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INTHEHIGHCOURTOFJUDICATUREATBOMBAY CIVILAPPELLATEJURISDICTION WRITPETITIONNO.7804OF2009 WITH WRITPETITIONNO.7636OF2009 1 Enercon(India)Ltd. acompanyincorporatedand existingunderthelawsof Indiaandhavingits registeredofficeatPlotNo. 33,DamanPatalia, Bhimpore,Daman396210 India YogeshJ.Mehra beingIndianInhabitant residingat101,Hare Krishna,ResidencySociety, J.V .D.Scheme,North .P SouthRoadNo.8,VileParle(W) Mumbai400049 AjayJ.Mehra beingIndianInhabitant residingat101,Hare Krishna,ResidencySociety, J.V .D.Scheme,North .P SouthRoadNo.8,VileParle(W) Mumbai400049 Versus 1 EnerconGmbH acompanyduly incorporatedandexisting underthelawofGermany andhavingitsregistered officeatDreekamp5, D26605,Aurich,Germany. ] ] ] ] ] ] ] ]
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] ] ] ] ] ] ] ] ] ] ] ] ] ] ] ] ] ] ] ] ] ] ] ]..... Petitioners.

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WobbenPropertiesGmbH acompanyduly incorporatedandexisting underthelawsofGermany andhavingitsofficeat Dreekamp5D26605, 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 thePetitioners in both the Petitions. Mr.S.U.Kamdar,SeniorAdvocatewithMr.ZubinBehramkamdin,Ms.Naira VariavaJejeebhoy,Mr.RohanCama,Mr.VivekVashi,Ms.AnushaJegadeesh, Ms.DevikaDeshmukh,andMs.KanikaSharmai/byBharucha&Partners fortheRespondentsinWritPetitionNo.7804of2009. Mr. Navroze Seervai, Senior Advocate with Mr. Zubin Behramkamdin, Ms.NairaVariavaJejeebhoy,Mr.RohanCama,Mr.VivekVashi,Ms.Anusha Jegadeesh,Ms.DevikaDeshmukh,andMs.KanikaSharmai/byBharucha& PartnersfortheRespondentsinWritPetitionNo.7636of2009. CORAM: R.M.SAVANT,J. JudgmentReservedon:6thAugust2012. JudgmentPronouncedon:5thOctober2012. JUDGMENT:

The above Writ Petitions have been filed invoking the Writ

Jurisdiction of this Court under Article 227 of the Constitution of India challengingtheorderdated27th August2009passedbythelearnedDistrict Judge, Daman by which order the Appeals being Misc. Civil Appeal Nos.1/2009,2/2009,3/2009and4/2009cametobeallowedandresultantly theorderpassedbytheTrialCourtdated9 th January2009cametobeset aside,resultingintheApplicationfiledunderSection45oftheArbitrationand
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ConciliationAct,1996beingallowedintermsofprayerclause28(a)thereof, andtheInjunctionApplication ofthe Petitionersabovenamed,whoarethe originalPlaintiffs,cametoberejected.

TheissuethatarisesintheabovePetitionsisthereforeintwoparts

viz. Whether the partiesare tobe referredto arbitration,and Whether the Petitionersareentitledtoanantisuitinjunctioninthefactsandcircumstances ofthepresentcase.Theimpugnedorderisthereforealsointwoparts;first part deals with the aspect of whether the parties are to be referred to arbitration,andsecondpartis,whetherthePetitionersareentitledtoananti suit injunction. Since both the Petitions involve common facts and are interconnected,thesameare,therefore,heardtogether.

ForthesakeofbrevitytheArbitrationandConciliationAct,1996 ofIndiaand,theArbitrationandConciliationAct,1996ofEnglandwouldbe referredtoastheIndianArbitrationActandEnglishArbitrationAct.

FACTUALMATRIX:

ThePetitionerNo.1hereincarriesonbusinessofmanufacturing

andmarketingoftheWindTurbineGenerators(WTG's)andcomponentsin India,andisalsointhebusinessofsettingupwindpowerprojectsonturnkey

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basis. ThePetitionerNos.2and3hereinaretheDirectorsofthePetitioner No.1andarearrayedasthePlaintiffNos.1to3intheSuitinquestion.The RespondentNo.1EnerconGmbHisaCompanyincorporatedunderthelawsof GermanyandishavingitsregisteredofficeatAurich,Germany.OneDr.Alloys WobbenisaDirectoroftheRespondentNo.1.TheRespondentNo.2Wobben PropertiesGmbHisaCompanyincorporatedunderthelawsofGermanyandis alsohavingitsregisteredofficeatAurich,Germany. TheRespondentNo.1is engaged in mechanical engineering and possesses technical knowledge and equipmentformanufacturingandmarketingtheWindTurbineGeneratorsand components. TheRespondentNo.1carriesonthesaidbusinessalloverthe world.TheRespondentNos.1and2arearrayedastheDefendantNos.1and2 totheSuitinquestion.ThePetitionersandtheRespondentsarerunningthe jointventurebusinessthroughthePetitionerNo.1CompanyatDamaninIndia. AccordinglythepartieshaveenteredintovariousAgreementsinfurtheranceof thesaidbusiness.ThePetitionerNos.2and3,on12/01/1994enteredintoa ShareholdingAgreement.IntermsofthesaidAgreementtheRespondentNo.1 washolding51%sharesofthePetitionerNo.1Company,andthePetitioner Nos.2and3wereholding49%shares.ThesaidShareholdingAgreementwas subsequentlyamendedbytwoSupplementaryShareholdingAgreementsdated 19/05/1998 and 19/05/2000. Pursuant to the said Supplementary ShareholdingAgreements,theRespondentNo.1becamea56%shareholderin thePetitionerNo.1CompanywhilsttheshareholdingofthePetitionerNos.2

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and 3 was reduced to 44%. On the same day i.e. on 12/01/1994, the PetitionerNo.1andtheRespondentNo.1enteredintoaTechnicalKnowHow Agreement by which the Respondent No.1 had agreed to transfer to the PetitionerNo.1therightandthetechnologytousethetechnicalknowhowfor themanufactureofE26WindTurbineGeneratorsspecifiedthereinandtheir components.ASupplementaryTechnicalKnowHowAgreementamendingthe earlier Technical KnowHow Agreement was executed on 19/05/2000 by which a further licence to manufacture the E30 and E40 Wind Turbine GeneratorswasconferredbytheRespondentNo.1tothePetitioners.Underthe terms of the Technical KnowHow Agreement, the Respondent No.1 has to continuouslysupplyspecialcomponentstothePetitionerNo.1.InApril2004 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 windmilltechnology.Itappearsthatfromtheyear2000onwardsandtilldate 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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RespondentsagreedtoenterintowhatisknownastheIntellectualProperty LicenseAgreement(IPLAforshort),whichisthesubjectmatteroftheSuitin question. ItisthecaseofthePetitionersthattheAgreedPrinciplesarethe binding principles agreed between the parties, and which records an agreementthatalldefinitiveagreementsbetweenthepartiesthatweretobe preparedandfinallyexecutedwouldbeonthebasisofthebindingprinciples agreed therein. One of the agreements contemplated by the said Agreed PrincipleswastheIPLA.ThePetitionerNos.2and3arethepartiestotheIPLA. ItseemsthatthePetitionerNo.2hassignedtheIPLAonbehalfoftheMehra family. AtthetimeofthesigningoftheIPLAthePetitionerswerealready awareofthefivemodelsoftheWTG'sbeingE26,E30,E40,E48andE53. ItisthecaseofthePetitionersthattheIPLAwasmerelyadraftoftheoral termsandnotaconcludedcontractbetweentheparties.Itwastheircasethat thesaiddocumentwasanunincorporatedandinchoatedocumentandwasnot aconcludedcontract.ItappearsthatoneMr.Ketwigg,theManagingDirector ofRespondentNo.1inaletterdated02/10/2006,addressedtoPetitionerNo.2 statedthereinthatallthenecessarycontractsbetweenthepartiesshouldbe completedby19/10/2006.Furtherintheemaildated04/10/2006Ms.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. Itis the case of the Petitionersthat to their utter shock and surprise, on 18/10/2006 Ms. Nicole Fritsch of the Respondent No.1 totally

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turnedaroundandaddressedalettertothePetitionerNo.2falselyallegingthat the draft IPLA which was signed on 29/09/2006 was a final document. Thereaftercorrespondenceensuedbetweenthepartiesandacontentiousissue aroseastowhethertheIPLAcanbecalledfinalornot. Thereafterspateof litigationensuedbetweentheparties.ThiswasasaresultoftheRespondent No.1stoppingsupplieswhichresultedinthePetitionerNos.2and3filinga derivative Suit on the Original Side of this Court being Short Cause Suit No.2667of2007seekingresumptionofsupplies.ThisCourthas,byaninterim orderdated31/10/2007withoutprejudicetotheindividualcontentionsofthe parties, directed resumption of supplies by the Respondent No.1 to the PetitionerNo.1untilfurtherordersofthisCourt.Inviewofthefactthatthe saidorderwasnotcompliedwithbytheRespondentNo.1,thereisaContempt PetitionwhichhasbeenfiledbythePetitioners,whichispending.

The Respondent No.1 has also filed a Company Petition being

No.121 of 2007 against the Petitioners before the Company Law Board, PrincipalBench,NewDelhisometimeinAugust2007.ThesaidPetitionhas 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 PetitionerNos.2and3asDirectorsofPetitionerNo.1,transferoftheMehras shareholding in the Petitioner No.1 as well as associate and subsidiary companies of Petitioner No.1 to Respondent No.1, and investigation to

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ascertain the conduct of Mehras in dealing with properties, monies and managementofthePetitionerNo.1. Inviewofthenoncomplianceofthe orderpassedbythe CompanyLawBoard,contemptproceedingshavebeen initiatedbythePetitionersagainstDr.WobbenandMr.Ketwigg.TheMehrasi.e. thePetitionerNos.2and3filedCompanyPetitionNo.74of2008againstthe RespondentNo.1,Dr.WobbenandMr.HDKetwiggallegingoppressionand mismanagementbytheRespondents. ThesaidPetitionwasalsofiledunder Sections397and398oftheCompaniesAct.

The Respondent No.1 had filed a Petition against the Petitioner

No.1andothersallegingthatPetitionerNo.1hadbeensupplyingWindTurbine Generators to third parties in Germany thereby infringing the trademarks belongingtoRespondentNo.1.ThesamewasfiledintheHamburgDistrict Court which Court had initially granted an exparte adinterim order dated 17/09/2007 restraining the Petitioner No.1 from effecting supplies to such thirdpartiesinGermany.TheHamburgDistrictCourtthereafterdismissedthe claimoftheRespondentNo.1onthegroundthattherewasnoevidenceto suggest Petitioner No.1's involvement in the matter. The aforesaid facts thereforedisclosethediverselitigationinwhichthepartiesareinvolved.

TheRespondentNo.1addressedaletterdated13/03/2008stating

thereinthatitwasdesirousofhavingalldisputesrelatingtotheIPLAsettled,

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includingwhetherthereisabindingagreementbetweenPetitionerNo.1and 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 . . nomineearbitratorandcalleduponthePetitionersincludingPetitionerNos.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 PetitionerNo.2,onbehalfofthePetitioners,repliedtothesaidletterbyhis letter dated 31/03/2008 stating therein that since the IPLA was not a concludedcontract,therewasnoquestion ofavalidArbitration 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 conductandattitudeoftheRespondentNo.1establishedthatithadwaivedthe Arbitration Agreement. The UK Solicitors of the Respondent Nos.1 and 2 addressedalettertothePetitionersdated02/04/2008statingthereinthatin theeventthePetitionersdidnotnominatetheirarbitratorwithinsevendaysof thereceiptofthesaidletter,theRespondentNos.1and2shallproceedunder theEnglishArbitrationAct,1996toappointtheirnomineearbitratorMr.V . .V VeederQC,asthesolearbitrator.ThesaidletterwasreceivedbythePetitioner No.1 in Daman on 03/04/2008, along with the said letter was annexed `ArbitrationClaimForm'dated27/03/2008issuedbytheRespondentNos.1 and2seekingseveraldeclaratoryreliefsfromtheEnglishCourtinrelationto the IPLA which according to the Respondent Nos.1 and 2 is a concluded

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contract. Thesaiddeclaratoryreliefsinteraliaincludeinjunctiverelieffrom theEnglishCourttorestrainthePetitionerNos.2and3fromcontinuingwith independent proceedings before this Court, i.e. the Suit which was already filedbythePetitionerNos.2and3inaderivativecapacityasshareholdersof thePetitionerNo.1. Thesaid'ArbitrationClaimForm',whichhadbeenfiled beforetheEnglishCourt,wasalsoserveduponthePetitionerNo.1inDaman 04/04/2008andseemstohavetriggeredoffthefilingoftheRegularCivilSuit No.9 of 2008 before the learned Civil Judge, Senior Division, Daman on 08/04/2008interaliaforthefollowingreliefsviz.foradeclarationthatthe IPLA was not a concluded contract and correspondingly that there was no ArbitrationAgreementbetweentheparties;foradeclarationthattheinitiation of proceedings before the English Court by the Respondents was void and illegal; and for a permanent injunction restraining the Respondents from continuingwiththeproceedingsbeforetheEnglishCourt.InthesaidSuitthe Petitioners moved an Application for temporary injunction and for other interim reliefs. The Trial Court, it seems, passed a status quo order on 08/04/2008directingtheRespondentstomaintainstatusquoasregardsthe proceedingsinitiatedbeforetheEnglishCourttilltheirappearanceintheSuit andtoshowcausewhyaninterimordershouldnotbepassedagainstthem. TheRespondentsappearedintheSuitandfiledanApplicationunderSection 45oftheIndianArbitrationActcontendingthereinthattheSuitbeforethe TrialCourtoughttobereferredtoarbitrationpursuanttothearbitrationclause

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containedintheIPLA. TheRespondentsalsosoughtavacationofthestatus quoorder. Itappearsthatintheinterregnumon11/04/2008,thePetitioner No.1hadappointedMr.Justice B.P .Jeevan Reddy(Retd.)asitsarbitrator. This,accordingtoit,wasnecessitatedinviewofthethreatsoftheRespondents thatthearbitratorappointedbythemcouldbenominatedasasolearbitrator undertheEnglishLaw,intheeventthePetitionerNo.1failedtonominateits arbitrator.ItseemsthatthearbitratorappointedbythePetitionersbyhisletter dated24/04/2008statedthattherewereinherentdefectsinthearbitration clause contained in the IPLA and therefore the same was unworkable and expressed the inability of the arbitrators to appoint a third arbitrator. Thereafterajointletterwasaddressedwhichisdated05/08/2008byboththe arbitratorsi.e.Mr.V .VeederQCandMr.JusticeB.P .V .JeevanReddy(Retd.) askingthepartiestotakenecessarystepsasmaybeadvised.

ThePlaintiffsi.e.thePetitionershereinhadmovedanapplication

for temporary injunction exparte in the said suit, wherein the Trial Court directedthepartiestomaintainstatusquo.TheTrialCourthadgrantedan exparteinjunctionrestrainingtheDefendantsi.e.theRespondentshereinfrom proceeding with the proceedings they had filed in the English Court. The Application for interim reliefsandthe Application filed bythe Respondents underSection45ofthesaidActwasheardbytheTrialCourt,andbytheorder dated09/01/2009,thelearnedCivilJudge,SeniorDivision,Daman,allowed

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thesaidApplicationforinterimreliefsfiledbythePetitioners,andrejectedthe ApplicationforreferringthepartiestoarbitrationfiledunderSection45ofthe saidActbythe Respondents,i.e.the Trial Courtconfirmedthe exparte ad interimorderofstatusquograntedbyiton8/4/2008tilldecisionofthesuit. TheDefendantsi.e.theRespondentshereinwererestrainednottoconstrain the Plaintiffs i.e. the Petitioners herein to go for arbitration till the final decisionofthesuitbyinvokingtheIPLA.

ThegistofthereasoningoftheTrialCourtwastotheeffectthat

thedocumentinquestioni.e.theIPLAwasnotonastamppaperanditdoes notbearthesignatureandsealofthePublicOfficeinauthenticationthatthe document is enforceable in law; that the Plaintiff No.2 had signed the documentundertheinfluenceofDr.AlloysWobben.TheTrialCourt,onthe basisofthematerialonrecord,recordedafindingthattheIPLAwasnota concludedcontractforwantoffreeconsent,andwasexecutedduetoundue influence, fraud, misrepresentation and mistake, that the Plaintiffs would sufferheavyeconomiclossifthearbitrationisheldatLondon.Insofarasthe jurisdictionalaspectisconcerned,theTrialCourtrecordedafindingthatthe Court at Daman would have jurisdiction as the Plaintiff No.1 was a joint venturebetweenthePlaintiffNo.1andtheDefendantswhichhaditsfactoryat Daman.

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Aggrieved by the order dated 09/01/2009 passed by the Trial

Court, the Defendants i.e. the Respondents herein filed four Appeals which wereCivilMisc.AppealNos.1/2009,2/2009,3/2009and4/2009. Thesaid AppealswerefiledbytheRespondentscoveringtwoaspectsastothegrantof theantiSuitinjunction,andastotherejectionoftheApplicationfiledbythem underSection45ofthesaidAct.ThesaidAppealswereheardbythelearned PrincipalDistrictJudge,Daman,whobytheorderdated27/08/2009allowed thesaidfourAppeals,andconsequentlysetasidetheorderspassedbytheTrial CourtgrantingtheantiSuitinjunction,andreferredthepartiestoarbitration byallowingtheApplicationfiledunderSection45ofthesaidAct. However, the Lower Appellate Court has directed the Trial Court to first decide the jurisdictionpointbeforeproceedingwiththeSuit.TheLowerAppellateCourt hasinteraliaconsideredtheenforceabilityoftheArbitrationAgreement,the caseofthePlaintiffsthattheIPLAwasnotaconcludedcontract,whichthe Plaintiffshadsoughttosupportbybothintrinsicaswellasextrinsicmaterial, andalsothecaseofthePlaintiffsthatthesaidClause18.3wasunworkablein view of the methodology mentioned therein for the appointment of the arbitrators. TheLowerAppellateCourtascanbeseenfromitsorderhason thebasisofthefactthattheIPLAwassignedbythePlaintiffNo.2,reacheda conclusion that there was an agreement between the parties to refer the disputestoarbitrationwhichintentionoftheparties,accordingtotheLower

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AppellateCourt,wasrequiredtobegiveneffectto.TheLowerAppellateCourt held that assuming that there was some defect in the methodology for appointmentofthearbitrators,thatwouldnotcomeinthewayofenforcement oftheArbitrationAgreement.TheLowerAppellateCourtheldthatsincethe partieshadagreedtoLondonbeingtheseatofarbitration,thePlaintiffscould notmakeagrievanceasregardsthejurisdictionoftheEnglishCourts. The LowerAppellateCourthasbyitsorderdated27/08/2009,asindicatedabove, hasallowedthesaidfourAppeals.

10

ItistheorderpassedbytheLowerAppellateCourtinthesaidfour

AppealswhichisthesubjectmatteroftheabovetwoPetitions. Insofaras WritPetitionNo.7804of2009isconcerned,thesamechallengestheorderto theextentofreferringthepartiestoarbitration;whereasWritPetitionNo.7636 of2009concernsthechallengetothesettingasideoftheantiSuitinjunction.

11

SUBMISSIONS ON BEHALF OF THE PETITIONERS BY THE LEARNEDSENIORCOUNSELDR.VEERENDRATULZAPURKAR INWRITPETITIONNO.7804OF2009: That the Lower Appellate Court failed to decide the important issue,astowhethertheIPLAwasaconcludedcontractandthat thereisavalidsubsistingArbitrationAgreement.

i]

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ii]

Since the Lower Appellate Court has failed to decide the very importantjurisdictionalfact,namelytheexistenceofaconcluded contractbeforereferringthepartiestoarbitration,theexerciseof the Writ Jurisdiction of this Court under Article 227 of the ConstitutionofIndiaiswarranted. ThelearnedSeniorCounsel reliedupontheJudgmentsoftheApexCourtreportedin(2006) 3SCC312 inthematterof KishoreKumarKhaitanandAnr. V/s.PraveenKumarSinghand;(2008)14SCC58inthematter ofRameshChandraSankalaV/s.VikramCement.

iii]

ThattheIPLAisnotaconcludedcontractandisonlyadraft.The learnedSeniorCounselsoughttobuttressthesaidsubmissionby referringtotheclausesmentionedintheIPLA,regardingthegrant oflicences,finance,tenureoftheIPLA;

iv]

Thatthepatentsinrespectofwhichthelicencesweretobegiven tothePetitionerswerenotfinalized,thetenureoftheIPLAwas alsoindefinite,andsincetheroyaltyistobepaidonthepatents, andsincethefixationoftheroyaltywasalsonotfinalized;the IPLAcouldnotbesaidtobeaconcludedcontract.

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v]

ThatassumingtheIPLAisaconcludedcontract,thearbitration clause18.1isvagueandisunimplementableinviewofthefact thatthearbitratorofthelicensoristodontwohats,tworoles,one beingthearbitratorofthelicensorandsecondbeingthepresiding arbitrator;

vi]

Thatthearbitrationclauseisunworkableisborneoutbythefact thatboththearbitratorsi.e.MrVVVeeder,QCandMr.JusticeBP JeevanReddy(Retd.)haveexpressedthatthearbitrationclauseas itstandsisunworkableandwouldrequireclarification.

vii]

Thatnostepsweretakenforregistrationofthepatentsasrequired bySection69ofthePatentsAct,asboththepartiestreateditas notaconcludedcontract.

viii]

ThattheIPLAcannotbesaidtobeaconcludedcontractinviewof thefactthataspertheAgreedPrinciplesallthefouragreements mentionedthereinweretobeexecutedatonetimeandtheIPLA therefore could be said to be finalized only after the said four documentswhichwereinclusiveoftheIPLAwereexecuted.

ix]

The extrinsic evidence which is in the nature of the

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correspondence exchanged between the parties shows that the IPLAwasnotaconcludedcontract. ThelearnedSeniorCounsel wouldrelyuponthelettersdated11/3/2006,10/4/2006,asalso thelettersdate30/09/2006,2/10/2006and24/11/2006which arepostthesigningoftheIPLAon29/09/2006whichaccording tothelearnedSeniorCounselexfaciepointoutthattheIPLAwas notaconcludedcontract,andthatitwasonlyadraft;

x]

Thatsincethe maincontractcannotbesaidtohavecomeinto existence,therefore,theclauseprovidingforarbitrationhasalso necessarytobeheldasnothavingcomeinexistence.Thelearned SeniorCounselwouldrelyuponthejudgmentoftheApexCourt reportedin (1960)1SCR493 inthematterof UnionofIndia v/s. Kishorilal Gupta and Brothers and, two Division Bench Judgments of this Court reported in 2010 (2) Company Law Reporter393 inthematterof NasirHusainFilms(P)Ltd.v/s SaregamaIndiaLtdandanr.;and 2008(4)ArbitrationLaw Reporter 179 in the matter of Oberoi Construction P Ltd v/s . WorliShivshahiCoopHsg.SocietyLtd.;

xi]

Thatsincetheunderlyingcontracthasnotcomeintoexistence,in viewthereofthearbitrationclauseinthecontractisinoperative.

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ThelearnedSeniorCounselwouldrelyuponthejudgmentofthe ApexCourtreportedin (1996)2SCC667 inthematterof U.P . RajkiyaNirmanNigamLtdVs.IndurePvt.Ltd.&ors.

xii]

ThattheIPLAisnotaconcludedcontract,sincethesubjectmatter being absent as the portfolio regarding the patents was not finalized. The parties were also not adidem as regards commencementoftheIPLAanditsduration.TheIPLAistherefore vague, ambiguous and uncertain, and is therefore, void under Section29oftheIndianContractAct.ThelearnedSeniorCounsel wouldplacerelianceonthejudgmentofaDivisionBenchofthe KarnatakaHighCourtreportedin AIR1966Mysore118 inthe 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;reportedin(2004)1SCC252inthematterofUnitedBank ofIndia v/s Ramdas Mahadeo Prashad & others; reported in AIR 1949 Nagpur 286 in the matter of The Central Bank, YeotmalLtd.V/sVyankateshBapuji;andreportedin(1976)1 WLR591 inthematterof BushwallPropertiesLtdv/sVortex PropertiesLtd.

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SincetherewasuncertaintyaboutthedurationoftheIPLA,the said agreement was void on account of uncertainty. Since the portfolioofthepatentswasnotfinalized,therewasuncertaintyas regardsthepatentsandtheirduration,andsincethedurationof theIPLAwascontingentupon,theexpiryofthelastpatentsthe durationoftheIPLAwasnotcertain.ThelearnedSeniorCounsel insupportofthesaidcontentionrelieduponthejudgmentofthe ApexCourtreportedin(2008)5SCC58inthematterofVimlesh KumariKulshresthav/s.Sambhajiraoandanr.

xiii]

That the extrinsic evidence which has been referred to in the ApplicationfortemporaryinjunctionprovesthatthesaidIPLAwas notaconcludedcontract. ThereplyfiledbytheRespondentsto thesaidApplicationfortemporaryinjunctionwascontradictoryto theirletterdated24/11/2006whereintheyhadagreedthatthere was some uncertainty and that they would try to resolve it by havingainhousemeeting.

xiv]

Thattherecanbenoarbitrationifthereisnoconcludedcontract. SinceintheinstantcasetheIPLAisnotaconcludedcontract,the partiesthereforecannotbereferredtoarbitration. Thelearned SeniorCounsel,insupportofthesaidsubmission,soughttorely

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uponthefollowingjudgmentsoftheApexCourtreportedin(1) (2006)1SCC751,DresserRandS.A.v/s.BindalAgroChem LtdandK.G.KhoslaCompressorsLtd.;(2)(2010)5SCC425, AndhraPradeshTourismDevelopmentCorporationLtd&Anr. V/s.PampaHotelsLtd.; (3) AIR 1962SC378,JawaharLal 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 underSection45oftheIndianArbitrationActhasonlytotakea primafacieview,cannotbesaidtobeamajorityview,inviewof thediscordantnotesoundedbyJusticeD.M.DharmadhikariinPara 112ofthesaidjudgment.

xvi]

Thatinthefactsandcircumstancesofthecasetheexerciseofwrit jurisdiction under Article 227 of the Constitution of India is warranted.

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12

SUBMISSIONS ON BEHALF OF THE RESPONDENTS BY THE LEARNED SENIOR COUNSEL SHRI S U KAMDAR IN WRIT PETITIONNO.7804OF2009: That exercise of the Writ Jurisdiction under Article 227 of the ConstitutionofIndiaisnotwarrantedinthefactsofthepresent case;astheviewtakenbytheLowerAppellateCourtontheaspect ofthepartiesbeingreferredtoarbitration,cannotbesaidtobea viewwhichcouldnotbetakeninthefactsandcircumstancesof thecase.

[a]

[b]

ThatthePetitionershavenotpointedoutastohowtherehasbeen afailuretoexercisethejurisdictionortheLowerAppellatecourt hasexceededitsjurisdictioninpassingtheimpugnedorderwhich isaprerequisitetowarranttheexerciseofthewritjurisdiction;

[c]

ThattheLowerAppellatecourthaspassedtheimpugnedorder consideringtherelevantmaterialonrecord,whichtheTrialCourt hadfailedtodo,andthereforeitcannotbesaidthattheorder 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 Courtreportedin(1)(2001)8SCC97,EstrallaRubberv/sDass Estate(P)Ltd. (2) (2003)6SCC641, StateThroughSpecial

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Cell,NewDelhiv/s.NavjotSandhualiasAfshanGuruandors. and(3) (2010)9SCC385,JaiSinghand orsv/s.Municipal CorporationofDelhiandors.

Insofarasaspectofperversityisconcerned,thelearnedSenior CounselrelieduponthejudgmentoftheApexCourtreportedin (2009)10SCC206inthematterofArulveluandanrv/s.State RepresentedbythePublicProsecutorandanr.

Thesaidjudgmentsinteralialaydownthescopeofinterference underArticle227oftheConstitutionofIndia.Thesaidjudgments inter alia lay down that the power under Article 227 of the ConstitutionofIndiaistobeexercisedtokeeptheinferiorCourts withintheirbounds.Itisnotinthenatureofanappellatepower and cannot be exercised for correcting a mere error. The said judgments lay down that if there is a failure to exercise jurisdictionorjurisdictionisexercisedinexcessofthepowersor the findings recorded are so perverse that no reasonable man couldhavearrivedatsuchafindingthattheexerciseofthewrit jurisdiction under Article 227 of the Constitution of India is warranted.

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[d]

ThattheCourtwhilstconsideringtheapplicationundersection45 hasonlytoarriveataprimafacieviewasregardstheexistenceof theArbitrationAgreementandthearbitrabilityofthedisputeand is not concerned with any dispute as regards the underlying contract.ThelearnedSeniorCounselforthesaidpurposerelied uponthejudgmentoftheApexCourtreportedin (2005)7SCC 234 in the matter of ShinEtsu Chemical Co. Ltd. v/s. Aksh OptifibreLtdandanr.

[e]

ForthepropositionthattheCourthastoonlyarriveata prima facieviewasregardsArbitrationAgreementandthearbitrabilityof the dispute. The learned Senior Counsel for the Respondents, apart from the judgment of the Apex Court in ShinEtsu' case s (supra)relieduponanotherjudgmentoftheApexCourtreported in(2009)2SCC134inthematterofShaktiBhogFoodsLimited V/sKolaShippingLimited andtheDivisionBenchJudgmentof this Courtreported in 2007(5) Bom.C.R.227 in the matter of CaribjetIncv/sAirIndiaLimitedandthejudgmentofalearned SingleJudgeofthisCourtreportedin 2012(3)Bom.C.R.36 in thematterofOliveHealthcarev/s.LannettCompanyInc.&anr.

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[f]

Thatthedocumentsinquestionunmistakablyleadtoaconclusion that the IPLA was a concluded contract. The learned Senior Counsel sought to rely upon the correspondence between the partiespriortotheagreementbeingexecutedon26/9/2006.The saidcorrespondencestartswiththeemaildated25/6/2006and theemailandlettersexchangedthereafter;

[g]

ThatthefactthatIPLAisaconcludedcontractisborneoutbythe factthatthepartieshavesignedthesame,andtherefore,interms oftherequirementsasmentionedinSection44ofthesaidAct,the Lower Appellate Court was right in referring the parties to arbitration.

[h]

ThatallalongithasbeenthestandoftheRespondentsthatthe PetitionershaveexecutedtheIPLAwhichwasnotdisputedbythe Petitionersherein.Thedisputestartedonaccountofthepayment inrespectoftheequityshareswhichweretobepurchasedbythe Respondents. The said fact is borne out by the letter dated 3 rd November2006ofthePetitionersanditisonlythereafterthatthe Petitionersstartedraisingadisputeasregardscertainaspectsof theIPLA;

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[i]

That the aspect of the main/underlying contract and the ArbitrationAgreementareseparable.Inagivencase,evenifthe maincontractcanbesaidtobesufferingfromsomeinfirmitybut thatwouldnothaveanyeffectontheArbitrationAgreement.The Court has only to prima facie see whether there is a valid ArbitrationAgreement.

[j]

Thattheconclusivitythatisrequiredtobeseenisonlyasregards the Arbitration Agreement. The requirement for which finds a placeinSection44oftheIndianArbitrationAct.Therequirement being that the Arbitration Agreement has to be in writing and signedbytheparties.Intheinstantcaseboththeconditionsare satisfied. The learned Senior Counsel for the Respondents in supportofthesaidsubmission relieduponthejudgmentofthe ApexCourtreportedin (2012)2SCC93 inthematterof Reva Electric Car Company Private Limited v/s. Green Mobil and (2008)14SCC240inthematterofGreatOffshoreLimitedv/s. IranianOffshoreEngineeringandConstructionCompany.

[k]

ThatthefactsinKishorilalGupta'scaseareclearlydistinguishable fromthefactsofthepresentcase,asinKishorilalGupta'scasethe contract itself was superseded and therefore in the said fact

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situationtheCourtheldthatnoreliancecouldbeplacedonthe arbitration clause in the superseded contract. For the said purpose,thelearnedSeniorCounselrelieduponthejudgmentof theApexCourtreportedin (2009)10SCC103 inthematterof BranchManager,MagmaLeasingandFinanceLimitedandAnr. v/s. Potluri Madhavilata and anr. wherein the judgment in KishorilalGuptahasbeendistinguishedbytheApexCourt.

[l]

Thatwhilstconsideringthe applicationunderSection 45of the said Act there can only be a prima facie examination of the materialonrecordsoastoarriveataconclusionwhetherthereis anArbitrationAgreementbetweentheparties.Insofarasother aspectsareconcerned,theissuecanberaisedbeforetheArbitral Tribunal. Insupportofthesaidsubmission,thelearnedSenior CounselfortheRespondentsrelieduponthejudgmentoftheApex Courtreportedin (2007)7SCC120 inthematterof Aurohill GlobalCommoditiesLtd.v/s.MaharashtraSTCLtd.and(2009) 2SCC134inthematterofShaktiBhogFoodsLimitedv/s.Kola ShippingLimited.

[m]

Thattheinfirmityifanyinthemaincontractwouldnotimpinge upontheArbitrationAgreementencompassedinthesaidcontract.

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ThepositioninlawinthatrespectinIndiaaswellasinEnglandis thesame.HencethecontentionofthelearnedSeniorCounselfor thePetitionersthatinviewofthefactthattheannexuretothe IPLAorothergroundsonwhichthePetitionerscontendthatthe IPLAwasnotaconcludedcontractwouldhavenobearingonthe Arbitration Agreement as it is well settled that the Arbitration Agreementstandsapartfromthemaincontract.Insupportofthe said submission the learned Senior Counsel relied upon the Englishjudgmentreportedin (2007)UKHL40 inthematterof PremiumNaftaProductsLimited(20 Defendant)andothers th v/s.FiliShippingCompanyLimited(14Claimant)andothers th andalsorelieduponthejudgmentofalearnedSingleJudgeof this Court reported in 2003 CLC 601 in the matter of GTC Limitedv/sRoyalConsultingRVandanr.

[n]

Thatmerelybecausethereisachallengetothemainunderlying contract,thesaidfactwouldnotimpingeuponthevalidityofthe Arbitration Agreement. The learned Senior Counsel for the Respondents relied upon the judgment of the US Federal Court reportedin546US440inthematterofBuckeyeCheckCashing Inc.v.Cardegna.ThesaidviewoftheUSFederalCourthasbeen affirmedbytheApexCourtinthejudgmentreportedin(2009)2

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SCC 494 in the matter of P Manohar Reddy & Bros. v/s. . Maharashtra Krishna Valley Development Corporation and othersandpara28thereof.

[o]

Thatitisonlywhenthemainunderlyingcontractisvitiatedon accountoffraud,coercion,etc,thattheArbitrationAgreementcan besaidtobeaffected,suchisnotthecaseintheinstantmatter.

(p)

Thatitiswellsettledevenifthereisanyuncertaintyorambiguity intheunderlyingcontract,itcanbelookedintoandifnecessary corrected by relying on extrinsic evidence. The learned Senior Counselinsupportofthesaidcontentionsoughttoplacereliance on Paras 11123, 12117, 12118 and 13008 from the learned AuthorChittyonContract.

[q]

Thatthereisnouncertaintyasregardsthetermsoftheunderlying contract. The date of execution of the IPLA is certain and is referabletopage46.Thedate17/09/2006appearingonIPLAis referable to the letter dated 17/09/2006 of Yogesh Mehra by which he has communicated his inability to remain present in AurichGermanyonthesaidday;

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[r]

That the contention of the learned Senior Counsel for the Petitionersthatthe agreementisnota concludedcontractasit doesnotcontaintheannexureinrespectofthepatentswhichhave beengrantedtothePetitionersisonlyabogeyraisedonbehalfof thePetitioners,asthePetitionersareusingthepatentsfrom1994 to2004andtwomorepatentswereusedsince2004,theTechnical KnowHow Agreement and Supplemental Technical KnowHow Agreement spelt out which patents have been given to the Petitioners.

[s]

Thatallquestionsrelatingtotheagreementinanyeventhaveto bedecidedbytheArbitralTribunal.Thatsincetheagreementhas been signed, the requirement under Section 7 of the Indian Arbitration Act is satisfied. For the said purpose the learned SeniorCounselrelieduponthejudgmentofalearnedSingleJudge ofthisCourtreportedinAIR2000Bombay108inthematterof Keval Krishna Balakram Hitkari v/s Anil Keval Hitkari and othersandthejudgmentoftheApexcourtreportedin(1995)6 SCC 571 in the matter of J.K.Jain and others v/s. Delhi DevelopmentAuthorityandothers.

Thatinsofarastheissueastowhetherthecontractisconcluded

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ornot,thesigningofthecontractisoneofthedefiningaspects which test is laid down by the Apex Court in the judgment reportedin(2010)1SCC83inthematterofGrasimIndustries LimitedandAnrv/s.AgarwalSteel

[t]

That the contention of the learned Senior Counsel for the Petitioners that the judgment of the Lower Appellate Court is bereftofanyfindingsisnotcorrect.Findingshavebeenrecorded onthebasisthatthepartieshavesignedtheIPLAasalsoonthe basis of the correspondence entered into between the parties whichcanbeseenfromtheimpugnedorder.

[u]

Thatevenif a partof thearbitrationclauseisunworkable,the same is severable as in the instant case the grievance of the Petitionersisonlyasregardsthenumberofarbitratorswhoareto be appointed. The said dispute can therefore be said to be a disputeonlyasregardsthemachineryprovisionbutnotasregards theagreementbetweenthepartiestogoforarbitration.

[v]

Thatevenifpartoftheagreementisbad,thepartwhichcanbe sustainedwill havetobeenforced.ThelearnedSeniorCounsel relieduponthejudgmentoftheApexCourtreportedinAIR1997

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SC605inthematterofM.M.T.C.Limitedv/s.SterliteIndustries (India)Ltd.whichisfollowedin(2002)3SCC572inthematter ofNarayanPrasadLohiav/s.NikunjKumarLohiaandothers.

[w]

That the letter of the arbitrator appointed by the Petitioners cannotbeconclusiveofthefactthattheArbitrationAgreementis notworkable.Thecorrespondenceprecedingthesaidletterdoes notindicatethatthesaidArbitrationAgreementisunworkable.

[x]

Thatthedefiningaspectasitwere,istheintentionoftheparties togoforarbitrationwhichisclearlymanifest.Forthesaidpurpose the learnedcounsel relied upon the judgmentof the Allahabad HighCourtreportedinAIR1954Allahabad750inthematterof AHBhiwindiwalaandCo.v/s.RBLakshmanDassMohanLal and Sons Ltd and anr. , and the judgment of the Apex Court reported in (2009) 4 SCC 495 in the matter of Nandan BiomatrixLimitedv/s.D1Oilslimited.

(y)

Thatthereisnomeritinthecontentionofthelearnedcounselfor the Petitioners that the second relief sought in the suit of injunctioncannotgotoarbitration.Thatthesaidreliefcanonly said to be referable to the IPLA as it is the contention of the

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learned Senior Counsel that since the IPLA is not a concluded contract,the Arbitration Agreementisnotenforceable.Thetest 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 Courtreportedin (2006)7SCC275 inthematterof Rashtriya IspatNigamLtdv/s.VermaTransportCo asalsothejudgment reportedin(2008)16SCC774inthematterofEverestHolding Limitedv/s.SyamKumarShrivastavaandothers.

[z]

ThelearnedSeniorCounselsoughttodistinguishthejudgments cited by the learned Senior Counsel for the Petitioners in the context of the facts of the present case. The learned Senior CounselfortheRespondentswouldcontendthatinthecontextof thefactsofthecasesinthejudgmentscitedbythelearnedSenior CounselforthePetitionersthattheApexCourthasheldthatthe parties were not adidem, and therefore, the contract was not concluded,butthesameisnotthecaseintheinstantmatter.

CONSIDERATIONWRITPETITIONNO.7804of2009 13 Heard the learned counsel for the parties and also perused the

WrittenSubmissionsfiledonbehalfoftheparties.

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14

Sinceclause(18)oftheIPLAisatthefulcrumofthecontroversy

involvedinboththePetitions,itwouldbeappositetoreproducesubclauses 18.1to18.3ofclause18oftheIPLA. (18.1) All disputes, controversies or differences whichmayarisebetweenthepartiesinrespectof thisAgreementincludingwithoutlimitationtothe 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 throughmutualconsultationwithin30daysafter 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)forresolutiontoanarbitraltribunal toconsistofthree(3)arbitratorsofwhomonewill be appointed by each of the Licensor and the licensee and the arbitrator appointed by Licensor shallalsoactaasthepresidingarbitrator. 18.2) Thearbitratorsshallhave powerstoaward and/orenforcespecificperformance.Theawardof the arbitrators shall be final and binding on the parties.Inordertopreserveitsrightsandremedies, eitherpartymayseekpreliminaryinjunctiverelief or other temporary relief from any court of competent jurisdiction or from the arbitration tribunalpendingthefinaldecisionorawardofthe arbitrator(s). Any such application to a court of competentjurisdictionforthepurposesofseeking injunctivereliefshallnotbedeemedincompatible withthisagreementtoarbitrateorasawaiverof thisAgreementtoarbitrate. 18.3) All proceedings in such arbitration shall be conductedinEnglish.Thevenueofthearbitration proceedingsshallbeLondon.Thearbitratorsmay
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(but shall not be obliged to ) award costs and reasonableexpenses(includingreasonablefeesof counsel)totheparty(ies)thatsubstantiallyprevail onmerit.TheprovisionsoftheIndianArbitration andConciliationAct,1996shallapply. 15 Itwouldalsobeappositetoreproducetherelevantprovisionsof

theIndianArbitrationandConciliationAct,1996namelySections7,44and45 (7) Arbitration agreement (1) in this part, arbitration agreement means an agreement by thepartiestosubmittoarbitrationall or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship,whethercontractualornot. (2)Anarbitrationagreementmaybeintheformof anarbitrationclauseinacontractorintheformof aseparateagreement (3)Anarbitrationagreementshallbeinwriting. (4)Anarbitrationagreementisinwritingifitis containedin (a)adocumentsignedbytheparties; (b) an exchange of letters, telex, telegrams or othermeansoftelecommunicationwhichprovidea recordoftheagreement;or (c)anexchangeofstatementsofclaimanddefence inwhichtheexistenceoftheagreementisalleged byonepartyandnotdeniedbytheother. (5) The reference in a contract to a document containing an arbitration clause constitutes an arbitrationagreementifthecontractisinwriting and the reference is such as to make that arbitrationclausepartofthecontract. (44) Definition In this Chapter, unless the contextotherwiserequires,foreignawardmeans anarbitralawardondifferencesbetweenpersons arising out of legal relationships, whether contractual or not, considered as commercial underthelawinforceinIndia,madeonorafter the11thdayofOctober,1960
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(a) in pursuance of an agreement in writing for arbitrationtowhichtheConventionsetforthinthe FirstScheduleapplies,and (b) in one of such territories as the Central Government, being satisfied that reciprocal provisionshavebeenmademay,bynotificationin the Official Gazette, declare to be territories to whichthesaidConventionapplies. (45)PowerofJudicialauthoritytoreferparties to arbitration Notwithstanding anything contained in Part I or in the Code of Civil Procedure,1908(5of1908)ajudicialauthority, whenseizedofanactioninamatterinrespectof which the parties have made an agreement referredtoinsection44,shall,attherequestof oneofthepartiesoranypersonclaimingthrough or under him, refer the parties to arbitration, unlessitfindsthatthesaidagreementisnulland void,inoperativeorincapableofbeingperformed. 16 Ascanbeseen,Section45providesthatanapplicationmaybe

madetoajudicialauthoritytoreferanyproceedingbeforeittoArbitration, wherethepartieshaveenteredintoanArbitrationAgreementascontemplated underSection44ofthesaidAct.Itfurtherprovidesthatsuchreferencemust 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 Agreementisintheformofaclauseinthemaincontract,thenreferencein Sections44and45wouldbetothatclausewhichisanArbitrationAgreement containedasandbywayofaclauseinthemaincontract.

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17

InsofarasthescopeoftheinquiryunderSection45oftheIndian

Arbitration Act is concerned, the same is well settled by the authoritative pronouncementoftheApexCourtintheJudgmentreportedin 2005(7)SCC 234inthematterof ShinEtsuChemicalCo.Ltd.&Ors.vsAkshOptifibre Ltd.Paragraph72to75ofthesaidJudgmentarematerialandarereproduced hereinunder: 72. True, that there is nothing in Section 45 whichsuggeststhatthefindingastothenatureof thearbitralagreementhastobeexfacieorprima facie.Inmyview,however,thisisaninescapable inferencefromanexvisceribusinterpretationof thestatute.Subsection(3)ofSection8inPartI of the Act envisages that even in a situation whereanapplicationtothecourthasbeenmade under subsection (1), the arbitration may commence,continueandevenanarbitralaward bemade.Thiswasobviouslymeanttocutdown delay in the conclusion of the arbitral proceedings. There is conspicuous absence of a correspondingprovisioneitherinSection45orin the rest of the provisions in Part II. This legitimatelygivesrisetoan inference thatonce the arbitral agreement has been subjected to scrutinybeforethecourtunderSection45ofthe Act,conceivably,thearbitralproceedingscouldbe stayedtillthedecisionofthecourtonthenature of the arbitral agreement. If it were to be held that the finding of the court under Section 45 shouldbeafinal,determinativeconclusion,then itisobviousthat,untilsuchapronouncementis made,thearbitralproceedingswouldhavetobe in limbo. This evidently defeats the credo and ethosoftheAct,whichistoenableexpeditious arbitration without avoidable intervention by judicialauthorities. 73. The absence in Part II of the Act of a provisioncorrespondingtoSection5inPartIhas
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been highlightedassupportive of the viewthat greater judicial intervention is contemplated in Part II of the Act. The question that has arisen beforetheCourtisnotthepresenceorabsenceof judicialintervention;itisonewithregardtothe manner in which the said judicial intervention shouldproceedwhetheronafinalvieworprima facieviewofthefactorsenumeratedinSection45 oftheAct. 74. Therearedistinctadvantagesinveeringto theviewthatSection45doesnotrequireafinal determinative findingbythe Court.First,under the Rules of Arbitration of the International Chamber of Commerce (as in force with effect from1.1.1998),asinthepresentcase,invariably thearbitraltribunalisvestedwiththepowerto ruleuponitsownjurisdiction.Evenifthecourt takestheviewthatthearbitralagreementisnot vitiated or that it is not invalid, inoperative or unenforceable, based upon purely a prima facie view,nothingpreventsthearbitratorfromtrying the issue fully and rendering a final decision thereupon.Ifthearbitratorfindstheagreement valid,thereisnoproblemasthearbitrationwill proceedandtheawardwillbemade.However,if the arbitrator finds the agreement invalid, inoperativeorvoid,thismeansthatthepartywho wanted to proceedfor arbitration wasgiven an opportunityofproceedingtoarbitration,andthe arbitrator after fully trying the issue has found that there no scope for arbitration. Since the arbitrator'sfindingwouldnotbeanenforceable award,thereisnoneedtotakerecoursetothe judicial intercession available under Section 48(1)(a)oftheAct. 75. Thefindingofthecourtthatthearbitration agreementisvalid,operativeandenforceable,if infavourofthepartysettingupthearbitration agreement,isnotappealableunderSection50as a matter of legislative policy. Refusing to refer parties to arbitration under Section 45, is however, made appealable under Section 50(1)
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(a)oftheAct.Evenafterthecourttakesaprima 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 arbitrationagreementandmakesanaward,such anawardcanbechallengedunderSection48(1) (a). The award will be set aside if the party againstwhomitisinvokedsatisfiesthecourtinter aliathattheagreementwasnotvalidunderthe lawtowhichthepartieshadsubjecteditorunder the law of the country where the award was made. The two basic requirements, namely, expeditionattheprereferencestage,andafair opportunitytocontesttheawardafterfulltrial, wouldbefullysatisfiedbyinterpretingSection45 as enabling the court to act on a prima facie view. 18 A useful reference could also be made to the judgment of a

DivisionBenchofthisCourtin CaribjetIncv/sAirIndiaLimited (supra). Para6ofthesaidjudgmentismaterialandisreproducedhereinunder: 6.AsrightlysubmittedbythelearnedCounsel fortheappellant,theissuewhichissoughtto beraisedisnomoreresintegraandhasbeen wellsettledbythedecisionoftheApexCourt inShinEtsuChemicalCompany'scase(supra). By a majority decision in the said case, the ApexCourthasheldthat: if on a prima facie examination of the documents and material on record including thearbitrationagreementonwhichrequestfor reference is made by one of the parties, the judicialauthorityorthecourtdecidestomake a reference, it may merely mention the submissionsandcontentionsofthepartiesand summarilydecidetheobjectionifanyraisedon theallegednullity,voidness,inoperativenessor incapability of the arbitration agreement. In case, however, on a prima facie view of the matter, which is required to be objectively
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taken on the basis of material and evidence producedbythe partieson the recordof the case,thejudicialauthorityincludingaregular civilcourt,isinclinedtorejecttherequestfor referenceonthegroundthattheagreementis "nullandvoid"or"inoperative"or"incapableof being performed" within the meaning of Section45oftheAct,thejudicialauthorityor thecourtmustaffordfullopportunitiestothe partiestoleadwhateverdocumentaryororal evidencetheywanttoleadandthendecidethe question like trial of a preliminary issue on jurisdictionorlimitationinaregularcivilsuit andpassanelaboratereasonedorder.Wherea judicialauthorityorthecourtrefusestomakea reference on the grounds available under Section 45 of the Act, it is necessary for the judicialauthorityorthecourtwhichisseized ofthemattertopassareasonedorderasthe sameissubjecttoappealtotheappellatecourt underSection50(1)(a)oftheActandfurther appealtothisCourtunderSubsection(2)of thesaidsection.

19

TheinquirycontemplatedunderSection45isthereforeofaprima

facienatureoftheexistenceofanArbitrationAgreement.IftheCourtcomesto aprimafacieconclusionthatthereisanArbitrationAgreementandthesameis legalandvalidthemattermustbereferredtotheArbitralTribunalforfurther considerationwhichcanthereafterconclusivelydecideeitherway.IftheCourt comes to the prima facie conclusion that there is either no Arbitration Agreementorthatthesameisnotvalidinlaw,theCourtmustthenproceedto determinethesamefinallyandconclusively.

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20

The issue which requires to be addressed at the threshold is

whethertheviewexpressedbyJusticeB.N.ShrikrishnainShinEtsuChemical 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 paragraph112ofthesaidJudgmentofShinEstuChemicalCo.Ltd.(Supra) thatJusticeD.M.Dharmadhikari hasnotconcurredwiththeviewofJustice B.N.Shrikrishna. In paragraph 111 of the said Judgment Justice D.M.DharmadhikariexpresslyconcurswiththeviewofJusticeShrikrishnaand thereforetherecanbenodisputethatthepropositionlaiddownbyJustice Shrikrishna has been accepted by Justice D.M.Dharmadhikari, and is the majority view in the said judgment. The said paragraph 111 is reproduced hereinunder: Withutmostrespecttobothofthem,Iaminclinedto agree with the view expressed by learned Brother SrikrishnaJ.butonlywithariderandapartlydifferent reasonwhichmayIstatebelow: Themainissueisregardingthescopeofpowerofany judicialauthorityincludingaregularcivilcourtunder section45oftheActinmakingorrefusingareference of dispute arising from an international arbitration agreementgovernedbytheprovisionscontainedinPart III ChapterI of the Act of 1996. I respectfully Agree withlearnedBrotherSrikrishnaJonlytotheextentthat if on prima facie examination of the documents and materialonrecord,includingthearbitrationagreement onwhichrequestforreferenceismadebyoneofthe 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 allegednullity,voidness,inoperativenessorincapability of the arbitration agreement. In case, however, on a
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primafacieviewofthematter,whichisrequiredtobe objectivelytakenonthebasisofmaterialandevidence producedbythepartiesontherecordofthecase,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 authorityorthecourtmustaffordfullopportunitiesto the parties to lead whatever documentary or oral evidence they want to lead and then decide the questionliketrialofapreliminaryissueonjurisdiction orlimitationinregularcivilsuitandpassanelaborate reasonedorder.Whereajudicialauthorityorthecourt refusesto 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,topassareasonedorderasthesameissubject toappealtotheappellatecourtundersection50(1)(a) oftheActandfurtherappealtothisCourtundersub section(2)ofthesaidsection. (emphasissupplied) Insofarasparagraph112whichhasbeenrelieduponbytheLearnedSenior Counsel,thesamedealswithasituationwheretheAwardispassedinspiteof/ and/orpriortothedecisionholdingthatsuchanArbitrationAgreementdoes notexist.TheApexCourtinthe saidcaseof ShinEstuChemicalCo.Ltd. (supra) was not concerned with such a case, neither is this Court, in the presentPetition.

21

TheJudgmentin ShinEstuChemicalCo.Ltd (supra)hasbeen

followedbythe ApexCourtin ShaktiBhogFoodsLtd,(supra)asalsobya DivisionBenchofthisCourtinCaribjetInc.Vs.AirIndiaLtd.(supra),asalso

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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 agreementunderSection45oftheIndianArbitrationAct,hastorestrictits enquirytothe Arbitration Agreementandnotthe underlying contract.Itis requiredtobenotedthatthereisasubstantialchangeinlawfromtheonethat existedundertheIndianArbitrationAct1940.Inthe1940ActunderSection 33thereof,theCourthadthepowerandjurisdictiontodeterminetheexistence or validity of Arbitration Agreement. However, under the provisions of the IndianArbitrationAct,thesaidpoweroftheCourthasbeentakenawayandis nowexpresslyvestedwiththeArbitralTribunalunderSection16oftheIndian ArbitrationAct.UnderSection16,theArbitralTribunalcanruleonitsown jurisdictionincludingrulingonanyobjectionwithrespecttotheexistenceor validityoftheArbitrationAgreement.Thusthepowertodeterminefinallyand conclusivelytheexistenceandvalidityofanArbitrationAgreementhasbeen conferredontheArbitralTribunalunderSection16ofthe1996Act.Itisthe Arbitral Tribunal therefore which will determine whether there is an ArbitrationAgreementornotforthatpurposetheArbitrationAgreementwill beatotallyindependentagreementdehorstheothertermsofthecontractand suchanagreementwouldnotipsojurebecomenullandvoidorinvalidevenif ithasbeenheldthattheunderlyingcontractisvoid.Anotheraspectwhichis to be noted is that the severability and separability of the Arbitration

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Agreementthoughbeingaclauseinthesamecontract,hasnowarecognition notonlyunderSection16ofthe1996ActbutbyacatenaoftheJudgmentsof theApexCourt.AusefulreferencecouldbemadetotheJudgmentreportedin 2009(2)SCC 494 in the matter of P Manohar Reddy & Bros. Vs. . Maharashtra Krishna Valley Dev. Corp. & ors., The Apex Court has recognizedthattheArbitrationAgreementisseparateandindependentfrom themainAgreement.IthasbeenheldthattheArbitrationclausethoughbeing apartofthecontractisacollateraltermwhichneednotinallsituationsperish withcomingtoanendoftheunderlyingcontractanditmaysurvivethesame. Paragraphs27and28ofthesaidJudgmentarematerialandarereproduced hereinunder: 27.An arbitration clause,asiswell known,isa partofthecontract.Itbeingacollateraltermneed not,inallsituations,perishwithcomingtoanend of the contract. It may survive. This concept of separabilityofthearbitrationclauseisnowwidely accepted.Inlinewiththisthinking,theUNCITRAL Model Law on International Commercial Arbitrationincorporatesthedoctrineofseparability inArticle16(1).TheIndianlawTheArbitration andConciliationAct,1996,whichisbasedonthe UNCITRAL Model Law, also explicitly adopts this approach in Article 16 (1)(b), which reads as under: 16. Competenceofarbitraltribunaltorule onitsjurisdictional.(1)Thearbitraltribunalmay ruleonitsownjurisdiction,includingrulingonany objectionswithrespecttotheexistenceorvalidity ofthearbitrationagreement,andforthatpurpose, (a) An arbitration clause which forms part of a contract shall be treated as an agreement
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independentoftheothertermsofthecontract;and (b) A decision by the arbitral tribunal that the contractisnullandvoidshallnotentailipsojure theinvalidityofthearbitrationclause. (Emphasissupplied) Modernlawsonarbitrationconfirmtheconcept. 28. The United States Supreme Court in the recentjudgmentinBuckeyeCheckCashing,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 Corporationv.Flood&ConklinMfg.Co.388U.S. 395,andSouthlandCorporationv.Keating465U. S.1,interalia,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 severablefromtheremainderofthecontract. But this must be distinguished from the situation where the claim itself was to be raised duringthesubsistenceofacontractsoastoinvoke thearbitrationagreementwouldnotapply. The said Judgment as can be seen approves the Judgments of United States Supreme Court reported in 546 US 460 in the matter of BuckeyeCheckCashingInc.Vs.Cardeganaand,reportedin388US395in the matter of Prima Paint Corporation Vs. Floor and Conkling ManufacturingCompany

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22

AreferencecouldalsobemadetotheJudgmentoftheApexCourt

reportedin 2009(10)SCC103 inthematterof BranchManagerMagma LeasingandFinanceLtd.&Anr.Vs.PotluriMadhavilata&Anr. TheApex Court in the said Judgment has approved the proposition laid down in P . Manohar Reddys case (supra) and once again referred with approval the judgmentoftheUnitedStatesSupremeCourtinBuckeyeCheckCashingInc. The aforesaid Judgments of the Apex Court as well as the United States SupremeCourt,makeitclearthattheArbitrationAgreementwouldsurvive evenincaseofinvalidityofthemainagreementortheunderlyingcontract.It isonlyincaseswheretheunderlyingcontractisvitiatedbyfraud,coercionor misrepresentationthatthesamewouldimpacttheArbitrationAgreement.

23

The principles of severability and separabilityof the Arbitration

AgreementiscommonbothundertheEnglishArbitrationAct,1996andthe IndianArbitrationAct1996,asevidencedbythefollowingJudgmentsofthe ApexCourtandtheHouseofLordsreportedin: 1]2003CLC601,GTCLtd.Vs.RoyalConsultR.V.&Anr. 2]2009(2)SCC134,ShaktiBhogFoodsLtd.Vs.KolaShipping Ltd. 3]JudgmentoftheHouseofLordsreportedin2007UKHL40, PremiumNaftaProductsLtd.&Ors.Vs.FiliShippingCo.Ltd.& Ors.

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24

Itisinthecontextofthesettledlawasaforestatedthatthefacts

ofthepresentcasewouldhavetobeseen.TheLearnedSeniorCounselforthe Petitionerslaidmuchstoreonthecorrespondencepost2992006i.e.thedate when the IPLA was signed, to contend that the IPLA was not a concluded contract. However, the correspondence prior thereto between the parties indicatesotherwise.Ifthesaidcorrespondenceisseen,towhichmyattention isdrawnbytheLearnedSeniorCounselappearingfortheRespondents,the samedisclosesthatitwason2762006i.e.agoodthreemonthspriortoits execution,thatthedraftIPLAwassenttothePetitioners.ThesaidIPLAhad alreadyundergonechangesonthebasisofthesuggestionsofboththeparties andthefinaldocumentwaskeptreadyon2992006asthePetitionerNo.2 hadshownhisinabilitytocometoAurichon1792006whenitwastobe executed. The other three agreements namely the Successive Technological Transfer Agreement, Name Use Licence Agreement and the Shareholders Agreementwerenotexecutedon2992006becausetheywerenotfinalisedas certainissueswerestillrequiredtobefinalised.Themostimportantletterifit can be said so, is the letter dated 3092006 which is addressed by the PetitionerNo.2YogeshMehrainhisownhandwritingstatingthereinthathe hasexecutednotonebutmorethanoneagreementon2992006.Pertinently inparagraph2ofthesaidletter,thePetitionerNo.2hasinfactreferredtothe patent of E82 being the subject matter of the IPLA and not the Agreed

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Principles.Thefactthattheletterdated3092006referstotheexecutionof two agreements on 2992006 and also refers to the E82 patent, further indicatesthatbythesaidletterdated3092006thePetitionerNo.2admitted 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 agreementsaccordingtotheAgreedPrinciples.Thesaidemailreferstothe otherthreeagreements.Itseemsthatonlyaftertheclaimforroyaltywasmade by the Respondents, that on 3112006 the Petitioners purportedly incorporatedanindirectdenialoftheexecutionoftheIPLA.Insofarasthe emaildated24112009isconcerned,thesaidemailascanbeseenfromits subject refers to the final IPLA the Shareholders Agreement and other SuccessiveAgreements.Theemailwhichdealtwiththeoutstandingdraftsof theAgreementsobviouslydidnotrefertothefinalIPLAbutreferstotheother SuccessiveAgreementsbecauseasfarastheIPLAwasconcerned,thesame itselfstatedthatitwasalreadyafinalisedagreement.Theemailtherefore,did notrefertoanydraftoftheIPLAortheShareholdersAgreementandtherefore thesaidemaildoesnotinanymanneraidthecaseofthePetitionersthatthe IPLAwasnotaconcludedcontract.Furthertheemaildated15122006from thePetitionerstotheRespondentswhereinalsothePetitionersdealtwiththe draftagreementsbutthesubjectofthesaidemailascanbeseenwasthesame asthatoftheemaildated24112006.Thereaftertheemaildated1012007 dealt with a further visit to Germany and revised Drafts of Outstanding

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Contracts.Thereafter,theemaildated2912007sentbythePetitioners,in factmentionstheamendedversionoftheShareholdersAgreementwhichis outstanding and not executed, Name Use Licence Agreement, and the SuccessiveTechnologicalTransferAgreement.Theaforesaidmaterialtherefore leavesnomannerofdoubtthatthedraftagreementsreferredtothereinwere onlytheotherthreeagreementsandnottheIPLA.Therefore,aperusalofthe documents on record discloses that not only is the Arbitration Agreement containedinclause18.1totheIPLAlegallyandvalidlyexecuted,butitisin writingandsignedbytheparties.

25

ThecontentionsoftheLearnedSeniorCounselforthePetitioners

asregardstheunenforceabilityoftheArbitrationAgreementallrevolvearound theallegeduncertaintyandambiguityintheunderlyingorthematrixcontract. ItwascontendedthatsincetheIPLAisvague,ambiguousanduncertain,the sameisvoidunderSection29oftheIndianContractAct,1872.Consequently theArbitrationAgreementascontainedinclause18ofIPLA,isalsovoid.The contentionthereforeofambiguityanduncertaintyisasregardstheunderlying contractandnotinrespectoftheArbitrationAgreement.Assumingittobeso, applying the principle of separability and severability of the Arbitration Agreement from the main agreement, the submission of the learned Senior CounselforthePetitionersdoesnothavemeritandcannotimpedetheCourt fromreferringthepartiestoarbitration.

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26

NowcomingtothecontentionoftheLearnedSeniorCounselfor

the Petitioners that since on the IPLA three dates are appearing, the commencementdateandthedurationoftheIPLAisthereforeuncertainand therefore the IPLA is not a concluded contract on account of the said uncertaintyandambiguity.Insofarasthesaidthreedatesareconcerned,the firstdatei.e.2762006isreferabletothefirstemaildated2762006under whichthedraftIPLAwasforwardedtothePetitionerNo.2.ThePetitionerNo.2 canthereforebesaidtobeawarethat2762006isreferabletothedateon whichthedraft wasforwardedandthereforeitcouldneverbethedateof execution.Thedate1792006appearingonthethirdpageoftheIPLAisthe dateonwhichtheIPLAwasproposedtobeexecuted.SincethePetitionerNo.2 cancelledhisvisittoAurichGermanybyitsemaildated1692006,thesaid date1792006remainedtobecancelled/altered.Thethirddateis2992006 whichalsoappearsonthefirstpageoftheIPLA.Thereisnodisputethatthe signaturesontheIPLAhavebeenaffixedbythepartieson2992006.Inthe lightoftheaforesaidandsinceitisnotdisputedbythePetitionersi.e.theIPLA hasbeenexecutedon2992006,thequestionoftakingintoconsiderationany otherdatewouldnotarise.Inanyevent,thesaiddisputecanonlyberelatable totheunderlyingcontractandcanberaisedbeforetheTribunalandifraised, itisfortheArbitralTribunaltoadjudicateuponthesame.

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27

NowcomingtothejudgmentscitedbythelearnedSeniorCounsel

for the Petitioners in support of his contention that since the underlying contract cannot be said to have come into existence, therefore, the clause providingforarbitrationhasalsonecessarytobeheldasnothavingcomeinto existence.InsofarasKishorilalGupta'scase(supra)isconcerned,inthesaid case,thecontentionwasthatevenaftersupersessionofanearliercontract,the ArbitrationAgreementcontainedinthesupersededcontractcontinuesinspite oftheadmittedpositionthatunderthenewcontract,therewasnoarbitration clause. ItisinthesaidfactsituationthattheApexCourtheldthatwiththe supersession of the whole contract, the Arbitration Agreement also stood supersededanddoesnotsurvive.Thesaidjudgmenthasbeendistinguishedby theApexCourtinthecaseofBranchManager,MagmaLeasingandFinance Ltd, by holding that the new contract entered into was a novation under Section62oftheIndianContractActandthusnoreliancecanbeplacedonthe ArbitrationAgreementcontainedinsuchasupersededcontract.

InthecaseofU.P .RajkiyaNirmanNigamLtd.,(supra)thefacts werethatthecounterproposalwasnotsignedatallandthus,noconcluded contractwasarrivedatbetweentheparties.Itwasinthesaidcontextthatthe ApexCourtheldthattherewasnoconcludedcontract. Para19ofthesaid judgmentismaterialandisreproducedhereinunder: Inviewofthefactthat Section 2 [a] of the Act envisages a written agreement for arbitration and
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that written agreement to submit the existing or futuredifferencestoarbitrationisapreconditionand furtherinviewofthefactthatthe originalcontract itselfwasnotaconcludedcontract,thereexisted no arbitrationagreementforreferencetothearbitrators. TheHighCourt,therefore,committedagrosserrorof lawinconcluding that anagreement hademerged between the parties, from the correspondence and from submission of the tenders to the Board. Accordingly it is declared that there existed no arbitration agreementandthatthereferencetothe arbitration,therefore,isclearly illegal.Consequently arbitrators cannot proceed further to arbiter the dispute,ifany.TheconclusionoftheHighCourtisset aside. InthecaseofNasirHusainFilms(P)Ltd.(supra)thefactswere thatreliancewasplacedonadraftdocument.TheDivisionBenchofthisCourt heldthatthemajorissuesonwhichnegotiationswerestillinprogresswerenot settled.Thecontractcouldnotbesaidtobeconcluded.

Inthecaseof OberoiConst.Pvt.Ltd(supra)thefactswerethat the General Body Resolution passed by the society did not accept the concludedagreementandstatedthatthesamewillbesubjecttocirculationof thedraftandfinalizationthereof.ItwasinthesaidcontextthattheDivision Benchheldthatsincethedocumentwasnotacceptedorsignedorexecutedby thesociety,therewasnoconclusivityofthecontract.

However in the instant case, the IPLA has admittedly been executedon29/09/2006bythepartiessigningoneachpageandalsointhe
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executionclause,therefore,thesaidjudgments(supra)citedbythelearned SeniorCounselforthePetitionerswouldhavenoapplication.

Inthecaseof UnitedBankofIndia (supra)theissuebeforethe ApexCourtwascenteredaroundastowhethertheMOUenteredintobetween thepartieson1851994andforwardedbyletterdated2051994hasbeen acteduponandcompliedwithbytheparties.Oneoftheconditionsforthe MOUtocomeintoforcewaswithdrawalofthesuitbytheRespondentsfiledby themagainsttheUnitedBankofIndia.Sincethesuitwasnotwithdrawn,the ApexCourtheldthattheMOUcannotbesaidtohavecomeintoexistence. Para7ofthesaidjudgmentismaterialandisreproducedhereinunder: Undisputedly, the respondents did not withdraw the suit filed by them against the United Bank of India, whichistheconditionprecedentstipulatedinclause(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,bynostretchofimaginationitcanbesaid that the terms and conditions stipulated in the MOU hadbeencompliedwithandacteduponbytheparties. Apartfromwhathasbeensaid,subsequenttotheMOU there was also a lot of correspondence between the partiesbyexchanginglettersgivingoffersandcounter offers, as would be revealed in the letters dated 16.6.94,23.12.94,12.6.95,15.6.95and19.6.95.Allthese correspondencewouldgotoshowthatthepartiesfailed toarriveataconsensusevenonwhatwerethetermsof theMOU.Thus,itisclearthattherewasnoconcluded contractnorwasthereanynovation. InthecaseofVimleshKumarKulshrestha(supra)theagreement in question was held to be void for uncertainty as there was no proper
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descriptionofthepropertygivenintheagreementbyannexingamap,though mapwasreferredtointheagreement,northedescriptionwassatisfactorily provedinasuitforspecificperformance.ItisthesaidcontextthattheApex Courtheldthattheagreementifreadwasuncertain.Para24ofthesaidreport ismaterialandisreproducedhereinunder: Referencetothesaidlegalmaxim,inouropinion,is notappositeinthefactsandcircumstancesofthiscase. Byreferencetotheboundariesofthe premisesalone, thedescriptionofthepropertiesagreedtobesolddid notbecomecertain.Forthepurposeoffindingoutthe correctdescriptionoftheproperty,theentireagreement was required to be read as a whole. So read, the agreementbecomesuncertain. In thecaseof CoffeeBoard,Bangalore (supra),the factswere thatthedefendanthadtospecifythequantityofcoffeewhichheintendedto purchase, those quantities were omitted to be specified and those portions wereleftblankinthetenderform.ItisinthesaidcontextthattheDivision Bench of the Karnataka High Court held that the offer was vague for uncertaintyandindefinitenessontheacceptanceofwhichnocontractisever bornorcomesintobeing.Paras30and31ofthesaidreportarematerialand arereproducedhereinunder: 30 Now,inthiscasethedefendantdidonlyoneof thosetwothings.Hestatedtheprices,buthedidnot statethequantitieswhichhewanted.Ifapersonistold thatgoodsofmorethanonedescriptionareavailable forsaleandheisaskedtostatewhatpriceshewouldbe willing to offer for those goods and which of those goodshewouldbewillingtobuyatthoseprices,and thatpersonstatesonlyhispricesbutneverindicatesthe
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goodsrequiredbyhim,itis,Ithink,Impossibleforany onetosuggestthattherewasanyacceptableoffermade by him. I do not find it possible to accede to the argumentthatinacaseinwhichatendererwhohadto submit his tender in the form Exhibit A3 which was sentinthiscase,doesnotfillintheblanksinthelast paragraphofthattender,thenecessaryandinevitable inferenceisthatheiswillingtobuyallthegoodsto whichthetenderformreferred. 31 The fact that paragraph 3(a) of Exhibit A1 requiredthetenderertostatethequantitiesandthefact thatExhibitA3containsseparatecolumnsfortheprice andthequantity,makesthepositionabundantlyclear that unless a tender like Ex. A3 not only states the prices but also states the quantities, the tender is no offerwhichinlawcanbeaccepted.Inmyopinion,the specification of the quantity required by the tenderer wasanessentialtermoftheoffer,andifthattermwas not to be found in the offer his offer was vague for uncertainty and indefiniteness, on the acceptance of whichnocontractiseverbornorcomesintobeing. TheaforesaidjudgmentswererelieduponbythelearnedSenior CounselforthePetitionerstobuttresshissubmissionthattheIPLAwasvoidon accountofambiguityanduncertainty.

Readingofthesaidjudgmentsdisclosesthatallthesaidjudgments areconcerningthevalidityoftheunderlyingcontractandnottheArbitration Agreement.Inthesaidjudgmentstheunderlyingcontracthasbeenheldtobe 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 ArbitrationAct,theinfirmity,ifany,intheunderlyingcontractcannottherefore

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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 extrinsicevidence,asrightlycontendedbythelearnedSeniorCounselforthe Respondents, by placing reliance on the extracts from the learned Author ChittyonContract.ThereforethesaidjudgmentscannotaidthePetitionersto furthertheircasethatthepartiescannotbereferredtoarbitration.

28

InsofarasthesubmissionoftheLearnedSeniorCounselforthe

Petitioners that all the agreements were to be executed simultaneously, the sameisnotborneoutbyanydocument.Thecompositearrangementreferred to pertains only to the fact that the said arrangement will govern the subsequentrelationshipofthepartiesinacompositemannerandnotthateach ofthedocumentsmustbeexecutedsimultaneously.

TheissueastowhethertheIPLAisaconcludedcontractcanalso belookedatfromtheangleofthesamebeingsignedbytheparties.Thereis no dispute that the Petitioner No.2 has signed the IPLA on 2992006 by affixinghissignatureoneverypageoftheIPLAincludingtheexecutionclause. Thepresumptionwhicharisesontheexecutionofthedocumentsisenunciated bytheJudgmentoftheApexCourtreportedin2010(1)SCC83inthematter of M/S.GrasimIndustriesLtd.vsM/S.AgarwalSteel.Para6ofthesaid reportismaterialandisreproducedhereinunder:

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Inouropinion,whenapersonsignsadocument,there isapresumption,unlessthereisproofofforceorfraud, thathehasreadthedocumentpropertyandunderstood itandonlythenhashasaffixedhissignaturesthereon, 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 strongerintheircase.Thereisnoallegationofforceor fraud in this case. Hence it is difficult to accept the contentionoftherespondentwhileadmittingthatthe document, Ext. D8 bears his signatures that it was signedundersomemistake.Wecannotagreewiththe viewoftheHighCourtonthisquestion.Onthisground alone, we allow this appeal, set aside the impugned judgmentoftheHighCourtandremandthematterto theHighCourtforexpeditiousdisposalinaccordance withlaw. InthesaidcontexttheJudgmentofaLearnedSingleJudgeofthis Courtisalsorelevant,whichJudgmentisreportedin AIR2000BOM108 in thematterofKevalKrishnaBalakramHitkariv/sAnilKevalHitkari.Para8 ofthesaidJudgmentisrelevantandisreproducedhereinunder: 8.SofarastheobjectionsraisedbyrespondentNo.1 thattheagreementofarbitrationwasnotsignedonthe dayonwhichitisshowntohavebeensignedanditwas signed on the day on which the award was made is concernedinmyopinionevenifitisassumedthatthe arbitration agreement was not signed in November, 1994asclaimedandthatitwassignedon3rdApril, 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 betweentheparties.TheobservationsoftheSupreme Courtinpara6ofitsjudgmentinthecaseofVaidya Harishankar Laxmiram Rajyaguru of Rajkot are pertinentwhichreadsasfollows:
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"6.Themainobjectiontotheawardisthattherewasno written agreementsigned by both the parties torefer thedisputestoarbitration.Itisclearfromthenarration offactsthatthepartieshadagreedtoreferthedispute to arbitrator. The award signed by both the parties aboutwhichthereisnofactual disputereiteratedthe factthatthepartieshadagreedtoreferthedisputeto thearbitrationofthesaidarbitratorandthathemade anaward.Alltheseareinwritingandsignedbyallthe parties.Thisinouropinioninthelightofthefactsand circumstancesofthecasecancertainlybeconstruedto be aproper arbitration agreementin termsofsection 2(a) of the Act. In this connection reference may be madetotheobservationsofthisCourtinPrasunRoyv. CalcuttaMetropolitanDevelopmentAuthority,AIR1988 SC 205 : (1987) 4 SCC 217 where all the relevant authoritiesonthispointhavebeendiscussed.Seealso in this connection the decision of the Judicial Committee in Chowdhri Murtaza Hossein v. Mst. Bibi Bechunnissa,(187576)3IA209,220.Theobservations inthesaiddecisionweremadeindifferentcontext.But inthepresentcontextitisclearthattheconductofthe partiesthattherewasanarbitrationagreementandby signingtwoawarditcouldbesaidthatthepartieshad agreedtoreferthedisputesinwritingtothearbitration ofthenamedarbitrator.Thisagreementwasdonetwice firstlybysigninganendorsementbelowtheawardand secondlybyenteringintoanagreementintheformofa letterdatedAugust14,1978(Ex.40)." Hence there can be no escape for the Petitioners from the consequences flowingfromthesigningoftheIPLA;andthesigningoftheIPLAbytheparties isthereforeastrongcircumstanceinarrivingata primafacie conclusionas enunciatedin ShinEtsuChemicalCo.Ltd's caseforreferringthepartiesto arbitration.

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29

Now coming to the submission of the Learned Senior Counsel

appearingforthePetitionersthatclause18.1oftheIPLAitselfisuncertain, ambiguousandunworkableasaccordingtotheLearnedSeniorCounsel,outof 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.Areadingofthesaidclause18.1disclosesthateachofthelicensors havetoappointanArbitratorandthelicenseeistoappointoneArbitrator.In terms of the IPLA, the Respondent No.2 has licenced the patents to the RespondentNo.1whohasthenlicencedthemtothePetitioners,hencetwo Arbitratorshavetobeappointedbyeachofthelicensorsandonehastobe appointedbythelicenseemakingitinallthreeArbitrators.Sinceatthetimeof invocation of the arbitration clause, the Respondents in fairness agreed to appoint the third arbitrator independently, the said fact cannot make the ArbitrationAgreementinvalid,ambiguousanduncertainascontendedbythe LearnedSeniorCounsel.Inanyevent,theprovisionregardingthenumberof arbitrators is merely a machinery provision and does not form part of the ArbitrationAgreement.Evenifthemachinerypartisinvalid,thereisstillan ArbitrationAgreementbyandbetweenthepartieswhichcanbeenforced.A usefulreferencecouldbemadetotheJudgmentsoftheApexCourtwhichhave been relied upon by the learned Senior Counsel for the Respondents. The relevantparagraphsthereofarereproducedhereinunder:

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AIR1997SC605inthematterof M.M.T.C.LimitedvsSterlite Industries (India)Ltd. (supra)Paras8,9,10and11arerelevantandarereproduced hereinunder: 8. Subsection(3) ofSection 7requires anarbitrationagreementtobeinwritingand subsection (4) describe the kind of that writing.Thereis nothingsin Section 7 to indicate the requirement of the number of arbitratorsasapartof the arbitration agreement.Thusthevalidityofanarbitration agreementdoesnotdependonthenumberof arbitratorsspecified therein. The number of arbitratorsisdealtwithseparatelyinSection 10whichisapartofmachineryprovisionfor theworkingofthearbitrationagreement.It is, therefore clear that an arbitration agreement specifying an even number of arbitratorscannotbeagroundtorenderthe arbitration agreementinvalidunderthe 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 thatsuchnumbershall notbeanevennumber.Subsection(2)then saysthatfailingthe determination referred to in subsection (1),thearbitral tribunal shall consist ofasolearbitrator.Section11 providesforappointmentofarbitrators.Thisis howarbitraltribunalisconstituted.

10. The arbitration clause provides that eachpartyshallnominateone arbitratorand the two arbitrators shall then appoint an umpirebeforeproceedingwiththereference. Thearbitrationagreementisvalidas it satisfiestherequirementofSection7 ofthe New Act . Section 11 (3) requires the two arbitrators to appoint the third arbitrator or
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theumpire.There canbe nodoubtthatthe arbitration agreement in the present case accordswiththeimpliedconditioncontained 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 fromthelatest date of their respectiveappointments. 11. The question is: whether there is anything in the New Act to make such an agreementunenforceable?Wedonotfindany such indication in the New Act. There is no dispute that the arbitral proceeding in the present case commenced after the New Act cameintoforceand,therefore,theNewAct applies.Inviewoftheterminthearbitration agreement that the two arbitrators would appoint the umpire or the third arbitrator before proceeding with the reference, the requirementofSubsection(1)ofSection10is satisfiedandsubsection (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,begovernedbySection11of theNewAct. (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: WearealsounabletoacceptMr.Venugopal's argument that, as a matter of public policy, Section 10 should be held to be non derogable.EventhoughthesaidActisnowan integratedlawonthesubjectofArbitration,it cannot and does not provide for all contingencies.Anarbitrationbeingacreature
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ofagreementbetweentheparties,itwouldbe impossible for the Legislature to cover all aspects. Just by way of example Section 10 permitsthepartiestodeterminethenumberof arbitrators,providedthatsuchnumberisnot anevennumber.Section11(2)permitsparties to agree on a procedure for appointing the arbitrator or arbitrators. Section 11 then provideshowarbitratorsaretobeappointedif thepartiesdonotagreeonaprocedureorif there is failure of the agreed procedure. A readingofSection11wouldshowthatitonly providesforappointmentsincaseswherethere isonlyonearbitrator or three arbitrators.By agreement parties may provide for appointmentof 5 or 7 arbitrators.If they do not provide for a procedure for their appointmentorthere isfailure of theagreed procedure, then Section 11 does not contain anyprovisionforsuchacontingency.Canthis be taken to mean that the Agreement of the partiesisinvalid.Theanswerobviouslyhasto beinthenegative.Undoubtedlytheprocedure providedinSection11willmutatismutandis apply for appointment of 5 or 7 or more arbitrators.Similarlyevenifpartiesprovidefor appointmentofonlytwoarbitrators,thatdoes notmeanthattheagreementbecomesinvalid. UnderSection11(3)thetwoarbitratorsshould thenappointathirdarbitratorwhoshallactas thepresidingarbitrator.Suchanappointment should preferably be made at the beginning. However, we see no reason, why the two arbitratorscannotappointathirdarbitratorat alaterstagei.e.ifandwhentheydiffer.This wouldensurethatonadifferenceofopinion thearbitrationproceedingsarenotfrustrated. But if the two Arbitrators agree and give a common award there is nofrustration of the proceedings. In such a case their common opinionwouldhaveprevailed,evenifthethird arbitrator, presuming there was one, had differed.Thuswedonotseehowtherewould bewasteoftime,moneyandexpenseifaparty,
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withopeneyes,agreestogotoArbitrationof two persons and then participates in the proceedings. On the contrary there would be waste of time, money and energy if such a partyisallowedtoresilebecausetheAwardis notofhisliking.Allowingsuchapartytoresile would not be in furtherance of any public policyandwouldbemostinequitable. The next contention of the learned Senior Counsel for the PetitionersthatsincetheAnnexures1to4totheIPLAdonotformpartofthe finally executedIPLA,there isanuncertainty andambiguityasregardsthe Patent portfolio and the Marks which are licensed under the IPLA to the Petitioners. Though in terms of the scope of inquiry contemplated under Section45oftheIndianArbitrationAct,thesameisnotnecessarytobegone intobythisCourt.Insofarasthesaidcontentionisconcerned,itisrequiredto benotedthatthebusinessrelationshipbetweenthepartiesexistedfromthe year1994.ThePetitionerswerealreadyusingthePatentsrightfrom1994and towhichPatentstherewereadditions.EventheMarkshavebeenusedbythe Petitionersrightfromtheyear1994,andtherefore,thepartieswereawareof the Patents and the marks in respect of which they have entered into a contract.Therefore,primafacie,theredoesn'tseemtobeanymeritinthesaid contentionofthePetitioners.However,asindicatedabove,theissueasregards theallegedinfirmityintheunderlyingcontracti.e.theIPLAisrequiredtobe urgedbeforetheArbitralTribunal,anditwillbefortheArbitralTribunalto considerthesame.

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The defining aspect is the intention of the parties to go for arbitrationwhichintentionisclearlymanifestintheIPLA.Onthesaidaspect, itwouldbegainfultorefertothe judgmentoftheApexCourtreportedin 2009(4)SCC495inthematterof NandanBiomatrixLimited D1Oils Vs. Limited,.Paras26,27,30,32,33and34arematerialandarereproduced hereinunder: 26 The disputed arbitration clause in the present case is clause 15.1, mentioned in the Supply Agreement,whichisreproducedasunder: "15.1.Anydisputethatarisesbetweenthepartiesshall beresolvedbysubmittingthesametotheinstitutional arbitrationinIndiaundertheprovisionsofarbitration andconciliationact,1996." 27 Arbitration agreement is defined under Section 7 of the 1996 Act. It does not prescribe any particularformassuch.Intermsofthesaidprovision, arbitrationagreementmeans: "Section 7 Arbitration agreement (1) In this Part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes whichhavearisenorwhichmayarisebetweenthemin respect of a defined legal relationship, whether contractualornot. (2)Anarbitrationagreementmaybeintheformofan arbitration clause in a contract or in the form of a separateagreement. (3)Anarbitrationagreementshallbeinwriting. (4) An arbitration agreement is in writing if it is contained13in(a)adocumentsignedbytheparties 30
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whether the existence of an agreement to refer the disputetoarbitrationcanbeclearlyascertainedinthe factsandcircumstancesofthecase.This,inturn,may dependupontheintentionofthepartiestobegathered from the correspondence exchanged between the parties,theagreementinquestionandthesurrounding circumstances. What is required is to gather the intentionofthepartiesastowhethertheyhaveagreed forresolutionofthedisputesthrougharbitration.What isrequiredtobedecidedinanapplicationonSection11 of the 1996 Act is : whether there is an arbitration agreementasdefinedinthesaidAct. 32 I do not find any merit in the above contentionsraisedonbehalfofthenonapplicant.The question which needs to be asked is : what did the parties intend at the time of execution of the Supply Agreementdated10.8.04?Whatdidthepartiesintend whenclause15.1cametobeincorporatedinthesaid Supply Agreement? The answer to the said questions undoubtedlyisthatanydisputethatmayarisebetween thepartiesshallberesolvedbysubmittingthesameto the Institutional Arbitration in India under the provisionsofthe1996Act.Itmaybementionedthatthe nameofaspecificinstitutionisnotindicatedinclause 15.1. 33 The1996Actdoesnotprescribeanyform foranarbitrationagreement.Thearbitrationagreement isnotrequiredtobeinanyparticularform. [See:BiharStateMineralDevelopmentCorporation& Anotherv.EnconBuilders(I)(P)Ltd.(2003)7SCC 418].Whatisrequiredistogathertheintentionofthe partiesastowhethertheyhaveagreedforresolutionof thedisputesthrougharbitration. 34 In my view, in the present case, the parties unequivocally agreed for resolution of the disputes throughInstitutionalArbitrationandnotthroughanad hoc arbitration. Therefore, in my view, there exists a valid arbitration agreement between the parties vide clause15.1intheSupplyAgreementdated10.8.04.The
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first issue is accordingly answered in favour of the applicantandagainstthenonapplicant.

30

NowcomingtothecontentionoftheLearnedSeniorCounselfor

thePetitionersthattheprayerinthesuitpertainingtotheantisuitinjunction canneverbereferredtoarbitrationinsupportofwhichcontentionrelianceis placedbytheLearnedSeniorCounselontheJudgmentoftheApexCourtin Sukanya Holdings Pvt. Ltd. (supra). In so far as the said contention is concerned,itisrequiredtobenotedthattheJudgmentinSukanyaHoldings Pvt. Ltd (supra) has been distinguished by the Apex Court in the case of RashtriyaIspatNigamLimitedv/sVermaTransportCo.reportedin(2006) 7SCC275.Paras23,45and47ofthesaidreportarematerialandreproduced hereinunder: 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,thearbitrationagreementcontainedinclause 44ofthecontractwouldbesquarelyattracted. Once the conditions precedent contained in the said proceedings are satisfied, the judicial authority is statutorilymandatedtoreferthemattertoarbitration. Whatisnecessarytobelookedintotherefor,interalia, wouldbeastowhetherthesubjectmatterofthedispute iscoveredbythearbitrationagreementornot. 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 onlyasuitfordissolutionofthefirmwasfiled,buta differentcauseofactionhadariseninrelationwhereto apart from parties to the arbitration agreement, other partieshadalsobeenimpleaded.Intheaforementioned
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factsituation,thisCourtheld: "Secondly,thereisnoprovisionintheActthatwhenthe subjectmatterofthesuitincludessubjectmatterofthe arbitration agreement as well as other disputes, the matterisrequiredtobereferredtoarbitration.Thereis alsonoprovisionforsplittingthecauseorpartiesand referring the subjectmatter of the suit to the arbitrators. 47 Such a question does not arise herein as the partieshereinarepartiestothearbitrationagreement and the question in regard to the jurisdiction of the arbitrator,ifany, canbedeterminedbythearbitrator himselfintermsofSection16ofthe1996Act. Inmyview,theJudgmentinSukanyaHoldingsPvt.Ltd.(supra), hasnoapplicationeveninthepresentcasebecausethepartiestotheinstant proceedingsarepartiestotheArbitrationAgreementandthecauseofaction whichissoughttobeinvokedisalsocoveredbytheArbitrationAgreement betweenthepartiesandthesaidreliefi.e.antisuitinjunctionisalsoclaimed on the basis of the dispute between the parties which are covered by the ArbitrationAgreement.ItwasheldbytheApexCourtinEverestHolding'scase (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 SukanyaHoldingsPvt.Ltd.'scasetwodistinctanddifferentcausesofaction weremergedinasuitanditrequiredindependentadjudicationoftherightsof theflatpurchaserswhoarenotgovernedbytheArbitrationAgreementandthe causeofactionwhichissoughttobeinvokedisalsocoveredbytheArbitration Agreementbetweentheparties.
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31

NowcomingtothejudgmentsrelieduponbythelearnedSenior

CounselforthePetitionersinsupportofhiscontentionthattherecanbeno arbitration,ifthereisnoconcludedcontract.ThejudgmentinDresserRand S.A.(supra)wasacasewherenocontracthadcomeintoexistenceatallas thecontractwasspeltoutonthebasisofatenderdocumentandultimatelythe saidtenderdocumentwhichwasheldtobemerelyaninvitationtoofferwas notacceptedasafinalcontract. Thetermsandconditioninthesaidcase contemplated for an agreement tocome into existence only when thefinal purchaseorderwasplaced,astherewasnosuchpurchaseorderplaced,itwas heldthattherewasnoconcludedcontract.Itisiswellsettledthatthetender orbiddocumentismerelyaninvitationtooffer,andtherefore,thesameby itselfcannotbetreatedasacontractbetweentheparties.

In the case of Andhra Pradesh Tourism Development Corporation Ltd & Anr. (supra), the facts were that even prior to the incorporationandregistrationofacompany,acontractwasexecutedbyits purportedManagingDirectorin thecapacityofaManagingDirectorofthe companywhichwasatthetimenotinexistence.Itwasheldthatobviously 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 ArbitrationAgreementbetweensuchparties.

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InthecaseofJawaharLalBurman(supra)thecontentionwas thattherewasonlyaconditionalacceptanceofthetenderandthereforethere wasnoconcludedvalidcontract.Onthebasisofthefactsofthesaidcasethe ApexCourthasheldinPara15ofthesaidreportthattherewasaconcluded contractandtheconditionofsecuritydepositwasaconditionsubsequentand notaconditionprecedent.

In the case of Rickmers Verwaltung GmbH (supra) the correspondencebetweenthepartiesweresoughttobereliedupontospellout aconcluded contract.ItisinthesaidcontextthattheApexCourtexamined thesaidcaseandcametoaconclusionthatthecorrespondenceinthatcase doesnotspelloutaconcludedcontractbetweentheparties.

In my view, the said judgments do not further the case of the Petitionersinanymanner. Asindicatedabove,theinquirythatthisCourtis requiredtomakeunderSection45oftheIndianArbitrationActislimitedto determine primafaciewhetherthereisinexistenceanArbitrationAgreement andifyes,referthepartiestoarbitrationunlessitfindsthatthe Arbitration Agreementisinvalid,inoperative,null,voidandincapableofbeingperformed. Invalidity of the agreement could only be on the ground if the same is questionedonthegroundsofcoercion,fraud,misrepresentationorthatthe

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saidagreementhasnotbeendulyexecuted.Itispertinenttonotethatinthe instant case, the parties are not relying upon any correspondence for the purposesofestablishingtheexistenceofthecontract,becauseintheinstant case the IPLA is duly executed in writing and signed by the parties. The correspondencethatissoughttoberelieduponbythepartiesisinsupportof theirrespectiveassertionsthattheIPLAisnotaconcludedcontractorthatthe IPLAisaconcludedcontract. SofarastheRespondentsareconcerned,the saidcorrespondenceisreliedupontodemonstratethatthepartieshadapplied their mind to the drafts of the IPLA, that were prepared before finally executingthesameon29/09/2006. Inmyview,theLowerAppellateCourt wasrightininterferingwiththe orderpassedbythe TrialCourt.Theview takenbytheLowerAppellateCourtontheaspectofreferringthepartiesto arbitration on a prima facie view that there is in existence an Arbitration Agreementcannotbefaultedwithinthefactsandcircumstancesofthecase.

CONCLUSIONWRITPETITIONNO.7804OF2009

32

InthelightofthewellsettledpositioninlawthattheCourtwhilst

consideringanApplicationunderSection45oftheIndianArbitrationActhas only to arrive at a prima facie conclusion that there exist an Arbitration Agreement,thesubmissionofthelearnedSeniorCounselforthePetitioners that since the Lower Appellate Court hasreferred the parties toarbitration

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withoutrecordingafindingthattheIPLAisaconcludedcontract,istherefore without merit. The scope of the jurisdiction under Article 227 of the ConstitutionofIndiahasbeensuccinctlyelucidatedinthejudgmentswhich havebeencitedoneitherside.ItiswellsettledthatthepowersunderArticle 227oftheConstitutionofIndiacannotbeexercisedasacloakofanAppealin disguiseandthatthewritcourtcannotsubstituteitsownconclusionforthe conclusionreachedbythecourtsbelow. Interferenceiscalledforonlyifthe impugned order results in a miscarriage of justice or the findings are so perversethatnoreasonablepersoncouldhavearrivedatsuchfindings.Inmy view,inthefactsandcircumstancesofthepresentcase,theconclusionarrived at by the Lower Appellate Court whilst referring the parties to arbitration cannotbesaidtobeaconclusionwhichcouldnotbearrivedatinthe facts andcircumstancesofthecase

33

Inanyevent,sincethefindingsoftheLowerAppellateCourtcan

only be said to be prima facie in nature, the Petitioners would have an opportunitytoagitatetheissuewhichtheyseektoagitatebeforetheArbitral Tribunal.Henceinsofarasthepartoftheimpugnedorder,whichrelatesto theapplicationfiledbytheRespondentsunderSection45,isconcerned,no interferenceiscalledforinthewritjurisdictionofthisCourtunderArticle227 oftheConstitutionofIndia.TheWritPetitionNo.7804of2009isaccordingly dismissed.Ruledischarged,withnoorderastocosts.

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34

SUBMISSIONS ON BEHALF OF THE PETITIONERS BY THE LEARNED SENIOR COUNSEL DR.VEERENDRA TULZAPURKAR INWRITPETITIONNO.7636OF2009 ThatassumingthattheIPLAisaconcludedcontractinviewof Clause 18.3 wherein it has been specifically stated that the ArbitrationandConciliationAct,1996i.e.theIndianArbitration Actwouldbeapplicable,thesaidActwouldthereforegovernthe procedureasalsoaconductoftheproceedingsandthereforethe EnglishCourtswouldnothavejurisdiction.

(i)

(ii)

Thatsince the arbitration is governed bythe Indian Arbitration Act, itisonlytheIndianCourtswhichwouldhavejurisdiction, and the Petitioners are therefore entitled to an injunction restraining the Respondents from proceeding further with the proceedingsintheEnglishCourt;

(iii)

Thatinviewofanexpresschoiceoflawi.e.theIndianArbitration Act,havingbeen made bythe partiesasthe lawgoverningthe arbitrationandthecuriallaw,thereisnoquestionofdetermining the seat of arbitration. For the said purpose the learned Senior Counselwouldplacerelianceonthefollowingjudgmentsreported in:

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(1) (2) (3) (4) (5) (6) (7)

(2007) 5 SCC 692, National Agricultural Coop MarketingFederationIndianLtdv/s.GainsTradingLtd. (2009)7SCC220,CitationInfowaresLtd.v/s.Equinox Corporation; (2008)10SCC308,IndtelTechnicalServicesPvt.Ltdv/s. W.S.Atkins; (2002)4SCC105,BhatiaInternationalv/s.BulkTrading S.A.AndAnother; (1988) 1 Lloyds L.R. 116, Naviera Amazonica v/s CompaniaInternational; 2011(3)ARBL350,PrimaBuildwellv/s.LostCity; (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.Theseatofarbitrationwouldhavetheconsequences offixingthejurisdiction.Intheinstantcase,sincetheLondonis onlythevenueandsincethepartieshavechosentheapplication oftheIndianArbitrationAct,thepartieswouldbegovernedbythe saidIndianLaw.

(v)

Thatthedeterminationoftheseatofarbitrationwouldcomeinto playonlyifthepartieshavenotchosenthelawwhichwouldbe applicableanditisonlyinthesaidcontextthattheCourtwould have to find out as to which curial law would apply to the arbitration.Moreover,thecuriallawcomesmuchlaterwhichisin respectoftheconductoftheproceedings.Intheinstantcase,there

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isnoneedtofindoutthelawapplicableforwhichtheseatof arbitrationcanbeanindicia,asthepartieshavebychoiceagreed to the application of the Indian Arbitration Act. For the said purpose the learned Senior Counsel relied upon two English Judgmentsi.e.thejudgmentreportedin(2008)EWHC426inthe matterof BraesofDouneWindFarm(Scotland)Ltd.v.Alfred McalpineBusinessServicesLtd. and (1988)Vol.1Lloyd'sLaw Reports116 inthematterof NavieraAmazonicaPeruanaS.A. v/s.CompaniaInternacionalDESegurosDelPeru.

(vi)

Thatoncetheagreementcontainedaexpresstermwhichinthis caseistheIndianArbitrationAct,itisnotopenfortheCourtto readintoacontractatermonthebasisofthevenuewhichinthe instantcaseistheapplicationofthe EnglishLaw. Thelearned SeniorCounselforthesaidpurposerelieduponthejudgmentsof theApexCourtreportedin (1968)1SCR821 inthematterof NathatiJuteMillsLtd.v/sKhyaliramJagannath.

(vii)

Thatitis notpermissible tointerpretthe said clause 18.3 ina restrictedmannersoastolimit/confinethechoiceoflawmadeby thepartiesonlytosomepartsoftheAct.Whentheagreementin clause 18.3 provides that the 'provisions of the Arbitration and

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ConciliationAct,1996shallapply',itisagreedbetweentheparties that the entire Act applies and not the select provisions. In supportofthesaidcontentionthelearnedSeniorCounselwould 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 matterofNaihitiJuteMillsLimitedv/s.KhyalynamJagannath.

(viii)

ThatoncethepartieshaveagreedthattheIndianArbitrationAct would apply, then any action contrary to the provisions of the Indian Arbitration Act amounts to breach of contract, and if a partycommitsbreachofcontractafterexpresslyagreeingtothe applicationoftheIndianArbitrationActtherebytotheexclusive jurisdiction of the Indian Court, the Court ought to grant an interiminjunctionpreventingcontinuanceofsuchbreach.

(ix)

That since the substantive prayer is as regards the injunction soughtbythePetitionersagainsttheRespondentsrestrainingthem 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 matterofarbitration.ThelearnedSeniorCounselrelieduponthe

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judgmentoftheApexCourtin(2003)5SCC531inthematterof SukanyaHoldings (P)Ltd.v/s.JayeshHPandyaandanr.

(x)

Thatitiswellsettledthatwhereapartyisputinaninextricable situation by the proceedings filed in a foreign court, such a situationwouldbeoppressivetosuchaparty.TheApexCourthas 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 judgmentoftheApexCourtreportedin(1987)1SCC496inthe matterofONGCv/s.WesternCompany,NorthAmerica.

(xi)

That the learned Senior Counsel for the Petitioners in the alternativesubmittedthatevenassumingtheEnglishArbitration 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 ArbitrationActwillapply,theapplicationofthenonmandatory provisionoftheEnglishArbitrationActisexcludedbyvirtueofthe provisions of Section 4(2) of the English Arbitration Act, 1996. The English Court therefore would have no jurisdiction to entertainanyapplicationforappointmentofArbitralTribunal.

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(xii)

Thattheissueofseatofarbitrationwouldnotariseinthepresent caseinviewofthesettledpositioninlawasenunciatedbythe ApexCourtinthecaseofBhatiaInternationalv/sBulkTrading SAandAnotherreportedin(2002)4SCC105whereintheApex Court has held that in cases of international commercial arbitrations held out of India provisions of Part I would apply unlessthepartiesbyagreement,expressorimplied,excludeallor anyofitsprovisions.

(xiii)

ThatthematterofappointmentofArbitralTribunaliscoveredby thelawofArbitrationAgreement,andnotthecuriallawor lex arbitri. In support of the said submission the learned Senior CounselwouldplacerelianceonthejudgmentoftheApexCourt reportedin(1998)1SCC305inthematterofSumitomoHeavy Industriesv/s.ONGC, and(2012)1BCR547 inthematterof SakumaExportsv/sLouis.

(xiv)

That the curial law that would be applicable to the arbitration proceedingcannotbeapproachedfromthechoiceofseatifthe partieshaveexpresslychosentheapplicationofaparticularlaw. The approach should therefore be to find out what is the law

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chosen by the partiesrather than firstfindingout the seat and thendeterminethelaw;thatoncethepartieshavemadeachoice ofthelawapplicabletoArbitrationAgreementandthecuriallaw, thenthereisnoneedforfindingoutwhattheseatisandwhat wouldbethelawifaseatisinaparticularcountry.

(xv)

That the reference to the seat becomes relevant only in the absenceofchoiceofthecuriallawandthisisborneoutfromthe passagesoftheverytextbooksandthejudgmentsrelieduponby theRespondents.

(xvi)

That the choice of the parties as regards the proper law of arbitration or the curial law is the determinative factor for ascertainingtheseatofarbitration.Onlyabsentsuchchoice,the questionoffindingtheseatofarbitrationarises.

(xvii)

That the judgments cited on behalf of the Respondents on the aspectofseatbeingthedeterminativefactorarenotapplicablein the facts of the present case when the parties have expressly chosentheapplicationoftheIndianArbitrationAct.Inthecases citedbytheRespondentstherewasnochoiceoftheproperlawof theArbitrationAgreementand/orthecuriallawanditisinthe

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said circumstances that the choice of the seat became a determinativefactor.

(xviii)

That the parties have agreed to the application of the Indian ArbitrationAct,1996tobetheproperlawofarbitrationaswellas curiallawisalsoindicativefromthefactthatinclause18.3the expression Presiding Arbitrator is used which appears in the IndianArbitrationAct,1996whereastheEnglishArbitrationAct, 1996thewordUmpireappears.

(xix)

Ifapartyactsagainstthetermsofthecontract,ithastheeffectof causingharmandinjurytotheotherside.Intheinstantcase,the RespondentshaveinvokedjurisdictionoftheEnglishCourtsand therebydraggingthePetitionerstoaCourtwhichdoesnothave jurisdictionintermsoftheagreement.Reliancewasplacedonthe judgment of the Apex court in ONGC v/s. Western Company, NorthAmerica.(supra)

(xx)

ThatthePetitionersareentitledtoanantisuitinjunctionbythe reasonofchoiceoftheIndianArbitrationAct,bythepartiesasthe applicable law relating to the entire arbitration. It is only the Indian Courts which would have jurisdiction, and the English

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Courtswouldhavenone.TheRespondentshavingapproachedthe 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 continuanceofthebreachbyseekinganantisuitinjunction.

(xxi)

That the assets of the Respondents in the form of shares of PetitionerNo.1andthedividendincomearisingthereformarein Daman making the Respondents personally amenable to the jurisdictionoftheDamanCourtasanyorderpassedbytheDaman Courtcan 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 natureofapartnership. TheRespondentNo.1aspartnerofthe jointventureiscarryingonbusinessinDaman,andassuchare withinthepersonaljurisdictionoftheDamanCourt.Thelearned SeniorCounselinsupportofthesaidcontentionhasreliedupon thejudgmentoftheApexCourtreportedin1995(1)SCC478in thematterofNewHorizonsLimitedandAnrv/sUnionofIndia, andthejudgmentsofthisCourtreportedinAIR1932Nag114in

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thematterofTarabaiv/sChogmalandinAIR1971Bom362in the matter of ExparteGirdharlal Shankar Dave which was approved in the judgment reported in 1986 MLJ 325 in the matterofHarshadV/sIshardas.

(xxiii)

That allowing the Respondents to proceed in the English Court willresultinallowingthemtocommitbreachofandcontinueto commitbreachoftheexpressagreementbetweentheparties.

35

SUBMISSIONS ON BEHALF OF THE RESPONDENTS BY THE LEARNED SENIOR COUNSEL SHRI NAVROZE SEERVAI IN WRITPETITIONNO.7636OF2009: Thattheseatisajuristicconceptandisnotalinguisticconcept, as is sought to be contended by the learned counsel for the Petitioners.Thejuristicconceptofaseatistobegatheredfrom thetermsoftheagreement,asitexpressestheconsensualintent oftheparties.

[A]

[B]

Thatuseoftheexpressionplace,venueordirectlyreferringto thecitywherethearbitrationistotakeplace,wouldmeanthat allsuchwords,phrasesareusedtoindicatetheseatofarbitration andwouldnotmeanageographicallocation.

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[C]

Thatsincenoneofthe partiestothe IPLAareevenlocatedin London, it therefore clearly indicates that London was not referredtoforthesakeofconveniencebutwasdesignatedasthe seatbytheparties.

(D)

ThatthepartieshavingchosentheseatofarbitrationasLondon which is contained in Clause 18.3 of the agreement, it is not properforthePetitionerstoresilefromthesaidclausesoasto contend that London was chosen geographically as it was convenientforthepartiestomeetinLondon.

(E)

ThatthePetitionersapproachingtheCivilCourtinDamani.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 ArbitrationActmakesitclearthatoncetheArbitrationAgreement isinwritingandthevenueisLondon,thesaidagreementwould havetobegiveneffect.

(G)

ThatintermsoftheEnglishArbitrationActboththemandatory andnonmandatoryprovisionsofthesaidActwouldapply.

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(H)

ThatinviewofthefactthattheseatofarbitrationisLondon,the applicabilityoftheArbitrationandConciliationAct,1996ofIndia would only govern the Arbitration Agreement but not the Lex Arbitri.

(I)

Thatthelawofthecountrywhereintheseatissituatedwouldbe 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 learnedSeniorCounselrelieduponthefollowingpassagesfrom thecommentariesofthethreelearnedauthors. Mustill and Boyd Chapter IV The applicable law and the jurisdictionofthecourt. RussellParagraphs2087,2088,2090,2093,2094,2099,2 100to2109. Redfern andHunter Chapter 3Paragraphs 3.09 to 3.33 & Paragraph 3.34 from the Chapter The Law Governing the Arbitration

[J]

ThatthelearnedAuthorshavemadeitclearthatintheabsenceof an agreement as to the procedural law, the choice of seat determines the procedural law of the arbitration. That where

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partieshave failed to choose the lawgoverningthe arbitration proceedings, those proceedings must be considered as being governedbythe lawofthe countryin whichthearbitrationis heldonthegroundthatitisthecountrymostcloselyconnected with the proceedings. In support of the said contention, the learnedSeniorCounselfortheRespondentshasrelieduponthe followingjudgments. (1970)AC583,JamesMiller&Partners Ltd. v/s Whitworth Street Estate; (1984) 1 QB 291, Bank Mellatv/sHellinikiTechnikiSA;(1988)1Lloyd'sLawReports 116, Navierav/sCompania; (2011)6SCC179,DozcoIndia Pvt.Ltd.v/sDoosanInfracoreCompanyLtd; (2011)6161, VideoconIndustriesLtdv/s.UnionofIndia;(2011)9SCC735 Yograj Infrastructure Ltd. v/s. Ssang Yong Engineering and Construction Ltd; (2010) 3 Arb. L.R. 70, Bhushan Steel v/s SingaporeInternationalArbitrationCentre;and(2011)3Arb. L.R. 350, Prima Buildwell Private Ltd v/s. Lost City DevelopmentLLC.

(K)

ThatsincetheseatofarbitrationbeingLondon,theEnglishLaw wouldbeapplicablecanbeseenfromSection4oftheEnglish Arbitration and Conciliation Act, 1996. The said Act postulates thatunlessthereisclearandunequivocalintentiontothecontrary

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thelawofthecountrywhereintheseatofarbitrationissituated wouldgovernthelawofarbitration.

(L)

Thattheseatofarbitrationhasgotfarreachingconsequencesin thecontextoftheapplicationofthe lexarbitri orthecuriallaw, the learned Senior Counsel in support of his contention that it would be the English Arbitration Act that would be applicable relieduponthefollowingEnglishjudgments: (2008)Vol.1Lloyd'sLawReporterpage239inthematter ofCvD. [II] (2007)Vol.1Lloyd'sLawReporterpage237inthematter ofAvB [III] 2007Vol.1Lloyd'sLawReporterpage358inthematterof AvB(Costs)(No.2) [IV] (2009)Vol.2Lloyd'sLawReporterpage376 inthematter ofShashouaandothersvSharma [V] (2006)1ACpage221 inthematterof LesothoHighlands DevelopmentAuthorityv/sImpregiloSpaandothers. [VI] 1970ACpage583inthematterofJamesMiller&Partners Ltd,andWhitworthStreetEstates(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 RobertGoffL.JJ) [VIII](1988)Vol1page116,inthematerofNavieraAmazonica Peruana S.A. v. Compania Interacional De Serguros Del Peru [I]

[M]

ThattheseatbeingLondon,thearbitrationproceedingswouldbe governed by the English Arbitration Act, and therefore, there wouldbeexclusionoftheIndianArbitrationAct,insofarasthe LexArbitri orthecuriallawisconcerned,thenaturalcorollary

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wouldbethattheEnglishCourtswouldhavesupervisionoverthe arbitrationproceedings,therefore,theRespondentswereentitled toapproachtheEnglishCourt.Insupportofthesaidcontention, the learned Senior Counsel relied upon the following English Judgments: (2007)Vol.2Lloyd'sLawReporterpage367inthematterof CvD [II] (2008)Vol.1Lloyd'sLawReporterAppealCourtpage239 inthematterofCvD. [I] [III] (2007)Vol.1Lloyd'sLawReporterpage237inthematter ofAvB [IV] 2007Vol.1Lloyd'sLawReporterpage358inthematterof AvB(No.2) [IV] (2009)Vol.2Lloyd'sLawReporterpage376 inthematter ofShashouaandothersvSharma [N] That in so far as international commercial arbitration is concerned,therearethreepotentialsystemsoflawapplicableto the arbitration viz, (1) The law governing the substantive contract;(2)Thelawgoverningtheagreementtoarbitrateand theperformanceofthatagreement;and(3)Thelawgoverning theconductofthearbitration.Inmajorityofcasesallthreewill bethesame,but(1)willoftenbedifferentfrom(2)and(3),and occasionally,butrarely,(2)mayalsodifferfrom(3).

[O]

ThattheenquiryoftheCourttoascertainthechoiceofseatina casewhereaplace/venue/cityhasbeenmentioned/nominatedby

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the parties, does not commence with a consideration of the properlawofthecontract/arbitration,whilstignoringthechosen place/venue, as contended by the Petitioners. If the said contentionofthePetitionersisaccepted,itwouldmeanthatonce the parties have chosen the law governing the Arbitration Agreement,thatlawisboththelawoftheArbitrationAgreement andthecuriallawandtheparties'sexpresschoiceofacuriallaw byreferencetoaseatistobecompletelyignoredandrendered otiose

[P]

Thatthechoiceoflawhastobeaspecificchoiceofcuriallawi.e. theagreementmuststatethatthelawofaparticularcountryas thecuriallaw.Intheabsenceofanysuchspecificagreementasto curiallaw,thelawofthecountryinwhichtheseatofarbitration issituatewillapply.

[Q]

ThatthenonmandatoryprovisionsoftheEnglishArbitrationAct canbeexcludedifthereisanexpressagreementtothecontrary andsuchagreementistheonecontemplatedbySection4(2)of theEnglishArbitrationActandthatintheabsenceofanysuch agreement,thenonmandatoryprovisionsbecomemandatoryand thatinviewthereof,theprovisionsofSection18oftheEnglish

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ArbitrationAct,whichprovidesformachineryforappointmentof Arbitral Tribunal, is applicable and the Respondents cannot be preventedfromapproachingtheEnglishCourtforconstitutionof theArbitralTribunal.

[R]

ThatthecuriallawandthesubstantivelawrelatingtoArbitration 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 appointmentofTribunal,andthattheterms'Constitutionofthe Tribunal' refers to the composition or qualification of the arbitratorsandnotitsappointment.

[S]

ThatthePetitionersbeinginbreachoftheagreementwhereby theyhaveagreedtotheexclusivejurisdictionoftheEnglishCourt havingagreedtoLondonastheseatarenotentitledtoanyanti suitinjunction.

[T]

ThattheRespondentsarenotamenabletothejurisdictionofthe Courts in Daman and the Respondents cannot therefore be injuncted from proceeding in a Court which has exclusive jurisdiction.

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[U]

ThatthePetitionersarenotentitledtoantisuitinjunctioninview ofthewellsettledprincipleslaiddowninthejudgmentofthe ApexCourtreportedin (2003)4SCC341 inthecaseof Modi EntertainmentLtd.V/s.W.S.G.CricketPvt.Ltd.

[V]

The learned Senior Counsel in the alternative submitted that assumingtheIndianArbitrationandConciliationAct1996applies on account of the choice of London as the venue, the English Courts, if not having an exclusive jurisdiction, have concurrent jurisdictiononaccountofSection2(4)oftheEnglishArbitration Act.

[W]

Thatsincethepartieshavenotspecificallyprovidedforastowhat is to happen in the event of a failure of the procedure for appointmentoftheArbitralTribunal,andsinceSection18ofthe English Act has not been excluded by the parties, the English Courtshaveconcurrentjurisdiction.

CONSIDERATIONWRITPETITIONNO.7636OF2009 36 Heard the learned counsel for the parties and also perused the

WrittenSubmissionsfiledonbehalfoftheparties.

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37

ThisCourtinWritPetitionNo.7804of2009hastakena prima

facieviewthatthereisinexistenceanArbitrationAgreementandthereforethe partiescanbereferredtoarbitration. InsofarasinstantPetitioni.e.Writ PetitionNo.7636of2009isconcerned,thequestioniswhetherthePetitioners areentitledtoanantisuitinjunction,andwhethertheEnglishCourtshave jurisdiction.

38

Theadjudicationofthesaidaspectthereforerevolvesaroundthe

interpretationofclause18.3oftheIPLA.Forthesakeofconvenience,thesaid clause18.3isrevisitedhereinunderforthepurposesofthepresentPetition. Clause18.3Allproceedingsinsucharbitrationshall beconductedinEnglish. Thevenueofthearbitration proceedingsshallbeLondon.Thearbitratorsmay(but shall not be obliged to) award costs and reasonable expenses(includingreasonablefeesofcounsel)tothe Party(ies) that substantially prevail on merit. The provisionsoftheIndianArbitrationandConciliationAct, 1996shallapply 39 The defining words therefore are that The venue of the

arbitration proceedings shall be London, The provisions of the Indian ArbitrationandConciliationAct,1996shallapply.ThelearnedSeniorCounsel forthePetitionerswouldcontend,relyinguponthesaidwordsthattheparties havemadeachoiceofLexArbitriaswellascuriallaw,andtherefore,thereis noquestionofembarkinguponanexerciseofdeterminingtheseatsoasto

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determinethecuriallawthatwouldbeapplicable.Inthesaidcontext,itwould beappositetorefertothejudgmentinBhatiaInternationalv/sBulkTrading S.A.&Anotherreportedin(2002)4SCC105;whichcoverstheissueofthe application of PartI of the Indian Arbitration Act. In the said case the arbitrationclauseprovidedthatthearbitrationwouldaspertheruleofthe InternationalChambersofCommerce.ThearbitrationwastobeheldinParis. Section9oftheArbitrationAct,1996wasinvoked. TheAdditionalDistrict JudgeseatingatIndoreheldthathehadjurisdictionagainstthesaidorder.A writwasfiledwhichwasdismissedandthematterreachedtheApexCourt. TheApexCourtheldthatPartIappliesevenwhenthearbitrationwastobe held out of India unless parties agreed to exclude application of that part. Para32ofthesaidjudgmentismaterialandisreproducedhereinunder: 32.ToconcludeweholdthattheprovisionsofPartI would apply to all arbitrations and to all proceedings relatingthereto.WheresucharbitrationisheldinIndia the provisions of Part I would compulsory apply and partiesarefreetodeviateonlytotheextentpermitted by the derogable provisions of Part I. In cases of internationalcommercialarbitrationsheldoutofIndia provisions of Part I would apply unless the parties by agreement,expressorimplied,excludealloranyofits provisions.Inthatcasethelawsorruleschosenbythe partieswouldprevail.Anyprovision,inPartI,whichis contrary to or excluded by that law or rules will not apply. 40 Inthesaidcontext,areferencecouldbemadetothejudgment

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
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TradingLtd.Paras8and9arematerialandarereproducedhereinunder: 8. Let me now examine whether the arbitration procedure and appointment of arbitrator is governed by theAct,orbythelawsinHongKong.Thisdependsonthe 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 KonginaccordancewiththeprovisionsoftheArbitration andConciliationAct,1996."Therespondentwantstoread thisprovisionthus: (i) (ii) thematterindisputeshallbereferredto arbitrationatHongKong; thematterindisputeshallbefinallyresolved byarbitrationatHongKong;and

Therespondentwantstoignorethewords"inaccordance with the provisions of Arbitration and Conciliation Act, 1976 or any other statutory modification, enactment or amendmentthereofforthetimebeinginforce"inclause 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 accordancewithHongKongLaws. 9. Therulesofinterpretationrequiretheclausetobe readintheordinaryandnaturalsense,exceptwherethat wouldleadtoanabsurdity.Nopartofatermorclause shouldbeconsideredasameaninglesssurplusage,whenit 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 matterindisputeshallbereferredtoandfinallyresolved by arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (or any statutory modification,enactmentoramendmentthereof)andthe venue of arbitration shall be Hong Kong. This interpretationdoesnotrenderanypartofthearbitration clause, meaningless or redundant. Merely because the partieshaveagreedthatthevenueofarbitrationshallbe HongKong,itdoesnotfollowthatLawsinforceinHong
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Kong will apply. The arbitration clause states that the ArbitrationandConciliationAct,1996(anIndianStatute) will apply. Therefore, the said Act will govern the appointment of arbitrator, the reference of disputes and theentireprocessandprocedureofarbitrationfromthe stageofappointmentofarbitratortilltheawardismade andexecuted/giveneffectto. (2009)7SCC220inthematterofCitationInfowaresLimitedv/s.Equinox Corporation. Paras 9, 12, 16, 31 and 32 are material and are reproduced hereinunder: 9.Whatisimportantistheagreementdated25.01.2007 which has already been referred to. Under the said agreementclause10.1providedasunder: 10.1 Governing law This agreement shall be governedbyandinterpretedinaccordancewith the laws of California, USA and matters of dispute,ifany,relatingtothisagreementorits subjectmattershallbereferredforarbitrationto amutuallyagreedArbitrator. Thus,inbetween,firstagreementdated09.02.2004and thesubsequentagreementdated25.01.2007therewasan essential difference that under the last agreement the governinglawwastobethatofCalifornia,USA.However, thatclausedidprovideforarbitrationincaseofdisputes. 12 So far so good. However, the question that has ariseniswhetherthisCourtwouldhavethejurisdictionin thepresentfactualscenarioandonthe backdropofthe factthatthepartiesvidetheaforementionedclause10.1 had agreed that the governing law would be that of California,USA.Accordingtotheapplicant,itisonlythis Court which would have the jurisdiction to appoint the Arbitrator, while according to the respondent this Court doesnothavethejurisdictiontoappointtheArbitratoras the provisions of the Arbitration Act would necessarily standexcludedinviewofthespecificlanguageofclause 10.1oftheagreementwhereinthegoverninglawwould bethelawofCalifornia,USA.
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16. As against this, Shri Krishnan Venugopal, Learned Senior Counsel appearing on behalf of the respondent urgedfromthelanguageoftheclause10.1thatwherethe governinglawisagreedbetweentheparties,sayforeign law, then essentially, the question of appointment of arbitrator alsofallsinthe realmofthe saidforeignlaw andnotwithintherealmofArbitrationandConciliation Act. 31 ItmaybethattheArbitratormightberequiredto takeintoaccounttheapplicablelawswhichmaybethe foreignlawsbutthatdoesnoteffectthejurisdictionunder Section11whichfallsinPartIwhichhasbeenspecifically heldapplicablein BhatiaInternationalcase.Thelearned Judge, deciding Indtel Technical Services' case also has takenintoconsiderationthisaspectandhasexpressedin Paragraph36asfollows:(SCCp.317) 36...... The decisions cited by Mr. Tripathi andtheviewsofthejuristsreferredtoin NTPC case supportsuchaproposition.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 propositionthatnotwithstandingtheprovisionsof Section 2(2) of the Arbitration and Conciliation Act, 1996 indicating that Part I of the said Act wouldapplywheretheplaceofarbitrationisin India,eveninrespectofinternationalcommercial agreements,whicharetobegovernedbythelaws ofanothercountry,thepartieswouldbeentitled toinvoketheprovisionsofPartIoftheaforesaid Actandconsequentlytheapplicationmadeunder Section11thereofwouldbemaintainable. Thesituationthereforeisidenticalinthepresentmatter. 32 Shri Venugopal, however, contended that if thepartiesintendedspecificallyinthiscasethatthelaw governingthecontractwasCalifornianlaw,asexpressed
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in Bhatia International as well as in Indtel Technical Services' case, an implied exclusion of Part I should be presumed.Iamafraiditisnotpossibletoreadsuchan impliedexclusion.Seeingthestrikingsimilaritybetween Clause10.1intheinstantcaseandClauses13.1and13.2 in Indtelcase whichhavebeenquotedaboveandfurther the view expressed by learned Judge in Indtel Technical Services'caseregardingtheexclusion,itisonlypossibleto readevendistantlysuchanimpliedexclusionofPartI.It cannotbeforgottenthatoneofthecontractingpartiesis theIndianparty.Theobligationsunderthecontractwere tobecompletedinIndia.Furtherconsideringthenatureof the contract, it is difficult to read any such implied exclusion ofPartIin thelanguageofClause10.1.That argument of learned senior counsel for the respondent thereforemustberejected. (2008) 10 SCC 308 in the matter of Indtel Technical Services Private Limitedv/s.W.S.AtkinsRailLimited;Para36isrelevantandisreproduced hereinunder: 36 Although, the matter has been argued at great lengthandMr.Tripathihastriedtoestablishthatthe decisionofthisCourtinBhatiaInternationalcaseisnot relevantforadecisioninthiscase,Iamunabletoaccept such contention in the facts and circumstances of the present case. Itis nodoubttrue that it isfairlywell settledthatwhenanarbitrationagreementissilentasto thelawandproceduretobefollowedinimplementing the arbitration agreement, the law governing the said agreement would ordinarily be the same as the law governingthecontractitself.ThedecisionscitedbyMr. TripathiandtheviewsofthejuristsreferredtoinNTPC 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 thisCourtlaiddownthepropositionthat notwithstanding the provisions of Section 2(2) of the Arbitration and Conciliation Act, 1996 indicating that PartIofthesaidActwouldapplywheretheplaceof arbitrationisinIndia,eveninrespectofinternational
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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 underSection11thereofwouldbemaintainable. (1988)1LloydsL.R.116inthematterofNavieraAmazonicav/sCompania International,InthesaidjudgmentthestatementoflawinPara(C)onpage 119isrelevantandthesameisreproducedhereinunder: Where the parties have failed to choose the law governing the arbitration proceedings, those proceedings must be considered, at any rate prima facie,asbeinggovernedbythelawofcountryinwhich the arbitration is held, on the ground that it is the countrymostcloselyconnectedwiththeproceeding.

Similarviewhasbeenexpressedinthejudgmentsreportedin2011(3)ARBL 350, inthematterof PrimaBuildersv/s.LostCity, and (2008)E.W.H.C. 426,inthematterof BreasofDounev/s.Alfred.Thepropositionwhichis laiddownisthatonceanexpresschoiceismadebytheparties,theparties wouldbeboundbythesaidchoice.

41

It is a well settled position based on the commentaries of the

learnedauthorsasalsothejudicialpronouncements,thattheproblemsarising outofanarbitrationmaycallfortheapplicationofanyoneormoreofthe followinglaws:

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[i] theproperlawofthecontracti.e.thelawgoverningthe contract which creates the substantive rights of the partiesinrespectofwhichdisputehasarisen; [ii] the proper law of arbitration agreement i.e. the law governing the obligation of the parties to submit disputestoarbitrationandtohonouranyaward;and [iii] thecuriallawi.e.thelawgoverningtheconductofthe individualreference. 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;theconstitutionofthetribunal;thequestion whether an award lies within the jurisdiction of the arbitrator;theformalvalidityoftheaward;thequestion whether the parties have been discharged from any obligationtoarbitratefuturedispute. [ii] The curial law governs : the manner in which the referenceistobeconducted;theproceduralpowersand duties of the arbitrator; questions of evidence; the determinationoftheproperlawofthecontract. [iii] Theproperlawofthereferencegoverns:thequestion whether the parties have been discharged from the obligation to continue with the reference of the individualdispute. The learned author Russell has classified in Chapter 5(c) as follows:

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That with the arbitration agreement itself it is also opentothepartiestospecifyaprocedurallawforthe 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 procedurallawofarbitration. Thelearnedauthors Mustill&Boyd withreferencetodeterminationofthe curiallawhavestatedasfollows: Thechoiceofcuriallawmaybemadeexpressly,and suchachoiceiseffective,eventhoughthelawchosenis neithertheproperlawofthearbitrationagreementnor thelawofthecountrywherethearbitrationistotake place.Anexpresschoiceofcuriallawdifferentfromthat 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. Thisisnodoubtbecauseoftheformidableconceptual andpracticalproblemswhicharelikelytoariseshould benecessarytoinvokethepowersofacourtinrelation tothereference....Intheabsenceofexpressagreement, thereisastrongprimafaciepresumptionthattheparties intendedthecuriallawtobethelawofthe`seat'ofthe arbitration,i.e.theplaceatwhichthearbitrationistobe conducted,onthegroundthatthatisthecountrymost closelyconnectedwiththeproceedings.Soinorderto determinethecuriallawintheabsenceofanexpress choicebythepartiesitisfirstnecessarytodeterminethe seatofthearbitration,byconstruingtheagreementto arbitrate. The learned Senior Counsel appearing for the Respondents strenuouslyurgedthatintheinstantcasethoughLondonisthevenueforthe arbitrationmeetings,itisinfacttheseatofarbitrationandnotaconvenient

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geographicallocationandthereforetheEnglishArbitrationActwouldapply anditwouldbetheEnglishCourtsthatwouldhavejurisdiction.Thelearned SeniorCounselfortheRespondentsinsupportofthesaidcontentionrelied uponanumberofjudgmentswhichincludedwellknownEnglishJudgments.It wouldbeappositetoconsiderthematthisstage.20072Lloyd'sLawReports 367,CvD;20081Lloyd'sLawReports239,CvD; 20071Lloyd'sLaw Reports237,AvB;20071Lloyd'sLawReportspage358,AvB;(2009)2 Lloyds Law Reports 376, Shashoua v Sharma; 2006 1 AC 221, Lesotho HighlandsDevelopmentAuthorityVs.ImpergiloSpA;(2011)6SCC179, 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)ArbitrationLawReports350,PrimaBuildwellPvt.Ltd Vs. Lost City Development and the judgment of Justice EDER reported in (2012)EWHC689(Comm)betweenEnerconGmbHandAnr.v/.sEnercon (India)Ltd. In C v. D,2007 Lloyd's Law Reports 367 (supra) the relevant clausewasasfollows: 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

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ItisinthesaidcontextthelearnedJudgehasobservedinPara24ofthesaid reportasfollows: By agreeing to the 1996 Arbitration Act, the parties thus, prima facie, accept the framework of the mandatoryprovisionsand,absentotheragreement,to the application of the nonmandatory provisions. Section4(4)providesthatitisimmaterialwhetheror notthelawapplicabletotheparties'agreementisthe law of England and Wales. In the context this must mean the law applicable to the parties agreement to arbitrate. ThereafterinPara25thelearnedJudgehasobservedasfollows: Thus,ifthepartiesagreeacuriallawwhichisnotthe law of England and Wales, provisions of that are effectivetoreplaceanynonmandatoryprovisioninthe 1996 Act, insofar as they make provision for such a matter. Thesaidjudgmentcanthereforebesaidtobeajudgmentontheproposition thatthecontractreferredtointheprovisionofSection2oftheEnglishActis not the contract regarding proper law of the underlying contract but the contractpertainingtotheproperlawofarbitrationand,oncesuchcontract exists,then,itispermissibleforthepartiestocontractoutofnonmandatory provisions.

ThesecondjudgmentinCv.D20081Lloyd'sLawReports239 (supra) reiterates the said position. Para 19 of the said report is material whereinithasbeenobservedasfollows:

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Thatisreinforcedbythetermsofsection4(5)ofthe Actwhichrefersnottoachoiceoflawclausegenerally buttoachoiceoflawastheapplicablelawinrespect ofamatterprovidedforbyanonmandatoryprovision ofthispartoftheAct.Inotherwordstherehastobea choiceoflawwithregardtothespecificprovisionofthe Actwhichthepartiesagreeisnottoapply. InthecaseofAv.B,(2007)1Lloyd'sLawReports237(supra), thechoiceoflawofarbitrationwasSwisslawandtheseatwasGeneva.Inthe said circumstances it was held that the Swiss law was applicable and, therefore,theEnglishCourthadnojurisdiction.Inthesaidcasealsoreference wasmadetothedecisionin NavieraAmazonica andapassagewasquoted from the said judgment in Para 111 thereof which is reproduced herein under: Englishlawdoesnotrecognisetheconceptofade localised arbitration (see Dicey & Morris at pp 541, 542) or of arbitral procedures floating in the transitionalfirmament,unconnectedwithanymunicipal system of law (Blank Mellat v Helliniki Techniki SA [1984]QB291atp301(CourtofAppeal).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 curialorprocedurallawofanarbitrationistobethe lawofXhastheconsequencethatXisalsothelawof theseatofthearbitration.TheLexforiisthenthelaw of X and, accordingly, X is the agreed forum of the arbitration.Afurtherconsequenceisthenthatthecourts whicharecompetenttocontrolorassistthearbitration arethecourtsexercisingjurisdictionatX.

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InthecaseofAv.B,20071Lloyd'sLawReports358(supra)in viewofthechoiceoflawofarbitrationbeingSwissandtheseatofarbitration beingGeneva,itwasheldthatthepartAhadcommittedabreachofcontract toinvokethejurisdictionoftheEnglishcourts.

Inthecaseof Shashouav.Sharma (supra)therelevantclause wasclause14whichwasthearbitrationclausewhichprovidedforarbitration to be in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, Paris. Clause 14.2 provided for arbitrationproceedingstobeconductedintheEnglishlanguageandclause 14.4providedthatthevenueofarbitrationshallbeLondon,UnitedKingdom. However,thematrixcontractortheunderlyingcontractwastobegovernedby thelawsofIndia,andthereforetherewasnochoiceoflawofarbitration.It wasinthecontextofthesaidfactsthatitwasstatedthattheEnglishlawwas applicabletoarbitration.ThecontentionoftheDefendantsthatastheproper lawoftheunderlyingcontractwasIndianlaw,thelawrelatingtoarbitrationis alsoIndianlaw,wasnegativedbythecourtonthegroundthattherewasno choiceofthelawofarbitration,andtherefore,sincetheseatbeinginEngland, theEnglishlawasapplicable.Itwasheldinthesaidjudgmentthatthevenue wasequivalenttotheseatandtheICCRuleswerenotthelawofarbitrationas theICCRuleswerenotconnectedtoanycourt.Areferencewasmadetothe decisioninthecaseofBraesandDoune.Inthesaidfactsituationitwasheld

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inthesaidcasethatEnglishlawwasapplicableastheseatwasinEnglandas therewasnochoiceofthelawofarbitration.

Inthecaseof LesothoHighlandsDevelopmentAuthoritativev. ImpregiloSpA (supra)ithasbeenexpresslystatedthatthe lawofLesotho (thatistheproperlawoftheunderlyingcontract)isnotanagreementtothe contraryinwritingofthenaturereferredtoinSection4(2)and4(5)ofthe EnglishArbitrationAct,1996.

Inthecaseof DozcoIndiaPrivateLimitedv.DoosanInfracore CompanyLimited(supra),theseatwasSeoul,Koreaanditwasheldthatthe samecannotbechangedwithoutawrittenagreement.Inpara14apassage fromMustillandBoydwasreferredto.However,whatisrequiredtobenoted isthatinthesaidcasealsotherewasnochoiceofthelawofarbitration.Itisin thesaidcontext,theseatassumesimportancefordeterminingthecuriallawor lexarbitri.Itisinthefactsituationofthesaidcase,itwasheldthatPartIof theIndianArbitrationActwouldnotapply.

InthecaseofVideoconIndustriesLtd.v.UnionofIndia(Supra) thequestionthataroseinthesaidcasecanbefoundinparas20and24ofthe saidreportviz.KualaLumpurwasthedesignatedseatortheseatofarbitration andthesamehasbeenshiftedtoLondon,andthenextissuewas,whetherthe

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DelhiHighCourtcouldentertain apetitionfiledbytheRespondentsunder Section9oftheArbitrationandConciliationAct,1996. Therewasnoissue beforetheApexCourtastowhetherwhenthereisachoiceofproperlawof arbitration,thelawofthecountryinwhichseatissituatewillprevailoversuch choice.InthesaidcasetherewasnodisputethatKualaLumpurwastheseat andthepartieshadinitiatedarbitrationproceedingsonthesaidbasis. The ApexCourtinthesaidfactsituationheldthattheDelhiHighCourtwouldhave no jurisdiction to entertain the Petition under Section 9 of the Indian ArbitrationAct.Notwithstandingthefactthatthemeetingsofthearbitration wereheldinLondon,thoughtheseatofarbitrationwasinKualaLumpur.

Inthecaseof YograjInfrastructurev.SsangYongEngineering (supra),ascanbeseenfromreadingofPara54,theproperlawofarbitration wasalsothelawofSingaporeandtheseatwasalsoinSingapore.Thelawof Singaporewasincorporatedintherulesandwhichruleswereagreedtobe applicablebythepartiesinthecontract.

In the case of Bhushan Steel Ltd v. Singapore International ArbitrationCentre(supra),itwasheldthatPartIoftheArbitrationActwould apply,ifthereisnoagreementregardingthegoverninglawofarbitration.

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InthecaseofPrimaBuildwellPvt.Ltdv.LostCityDevelopment (supra)ithasbeenheldthatintheabsenceofanyotheragreementtothe contrary,thelawgoverningtheArbitrationAgreementwherethearbitrationis agreedtobeheldisthelawofEnglandandWales.

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 choiceofseati.e.theplace/venueofthearbitrationproceedings,theCourts haveveryrarely(andforexceptionalreasons)disregardedthechoiceofseatof theparties.

43

ThenextlimbofthesubmissionsofthelearnedSeniorCounselfor

theRespondentswasthatintheabsenceofanexpressagreementastothe procedurallaw,thechoiceofseatprescribestheprocedurallawofarbitration. In support of which submission, the learned Senior Counsel for the RespondentsrelieduponthejudgmentoftheHouseofLordsinJamesMiller &PartnersLtd.V/sWhitworthStreetEstate,(supra).Inthesaidjudgment apassagefrom DiceyandMorris hasbeenquotedwithapprovalwhichis reproducedhereinunder: Where the parties have failed to choose the law governing the arbitration proceedings, those proceedingsmustbeconsidered,atanyrateprimafacie, asbeinggovernedbythelawofthecountryinwhich the arbitration is held on the ground that it is the countrymostcloselyconnectedwiththeproceeding
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ThelearnedSeniorCounselinsupportoftheaforesaidsubmissionalsorelied 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 forumofarbitrationwillapplyintheabsenceofanycontractualprovisionto the contrary. The following excerpt on page 301 of the said judgment is materialandisreproducedhereinunder: The fundamental principle in this connection is that under our rules of private international law, in the absenceofanycontractualprovisiontothecontrary,the procedural(orcurial)lawgoverningarbitrationsisthat oftheforumofthearbitration,whetherthisbeEngland, Scotland or some foreign country, since this is the systemoflawwithwhichtheagreementtoarbitratein theparticularforumwillhaveitsclosestconnections: seeWhitworthStreetEstates(Manchester)Ltd.v.James Miller&PartnersLtd.[1970]A.C.583 InsupportoftheaforesaidsubmissionthelearnedSeniorCounselalsorelied upon the judgment in the case of Naviera Amazonica V/s Compania Internacional,(supra). Before considering the correct construction of this particularcontractonthequestionwhethertheseat (or whatever term one uses) of any arbitration thereunderwasagreedtobeLondonorLima,orto putitcolloquiallywhetherthiscontractprovidedfor arbitration in London or Lima, I must summarize the stateofthejurisprudenceonthistopicanddealwith the general submissions which were debated on this appeal. In that connection we were referred to Oppenheim&Co.v.MahomedHaneef,[1922]1A.C. 482atp.487;JamesMiller&PartnersLtd.v.Whitworth
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StreetEstates(Manchester)Ltd,[1970]1Lloyd'sRep. 269;[1970]A.C.583,inparticularperLordWilberforce at pp.281 and 616, 617; Black Clawson International Ltd.v.PaperwerkeWaldhofAschaffenburgA.G.,[1981] 2Lloyd'sRep.446perMr.JusticeMustill(ashethen was)atp.453;Dicey&MorrisonTheConflictofLaws (11thed.)vol.1,r.58atpp.539to542;Mustill&Boyd onCommercialArbitration,passim;D.RhidianThomas The Curial Law of Arbitration Proceedings, Lloyd's MaritimeandCommercialLawQuarterly(1984)p.491; and Redfern and Hunter The Law and Practice of InternationalCommercialArbitration(1986)atpp.52 to70.Inaddition,amongmanyotherpublicationsone should mention the two important earliest and most recent discussions of this topic; first Dr. F. A. Mann's Lexfacitarbitrium in 1967,reprintedin Arbitration International,1986,Vol.2p.241andnowThenewlex mercatoria by Lord Justice Mustill in Bos and Brownlies Liber Amicorum for Lord Wilberforce (1987)atp.149 Withoutanalysinganyofthismaterialindetail, the conclusions which emerge from it can be summarizedasfollows: A. All contracts which provide for arbitration and containaforeignelementmayinvolvethreepotentially 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)Thelawgoverningtheconductofthe arbitration.Inthemajorityofcasesallthreewillbethe same.But(1)willoftenbedifferentfrom(2)and(3). And occasionally, but rarely, (2) may also differ from (3). Inthepresentcasetherewasnoinvestigationof (1), the substantive law, because nothing turns on it, butIamcontenttoassumethatthiswasthelawofPeru onthegroundthatthiswasthesystemwithwhichthis policywasmostcloselyconnected.Onthisappealthere wasalsoultimatelynocontestaboutlaw(2)whichmay beregardedasthesubstantivelawoftheagreementto arbitrate.TheJudgerightlyheldthatonthewording
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of the arbitration clause the parties had agreed expressly that their agreement to arbitrate should be subjecttoEnglishlawandthattheleavegrantedunder O.11 to serve the insurers out of the jurisdiction had been correct on this ground. Accordingly, the entire issuedturnedonlaw(3),thelawgoverningtheconduct of the arbitration. This is usually referred to as the curialorprocedurallaw,orthelexfori. B. Englishlawdoesnotrecognizetheconceptofa 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 proceduralrulestothemunicipallawwhichistherein force.ThisiswhatIhavetermedlaw(3). C. Where the parties have failed to choose the law governing the arbitration proceedings, those proceedingsmustbeconsidered,atanyrateprimafacie, asbeinggovernedbythelawofthecountryinwhich the arbitration is held, on the ground that it is the countrymostcloselyconnectedwiththeproceedings... SeeDicey&MorrisVol.1atp.539andthereferencesto theapprovalofthisclassicstatementbytheHouseof LordsinWhitworthStreeEstatev.JamesMiller(sup). Or,toquotethewordsofMr.JusticeMustillintheBlack Clawson case (sup.) at p.453 where he characterized law(3)asthelawoftheplacewherethereferenceis conducted: the lext fori. Although Mr.Milligan contestedthis,Icannotseeanyreasonfordoubtingthat 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 curialorprocedurallawofanarbitrationistobethe lawofXhastheconsequencethatXisalsotobethe seatofthearbitration.Thelexforiisthenthelawof X, and accordingly X is the agreed forum of the arbitration. A further consequence is then that the
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Courts which are competent to control or assist the arbitrationaretheCourtsexercisingjurisdictionatX. Prima facie, therefore, the forum of any arbitration which might arise under this policy was London,sincethearbitrationclauseprovided,ineffect, thatthelawinforceinLondonwastobethecurialor procedurallawofanysucharbitration. D. Inthelightofsomeofthemattersdebatedbefore usitmaybehelpfultoaddthatinmyview,noneof theseprinciplesisdifferentinrelationtoinstitutional arbitrations,suchasthoseconductedundertherulesof theInternationalChamberofCommerceortheLondon CourtofInternationalArbitration.Therelevantrulesof such bodies are incorporated by reference into the contract between the parties, and their binding contractualeffectwillberespectedandenforcedbythe Courts of the forum, except in so far as they may conflict with the public policy or any mandatory provisionsofthelextfori. AreadingofthesaidjudgmentsrelieduponbythelearnedSeniorCounselfor theRespondentsmakesitclearthatitisonlyintheabsenceofanagreementas totheprocedurallawthatthechoiceofseatassumessignificanceasinthat eventtheseatprescribestheprocedurallaw.

In so far as the decision of Justice EDER rendered in the proceedingsbetweenthePetitionersandtheRespondentsisconcerned,itis requiredtobenotedthatthelearnedJudgeinPara54hashimselfobservedas follows: Another reason why I have reached my conclusion somewhatreluctantlyisthatIwouldhavereachedthe conclusionthattheseatofthearbitrationisLondon
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whichis,ofcourse,theconclusionwhichtheclaimants say Judge Purohit reached. Given my conclusion that theseproceedingsbestayed,myviewsonthisissueare obiter.However,thisissuewasaddressedatsomelength 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.ItmayalsobeofassistancetotheBHCifan whenitcomestoheartheWritPetitionsalthough,asI say,myviewsarestrictlyobiter. FurtherinPara55,afterreferringtotheissuewhicharisesinthecontestofthe questionofseat,thelearnedjudgehasobservedasfollows:

These are difficult issues. However, for present purposesIproposetoaddressthequestionofseaton assumptionthatitistobedeterminedonabalanceof probability as a matter of English law by the court although I recognise that those assumptions are not necessarilycorrect. Thesaiddecisionthereforecanhardlybesaidtosupportthecontentionofthe RespondentsasregardsLondonbeingtheseatofarbitrationasthelearned Judgehashimselfobservedthattheviewsexpressedbyhimwereobiter.

44

ThesubmissionofthelearnedSeniorCounselfortheRespondents

thatthelawgoverningthearbitrationproceedingswillbetheEnglishlawand thatthepartieshaveconferredexclusivejurisdictionontheEnglishCourt,and therebyhaveexcludedthejurisdictionoftheIndianCourtismadeonthebasis thattheseatbeingLondon,theEnglishArbitrationandConciliationAct,1996

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applies,andtherefore,thearbitrationproceedingsaretobegovernedbythe EnglishCourt,andtherefore,thejurisdictionoftheIndianCourtsisousted.

45

Theissuewhichthereforearisesis,astowhetherintheinstant

caseenquiryastodeterminetheseatofarbitrationisnecessarysothatthe samewouldresultindeterminationofthecuriallawthatwouldbeapplicable. Thelegalpositionascanbeseenthatemergesfromthejudgmentscitedbythe learnedSeniorCounselforthePetitionersisthatthesaidenquiryisnecessary ifthepartieshavefailedtochoosethecuriallaw,asintheinstantcaseitisnot disputedbytheRespondentsthatthelawrelatingtoArbitrationAgreementis theIndianArbitrationAct.Inthecontextofthesaidissueitwouldberelevant toreverttotheexcerptofclause18.3oftheIPLAwhichisasfollows: Clause18.3Allproceedingsinsucharbitrationshall beconductedinEnglish. Thevenueofthearbitration proceedingsshallbeLondon.Thearbitratorsmay(but shall not be obliged to) award costs and reasonable expenses(includingreasonablefeesofcounsel)tothe Party(ies) that substantially prevail on merit. The provisionsoftheIndianArbitrationandConciliationAct, 1996shallapply Ascanbeseenthatafterprovidingforawardcostsandreasonableexpenses (including reasonable fees of counsel) to the Party(ies) that substantially prevailonmerit. ThesaidclauseprovidesthattheprovisionsoftheIndian ArbitrationandConciliationAct,1996shallapply.Ifthesaidclauseisreadin theordinaryandnaturalsense,theplacementofthewordsthattheIndian

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ArbitrationandConciliationActshallapplyinthelastclause18.3indicates thespecificintentionofthepartiestotheapplicationoftheIndianArbitration Act,notonlytotheArbitrationAgreementbutalsothatthecuriallaworthe LexArbitriwouldbetheIndianArbitrationAct.TheapplicationoftheIndian Arbitration Act therefore can be said to permeate clause18 so that in the instantcaselaws(2)and(3)aresameif theclassificationasmadebythe learnedauthorsistobeapplied.ThereferencetotheIndianArbitrationActis therefore not merely a clarification as to the proper law of the arbitration agreementasissoughttobecontendedonbehalfoftheRespondents.Ithasto beborneinmindthatthepartiesarebusinessmenandwouldthereforenot include words without any intent or object behind them. It is in the said context,probablythatthepartieshavealsousedthewordvenueratherthan 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 ArbitrationActatallthestages,andtherefore,thelogicalconsequenceofthe samewouldbethatinchoosingLondonasthevenuethepartieshavechosenit onlyasaplaceofarbitrationandnottheseatofarbitrationwhichisajuristic concept.

46

Thepropositionthatwhenachoiceofaparticularlawismade,

thesaidchoicecannotberestrictedtoonlyapartoftheActorthesubstantive

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provisionofthatActonly.Thechoiceisinrespectofallthesubstantiveand curial law provisions of the Act. The said proposition has been settled by judicialpronouncementsintherecentpast.Ausefulreferencecouldbemade tothejudgmentofalearnedSingleJudgeoftheGujaratHighCourtreported inXLVIIGujaratLawReports658inthecaseofHardyOilandGasLtd.Vs HindustanOilExportationCo.Ltd..Para11.3ofthesaidjudgmentisrelevant isreproducedhereinunder: However,theirLordshipsobservedinPara32thatin casesofinternationalcommercialarbitrationsheldout of India provisions of PartI would apply unless the partiesbyagreement,expressorimplied,excludeallor anyofitsprovisions.Inthatcaselawsorruleschosen bythepartieswouldprevail.Anyprovision,inPartI, whichiscontrarytoorexcludedbythatlaworrules wouldnotapply.Thus,evenasperthedecisionrelied upon by learned Advocate for the appellant, if the partieshave agreedtobegovernedbyanylawother than Indian law in cases of international commercial arbitration,samewouldprevail.Inthecaseonhand,it isveryclearevenonplainreadingofClause9.5.4that theparties'intentionwastobegovernedbyEnglishlaw in respect of arbitration. It is not possible to give a narrowmeaningtothisclauseassuggestedbytheLd. Sr.Advocate,Mr.Thakore,thatitwouldapplyonlyin case of dispute of arbitration agreement. It can be interpretedtoonlytomeanthatincaseofanydispute 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 possibleinthelightofexceptioncarvedoutofclause 0.5.1 relating to arbitration. Term Arbitration, in clause 9.5.4 cannot be taken to mean arbitration agreement.Entirearbitralproceedingshavetobetaken tobegovernedbyEnglishlaw.

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47

The argument which was advanced on behalf of the Petitioner

thereinwhohadinvokedtheIndianArbitrationActtosaythatwhereasthe choice pertained only to the existence and validity of the Arbitration Agreementothermatterswerenotcoveredbythatchoiceandthereforean applicationunderSection9theIndianArbitrationActwasmaintainablewas negativedbythelearnedJudge. Thesaidviewin HardyOilandGasLtd (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 ExportLtd.v/sLouisDrefusCommoditiesreportedin2012(1)BomCR547, (Paras3538)arerelevantandarereproducedhereinunder: 35.Thereisyetanothergroundonwhichtheaforesaid conclusion can be reached. It also arises out of the expressagreementbetweentheparties.Asnotedabove, the express agreement between the parties stipulates that Rules of the Refined Sugar Association, London form partofthe contract,if theyarenotinconsistent 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 AssociationrelatingtoArbitrationreadsasunder: "Whenthepartiestoacontracthaveincorporatedaclause to the effect that any dispute arising out of it shall be referred to The Refined Sugar Association (sometimes referredtoastheRSA)suchdisputemaybereferredtothe Association for settlement in accordance with the Rules relatingtoArbitrationandtheArbitrationAct,1996." 36. From the above clause, it is clear that once the partiestothecontractincorporateaclausetotheeffect that any dispute arising out of the contract shall be referredtotheRefinedSugarAssociation,suchdispute mustbesettledinaccordancewiththeRulesrelatingto ArbitrationandEnglishArbitrationAct,1996.Therefore evenonthisanalysisitisclearthatthisCourtdoesnot
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havejurisdictiontoentertainthepresentPetitionunder Section34oftheArbitrationandConciliationAct,1996. 37. Again, the second clause relied upon by the Respondent from the Introduction/Preamble to the Rules of Refined Sugar Association relating to Arbitrationreadsasunder: "The Association's Rules and Arbitration procedures are conducted in accordance with English Law. However, wherethepartieshaveagreedacontractlawotherthan English,theAssociationmay,withtheparties'agreement, decidethedispute." 38. The above Clause clearly stipulates that the Association's Rules and Arbitration procedures are conductedinaccordancewithEnglishLawanditisonly wherethepartieshaveagreedtoacontractlawother than English, the association may, with the parties agreementdecidethedispute.Inthepresentcase,the partieshavenotagreedtoanycontractlawotherthan English.Inviewofcategoricalassertionintheclauseset out hereinabove that the Association Rules and Arbitration procedures are conducted in accordance withEnglishlawcoupledwiththefactthattheparties have expressly agreed to be governed by the Association'sRulesrelatingtoarbitration,thereremains nodoubtinconcludingthatthepartieshaveexpressly agreed that the arbitration would be conducted in accordancewiththeEnglishlaw.AgaininRule8itis clearlystatedthat"Forthepurposeofallproceedingsin arbitration,thecontractshallbedeemedtohavebeen madeinEngland,........Englandshallberegardedasthe placeofperformance,disputesshallbesettledaccording tothelawofEngland.............Theseatofthearbitration shallbeEnglandandallproceedingsshalltakeplacein England.........." In view thereof, nothing turns on the issueraisedbythePetitionerthattheRespondentshave notexactlyincorporatedthe recommendedarbitration clausewhichincludeaconditionthat"sucharbitration shallbeconductedinaccordancewithEnglishLaw".As set out hereinabove, the introduction to the Association's Rules/Preambles provide that the arbitration proceedings are generally conducted in accordancewithEnglishLawexceptwheretheparties have agreed to a contract law other than English. In
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viewthereof,thoughitisbeyondanydoubtfromthe aforestateddecisionsoftheHon'bleSupremeCourtthat thecuriallawdoesnotgovernthequestionpertaining tothemaintainabilityofthepresentPetitionsu/s.34of theArbitration&ConciliationAct,1996,itisestablished thatthepartieshereinhaveagreedtotheAssociation's Rules and arbitration procedures being conducted in accordance with English law and Mr. Chinoy is not correctinhissubmissionthattheagreementcontainsno provision stipulating a choice of law governing the arbitrationprocedure.

48

Inthejudgmentreportedin (2012)2BCR168 inthematterof

EitzenvsAshapurawhatfellforconsiderationbeforealearnedSingleJudge ofthisCourtwastheinterpretationoftheclausewhichstatedthatEnglishlaw toapply.Thesaidlawwasinterpretedtomeanthatthesamegovernedthe entirearbitrationproceedingsandtheuseoftheexpressionumpireclearly establishedthatthepartieschosetheapplicationoftheEnglishlawasthesaid expressionumpireappearsintheEnglishlaw.ThesaidjudgmentinEitzen (supra)hasrelevancetothepresentcaseasinthepresentcaseClause18.3of the IPLA uses the expression Presiding Arbitrator which expression finds placeintheIndianArbitrationActandnotintheEnglishArbitrationAct.This thereforeisonemorecircumstanceorindiciawhichshowsthatthechoiceof lawwastheIndianArbitrationActandsuchchoicehavingbeenmadebythe parties,thesamegovernedtheentirearbitration. ThefindingsoftheLower AppellateCourtontheaspectofthelawapplicablewhicharedrawnonthe basisofLondonbeingtheseatofarbitrationarethereforeunsustainable.

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49

ThoughintermsofinterpretationofClause18.3,thisCourthas

reachedaconclusionthatthe lexarbitri wouldbetheIndianArbitrationAct. The question would be, whether the Indian Courts would have exclusive jurisdiction.Thenexusbetweentheseatortheplaceofarbitrationvisa 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 RedfernandHunterwhohavestatedthus: the place or seat of the arbitration is not merely a matterofgeography.Itistheterritoriallinkbetweenthe arbitrationitselfandthelawoftheplaceinwhichthat arbitrationislegallysituated... The choice of seat also has the effect of conferring exclusive jurisdictiontotheCourtswhereintheseatissituated.Intheinstantcase,as canbeseen,thereisnoagreementbetweenthepartiesasregardstheseatof arbitration as the parties have chosen London as only the venue for the arbitrationmeetings. InviewofLondonbeingthevenueforthearbitration meetings,thequestionthatisposedis,whethertheEnglishCourtscanexercise jurisdictioninsupportofarbitrationbetweentheparties.

50

Itisrequiredtobenotedthattheinstantcaseisauncommoncase

where there is no agreement between the parties as regards the seat of arbitration,andtheagreementbetweenthepartiesisonlyasregardsLondon

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beingthevenueforarbitration.TheArbitrationAgreementintheinstantcase 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,theapplicationofthesaidprovisionhasnotbeenexpresslyexcluded bytheparties,andtherefore,thesaidprovisionisavailableforinvocationby theparties.InthecontextofLondonbeingonlythevenueandnottheseatof arbitration. It would be apposite to refer to Section 2(4) of the English ArbitrationActwhichreadsthus: The Court may exercise a power conferred by any provisionofthisPartnotmentionedinsubsection(2)or (3) for the purpose of supporting the arbitral process where (a) (b) noseatofthearbitrationhasbeendesignatedor determined,and by reason of a connection with England and WalesorNorthernIrelandthecourtissatisfied thatitisappropriatetodoso.

ThereforeinsofarasSection2(4)oftheEnglishActisconcerned, thetworequirementsforexercisingpowerunderanyoftheprovisionsofthe EnglishArbitrationAct,arethatnoseatofarbitrationhasbeendesignated,and thatbyreasonofaconnectionwithEnglandandWalesorNorthernIrelandthe courtissatisfiedthatitisappropriatetodoso. Intheinstantcase,boththe conditionsfortheexerciseofpowerunderthesaidPartoftheEnglishActare satisfied,asnoplaceotherthanLondonismentionedinclause18oftheIPLA,

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sinceLondonisnottheseat,andtherefore,noseatofarbitrationhasbeen designatedbytheparties.Secondlysincethemeetingsofthearbitrationareto takeplaceinLondon,thereisastrongconnectionbetweenthearbitrationand thecountrywhereinthearbitrationmeetingshavetotakeplace.Asindicated aboveSection2(4)oftheEnglishArbitrationActclampsitselfinviewofthe peculiarfactsituationwheretheseatofarbitrationhasnotbeendesignatedby theparties.

Lookedatfromthesaidanglei.e.theterritoriallinkbetweenthe arbitrationitselfandthelawoftheplaceinwhichthearbitrationmeetingsare tobeheld,theconclusionthatisisrequiredtobedrawnisthattheEnglish Courtswouldhaveconcurrentjurisdiction.TheLowerAppellateCourthasalso heldthatnoexclusivejurisdictionhasbeengiventotheIndianCourts.Hence theRespondentscannotbesaidtohavecommittedabreachoftheagreement byinvokingthejurisdictionoftheEnglishCourtforconstitutingtheArbitral Tribunal. The finding of the Lower Appellate Court to the said extent is requiredtobesustained.

51

ThecontentionofthelearnedSeniorCounselfortheRespondents

that splitting up of the application of Indian Arbitration Act is permissible, inasmuchasinrespectoftheArbitrationAgreementtheIndianArbitrationAct would applybut in so far ascurial lawis concerned,the provisions of the

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EnglishArbitrationActwouldhaveapplication.Thesaidcontentionproceeds onthebasisthatLondonistheseatofarbitrationandtherefore,theEnglish Arbitration Act would apply. The Indian Arbitration Act contains both the procedural and the curial provisions, and therefore, when the parties have agreedtotheapplicationoftheIndianArbitrationAct,ithastoapplyasa wholeandnotinparts.ThesubmissionofthelearnedSeniorCounselforthe PetitionersbasedonSumitomoHeavyIndustries(supra)thattheappointment oftheArbitralTribunalprecedesthereferenceandthereforethecuriallawis notapplicableiswellfounded.Howeverforthereasonthatthepartieshave chosenLondonastheplaceofarbitration,andsincethereisnoagreement 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 notwithstandingthefactthatintermsofthelawlaiddowninHardyOiland Gas Ltd (supra) and Sakuma Export Ltd (supra), the invocation of the jurisdictionoftheEnglishCourtsfortakingsuchmeasuresasareneededin supportofarbitrationcannotbepreventedastheEnglishCourtscanbesaidto haveconcurrentjurisdiction.

52

AsregardsthesubmissionofthelearnedSeniorCounselforthe

RespondentsbasedonSection4(2)oftheEnglishActisconcerned,thesame hastobereadwithSection4(5)oftheEnglishAct.ThesaidSectionprovides thatifachoiceoflawotherthanthelawofEnglandandWalesorNorthern

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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 provisionaboutthatmatter.Thus,aspertheEnglishAct,whenachoiceoflaw other than law of England is made in respect of a nonmandatory matter (appointmentofArbitralTribunalgovernedbySection18oftheAct)thensuch achoicewillconstitutetheagreementcontemplatedbySection4(2)ofthe English Act so as to make the English Act inapplicable as regards non mandatoryprovision.Inthepresentcase,sincethereisnoagreementbetween thepartiesasregardstheseatand,sincethepartieshaveagreedtoholdthe arbitrationmeetingsatLondon,thepartieshaveexpresslynotexcludedthe application of Section 18 of the English Arbitration Act, and is therefore availableforinvocationbytheparties.Thepartieswouldthereforebeentitled toapproachtheEnglishCourtsforconstitutionoftheArbitralTribunal.

53

In so far as the relief of anti suit injunction is concerned, the

learnedSeniorCounselforthePetitionerssoughttorelyuponthejudgmentof theApexCourtreportedin (1987)1SCC496 inthematterof ONGCv/s. WesternCompany,NorthAmerica. The saidantisuitinjunction hasbeen sought by the Petitioners on the ground of breach of agreement by the RespondentsandonthegroundofLondonbeingforumnonconveniens.The learnedSeniorCounselforthePetitionerscontendedthattheDamanCourthas apersonaljurisdictionovertheRespondents.Insupportofthesaidcontention

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hesoughttorelyuponthejudgmentoftheApexCourtreportedin(1995)1 SCC478 inthematterof NewHorizonsLtd.v/s.UnionofIndia, andthe judgmentsofthisCourtin Tarabai's case, GirdharlalShankarDave's case andIshardas'scase(supra).

Per contra, in so far as the aspect of anti suit injunction is concerned,the learnedSenior Counsel forthe Respondentsrelieduponthe judgmentoftheApexCourtreportedin (2003)4SCC341 inthematterof ModiEntertainmentv/s.W.S.G.CricketPrivateLtd.Theprinciplesspeltout bytheApexCourtinthesaidcasewhilstconsideringtheapplicationforanti suitinjunctioncanbeseenfromPara24ofthesaidreportwhichisreproduced hereinunder: From the above discussion the following principles emerge: (1) In exercising discretion to grant an antisuit injunctionthecourtmustbesatisfiedofthefollowing aspects: (a)thedefendant,againstwhominjunctionissought,is amenabletothepersonaljurisdictionofthecourt; (b)iftheinjunctionisdeclinedtheendsofjusticewill bedefeatedandinjusticewillbeperpetuated;and (c) the principle of comity respect for the court in which the commencement or continuance of action/proceedingissoughttoberestrainedmustbe borneinmind; (2) in a case where more forums than one are available,theCourtinexerciseofitsdiscretiontogrant antisuit injunction will examine as to which is the appropriateforum(forumconveniens)havingregardto theconvenienceofthepartiesandmaygrantantisuit
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injunctioninregardtoproceedingswhichareoppressive orvexatiousorinaforumnonconveniens; (3)Wherejurisdictionofacourtisinvokedonthebasis ofjurisdictionclauseinacontract,therecitalsthereinin regardtoexclusiveornonexclusivejurisdictionofthe courtofchoiceofthepartiesarenotdeterminativebut arerelevantfactorsandwhenaquestionarisesastothe natureofjurisdictionagreedtobetweenthepartiesthe courthastodecidethesameonatrueinterpretationof the contract on the facts and in the circumstances of eachcase; (4) a court of natural jurisdiction will not normally grantantisuitinjunctionagainstadefendantbeforeit where parties have agreed to submit to the exclusive jurisdictionofacourtincludingaforeigncourt,aforum of their choice in regard to the commencement or continuanceofproceedingsinthecourtofchoice,save inanexceptionalcaseforgoodandsufficientreasons, withaviewtopreventinjusticeincircumstancessuchas whichpermitacontractingpartytoberelievedofthe burdenofthecontract;orsincethedateofthecontract the circumstances or subsequent events have made it impossibleforthepartyseekinginjunctiontoprosecute thecaseinthecourtofchoicebecausetheessenceofthe jurisdictionofthecourtdoesnotexistorbecauseofa vismajororforcemajeureandthelike; (5) wherepartieshaveagreed,underanonexclusive jurisdictionclause,toapproachaneutralforeignforum and be governed by the law applicable to it for the resolutionoftheirdisputesarisingunderthecontract, ordinarily no antisuit injunction will be granted in regardtoproceedingsinsuchaforumconveniensand favouredforumasitshallbepresumedthattheparties have thought over their convenience and all other relevant factors before submitting to nonexclusive jurisdictionofthecourtoftheirchoicewhichcannotbe treatedjustanalternativeforum; (6) a party to the contract containing jurisdiction clausecannotnormallybepreventedfromapproaching thecourtofchoiceofthepartiesasitwouldamountto
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aiding breach of the contract; yet when one of the partiestothejurisdictionclauseapproachesthecourtof choiceinwhichexclusiveornonexclusivejurisdictionis created,theproceedingsinthatcourtcannotpersebe treatedasvexatiousoroppressivenorcanthecourtbe saidtobeforumnonconveniens;and (7) the burden of establishing that the forum of choice is a forum nonconveniens or the proceedings thereinareoppressiveorvexatiouswouldbeon thepartysocontendingtoaverandprovethesame.

InviewoftheconclusionthatthisCourthasreached,namelythattheEnglish Courtswouldhaveconcurrentjurisdictiontoactinsupportofarbitration,the caseofthePetitionersforanantisuitinjunctiondoesnotstandtoscrutiny. However,insofarastheaspectofforumnonconveniensisconcerned,inmy view,sincethePetitionershaveagreedtoLondonasthevenueforarbitration, theycannotbeheardtocomplainthattheCourtsatLondonareforumnon conveniensforthem. ThePetitionershaveappearedbeforethesaidCourts, andtherefore,thecaseofforumnonconveniensisbereftofanymerit.

54

Forthereasonsmentionedhereinabovethefinding(referpara63

oftheimpugnedjudgment)oftheLowerAppellateCourtthatLondonisthe 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 arbitrationmeetings.

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CONCLUSIONSWRITPETITIONNO.7636OF2009

55

On an interpretation of clause 18.3 of the IPLA this Court has

reachedaconclusionthatthecuriallawor LexArbitri wouldbetheIndian ArbitrationAct. ThoughtheIndianArbitrationActwouldapply,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 andthereforethejurisdictionoftheEnglishCourtscanalsobeinvokedbythe partiesfortakingsuchmeasuresasarerequiredinsupportofarbitration.The judgmentandorderoftheLowerAppellateCourtontheaspectofantisuit injunction is, therefore, sustained but on a different ground which is mentionedinthebodyofthisJudgment.TheaboveWritPetitionNo.7636of 2009isaccordinglydismissed.Ruledischarged,withnoorderastocosts. [R.M.SAVANT,J]

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