects on turnkey
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basis.   The Petitioner Nos.2 and 3 herein are the Directors of the Petitioner
No.1 and are arrayed as the Plaintiff Nos.1 to 3 in the Suit in question.  The
Respondent No.1­Enercon GmbH is a Company incorporated under the laws of
Germany and is having its registered office at Aurich, Germany.  One Dr.Alloys
Wobben is a Director of the Respondent No.1.  The Respondent No.2 – Wobben
Properties GmbH is a Company incorporated under the laws of Germany and is
also having its registered office at Aurich, Germany.  The Respondent No.1 is
engaged in mechanical engineering  and  possesses  technical  knowledge  and
equipment for manufacturing and marketing the Wind Turbine Generators and
components.   The Respondent No.1 carries on the said business all over the
world.  The Respondent Nos.1 and 2 are arrayed as the Defendant Nos.1 and 2
to the Suit in question.  The Petitioners and the Respondents are running the
joint venture business through the Petitioner No.1­Company at Daman in India.
Accordingly the parties have entered into various Agreements in furtherance of
the said business.  The Petitioner Nos.2 and 3, on 12/01/1994 entered into a
Shareholding Agreement.  In terms of the said Agreement the Respondent No.1
was holding 51% shares of  the Petitioner No.1­Company, and  the Petitioner
Nos.2 and 3 were holding 49% shares. The said Shareholding Agreement was
subsequently amended by two Supplementary Shareholding Agreements dated
19/05/1998   and   19/05/2000.     Pursuant   to   the   said   Supplementary
Shareholding Agreements, the Respondent No.1 became a 56% shareholder in
the Petitioner No.1­Company whilst the shareholding of the Petitioner Nos.2
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and   3   was   reduced   to   44%.     On   the   same   day   i.e.   on   12/01/1994,   the
Petitioner No.1 and the Respondent No.1 entered into a Technical Know­How
Agreement   by   which   the   Respondent   No.1   had   agreed   to   transfer   to   the
Petitioner No.1 the right and the technology to use the technical know­how for
the manufacture of E­26 Wind Turbine Generators specified therein and their
components.  A Supplementary Technical Know­How Agreement amending the
earlier   Technical   Know­How   Agreement   was   executed   on   19/05/2000   by
which   a   further   licence   to   manufacture   the   E­30   and   E­40  Wind   Turbine
Generators was conferred by the Respondent No.1 to the Petitioners. Under the
terms  of  the Technical Know­How Agreement,  the Respondent No.1  has  to
continuously supply special components to the Petitioner No.1. In April 2004
the   period   of   the   Technical   Know­How   Agreement   expired,   however,   the
Respondent   No.1   continued   to   supply   the   Wind   Turbine   Generators   and
components.       The   Respondent   No.2   has   the   patent   of   the   said   windmill
technology;  whereas  the  Respondent  No.1 is  a licensor  to  supply  the  said
windmill   technology,   and   the   Petitioners  are   the   licensees  to   use   the   said
windmill technology.  It appears that from the year 2000 onwards and till date
the   Petitioners   are   manufacturing   the   said   Wind   Turbine   Generators   and
continue   to   use   the   patents   that   were   licensed   by   these   agreements.   On
29/09/2006  the  Petitioners  and  the Respondent  No.1 entered into what is
known   as  the   “Agreed  Principles”   for   the   use   and   supply   of   the   windmill
technology.     Under   the   said   Agreed   Principles   the   Petitioners   and   the
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Respondents agreed to enter into what is known as the Intellectual Property
License Agreement (“IPLA” for short), which is the subject matter of the Suit in
question.   It is the case of the Petitioners that the Agreed Principles are the
binding   principles   agreed   between   the   parties,   and   which   records   an
agreement that all definitive agreements between the parties that were to be
prepared and finally executed would be on the basis of the binding principles
agreed  therein.    One   of  the  agreements  contemplated  by  the   said  Agreed
Principles was the IPLA.  The Petitioner Nos.2 and 3 are the parties to the IPLA.
It seems that the Petitioner No.2 has signed the IPLA on behalf of the Mehra
family.   At  the  time of  the signing of  the  IPLA  the Petitioners were already
aware of the five models of the WTG's being E­26, E­30, E­40, E­48 and E­53.
It is the case of the Petitioners that the IPLA was merely a draft of the oral
terms and not a concluded contract between the parties.  It was their case that
the said document was an unincorporated and inchoate document and was not
a concluded contract.  It appears that one Mr.Ketwigg , the Managing Director
of Respondent No.1 in a letter dated 02/10/2006, addressed to Petitioner No.2
stated therein that all the necessary contracts between the parties should be
completed by 19/10/2006.  Further in the e­mail dated 04/10/2006  Ms.Nicole
Fritsch   of   the   Respondent   No.1   stated   that   she   would   try   her   best   to
prepare/adapt   the   agreements   according   to   the   Agreed   Principles   by
19/10/2006.    It is  the case of  the Petitioners  that  to  their utter shock and
surprise,  on  18/10/2006 Ms. Nicole  Fritsch  of  the Respondent No.1  totally
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turned around and addressed a letter to the Petitioner No.2 falsely alleging that
the   draft   IPLA   which   was   signed   on   29/09/2006   was   a   final   document.
Thereafter correspondence ensued between the parties and a contentious issue
arose as to whether the IPLA can be called final or not.  Thereafter spate of
litigation ensued between the parties. This was as a result of the Respondent
No.1 stopping supplies which resulted in the Petitioner Nos.2 and 3  filing a
derivative   Suit  on   the   Original   Side   of   this   Court   being   Short  Cause   Suit
No.2667 of 2007 seeking resumption of supplies.  This Court has, by an interim
order dated 31/10/2007 without prejudice to the individual contentions of the
parties,   directed   resumption   of   supplies   by   the   Respondent   No.1   to   the
Petitioner No.1 until further orders of this Court.  In view of the fact that the
said order was not complied with by the Respondent No.1, there is a Contempt
Petition which has been filed by the Petitioners, which is pending.
4 The  Respondent  No.1  has  also  filed  a  Company  Petition  being
No.121   of   2007   against   the   Petitioners   before   the   Company   Law   Board,
Principal Bench, New Delhi some time in August 2007.  The said Petition has
been  filed under  Sections 397  and 398  of  the Companies Act.   The  reliefs
sought   in   the   said   Company   Petition   inter   alia   included   removal   of   the
Petitioner Nos.2 and 3 as Directors of Petitioner No.1, transfer of the Mehras
shareholding   in   the   Petitioner   No.1   as   well   as   associate   and   subsidiary
companies   of   Petitioner   No.1   to   Respondent   No.1,   and   investigation   to
lgc  7 of 124      wps­7804.09 & 7636.09
ascertain   the   conduct   of   Mehras   in   dealing   with   properties,   monies   and
management of the Petitioner No.1.      In view of the non­compliance of  the
order passed by  the Company Law Board, contempt proceedings have been
initiated by the Petitioners against Dr.Wobben and Mr.Ketwigg.  The Mehras i.e.
the Petitioner Nos.2 and 3 filed Company Petition No.74 of 2008 against the
Respondent No.1, Dr.Wobben and Mr. H D Ketwigg alleging oppression and
mismanagement by the Respondents.   The said Petition was also filed under
Sections 397 and 398 of the Companies Act.
5 The Respondent No.1 had  filed a Petition against  the Petitioner
No.1 and others alleging that Petitioner No.1 had been supplying Wind Turbine
Generators   to   third   parties   in   Germany   thereby   infringing   the   trademarks
belonging  to Respondent No.1. The same was  filed in  the Hamburg District
Court which Court had initially granted  an ex­parte ad­interim order dated
17/09/2007  restraining  the  Petitioner  No.1  from effecting  supplies  to  such
third parties in Germany.  The Hamburg District Court thereafter dismissed the
claim of the Respondent No.1 on  the ground that there was no evidence to
suggest   Petitioner   No.1's   involvement   in   the   matter.     The   aforesaid   facts
therefore disclose the diverse litigation in which the parties are involved.
6 The Respondent No.1 addressed a letter dated 13/03/2008 stating
therein that it was desirous of having all disputes relating to the IPLA settled,
lgc  8 of 124      wps­7804.09 & 7636.09
including whether there is a binding agreement between Petitioner No.1 and
Respondent   Nos.1   and   2   in   respect   of   the   IPLA.     The   Respondents   also
informed   the   Petitioners   that   it   had   appointed  Mr.  V.  V.   Veeder   QC  as   its
nominee arbitrator and called upon the Petitioners including Petitioner Nos.2
and   3   to   nominate   their   arbitrator   in   accordance   with   the   IPLA,   which
according  to  the Respondent  Nos.1  and  2 was  a  concluded  contract.    The
Petitioner No.2, on behalf of the Petitioners, replied to the said letter by his
letter   dated   31/03/2008   stating   therein   that   since   the   IPLA   was   not   a
concluded contract,  there was no question of a valid Arbitration Agreement
between  the parties  and  as  such,  there was no  question  of  appointing  any
arbitrator in  the matter.    It was  further  stated  that in  any event,  the  past
conduct and attitude of the Respondent No.1 established that it had waived the
Arbitration Agreement.    The UK  Solicitors  of  the Respondent  Nos.1  and  2
addressed a letter to the Petitioners dated 02/04/2008 stating therein that in
the event the Petitioners did not nominate their arbitrator within seven days of
the receipt of the said letter, the Respondent Nos.1 and 2 shall proceed under
the English Arbitration Act, 1996 to appoint their nominee arbitrator Mr. V. V.
Veeder QC, as the sole arbitrator.  The said letter was received by the Petitioner
No.1   in   Daman   on   03/04/2008,   along   with   the   said   letter   was   annexed
`Arbitration Claim Form' dated 27/03/2008 issued by the Respondent Nos.1
and 2 seeking several declaratory reliefs from the English Court in relation to
the   IPLA  which   according  to   the   Respondent  Nos.1  and   2 is   a  concluded
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contract.  The said declaratory reliefs inter­alia include injunctive relief from
the English Court to restrain the Petitioner Nos.2 and 3 from continuing with
independent proceedings before  this Court, i.e.  the  Suit which was  already
filed by the Petitioner Nos.2 and 3 in a derivative capacity as shareholders of
the Petitioner No.1.  The said 'Arbitration Claim Form', which had been filed
before the English Court, was also served upon the Petitioner No.1 in Daman
04/04/2008 and seems to have triggered off the filing of the Regular Civil Suit
No.9   of   2008   before   the   learned   Civil   Judge,   Senior   Division,   Daman   on
08/04/2008 inter­alia for the following reliefs viz. for a declaration that the
IPLA was not  a  concluded  contract  and  correspondingly  that  there was no
Arbitration Agreement between the parties; for a declaration that the initiation
of  proceedings  before  the English Court  by  the Respondents was void  and
illegal;   and   for   a   permanent   injunction   restraining   the   Respondents   from
continuing with the proceedings before the English Court.  In the said Suit the
Petitioners   moved   an   Application   for   temporary   injunction   and   for   other
interim   reliefs.     The   Trial   Court,   it   seems,   passed   a   status   quo   order   on
08/04/2008 directing the Respondents to maintain status quo as regards the
proceedings initiated before the English Court till their appearance in the Suit
and to show cause why an interim order should not be passed against them.
The Respondents appeared in the Suit and filed an Application under Section
45 of the  Indian Arbitration Act contending  therein  that the Suit before the
Trial Court ought to be referred to arbitration pursuant to the arbitration clause
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contained in the IPLA.  The Respondents also sought a vacation of the status
quo order.  It appears that in the interregnum on 11/04/2008, the Petitioner
No.1 had appointed Mr. Justice B. P. Jeevan Reddy (Retd.) as its arbitrator.
This, according to it, was necessitated in view of the threats of the Respondents
that the arbitrator appointed by them could be nominated as a sole arbitrator
under the English Law, in the event the Petitioner No.1 failed to nominate its
arbitrator.  It seems that the arbitrator appointed by the Petitioners by his letter
dated 24/04/2008 stated that there were inherent defects in the arbitration
clause  contained in  the  IPLA  and  therefore  the  same was  unworkable  and
expressed   the   inability   of   the   arbitrators   to   appoint   a   third   arbitrator.
Thereafter a joint letter was addressed which is dated 05/08/2008 by both the
arbitrators i.e. Mr. V. V. Veeder QC and Mr. Justice B. P. Jeevan Reddy (Retd.)
asking the parties to take necessary steps as may be advised.
7 The Plaintiffs i.e. the Petitioners herein had moved an application
for  temporary injunction ex­parte in  the  said  suit,  wherein  the  Trial Court
directed the parties to maintain status quo. The Trial Court had granted an
exparte injunction restraining the Defendants i.e. the Respondents herein from
proceeding with  the  proceedings  they  had  filed in  the English Court.   The
Application  for interim  reliefs and  the Application  filed by  the Respondents
under Section 45 of the said Act was heard by the Trial Court, and by the order
dated 09/01/2009, the learned Civil Judge, Senior Division, Daman, allowed
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the said Application for interim reliefs filed by the Petitioners, and rejected the
Application for referring the parties to arbitration filed under Section 45 of the
said Act by  the Respondents, i.e.  the Trial Court confirmed  the ex­parte  ad
interim order of status quo granted by it on 8/4/2008 till decision of the suit.
The Defendants i.e. the Respondents herein were restrained not to constrain
the   Plaintiffs   i.e.   the   Petitioners   herein   to   go   for   arbitration   till   the   final
decision of the suit by invoking the IPLA.
8 The gist of the reasoning of the Trial Court was to the effect that
the document in question i.e. the IPLA was not on a stamp paper and it does
not bear the signature and seal of the Public Office in authentication that the
document   is   enforceable   in   law;   that   the   Plaintiff   No.2   had   signed   the
document under  the influence of Dr.Alloys Wobben. The Trial Court, on the
basis of the material on record, recorded a  finding that  the  IPLA was not a
concluded contract for want of free consent, and was executed due to undue
influence,   fraud,   mis­representation   and   mistake,   that   the   Plaintiffs   would
suffer heavy economic loss if the arbitration is held at London.  In so far as the
jurisdictional aspect is concerned, the Trial Court recorded a finding that the
Court  at Daman   would  have jurisdiction  as  the  Plaintiff No.1 was  a joint
venture between the Plaintiff No.1 and the Defendants which had its factory at
Daman.
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9 Aggrieved  by  the   order  dated  09/01/2009  passed  by  the   Trial
Court,  the Defendants i.e.  the Respondents herein  filed  four Appeals which
were Civil Misc. Appeal Nos.1/2009, 2/2009, 3/2009 and 4/2009.  The said
Appeals were filed by the Respondents covering two aspects as to the grant of
the anti Suit injunction, and as to the rejection of the Application filed by them
under Section 45 of the said Act.  The said Appeals were heard by the learned
Principal District Judge, Daman, who by the order dated 27/08/2009 allowed
the said four Appeals, and consequently set aside the orders passed by the Trial
Court granting the anti Suit injunction, and referred the parties to arbitration
by allowing the Application filed under Section 45 of the said Act.  However,
the  Lower  Appellate  Court  has  directed  the  Trial Court  to  first  decide  the
jurisdiction point before proceeding with the Suit.  The Lower Appellate Court
has inter alia considered the enforceability of the Arbitration Agreement,  the
case of the Plaintiffs that the  IPLA was not a concluded contract, which the
Plaintiffs had sought to support by both intrinsic as well as extrinsic material,
and also the case of the Plaintiffs that the said Clause­18.3 was unworkable in
view   of   the   methodology   mentioned   therein   for   the   appointment   of   the
arbitrators.  The Lower Appellate Court as can be seen from its order has on
the basis of the fact that the IPLA was signed by the Plaintiff No.2, reached a
conclusion   that   there   was   an   agreement   between   the   parties   to   refer   the
disputes to arbitration which intention of the parties, according to the Lower
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Appellate Court, was required to be given effect to.  The Lower Appellate Court
held   that   assuming   that   there   was   some   defect   in   the   methodology   for
appointment of the arbitrators, that would not come in the way of enforcement
of the Arbitration Agreement.  The Lower Appellate Court held that since the
parties had agreed to London being  the seat of arbitration, the Plaintiffs could
not make a grievance as regards the jurisdiction of the English Courts.   The
Lower Appellate Court has by its order dated 27/08/2009, as indicated above,
has allowed the said four Appeals.
10 It is the order passed by the Lower Appellate Court in the said four
Appeals which is the subject matter of the above two Petitions.  In so far as
Writ Petition No.7804 of 2009 is concerned, the same challenges the order to
the extent of referring the parties to arbitration; whereas Writ Petition No.7636
of 2009 concerns the challenge to the setting aside of the anti Suit injunction.
11     SUBMISSIONS      ON   BEHALF   OF   THE   PETITIONERS   BY   THE
LEARNED SENIOR COUNSEL DR. VEERENDRA TULZAPURKAR
IN WRIT PETITION NO.7804 OF 2009:­
i] That  the  Lower Appellate Court  failed  to  decide  the important
issue, as to whether the IPLA was a concluded contract and that
there is a valid subsisting Arbitration Agreement.
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ii] Since  the  Lower  Appellate  Court  has  failed  to  decide  the  very
important jurisdictional fact, namely the existence of a concluded
contract before referring the parties to arbitration, the exercise of
the   Writ   Jurisdiction   of   this   Court   under   Article   227   of   the
Constitution of  India is warranted.   The learned Senior Counsel
relied upon the Judgments of the Apex Court reported in (2006)
3 SCC 312  in  the matter of  Kishore Kumar Khaitan and Anr.
V/s. Praveen Kumar Singh and; (2008) 14 SCC 58 in the matter
of Ramesh Chandra Sankala V/s. Vikram Cement.
iii] That the IPLA is not a concluded contract and is only a draft.  The
learned Senior Counsel sought to buttress the said submission by
referring to the clauses mentioned in the IPLA, regarding the grant
of licences, finance, tenure of the IPLA;
iv] That the patents in respect of which the licences were to be given
to the Petitioners were not finalized, the tenure of the IPLA was
also indefinite, and since the royalty is to be paid on the patents,
and since  the  fixation of  the royalty was also not  finalized;  the
IPLA could not be said to be a concluded contract.
lgc  15 of 124      wps­7804.09 & 7636.09
v] That assuming  the  IPLA is a concluded contract,  the arbitration
clause 18.1 is vague and is unimplementable in view of the fact
that the arbitrator of the licensor is to don two hats, two roles, one
being the arbitrator of the licensor and second being the presiding
arbitrator;
vi] That the arbitration clause is unworkable is borne out by the fact
that both the arbitrators i.e. Mr V V Veeder, QC and Mr.Justice B P
Jeevan Reddy (Retd.) have expressed that the arbitration clause as
it stands is unworkable and would require clarification.
vii] That no steps were taken for registration of the patents as required
by Section 69 of the Patents Act, as both the parties treated it as
not a concluded contract.
viii] That the IPLA cannot be said to be a concluded contract in view of
the fact that as per the Agreed Principles all the four agreements
mentioned therein were to be executed at one time and the IPLA
therefore could be  said  to be  finalized  only  after  the  said  four
documents which were inclusive of the IPLA were executed.
ix] The   extrinsic   evidence   which   is   in   the   nature   of   the
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correspondence   exchanged  between   the   parties  shows  that  the
IPLA was not a concluded contract.  The learned Senior Counsel
would rely upon the letters dated 11/3/2006, 10/4/2006, as also
the letters date 30/09/2006, 2/10/2006 and 24/11/2006 which
are post the signing of the IPLA on 29/09/2006 which according
to the learned Senior Counsel ex­facie point out that the IPLA was
not a concluded contract, and that it was only a draft;
x] That since  the main contract cannot be said  to have come into
existence,  therefore, the clause providing for arbitration has also
necessary to be held as not having come in existence.  The learned
Senior Counsel would rely upon the judgment of the Apex Court
reported in  (1960) 1 SCR 493 in the matter of  Union of India
v/s.   Kishorilal   Gupta   and   Brothers  and,   two   Division   Bench
Judgments  of  this  Court  reported in  2010  (2)  Company  Law
Reporter 393 in the matter of  Nasir Husain Films (P) Ltd. v/s
Saregama  India Ltd and anr.; and  2008 (4) Arbitration Law
Reporter 179  in  the matter  of  Oberoi Construction P.  Ltd v/s
Worli Shivshahi Co­op Hsg. Society Ltd. ;
xi] That since the underlying contract has not come into existence, in
view thereof the arbitration clause in the contract is inoperative.
lgc  17 of 124      wps­7804.09 & 7636.09
The learned Senior Counsel would rely upon the judgment of the
Apex Court reported in (1996) 2 SCC 667 in the matter of U.P.
Rajkiya Nirman Nigam Ltd Vs.  Indure Pvt. Ltd. & ors.
xii] That the IPLA is not a concluded contract, since the subject matter
being   absent   as   the   portfolio   regarding   the   patents   was   not
finalized.   The   parties   were   also   not   ad­idem   as   regards
commencement of the IPLA and its duration. The IPLA is therefore
vague,  ambiguous   and   uncertain,   and  is   therefore,   void   under
Section 29 of the Indian Contract Act. The learned Senior Counsel
would place reliance on the judgment of a Division Bench of the
Karnataka High Court reported in  AIR 1966 Mysore 118  in the
matter   of  Coffee   Board,   Bangalore   v/s.   Janab   Dada   Haji
Ibrahim   Halari,   the   judgment   of   the   Apex   Court   reported   in
(1990)  3  SCC  1  in  the matter  of  Mayawanti  v/s. Kaushalya
Devi; reported in (2004) 1 SCC 252 in the matter of United Bank
of  India v/s Ramdas Mahadeo Prashad & others;  reported in
AIR   1949   Nagpur   286 in   the   matter   of  The   Central   Bank,
Yeotmal Ltd. V/s Vyankatesh Bapuji;  and reported in (1976) 1
WLR 591  in  the matter of  Bushwall Properties Ltd v/s Vortex
Properties Ltd.
lgc  18 of 124      wps­7804.09 & 7636.09
Since there was uncertainty about the duration of the  IPLA, the
said  agreement was void  on  account  of uncertainty.    Since  the
portfolio of the patents was not finalized, there was uncertainty as
regards the patents and their duration, and since the duration of
the IPLA was contingent upon, the expiry of the last patents the
duration of the IPLA was not certain.  The learned Senior Counsel
in support of the said contention relied upon the judgment of the
Apex Court reported in (2008) 5 SCC 58 in the matter of Vimlesh
Kumari Kulshrestha v/s. Sambhajirao and anr.
xiii] That  the   extrinsic   evidence   which  has  been   referred   to  in   the
Application for temporary injunction proves that the said IPLA was
not a concluded contract.  The reply filed by the Respondents to
the said Application for temporary injunction was contradictory to
their letter dated 24/11/2006 wherein they had agreed that there
was  some uncertainty  and  that  they would  try  to  resolve it  by
having a in­house meeting.
xiv] That there can be no arbitration if there is no concluded contract.
Since in the instant case the IPLA is not a concluded contract, the
parties  therefore cannot be referred  to arbitration.   The learned
Senior Counsel, in support of the said submission,  sought to rely
lgc  19 of 124      wps­7804.09 & 7636.09
upon the following judgments of the Apex Court reported in (1)
(2006) 1 SCC 751, Dresser Rand S.A. v/s. Bindal Agro Chem
Ltd and K. G. Khosla Compressors Ltd.; (2) (2010) 5 SCC 425,
Andhra Pradesh Tourism Development Corporation Ltd & Anr.
V/s. Pampa Hotels Ltd.;   (3)  AIR 1962 SC 378, Jawahar Lal
Burman   Vs.   Union   of   India  and   (4) (1999)   1   SCC   9   M/s.
Rickmers Verwaltung GmbH v/s.  The  Indian Oil Corporation
Ltd.
xv] That   the   judgment   in  Shin­Etsu  Chemical  Co.  Ltd.  v/s.  Aksh
Optifibre  Ltd  and  anr cannot  be  placed  reliance  upon   as  the
proposition laid  down  by  Justice   B.N.Srikrishna  that  the   Court
under Section 45 of the Indian Arbitration Act has only to take a
prima facie view, cannot be said to be a majority view, in view of
the discordant note sounded by Justice D.M.Dharmadhikari in Para
112 of the said judgment.
xvi] That in the facts and circumstances of the case the exercise of writ
jurisdiction   under   Article   227   of   the   Constitution   of   India   is
warranted.
lgc  20 of 124      wps­7804.09 & 7636.09
12  SUBMISSIONS ON BEHALF OF  THE RESPONDENTS BY  THE
LEARNED   SENIOR   COUNSEL   SHRI   S   U   KAMDAR   IN   WRIT
PETITION NO.7804 OF 2009 :­
[a] That exercise  of  the Writ  Jurisdiction  under Article  227  of  the
Constitution of India is not warranted in the facts of the present
case; as the view taken by the Lower Appellate Court on the aspect
of the parties being referred to arbitration, cannot be said to be a
view which could not be taken in the facts and circumstances of
the case.
[b] That the Petitioners have not pointed out as to how there has been
a failure to exercise the jurisdiction or the Lower Appellate court
has exceeded its jurisdiction in passing the impugned order which
is a pre­requisite to warrant the exercise of the writ jurisdiction;
[c] That  the Lower Appellate court has passed  the impugned order
considering the relevant material on record, which the Trial Court
had  failed to do, and therefore it cannot be said that the order
passed   by   the   Lower   Appellate   Court   directing   the   parties   to
arbitration   is   perverse.   In   support   of   the   said   submission,   the
learned  Senior Counsel  relied upon  the judgments  of  the Apex
Court reported in (1) (2001) 8 SCC 97, Estralla Rubber v/s Dass
Estate (P) Ltd.   (2)   (2003) 6 SCC 641, State Through Special
lgc  21 of 124      wps­7804.09 & 7636.09
Cell, New Delhi v/s. Navjot Sandhu alias Afshan Guru and ors.
and (3)      (2010) 9 SCC 385, Jai Singh and      ors v/s. Municipal
Corporation of Delhi and ors.
In so far as aspect of perversity is concerned, the learned Senior
Counsel relied upon the judgment of the Apex Court reported in
(2009) 10 SCC 206 in the matter of Arulvelu and anr v/s. State
Represented by the Public Prosecutor and anr.  
The said judgments inter alia lay down the scope of interference
under Article 227 of the Constitution of India. The said judgments
inter   alia   lay   down   that   the   power   under   Article   227   of   the
Constitution of India is to be exercised to keep the inferior Courts
within their bounds. It is not in the nature of an appellate power
and  cannot  be  exercised  for  correcting  a mere  error.  The  said
judgments   lay   down   that   if   there   is   a   failure   to   exercise
jurisdiction or jurisdiction is exercised in excess of the powers or
the  findings  recorded  are  so  perverse   that  no  reasonable  man
could have arrived at such a finding that the exercise of the writ
jurisdiction   under   Article   227   of   the   Constitution   of   India   is
warranted.
lgc  22 of 124      wps­7804.09 & 7636.09
[d] That the Court whilst considering the application under section 45
has only to arrive at a prima facie view as regards the existence of
the Arbitration Agreement and the arbitrability of the dispute and
is   not   concerned   with   any   dispute   as   regards   the   underlying
contract. The learned Senior Counsel for the said purpose relied
upon the judgment of the Apex Court reported in (2005) 7 SCC
234  in   the   matter   of  Shin­Etsu  Chemical  Co.  Ltd.  v/s.  Aksh
Optifibre Ltd and anr.
[e]    For the proposition that the Court has to only arrive at a  prima
facie view as regards Arbitration Agreement and the arbitrability of
the  dispute.    The learned  Senior Counsel  for  the Respondents,
apart  from  the judgment of  the Apex Court in      Shin­Etsu'  s  case
(supra) relied upon another judgment of the Apex Court reported
in (2009) 2 SCC 134 in the matter of Shakti Bhog Foods Limited
V/s Kola Shipping Limited  and the Division Bench Judgment of
this Court  reported in  2007(5) Bom.C.R. 227  in  the matter of
Caribjet Inc v/s Air India Limited and the judgment of a learned
Single Judge of this Court reported in 2012(3) Bom. C.R. 36 in
the matter of Olive Healthcare v/s. Lannett Company Inc. & anr.
lgc  23 of 124      wps­7804.09 & 7636.09
[f] That the documents in question unmistakably lead to a conclusion
that   the   IPLA   was   a   concluded   contract.   The   learned   Senior
Counsel   sought   to   rely   upon   the   correspondence   between   the
parties prior to the agreement being executed on 26/9/2006.   The
said correspondence starts  with the e­mail dated 25/6/2006 and
the e­mail and letters exchanged thereafter;
[g] That the fact that IPLA is a concluded contract is borne out by the
fact that the parties have signed the same, and therefore, in terms
of the requirements as mentioned in Section 44 of the said Act, the
Lower   Appellate   Court   was   right   in   referring   the   parties   to
arbitration.
[h] That all along it has been the stand of the Respondents that the
Petitioners have executed the IPLA which was not disputed by the
Petitioners herein. The dispute started on account of the payment
in respect of the equity shares which were to be purchased by the
Respondents. The  said  fact is  borne  out by  the letter  dated  3
rd
November 2006 of the Petitioners and it is only thereafter that the
Petitioners started raising a dispute as regards certain aspects of
the IPLA;
lgc  24 of 124      wps­7804.09 & 7636.09
[i] That   the   aspect   of   the   main/underlying   contract   and   the
Arbitration Agreement are  separable.  In a given case, even if the
main contract can be said to be suffering from some infirmity but
that would not have any effect on the Arbitration Agreement. The
Court   has   only   to  prima   facie  see   whether   there   is   a   valid
Arbitration Agreement.
[j] That the conclusivity that is required to be seen is only as regards
the   Arbitration   Agreement.   The   requirement   for   which   finds   a
place in Section 44 of the Indian Arbitration Act.  The requirement
being  that  the  Arbitration Agreement  has  to  be in  writing  and
signed by the parties.  In the instant case both the conditions are
satisfied.     The   learned   Senior   Counsel   for   the   Respondents   in
support of  the said submission relied upon  the judgment of  the
Apex Court reported in  (2012) 2 SCC 93 in the matter of  Reva
Electric   Car  Company  Private  Limited  v/s.   Green  Mobil  and
(2008) 14 SCC 240 in the matter of Great Offshore Limited v/s.
Iranian Offshore Engineering and Construction Company.
[k] That the facts in Kishorilal Gupta's case are clearly distinguishable
from the facts of the present case, as in Kishorilal Gupta's case the
contract   itself   was   superseded   and   therefore   in   the   said   fact
lgc  25 of 124      wps­7804.09 & 7636.09
situation the Court held that no reliance could be placed on the
arbitration   clause   in   the   superseded   contract.       For   the   said
purpose, the learned Senior Counsel relied upon the judgment of
the Apex Court reported in (2009) 10 SCC 103 in the matter of
Branch Manager, Magma Leasing and Finance Limited and Anr.
v/s.   Potluri   Madhavilata   and   anr.  wherein   the   judgment   in
Kishorilal Gupta has been distinguished by the Apex Court.
[l] That whilst considering  the application under Section 45 of  the
said   Act   there   can   only   be   a  prima   facie  examination   of   the
material on record so as to arrive at a conclusion whether there is
an Arbitration Agreement between the parties.  In so far as other
aspects are concerned, the issue can be raised before the Arbitral
Tribunal.    In support of  the said submission,  the learned Senior
Counsel for the Respondents relied upon the judgment of the Apex
Court reported in  (2007) 7 SCC 120  in  the matter of  Aurohill
Global Commodities Ltd. v/s. Maharashtra STC Ltd. and (2009)
2 SCC 134 in the matter of Shakti Bhog Foods Limited v/s. Kola
Shipping Limited.
[m] That the infirmity if any in the main contract would not impinge
upon the Arbitration Agreement encompassed in the said contract.
lgc  26 of 124      wps­7804.09 & 7636.09
The position in law in that respect in India as well as in England is
the same.  Hence the contention of the learned Senior Counsel for
the Petitioners that in view of  the  fact  that the annexure  to the
IPLA or other grounds on which the Petitioners contend that the
IPLA was not a concluded contract would have no bearing on the
Arbitration   Agreement  as it is  well  settled  that  the  Arbitration
Agreement stands apart from the main contract. In support of the
said   submission   the   learned   Senior   Counsel   relied   upon   the
English judgment reported in  (2007) UKHL 40  in the matter of
    Premium Nafta Products Limited (20
th
        Defendant) and others
    v/s. Fili Shipping Company Limited (14
th
       Claimant) and others
and also relied upon the judgment of a learned Single Judge of
this   Court   reported   in  2003   CLC   601  in   the   matter   of  GTC
Limited v/s Royal Consulting RV and anr.
[n] That merely because there is a challenge to the main underlying
contract, the said fact would not impinge upon the validity of the
Arbitration   Agreement.     The   learned   Senior   Counsel   for   the
Respondents  relied upon  the judgment of  the US Federal Court
reported in 546 US 440 in the matter of Buckeye Check Cashing
Inc. v. Cardegna. The said view of the US Federal Court has been
affirmed by the Apex Court in the judgment reported in (2009) 2
lgc  27 of 124      wps­7804.09 & 7636.09
SCC   494    in   the   matter   of  P.   Manohar   Reddy   &   Bros.   v/s.
Maharashtra   Krishna   Valley   Development   Corporation   and
others  and para 28 thereof.
[o] That it is only when the main underlying contract is vitiated on
account of fraud, coercion, etc, that the Arbitration Agreement can
be said to be affected, such is not the case in the instant matter.
(p) That it is well settled even if there is any uncertainty or ambiguity
in the underlying contract, it can be looked into and if necessary
corrected by  relying on extrinsic evidence.   The learned Senior
Counsel  in support of the said contention sought to place reliance
on Paras 11­123, 12­117,  12­118  and 13­008  from  the learned
Author Chitty on Contract.
[q] That there is no uncertainty as regards the terms of the underlying
contract.    The  date   of  execution   of  the  IPLA is  certain  and is
referable to page 46.  The date 17/09/2006 appearing on IPLA is
referable   to   the   letter   dated   17/09/2006   of   Yogesh   Mehra   by
which  he  has  communicated  his inability  to  remain  present in
Aurich­Germany on the said day;
lgc  28 of 124      wps­7804.09 & 7636.09
[r] That   the   contention   of   the   learned   Senior   Counsel   for   the
Petitioners  that  the agreement is not a concluded contract as it
does not contain the annexure in respect of the patents which have
been granted to the Petitioners is only a bogey raised on behalf of
the Petitioners, as the Petitioners are using the patents from 1994
to 2004 and two more patents were used since 2004, the Technical
Know­How   Agreement   and   Supplemental   Technical   Know­How
Agreement     spelt   out   which   patents   have   been   given   to   the
Petitioners.
[s] That all questions relating to the agreement in any event have to
be decided by the Arbitral Tribunal. That since the agreement has
been   signed,   the   requirement   under   Section   7   of   the   Indian
Arbitration   Act   is   satisfied.     For   the   said   purpose   the   learned
Senior Counsel relied upon the judgment of a learned Single Judge
of this Court reported in AIR 2000 Bombay 108 in the matter of
Keval Krishna  Balakram  Hitkari  v/s  Anil  Keval  Hitkari  and
others and the judgment of the Apex court reported in (1995) 6
SCC   571  in   the   matter   of  J.K.Jain   and   others   v/s.   Delhi
Development Authority and others.
That in so far as the issue as to whether the contract is concluded
lgc  29 of 124      wps­7804.09 & 7636.09
or not, the signing of the contract is one of the defining aspects
which   test   is   laid   down   by   the   Apex   Court   in   the   judgment
reported in (2010) 1 SCC 83  in the matter of Grasim Industries
Limited and Anr v/s. Agarwal Steel
[t] That   the   contention   of   the   learned   Senior   Counsel   for   the
Petitioners   that   the   judgment   of   the   Lower   Appellate   Court   is
bereft of any findings is not correct.  Findings have been recorded
on the basis that the parties have signed the IPLA as also on the
basis   of   the   correspondence   entered   into   between   the   parties
which can be seen from the impugned order.
[u] That even if a part of  the arbitration clause is unworkable,  the
same   is   severable   as   in   the   instant   case   the   grievance   of   the
Petitioners is only as regards the number of arbitrators who are to
be   appointed.   The   said   dispute   can   therefore   be   said   to   be   a
dispute only as regards the machinery provision but not as regards
the agreement between the parties to go for arbitration.
[v] That even if part of the agreement is bad, the part which can be
sustained will   have to be enforced. The learned Senior Counsel
relied upon the judgment of the Apex Court reported in AIR 1997
lgc  30 of 124      wps­7804.09 & 7636.09
SC 605 in the matter of M.M.T.C. Limited v/s. Sterlite Industries
(India) Ltd.  which is followed in (2002) 3 SCC 572 in the matter
of Narayan Prasad Lohia v/s. Nikunj Kumar Lohia and others.
[w] That   the   letter   of   the   arbitrator   appointed   by   the   Petitioners
cannot be conclusive of the fact that the Arbitration Agreement is
not workable.  The correspondence preceding the said letter does
not indicate that the said Arbitration Agreement is unworkable.
[x] That the defining aspect as it were, is the intention of the parties
to go for arbitration which is clearly manifest. For the said purpose
the learned counsel  relied upon  the judgment of  the Allahabad
High Court reported in AIR 1954 Allahabad 750 in the matter of
A H Bhiwindiwala and Co. v/s.  R B Lakshman Dass Mohan Lal
and Sons  Ltd and anr.  ,  and  the judgment of  the Apex Court
reported   in  (2009)   4   SCC   495  in   the   matter   of  Nandan
Biomatrix Limited v/s. D 1 Oils limited.
(y) That there is no merit in the contention of the learned counsel for
the   Petitioners   that   the   second   relief   sought   in   the   suit   of
injunction cannot go to arbitration. That the said relief can only
said  to  be  referable  to  the  IPLA  as it is  the  contention  of  the
lgc  31 of 124      wps­7804.09 & 7636.09
learned  Senior Counsel  that  since  the  IPLA is  not  a  concluded
contract,  the Arbitration Agreement is not enforceable. The  test
would   therefore   be   whether   the   Arbitration   Agreement   as
contained   in   IPLA   can   be   enforced.   For   the   said   purpose   the
learned  Senior  Counsel  relied  upon  the  judgment  of  the   Apex
Court reported in (2006) 7 SCC 275 in the matter of Rashtriya
Ispat Nigam Ltd v/s. Verma Transport Co  as also the judgment
reported in (2008) 16 SCC 774 in the matter of Everest Holding
Limited v/s. Syam Kumar Shrivastava and others.
[z] The learned Senior Counsel sought to distinguish the judgments
cited  by  the  learned   Senior   Counsel   for   the   Petitioners  in   the
context   of   the   facts   of   the   present   case.   The   learned   Senior
Counsel for the Respondents would contend that in the context of
the facts of the cases in the judgments cited by the learned Senior
Counsel for the Petitioners that the Apex Court has held that the
parties  were  not  ad­idem,  and  therefore,  the  contract  was  not
concluded, but the same is not the case in the instant matter.
CONSIDERATION ­ WRIT PETITION NO.7804 of 2009
13 Heard  the learned counsel  for  the parties  and  also perused  the
Written Submissions filed on behalf of the parties.
lgc  32 of 124      wps­7804.09 & 7636.09
14 Since clause (18) of the IPLA is at the fulcrum of the controversy
involved in both the Petitions, it would be apposite to reproduce sub­clauses
18.1 to 18.3 of clause 18 of the IPLA.
(18.1)   All   disputes,   controversies   or   differences
which may arise between the parties in respect of
this Agreement including without limitation to the
validity,   interpretation,   construction,   performance
and   enforcement   of   alleged   breach   of   this
Agreement,  the parties  shall, in  the  first instance
attempt   to   resolve   such   dispute,   controversy   or
difference   through   mutual   consultation.   If   the
dispute,  controversy  or  difference is not  resolved
through mutual consultation within 30 days after
commencement   of   discussions   or   such   longer
period  as  the   parties  may  agree   in   writing,   any
party   may   refer   dispute(s)   controversy(ies)   or
difference(s)  for resolution  to an arbitral  tribunal
to consist of three (3) arbitrators of whom one will
be   appointed   by   each   of   the   Licensor   and   the
licensee and  the arbitrator appointed by Licensor
shall also act aas the presiding arbitrator.
18.2) The arbitrators shall have powers  to award
and/or enforce specific performance. The award of
the  arbitrators  shall  be  final  and  binding  on  the
parties. In order to preserve its rights and remedies,
either party may seek preliminary injunctive relief
or   other   temporary   relief   from   any   court   of
competent   jurisdiction   or   from   the   arbitration
tribunal pending the final decision or award of the
arbitrator(s).  Any  such  application   to  a  court  of
competent jurisdiction for the purposes of seeking
injunctive relief shall not be deemed incompatible
with this agreement to arbitrate or as a waiver of
this Agreement to arbitrate.
18.3) All proceedings in such arbitration  shall be
conducted in English. The venue of the arbitration
proceedings shall be London. The arbitrators may
lgc  33 of 124      wps­7804.09 & 7636.09
(but   shall   not   be   obliged   to   )   award   costs   and
reasonable expenses (including reasonable  fees of
counsel) to the party(ies) that substantially prevail
on merit. The provisions of the Indian Arbitration
and Conciliation Act, 1996 shall apply.
15 It would also be apposite to reproduce the relevant provisions of
the Indian Arbitration and Conciliation Act, 1996 namely Sections 7, 44 and 45
(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 ­
(a) a document signed by the parties;
(b)   an   exchange   of   letters,   telex,   telegrams   or
other means of telecommunication 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.
(44)   Definition  –   In   this   Chapter,   unless   the
context otherwise requires, “foreign award” means
an arbitral award on differences between persons
arising   out   of   legal   relationships,   whether
contractual   or   not,   considered   as   commercial
under the law in force in India, made on or after
the 11
th
 day of October, 1960 ­
lgc  34 of 124      wps­7804.09 & 7636.09
(a) in pursuance of  an  agreement in writing  for
arbitration to which the Convention set forth in the
First Schedule applies, and
(b)   in   one   of   such   territories   as   the   Central
Government,   being   satisfied   that   reciprocal
provisions have been made may, by notification in
the   Official   Gazette,   declare   to   be   territories   to
which the said Convention applies.
(45) Power of Judicial authority to refer parties
to   arbitration   –  Notwithstanding   anything
contained   in   Part   I   or   in   the   Code   of   Civil
Procedure, 1908 (5 of 1908) a judicial authority,
when seized of an action in a matter in respect of
which   the   parties   have   made   an   agreement
referred  to in section 44, shall, at  the  request of
one of the parties or any person claiming through
or   under   him,   refer   the   parties   to   arbitration,
unless it finds that the said agreement is null and
void, inoperative or incapable of being performed.
 
16 As can be seen, Section 45 provides that an application may be
made to a judicial authority to refer any proceeding before it to Arbitration,
where the parties have entered into an Arbitration Agreement as contemplated
under Section 44 of the said Act. It further provides that such reference must
be made by  the Court unless it  finds  that  the Agreement is  null  and void,
inoperative   or   incapable   of   being   performed.   The   reference   therefore   in
Sections   44   and   45   is   to   an   Arbitration   Agreement.   If   the   Arbitration
Agreement is in the form of a clause in the main contract, then reference in
Sections 44 and 45 would be to that clause which is an Arbitration Agreement
contained as and by way of a clause in the main contract.
lgc  35 of 124      wps­7804.09 & 7636.09
17 In so far as the scope of the inquiry under Section 45 of the Indian
Arbitration  Act is  concerned,  the  same is  well  settled  by  the  authoritative
pronouncement of the Apex Court in the Judgment reported in 2005(7) SCC
234 in the matter of  Shin­Etsu Chemical Co. Ltd. & Ors. vs Aksh Optifibre
Ltd.  Paragraph 72 to 75 of the said Judgment are material and are reproduced
herein under:
“72. True,  that  there is  nothing in  Section  45
which suggests that the finding as to the nature of
the arbitral agreement has to be ex facie or prima
facie. In my view, however, this is an inescapable
inference from an ex visceribus interpretation of
the statute. Sub­section (3) of Section 8 in Part I
of   the   Act   envisages   that   even   in   a   situation
where an application to the court has been made
under   sub­section   (1),   the   arbitration   may
commence, continue and even an arbitral award
be made. This was obviously meant to cut down
delay   in   the   conclusion   of   the   arbitral
proceedings. There is  conspicuous  absence  of  a
corresponding provision either in Section 45 or in
the   rest   of   the   provisions   in   Part   II.   This
legitimately gives  rise  to an inference  that once
the   arbitral   agreement   has   been   subjected   to
scrutiny before the court under Section 45 of the
Act, conceivably, the arbitral proceedings could be
stayed till the decision of the court on the nature
of  the  arbitral  agreement.  If it were  to be held
that  the  finding  of  the  court  under  Section  45
should be a final, determinative conclusion, then
it is obvious that, until such a pronouncement is
made, the arbitral proceedings would have to be
in  limbo.  This  evidently   defeats   the   credo   and
ethos of  the Act, which is  to enable expeditious
arbitration   without   avoidable   intervention   by
judicial authorities.
73. The   absence   in   Part   II   of   the   Act   of   a
provision corresponding to Section 5 in Part I has
lgc  36 of 124      wps­7804.09 & 7636.09
been highlighted as supportive of  the view  that
greater   judicial  intervention  is   contemplated   in
Part  II of  the Act. The  question  that  has  arisen
before the Court is not the presence or absence of
judicial intervention; it is one with regard to the
manner   in   which   the   said   judicial   intervention
should proceed  whether on a final view or prima
facie view of the factors enumerated in Section 45
of the Act.
74.  There are distinct advantages in veering to
the view that Section 45 does not require a final
determinative  finding by  the Court. First, under
the   Rules   of   Arbitration   of   the   International
Chamber  of  Commerce  (as in  force  with  effect
from 1.1.1998), as in the present case, invariably
the arbitral tribunal is vested with the power to
rule upon its own jurisdiction. Even if the court
takes the view that the arbitral agreement is not
vitiated  or  that it is  not invalid, inoperative  or
unenforceable, based upon  purely  a  prima facie
view, nothing prevents the arbitrator from trying
the   issue   fully   and   rendering   a   final   decision
thereupon.  If  the arbitrator  finds  the agreement
valid, there is no problem as the arbitration will
proceed and the award will be made. However, if
the   arbitrator   finds   the   agreement   invalid,
inoperative or void, this means that the party who
wanted  to proceed  for arbitration was given an
opportunity of proceeding to arbitration, and the
arbitrator  after  fully  trying  the issue  has  found
that   there   no   scope   for   arbitration.   Since   the
arbitrator's  finding would not be an enforceable
award, there is no need to take recourse to the
judicial   intercession   available   under   Section
48(1)(a) of the Act.
75. The finding of the court that the arbitration
agreement is valid, operative and enforceable, if
in  favour of  the party setting up  the arbitration
agreement, is not appealable under Section 50 as
a matter  of  legislative   policy.  Refusing  to  refer
parties   to   arbitration   under   Section   45,   is
however, made  appealable  under  Section  50(1)
lgc  37 of 124      wps­7804.09 & 7636.09
(a) of the Act. Even after the court takes a prima
facie  view  that  the  arbitration  agreement is not
vitiated   on   account   of   factors   enumerated   in
Section  45,  and  the  arbitrator  upon  a  full  trial
holds   that   there   is   no   vitiating   factor   in   the
arbitration agreement and makes an award, such
an award can be challenged under Section 48(1)
(a).   The   award   will   be   set   aside   if   the   party
against whom it is invoked satisfies the court inter
alia that the agreement was not valid under the
law to which the parties had subjected it or under
the   law   of   the   country   where   the   award   was
made.   The   two   basic   requirements,   namely,
expedition at the pre­ reference stage, and a fair
opportunity to contest the award after  full  trial,
would be fully satisfied by interpreting Section 45
as   enabling   the   court   to   act   on   a  prima   facie
view.”
18 A   useful   reference   could   also   be   made   to   the   judgment   of   a
Division Bench of  this Court in  Caribjet  Inc v/s Air  India Limited  (supra).
Para 6 of the said judgment is material and is reproduced herein under :­
6. As rightly submitted by the learned Counsel
for the appellant, the issue which is sought to
be raised is no more res integra and has been
well­settled by the decision of the Apex Court
in Shin­Etsu Chemical Company's case (supra).
By   a  majority   decision   in   the   said   case,  the
Apex Court has held that:
if   on   a  prima   facie  examination   of   the
documents   and   material   on   record  including
the arbitration agreement on which request for
reference is made  by  one  of  the  parties,  the
judicial authority or the court decides to make
a   reference,   it   may   merely   mention   the
submissions and contentions of the parties and
summarily decide the objection if any raised on
the alleged nullity, voidness, inoperativeness or
incapability   of   the   arbitration   agreement.   In
case,  however,  on   a  prima  facie  view   of   the
matter,   which   is   required   to   be   objectively
lgc  38 of 124      wps­7804.09 & 7636.09
taken   on  the   basis  of material  and  evidence
produced by  the parties on  the  record of  the
case, the judicial authority including a regular
civil court, is inclined to reject the request for
reference on the ground that the agreement is
"null and void" or "inoperative" or "incapable of
being   performed"   within   the   meaning   of
Section 45 of the Act, the judicial authority or
the court must afford full opportunities to the
parties  to lead whatever documentary or oral
evidence they want to lead and then decide the
question   like   trial   of   a   preliminary   issue   on
jurisdiction or limitation in a regular civil suit
and pass an elaborate reasoned order. Where a
judicial authority or the court refuses to make a
reference   on   the   grounds   available   under
Section 45 of  the Act, it is necessary  for  the
judicial authority or the court which is seized
of the matter to pass a reasoned order as the
same is subject to appeal to the appellate court
under Section 50(1)(a) of the Act and further
appeal  to  this Court under Sub­section (2) of
the said section.”
19 The inquiry contemplated under Section 45 is therefore of a prima
facie nature of the existence of an Arbitration Agreement. If the Court comes to
a prima facie conclusion that there is an Arbitration Agreement and the same is
legal and valid the matter must be referred to the Arbitral Tribunal for further
consideration which can thereafter conclusively decide either way. If the Court
comes   to   the  prima   facie  conclusion   that   there   is   either   no   Arbitration
Agreement or that the same is not valid in law, the Court must then proceed to
determine the same finally and conclusively.
lgc  39 of 124      wps­7804.09 & 7636.09
20 The   issue   which   requires   to   be   addressed   at   the   threshold   is
whether the view expressed by Justice B.N.Shrikrishna in Shin­Etsu Chemical
Co.  Ltd  (supra) is  the majority view.   The  said issue  arises in view  of  the
submission  of  the  Learned  Senior  Counsel  for  the  Petitioners  relying  upon
paragraph 112 of the said Judgment of Shin Estu Chemical Co. Ltd. (Supra)
that Justice D.M.Dharmadhikari   has not concurred with the view of Justice
B.N.Shrikrishna.   In   paragraph   111   of   the   said   Judgment   Justice
D.M.Dharmadhikari expressly concurs with the view of Justice Shrikrishna and
therefore  there can be no dispute  that the proposition laid down by Justice
Shrikrishna   has   been   accepted   by   Justice   D.M.Dharmadhikari,   and   is   the
majority view in  the  said judgment. The  said paragraph 111 is  reproduced
herein under :­
“With utmost respect to both of them, I am inclined to
agree   with   the   view   expressed   by   learned   Brother
Srikrishna J. but only with a rider and a partly different
reason which may I state below:­
The main issue is regarding the scope of power of any
judicial authority including a regular civil court under
section 45 of the Act in making or refusing a reference
of   dispute   arising   from   an   international   arbitration
agreement governed by the provisions contained in Part
III Chapter­I  of  the Act  of  1996.  I  respectfully Agree
with learned Brother Srikrishna J only to the extent that
if  on  prima  facie  examination  of  the  documents  and
material on record, including the arbitration agreement
on which request for reference is made by one of the
parties,  the judicial  authority  or  the  court  decides  to
make   a   reference,   it   may   merely   mention   the
submissions   and   contentions   of   the   parties   and
summarily  decide   the   objection  if   any  raised   on   the
alleged nullity, voidness, inoperativeness or incapability
of  the  arbitration  agreement.  In  case,  however,  on  a
lgc  40 of 124      wps­7804.09 & 7636.09
prima facie view of the matter, which is required to be
objectively taken on the basis of material and evidence
produced by the parties on the record of the case, the
judicial   authority   including   a   regular   civil   court,   is
inclined   to   reject   the   request   for   reference   on   the
ground   that   the   agreement   is   'null   and   void'   or
'inoperative'  or  'incapable  of   being  performed'  within
the   meaning   of   section   45   of   the   Act,   the   judicial
authority or the court must afford full opportunities to
the   parties   to   lead   whatever   documentary   or   oral
evidence   they   want   to   lead   and   then   decide   the
question like trial of a preliminary issue on jurisdiction
or limitation in regular civil suit and pass an elaborate
reasoned order. Where a judicial authority or the court
refuses  to make a  reference on  the grounds available
under   section   45   of   the   Act,   it   is   necessary   for   the
judicial  authority  or  the  court which is  seized  of  the
matter, to pass a reasoned order as the same is subject
to appeal to the appellate court under section 50(1)(a)
of the Act and further appeal to this Court under sub­
section (2) of the said section.”
(emphasis supplied)
In so far as paragraph 112 which has been relied upon by the Learned Senior
Counsel, the same deals with a situation where the Award is passed in spite of/
and/or prior to the decision holding that such an Arbitration Agreement does
not exist. The Apex Court in  the said case of  Shin Estu Chemical Co. Ltd.
(supra)  was  not  concerned  with  such  a  case,  neither is  this  Court, in  the
present Petition.
21 The Judgment in  Shin Estu Chemical Co. Ltd  (supra) has been
followed by the  Apex Court in Shakti Bhog Foods Ltd, (supra) as also by a
Division Bench of this Court in Caribjet Inc. Vs. Air India Ltd. (supra), as also
lgc  41 of 124      wps­7804.09 & 7636.09
by   a  Learned   Single   Judge   of   this   Court  in  Olive  Healthcare  Vs.  Lannet
Company  Inc.  (supra).  Hence, in  the light of  the  aforesaid Judgments,  the
Court   for   the   purpose   of   determination   of   the   existence   or   validity   of   an
agreement under Section 45 of the  Indian Arbitration Act, has to restrict its
enquiry  to  the Arbitration Agreement and not  the underlying contract.  It is
required to be noted that there is a substantial change in law from the one that
existed under the Indian Arbitration Act 1940. In the 1940 Act under Section
33 thereof, the Court had the power and jurisdiction to determine the existence
or validity  of Arbitration Agreement. However,  under  the  provisions  of  the
Indian Arbitration Act, the said power of the Court has been taken away and is
now expressly vested with the Arbitral Tribunal under Section 16 of the Indian
Arbitration Act. Under Section 16, the Arbitral Tribunal can rule on its own
jurisdiction including ruling on any objection with respect to the existence or
validity of the Arbitration Agreement. Thus the power to determine finally and
conclusively the existence and validity of an Arbitration Agreement has been
conferred on the Arbitral Tribunal under Section 16 of the 1996 Act. It is the
Arbitral   Tribunal   therefore   which   will   determine   whether   there   is   an
Arbitration Agreement or not for that purpose the Arbitration Agreement will
be a totally independent agreement dehors the other terms of the contract and
such an agreement would not ipso­jure become null and void or invalid even if
it has been held that the under lying contract is void. Another aspect which is
to   be   noted   is   that   the   severability   and   separability   of   the   Arbitration
lgc  42 of 124      wps­7804.09 & 7636.09
Agreement though being a clause in the same contract, has now a recognition
not only under Section 16 of the 1996 Act but by a catena of the Judgments of
the Apex Court. A useful reference could be made to the Judgment reported in
2009(2)SCC   494  in   the   matter   of    P.   Manohar   Reddy   &   Bros.   Vs.
Maharashtra   Krishna   Valley   Dev.   Corp.   &   ors.,  The   Apex   Court   has
recognized that the Arbitration Agreement is separate and independent from
the main Agreement. It has been held that the Arbitration clause though being
a part of the contract is a collateral term which need not in all situations perish
with coming to an end of the underlying contract and it may survive the same.
Paragraphs 27 and 28 of the said Judgment are material and are reproduced
herein under  :
“27. An arbitration clause, as is well known, is a
part of the contract. It being a collateral term need
not, in all situations, perish with coming to an end
of   the   contract.   It   may   survive.   This   concept   of
separability of the arbitration clause is now widely
accepted. In line with this thinking, the UNCITRAL
Model   Law   on   International   Commercial
Arbitration incorporates the doctrine of separability
in Article 16(1). The Indian law ­ The Arbitration
and Conciliation Act, 1996, which is based on the
UNCITRAL Model  Law,  also explicitly  adopts  this
approach   in   Article   16   (1)(b),   which   reads   as
under:­
“16.  Competence of arbitral tribunal to rule
on its jurisdictional. ­ (1) The arbitral tribunal may
rule on its own jurisdiction, including ruling on any
objections with respect to the existence or validity
of the arbitration agreement, and for that purpose,
(a)   An   arbitration   clause   which   forms  part  of   a
contract   shall   be   treated   as   an   agreement
lgc  43 of 124      wps­7804.09 & 7636.09
independent of the other terms of the contract; and
(b)   A   decision   by   the   arbitral   tribunal   that   the
contract is null and void shall not entail ipso jure
the invalidity of the arbitration clause.
   (Emphasis supplied)
Modern laws on arbitration confirm the concept.
28. The   United   States   Supreme   Court   in     the
recent judgment in Buckeye Check Cashing, Inc. v.
Cardegna   546   US   460   acknowledged   that   the
separability   rule   permits   a   court   "to   enforce   an
arbitration   agreement   in   a   contract   that   the
arbitrator   later   finds   to   be   void."   The   Court,
referring   to   its   earlier   judgments   in   Prima   Paint
Corporation v. Flood & Conklin Mfg. Co. 388 U. S.
395, and Southland Corporation v. Keating 465 U.
S. 1, inter alia, held:
Prima   Paint   and   Southland   answer   the
question   presented   here   by   establishing   three
propositions.   First,   as   a   matter   of   substantive
federal arbitration law, an arbitration provision is
severable from the remainder of the contract.
But   this   must   be   distinguished   from   the
situation where  the  claim itself was  to  be  raised
during the subsistence of a contract so as to invoke
the arbitration agreement would not apply.”
The  said  Judgment  as  can  be  seen  approves  the  Judgments  of
United   States   Supreme   Court   reported   in  546   US   460  in   the   matter   of
Buckeye Check Cashing Inc. Vs. Cardegana and,  reported in 388 US 395 in
the   matter   of    Prima   Paint   Corporation   Vs.   Floor   and   Conkling
Manufacturing Company
lgc  44 of 124      wps­7804.09 & 7636.09
22 A reference could also be made to the Judgment of the Apex Court
reported in  2009(10) SCC 103  in the matter of   Branch Manager Magma
Leasing and Finance Ltd. & Anr. Vs. Potluri Madhavilata & Anr. The Apex
Court in  the  said  Judgment  has  approved  the  proposition laid  down in  P.
Manohar Reddy’s  case  (supra)  and  once  again  referred  with  approval  the
judgment of the United States Supreme Court in Buckeye Check Cashing Inc.
The   aforesaid   Judgments   of   the   Apex   Court   as   well   as   the   United   States
Supreme Court, make it clear that the Arbitration Agreement would survive
even in case of invalidity of the main agreement or the underlying contract. It
is only in cases where the underlying contract is vitiated by fraud, coercion or
misrepresentation that the same would impact the Arbitration Agreement.
23 The principles of  severability  and separability of  the Arbitration
Agreement is common both under the English Arbitration Act, 1996 and the
Indian Arbitration Act 1996, as evidenced by the following Judgments of the
Apex Court and the House of Lords reported in :­
1] 2003 CLC 601, GTC Ltd. Vs. Royal Consult R.V. & Anr.
2] 2009(2) SCC 134, Shakti Bhog Foods Ltd. Vs. Kola Shipping
    Ltd.
3] Judgment of the House of Lords reported in 2007 UKHL 40,
   Premium Nafta Products Ltd. & Ors. Vs. Fili Shipping Co. Ltd. &
Ors.
lgc  45 of 124      wps­7804.09 & 7636.09
24 It is in the context of the settled law as afore stated that the facts
of the present case would have to be seen. The Learned Senior Counsel for the
Petitioners laid much store on the correspondence post 29­9­2006 i.e. the date
when  the  IPLA was  signed,  to  contend  that  the  IPLA was not  a  concluded
contract.   However,   the   correspondence   prior   thereto   between   the   parties
indicates otherwise. If the said correspondence is seen, to which my attention
is drawn by the Learned Senior Counsel appearing  for the Respondents, the
same discloses that it was on 27­6­2006 i.e.  a good three months prior to its
execution, that the draft IPLA was sent to the Petitioners. The said IPLA had
already undergone changes on the basis of the suggestions of both the parties
and the final document was kept ready on 29­9­2006 as the Petitioner No.2
had shown his inability to come to Aurich on 17­9­2006 when it was to be
executed.  The  other  three  agreements  namely  the  Successive  Technological
Transfer   Agreement,   Name   Use   Licence   Agreement   and   the   Shareholders
Agreement were not executed on 29­9­2006 because they were not finalised as
certain issues were still required to be finalised. The most important letter if it
can   be   said   so,   is   the   letter   dated   30­9­2006   which   is   addressed   by   the
Petitioner No.2 Yogesh Mehra in his own handwriting stating therein that he
has executed not one but more than one agreement on 29­9­2006. Pertinently
in paragraph 2 of the said letter, the Petitioner No.2 has in fact referred to the
patent   of   E­82   being   the   subject   matter   of   the   IPLA   and   not   the   Agreed
lgc  46 of 124      wps­7804.09 & 7636.09
Principles. The fact that the letter dated 30­9­2006 refers to the execution of
two   agreements   on   29­9­2006   and   also   refers   to   the   E­82   patent,   further
indicates that by the said letter dated 30­9­2006 the Petitioner No.2 admitted
to  the   execution   of   the   IPLA.    In  so  far   as  the   email   dated  4­10­2006 is
concerned,   the   said   email   refers   to   the   preparation   and   adoption   of   the
agreements according to the “Agreed Principles”. The said email refers to the
other three agreements. It seems that only after the claim for royalty was made
by   the   Respondents,   that   on   3­11­2006   the   Petitioners   purportedly
incorporated an indirect denial  of the execution of the IPLA. In so far as the
email dated 24­11­2009 is concerned, the said email as can be seen from its
subject   refers   to   the   final   IPLA   the   Shareholders   Agreement   and   other
Successive Agreements. The email which dealt with the outstanding drafts of
the Agreements obviously did not refer to the final IPLA but refers to the other
Successive Agreements because as  far as  the  IPLA was concerned,  the same
itself stated that it was already a finalised agreement. The email therefore, did
not refer to any draft of the IPLA or the Shareholders Agreement and therefore
the said email does not in any manner aid the case of the Petitioners that the
IPLA was not a concluded contract. Further the email dated 15­12­2006 from
the Petitioners to the Respondents wherein also the Petitioners dealt with the
draft agreements but the subject of the said email as can be seen was the same
as that of the email dated 24­11­2006. Thereafter the email dated 10­1­2007
dealt   with   a   further   visit   to   Germany   and   revised   “Drafts   of   Outstanding
lgc  47 of 124      wps­7804.09 & 7636.09
Contracts”. Thereafter, the email dated 29­1­2007 sent by  the Petitioners, in
fact mentions the amended version of the Shareholders Agreement which is
outstanding   and   not   executed,   Name   Use   Licence   Agreement,   and   the
Successive Technological Transfer Agreement. The aforesaid material therefore
leaves no manner of doubt that the draft agreements referred to therein were
only the other three agreements and not the IPLA. Therefore, a perusal of the
documents  on   record  discloses  that  not   only  is  the   Arbitration   Agreement
contained in clause 18.1to the IPLA legally and validly executed, but it is in
writing and signed by the parties.
25 The contentions of the Learned Senior Counsel for the Petitioners
as regards the unenforceability of the Arbitration Agreement all revolve around
the alleged uncertainty and ambiguity in the underlying or the matrix contract.
It was contended that since the IPLA is  vague, ambiguous and uncertain, the
same is void under Section 29 of the Indian Contract Act, 1872. Consequently
the Arbitration Agreement as contained in clause 18 of IPLA, is also void. The
contention therefore of ambiguity and uncertainty is as regards the underlying
contract and not in respect of the Arbitration Agreement. Assuming it to be so,
applying   the   principle   of   separability   and   severability   of   the   Arbitration
Agreement  from  the main agreement,  the submission of  the learned Senior
Counsel for the Petitioners does not have merit and cannot impede the Court
from referring the parties to arbitration.
lgc  48 of 124      wps­7804.09 & 7636.09
26 Now coming to the contention of the Learned Senior Counsel for
the   Petitioners   that   since   on   the   IPLA   three   dates   are   appearing,   the
commencement date and the duration of the IPLA is therefore uncertain and
therefore   the   IPLA   is   not   a   concluded   contract   on   account   of   the   said
uncertainty and ambiguity. In so far as the said three dates are concerned, the
first date i.e. 27­6­2006 is referable to the first email dated 27­6­2006 under
which the draft IPLA was forwarded to the Petitioner No.2. The Petitioner No.2
can therefore be said to be aware that 27­6­2006 is referable to the date on
which the draft   was forwarded and therefore it could never be the date of
execution. The date 17­9­2006 appearing on the third page of the IPLA is the
date on which the IPLA was proposed to be executed. Since the Petitioner No.2
cancelled his visit to Aurich­Germany by its email dated 16­9­2006, the said
date 17­9­2006 remained to be cancelled /altered. The third date is 29­9­2006
which also appears on the first page of the IPLA. There is no dispute that the
signatures on the IPLA have been affixed by the parties on 29­9­2006. In the
light of the aforesaid and since it is not disputed by the Petitioners i.e. the IPLA
has been executed on 29­9­2006, the question of taking into consideration any
other date would not arise. In any event, the said dispute can only be relatable
to the underlying contract and can be raised before the Tribunal and if raised,
it is for the Arbitral Tribunal to adjudicate upon the same.
lgc  49 of 124      wps­7804.09 & 7636.09
27 Now coming to the judgments cited by the learned Senior Counsel
for   the   Petitioners   in   support   of   his   contention   that   since   the   underlying
contract cannot be  said  to have come into existence,    therefore,  the clause
providing for arbitration has also necessary to be held as not having come into
existence.  In so far as Kishorilal Gupta's case (supra) is concerned, in the said
case, the contention was that even after supersession of an earlier contract, the
Arbitration Agreement contained in the superseded contract continues in spite
of the admitted position that under the new contract, there was no arbitration
clause.  It is in the said fact situation that the Apex Court held that with the
supersession   of   the   whole   contract,   the   Arbitration   Agreement   also   stood
superseded and does not survive.  The said judgment has been distinguished by
the Apex Court in the case of Branch Manager, Magma Leasing and Finance
Ltd,  by  holding  that  the new  contract entered   into was  a novation under
Section 62 of the Indian Contract Act and thus no reliance can be placed on the
Arbitration Agreement contained in such a superseded contract.
In the case of U.P. Rajkiya Nirman Nigam Ltd., (supra) the facts
were that the counter proposal was not signed at all and thus, no concluded
contract was arrived at between the parties.  It was in the said context that the
Apex Court held  that  there was no concluded contract.  Para 19 of  the said
judgment is material and is reproduced herein under :­
“In view  of the  fact that  Section   2    [a]  of    the  Act
envisages  a   written    agreement  for  arbitration  and
lgc  50 of 124      wps­7804.09 & 7636.09
that   written   agreement   to   submit   the   existing   or
future differences to arbitration is a pre­condition and
further in view of  the  fact  that  the original contract
itself was not a concluded contract, there existed  no
arbitration agreement for reference to the arbitrators.
The High Court, therefore, committed a gross error of
law in concluding  that  an agreement  had emerged
between    the  parties,  from  the   correspondence  and
from   submission     of   the     tenders   to   the   Board.
Accordingly   it is    declared  that    there existed    no
arbitration   agreement and  that  the reference  to  the
arbitration, therefore, is clearly  illegal. Consequently
arbitrators   cannot     proceed   further     to   arbiter   the
dispute, if any. The conclusion of the High Court is set
aside.”
In the case of Nasir Husain Films (P) Ltd. (supra) the facts were
that reliance was placed on a draft document.  The Division Bench of this Court
held that the major issues on which negotiations were still in progress were not
settled.  The contract could not be said to be concluded.
In the case of Oberoi Const. Pvt. Ltd (supra) the facts were that
the   General   Body   Resolution   passed   by   the   society   did   not   accept   the
concluded agreement and stated that the same will be subject to circulation of
the draft and finalization thereof.  It was in the said context that the Division
Bench held that since the document was not accepted or signed or executed by
the society, there was no conclusivity of the contract.
However   in   the   instant   case,   the   IPLA   has   admittedly   been
executed on 29/09/2006 by the parties signing on each page and also in the
lgc  51 of 124      wps­7804.09 & 7636.09
execution clause, therefore, the said judgments (supra) cited by the learned
Senior Counsel for the Petitioners would have no application.
In the case of United Bank of India  (supra) the issue before the
Apex Court was centered around as to whether the MOU entered into between
the parties on 18­5­1994 and forwarded by letter dated 20­5­1994 has been
acted upon and complied with by the parties .  One of the conditions for the
MOU to come into force was withdrawal of the suit by the Respondents filed by
them against the United Bank of India. Since the suit was not withdrawn, the
Apex Court held that  the MOU cannot be said to have come into existence.
Para 7 of the said judgment is material and is reproduced herein under :­
“Undisputedly,  the   respondents  did  not  withdraw  the
suit  filed  by  them  against  the  United  Bank  of  India,
which is the condition precedent stipulated in clause (1)
of   the   MOU.   The   respondents   also   did   not   pay   the
guarantee   liability   of   Rs.   2.33   lacs.   No   compromise
petition   was   filed   before   an   appropriate   court.
Therefore, by no stretch of imagination it can be said
that  the  terms  and  conditions  stipulated in  the MOU
had been complied with and acted upon by the parties.
Apart from what has been said, subsequent to the MOU
there   was   also   a   lot  of   correspondence   between   the
parties by exchanging letters giving offers and counter­
offers,   as   would   be   revealed   in   the   letters   dated
16.6.94,23.12.94,12.6.95,15.6.95 and 19.6.95. All these
correspondence would go to show that the parties failed
to arrive at a consensus even on what were the terms of
the MOU. Thus, it is clear that there was no concluded
contract nor was there any novation.”
In the case of Vimlesh Kumar Kulshrestha (supra) the agreement
in   question   was   held   to   be   void   for   uncertainty   as   there   was   no   proper
lgc  52 of 124      wps­7804.09 & 7636.09
description of the property given in the agreement by annexing a map, though
map was referred to in the agreement, nor the description was satisfactorily
proved in a suit for specific performance. It is the said context that the Apex
Court held that the agreement if read was uncertain.  Para 24 of the said report
is material and is reproduced herein under :­
“Reference  to  the said legal maxim, in our opinion, is
not apposite in the facts and circumstances of this case.
By reference  to  the boundaries of  the premises alone,
the description of the properties agreed to be sold did
not become certain.  For the purpose of finding out the
correct description of the property, the entire agreement
was   required   to   be   read   as   a   whole.   So   read,   the
agreement becomes uncertain.”
In  the case of  Coffee Board, Bangalore  (supra),  the  facts were
that the defendant had to specify the quantity of coffee which he intended to
purchase,  those  quantities were  omitted  to  be  specified  and  those  portions
were left blank in the tender form. It is in the said context that the Division
Bench   of   the   Karnataka   High   Court   held   that   the   offer   was   vague   for
uncertainty and indefiniteness on the acceptance of which no contract is ever
born or comes into being. Paras 30 and 31 of the said report are material and
are reproduced herein under :­
“30 Now, in this case the defendant did only one of
those two things. He stated the prices, but he did not
state the quantities which he wanted. If a person is told
that goods of more than one description are available
for sale and he is asked to state what prices he would be
willing   to   offer   for   those   goods   and   which   of   those
goods he would be willing to buy at those prices, and
that person states only his prices but never indicates the
lgc  53 of 124      wps­7804.09 & 7636.09
goods required by him, it is, I think, Impossible for any
one to suggest that there was any acceptable offer made
by  him.    I  do  not  find it  possible  to  accede    to  the
argument that in a case in which a tenderer who had to
submit his  tender in  the  form Exhibit A­3 which was
sent in this case, does not fill in the blanks in the last
paragraph of that tender, the necessary and inevitable
inference is  that he is willing  to buy all  the goods  to
which the tender form referred.”
31 The   fact   that   paragraph   3(a)   of   Exhibit   A­1
required the tenderer to state the quantities and the fact
that Exhibit A­3 contains separate columns for the price
and  the quantity, makes  the position abundantly clear
that  unless  a  tender like  Ex. A­3  not  only  states  the
prices  but  also  states  the  quantities,  the  tender is no
offer which in law can be accepted. In my opinion, the
specification  of  the quantity  required  by  the  tenderer
was an essential term of the offer, and if that term was
not  to  be  found in  the  offer  his  offer was vague  for
uncertainty   and   indefiniteness,   on   the   acceptance   of
which no contract is ever born or comes into being.”
The aforesaid judgments were relied upon by the learned Senior
Counsel for the Petitioners to buttress his submission that the IPLA was void on
account of ambiguity and uncertainty.
Reading of the said judgments discloses that all the said judgments
are concerning the validity of the underlying contract and not the Arbitration
Agreement.  In the said judgments the underlying contract has been held to be
void  or  has  not  come into existence  on  account  of  the  reasons mentioned
therein.   However,   the   instant   case   arises   under   Section   45   of   the   Indian
Arbitration Act, the infirmity, if any, in the underlying contract cannot therefore
lgc  54 of 124      wps­7804.09 & 7636.09
be looked into.    It is well  settled  that even if  there is  any  uncertainty  or
ambiguity,  it   can   be  looked  into  and  if   necessary  corrected   by   relying  on
extrinsic evidence, as rightly contended by the learned Senior Counsel for the
Respondents,   by   placing  reliance   on   the   extracts   from   the   learned   Author
Chitty on Contract.  Therefore the said judgments cannot aid the Petitioners to
further their case that the parties cannot be referred to arbitration.
28 In so far as the submission of the Learned Senior Counsel for the
Petitioners  that  all  the  agreements were  to be executed  simultaneously,  the
same is not borne out by any document. The composite arrangement referred
to   pertains   only   to   the   fact   that   the   said   arrangement   will   govern   the
subsequent relationship of the parties in a composite manner and not that each
of the documents must be executed simultaneously.
The issue as to whether the IPLA is a concluded contract can also
be looked at from the angle of the same being signed by the parties. There is
no  dispute   that  the   Petitioner  No.2  has  signed  the   IPLA  on   29­9­2006  by
affixing his signature on every page of the IPLA including the execution clause.
The presumption which arises on the execution of the documents is enunciated
by the Judgment of the Apex Court reported in 2010 (1) SCC 83 in the matter
of   M/S. Grasim Industries Ltd. vs M/S. Agarwal Steel. Para 6 of the said
report is material and is reproduced herein under :
lgc  55 of 124      wps­7804.09 & 7636.09
“In our opinion, when a person signs a document, there
is a presumption, unless there is proof of force or fraud,
that he has read the document property and understood
it and only then has has affixed his signatures thereon,
otherwise   no   signature   on   a   document   can   ever   be
accepted.   In   particular,   businessmen,   being   careful
people   (since   their   money   is   involved)   would   have
ordinarily   ready   and   understood   a   document   before
signing   it.   Hence   the   presumption   would   be   even
stronger in their case. There is no allegation of force or
fraud in  this  case.  Hence it is  difficult  to  accept  the
contention of the respondent while admitting that the
document,   Ext.   D­8   bears   his   signatures   that   it   was
signed under some mistake. We cannot agree with the
view of the High Court on this question.  On this ground
alone,  we   allow  this  appeal,  set  aside   the  impugned
judgment of the High Court and remand the matter to
the High Court  for expeditious disposal in accordance
with law.”
In the said context the Judgment of a Learned Single Judge of this
Court is also relevant, which Judgment is reported in AIR 2000 BOM 108 in
the matter of  Keval Krishna Balakram Hitkari v/s Anil Keval Hitkari. Para 8
of the said Judgment is relevant and is reproduced herein under :­
8. So far as the objections raised by respondent No. 1
that the agreement of arbitration was not signed on the
day on which it is shown to have been signed and it was
signed  on  the  day  on which  the  award was made is
concerned in my opinion even if it is assumed that the
arbitration   agreement   was   not   signed   in   November,
1994 as claimed and  that it was signed on 3rd April,
1995   the   conduct   of   the   parties   of   signing   that
agreement   and   accepting   the   award   and   executing
further  documents  pursuant  to  that  award  has  to  be
construed   as   existence   of   an   arbitration   agreement
between  the parties. The observations of the Supreme
Court in para 6 of its judgment in  the case of Vaidya
Harishankar   Laxmiram   Rajyaguru   of   Rajkot   are
pertinent which reads as follows :
lgc  56 of 124      wps­7804.09 & 7636.09
"6. The main objection to the award is that there was no
written agreement signed by both  the parties  to  refer
the disputes to arbitration. It is clear from the narration
of facts that the parties had agreed to refer the dispute
to   arbitrator.   The   award   signed   by   both   the   parties
about which  there is no  factual dispute  reiterated  the
fact that the parties had agreed to refer the dispute to
the arbitration of the said arbitrator and that he made
an award. All these are in writing and signed by all the
parties. This in our opinion in the light of the facts and
circumstances of the case can certainly be construed to
be a proper arbitration agreement in  terms of section
2(a)  of  the Act.  In  this  connection  reference may  be
made to the observations of this Court in Prasun Roy v.
Calcutta Metropolitan Development Authority, AIR 1988
SC   205   :   (1987)   4   SCC   217   where   all   the   relevant
authorities on this point have been discussed. See also
in   this   connection   the   decision   of   the   Judicial
Committee in Chowdhri Murtaza Hossein v. Mst. Bibi
Bechunnissa, (1875­76) 3 IA 209, 220. The observations
in the said decision were made in different context. But
in the present context it is clear that the conduct of the
parties that there was an arbitration agreement and by
signing two award it could be said that the parties had
agreed to refer the disputes in writing to the arbitration
of the named arbitrator. This agreement was done twice
firstly by signing an endorsement below the award and
secondly by entering into an agreement in the form of a
letter dated August 14, 1978 (Ex. 40)."
Hence   there   can   be   no   escape   for   the   Petitioners   from   the   consequences
flowing from the signing of the IPLA; and the signing of the IPLA by the parties
is  therefore a strong circumstance in arriving at a  prima facie  conclusion as
enunciated in  Shin Etsu Chemical Co. Ltd's  case for referring the parties to
arbitration.
lgc  57 of 124      wps­7804.09 & 7636.09
29 Now  coming  to  the  submission  of  the  Learned  Senior   Counsel
appearing  for the Petitioners that clause 18.1 of the IPLA itself is uncertain,
ambiguous and unworkable as according to the Learned Senior Counsel, out of
the  two Arbitrators,  one Arbitrator is  also  to  don  the  hat  of  the  Presiding
Arbitrator.   For   the   said   purpose   clause   18   of   the   IPLA   would   have   to   be
revisited. A reading of the said clause 18.1 discloses that each of the licensors
have to appoint an Arbitrator and the licensee is to appoint one Arbitrator. In
terms   of   the   IPLA,   the   Respondent   No.2   has   licenced   the   patents   to   the
Respondent No.1 who has  then licenced  them  to  the Petitioners, hence  two
Arbitrators have to be appointed by each of the licensors and one has to be
appointed by the licensee making it in all three Arbitrators. Since at the time of
invocation  of  the  arbitration  clause,  the Respondents in  fairness  agreed  to
appoint   the   third   arbitrator   independently,   the   said   fact   cannot   make   the
Arbitration Agreement invalid, ambiguous and uncertain as contended by the
Learned Senior Counsel. In any event, the provision regarding the number of
arbitrators is merely  a machinery  provision  and  does  not  form  part  of  the
Arbitration Agreement. Even if the machinery part is invalid, there is  still an
Arbitration Agreement by and between the parties which can be enforced. A
useful reference could be made to the Judgments of the Apex Court which have
been  relied upon by  the learned Senior Counsel  for  the Respondents.   The
relevant paragraphs thereof are reproduced herein under :­
lgc  58 of 124      wps­7804.09 & 7636.09
    AIR 1997 SC 605 in the matter of   M.M.T.C. Limited vs Sterlite Industries
(India) Ltd.  (supra) Paras 8, 9, 10 and 11 are relevant and are reproduced
herein under :­
“8.  Sub­section (3)   of Section   7 requires
an arbitration agreement to be in writing and
sub­section   (4)   describe   the   kind   of   that
writing. There is   nothings in   Section 7    to
indicate  the    requirement  of  the  number  of
arbitrators as a part of   the   arbitration
agreement. Thus the validity of an arbitration
agreement does not depend on the number of
arbitrators specified    therein. The number of
arbitrators is dealt with  separately in  Section
10  which is a part of machinery provision  for
the  working of  the arbitration agreement.  It
is,     therefore   clear   that   an   arbitration
agreement   specifying   an   even   number   of
arbitrators cannot be a ground  to render  the
arbitration agreement invalid under  the New
Act   as   contended   by   the   learned   Attorney
General.
9.  Section  10  deals with    the  number  of
arbitrators.   Sub­section   (1)     says   that   the
parties  are  free  to  determine  the number  of
arbitrators, provided   that such number shall
not be an  even number.  Sub­section (2)  then
says  that  failing  the   determination   referred
to   in   sub­section   (1), the arbitral   tribunal
shall   consist   of a sole arbitrator. Section 11
provides for appointment of arbitrators. This is
how arbitral tribunal is constituted.
10.  The   arbitration     clause   provides     that
each party shall nominate one  arbitrator and
the   two   arbitrators   shall   then   appoint   an
umpire before proceeding with the reference.
The arbitration  agreement is  valid   as   it
satisfies the requirement of Section 7   of the
New Act   .  Section  11  (3)  requires  the  two
arbitrators  to  appoint  the  third  arbitrator  or
lgc  59 of 124      wps­7804.09 & 7636.09
the umpire. There  can be  no doubt that the
arbitration   agreement   in     the   present    case
accords  with the  implied condition contained
in   para     2   of   the   First   Schedule   to   the
Arbitration   Act,     1940   requiring     the   two
arbitrators,   one   each   appointed   by   the   two
sides,  to  appoint.  an umpire  not later    than
one   month    from  the latest   date   of    their
respective appointments.
11. The   question   is:   whether   there   is
anything   in   the   New   Act   to   make   such   an
agreement unenforceable? We do not find any
such indication in  the New Act. There is no
dispute   that   the   arbitral   proceeding   in   the
present   case   commenced   after   the   New   Act
came  into force  and, therefore, the New Act
applies. In  view of  the term in the arbitration
agreement  that  the     two  arbitrators    would
appoint    the umpire    or  the  third  arbitrator
before   proceeding     with   the   reference,   the
requirement of Sub­section (1) of Section 10 is
satisfied and sub­section (2)   thereof   hes   no
application. As earlier  stated  the    agreement
satisfies  the  requirement of  Section 7  of  the
Act   and   therefore,   is   a   valid   arbitration
agreement.   The   appointment   of   arbitrators
must, therefore, be governed by Section 11 of
the New Act.
(2002)  3  SCC  572  in  the matter  of   Narayan  Prasad  Lohia v/s.  Nikunj
Kumar  Lohia and  others .    Para  17 is material  and is  reproduced  herein
under:­
“We are also unable to accept Mr. Venugopal's
argument   that,   as   a  matter   of   public   policy,
Section   10   should   be   held   to   be   non­
derogable. Even though the said Act is now an
integrated law on the subject of Arbitration, it
cannot   and   does   not   provide   for   all
contingencies. An arbitration being a creature
lgc  60 of 124      wps­7804.09 & 7636.09
of agreement between the parties, it would be
impossible   for   the   Legislature   to   cover   all
aspects.   Just   by   way   of   example   Section   10
permits the parties to determine the number of
arbitrators, provided  that such number is not
an even number. Section 11(2) permits parties
to   agree   on   a   procedure   for   appointing   the
arbitrator   or   arbitrators.   Section   11   then
provides how arbitrators are to be appointed if
the parties do not agree on a procedure or if
there   is   failure   of   the   agreed   procedure.   A
reading of Section 11 would show that it only
provides for appointments in cases where there
is only one arbitrator or  three arbitrators. By
agreement   parties   may   provide   for
appointment of 5 or 7 arbitrators.  If  they do
not   provide   for   a   procedure   for   their
appointment or  there is  failure of  the agreed
procedure,  then  Section  11  does  not  contain
any provision for such a contingency. Can this
be  taken  to mean  that  the Agreement  of  the
parties is invalid. The answer obviously has to
be in the negative. Undoubtedly the procedure
provided in Section 11 will mutatis mutandis
apply   for   appointment   of   5   or   7   or   more
arbitrators. Similarly even if parties provide for
appointment of only two arbitrators, that does
not mean that the agreement becomes invalid.
Under Section 11(3) the two arbitrators should
then appoint a third arbitrator who shall act as
the presiding arbitrator. Such an appointment
should  preferably  be made  at  the  beginning.
However,   we   see   no   reason,   why   the   two
arbitrators cannot appoint a third arbitrator at
a later stage i.e. if and when they differ. This
would ensure  that on a difference of opinion
the arbitration proceedings are not frustrated.
But   if   the   two   Arbitrators   agree   and   give   a
common  award  there is no  frustration of  the
proceedings.   In   such   a   case   their   common
opinion would have prevailed, even if the third
arbitrator,   presuming   there   was   one,   had
differed. Thus we do not see how there would
be waste of time, money and expense if a party,
lgc  61 of 124      wps­7804.09 & 7636.09
with open eyes, agrees to go to Arbitration of
two   persons   and   then   participates   in   the
proceedings. On  the contrary  there would be
waste   of   time,   money   and   energy   if   such   a
party is allowed to resile because the Award is
not of his liking. Allowing such a party to resile
would   not   be   in   furtherance   of   any   public
policy and would be most inequitable.”
The   next   contention   of   the   learned   Senior   Counsel   for   the
Petitioners that since the Annexures 1 to 4 to the IPLA do not form part of the
finally executed  IPLA,  there is an uncertainty  and ambiguity as  regards  the
Patent  portfolio   and  the  Marks   which   are  licensed  under   the   IPLA  to  the
Petitioners.    Though in  terms  of   the   scope  of inquiry  contemplated  under
Section 45 of the Indian Arbitration Act, the same is not necessary to be gone
into by this Court. In so far as the said contention is concerned, it is required to
be noted that the business relationship between the parties existed from the
year 1994.  The Petitioners were already using the Patents right from 1994 and
to which Patents there were additions.  Even the Marks have been used by the
Petitioners right from the year 1994, and therefore, the parties were aware of
the   Patents   and   the   marks   in   respect   of   which   they   have   entered   into   a
contract.  Therefore, prima facie, there doesn't seem to be any merit in the said
contention of the Petitioners.  However, as indicated above, the issue as regards
the alleged infirmity in the underlying contract i.e. the IPLA is required to be
urged before the Arbitral Tribunal, and it will be for the Arbitral Tribunal to
consider the same.
lgc  62 of 124      wps­7804.09 & 7636.09
The   defining   aspect   is   the   intention     of   the   parties   to   go   for
arbitration which intention is clearly manifest in the IPLA.  On the said aspect,
it would be gainful  to refer  to  the judgment of  the Apex Court reported in
2009(4) SCC 495 in the matter of      Nandan Biomatrix Limited     Vs.     D 1 Oils
Limited,. Paras 26, 27, 30, 32, 33 and 34 are material and are reproduced
herein under :­
“26  The   disputed   arbitration   clause   in   the
present  case is  clause  15.1, mentioned in  the  Supply
Agreement, which is reproduced as under:
"15.1 . Any dispute that arises between the parties shall
be resolved by submitting the same to the institutional
arbitration in  India under the provisions of arbitration
and conciliation act, 1996."
“27 Arbitration   agreement   is   defined   under
Section  7  of  the  1996  Act.  It  does  not  prescribe  any
particular form as such. In terms of the said provision,
arbitration agreement means:
"Section   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 13 in­ (a) a document signed by the parties”
“30 The Court is required, therefore, to decide
lgc  63 of 124      wps­7804.09 & 7636.09
whether   the   existence   of   an   agreement   to   refer   the
dispute to arbitration can be clearly ascertained in the
facts and circumstances of the case. This, in turn, may
depend upon the intention of the parties to be gathered
from   the   correspondence   exchanged   between   the
parties, the agreement in question and the surrounding
circumstances.   What   is   required   is   to   gather   the
intention of the parties as to whether they have agreed
for resolution of the disputes through arbitration. What
is required to be decided in an application on Section 11
of   the   1996   Act  is   :   whether   there   is  an   arbitration
agreement as defined in the said Act.”
“32 I   do   not   find   any   merit   in   the   above
contentions raised on behalf of the non­applicant. The
question   which   needs  to   be   asked is   :   what   did  the
parties intend  at  the  time of execution of  the Supply
Agreement dated 10.8.04? What did the parties intend
when clause 15.1 came to be incorporated in the said
Supply Agreement?  The  answer  to  the  said  questions
undoubtedly is that any dispute that may arise between
the parties shall be resolved by submitting the same to
the   Institutional   Arbitration   in   India   under   the
provisions of the 1996 Act. It may be mentioned that the
name of a specific institution is not indicated in clause
15.1.”
“33 The 1996 Act does not prescribe any form
for an arbitration agreement. The arbitration agreement
is not required to be in any particular form.
[See : Bihar State Mineral Development Corporation &
Another v. Encon Builders (I) (P) Ltd. ­ (2003) 7 SCC
418]. What is required is to gather the intention of the
parties as to whether they have agreed for resolution of
the disputes through arbitration.”
34  In   my   view,   in   the   present   case,   the   parties
unequivocally   agreed   for   resolution   of   the   disputes
through Institutional Arbitration and not through an ad
hoc  arbitration.  Therefore, in my view,  there exists  a
valid   arbitration   agreement   between   the   parties   vide
clause 15.1 in the Supply Agreement dated 10.8.04. The
lgc  64 of 124      wps­7804.09 & 7636.09
first   issue   is   accordingly   answered   in   favour   of   the
applicant and against the non­applicant.
30 Now coming to the contention of the Learned Senior Counsel for
the Petitioners that the prayer in the suit pertaining to the anti suit injunction
can never be referred to arbitration in support of which contention reliance is
placed by the Learned Senior Counsel on the Judgment of the Apex Court in
Sukanya   Holdings   Pvt.   Ltd.   (supra).   In   so   far   as   the   said   contention   is
concerned, it is required to be noted that the Judgment in Sukanya Holdings
Pvt.  Ltd    (supra)  has been distinguished by  the Apex Court in  the case of
Rashtriya Ispat Nigam Limited v/s Verma Transport Co. reported in (2006)
7 SCC 275. Paras 23, 45 and 47 of the said report are material and reproduced
herein under :­
“23  In   the   instant   case,   the   existence   of   a   valid
agreement  stands  admitted. There cannot  also be  any
dispute  that  the matter  relating  to  termination of  the
contract would  be  a  dispute  arising out  of  a  contract
and, thus, the arbitration agreement contained in clause
44 of the contract would be squarely attracted.   Once
the   conditions   precedent   contained   in   the   said
proceedings   are   satisfied,   the   judicial   authority   is
statutorily mandated to refer the matter to arbitration.
What is necessary to be looked into therefor, inter alia,
would be as to whether the subject­matter of the dispute
is covered by the arbitration agreement or not.”
“45  Reliance   placed   by   the   learned   counsel   on
Sukanya   Holdings   (P)   Ltd.   v.   Jayesh   H.   Pandya   and
Another  [(2003)  5  SCC  531  is misplaced.Therein,  not
only a suit  for dissolution of the  firm was  filed, but a
different cause of action had arisen in relation whereto
apart  from parties  to  the  arbitration agreement, other
parties had also been impleaded.  In the aforementioned
lgc  65 of 124      wps­7804.09 & 7636.09
fact situation, this Court held :
"Secondly, there is no provision in the Act that when the
subject­matter of the suit includes subject­matter of the
arbitration   agreement   as   well   as   other   disputes,   the
matter is required to be referred to arbitration. There is
also no provision for splitting the cause or parties and
referring   the   subject­matter   of   the   suit   to   the
arbitrators.”
“47 Such   a   question   does   not   arise   herein   as   the
parties herein are parties  to  the arbitration agreement
and  the   question  in   regard  to  the  jurisdiction  of   the
arbitrator, if any,   can be determined by the arbitrator
himself in terms of Section 16 of the 1996 Act.”
In my view, the Judgment in Sukanya Holdings Pvt. Ltd. (supra),
has no application even in the present case because the parties to the instant
proceedings are parties to the Arbitration Agreement and the cause of action
which is sought to be invoked is also covered by  the Arbitration Agreement
between the parties and the said relief i.e. anti suit injunction is also claimed
on  the  basis  of  the  dispute  between  the  parties which  are  covered  by  the
Arbitration Agreement. It was held by the Apex Court in Everest Holding's case
(supra)  that  the  Judgment in  Sukanya Holdings  Pvt.Ltd.'s  case(supra)  has
been   distinguished  in   the   case   of  Rashtriya  Ispat  Nigam   Ltd.  because  in
Sukanya Holdings Pvt. Ltd.'s case two distinct and different causes of action
were merged in a suit and it required independent adjudication of the rights of
the flat purchasers who are not governed by the Arbitration Agreement and the
cause of action which is sought to be invoked is also covered by the Arbitration
Agreement between the parties.        
lgc  66 of 124      wps­7804.09 & 7636.09
31 Now coming to the judgments relied upon by the learned Senior
Counsel for the Petitioners in support of his contention that there can be no
arbitration, if there is no concluded contract.  The judgment in  Dresser Rand
S.A.   (supra) was a case where no contract had come into existence at all as
the contract was spelt out on the basis of a tender document and ultimately the
said tender document which was held to be merely an invitation to offer was
not accepted as a  final contract.   The  terms and condition in  the said case
contemplated  for an agreement  to come into existence only when  the  final
purchase order was placed, as there was no such purchase order placed, it was
held that there was no concluded contract.  It is is well settled that the  tender
or bid document is merely an invitation to offer, and therefore, the same by
itself cannot be treated as a contract between the parties.
In   the   case   of  Andhra   Pradesh   Tourism   Development
Corporation   Ltd   &   Anr.  (supra),   the   facts   were   that   even   prior   to   the
incorporation and registration of a company, a contract was executed by its
purported Managing Director in  the capacity of a Managing Director of  the
company which was at the time not in existence.   It was held that obviously
when  the parties  to an  agreement do not exist,  there could never be valid
parties   to   the   agreement,   and   consequently,   there   can   never   be   a   valid
Arbitration Agreement between such parties.
lgc  67 of 124      wps­7804.09 & 7636.09
In the case of Jawahar Lal Burman  (supra) the contention was
that there was only a conditional acceptance of the tender and therefore there
was no concluded valid contract.  On the basis of the facts of the said case the
Apex Court has held in Para 15 of the said report that there was a concluded
contract and the condition of security deposit was a condition subsequent and
not a condition precedent.
In   the   case   of  Rickmers   Verwaltung   GmbH    (supra)   the
correspondence between the parties were sought to be relied upon to spell out
a concluded contract.  It is in the said context that the Apex Court examined
the said case and came to a conclusion that the correspondence in that case
does not spell out a concluded contract between the parties.
In my view,  the  said judgments  do not  further  the  case  of  the
Petitioners in any manner.  As indicated above, the inquiry that this Court is
required to make under Section 45 of the Indian Arbitration Act is limited to
determine prima facie whether there is in existence an Arbitration Agreement
and if yes, refer the parties to arbitration unless it finds that the  Arbitration
Agreement is invalid, inoperative, null, void and incapable of being performed.
Invalidity   of   the   agreement   could   only   be   on   the   ground   if   the   same   is
questioned on the grounds of coercion,  fraud, misrepresentation or  that the
lgc  68 of 124      wps­7804.09 & 7636.09
said agreement has not been duly executed.  It is pertinent to note that in the
instant  case,  the   parties   are   not   relying  upon   any  correspondence   for   the
purposes of establishing the existence of the contract, because in the instant
case  the  IPLA is  duly executed in writing  and  signed  by  the  parties.    The
correspondence that is sought to be relied upon by the parties is in support of
their respective assertions that the IPLA is not a concluded contract or that the
IPLA is a concluded contract.   So far as the Respondents are concerned, the
said correspondence is relied upon to demonstrate that the parties had applied
their   mind   to   the   drafts   of   the   IPLA,   that   were   prepared   before   finally
executing the same on 29/09/2006.  In my view, the Lower Appellate Court
was  right in interfering with  the order passed by  the Trial Court. The view
taken by the Lower Appellate Court on the aspect of referring the parties to
arbitration   on   a  prima facie  view  that  there  is in   existence  an  Arbitration
Agreement cannot be faulted with in the facts and circumstances of the case.
CONCLUSION ­ WRIT PETITION NO.7804 OF 2009
32 In the light of the well settled position in law that the Court whilst
considering an Application under Section 45 of the Indian Arbitration Act has
only   to   arrive   at   a  prima   facie  conclusion   that   there   exist   an   Arbitration
Agreement, the submission of the learned Senior Counsel  for the Petitioners
that  since  the  Lower Appellate Court has  referred  the parties  to arbitration
lgc  69 of 124      wps­7804.09 & 7636.09
without recording a finding that the IPLA is a concluded contract, is therefore
without   merit.   The   scope   of   the   jurisdiction   under   Article   227   of   the
Constitution of  India has been succinctly elucidated in the judgments which
have been cited on either side.  It is well settled that the powers under Article
227 of the Constitution of India cannot be exercised “as a cloak of an Appeal in
disguise” and that the writ court cannot substitute its own conclusion for the
conclusion reached by the courts below.  Interference is called for only if the
impugned  order   results in   a mis­carriage  of   justice   or  the   findings  are   so
perverse that no reasonable person could have arrived at such findings. In my
view, in the facts and circumstances of the present case, the conclusion arrived
at  by  the  Lower  Appellate  Court  whilst  referring  the  parties  to  arbitration
cannot be said to be a conclusion which could not be arrived at in the  facts
and circumstances of the case
33 In any event, since the findings of the Lower Appellate Court can
only   be   said   to   be  prima   facie  in   nature,   the   Petitioners   would   have   an
opportunity to agitate the issue which they seek to agitate before the Arbitral
Tribunal.  Hence in so far as the part of the impugned order, which relates to
the application  filed by the Respondents under Section 45, is concerned, no
interference is called for in the writ jurisdiction of this Court under Article 227
of the Constitution of India. The Writ Petition No.7804 of 2009 is accordingly
dismissed. Rule discharged, with no order as to costs.
lgc  70 of 124      wps­7804.09 & 7636.09
34 SUBMISSIONS   ON   BEHALF   OF   THE   PETITIONERS   BY   THE
LEARNED  SENIOR COUNSEL DR.VEERENDRA TULZAPURKAR
IN WRIT PETITION NO.7636 OF 2009
(i) That assuming  that  the  IPLA is a concluded contract in view of
Clause   18.3   wherein   it   has   been   specifically   stated   that   the
“Arbitration and Conciliation Act, 1996” i.e. the Indian Arbitration
Act would be applicable, the said Act would therefore govern the
procedure as also a conduct of the proceedings and therefore the
English Courts would not have jurisdiction.
(ii) That since  the arbitration is governed by  the  Indian Arbitration
Act,   it is only the Indian Courts which would have jurisdiction,
and   the   Petitioners   are   therefore   entitled   to   an   injunction
restraining   the   Respondents   from   proceeding   further   with   the
proceedings in the English Court;
(iii) That in view of an express choice of law  i.e. the Indian Arbitration
Act, having been made by  the parties as  the law governing  the
arbitration and the curial law, there is no question of determining
the  seat of  arbitration. For  the said purpose  the learned Senior
Counsel would place reliance on the following judgments reported
in :­
lgc  71 of 124      wps­7804.09 & 7636.09
(1) (2007)   5   SCC   692,   National   Agricultural   Co­op
Marketing Federation Indian Ltd v/s. Gains Trading Ltd.
(2) (2009) 7 SCC 220, Citation Infowares Ltd. v/s. Equinox
Corporation ;
(3) (2008) 10 SCC 308, Indtel Technical Services Pvt. Ltd v/s.
W.S. Atkins;
(4) (2002) 4 SCC 105, Bhatia International v/s. Bulk Trading
S.A. And Another;
(5) (1988)   1   Lloyds   L.R.   116,   Naviera   Amazonica   v/s
Compania International;
(6) 2011(3) ARBL 350, Prima Buildwell v/s. Lost City;
(7) (2008)   E.W.H.C.   426,   Breas   of   Doune   v/s.   Alfred   Mc
Alpine,
(iv) That   in   so   far   as   arbitration   proceedings   are   concerned,   the
concept   of   venue   is   different   from   the   concept   of   seat   of
arbitration. The seat of arbitration would have the consequences
of fixing the jurisdiction. In the instant case, since the London is
only the “venue” and since the parties have chosen the application
of the Indian Arbitration Act, the parties would be governed by the
said Indian Law.
(v) That the determination of the seat of arbitration would come into
play only if the parties have not chosen the law which would be
applicable and it is only in the said context that the Court would
have   to   find   out   as   to   which   curial   law   would   apply   to   the
arbitration. Moreover, the curial law comes much later which is in
respect of the conduct of the proceedings. In the instant case, there
lgc  72 of 124      wps­7804.09 & 7636.09
is no need  to  find out  the law applicable  for which  the seat of
arbitration can be an indicia, as the parties have by choice agreed
to  the   application   of   the   Indian   Arbitration   Act.     For  the   said
purpose   the   learned   Senior   Counsel   relied   upon   two   English
Judgments i.e. the judgment reported in (2008) EWHC 426 in the
matter of  Braes of Doune Wind Farm (Scotland) Ltd. v. Alfred
Mcalpine Business Services Ltd.   and (1988) Vol.1 Lloyd's Law
Reports 116 in the matter of  Naviera Amazonica Peruana S.A.
v/s. Compania Internacional DE Seguros Del Peru.
(vi) That once the agreement contained a express term which in this
case is the Indian Arbitration Act, it is not open for the Court to
read into a contract a term on the basis of the venue which in the
instant case is  the application of  the English Law.   The learned
Senior Counsel for the said purpose relied upon the judgments of
the Apex Court reported in  (1968) 1 SCR 821  in the matter of
Nathati Jute Mills Ltd.  v/s Khyaliram Jagannath.
(vii) That it is not permissible  to interpret  the said clause 18.3 in a
restricted manner so as to limit/confine the choice of law made by
the parties only to some parts of the Act. When the agreement in
clause  18.3  provides  that  the  'provisions  of  the  Arbitration  and
lgc  73 of 124      wps­7804.09 & 7636.09
Conciliation Act, 1996 shall apply', it is  agreed between the parties
that   the   entire   Act   applies   and   not   the   select   provisions.     In
support of the said contention the learned Senior Counsel would
place  reliance on  the judgments  of  the Apex Court  reported in
(1994)   4   SCC   104  in   the   matter   of  Assistant   Excise
Commissioner v/s  Isaac  Peter,  and  1968  (1)  SCR  821  in  the
matter of Naihiti Jute Mills Limited v/s. Khyalynam Jagannath.
(viii) That once the parties have agreed that the Indian Arbitration Act
would  apply,  then  any  action  contrary  to  the  provisions  of  the
Indian Arbitration  Act  amounts  to  breach  of  contract,  and if  a
party commits breach of contract after expressly agreeing to the
application  of the Indian Arbitration Act thereby to the exclusive
jurisdiction  of  the  Indian  Court,    the  Court  ought  to  grant  an
interim injunction preventing continuance of such breach.
(ix) That   since   the   substantive   prayer   is   as   regards   the   injunction
sought by the Petitioners against the Respondents restraining them
from   approaching   the   English   Courts   in   view   of   the   said
Arbitration   Agreement,   this   Court   would   have   to   consider   the
grant of  the  said  relief  as  the  said  relief cannot  be  the  subject
matter of arbitration.  The learned Senior Counsel relied upon the
lgc  74 of 124      wps­7804.09 & 7636.09
judgment of the Apex Court in (2003) 5 SCC 531 in the matter of
    Sukanya Holdings     (P) Ltd. v/s. Jayesh H Pandya and anr.
(x) That it is well settled that where a party is put in an inextricable
situation   by   the   proceedings   filed   in   a   foreign   court,   such   a
situation would be oppressive to such a party.  The Apex Court has
ruled  that in  such  cases  the  Courts in  India  ought  to  exercise
jurisdiction   and   injunct   parties   from   proceeding   with   the
proceedings   in   a   foreign   court.       Reliance   was   placed   on   the
judgment of the Apex Court reported in (1987) 1 SCC 496 in the
matter of  ONGC v/s. Western Company, North America.
(xi) That   the   learned   Senior   Counsel   for   the   Petitioners   in   the
alternative submitted that even assuming the English Arbitration
Act,   1996   applies,   since   Section   18   which   provides   for
appointment   of   Arbitral   Tribunal   being   non­mandatory,   and   in
view   of   the   agreement   between   the   parties   that   the   Indian
Arbitration Act will apply,  the application of  the non­mandatory
provision of the English Arbitration Act is excluded by virtue of the
provisions of Section 4(2) of  the English Arbitration Act, 1996.
The   English   Court   therefore   would   have   no   jurisdiction   to
entertain any application for appointment of Arbitral Tribunal.
lgc  75 of 124      wps­7804.09 & 7636.09
(xii) That the issue of seat of arbitration would not arise in the present
case in view of the settled position in law as enunciated by the
Apex Court in the case of Bhatia International v/s Bulk Trading
SA and Another reported in (2002) 4 SCC 105 wherein the Apex
Court   has   held   that   in   cases   of   international   commercial
arbitrations  held  out  of  India  provisions  of  Part  I  would  apply
unless the parties by agreement, express or implied, exclude all or
any of its provisions.
(xiii) That the matter of appointment of Arbitral Tribunal is covered by
the law of Arbitration Agreement, and not the curial law or  lex
arbitri.     In   support   of   the   said   submission   the   learned   Senior
Counsel would place reliance on the judgment of the Apex Court
reported in (1998) 1 SCC 305 in the matter of Sumitomo Heavy
Industries v/s. ONGC,  and (2012) 1 BCR 547   in the matter of
Sakuma Exports v/s Louis .
(xiv) That  the  curial law  that would  be  applicable  to  the  arbitration
proceeding cannot be approached  from the choice of seat if the
parties have expressly chosen the application of a particular law.
The  approach  should  therefore  be  to  find  out what is  the law
lgc  76 of 124      wps­7804.09 & 7636.09
chosen by  the parties  rather  than  first  finding out  the seat  and
then determine the law; that once the parties have made a choice
of the law applicable to Arbitration Agreement and the curial law,
then there is no need for finding out what the seat is and what
would be the law if a seat is in a particular country.
(xv) That   the   reference   to   the   seat   becomes   relevant   only   in   the
absence of choice of the curial law and this is borne out from the
passages of the very text books and the judgments relied upon by
the Respondents.
(xvi) That   the   choice   of   the   parties   as   regards   the   proper   law   of
arbitration   or   the   curial   law   is   the   determinative   factor   for
ascertaining the seat of arbitration. Only absent such choice, the
question of finding the seat of arbitration arises.
(xvii) That  the judgments  cited  on  behalf  of  the Respondents  on  the
aspect of seat being the determinative factor are not applicable in
the   facts   of   the   present   case   when   the   parties   have   expressly
chosen the application of the Indian Arbitration Act.  In the cases
cited by the Respondents there was no choice of the proper law of
the Arbitration Agreement and/or the curial law and it is in the
lgc  77 of 124      wps­7804.09 & 7636.09
said   circumstances   that   the   choice   of   the   seat   became   a
determinative factor.
(xviii) That   the   parties   have   agreed   to   the   application   of   the   Indian
Arbitration Act, 1996 to be the proper law of arbitration as well as
curial law is also indicative from the fact that in clause 18.3 the
expression   “Presiding   Arbitrator”  is   used   which   appears  in   the
Indian Arbitration Act, 1996 whereas the English Arbitration Act,
1996 the word “Umpire” appears.
(xix) If a party acts against the terms of the contract, it has the effect of
causing harm and injury to the other side. In the instant case, the
Respondents have invoked jurisdiction of the English Courts and
thereby dragging the Petitioners to a Court which does not have
jurisdiction in terms of the agreement.  Reliance was placed on the
judgment of  the Apex court in   ONGC v/s. Western Company,
North America.(supra)
(xx) That the Petitioners are entitled to an anti suit injunction by the
reason of choice of the Indian Arbitration Act, by the parties as the
applicable law  relating  to  the  entire  arbitration.  It is  only  the
Indian   Courts   which   would   have   jurisdiction,   and   the   English
lgc  78 of 124      wps­7804.09 & 7636.09
Courts would have none.  The Respondents having approached the
English   Court   thereby   breaching   the   agreement   as   they   have
wrongly   invoked   the   jurisdiction   of   the   English   Court,   the
Petitioners  are  therefore  approaching  the Civil Court  to prevent
continuance of the breach by seeking an anti suit injunction.
(xxi) That   the   assets   of   the   Respondents   in   the   form   of   shares   of
Petitioner No.1 and the dividend income arising thereform are in
Daman   making   the   Respondents   personally   amenable   to   the
jurisdiction of the Daman Court as any order passed by the Daman
Court can be enforced against  the assets of  the Respondents in
Daman.
(xxii) That   the   Petitioner   No.1   being   a   joint   venture   between   the
Respondent   No.1   and   Mehra   family.   A   joint   venture   is   in   the
nature of a partnership.  The Respondent No.1 as partner of the
joint venture is carrying on business in Daman, and as such are
within the personal jurisdiction of the Daman Court.  The learned
Senior Counsel in support of the said contention has relied upon
the judgment of the Apex Court reported in 1995(1) SCC 478 in
the matter of New Horizons Limited and Anr v/s Union of India,
and the judgments of this Court reported in AIR 1932 Nag 114 in
lgc  79 of 124      wps­7804.09 & 7636.09
the matter of Tarabai v/s Chogmal and in AIR 1971 Bom 362 in
the   matter   of  Ex­parte­Girdharlal   Shankar   Dave  which   was
approved   in   the   judgment   reported   in  1986   MLJ   325  in   the
matter of Harshad V/s Ishardas.
(xxiii) That  allowing  the Respondents  to proceed in  the English Court
will result in allowing them to commit breach of and continue to
commit breach of the express agreement between the parties.
35 SUBMISSIONS ON BEHALF OF THE RESPONDENTS BY THE
LEARNED   SENIOR   COUNSEL   SHRI   NAVROZE   SEERVAI   IN
WRIT PETITION NO.7636 OF 2009:­
[A] That the seat is a juristic concept and is not a linguistic concept,
as   is   sought   to   be   contended   by   the   learned   counsel   for   the
Petitioners.  The juristic concept of a seat is to be gathered from
the terms of the agreement, as it expresses the consensual intent
of the parties.
[B] That use of the expression “place”, “venue” or directly referring to
the “city” where the arbitration is to take place, would mean that
all such words, phrases are used to indicate the seat of arbitration
and would not mean a geographical location.
lgc  80 of 124      wps­7804.09 & 7636.09
[C] That since none of  the parties  to  the  IPLA are even located in
London,   it   therefore   clearly   indicates   that   London   was   not
referred to for the sake of convenience but was designated as the
seat by the parties.
(D) That the parties having chosen the seat of arbitration as London
which is  contained in  Clause  18.3  of  the   agreement, it is  not
proper for the Petitioners to resile  from the said clause so as to
contend   that   London   was   chosen   geographically   as   it   was
convenient for the parties to meet in London.
(E) That the Petitioners approaching the Civil Court in Daman i.e. the
Indian   Court  are   therefore   acting in   breach  of  the  Arbitration
Agreement.
(F) The   conjoint   reading   of   Sections,   2,   4   and   5   of   the   English
Arbitration Act makes it clear that once the Arbitration Agreement
is in writing and the venue is London, the said agreement would
have to be given effect.
(G) That in terms of the English Arbitration Act both the mandatory
and non­mandatory provisions of the said Act would apply.
lgc  81 of 124      wps­7804.09 & 7636.09
(H) That in view of the fact that the seat of arbitration is London, the
applicability of the Arbitration and Conciliation Act, 1996 of India
would  only  govern  the  Arbitration Agreement  but  not  the  Lex
Arbitri.
(I) That the law of the country wherein the seat is situated would be
applicable   in   so   far   as   the  Lex   Arbitri  is   concerned,   the   said
position   is   made   clear   from   the   commentaries   of   the   learned
Authors  Mustill   &   Boyd,   Russell   and   Redfern   &   Hunter.   The
learned Senior Counsel relied upon the  following passages from
the commentaries of the three learned authors.
Mustill  and  Boyd  –  Chapter  IV  ­  The  applicable law  and  the
jurisdiction of the court.
Russell – Paragraphs 2­087, 2­088, 2­090, 2­093, 2­094, 2­099, 2­
100 to 2­109.
Redfern and Hunter  – Chapter 3 – Paragraphs 3.09  to 3.33 &
Paragraph   3.34   from   the   Chapter   ­   The   Law   Governing   the
Arbitration
[J] That the learned Authors have made it clear that in the absence of
an   agreement   as   to   the   procedural   law,   the   choice   of   seat
determines  the  procedural law  of  the  arbitration.   That where
lgc  82 of 124      wps­7804.09 & 7636.09
parties have  failed  to choose  the law governing  the arbitration
proceedings,   those   proceedings   must   be   considered   as   being
governed by  the law of  the country in which  the arbitration is
held on the ground that it is the country most closely connected
with   the   proceedings.     In   support  of   the   said  contention,  the
learned Senior Counsel for the Respondents has relied upon the
following judgments. (1970) AC 583, James Miller & Partners
Ltd. v/s Whitworth  Street  Estate;    (1984)  1 QB  291, Bank
Mellat v/s Helliniki Techniki SA;  (1988) 1 Lloyd's Law Reports
116, Naviera v/s Compania;  (2011) 6 SCC 179, Dozco India
Pvt. Ltd. v/s Doosan Infracore Company Ltd;   (2011) 6 161,
Videocon Industries Ltd v/s. Union of India; (2011) 9 SCC 735
Yograj   Infrastructure  Ltd.  v/s.   Ssang  Yong  Engineering  and
Construction  Ltd;  (2010) 3 Arb.  L.R. 70, Bhushan  Steel v/s
Singapore International Arbitration Centre; and (2011) 3 Arb.
L.R.   350,   Prima   Buildwell   Private   Ltd   v/s.   Lost   City
Development LLC.
(K) That since the seat of arbitration being London, the English Law
would be applicable can be seen  from Section 4 of  the English
Arbitration  and Conciliation Act,  1996. The  said Act postulates
that unless there is clear and unequivocal intention to the contrary
lgc  83 of 124      wps­7804.09 & 7636.09
the law of the country wherein the seat of arbitration is situated
would govern the law of arbitration.
(L) That the seat of arbitration has got far reaching consequences in
the context of the application of the lex arbitri  or the curial law,
the learned Senior Counsel in  support of his contention  that it
would  be  the  English Arbitration Act  that would  be  applicable
relied upon the following English judgments :­
[I] (2008) Vol. 1 Lloyd's Law Reporter page  239 in the matter
of C v D.
[II] (2007) Vol. 1 Lloyd's Law Reporter page 237 in the matter
of A v B
[III] 2007  Vol. 1 Lloyd's Law Reporter page 358 in the matter of
A v B (Costs) (No.2)
[IV] (2009) Vol.2 Lloyd's Law Reporter page 376  in the matter
of Shashoua and others v Sharma
[V] (2006)1 AC page 221  in the matter of  Lesotho Highlands
Development Authority v/s Impregilo Spa and others.
[VI] 1970 AC page 583 in the matter of James Miller & Partners
Ltd, and Whitworth Street Estates (Manchester) Ltd.  (Lord
Hudson, J)
[VII] (1984)  1 QB  page  291, in  the matter  of  Bank Mellat  v
Helliniki Techniki  S.A  (Lord Waller,  Lord Kerr and  Lord
Robert Goff L. JJ)
[VIII] (1988) Vol 1 page 116, in the mater of Naviera Amazonica
Peruana  S.A. v. Compania  Interacional  De  Serguros  Del
Peru
[M] That the seat being London, the arbitration proceedings would be
governed   by   the   English   Arbitration   Act,   and   therefore,   there
would be exclusion of the Indian Arbitration Act, in so far as the
Lex Arbitri  or the curial law is concerned, the natural corollary
lgc  84 of 124      wps­7804.09 & 7636.09
would be that the English Courts would have supervision over the
arbitration proceedings, therefore, the Respondents were entitled
to approach the English Court.  In support of the said contention,
the   learned   Senior   Counsel   relied   upon   the   following   English
Judgments :­
[I] (2007) Vol.2 Lloyd's Law Reporter page 367 in the matter of
C v D
[II] (2008) Vol. 1 Lloyd's Law Reporter Appeal Court page  239
in the matter of C v D.
[III] (2007) Vol. 1 Lloyd's Law Reporter page 237 in the matter
of A v B
[IV] 2007  Vol. 1 Lloyd's Law Reporter page 358 in the matter of
A v B (No.2)
[IV] (2009) Vol.2 Lloyd's Law Reporter page 376  in the matter
of Shashoua and others v Sharma
[N] That   in   so   far   as   international   commercial   arbitration   is
concerned, there are three potential systems of law applicable to
the   arbitration   viz,   (1)   The   law   governing   the   substantive
contract; (2) The law governing the agreement to arbitrate and
the performance of that agreement; and (3) The law governing
the conduct of the arbitration.  In majority of cases all three will
be the same, but (1) will often be different from (2) and (3), and
occasionally, but rarely, (2) may also differ from (3).
[O] That the enquiry of the Court to ascertain the choice of seat in a
case where a place/venue/city has been mentioned/nominated by
lgc  85 of 124      wps­7804.09 & 7636.09
the   parties,   does   not   commence   with   a   consideration   of   the
proper law of the contract/ arbitration, whilst ignoring the chosen
place/venue,   as   contended   by   the   Petitioners.   If   the   said
contention of the Petitioners is accepted, it would mean that once
the   parties   have   chosen   the   law   governing   the   Arbitration
Agreement, that law is both the law of the Arbitration Agreement
and the curial law and the parties's express choice of a curial law
by reference to a seat is to be completely ignored and rendered
otiose
[P] That the choice of law has to be a specific choice of curial law i.e.
the agreement must state that the law of a particular country as
the curial law.  In the absence of any such specific agreement as to
curial law, the law of the country in which the seat of arbitration
is situate will apply.
[Q] That the non­mandatory provisions of the English Arbitration Act
can be excluded if there is an express agreement to the contrary
and such agreement is the one contemplated by Section 4(2) of
the English Arbitration Act and that in the absence of any such
agreement, the non mandatory provisions become mandatory and
that in view thereof, the provisions of Section 18 of the English
lgc  86 of 124      wps­7804.09 & 7636.09
Arbitration Act, which provides for machinery for appointment of
Arbitral Tribunal, is  applicable  and  the Respondents cannot  be
prevented from approaching the English Court for constitution of
the Arbitral Tribunal.
[R] That the curial law and the substantive law relating to Arbitration
Agreement  are  different  and  separate; whereas  the  substantive
law   of   arbitration   governs   the   existence   or   validity   of   the
arbitration,  the  curial law  governs  the  reference including  the
appointment of Tribunal, and that the terms 'Constitution of the
Tribunal'   refers   to   the   composition   or   qualification   of   the
arbitrators and not its appointment.
[S] That  the Petitioners being in breach of  the agreement whereby
they have agreed to the exclusive jurisdiction of the English Court
having agreed to London as the seat are not entitled to any anti­
suit injunction.
[T] That the Respondents are not amenable to the jurisdiction of the
Courts   in   Daman   and   the   Respondents   cannot   therefore   be
injuncted   from   proceeding   in   a   Court   which   has   exclusive
jurisdiction.
lgc  87 of 124      wps­7804.09 & 7636.09
[U] That the Petitioners are not entitled to anti­suit injunction in view
of the well settled principles laid down in the judgment of  the
Apex Court reported in  (2003) 4 SCC 341 in the case of  Modi
Entertainment Ltd. V/s. W.S.G. Cricket Pvt. Ltd.
[V] The   learned   Senior   Counsel   in   the   alternative   submitted   that
assuming the Indian Arbitration and Conciliation Act 1996 applies
on  account  of  the  choice  of  London  as  the venue,  the English
Courts, if not having an exclusive jurisdiction, have concurrent
jurisdiction on account of Section 2(4) of the English Arbitration
Act.
[W] That since the parties have not specifically provided for as to what
is   to   happen   in   the   event   of   a   failure   of   the   procedure   for
appointment of the Arbitral Tribunal, and since Section 18 of the
English Act  has  not  been excluded  by  the  parties,  the  English
Courts have concurrent jurisdiction.
CONSIDERATION ­ WRIT PETITION NO.7636 OF 2009
36 Heard  the learned counsel  for  the parties  and  also perused  the
Written Submissions filed on behalf of the parties.
lgc  88 of 124      wps­7804.09 & 7636.09
37 This Court in Writ Petition No.7804 of 2009 has  taken a  prima
facie view that there is in existence an Arbitration Agreement and therefore the
parties can be referred  to arbitration.    In so  far as instant Petition i.e. Writ
Petition No.7636 of 2009 is concerned, the question is whether the Petitioners
are entitled to an anti suit injunction, and whether  the English Courts have
jurisdiction.
38 The adjudication of the said aspect therefore revolves around the
interpretation of clause 18.3 of the IPLA.  For the sake of convenience, the said
clause 18.3 is revisited herein under for the purposes of the present Petition.
“Clause 18.3­­­­ All proceedings in such arbitration shall
be conducted in English.   The venue of the arbitration
proceedings shall be London. The arbitrators may (but
shall   not   be   obliged   to)   award   costs   and   reasonable
expenses (including reasonable  fees of counsel) to  the
Party(ies)   that   substantially   prevail   on   merit.    The
provisions of the Indian Arbitration and Conciliation Act,
1996 shall apply”
39 The   defining   words   therefore   are   that   “The   venue   of   the
arbitration   proceedings   shall   be   London”,   “The   provisions   of   the   Indian
Arbitration and Conciliation Act, 1996 shall apply”. The learned Senior Counsel
for the Petitioners would contend, relying upon the said words that the parties
have made a choice of Lex Arbitri as well as curial law, and therefore, there is
no question of embarking upon an exercise of determining the seat so as to
lgc  89 of 124      wps­7804.09 & 7636.09
determine the curial law that would be applicable. In the said context, it would
be apposite to refer to the judgment in Bhatia International v/s Bulk Trading
S.A. & Another reported in (2002) 4 SCC 105; which covers the issue of the
application   of   Part­I   of   the   Indian   Arbitration   Act.   In   the   said   case   the
arbitration clause provided that the arbitration would as per the rule of the
International Chambers of Commerce. The arbitration was to be held in Paris.
Section 9 of the Arbitration Act, 1996 was invoked.   The Additional District
Judge seating at Indore held that he had jurisdiction against the said order. A
writ was  filed which was dismissed and the matter reached the Apex Court.
The Apex Court held that Part­I applies even when the arbitration was to be
held out of  India unless parties  agreed  to exclude  application of  that part.
Para­32 of the said judgment is material and is reproduced herein under :­
“32. To conclude we hold that the provisions of Part  I
would  apply  to  all  arbitrations  and  to  all proceedings
relating thereto. Where such arbitration is held in India
the  provisions  of  Part  I  would  compulsory  apply  and
parties are free to deviate only to the extent permitted
by   the   derogable   provisions   of   Part   I.   In   cases   of
international commercial arbitrations held out of  India
provisions of Part  I would  apply unless  the parties by
agreement, express or implied, exclude all or any of its
provisions. In that case the laws or rules chosen by the
parties would prevail. Any provision, in Part I, which is
contrary  to  or excluded  by  that law  or  rules will not
apply.”
40 In the said context, a reference could be made to the judgment
cited  on  behalf of  the  Petitioners viz.  (2007) 5 SCC 692  in  the matter  of
National  Agricultural   Co­op  Marketing   Federation   India   Ltd.   v/s   Gains
lgc  90 of 124      wps­7804.09 & 7636.09
Trading Ltd.  Paras 8 and 9 are material and are reproduced herein under :­
“8. Let   me   now   examine   whether   the   arbitration
procedure  and  appointment of  arbitrator is  governed by
the Act, or by the laws in Hong Kong. This depends on the
interpretation  of  the  arbitration  clause in  particular  the
following   words   :   "the   matter   in   dispute   shall   then   be
referred   to   and   finally   resolved   by   arbitration   in   Hong
Kong in accordance with the provisions of the Arbitration
and Conciliation Act, 1996."  The respondent wants to read
this provision thus :
(i) the matter in dispute shall be referred to
arbitration at Hong Kong;
(ii) the matter in dispute shall be finally resolved
by arbitration at Hong Kong; and
The respondent wants to ignore the words "in accordance
with  the  provisions  of  Arbitration   and  Conciliation  Act,
1976  or  any  other  statutory modification, enactment  or
amendment thereof for the time being in force" in clause
17   as   a   meaningless   addition.   The   use   of   the   words
'referred  to  and  finally  resolved  by  arbitration  in   Hong
Kong',  according  to  respondent,  shows  an intention  that
the   arbitration   has   to   take   place   in   Hong   Kong   in
accordance with Hong Kong Laws.
9. The rules of interpretation require the clause to be
read in the ordinary and natural sense, except where that
would lead  to an absurdity. No part of a  term or clause
should be considered as a meaningless surplusage, when it
is in consonance with  the other parts of  the clause  and
expresses   the   specific   intention   of   parties.   When   read
normally,  the   arbitration   clause  makes  it  clear   that   the
matter in dispute shall be referred to and finally resolved
by  arbitration  in   accordance   with  the   provisions  of   the
Arbitration  and Conciliation Act,  1996  (or  any  statutory
modification, enactment or amendment  thereof) and  the
venue   of   arbitration   shall   be   Hong   Kong.   This
interpretation does not render any part of the arbitration
clause,   meaningless   or   redundant.   Merely   because   the
parties have agreed that the venue of arbitration shall be
Hong Kong, it does not follow that Laws in force in Hong
lgc  91 of 124      wps­7804.09 & 7636.09
Kong   will   apply.   The   arbitration   clause   states   that   the
Arbitration and Conciliation Act, 1996 (an Indian Statute)
will   apply.   Therefore,   the   said   Act   will   govern   the
appointment  of  arbitrator,  the  reference  of  disputes  and
the entire process and procedure of arbitration  from  the
stage of appointment of arbitrator till the award is made
and executed/given effect to.”
(2009) 7 SCC 220 in the matter of  Citation Infowares Limited v/s. Equinox
Corporation.  Paras  9,  12,  16,  31  and  32  are material  and  are  reproduced
herein under :­
“9. What is important is the agreement dated 25.01.2007
which   has   already   been   referred   to.   Under   the   said
agreement clause 10.1 provided as under:
“10.1  Governing   law­   This   agreement   shall   be
governed by and interpreted in accordance with
the   laws   of   California,   USA   and   matters   of
dispute, if any, relating to this agreement or its
subject matter shall be referred for arbitration to
a mutually agreed Arbitrator.”
Thus, in between,  first agreement dated 09.02.2004 and
the subsequent agreement dated 25.01.2007 there was an
essential   difference   that   under   the   last   agreement   the
governing law was to be that of California, USA. However,
that clause did provide for arbitration in case of disputes.”
“12 So   far   so   good.   However,   the   question   that   has
arisen is whether this Court would have the jurisdiction in
the present  factual scenario and on  the backdrop of  the
fact that the parties vide the aforementioned clause 10.1
had   agreed   that   the   governing   law   would   be   that   of
California, USA. According to the applicant, it is only this
Court which would  have  the  jurisdiction  to  appoint  the
Arbitrator, while  according  to  the  respondent  this Court
does not have the jurisdiction to appoint the Arbitrator as
the   provisions   of   the   Arbitration   Act   would   necessarily
stand excluded in view of the specific language of clause
10.1 of the agreement wherein the governing law would
be the law of California, USA.”
lgc  92 of 124      wps­7804.09 & 7636.09
“16.  As  against  this,  Shri Krishnan Venugopal,  Learned
Senior   Counsel   appearing   on   behalf   of   the   respondent
urged from the language of the clause 10.1 that where the
governing law is agreed between the parties, say foreign
law,   then   essentially,   the   question   of   appointment   of
arbitrator also  falls in  the realm of  the said  foreign law
and not within the realm of Arbitration and Conciliation
Act.”
“31  It may be that the Arbitrator might be required to
take into account  the applicable laws which may be  the
foreign laws but that does not effect the jurisdiction under
Section 11 which falls in Part I which has been specifically
held applicable in  Bhatia  International case. The learned
Judge,   deciding  Indtel   Technical   Services'   case  also   has
taken into consideration this aspect and has expressed in
Paragraph 36 as follows: (SCC p.317)
“36...... The   decisions   cited   by   Mr.   Tripathi
and the views of the jurists referred to in  NTPC
case  support such a proposition. What, however,
distinguishes  the various decisions and views of
the   authorities   in   this   case   is   the   fact   that   in
Bhatia   International  this   Court   laid   down   the
proposition that notwithstanding the provisions of
Section 2(2) of  the Arbitration  and Conciliation
Act,  1996 indicating  that  Part  I  of  the  said Act
would apply where the place of arbitration is in
India, even in respect of international commercial
agreements, which are to be governed by the laws
of another country, the parties would be entitled
to invoke the provisions of Part I of the aforesaid
Act and consequently the application made under
Section 11 thereof would be maintainable.
The situation therefore is identical in the present matter.”
“32 Shri   Venugopal,   however,   contended   that   if
the parties intended specifically in this case that the law
governing the contract was Californian law, as expressed
lgc  93 of 124      wps­7804.09 & 7636.09
in  Bhatia   International  as   well   as   in  Indtel   Technical
Services'   case,  an   implied   exclusion   of   Part  I  should   be
presumed.  I am afraid it is not possible to read such an
implied exclusion. Seeing  the striking similarity between
Clause 10.1 in the instant case and Clauses 13.1 and 13.2
in  Indtel case  which have been quoted above and further
the view expressed by learned Judge in  Indtel Technical
Services' case regarding the exclusion, it is only possible to
read even distantly such an implied exclusion of Part I. It
cannot be forgotten that one of the contracting parties is
the Indian party. The obligations under the contract were
to be completed in India. Further considering the nature of
the   contract,   it   is   difficult   to   read   any   such   implied
exclusion of Part  I in  the language of Clause 10.1. That
argument   of   learned   senior   counsel   for   the   respondent
therefore must be rejected.”
(2008)   10  SCC  308  in   the   matter   of    Indtel  Technical  Services  Private
Limited v/s. W.S. Atkins Rail Limited; Para 36 is relevant and is reproduced
herein under :­
“36  Although,  the  matter  has  been  argued  at  great
length and Mr. Tripathi has  tried  to establish  that  the
decision of this Court in Bhatia International case is not
relevant for a decision in this case, I am unable to accept
such contention in  the  facts  and circumstances of  the
present case.  It is no doubt  true  that it is  fairly well­
settled that when an arbitration agreement is silent as to
the law and procedure to be followed in implementing
the  arbitration  agreement,  the law  governing  the  said
agreement   would   ordinarily   be   the   same   as   the   law
governing the contract itself. The decisions cited by Mr.
Tripathi and the views of the jurists referred to in NTPC
case  support   such   a   proposition.   What,   however,
distinguishes   the   various   decisions   and   views   of   the
authorities   in   this   case   is   the   fact   that   in  Bhatia
International  this Court laid down the proposition that
notwithstanding  the  provisions  of  Section  2(2)  of  the
Arbitration  and Conciliation Act,  1996 indicating  that
Part  I of  the said Act would apply where the place of
arbitration is in  India, even in respect of international
lgc  94 of 124      wps­7804.09 & 7636.09
commercial  agreements, which  are  to be  governed by
the   laws   of   another   country,   the   parties   would   be
entitled   to   invoke   the   provisions   of   Part   I   of   the
aforesaid   Act   and   consequently   the   application   made
under Section 11 thereof would be maintainable.”
(1988) 1 Lloyds L.R. 116 in the matter of  Naviera Amazonica v/s Compania
International,   In the said judgment the statement of law in Para (C) on page
119  is relevant and the same is reproduced herein under :­
“Where   the   parties   have   failed   to   choose   the   law
governing   the   arbitration   proceedings,   those
proceedings   must   be   considered,   at   any   rate   prima
facie, as being governed by the law of country in which
the   arbitration   is  held,   on   the   ground   that   it   is   the
country most closely connected with the proceeding.”
Similar view has been expressed in the judgments reported in 2011(3) ARBL
350,  in the matter of    Prima Builders v/s. Lost City,  and  (2008) E.W.H.C.
426, in the matter of   Breas of Doune v/s. Alfred . The proposition which is
laid down is that once an express choice is made by the parties, the parties
would be bound by the said choice.
41 It is  a  well  settled  position  based  on  the  commentaries  of  the
learned authors as also the judicial pronouncements, that the problems arising
out of an arbitration may call for the application of any one or more of the
following laws :­
lgc  95 of 124      wps­7804.09 & 7636.09
[i]  the proper law of the contract i.e. the law governing the
contract   which   creates   the   substantive   rights   of   the
parties in respect of which dispute has arisen;
[ii]  the   proper  law   of   arbitration   agreement  i.e.   the   law
governing   the   obligation   of   the   parties   to   submit
disputes to arbitration and to honour any award; and
[iii]  the curial law i.e. the law governing the conduct of the
individual reference.
The   learned   authors  Mustill   &   Boyd  have   classified   them   as
follows :­
[i]  The  proper law  of  arbitration  agreement  governs  the
validity   of   the   arbitration   agreement,   the   question
whether   a   dispute   lies   within   the   scope   of   the
arbitration   agreement;   the   validity   of   the   notice   of
arbitration; the constitution of the tribunal; the question
whether   an   award  lies  within   the   jurisdiction   of   the
arbitrator; the formal validity of the award; the question
whether   the   parties   have   been   discharged   from   any
obligation to arbitrate future dispute.
[ii]  The   curial   law   governs   :   the   manner   in   which   the
reference is to be conducted; the procedural powers and
duties   of   the   arbitrator;   questions   of   evidence;   the
determination of the proper law of the contract.
[iii]  The proper law of the reference governs: the question
whether   the   parties   have   been   discharged   from   the
obligation   to   continue   with   the   reference   of   the
individual dispute.
The   learned   author  Russell  has   classified   in   Chapter   5(c)   as
follows:­
lgc  96 of 124      wps­7804.09 & 7636.09
“That   with   the   arbitration   agreement   itself   it   is   also
open to the parties to specify a procedural law for the
arbitration which is  different  from  the law  governing
the  arbitration  agreement.    In  Para  2­101 it is made
clear  that in  the  absence  of  an  agreement  as  to  the
procedural   law   the   choice   of   seat   prescribes   the
procedural law of arbitration.”
The learned authors  Mustill & Boyd  with reference to determination of the
curial law have stated as follows :­
“The choice of curial law may be made expressly, and
such a choice is effective, even though the law chosen is
neither the proper law of the arbitration agreement nor
the law of the country where the arbitration is to take
place. An express choice of curial law different from that
of  the  proper law of  the  arbitration  agreement is not
particularly   unsual   and   does   not   give   rise   to   any
particular   problems.   An   express   choice   of   curial   law
different   from   the   law   of   the   country   in   which   the
arbitration is  to  be  held is  however  almost unknown.
This is no doubt because of the formidable conceptual
and practical problems which are likely to arise should
be necessary to invoke the powers of a court in relation
to the reference.... In the absence of express agreement,
there is a strong prima facie presumption that the parties
intended the curial law to be the law of the `seat' of the
arbitration, i.e. the place at which the arbitration is to be
conducted, on the ground that that is the country most
closely connected with the proceedings. So in order to
determine  the curial law in  the absence of an express
choice by the parties it is first necessary to determine the
seat of the arbitration, by construing the agreement to
arbitrate.”
The   learned   Senior   Counsel   appearing   for   the   Respondents
strenuously urged that in the instant case though London is the “venue” for the
arbitration meetings, it is in fact the seat of arbitration and not a convenient
lgc  97 of 124      wps­7804.09 & 7636.09
geographical location and  therefore the English Arbitration Act would apply
and it would be the English Courts that would have jurisdiction.  The learned
Senior Counsel  for the Respondents in support of the said contention relied
upon a number of judgments which included well known English Judgments. It
would be apposite to consider them at this stage. 2007 2 Lloyd's Law Reports
367, C v D ; 2008 1 Lloyd's Law Reports 239, C v D;  2007 1 Lloyd's Law
Reports 237, A v B; 2007 1 Lloyd's Law Reports page 358, A v B; (2009) 2
Lloyds  Law Reports  376,  Shashoua v  Sharma;  2006 1 AC 221,  Lesotho
Highlands Development Authority Vs.  Impergilo SpA; (2011) 6 SCC 179,
Dozco   India   Pvt.Ltd   v   Doosan   Infracore   Company   Ltd;   (2011)   6   161,
Videocon   Industries   Ltd   v   Union   of   India;   2011   9   SCC   735,   Yograj
Infrastructure   Vs   Ssang   Yong   Engineering;     2010   (3)   Arbitration   Law
Reports   70,   Bhushan   Steel   Ltd   Vs   Singapore   International   Arbitration
Centre;  2011 (3) Arbitration Law Reports 350, Prima Buildwell Pvt. Ltd
Vs.  Lost City Development  and  the judgment of  Justice EDER  reported in
(2012) EWHC 689 (Comm) between Enercon GmbH and Anr. v/.s Enercon
(India) Ltd.
In  C v. D, 2007  Lloyd's  Law Reports 367  (supra)  the  relevant
clause was as follows :­
“Any  dispute  arising under  this  policy  shall  be  finally
and   fully   determined   in   London,   England   under   the
provisions   of   the   English   Arbitration   Act   of   1950   as
amended”
lgc  98 of 124      wps­7804.09 & 7636.09
It is in the said context the learned Judge has observed in Para 24 of the said
report as follows :­
“By  agreeing  to  the  1996 Arbitration  Act,  the  parties
thus,   prima   facie,   accept   the   framework   of   the
mandatory provisions and, absent other agreement, to
the   application   of   the   non­mandatory   provisions.
Section 4(4) provides that “it is immaterial whether or
not the law applicable to the parties' agreement is the
law  of England  and Wales.    In  the context  this must
mean  the law  applicable  to  the  parties  agreement  to
arbitrate.”
Thereafter in Para 25 the learned Judge has observed as follows :­
“Thus, if the parties agree a curial law which is not the
law   of   England   and   Wales,   provisions   of   that   are
effective to replace any non­mandatory provision in the
1996  Act, insofar  as  they make  provision  for  such  a
matter.”
The said judgment can therefore be said to be a judgment on the proposition
that the contract referred to in the provision of Section 2 of the English Act is
not   the   contract   regarding   proper   law   of   the   underlying   contract   but   the
contract pertaining  to  the proper law of arbitration and, once such contract
exists, then, it is permissible for the parties to contract out of non­mandatory
provisions.
The second judgment in C v. D 2008 1 Lloyd's Law Reports 239
(supra)  reiterates  the  said  position.   Para  19  of  the  said  report is material
wherein it has been observed as follows :­
lgc  99 of 124      wps­7804.09 & 7636.09
“That is reinforced by the terms of section 4(5) of the
Act which refers not to a choice of law clause generally
but to a choice of law as “the applicable law in respect
of a matter provided for by a non­mandatory provision
of this part” of the Act. In other words there has to be a
choice of law with regard to the specific provision of the
Act which the parties agree is not to apply.”
In the case of A v. B, (2007) 1 Lloyd's Law Reports 237 (supra),
the choice of law of arbitration was Swiss law and the seat was Geneva.  In the
said   circumstances   it   was   held   that   the   Swiss   law   was   applicable   and,
therefore, the English Court had no jurisdiction.  In the said case also reference
was made to the decision in Naviera Amazonica   and a passage was quoted
from   the   said   judgment   in   Para   111   thereof   which   is   reproduced   herein
under :­
“English law does not  recognise  the concept of a “de­
localised”  arbitration  (see Dicey  & Morris  at  pp  541,
542)   or   of   “arbitral   procedures   floating   in   the
transitional firmament, unconnected with any municipal
system   of   law”   (Blank   Mellat   v   Helliniki   Techniki   SA
[1984] QB 291 at p 301 (Court of Appeal). Accordingly,
every  arbitration must  have  “seat”  or locus  arbitri  or
forum   which   subjects   its   procedural   rules   to   the
municipal  law  there in   force...  Prima facie,  ie  in  the
absence   of   some   express   and   clear   provision   to   the
contrary,   it   must   follow   that   an   agreement   that   the
curial or procedural law of an arbitration is  to be  the
law of X has the consequence that X is also the law of
the “seat” of the arbitration. The Lex fori is then the law
of   X   and,   accordingly,   X  is   the   agreed   forum   of   the
arbitration. A further consequence is then that the courts
which are competent  to control or assist  the arbitration
are the courts exercising jurisdiction at X.”
lgc  100 of 124      wps­7804.09 & 7636.09
In the case of A v. B, 2007 1 Lloyd's Law Reports 358 (supra) in
view of the choice of law of arbitration being Swiss and the seat of arbitration
being Geneva,  it was held that the part “A” had committed a breach of contract
to invoke the jurisdiction of the English courts.
In the case of  Shashoua v. Sharma  (supra)  the relevant clause
was clause 14 which was the arbitration clause which provided for arbitration
to  be in   accordance   with  the   Rules  of   Conciliation   and  Arbitration   of   the
International   Chamber   of   Commerce,   Paris.   Clause   14.2   provided   for
arbitration proceedings  to be conducted in  the English language and clause
14.4 provided that “the venue of arbitration shall be London, United Kingdom”.
However, the matrix contract or the underlying contract was to be governed by
the laws of India, and therefore there was no choice of law of arbitration.  It
was in the context of the said facts that it was stated that the English law was
applicable to arbitration.  The contention of the Defendants that as the proper
law of the underlying contract was Indian law, the law relating to arbitration is
also Indian law, was negatived by the court on the ground that there was no
choice of the law of arbitration, and therefore, since the seat being in England,
the English law as applicable.  It was held in the said judgment that the venue
was equivalent to the seat and the ICC Rules were not the law of arbitration as
the ICC Rules were not connected to any court.  A reference was made to the
decision in the case of Braes and Doune.  In the said fact situation it was held
lgc  101 of 124      wps­7804.09 & 7636.09
in the said case that English law was applicable as the seat was in England as
there was no choice of the law of arbitration.
In the case of  Lesotho Highlands Development Authoritative v.
Impregilo SpA  (supra) it has been expressly stated  that  the law of Lesotho
(that is the proper law of the underlying contract) is not an agreement to the
contrary in writing of the nature referred to in Section 4(2) and 4(5) of the
English Arbitration Act, 1996.
In the case of  Dozco India Private Limited v. Doosan Infracore
Company Limited (supra), the seat was Seoul, Korea and it was held that the
same cannot be changed without a written agreement. In para 14 a passage
from Mustill and Boyd was referred to. However, what is required to be noted
is that in the said case also there was no choice of the law of arbitration. It is in
the said context, the seat assumes importance for determining the curial law or
lex arbitri.  It is in the fact situation of the said case, it was held that Part­I of
the Indian Arbitration Act would not apply.
In the case of Videocon Industries Ltd. v. Union of India (Supra)
the question that arose in the said case can be found in paras 20 and 24 of the
said report viz. Kuala Lumpur was the designated seat or the seat of arbitration
and the same has been shifted to London, and the next issue was, whether the
lgc  102 of 124      wps­7804.09 & 7636.09
Delhi High Court could entertain a petition  filed by  the Respondents under
Section 9 of the Arbitration and Conciliation Act, 1996.  There was no issue
before the Apex Court as to whether when there is a choice of proper law of
arbitration, the law of the country in which seat is situate will prevail over such
choice. In the said case there was no dispute that Kuala Lumpur was the seat
and the parties had initiated arbitration proceedings on the said basis.   The
Apex Court in the said fact situation held that the Delhi High Court would have
no   jurisdiction   to   entertain   the   Petition   under   Section   9   of   the   Indian
Arbitration Act.  Notwithstanding the fact that the meetings of the arbitration
were held in London, though the seat of arbitration was in Kuala Lumpur.
In the case of  Yograj Infrastructure v. Ssang Yong Engineering
(supra), as can be seen from reading of Para 54,  the proper law of arbitration
was also the law of Singapore and the seat was also in Singapore.  The law of
Singapore was incorporated in the rules and which rules were agreed to be
applicable by the parties in the contract.
In   the   case   of  Bhushan  Steel  Ltd  v.  Singapore  International
Arbitration Centre (supra), it was held that Part­I of the Arbitration Act would
apply, if there is no agreement regarding the governing law of arbitration.
lgc  103 of 124      wps­7804.09 & 7636.09
In  the case of Prima Buildwell Pvt. Ltd v. Lost City Development
(supra) it has been held that in  the absence of any other agreement to the
contrary, the law governing the Arbitration Agreement where the arbitration is
agreed to be held is the law of England and Wales.
42 Relying  upon  the  said judgments it  was  the  submission  of  the
learned  Senior  counsel  for  the Respondents  that in  the  face of  the express
choice of seat i.e. the place/venue of the arbitration proceedings, the Courts
have very rarely (and for exceptional reasons) disregarded the choice of seat of
the parties.
43 The next limb of the submissions of the learned Senior Counsel for
the Respondents was that in the absence of an express agreement as to  the
procedural law, the choice of seat prescribes the procedural law of arbitration.
In   support   of   which   submission,   the   learned   Senior   Counsel   for   the
Respondents relied upon the judgment of the House of Lords in James Miller
& Partners Ltd. V/s Whitworth Street Estate,  (supra).  In the said judgment
a passage  from  Dicey and Morris   has been quoted with approval which is
reproduced herein under :­
“Where   the   parties   have   failed   to   choose   the   law
governing   the   arbitration   proceedings,   those
proceedings must be considered, at any rate prima facie,
as being governed by the law of the country in which
the   arbitration   is   held   on   the   ground   that   it   is   the
country most closely connected with the proceeding”
lgc  104 of 124      wps­7804.09 & 7636.09
The learned Senior Counsel in support of the aforesaid submission also relied
upon  the judgment in  the case of  Bank Mellat V/s Helliniki Techniki SA,
(supra) wherein it is held  that  the curial law or  the procedural law of  the
forum of arbitration will apply in the absence of any contractual provision to
the  contrary.    The  following excerpt  on  page  301  of  the  said judgment is
material and is reproduced herein under :­
“The  fundamental  principle in  this  connection is  that
under   our   rules   of   private   international   law,   in   the
absence of any contractual provision to the contrary, the
procedural (or curial) law governing arbitrations is that
of the forum of the arbitration, whether this be England,
Scotland   or   some   foreign   country,   since   this   is   the
system of law with which the agreement to arbitrate in
the particular forum will have its closest connections :
see Whitworth Street Estates (Manchester) Ltd. v. James
Miller & Partners Ltd . [1970] A.C. 583”
In support of the aforesaid submission the learned Senior Counsel also relied
upon   the   judgment   in   the   case   of   Naviera   Amazonica   V/s   Compania
Internacional,  (supra).
“Before   considering   the   correct   construction   of   this
particular contract on the question whether the “seat”
(or   whatever   term   one   uses)   of   any   arbitration
thereunder was agreed to be London or Lima, or­­­­ to
put it colloquially­­­ whether this contract provided for
arbitration in  London or  Lima,  I must  summarize  the
state of  the jurisprudence on  this  topic and deal with
the   general   submissions  which   were   debated   on   this
appeal.   In   that   connection   we   were   referred   to
Oppenheim & Co. v. Mahomed Haneef, [1922] 1 A.C.
482 at p.487; James Miller & Partners Ltd. v. Whitworth
lgc  105 of 124      wps­7804.09 & 7636.09
Street Estates (Manchester) Ltd, [1970] 1 Lloyd's Rep.
269; [1970] A.C. 583, in particular per Lord Wilberforce
at pp.281  and  616,  617; Black Clawson  International
Ltd. v. Paperwerke Waldhof­Aschaffenburg A.G., [1981]
2 Lloyd's Rep. 446 per Mr. Justice Mustill (as he then
was) at p.453; Dicey & Morris on The Conflict of Laws
(11
th
 ed.) vol.1, r. 58 at pp. 539 to 542; Mustill & Boyd
on Commercial Arbitration, passim; D. Rhidian Thomas
“The   Curial   Law   of   Arbitration   Proceedings”,   Lloyd's
Maritime and Commercial Law Quarterly (1984) p.491;
and   Redfern   and   Hunter   “The   Law   and   Practice   of
International Commercial Arbitration” (1986) at pp. 52
to 70.  In addition, among many other publications one
should mention  the   two important  earliest  and most
recent  discussions  of  this  topic;  first Dr.  F. A. Mann's
“Lex  facit arbitrium” in 1967,  reprinted in Arbitration
International, 1986, Vol. 2 p. 241 and now “The new lex
mercatoria”   by   Lord   Justice   Mustill   in   Bos   and
Brownlies   “Liber   Amicorum   for   Lord   Wilberforce”
(1987) at p. 149
Without analysing any of this material in detail,
the   conclusions   which   emerge   from   it   can   be
summarized as follows :
A. All   contracts   which  provide   for   arbitration   and
contain a foreign element may involve three potentially
relevant   systems   of   law.   (1)   The   law   governing   the
substantive   contract.   (2)   The   law   governing   the
agreement   to   arbitrate   and   the   performance   of   that
agreement. (3) The law governing  the conduct of  the
arbitration.  In the majority of cases all three will be the
same. But (1) will often be different from (2) and (3).
And occasionally, but  rarely,  (2) may  also differ  from
(3).
In the present case there was no investigation of
(1),  the  substantive law, because nothing  turns  on it,
but I am content to assume that this was the law of Peru
on the ground that this was the system with which this
policy was most closely connected. On this appeal there
was also ultimately no contest about law (2) which may
be regarded as the substantive law of the agreement to
arbitrate.   The Judge rightly held that on the wording
lgc  106 of 124      wps­7804.09 & 7636.09
of   the   arbitration   clause   the   parties   had   agreed
expressly  that  their  agreement  to  arbitrate  should  be
subject to English law and that the leave granted under
O.11  to  serve  the insurers out of  the jurisdiction had
been   correct   on   this   ground.   Accordingly,   the   entire
issued turned on law (3), the law governing the conduct
of  the  arbitration.    This is  usually  referred  to  as  the
curial or procedural law, or the lex fori.
B. English law does not recognize the concept of a
“de­localised”   arbitration   (see   Dicey   &   Morris   at   pp.
541,   542)   or   of   “arbitral   procedures   floating   in   the
transnational   firmament,   unconnected   with   any
municipal   system   of   law”   (Bank   Mellat   v.   Helliniki
Techniki   S.A.,   [1984]   Q.B.   291   at   p.301   (Court   of
Appeal)).   Accordingly,   every   arbitration   must   have   a
“seat”   or   locus   arbitri   or   forum   which   subjects   its
procedural rules to the municipal law which is there in
force. This is what I have termed law (3).
C. … Where  the parties have  failed  to  choose  the
law   governing   the   arbitration   proceedings,   those
proceedings must be considered, at any rate prima facie,
as being governed by the law of the country in which
the   arbitration   is  held,  on   the   ground   that  it  is   the
country most closely connected with the proceedings...
See Dicey & Morris Vol. 1 at p.539 and the references to
the approval of this classic statement by the House of
Lords in Whitworth Stree Estate v. James Miller (sup).
Or, to quote the words of Mr. Justice Mustill in the Black
Clawson  case  (sup.)  at  p.453 where  he  characterized
law (3) as “the law of the place where the reference is
conducted:   the   lext   fori”.     Although   Mr.Milligan
contested this, I cannot see any reason for doubting that
the   converse   is   equally   true.  Prima   facie,   i.e.   in   the
absence   of   some   express   and   clear   provision   to   the
contrary,   it   must   follow   that   an   agreement   that   the
curial or procedural law of an arbitration is  to be the
law of X has the consequence that X is also to be the
“seat” of the arbitration. The lex fori is then the law of
X,   and   accordingly   X   is   the   agreed   forum   of   the
arbitration.   A   further   consequence   is   then   that   the
lgc  107 of 124      wps­7804.09 & 7636.09
Courts   which   are   competent   to   control   or   assist   the
arbitration are the Courts exercising jurisdiction at X.
Prima   facie,   therefore,   the   forum   of   any
arbitration   which   might   arise   under   this   policy   was
London, since the arbitration clause provided, in effect,
that the law in force in London was to be the curial or
procedural law of any such arbitration.
D. In the light of some of the matters debated before
us it may be helpful  to add  that in my view, none of
these principles is different in relation to “institutional”
arbitrations, such as those conducted under the rules of
the International Chamber of Commerce or the London
Court of International Arbitration.  The relevant rules of
such   bodies   are   incorporated   by   reference   into   the
contract   between   the   parties,   and   their   binding
contractual effect will be respected and enforced by the
Courts   of   the   forum,   except   in   so   far   as   they   may
conflict   with   the   public   policy   or   any   mandatory
provisions of the lext fori.”
A reading of the said judgments relied upon by the learned Senior Counsel for
the Respondents makes it clear that it is only in the absence of an agreement as
to the procedural law that the choice of seat assumes significance as in that
event  the seat prescribes the procedural law.
In   so   far   as   the   decision   of  Justice   EDER  rendered   in   the
proceedings between the Petitioners and the Respondents is concerned, it is
required to be noted that the learned Judge in Para 54 has himself observed as
follows :­
“Another   reason   why   I   have   reached   my   conclusion
somewhat reluctantly is that I would have reached the
conclusion that the “seat” of  the arbitration is London
lgc  108 of 124      wps­7804.09 & 7636.09
which is, of course, the conclusion which the claimants
say  Judge  Purohit  reached. Given my  conclusion  that
these proceedings be stayed, my views on this issue are
obiter. However, this issue was addressed at some length
and   in   the   event   that   this   matter   goes   further   or
otherwise   comes   back   before   the   court,   it   may   be
convenient   to   set   out   my   brief   reasons   for   such
conclusion. It may also be of assistance to the BHC if an
when it comes to hear the Writ Petitions although, as I
say, my views are strictly obiter.”
Further in Para 55, after referring to the issue which arises in the contest of the
question of “seat”, the learned judge has observed as follows :­
“These   are   difficult   issues.   However,   for   present
purposes I propose to address the question of “seat” on
assumption that it is to be determined on a balance of
probability   as   a   matter   of   English   law   by   the   court
although   I   recognise   that   those   assumptions   are   not
necessarily correct.”
The said decision therefore can hardly be said to support the contention of the
Respondents as regards London being the “seat” of arbitration as the learned
Judge has himself observed that the views expressed by him were obiter.
44 The submission of the learned Senior Counsel for the Respondents
that the law governing the arbitration proceedings will be the English law and
that the parties have conferred exclusive jurisdiction on the English Court, and
thereby have excluded the jurisdiction of the Indian Court is made on the basis
that the seat being London, the English Arbitration and Conciliation Act, 1996
lgc  109 of 124      wps­7804.09 & 7636.09
applies, and therefore, the arbitration proceedings are to be governed by the
English Court, and therefore, the jurisdiction of the Indian Courts is ousted.
45 The issue which therefore arises is, as to whether in the instant
case enquiry as to determine the seat of arbitration is necessary so that the
same would result in determination of the curial law that would be applicable.
The legal position as can be seen that emerges from the judgments cited by the
learned Senior Counsel for the Petitioners is that the said enquiry is necessary
if the parties have failed to choose the curial law, as in the instant case it is not
disputed by the Respondents that the law relating to Arbitration Agreement is
the Indian Arbitration Act.  In the context of the said issue it would be relevant
to revert to the excerpt of clause 18.3 of the IPLA which is as follows :­
“Clause 18.3­­­­ All proceedings in such arbitration shall
be conducted in English.  The venue of the arbitration
proceedings shall be London. The arbitrators may (but
shall   not   be   obliged   to)   award   costs   and   reasonable
expenses (including reasonable  fees of counsel) to  the
Party(ies)   that   substantially   prevail   on   merit.     The
provisions of the Indian Arbitration and Conciliation Act,
1996 shall apply”
As can be seen that after providing for award costs and reasonable expenses
(including   reasonable   fees   of   counsel)   to   the   Party(ies)   that   substantially
prevail on merit.   The said clause provides that the provisions of the Indian
Arbitration and Conciliation Act, 1996 shall apply.  If the said clause is read in
the ordinary and natural sense, the placement of the words that “the Indian
lgc  110 of 124      wps­7804.09 & 7636.09
Arbitration and Conciliation Act shall apply” in  the last clause 18.3 indicates
the specific intention of the parties to the application of the Indian Arbitration
Act,  not only to the Arbitration Agreement but also that the curial law or the
Lex Arbitri would be the Indian Arbitration Act. The application of the Indian
Arbitration Act  therefore  can  be  said  to  permeate  clause­18  so  that in  the
instant case laws (2) and (3) are same if  the classification as made by  the
learned authors is to be applied. The reference to the Indian Arbitration Act is
therefore not merely  a  clarification  as  to  the  proper law  of  the  arbitration
agreement as is sought to be contended on behalf of the Respondents. It has to
be borne in mind that the parties are businessmen and would therefore not
include  words without  any intent  or  object  behind  them.  It is in  the  said
context, probably that the parties have also used the word “venue” rather than
the  word  “seat”  which is  usually  the   phrase   which is  used in   the   clauses
encompassing   an   Arbitration   Agreement.   There   is   therefore   a   clear   and
unequivocal indication  that  the parties  have  agreed  to  abide  by  the  Indian
Arbitration Act at all the stages, and therefore, the logical consequence of the
same would be that in choosing London as the venue the parties have chosen it
only as a place of arbitration and not the seat of arbitration which is a juristic
concept.
46 The proposition that when a choice of a particular law is made,
the said choice cannot be restricted to only a part of the Act or the substantive
lgc  111 of 124      wps­7804.09 & 7636.09
provision of that Act only. The choice is in respect of all the substantive and
curial law  provisions of  the Act.   The  said  proposition  has  been  settled by
judicial pronouncements in the recent past. A useful reference could be made
to the judgment of a learned Single Judge of the Gujarat High Court reported
in XLVII Gujarat Law Reports 658 in the case of  Hardy Oil and Gas Ltd. Vs
Hindustan Oil Exportation Co. Ltd.. Para 11.3 of the said judgment is relevant
is reproduced herein under :­
“However,  their Lordships observed in Para 32 that in
cases of international commercial arbitrations held out
of   India   provisions   of   Part­I   would   apply   unless   the
parties by agreement, express or implied, exclude all or
any of its provisions. In that case laws or rules chosen
by  the parties would prevail. Any provision, in Part­I,
which is contrary  to or excluded by  that law or rules
would not apply.  Thus, even as per the decision relied
upon   by   learned   Advocate   for   the   appellant,   if   the
parties have agreed  to be governed by any law other
than  Indian law in  cases  of international  commercial
arbitration, same would prevail.  In the case on hand, it
is very clear even on plain reading of Clause 9.5.4 that
the parties' intention was to be governed by English law
in   respect  of  arbitration.  It is  not  possible   to  give   a
narrow meaning to this clause as suggested by the Ld.
Sr. Advocate, Mr. Thakore, that it would apply only in
case   of   dispute   of   arbitration   agreement.   It   can   be
interpreted to only to mean that in case of any dispute
regarding  arbitration, English law would  apply. When
the   clause   deals   with   the   place   and   language   of
arbitration   with   a   specific   provision   that   the   law
governing  arbitration will  be  the English  Law,  such  a
narrow   meaning   cannot   be   given.   No   other   view   is
possible in the light of exception carved out of clause
0.5.1   relating   to   arbitration.   Term   “Arbitration”,   in
clause   9.5.4   cannot   be   taken   to   mean   arbitration
agreement. Entire arbitral proceedings have to be taken
to be governed by English law”.”
lgc  112 of 124      wps­7804.09 & 7636.09
47 The  argument  which  was  advanced  on  behalf  of  the  Petitioner
therein who had invoked the  Indian Arbitration Act to say that whereas the
choice   pertained   only   to   the   existence   and   validity   of   the   Arbitration
Agreement other matters were not covered by  that choice and  therefore an
application under Section 9 the Indian Arbitration Act was maintainable was
negatived by  the learned Judge.   The said view in  Hardy Oil and Gas Ltd
(supra)  has  been  approved  by  the Apex  Court in  Videocon  Industries  Ltd
(supra)  and  followed  by  a learned  Single  Judge  of  this  Court in  Sakuma
Export Ltd. v/s Louis Drefus Commodities reported in 2012 (1) Bom CR 547,
(Paras 35­38) are relevant and are reproduced herein under :­
35. There is yet another ground on which the aforesaid
conclusion   can   be   reached.   It   also   arises   out   of   the
express agreement between the parties. As noted above,
the   express  agreement  between  the   parties  stipulates
that   Rules   of   the   Refined   Sugar   Association,   London
form part of  the contract, if  they are not inconsistent
with   the   other   provisions   of   the   contract.   The   first
clause   relied   upon   by   the   Respondent   from   the
Introduction/Preamble   to   the   Rules  of   Refined  Sugar
Association relating to Arbitration reads as under :
"When the parties to a contract have incorporated a clause
to  the  effect  that  any  dispute  arising  out  of it  shall  be
referred   to   The   Refined   Sugar   Association   (sometimes
referred to as the RSA) such dispute may be referred to the
Association for  settlement in  accordance with  the Rules
relating to Arbitration and the Arbitration Act, 1996."
36.  From   the   above   clause, it is  clear  that  once   the
parties to the contract incorporate a clause to the effect
that  any  dispute   arising  out  of  the  contract  shall   be
referred to the Refined Sugar Association, such dispute
must be settled in accordance with the Rules relating to
Arbitration and English Arbitration Act, 1996. Therefore
even on this analysis it is clear that this Court does not
lgc  113 of 124      wps­7804.09 & 7636.09
have jurisdiction to entertain the present Petition under
Section 34 of the Arbitration and Conciliation Act, 1996.
37.   Again,   the   second   clause   relied   upon   by   the
Respondent   from   the   Introduction/Preamble   to   the
Rules   of   Refined   Sugar   Association   relating   to
Arbitration reads as under :
"The Association's  Rules  and Arbitration  procedures  are
conducted   in   accordance   with   English   Law.   However,
where the parties have agreed a contract law other than
English, the Association may, with the parties' agreement,
decide the dispute."
38.   The   above   Clause   clearly   stipulates   that   the
Association's   Rules   and   Arbitration   procedures   are
conducted in accordance with English Law and it is only
where the parties have agreed to a contract law other
than   English,   the   association   may,   with   the   parties
agreement decide the dispute. In the present case, the
parties have not agreed to any contract law other than
English. In view of categorical assertion in the clause set
out   hereinabove   that   the   Association   Rules   and
Arbitration   procedures   are   conducted   in   accordance
with English law coupled with the fact that the parties
have   expressly   agreed   to   be   governed   by   the
Association's Rules relating to arbitration, there remains
no doubt in concluding that the parties have expressly
agreed   that   the   arbitration   would   be   conducted   in
accordance with the English law. Again in Rule 8 it is
clearly stated that "For the purpose of all proceedings in
arbitration, the contract shall be deemed to have been
made in England, ........England shall be regarded as the
place of performance, disputes shall be settled according
to the law of England............. The seat of the arbitration
shall be England and all proceedings shall take place in
England.........."  In view  thereof,  nothing  turns  on  the
issue raised by the Petitioner that the Respondents have
not exactly incorporated  the  recommended arbitration
clause which include a condition that "such arbitration
shall be conducted in accordance with English Law". As
set   out   hereinabove,   the   introduction   to   the
Association's   Rules/Preambles   provide   that   the
arbitration   proceedings   are   generally   conducted   in
accordance with English Law except where the parties
have  agreed  to  a  contract law  other  than  English.  In
lgc  114 of 124      wps­7804.09 & 7636.09
view  thereof,  though it is beyond any doubt  from  the
aforestated decisions of the Hon'ble Supreme Court that
the curial law does not govern the question pertaining
to the maintainability of the present Petitions u/s.34 of
the Arbitration & Conciliation Act, 1996, it is established
that the parties herein have agreed to the Association's
Rules   and   arbitration   procedures   being   conducted   in
accordance   with   English   law   and   Mr.   Chinoy   is   not
correct in his submission that the agreement contains no
provision   stipulating   a   choice   of   law   governing   the
arbitration procedure.”
48 In the judgment reported in (2012) 2 BCR 168 in the matter of
Eitzen vs Ashapura what fell for consideration before a learned Single Judge
of this Court was the interpretation of the clause which stated that “English law
to apply”.  The said law was interpreted to mean that the same governed the
entire arbitration proceedings and the use of the expression “umpire” clearly
established that the parties chose the application of the English law as the said
expression “umpire” appears in the English law. The said judgment in Eitzen
(supra) has relevance to the present case as in the present case Clause 18.3 of
the  IPLA  uses  the   expression  “Presiding  Arbitrator”  which  expression  finds
place in the Indian Arbitration Act and not in the English Arbitration Act.  This
therefore is one more circumstance or indicia which shows that the choice of
law was the Indian Arbitration Act and such choice having been made by the
parties, the same governed the entire arbitration.  The findings of the Lower
Appellate Court on the aspect of the law applicable which are drawn on the
basis of London being the “seat” of arbitration are therefore unsustainable.
lgc  115 of 124      wps­7804.09 & 7636.09
49 Though in terms of interpretation of Clause 18.3, this Court has
reached a conclusion that the lex arbitri would be the Indian Arbitration Act.
The   question   would   be,   whether   the   Indian   Courts   would   have   exclusive
jurisdiction.  The nexus between  the “seat” or the “place” of arbitration vis­a­
vis   the   procedural   law   i.e.     the  lex   arbitri  is   well   settled   by   the   judicial
pronouncements   which   have   been   referred   to   in   the   earlier   part   of   this
judgment.    A  useful  reference  could  also  be made   to  the learned  authors
Redfern and Hunter who have stated thus :­
“the   place  or  seat  of  the   arbitration is  not merely  a
matter of geography. It is the territorial link between the
arbitration itself and the law of the place in which that
arbitration is legally situated...”
The   choice   of   seat   also   has   the   effect   of   conferring   exclusive
jurisdiction to the Courts wherein the seat is situated. In the instant case, as
can be seen, there is no agreement between the parties as regards the “seat” of
arbitration   as   the   parties   have   chosen   London   as   only   the   venue   for   the
arbitration meetings.   In view of London being the venue for the arbitration
meetings, the question that is posed is, whether the English Courts can exercise
jurisdiction in support of arbitration between the parties.
50 It is required to be noted that the instant case is a uncommon case
where   there   is   no   agreement   between   the   parties   as   regards   the   seat   of
arbitration, and the agreement between the parties is only as regards London
lgc  116 of 124      wps­7804.09 & 7636.09
being the venue for arbitration.  The Arbitration Agreement in the instant case
also    does not  provide what is  to  happen in  the event  of  a  failure  of  the
procedure  for  appointment  of  the Arbitral  Tribunal.  Therefore in  so  far  as
Section   18   of   the   English   Act   is   concerned,   which   is   a   non­mandatory
provision, the application of the said provision has not been expressly excluded
by the parties, and therefore, the said provision is available for invocation by
the parties.  In the context of London being only the venue and not the seat of
arbitration.     It   would   be   apposite   to   refer   to   Section   2(4)   of   the   English
Arbitration Act which reads thus:­
“The   Court   may   exercise   a   power   conferred   by   any
provision of this Part not mentioned in subsection (2) or
(3)  for  the purpose of  supporting  the arbitral process
where
(a)  no seat of the arbitration has been designated or
determined, and
(b)  by   reason   of   a   connection   with   England   and
Wales or Northern  Ireland  the court is satisfied
that it is appropriate to do so.”
Therefore in so far as Section 2(4) of the English Act is concerned,
the two requirements for exercising power under any of the provisions of the
English Arbitration Act, are that no seat of arbitration has been designated, and
that by reason of a connection with England and Wales or Northern Ireland the
court is satisfied that it is appropriate to do so.  In the instant case, both the
conditions for the exercise of power under the said Part of the English Act are
satisfied, as no place other than London is mentioned in clause 18 of the IPLA,
lgc  117 of 124      wps­7804.09 & 7636.09
since London is not  the seat, and  therefore, no seat of arbitration has been
designated by the parties.  Secondly since the meetings of the arbitration are to
take place in London, there is a strong connection between the arbitration and
the country wherein the arbitration meetings have to take place. As indicated
above Section 2(4) of the English Arbitration Act clamps itself in view of the
peculiar fact situation where the seat of arbitration has not been designated by
the parties.
Looked at from the said angle i.e. the territorial link between the
arbitration itself and the law of the place in which the arbitration meetings are
to be held, the conclusion that is is required to be drawn is that the English
Courts would have concurrent jurisdiction. The Lower Appellate Court has also
held that no exclusive jurisdiction has been given to the Indian Courts.  Hence
the Respondents cannot be said to have committed a breach of the agreement
by invoking the jurisdiction of the English Court for constituting the Arbitral
Tribunal.   The   finding   of   the   Lower   Appellate   Court   to   the   said   extent   is
required to be sustained.
51 The contention of the learned Senior Counsel for the Respondents
that  splitting up of  the  application of  Indian Arbitration Act is permissible,
inasmuch as in respect of the Arbitration Agreement the Indian Arbitration Act
would apply but in so  far as curial law is concerned,  the provisions of  the
lgc  118 of 124      wps­7804.09 & 7636.09
English Arbitration Act would have application.  The said contention proceeds
on the basis that London is the seat of arbitration and therefore, the English
Arbitration Act would  apply.   The  Indian Arbitration Act  contains  both  the
procedural  and  the  curial  provisions,  and  therefore, when  the  parties  have
agreed  to  the application of the  Indian Arbitration Act, it has  to apply as a
whole and not in parts.   The submission of the learned Senior Counsel for the
Petitioners based on Sumitomo Heavy Industries (supra) that the appointment
of the Arbitral Tribunal precedes the reference and therefore the curial law is
not applicable is well founded. However for the reason that the parties have
chosen London as  the place of arbitration, and since  there is no agreement
between  the  parties  as  regards  the  seat  of  arbitration,  Section  2(4)  of  the
English   Act   clamps   itself   as   it   were   on   the   agreement;   and   therefore
notwithstanding the fact that in terms of the law laid down in Hardy Oil and
Gas   Ltd  (supra)   and  Sakuma   Export   Ltd  (supra),   the   invocation   of   the
jurisdiction of the English Courts for taking such measures as are needed in
support of arbitration cannot be prevented as the English Courts can be said to
have concurrent jurisdiction.
52 As regards the submission of the learned Senior Counsel  for the
Respondents based on Section 4(2) of the English Act is concerned, the same
has to be read with Section 4(5) of the English Act. The said Section provides
that if a choice of law other than the law of England and Wales or Northern
lgc  119 of 124      wps­7804.09 & 7636.09
Ireland   as   applicable   law   in   respect   of   a   matter   provided   for   by   a   non­
mandatory   provision   of   this   part   is   equivalent   to   an   agreement   making
provision about that matter. Thus, as per the English Act, when a choice of law
other  than law  of  England is made in  respect  of  a  non­mandatory matter
(appointment of Arbitral Tribunal governed by Section 18 of the Act) then such
a choice will constitute the agreement contemplated by Section 4 (2) of the
English   Act   so   as   to   make   the   English   Act   in­applicable   as   regards   non­
mandatory provision.  In the present case, since there is no agreement between
the parties as regards the seat and, since the parties have agreed to hold the
arbitration meetings at London,  the parties have expressly not excluded  the
application   of   Section   18   of   the   English   Arbitration   Act,   and   is   therefore
available for invocation by the parties.  The parties would therefore be entitled
to approach the English Courts for constitution of the Arbitral Tribunal.
53 In  so  far  as  the  relief  of  anti  suit injunction is  concerned,  the
learned Senior Counsel for the Petitioners sought to rely upon the judgment of
the Apex Court reported in  (1987) 1 SCC 496 in the matter of   ONGC v/s.
Western Company, North America.   The said anti suit injunction has been
sought   by   the   Petitioners   on   the   ground   of   breach   of   agreement   by   the
Respondents and on the ground of London being forum non­conveniens.  The
learned Senior Counsel for the Petitioners contended that the Daman Court has
a personal jurisdiction over the Respondents.  In support of the said contention
lgc  120 of 124      wps­7804.09 & 7636.09
he sought to rely upon the judgment of the Apex Court reported in (1995) 1
SCC 478  in the matter of  New Horizons Ltd. v/s. Union of India,  and the
judgments of this Court in  Tarabai's   case,  Girdharlal Shankar Dave's  case
and Ishardas's case (supra).
Per   contra,   in   so   far   as   the   aspect   of   anti   suit   injunction   is
concerned,  the learned Senior Counsel  for  the Respondents  relied upon  the
judgment of the Apex Court reported in (2003) 4 SCC 341   in the matter of
Modi Entertainment v/s. W.S.G. Cricket Private Ltd.  The principles spelt out
by the Apex Court in the said case whilst considering the application for anti
suit injunction can be seen from Para 24 of the said report which is reproduced
herein under :­
“From   the   above   discussion   the   following   principles
emerge :
(1) In   exercising   discretion   to   grant   an   anti­suit
injunction the court must be satisfied of  the  following
aspects : ­
(a) the defendant, against whom injunction is sought, is
amenable to the personal jurisdiction of the court;
(b) if the injunction is declined the ends of justice will
be defeated and injustice will be perpetuated; and
(c)  the  principle  of  comity  –  respect  for  the  court in
which   the   commencement   or   continuance   of
action/proceeding is sought to be restrained ­ must be
borne in mind;
(2) in   a   case   where   more   forums   than   one   are
available, the Court in exercise of its discretion to grant
anti­suit   injunction   will   examine   as   to   which   is   the
appropriate forum (forum conveniens) having regard to
the convenience of the parties and may grant anti­suit
lgc  121 of 124      wps­7804.09 & 7636.09
injunction in regard to proceedings which are oppressive
or vexatious or in a forum non­conveniens;
(3)  Where jurisdiction of a court is invoked on the basis
of jurisdiction clause in a contract, the recitals therein in
regard to exclusive or non­exclusive jurisdiction of the
court of choice of the parties are not determinative but
are relevant factors and when a question arises as to the
nature of jurisdiction agreed to between the parties the
court has to decide the same on a true interpretation of
the  contract  on  the  facts  and in  the  circumstances  of
each case;
(4)   a   court   of   natural   jurisdiction   will   not   normally
grant anti­suit injunction against a defendant before it
where  parties  have  agreed  to  submit  to  the exclusive
jurisdiction of a court including a foreign court, a forum
of   their   choice   in   regard   to   the   commencement   or
continuance of proceedings in the court of choice, save
in an exceptional case for good and sufficient reasons,
with a view to prevent injustice in circumstances such as
which permit a contracting party to be relieved of the
burden of the contract; or since the date of the contract
the  circumstances  or  subsequent events  have made it
impossible for the party seeking injunction to prosecute
the case in the court of choice because the essence of the
jurisdiction of the court does not exist or because of a
vis major or force majeure and the like;
(5) where parties have agreed, under a non­ exclusive
jurisdiction clause, to approach a neutral foreign forum
and  be   governed   by  the  law  applicable   to  it   for   the
resolution of their disputes arising under  the contract,
ordinarily   no   anti­suit   injunction   will   be   granted   in
regard to proceedings in such a forum conveniens and
favoured forum as it shall be presumed that the parties
have   thought   over   their   convenience   and   all   other
relevant   factors   before   submitting   to   non­exclusive
jurisdiction of the court of their choice which cannot be
treated just an alternative forum;
(6) a   party   to   the   contract   containing   jurisdiction
clause cannot normally be prevented from approaching
the court of choice of the parties as it would amount to
lgc  122 of 124      wps­7804.09 & 7636.09
aiding   breach   of   the   contract;   yet   when   one   of   the
parties to the jurisdiction clause approaches the court of
choice in which exclusive or non­exclusive jurisdiction is
created, the proceedings in that court cannot per se be
treated as vexatious or oppressive nor can the court be
said to be forum non­conveniens; and
(7) the   burden   of   establishing   that   the   forum   of
choice is  a  forum  non­conveniens  or   the  proceedings
therein are oppressive or vexatious would be on
the party so contending to aver and prove the same.
In view of the conclusion that this Court has reached, namely that the English
Courts would have concurrent jurisdiction to act in support of arbitration, the
case of the Petitioners for an anti suit injunction does not stand to scrutiny.
However, in so far as the aspect of forum non­ conveniens is concerned, in my
view,  since the Petitioners have agreed to London as the venue for arbitration,
they cannot be heard to complain that the Courts at London are forum non­
conveniens for them.   The Petitioners have appeared before the said Courts,
and therefore, the case of forum non­ conveniens is bereft of any merit.
54 For the reasons mentioned herein­above the finding (refer para 63
of the impugned judgment) of the Lower Appellate Court that London is the
seat   of   arbitration   is   required   to   be   interfered   with,   the   said   finding   is
accordingly   set   aside   and   it   is   held   that   London   is   only   a   geographically
convenient location which  the  parties  have  chosen  as  a venue  to  hold  the
arbitration meetings.
lgc  123 of 124      wps­7804.09 & 7636.09
CONCLUSIONS – WRIT PETITION NO.7636 OF 2009
55 On  an interpretation  of  clause  18.3  of  the  IPLA  this Court  has
reached a conclusion  that  the curial law or  Lex Arbitri  would be  the  Indian
Arbitration Act.  Though the Indian Arbitration Act would apply, however, in
view of  the  fact  that  the parties have chosen  London  as  the venue  for  the
arbitration meetings,  the English Courts would  have concurrent jurisdiction
and therefore the jurisdiction of the English Courts can also be invoked by the
parties for taking such measures as are required in support of arbitration.  The
judgment and order of the Lower Appellate Court on the aspect of anti suit
injunction   is,   therefore,   sustained   but   on   a   different   ground   which   is
mentioned in the body of this Judgment.  The above Writ Petition No.7636 of
2009 is accordingly dismissed. Rule discharged, with no order as to costs.
[R.M.SAVANT, J]
lgc  124 of 124