ARBITRATION CASE LIST

Contents
1. Indowind Energy Ltd. Vs. Wescare (I) Ltd. & Subuthi Finance Ltd. .................................................................... 2
2. Kerala State Electricity Board and Anr. Vs. Kurien E. Kalathil and Anr .............................................................. 4
3. N.N. Global Mercantile (Pvt) Limited v Indo Unique Flame ................................................................................. 5
4. Magic Eye Developers Pvt Ltd v Green Edge Infra Pvt Ltd. ................................................................................. 7
5. Blue Coast Infrastructure Development v Blue Coast Hotels ................................................................................ 9
6. Gemini Bay v Integrated Sales ................................................................................................................................... 11
7. Messer Griesheim GmbH (“Appellant”) v. Goyal MG Gases Pvt. Ltd. (“Respondent”) ................................ 13
8. Zostel Hospitality Private Ltd. v. Oravel Stays Private Ltd & Anr ...................................................................... 15
9. [Link] Investment Holdings LLC (“Amazon”) v. Future Retail Limited & Ors. (“Future Group”) . 18
10. PASL Wind Solutions Private Ltd. v. GE Power Conversion India Private Ltd. .......................................... 21
11. Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engineering Pvt. Ltd. ........................................................... 25
12. SREI Infrastructure Finance Ltd. (“Srei Infrastructure”) vs. Tuff Drilling Private Limited ........................ 29
13. M/s Emkay Global Financial Services Limited v. Girdhar Sondhi .................................................................. 32
14. The Government of Haryana PWD Haryana (B and R) Branch v. M/s. G.F. Toll Road Pvt. Ltd. & Ors.
35
15. Union of India v. Hardy Exploration and Production (India) Inc. .................................................................. 38
16. Rajasthan Small Industries Corporation Limited v. M/s Ganesh Containers Movers Syndicate. ............... 41
17. Rashid Raza vs. Sadaf Akhtar ................................................................................................................................. 44
18. BGS SGS SOMA JV v. NHPC Ltd ...................................................................................................................... 46
19. Ashwani Minda and ors. v. U-shin Limited and Ors:. ........................................................................................ 50

1
 1. Indowind Energy Ltd. Vs. Wescare (I) Ltd. & Subuthi Finance Ltd.
J. Raveendran and J. KS Radhakrishnan
Facts:

• On 24th February 2006, an agreement of sale was made between two parties, W (Respondent 1) and S
(Respondent 2).
• The agreement mentioned S and its nominee as the "buyer" and as the "promoters of I".
• Disputes occurred between W on one side, and S and I on the other, regarding the agreement.
• W filed a petition under Section 11(6) of the Act, asking for a sole arbitrator to resolve the disputes related
to the agreement.
• I argued that it was not part of the agreement, did not approve or act on it, and that there was no arbitration
agreement between W and I.
Timeline:

• Section 11(6) petition was filed before Madras HC. Madras HC rejected I’s argument on the following
grounds:
o The agreement contemplated Indowind purchasing assets of W from S.
o I was promoter of S and both had common directors, including the director who executed the
Arbitration agreement.
• This decision is appealed before the SC vide an SLP.
Issue before the SC:

• Whether an arbitration clause found in a document (agreement) between two parties, could be considered
as a binding arbitration agreement on a person who is not a signatory to the agreement?
whether arbitration clause contained in an arbitration agreement is binding on a ‘third party’
which has not signed the agreement in question.
• Whether a company could be said to be a party to a contract containing an arbitration agreement, even
though it did not sign the agreement containing an arbitration clause, with reference to its subsequent
conduct?
Relevant Law:

• Provisions relied on: Section 2(h) and 7 of the Arbitration & Conciliation Act
• Relied on Yogi Agarwal v Inspiration Clothes & U to state that an arbitration agreement under section 7
must satisfy the following 2 conditions:
o It should be between the parties to the dispute
o It should relate to or be applicable to the dispute
• Party to an arbitration agreement is defined in section 2(h).
Arguments by parties:

• W argued that the agreement was entered to with S as the promoter of I. Moreover, I was a nominee of
S. This meant that I was to be bound by the arbitration clause.
• It was reasoned on the other side that S and I are independent companies. Existence of common directors,
and them signing agreements for one company cannot make the other liable. Since the director only signed
on behalf of S and not I, it shows that they did not intend to make W party to the agreement.
Findings:

2
 • Scope of examination under section 11(6) is restricted to the existence of an arbitration agreement between
the parties. [relied on SBP& Co v Patel Engineering Ltd]. SC observed that the HC cannot decide whether
an entity is “prima facie” party to an arbitration agreement. It must pass a final decision on whether they
are party. Consequently, Madras HC’s decision was set aside,
• There was also no subsequent conduct by I to indicate that it accepted being party to the arbitration
agreement.
• It was observed that I was not party to the arbitration agreement, because it was not a signatory, and
neither did its subsequent conduct indicate their intention to be bound by the arbitration agreement.
Analysis:

• This was in line with other legal precedents where ‘parties’ to an arbitration agreement have been
interpreted strictly.
• U.K has a wider scope by expanding the definition of ‘parties’ to include any person claiming under or
through a party to the agreement.
• Cases which upheld Indowind – Chloro Control and Ameet Lalchand v. Rishab Enterprises

3
 2. Kerala State Electricity Board and Anr. Vs. Kurien E. Kalathil and Anr
J. Bhanumathi and J. Gogoi
Facts:

• In 1981, the State Board entered into an agreement with a Contractor for the construction of a dam in
Kerala. After work began, the Kerala government revised the minimum wages in 1983, leading the
Contractor to claim additional labor costs and compensation for extra work done. The dispute led to
prolonged litigation before the Kerala HC.
• With the consent of the counsel for both parties, and without existence of an arbitration agreement or
written instructions provided by the parties, the High Court referred the parties to arbitration.
• An arbitral award was passed in favour of the Contractor, prompting the State Board to appeal the High
Court's decision before the Supreme Court.
• The Court, in exercise of its powers under Article 136 of the Constitution of India, chose to reappreciate
all facts and materials on record considering that public money was involved and that the findings of the
High Court would otherwise result in excessive hardship to the State Board
Issues:

• Whether the HC was right in referring the parties to arbitration on the oral consent given by the counsel
without written instruction from the party?
Relevant Law:

• Arbitration is a creature of contract between the parties.

• Section 7 sets a jurisdictional precondition to arbitration, which is that the parties should seek a reference
to arbitration.
• Afcons Infrastructure Ltd. V Cherian Varkey Construction Co Pvt Ltd – even if there is no pre-
existing arbitration agreement, parties to a suit can choose arbitration from list of ADR processes provided
under section 89 CPC.
• For a dispute to be referred to arbitration under section 89 of the CPC, the same can be done only when
parties agree for settlement of dispute through arbitration.
Findings:

• Referring the parties to arbitration has serious consequences, taking them away from accessing civil courts.
[Under section 1 ACA, the arbitral tribunal shall not be bound by CPC and evidence act]
• Courts can only refer parties to arbitration with written consent of parties through joint
memo/application. [Section 89 CPC]
• When there was no arbitration agreement between the parties, without a joint application by
parties, the HC erred in referring the parties to arbitration.
Analysis:

• Upholds party autonomy – a fundamental of arbitration law

• Court has given teeth to Section 7 of the Arbitration Act, requiring that an arbitration agreement must be
in writing in order to be valid
• This also substantiates requirements of Section 89 where parties are required to file the arbitration
agreement in court while seeking reference to arbitration

4
 3. N.N. Global Mercantile (Pvt) Limited v Indo Unique Flame
In Re: Interplay between arbitration agreements under the Arbitration and Conciliation Act 1996 and the
Indian Stamp Act 1899’
7 judges bench settled the law

Judgement Held
SMS Tea Estates Pvt Unstamped Arbitration Agreement is enforceable
Ltd v Chandmari Tea Co
Garware Wall Ropes Unstamped Arbitration Agreement is not enforceable
Limited v. Coastal
Marine Constructions &
Engineering Limited
N.N. Global Mercantile Unstamped Arbitration Agreement is enforceable
Private Limited v. Indo
Unique Flame Ltd. And
Others [NN Global 1]
NN Global 2 (5 Unstamped Arbitration Agreement is not enforceable
judge)
NN Global 3 (7 Unstamped Arbitration Agreement is enforceable
Judge)

Issue:
1. Whether unstamped agreements containing arbitration agreements make the arbitration agreements
unenforceable
2. Whether unstamped arbitration agreements are admissible as evidence in court?
Relevant law:

• Difference between enforceability and inadmissibility-

o While an agreement that is void is unenforceable, an agreement that cannot be produced as
evidence, is inadmissible.
• Section 35 of Stamp Act – inadequately stamped or unstamped instrument is inadmissible. [not
unenforceable] This can be rectified by paying fee.
Findings

• Defect in arbitration agreement does not render it void ab initio unless the defect is so fundamental that
it negates the intention of parties
• Since non-payment of stamp duty is a curable defect, it cannot render unstamped arbitration agreement
void ab initio.
• Also applied the doctrine of severability – Validity of arbitration agreement is independent of the validity
of the substantive contract.
• Principle of Kompetenz-Kompetenz
o Section 16 allows an arbitral tribunal to rule on its own jurisdiction including on issues of the
validity of the arbitration agreement
o Under Section 34 of the Arbitration Act, courts may review the decision of an arbitral tribunal on
jurisdiction only at the stage of challenge of the final award. Hence, as per the principle of

5
 kompetenz-kompetenz as provided in the Arbitration Act, the arbitral tribunal is vested with the
jurisdiction to determine all preliminary issues affecting its jurisdiction, including the issue of
sufficiency of stamping
• The principle of negative kompetenz-kompetenz prohibits courts from interfering in disputes where
parties have mutually consented to arbitration.
o Section 5 arb act – enshrines principles of minimum judicial intervention and party autonomy
• These principles lead to the answer that tribunals can decide the sufficiency of stamping at first instance,
and courts need not interfere
• Additionally, it was observed that Arbitration Act is the special law, and will have primacy over stamp act
and contract act
• The objects of the statutes are different as well
o Arbitration Act – dispute resolution with minimal judicial intervention
o Stamp Act – revenue generation for state
Finally:

• Unstamped arb act is enforceable, but not admissible

• It is not void ab initio/void due to lack of stamping
• Inadequate or unstamped instruments are curable defects

6
 4. Magic Eye Developers Pvt Ltd v Green Edge Infra Pvt Ltd.
2020 – Delhi HC – J. Mukesh Gupta
2023 – SC – J. CT Ravikumar and J. MR Shah
Facts:

• The Plaintiff and Defendant No. 1 entered into a business relationship through a Shareholders Agreement
(SHA), Share Purchase Agreement (SPA), and Memorandum of Understanding (MOU) for launching a
real estate project.
• The Plaintiff advanced INR 8,00,00,000 to Defendant No. 1, of which INR 5,20,00,000 was given as a
short-term loan to Mr. S.K. Hooda, the erstwhile managing director of Defendant No. 1.
• Defendant No. 1 breached its contractual obligations, leading to delays in the project. The Plaintiff filed a
commercial suit in the Delhi High Court seeking recovery of the loan, along with damages for breach of
contract, loss of reputation, and loss of business opportunity.
• The Plaintiff alleged that Defendant No. 1 was a sham company used by Mr. S.K. Hooda and his family,
along with other front companies (Defendants Nos. 2 and 3), to launder and siphon money, and that Mr.
S.K. Hooda was involved in multiple criminal investigations.
• Defendant No. 1 filed an application under Section 8 of the Arbitration and Conciliation Act, seeking to
refer the disputes to arbitration as per the SHA, SPA, and MOU, claiming that the agreements are
interconnected and cover the subject matter of the suit.
• Defendant Nos. 2 and 3 filed written statements and objected to being impleaded in the commercial suit.
Issue:

• Whether Defendant Nos. 2 & 3 can be joined to arbitration despite being non-signatories to the arbitration
agreement(s)?
• Whether twin claims – of recovery of loan and damages – can be settled through Arbitration?
Findings:
On Issue 1:

• Referred to chloro Controls India (P) Ltd. Vs. Severn Trent Water Purification Inc – Group of companies’ doctrine
• a non-signatory or third party could be subjected to arbitration without their prior consent, but in
exceptional cases. In such cases, they must fulfill three criteria:
o Direct relationship to the signatory of the arbitration agreement
o Direct commonality of subject matter
o Agreement between the parties being a composite transaction
• The Court held that from the intent of the parties as noticed from the various agreements, as also the
averments in the plaint and the arguments, it was evident that not only would Defendant No.1 but also
the Defendant Nos. 2 and 3 were amenable to arbitration. The Court accordingly referred all parties to
arbitration.
On Issue 2:
The Plaintiff contended that in addition to recovery of the loan, the Plaintiff had also claimed damages for which
there was no arbitration agreement between the parties. The Plaintiff relied on the decision in Sukanya Holdings
Pvt. Ltd. vs. Jayesh H. Pandya and stated that since the reliefs claimed under the suit could not be bifurcated, the
parties could not be referred to arbitration. The Court rejected the argument and held that the claim for damages
was based on the failure of Defendant No.1 to perform its contractual obligations under the various agreements.
7
This was an arbitrable dispute duly governed by arbitration clauses under the various agreements. As such, the
two reliefs were not required to be bifurcated and could be decided by arbitration

8
 5. Blue Coast Infrastructure Development v Blue Coast Hotels
What are the practical implications of this decision?
The Delhi High Court interpreted ACA 1996, s 9, which provides courts the power to award interim measures to
parties before, during or after the arbitral proceedings and prior to the enforcement of an arbitral award. The court
contrasted these powers against the powers of the arbitral tribunal under ACA 1996, s 17 to award interim
measures during arbitral proceedings. The court held that while under ACA 1996, s 17, the arbitral tribunal can
award interim measures only to the parties to the arbitration agreement, this limitation is not applicable to a court
under ACA 1996, s 9.
Thus, the court held that in certain situations, interim measures can be awarded by the court against even non-
parties to an arbitration agreement. Particularly, the court observed that it is possible to pass an order to attach a
property held by a third party if it is being held on behalf of a party to the arbitration. However, on the facts of
the present case, the court held that the third party, the second respondent, ie, IFCI Ltd. (IFCI), cannot be said
to be holding the property on behalf of the first respondent, ie Blue Coast Hotels Ltd. (Blue Coast Hotels), thereby,
the question of awarding interim relief to the applicant against IFCI did not arise.
What was the background to this decision?
The applicant, Blue Coast Infrastructure Development Pvt. Ltd. (the Applicant) had entered a Joint Development
Agreement (JDA) with Silver Resort Hotel India Private Limited (Silver Resort). Silver Resort was a special
purpose vehicle floated by Blue Coast Hotels to develop a commercial space in the New Delhi International
Airport (Aerocity Project). An Infrastructure Development and Service agreement had been executed between
Delhi International Airport Limited (DIAL) and Silver Resort. Pursuant to the JDA, the Applicant had been
authorised by Silver Resort to raise and collect funds from investors for allotting commercial shops to the investors
in the Aerocity Project. The JDA between the Applicant and Silver Resort contained an arbitration clause. It is
pertinent to note that Blue Coast Hotels and IFCI were not party to the JDA. However, the Applicant filed the
present application before the court pursuant to the arbitration clause contained in the JDA. Further, Silver Resort
was not joined as a respondent in the present proceedings.
Due to certain disputes between Silver Resort and DIAL, the Aerocity Project could not be completed.
Subsequently, there were multiple proceedings that were initiated in various fora.
Further, Blue Coast Hotels filed a writ petition before the High Court of Bombay at Goa to exercise its right of
redemption of the Goa property under pursuant to the Transfer of Property Act, 1882 • There are also several
execution petitions, contempt petitions and complaints against the Applicant initiated by the investors.
In the present proceedings, the Applicant prayed for interim measures to protect the amount of INR 85 crores
which was allegedly in the custody of IFCI on behalf of Blue Coast Hotels. IFCI, inter alia, raised an objection
that the court cannot grant any relief against it as it was not a signatory to the arbitration agreement under the
JDA.
Court Held?
The Delhi High Court held that it was possible to award interim relief against a non-signatory in certain
circumstances. For instance, the property of a third party holding property on behalf of a party to the arbitration
may be attached pursuant to ACA 1996, s 9.
The court contrasted these powers against the powers of the arbitral tribunal under ACA 1996, s 17 to award
interim measures during arbitral proceedings.

9
The court held that while under ACA 1996, s 17, the arbitral tribunal can award interim measures only to the
parties to the arbitration agreement, this limitation is not applicable to a court under ACA 1996, s 9
Thus, the court held that in certain situations, interim measures can be awarded by the court against even non-
parties to an arbitration agreement. Particularly, the court observed that it is possible to pass an order to attach a
property held by a third party if it is being held on behalf of a party to the arbitration.
Relying on the case of Value Advisory Services v ZTE Corporation and Ors, OMP No. 65/2008, the court
indicated that a party would have the right to seek attachment against a third party if the third party holds the
property in its possession on behalf of a party to the arbitration agreement.
Commentary on the decision
The Delhi High Court considered various judgments which have held that courts have the power to award interim
relief against a non-signatory to an arbitration agreement in certain situations. Particularly, in the case of Gatx
India Pvt Ltd v Arshiya Rail Infrastructure Ltd, 2015 VAD (Delhi), which relies upon Value Advisory Services v
ZTE Corporation and others, OMP No 65/2008, the Court held that, ‘the court may issue interim orders against
the third parties to arbitration only in exceptional circumstances which are such that denial thereof might frustrate
the petitioner's rights in arbitration; defeat the very object of arbitration between the parties thereto; render the
arbitration proceedings infructuous; lead to gross injustice; and/or, leave the petitioner remediless, depending on
facts of each case.’
Thus, it is clear that interim relief against a non-signatory can be awarded on a case-by-case basis. In the present
case, the court held that if IFCI was holding property on behalf of Blue Coast Hotels, the Court would have had
the jurisdiction to award interim relief under ACA 1996, s 9, and the objection that IFCI is not a party to the
arbitration agreement would not be sustained. However, it is surprising that the court arrived at this conclusion
prior to analysing how interim relief could be awarded against Blue Coast Hotel’s property (as allegedly held by
IFCI) in the first place, considering that even Blue Coast Hotels was also not a party to the arbitration agreement
contained in the JDA.
From the facts, it is clear that it was only the Applicant and Silver Resort who were parties to the JDA which
contained the arbitration clause. While Silver Resort is a special purpose vehicle floated by Blue Coast Hotels, it
would have been beneficial if the Court had undertaken an analysis to clarify that Silver Resort was possibly an
alter ego of Blue Coast Hotels, and thereby suggest that relief could be awarded against Blue Coast Hotels, despite
it not being a signatory to the arbitration agreement. Parties and practitioners would have benefited from further
clarity from the court on this aspect in order to understand the various circumstances wherein interim relief can
be granted by courts against non-signatories.

10
 6. Gemini Bay v Integrated Sales
What are the practical implications of this case?
The ability to arraign non-signatories in an arbitration remains the subject of debate, and the Supreme Court and
several High Courts in India have allowed arraignment of non-signatories to an arbitration agreement. Following
the decision of the Supreme Court in this case, parties can now anticipate that it will be extremely difficult to resist
enforcement of a foreign award in India against a non-signatory where the tribunal has held that the non-signatory
is liable under the award.
The ability of a non-signatory to be bound by the arbitration agreement can be certainly raised before the arbitral
tribunal, or such award can be challenged at the seat of arbitration; but at the enforcement stage, the Indian courts
will not look into such aspects.
The judgment of the Supreme Court is particularly relevant for complex transactions involving group entities since
the enforceability of a foreign award on non-signatories has now been settled by the Supreme Court. While holding
that a foreign award is binding and can be enforced against a non-signatory, the Supreme Court also discussed the
scope of the limited grounds to resist enforcement under section 48 of the Act and opined that such grounds
must be construed narrowly.
What was the background?
Integrated Sales Services (ISS), a Hong Kong based company had entered into a representation agreement
(Agreement) with an Indian company, DMC Management Consultants Ltd (DMC) on 18 September 2020, under
which, ISS assisted DMC in the sales of DMC’s goods and services against a fixed amount of commission. At the
time of entering into the Agreement, Mr Rattan Pathak signed the Agreement as the managing director of DMC.
The Agreement provided for dispute resolution by way of arbitration seated in Kansas City, Missouri before a sole
arbitrator. The governing law of the Agreement was laws of the State of Missouri, USA.
The Agreement was amended twice and was executed by Mr Arun Dev Upadhyaya on behalf of DMC. In the
second amendment, the governing law of the Agreement was amended to ‘laws of the State of Delaware’. Disputes
arose between the parties pursuant to which ISS initiated arbitration and raised a claim that DMC transferred
monies payable to ISS under the Agreement to Gemini Bay Transcriptions Pvt Ltd (GBT), a company owned and
controlled by Mr Arun Upadhyay (Arun), by terminating its contracts with certain customers introduced by ISS
and subsequently, executing the same contracts through GBT. Arun, DMC, DMC Global, Gemini Bay Consulting
Ltd (GBC) and GBT were all arrayed as a party to the arbitration proceeding by ISS.
The sole arbitrator held that Arun used the corporate forms of sister concerns like DMC Global Inc (DMC Global)
GBC to cover-up unjust results of eliminating ISS as well as refused to pay commissions payable to ISS under the
Agreement. Therefore, the arbitrator directed all the group entities and Arun to jointly and severally pay ISS a sum
of US$6,948,100 along with administrative fees and expense borne by ISS (Award). Only DMC participated before
the sole arbitrator and addressed the issue of applicable law governing the arbitration, but the other issues framed
by the sole arbitrator, such as the jurisdiction of the tribunal over non-signatory parties, piercing the corporate
veil of certain corporations, whether certain non-signatory parties to the original agreement should be excluded
from the arbitration were not addressed by DMC. The other parties impleaded in the arbitration, ie DMC Global,
GBC, GBT and Arun, did not enter appearance before the sole arbitrator.
The Single Judge of the Bombay High Court (Nagpur Bench) held that the Award was only enforceable against
DMC and not against the group entities as they were ‘non-signatories’ to the arbitration agreement. On appeal,
the Division Bench of the Bombay High Court (Division Bench) overturned the decision of the Single Judge

11
holding the Award was enforceable against the group entities. Thereafter, GBT filed an appeal before the Supreme
Court against the order of the Division Bench.
What did the court decide?
The Supreme Court of India refused to interfere with an award issued by a sole arbitrator in an arbitration seated
in the USA, holding that a foreign award could be enforced against non-signatories to the arbitration agreement
under the Arbitration and Conciliation Act 1996.
The Supreme Court also narrowed down the scope of resistance under section 48 of the Act (akin to Article V of
the New York Convention) by award-debtors to the enforcement of a foreign award. The ability of a non-signatory
to be bound by the arbitration agreement can be certainly raised before the arbitral tribunal, or such award can be
challenged at the seat of arbitration; but at the enforcement stage, the Indian courts will not look into such aspects.
The judgment of the Supreme Court is particularly relevant for complex transactions involving group entities since
the enforceability of a foreign award on non-signatories has now been settled by the Supreme Court.
Section 47(1)(c) of the Act [such evidence as may be necessary to prove that the award is a foreign award: The
provision is limited to adducing evidence by the award holder to establish that the three pre-requisites for
enforcement of a foreign award are met (see section 47 (Evidence) of the Act).
An award holder is not required to establish that a non-signatory is bound by the foreign award at the stage of
enforcement. Section 48(1)(a): A challenge to the enforcement of foreign award on the ground of non-signatory
is outside the scope of section 48(1)(a) (see section 48 (Conditions for enforcement of foreign awards) of the
Indian Act).
Moreover, such a question is likely to involve an analysis into the merits of the case which further renders it outside
the scope of enquiry under Section 48 of the Act (relying on Aloe Vera of America, Inc v Asianic Food (S) Pte
Ltd and another [2006] -the Supreme Court observed that similar to the New York Convention, the Act promotes
a pro-enforcement bias, therefore, the court must not reopen the case on merits especially when the burden lies
on an award debtor to establish the grounds under section 48;
section 48(1)(c) (see section 48 (Conditions for enforcement of foreign awards) of the Act): This provision only
covers circumstances wherein the foreign award covers a dispute that is outside the scope of the arbitration
agreement between the parties
section 48(1)(b) (see section 48 (Conditions for enforcement of foreign awards) of the Act): The scope of this
provision is restricted to instances prior to making of the award, such as notice of appointment of the arbitrator
or of the arbitral proceedings, etc (relying on Vijay Karia v Prysmian Cavi E Sistemi SRL, (2020) 11 SCC 1).
Therefore, an absence of reasons or perfunctory reasons in a foreign award is not included as a ground under
Section 48(1)(b) (para [63] of the judgment)
The enforcement of a foreign award cannot be refused on the ground that the foreign award violates substantive
law of the agreement (paras [71]–[73] of the judgment). Such a question can only be considered by the seat court,
and not by an enforcing court.
Damages: Nothing under Section 48(1) permits resisting the enforcement of a foreign award on the ground that
damages were awarded without basis or reason (para 74 of the judgment).
The only possible avenue for such a challenge is under section 48(2) and that too only when there is gross injustice
that shocks the conscience of the court (relying on Ssangyong Engg. & Construction Co Ltd v NHAI, (2019) 15
SCC 131; Section 48 (Conditions for enforcement of foreign awards) of the Act)

12
 7. Messer Griesheim GmbH (“Appellant”) v. Goyal MG Gases Pvt. Ltd. (“Respondent”)
• District courts (having pecuniary jurisdiction) v. High courts (having original civil jurisdiction)
• Supreme Court’s verdict on courts having jurisdiction to execute foreign decrees
• Issue: for an execution of foreign decree, before which court should the party approach to execute it.
• When matter goes for execution, it goes before court.
• Types: Pecuniary, territorial, subject matter jurisdiction. In SM and territorial, HC and district court both
have jurisdiction.
• Section 44 of CPC: they use the word district court. Arb act says HC for execution of forging award.
Section 5(2) of Delhi HC r/w definition of ICA says HC jurisdiction.
Introduction:
• Where there is a split jurisdiction between High Courts exercising original jurisdiction and District Courts
based on pecuniary value, such High Courts would be competent to execute a foreign decree of the
superior court of a reciprocating territory.
• By virtue of Section 5(2) of the Delhi High Court Act 1966, the Delhi High Court is vested with ordinary
original civil jurisdiction and holds exclusive jurisdiction to execute a foreign decree under Section 44A of
the CPC if it falls within its pecuniary jurisdiction.
• One of the many concerns which haunts parties in cross-border dispute resolution is locating the
jurisdiction and forum for execution of the decree of a foreign court. Section 44A (1) of the Code of Civil
Procedure 1908 (“CPC”) provides that “Where a certified copy of a decree of any of the superior
Courts of any reciprocating territory has been filed in a District Court, the decree may be executed
in India as if it had been passed by the District Court.”
• While a decree-holder may initiate execution proceedings in a jurisdiction where the judgment-debtor or
its properties are located, the question remained – would an execution petition be maintainable
before High Courts having ordinary original civil jurisdiction or only before the district courts?

HC said the Section 44 district court r/w 5(2) includes HC. Special law supersedes the general provision. Sir’s
opinion: must give proper clarity. Wrt value: if lesser or more value, decide accordingly if you want to go to HC
or district court.

• SC clarified that a High Court with original civil jurisdiction can entertain a petition for execution of a
foreign decree under Section 44A of the Civil Procedure Code, 1908 (“CPC”), provided it is within its
pecuniary jurisdiction. The Supreme Court arrived at this conclusion by holding that the definition of
District Court under Section 2(4) of the CPC would include High Courts having original jurisdiction.
• This gained significance in view of certain High Courts having ordinary original civil jurisdiction.
• Ordinary original civil jurisdiction of a court is when it has the power to hear a fresh case (if it is a
continuous case then it becomes appellate jurisdiction).
• In India, five High Courts (i.e., High Courts of Delhi, Bombay, Calcutta, Madras and Himachal Pradesh)
have original jurisdiction in civil cases of certain monetary value.
• For example, the Delhi High Court can exercise original civil jurisdiction with respect to Delhi, in every
suit where the value exceeds rupees two crores. In other jurisdictions, it is the district court which has
original jurisdiction in all civil suits.

Facts:
• The Appellant had initiated proceedings against the Respondent before the High Court of Justice, Queen’s
Bench Division, Commercial Court of the United Kingdom (“English High Court”) for a money decree.
The Appellant was awarded a decree for a principal sum of US $ 5.8 million (appx.) on 07 February 2006.
13
 • The English High Court had been notified as a superior court of a reciprocating territory for the purpose
of execution of foreign decrees in India under Section 44A of the CPC.
• Since the decretal amount fell within the pecuniary jurisdiction of the Delhi High Court, the Appellant
filed an execution petition under Section 44A of the CPC before the Delhi High Court on 27 April 2006.
• The Respondent raised an objection that the Delhi High Court does not have jurisdiction to entertain the
execution petition in view of Section 44A of the CPC.
• It was the Respondent’s case that Section 44A(1) of the CPC refers to “District Court”; therefore, only
the district court(s) in Delhi would have jurisdiction over the execution petition and not the Delhi High
Court.
• Distinguishing suits from execution proceedings, the Respondent argued that Section 5(2) of Delhi High
Court Act 1966 refers to ‘suit’; therefore, the High Court would be a principal civil court only for suits
exceeding the pecuniary limit and not for any other purpose.
• The Single Judge of the Delhi High Court rejected such objections and upheld the jurisdiction of the Delhi
High Court.
• On appeal, the division bench of the Delhi High Court overruled the Single Judge’s judgment and
observed that Section 44A of the CPC was an independent right conferred on the decree-holder/Appellant
for enforcement of a foreign decree in India.
• It is a fresh cause of action and has no co-relation with jurisdictional issues. It further held that the Delhi
High Court was not a ‘District Court’ in terms of Section 44A of the CPC.

Sir prefers arguments over final decision. Know the arguments of the case laws.

Supreme Court:
• The issue before the Supreme Court was –
o Whether the Delhi High Court in exercise of its original jurisdiction was a competent court to
entertain a petition for executing a money decree (in excess of INR 20,00,000/-) of a foreign court
which is notified as a ‘superior court’ of reciprocating territory under Section 44A of the CPC.
• The Supreme Court referred to the definition of ‘District Court’ under Section 2(4) of the CPC which
“refers to the local limits of the jurisdiction of a principal civil Court of original jurisdiction (provisions of
the Code called a “District Court”) and it includes the local limits of the ordinary original civil jurisdiction
of a High Court.”
• It observed that in cases where there is a split jurisdiction between High Courts exercising original
jurisdiction and District Courts based on pecuniary value, such High Courts would be competent to
execute a foreign decree of the superior court of a reciprocating territory.
• While exercising such power, the conditions under Section 44A of CPC would have to be satisfied in
addition to the fact that the underlying decree exceeds the pecuniary limits of the district court.
• Coming to the issue at hand, the Supreme Court set aside the judgment of the Division Bench and
observed that execution is always in continuation of the proceedings.
• In view of Section 5(2) of the Delhi High Court Act 1966, the Delhi High Court is vested with ordinary
original civil jurisdiction and holds exclusive jurisdiction to execute a foreign decree under Section 44A of
the CPC if it falls within its pecuniary jurisdiction.

14
 8. Zostel Hospitality Private Ltd. v. Oravel Stays Private Ltd & Anr
• Interim protection available only against the “fruits” of the arbitral award.
1. Application for interim protection at the post arbitral award stage must be confined to only the “fruits”
of the arbitral award;
2. Complete consensus ad idem is required in all parts of a contract before specific performance can be
directed;
3. Granting a part entitlement to take measures for specific performance of a contract does not amount to
directing specific performance of the contract itself.
• DHC held that a right to specific performance of the underlying agreement (under which the arbitration
was invoked) in an arbitral award does not necessarily imply that specific performance is itself granted. It
opined that the enforcement of such performance may still be subject to condition precedents and
following the due process of law.
• The Delhi HC has also elaborated on the scope of an interim protection under Section 9 of the Arbitration
and Conciliation Act, 1996 (“Act”) at the post-award stage and held that only the “fruit” of an arbitral
award can be protected by way of interim measures.
Background:
• Zostel Hospitality Pvt Ltd (“Zostel”) and one of its investor shareholders, Orios, entered into a contract
with Oravel Stays Pvt Ltd (“Oravel/OYO”), whereunder, essentially, Zostel agreed to transfer its hotel
business to OYO and Orios, against which OYO was required to transfer to Zostel, “identified assets”
which included 7% of OYO’s shareholding. Pursuant to the commercial understanding, a term sheet
(“Term Sheet”) was executed which stated that upon closing, Zostel’s shareholders would be entitled to
acquire shares in OYO not exceeding 7% of Oravel’s diluted shareholding, and that upon completion of
post-closing obligations, the founders would be entitled to a payout of US$ 1 million. The Term Sheet
also entailed that closing would require finalizing multiple definitive agreements regarding the exact terms
of the transfer, which were to be negotiated subsequently by Zostel and Oravel.
• Zostel began taking steps to fulfil its obligations1 under the Term Sheet, however, when Zostel attempted
to finalize the definitive agreements, Oravel delayed citing dissent from a particular shareholder of OYO.
Subsequently, owing to alleged defaults on the part of OYO, Zostel was unable to acquire its assets, and
initiated arbitration proceedings.
• The arbitral award (“Arbitral Award”) held that Zostel was entitled to specific performance of OYO’s
obligations under the Term Sheet.
• Given that OYO was in the process of filing for an Initial Public Offer (IPO), Zostel filed a petition under
Section 9 of the Act seeking a restraint on the IPO, so that the execution of the Arbitral Award in relation
to the specific performance of the Term Sheet is not rendered unenforceable.

Arbitral Award
• The Arbitral Tribunal held that: First, on consideration of the Term Sheet as a whole, it could not be said
to be a mere exploratory document. Even though the recital mentioned that the Term Sheet was not
binding, clauses 42 and 73 of the Term Sheet clarified that the definitive documents were not independent
of the Term Sheet.
• Second, OYO’s acceptance of communication from Zostel regarding performance of acts mentioned in
the Term Sheet also pointed towards its binding value.
• Third, there could not have been complete consensus ad idem on the draft definitive agreements, on the
premise that Zostel had forwarded multiple draft definitive agreements to OYO, and negotiations on the
same were still underway.

15
 • Finally, Zostel was entitled to specific performance of the Term Sheet, noting that Zostel had performed
all its obligations under the Term Sheet successfully. However, as the definitive agreements were yet to be
executed, the Arbitral Tribunal held that Zostel is entitled to file appropriate proceedings for specific
performance and execution of definitive agreements as envisaged under the Term Sheet.

Submission before Delhi High Court

Submissions for Zostel:
• First, as the Arbitral Tribunal had held that Zostel is entitled to specific performance of the Term Sheet,
OYO’s IPO should not be allowed as it would frustrate the enforcement of the award.
• Second, the arbitral tribunal had specifically found OYO to be in default and in breach of its obligations
under the Term Sheet, by failing to execute definitive agreements and transfer 7% of its shares to Zostel.
• Third, the only hurdle in execution of the definitive agreements was the dissent of a particular shareholder
of OYO, and but for that, the draft agreements were all but finalized.
• Fourth, the Term Sheet did not envision a situation where OYO did not transfer 7% of its share to Zostel,
and hence claimed it to be a foregone inevitable conclusion.
• Fifth, the draft shareholders agreement between the parties granted Zostel the rights to 7% equity shares
of OYO, resultantly, disqualifying OYO from issuing IPO under Regulation 5(2) of the SEBI (ICDR)
Regulations.
• Specific performance is a procedural right.

Submissions of OYO:
• First, the Arbitral Award does not offer Zostel substantive rights, and contended that Zostel was relying
on observations made within the Arbitral Award, while the operative part of the Award did not direct
specific performance of the Term Sheet. There was no consensus ad idem between Zostel and OYO on
the particulars of the Term Sheet, and hence, there remained no question of directing a specific
performance.
• Second, the draft agreements relied upon by Zostel, including the draft definitive agreements and
shareholders agreement, were but drafts and could not be shown to be an indicator of consensus between
the parties.
• Third, the act of transferring 7% of OYO’s shares to Zostel, which Zostel claimed OYO was in default
of performing, was contingent upon the “closing” of the contract between the two parties, as envisioned
in the Term Sheet.
• Fourth, the issuing of IPO would not directly impact the agreement between Zostel and OYO, and
submitted that the only relief Zostel might be able to claim is the difference in value of the 7% shareholding
that OYO is to transfer to Zostel i.e., prior to and post the IPO.

Judgment
• The Delhi HC primarily relied on two rulings: Dirk India Pvt Ltd v. Maharashtra State Power Generation
Co. Ltd5(“Dirk India”) in relation to the scope of an interim protection under Section 9 of the Act at a
post-award stage; and Mayawanti v. Kaushalya Devi6 (“Mayawanti”) in relation to the requirement of
consensus ad idem as a necessary condition for specific performance of the contract.
• Scope of Section 9 when invoked at post award stages
o The Delhi HC re-affirmed the position of law set out by the Bombay High Court in Dirk India,
which clarifies that if the petition is filed at the post-award stage, it only serves to protect the
“fruits” of the arbitral award. The Delhi HC thereafter analysed what “fruits” can be derived from
the Arbitral Award in question and observed that the Arbitral Award provided Zostel with a mere
16
 entitlement to specific performance of OYO’s obligations under the Term Sheet, and nothing
further. The Delhi HC further observed that the Arbitral Award did not direct OYO to
immediately hand over the properties it was to transfer to Zostel on the closing of the Term Sheet,
but merely directed Zostel to take steps towards making OYO fulfil its obligations as per the Term
Sheet.
• Requirement of complete consensus ad idem for specific performance
o The Delhi HC restated the position in Mayawanti regarding the requirement of complete
consensus ad idem for securing the remedy of specific performance. The Supreme Court in
Mayawanti had held that if the terms of an agreement are uncertain, and the parties are not at ad
idem, the contract does not exist in the first place, and consequently, there can be no scope for
claiming the remedy of specific performance.
o It observed that, contrary to Zostel’s claim that the parties were on the cusp of agreement, in the
present case the terms of the definitive agreements were clearly not agreed upon.

17
9. [Link] Investment Holdings LLC (“Amazon”) v. Future Retail Limited & Ors. (“Future
Group”)
• Case of Emergency Arbitration. Since there is no express provision for emergency arbitration in India and
many other places. They rely on institutional rules for this.
• The situation for emergency provisions arises before the arbitration agreement.
• How to determine whether a tribunal is regular or emergency arbitral tribunal?
• When both parties agree in an agreement, it is regular in nature.
• Emergency arbitration relies on curial law and not model law. Here, parties have an irreparable
damage that can happen and fast relief is required.
• Unless parties are aggrieved, the registry also doesn’t appoint an arbitrator. But practically, if the
registry has appointed an arbitrator based on the party’s request. It is then the arbitrator that
decides whether emergency arbitration is required or not. Registry does not adjudicate whether
your facts fulfil requirements of emergency arbitration or not.
• The Supreme Court allowed the appeal filed by Amazon against the order of the Division Bench of the
Delhi High Court dated March 22, 2021 (“Impugned Order”), and recognized the validity of an
emergency award passed in an India-seated arbitration under Section 17 of the Arbitration and Conciliation
Act, 1996 (“A&C Act”)
1. Emergency Awards in India-seated arbitrations are enforceable under Section 17 of the Indian A&C Act.
2. An appeal is not maintainable against an order of enforcement of an emergency award under Section 17(2)
of the A&C Act.
3. Depending on the circumstances, parties will need to evaluate whether emergency arbitration will provide
a more effective remedy than seeking interim reliefs before courts in Section 9 of the A&C Act.

• Main question is: How can emergency arbitration be considered under s 17 as an enforceable award.
• Emergency arbitration is part of the Curial Law. It states that assistance must be provided to the parties
seeking to go for EA. Curial Law is to be followed by the Registrar of an institution. If Registrar thinks
fit, based on request of one of the parties and consent of both parties, he appoints an emergency arbitrator.
• The Registrar looks into the request on three grounds while deciding on such an application:
o Multiple agreements
o Multiple parties
o Complexities
• Does the Registrar look into the merits of the case while deciding whether to appoint an emergency
arbitrator? No, he never looks into it.
• This is different from the appointment of regular arbitrators. This is why composition of arbitrator under
emergency arbitration is not called a tribunal.
• Tribunal consists of Arbitrators appointed by way of the Arbitration agreement. Unless the institution
reads the agreement and appoints an arbitrator, it is not regular appointment and it cannot be called a
tribunal.
• Awards of emergency arbitrators are called orders. Emergency arbitration was introduced mainly post
2016.
• Usually in trial courts, claimant files a suit to a registrar and seeks status quo for the next 24 hours in order
to not frustrate the reliefs of the main suit. This order may be passed by the civil judge under O39 in
chamber. This is an emergency assistance provided by Courts. Although the nature is different, facts and
circumstances are also different, O 39 still applies.
• Under Emergency Arbitration, an interim arbitrator is appointed who may grant the interim relief.
However, the only BT is that these orders by the arbitrator need to be enforceable under section 17.
18
 • Another BT is that these provisions of emergency arbitrator is not included in the Model Law. Curial Law
has to be relied upon for the same. However, such an order needs to be enforceable under Model Law.
• One more BT is the grey area about what happens if one party does not agree to an emergency arbitration.
• Difference between emergency arbitration and fast track arbitration
o No connection between them.
o S 29B is very specific wrt time limit of every stage.
o Emergency arbitration only deals with written pleadings. Quick order.
• Section 2(1)(a) is an inclusive definition and hence includes emergency arbitration also.
• Under S 17(2): “any orders” includes emergency orders. So emergency orders are also considered to be
decrees of court.
• Another practical aspect that parties use is to go before a court of law under s 9 and seek an interim order.
This is subject to which type of arbitration are you going with:
o If ad hoc arbitration then goes before a court, there is no point in going for emergency arbitration.
o If institutional, go for emergency arbitration.
Background:
• To encapsulate the facts, Amazon initiated arbitration against Future Coupons Pvt, Ltd. (“FCPL”)
and Future Retail Ltd. (“FRL”) under the Rules of Singapore International Arbitration Centre
(SIAC Rules), pursuant to a shareholders’ agreement (“FCPL SHA”).
• As per the FCPL SHA, the seat of arbitration was New Delhi, India. An emergency award was rendered
on October 25, 2020. Since FRL and FCPL did not comply with the emergency award, Amazon initiated
proceedings in the Delhi High Court to enforce the emergency award. A Single Judge of the Delhi High
Court recognized the emergency award and passed orders to enforce the emergency award.

• However, the Division Bench of the Delhi High Court granted stay on the operation of the order of the
Single Judge.
Issue: In appeal against the order of the Division Bench of the Delhi High Court, the Supreme Court considered
the following questions in the present matter:
• Whether an emergency arbitrator’s award is contemplated under the A&C Act, and whether an emergency
arbitrator’s award is an order under Section 17 of the A&C Act.
• Whether an appeal against an order enforcing an emergency arbitrator’s order under Section 17(2) is
maintainable under Order 43, Rule 1(r) of the Civil Procedure Code.
Parties have the autonomy to choose emergency arbitration
• The Supreme Court noted that while the A&C Act does not contain the words “emergency award”, the
freedom granted to parties under the A&C Act to agree to arbitral institutional rules implies that parties
have a right to make use of the emergency arbitration provisions in the institutional rules chosen by the
parties.
• By virtue of Section 2(6), Section 2(8), and Section 19(2) of the A&C Act, parties can (a) agree to authorize
an arbitral institution to determine issues that arise between the parties, (b) agree to include any arbitration
rules in their arbitration agreement, and (c) agree on the procedure to be followed by an arbitral tribunal
in conducting its proceedings.
• The Supreme Court noted that the parties have an indefeasible right to exercise party autonomy in respect
of choosing institutional rules which can include emergency arbitrators.4 The Supreme Court further stated
that the parties, while exercising such a right to party autonomy, do not bypass any mandatory provision
of the A&C Act, as there is nothing under the A&C Act which prohibits parties from agreeing on a set of
rules providing for the appointment of an emergency arbitrator.

19
Arbitral tribunal’ under the A&C Act includes an ‘emergency arbitrator’
• The Court then considered whether the definition of “arbitral tribunal” contained in Section 2(1)(d) should
so constrict Section 17(1), making it apply only to an arbitral tribunal that can give final reliefs by way of
an interim or final award, and not to an emergency arbitrator that passes an emergency award.
• Section 2(1)(d) of the A&C Act defines ‘arbitral tribunal’ to mean a sole arbitrator or a panel of arbitrators.
The Supreme Court noted that the definition of ‘arbitral tribunal’ under Section 2(1)(d) of the A&C Act
does not include an “emergency arbitrator”.6 However, it stated that Section 1 opens with the words
“unless the context otherwise requires”.
• When read with Section 2(1)(a) [that provides for “any” arbitration, whether or not administered by a
permanent arbitral institution]and Sections 2(6) and 2(8) [which permit incorporation of rules of arbitral
institutions], it is clear that interim orders passed by emergency arbitrators under the rules of an arbitral
institution would be included within the ambit and context of orders passed by an ‘arbitral tribunal’ under
Section 17(1).
• Therefore, the Court held that when Section 17(1) is concerned, the “arbitral tribunal” would, when
institutional rules apply, include an Emergency Arbitrator, the context of Section 17 “otherwise requiring”
– the context being interim measures that are ordered by arbitrators.
Emergency arbitration occurs ‘during arbitral proceedings’
• Remedy under Section 17 of the A&C Act is available to a party only during the arbitral proceedings. FRL
argued that Section 17 provides for interim reliefs only during the arbitral proceedings i.e. after the arbitral
tribunal is constituted. Hence, emergency arbitration that occurs prior to arbitral proceedings or prior to
the constitution of the arbitral tribunal, is not covered by Section 17 of the A&C Act.

• The Court disagreed. It relied on Section 21 of the A&C Act, which provides that arbitral proceedings in
respect of a dispute commence on the date on which a request for that dispute to be referred to arbitration
is received by the respondent. Similarly, Rule 3.3 of the SIAC Rules provides for the commencement of
the arbitration as the date of receipt of the complete ‘Notice of Arbitration’ by the registrar. Taking into
account these provisions, the Supreme Court noted that arbitral proceedings commence when a notice of
arbitration is issued, which is prior to the constitution of an arbitral tribunal.
• Since a remedy under Section 17 is available to a party ‘during the arbitral proceedings’, the powers of a
tribunal in granting such a remedy would include powers exercisable by an emergency arbitrator soon after
arbitral proceedings commence.9 Further, the Supreme Court also stated that the words ‘arbitral
proceedings’ under Section 17 are not limited by any definition and thus encompass proceedings before
an emergency arbitrator.
Emergency Arbitration furthers the object of the A&C Act
• The Supreme Court further noted that the provision of an emergency award furthers multiple objectives,
including, decongesting the court system and giving parties urgent interim relief in cases which deserve
such relief.
• Considering that party autonomy is respected by the A&C Act and that there is no prohibition under the
A&C Act against the appointment of an emergency arbitrator, the Supreme Court concluded that an
emergency arbitrator’s award, which is exactly like an order of an arbitral tribunal once constituted, falls
within the institutional rules to which the parties have agreed. As a result, the same is validly covered under
Section 17(1) of the A&C Act.
• Moreover, the Court stated that a party having agreed to institutional rules, cannot thereafter argue that it
is not bound by an emergency arbitrator’s ruling. Such orders are valid and are made under Section 17(1)
of the A&C Act.

20
 10. PASL Wind Solutions Private Ltd. v. GE Power Conversion India Private Ltd.
• Party autonomy trumps! SC allows two Indian parties to choose foreign seat of arbitration
• Two Indian parties are entitled to elect a seat of arbitration outside India;
• The expression “International Commercial Arbitration” in Part I of the Arbitration Act is party-centric,
whereas, when used in the context of Part II signifies a place-centric approach;
• Resultantly, a foreign seated arbitration between two Indian parties would qualify as “International
Commercial Arbitration” under Part II of the Arbitration Act, and enforcement of a foreign award arising
thereunder will have to be filed before the High Court;
• Two Indian parties are entitled to interim reliefs before Indian Courts, even if their arbitration is seated
outside India;
• SC held that two Indian parties are entitled to elect a foreign seat of arbitration. The Supreme Court further
clarified that the arbitral award passed in such cases would be considered as a foreign award enforceable
under the provisions of Part II of the Arbitration Act, 1996 (“Arbitration Act”).
• Although it has not been expressly ruled by the Supreme Court, a careful review of the judgment suggests
that there may not be any prohibition in two Indian parties electing a foreign law as the substantive law of
the contract, provided the seat of arbitration is outside India.

S. 47, 49, 2[2], 2[1][f], 2[2], 2[6], 2[4], s.2 [e][ii], 9, 44, 45, of the AC Act, 1996
S. 23 and 28 of the Contract Act, 1872
S. 10[3] of Commercial Courts Act, 2015

• The meaning of “any arbitration” includes ad hoc as well as emergency arbitration. Point of reading first
part is because both are Indian parties.
• Even is arbitration is seated/ placed outside India, it can be applicable.
• Although Supreme Court has not EXPRESSLY ruled it, there may not be any prohibition of two Indian
parties electing a foreign law provided that the sea arbitration.
• The court also held that two Indian parties are entitled to interim reliefs from Indian courts in support of
arbitration, even if their arbitration is seated outside India. Although it has not been expressly ruled by the
Supreme Court, a careful review of the judgment suggests that there may not be any prohibition on two
Indian parties electing a foreign law as the substantive law of the contract, provided the seat of arbitration
is outside India.
• Reading s 2(4) and 2(6) together help Indian parties in using Indian Law even when both parties may be
Indian.
Background:
• Certain disputes arose between two companies incorporated in India, namely PASL Wind Solutions
Private Ltd. (“Appellant”) and GE Power Conversion India Private Limited (“Respondent”), in relation
to purchase of convertors. The Respondent was a 99% subsidiary of General Electric Conversion
International SAS, France, which in turn was a subsidiary of the General Electric Company, United States.
• A settlement agreement was executed between the parties on 23 December 2014 (“Settlement
Agreement”). The dispute resolution clause therein provided for arbitration in accordance with the
International Chamber of Commerce (“ICC”) Arbitration Rules with Zurich as the seat of arbitration.
• Disputes arose between the parties under the Settlement Agreement. The Appellant issued a request for
arbitration before the ICC. The Respondent challenged the jurisdiction of the Tribunal on the ground
that two Indian parties cannot elect a foreign seat of arbitration. Notably, the Appellant opposed the
Respondent’s objection on the ground that Indian law did not bar Indian parties from electing a foreign
seat of arbitration.
21
 • The Tribunal dismissed the Respondent’s objection. However, on Respondent’s application, the venue of
the arbitration was decided as Mumbai in order to save costs. Subsequently, an arbitral award was passed
against the Appellant.
What are the practical implications of this judgment?
• This judgment paves the way for Indian parties to choose a foreign seat of arbitration. As a result,
unsuccessful and unhappy parties in such arbitrations will have the opportunity to take two bites at the
cherry post- award, ie to challenge the award before courts at the foreign seat of arbitration in accordance
with the curial law (procedural law), and to resist the enforcement of the resultant foreign award in India.
• Additionally, reliefs under section 9 of the Arbitration Act will continue to be available in such foreign-
seated arbitrations between the Indian parties.
• The permissibility of Indian parties choosing a foreign seat is critical for foreign companies having
subsidiaries in India.
• Such companies prefer to adjudicate disputes with other Indian parties outside India for several
commercial reasons such as neutrality, efficiency in the supervision of arbitration proceedings by courts
at the seat, and speed of disposal in courts at the seat should a challenge arise to the arbitration award.
Enforcement proceedings before Gujarat HC:
• The Respondent filed for enforcement of the award under Sections 47 and 49 of the Arbitration Act
before the Gujarat High Court. The Appellant resisted the enforcement proceedings on the premise that
the seat of arbitration was at Mumbai, and that choice of foreign seat by two Indian parties is against public
policy of India (contrary to their previous stand in the arbitration proceedings).
• The Gujarat High Court upheld the enforcement of the arbitral award. However, it denied the availability
of interim relief to the Respondent under Section 9 of the Arbitration Act on the ground that the term
“international commercial arbitration” in the proviso to Section 2(2) has the meaning ascribed by Section
2(1)(f) of the Arbitration Act, i.e., in the context of such arbitration taking place in India.
• The Appellant preferred the present appeal before the Supreme Court, while the Respondent filed cross-
objections challenging the finding of the Gujarat High Court on the maintainability of petition under
Section 9 of the Arbitration Act.
Judgement of the SC:
Seat of arbitration:
• The Appellant raised an objection on the maintainability of the enforcement proceedings filed under Part
II of the Arbitration Act and contended that by applying the ‘closest connection test’, the seat of arbitration
was Mumbai. The Supreme Court disagreed and observed that the Tribunal had explicitly recorded in the
Procedural Order that the seat of arbitration was Zurich, and the venue was shifted to Mumbai only to
save costs to the parties.
• The Supreme Court also noted that parties had not challenged the Procedural Order. On this basis, the
Supreme Court clarified that the closest connection test applies where the designation of the seat of
arbitration is unclear, which is not applicable in the facts of the case.
International Commercial Arbitration and Foreign Awards:
• The Respondent asserted that the arbitral award was a ‘foreign award’ and accordingly filed for
enforcement of the award under Part II of the Arbitration Act. However, the Appellant contended that
the expression “unless the context otherwise requires” appearing in Section 44 permitted it to import the context
of Section 2(1)(f) of the Arbitration Act into Section 44.
• Simply put, Section 44 of the Arbitration Act applied only when the arbitration involved “(i) an individual
who is a national of, or habitually resident in, any country other than India; or (ii) a body corporate which is incorporated in
22
 any country other than India; or (iii) an association or a body of individuals whose central management and control is exercised
in any country other than India; or (iv) the Government of a foreign country” as defined in Section 2(1)(f) in Part I of
the Arbitration Act.
• To substantiate the above submission, the Appellant also submitted that the proviso to Section 2(2) of the
Arbitration Act acted as a bridge that connected Part I and Part II of the Arbitration Act. Hence, definition
of international commercial arbitration under Section 2(1)(f) from Part I could be imported into Section
44 of Part II by virtue of this connection.
• The Supreme Court held that Part I is a completed code that dealt with arbitrations seated in India,
including appointment of arbitrators, commencement of arbitration, making of an award, challenges and
execution of the award. Therefore, it had no application to a foreign-seated arbitration. Similarly, Part II
only prescribes for the enforcement of a foreign award, with the only exception being Section 45 that deals
with referring the parties to arbitration. Accordingly, the Supreme Court concluded that Part I and II of
the Arbitration Act are mutually exclusive.
• The Supreme Court further held that the context of the term “International Commercial Arbitration” as
used in Part I, i.e., Section 2(1)(f)) of the Arbitration Act is different from Part II i.e., Section 44. Under
Section 2(1)(f), the definition of the expression “International Commercial Arbitration” is party-centric
wherein at least one of the parties to the arbitration agreement should be a person who is a national of or
habitually resident in any country other than India.
• However, the term “International Commercial Arbitration” under Section 44 signifies a place-centric approach.
• Thus, if an arbitration is convened between any two parties in a territory outside India, the New York Convention would
apply, and the arbitration will get classified as an “International Commercial Arbitration”.4
• Resultantly, an arbitral award made in such arbitrations would be considered to be ‘foreign awards’ which
are enforceable and recognized under Part II of the Arbitration Act.
Contract Act and Public Policy:
• Contrary to their previous stand, the Appellant submitted that two Indian parties electing a foreign seat of
arbitration would be contrary to Sections 23 and 28 of the Indian Contract Act, 1872 (“Contract Act”).
• With respect to Section 28 of the Contract Act, Exception 1 expressly exempts an arbitration
agreement from being in restraint of legal proceedings.
• The Court relied on the Supreme Court’s ruling in Atlas Exports Industries v. Kotak &
Company (“Atlas”) under the Arbitration Act, 1940 to the effect that Exception 1 to Section 28 of the
Contract Act specifically saves the arbitration of disputes between two persons, without reference
to the nationality of persons who may resort to arbitration.
• With respect to Section 23 of the Contract Act, the question framed by the Court was whether the public
policy of India interdicts the party autonomy of two Indian persons referring their disputes to
arbitration at a neutral forum outside India.
• The Supreme Court held that for “public policy” under Section 23 of the Contract Act to be triggered,
explicit harm to the public has to be proved.
• Additionally, the Supreme Court held that the freedom of contract had to be balanced with a clear and
undeniable harm to the public, and that there was no public harm in permitting two Indian parties from
getting their disputes arbitrated at a neutral forum outside India.
Section 28(1)(a) of the Arbitration Act:
• The Appellant submitted that two Indian parties electing a foreign seat of arbitration would be contrary
to Sections 28(1)(a) of the Arbitration Act. The Supreme Court held that Section 28(1)(a), when read with
Sections 2(2), 2(6) and 4 of the Arbitration Act, made it clear that the restriction to adjudicate the dispute
in accordance with the substantive law of India was only for cases where the arbitration was situated in
India.
23
 • The Court observed that Section 28(1)(a) of the Arbitration Act makes no reference to an arbitration being
conducted between two Indian parties in a country other than India, and cannot be held, by some tortuous
process of reasoning, to interdict two Indian parties from resolving their disputes at a neutral forum in a
country other than India.
• The Supreme Court observed, “Nothing stands in the way of party autonomy in designating a seat of arbitration outside
India even when both parties happen to be Indian nationals.

Section 10 of Commercial Courts Act, 2015:

• The Appellant placed reliance on Section 10(3) of the Commercial Courts Act, 2015 (“CC Act”) which
states that in all applications or appeals that arise out of arbitrations other than International Commercial
Arbitrations, the principal civil court of original jurisdiction in a district would have the jurisdiction.
• Since, two Indian parties electing a foreign seat of arbitration cannot be termed as an International
Commercial Arbitration, Section 10(3) would apply, consequently, the Gujarat High Court did not have
the requisite jurisdiction to adjudicate the case.
• However, the Supreme Court rejected the contention and noted that since the arbitral award is a foreign
award, it has to be enforced under Part II of the Arbitration Act. The explanation to Section 47 of the
Arbitration Act provides that only the High Court would have jurisdiction to enforce a foreign award.
Ability to secure interim reliefs under Section 9 of the Arbitration Act:
• The Supreme Court categorically observed that when two Indian parties elect a foreign seat of arbitration,
it would be classified as an international commercial arbitration by relying on the place-centric approach.
• Accordingly, it ruled that the interim application under Section 9 should be heard in terms of Section
2(e)(ii) of the Arbitration Act, and was therefore maintainable before the Gujrat High Court.
• Introduction: The Supreme Court has recently ruled that two Indian parties can arbitrate outside India
and the resulting award will be valid and enforceable in India.
• Brief Facts: Disputes arose between the parties under an agreement for the purchase of convertors. A
settlement agreement was executed which provided for ICC arbitration with Zurich as the seat of
arbitration. Since no governing law was specified, the parties were governed by the law of the seat, ie Swiss
law.
• The Tribunal's jurisdiction was challenged on the ground that Indian parties could not choose foreign law.
The Tribunal held that there was no bar. The arbitration was held at Mumbai to save costs. The Tribunal
ruled in favour of the Respondent, who then sought to enforce the award. Enforcement was resisted on
the basis that it was against public policy for two Indian parties to choose a foreign seat and law.
• Decision: The Supreme Court held that Indian parties are free to choose a seat outside India and that
there is no bar under the Arbitration & Conciliation Act 1996 against choosing a foreign law as the law of
the contract. It clarified that the resultant award would be a foreign award and enforceable in India under
Part-II of the Act. Indian courts would also be entitled to grant interim relief in relation to such awards.
• Conclusion: The decision reaffirms party autonomy and clarifies the issue regarding Indian parties
choosing foreign law following the conflicting judgments1 that have been passed by various courts.

24
 11. Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engineering Pvt. Ltd.
• Time to re-think scope of appeal in arbitral appointments
• Parliament may need to have a re-look at Section 11 (7) and Section 37 of the Act;
• Arbitrator directed to determine existence of an arbitration agreement as a preliminary issue prior to
considering merits.
Introduction:
• Recently, the Supreme Court in Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engineering Pvt. Ltd. (“Pravin
Electricals”), noted that Parliament may need to have a re-look at Section 11(7) and Section 37 of the
Arbitration and Conciliation Act, 1996 (“Act”) so that orders made under Section 8 and 11 are brought at
par with respect to their appealability.
• Before we delve into the facts and analysis in the present ruling, we have discussed the scope of provisions
relating to ‘reference to arbitration’ and ‘appointment of arbitrators’ and the ‘scope of appealable orders’
under the Act.

Reference to arbitration under Section 8:

• Under the act, a judicial authority is obligated to refer an ongoing dispute to arbitration if disputes arise
out of a contractual relationship which includes an arbitration agreement. However, the judicial authority
shall not refer the parties to arbitration if it finds that prima facie no valid arbitration agreement exists. The
Supreme Court, in Vidya Drolia v. Durga Trading Corporation (“Vidya Drolia”), dealt with the scope of
a prima facie determination of an arbitration agreement.3
• In Vidya Drolia, the Supreme Court stated that the courts need not venture into debatable questions of
facts surrounding the dispute.
• Nevertheless, courts must consider the following instances to refuse reference to arbitration in an
application under Section 8 – (a) when the cause of action relates to an action in rem, (b) when the subject
matter of the dispute affects third-party rights, have erga omnes effect and requires centralised adjudication;
(d) when the subject matter of the dispute relates to inalienable sovereign and public interest functions of
the state; (e) when the subject matter of the dispute is expressly non-arbitrable as per Indian statutes.

Arbitrator Appointment under Section 11:

• If parties to an arbitration agreement fail to appoint an arbitrator, the court can appoint the arbitrator for
the parties. The Arbitration and Conciliation (Amendment) Act, 2015 (“2015 Amendment Act”) inserted
a new provision limiting the scope of judicial review in a petition under Section 11. The 2015 Amendment
Act confined the courts to only examine the ‘existence’ of an arbitration agreement in an application under
Section 11.
• The Supreme Court in Vidya Drolia deliberated on the scope of ‘existence’ of the arbitration agreement while
deciding an application under Section 11. The Supreme Court held that the ‘existence’ and ‘validity’ of an
arbitration agreement are intertwined. Further, an arbitration agreement does not exist if it is illegal or does
not satisfy mandatory legal requirements.6

Appealable order under the Act: Section 8 vis-à-vis Section 11

• Section 37 of the Act exhaustively enlists orders against which an appeal can be preferred by parties under
the Act. A party can prefer an appeal under Section 37, inter alia, against an order of the court refusing to
refer the parties to arbitration under Section 8. However, parties cannot prefer an appeal under Section 37
against an order of the court under Section 11.

Factual background:

25
 • The appeal before the Supreme Court arose from a Delhi High Court (“High Court”) order on
appointment of an Arbitrator under Section 11(6) of the Act to adjudicate disputes between the parties
regarding payment obligations.
• The High Court, relying on the documentation placed on record, concluded that an arbitration agreement
existed and referred the parties to arbitration for adjudication of the dispute. The High Court appointed a
Sole Arbitrator.
• On appeal, the Supreme Court was faced with the issue on whether an arbitration agreement, in fact,
existed.

Supreme Court ruling and analysis:

The Supreme Court inferred that it cannot render a conclusive finding to the effect that there exists an arbitration
agreement between the parties as, amongst other reasons:
1. The agreement dated July 07, 2014 was ostensibly executed before a notary in Faridabad, Haryana whereas
the parties had their registered offices in Bihar and Mumbai respectively. Further, on the date on which
the agreement was executed, the license of the notary had expired.
2. Report of Central Forensic Science Laboratory (CFSL) regarding the specimen signatures of the
Appellant’s managing director was inconclusive.
3. The parties were in discussions even on July 15, 2014 i.e. subsequent to the alleged contract coming into
force, where the Appellant disputed various terms of the draft contract in reply to the email dated July 15,
2014; this suggested that no concluded contract between the parties was in fact existing.
4. Before the High Court, the Respondent contended that the contract was concluded on a different date -
on July 07, 2014, as opposed to July 15, 2014.

The Supreme Court noted that the issue of existence of an arbitration agreement would involve the examination
of documentary evidence and witness testimony. Since the proceedings under Section 11 of the Act are summary
in nature, questions on the existence of an arbitration agreement cannot be examined solely from a factual
perspective.

The Supreme Court set aside the order of the High Court to the extent it found the existence of an arbitration
agreement between the parties. However, the Supreme Court upheld the appointment of the arbitrator by the
High Court. The Supreme Court left the question of existence of the arbitration agreement to be determined by
the arbitrator as a preliminary issue. Further, it directed that the arbitrator would go ahead with the merits of the
case only if it was found that an arbitration agreement exists between the parties.

Such a direction is in consonance with the Indian judiciary’s pro-arbitration approach. At the same time, it also
ensures that where the existence of an agreement is dealt with as a preliminary issue, the parties are not subjected
to the rigor of the entire arbitration proceedings, until and unless there is a clear finding on the existence of an
arbitration agreement.

Separately, the Supreme Court noted that as a result of the judgment in Vidya Drolia, Section 8(1) and Section
11(6) of the Act have been brought at par with regards to the scope of determination of the validity / existence of
the arbitration agreement. The Supreme Court inferred that an anomaly has arisen as a result of the parity between
the scope of Section 8 and 11 coupled with existing incongruity in their appealability under the Act.

An application under Section 8 of the Act is subject to a prima facie determination of the validity of the arbitration
agreement. A prima facie determination of the validity of the arbitration agreement would entail a consideration of
the factors laid down in Vidya Drolia. In light of the above, the Supreme Court noted that parliament may need to
re-look at the relevant provisions so that orders made under Sections 8 and 11 are brought on par qua appealability.

Findings of the SC:

26
Upon hearing the parties, the SC observed that:

• Due to the various conundrums that arise on the facts of this case, it is unsafe to conclude, one way or the
other, that an arbitration agreement exists between the parties. The court made the following observations:
• The parties were not ad idem on submission of the dispute to arbitration, in view of the fact that when
the draft agreement was sent by PEPL to Galaxy, the same was sent back by Galaxy, where various terms
were disputed;
• The finding that PCTPL was a sub-contractor of PEPL, is contrary to the pleadings between the parties,
where the nature of entity varies from being a joint venture partner to PEPL to having common Directors
with PEPL, and thereafter to being described as the lead partner;
• The Court also observed that correspondence between SBPDCL and Galaxy do show that there is some
dealing between PEPL and Galaxy, with respect to a tender floated by SBPDCL, but not sufficient to
conclude that there is a concluded contract between the parties, which contains an arbitration clause; and
• The CFSL report did not express an opinion either way. It was therefore incumbent upon the learned
Single Judge to determine as to whether the Agreement was entered into.
• The court further placed reliance on a three-judge bench judgement of SC in Vidya Drolia, and observed
that a deeper consideration of whether an arbitration agreement exists between the parties must be left to
an Arbitrator who is to examine the documentary evidence produced before him in detail after witnesses
are cross-examined on the same.
• Thereby, partially setting aside the judgment passed by the HC till the extent that the Court held that an
arbitration agreement exists between the parties. Further, upholding the appointment of Justice G.S.
Sistani (Retd.), as a Sole Arbitrator, who would first determine the issue existence of the arbitration
agreement and then go on to decide the merits of the case, only if it is first found that such an Agreement
exists.

The Court further made another an observation in light of what has been decided in Vidya Drolia, that, a refusal
to refer parties to arbitration is appealable under Section 37(1)(a) of the Act, a similar refusal to refer parties to
arbitration under Section 11(6) read with Sections 6(A) and 7 of the Act, is not appealable, which creates an
anomaly. Thereby, suggesting that the parliament should re-look at Section 11(7) and Section 37 of the Act, so
that orders made under Sections 8 and 11 of the Act, are brought at par, qua appealability as well.

Analysis:
The Law Commission of India in its 246th Report examined the extent till which a Court can interfere while
appointing an arbitrator under Section 11 of the Act. Thereby, recommending the insertion of Section 11(6-A) to
the Act, which lays down that while appointing an arbitrator under Section 11(6-A) of the Act, the Court should
confine to the examination of the existence of an arbitration agreement. Thereby, limiting the intervention of the
Court at the stage of appointment of the arbitrator.

A 3-judge bench of SC in Mayavati Trading has also observed that, Section 11 (6-A) of the Act is confined to the
examination of existence of the arbitration agreement and is to be understood in a narrow sense. However, the
Court in the present case, while determining the existence of the arbitration has determined certain factual aspects
and has not confined itself to the limited powers available to the Court under Section 11 (6-A), thereby defeating
the legislative intent of the Act.

The Court further recommended that there should be a provision of appeal from an order passed by the Court
while deciding an application under Section 11 of the Act, so that the orders passed under Section 11 of the Act,
can be at brought at par with the orders passed under Section 8 of the Act.

It is pertinent to note that the Court under Section 8 of the Act, has been given powers to examine the validity of
an agreement as opposed to the power of the Court under Section 11 of the Act, where it has to look merely at
27
the existence of an arbitration agreement. Therefore, the Court under Section 8 of the Act, determines various
factor while deciding the question of validity of an arbitration agreement as compared to the Court under Section
11 of the Act.

Given the fact that the scope of inquiry may be different for a Court in a Section 11 and a Section 8 scenario,
could it be said that because an appeal lies from a decision in an application under Section 8, the same should
necessarily be extended to an application under Section 11? The question does arise in view of the present decision
and one which as of now does not seem to have a conclusive answer. Hopefully, a judicial precedent or a legislative
amendment may address this in the future.

28
 12. SREI Infrastructure Finance Ltd. (“SREI Infrastructure”) vs. Tuff Drilling Private Limited
• Apex court rules on inherent power of arbitral tribunals for procedural review

Supreme Court holds that:

• An arbitral tribunal has inherent power to recall its order of termination in the event of default in filing
statement of claim.
• Argument of tribunal being functus officio stands dealt with insofar as proceedings where termination is due
to default in filing statement of claim.

Introduction:
In a recent decision in SREI Infrastructure Finance Ltd. (“SREI Infrastructure”) vs. Tuff Drilling Private
Limited (“Tuff Drilling/Claimant”), the Supreme Court (“Court”) has held that in the event an arbitral tribunal
terminates the proceedings under Section 25(a) of the Arbitration & Conciliation Act, 1996 (“A&C Act”), it can
recall its order if sufficient cause is shown by the claimant for committing default in filing its statement of claim.
The Supreme Court held that if the arbitral tribunal is empowered to condone default on sufficient cause being
shown, this can be done by the tribunal recalling its order after the proceedings are terminated.

Facts:
As per the first preliminary meeting between the Sole Arbitrator and the parties on August 27, 2011, the Tuff
Drilling was required to file its Statement of Claim by November 19, 2011. The Claimant failed to submit the
SOC. The date for submission was extended to December 9, 2011. The Claimant failed again in making its
submission. On December 12, 2011, the tribunal terminated the proceedings in view of Section 25(a) of the A&C
Act.

On January 20, 2012, the Claimant filed an application stating reasons for delay in detail, praying for condonation
of delay in filing the SOC and recall of the order of termination. On April 26, 2012, the Tribunal rejected the
Claimant’s application on the ground that it had become functus officio and consequently could not recall its order
of termination.

Aggrieved by the Tribunal’s order, the Claimant filed a revision application under Art. 227 of the Constitution
before the Calcutta High Court. The High Court held that tribunal has power to recall its own order. The High
Court set aside the order of the arbitral tribunal and remitted the matter back to the arbitral tribunal to decide the
Claimant’s application on merits. Aggrieved by the Calcutta High Court judgment, the Original Respondent
approached the Supreme Court in appeal.

Issues:
• Whether arbitral tribunal, which has terminated the proceeding under Section 25(a) due to non-filing of
claim by claimant, has jurisdiction to consider the application for recall of the order terminating the
proceedings on sufficient cause being shown by the claimant?
• Whether the order passed by the arbitral tribunal under Section 25(a) terminating the proceeding is
amenable to jurisdiction of High Court under Article 227 of the Constitution of India?

Judgment:
The Court upheld the decision of the Calcutta High Court and held that the arbitral tribunal can recall the order
and re-commence the proceedings after termination of proceedings under Section 25(a) on sufficient cause being
shown by the Claimant. It directed the tribunal to proceed to decide the Claimant’s application expeditiously. The
reasoning of the Court is encapsulated below.

29
The scheme of Section 25(a)
Section 25 empowers an arbitral tribunal to terminate the proceedings upon failure of the Claimant to
communicate his SOC within the time as envisaged by Section 23, unless sufficient cause is shown by the Claimant.
The Court considered that conjunction of the words “where without showing sufficient cause” and “the claimant fails to
communicate his statement of claim” imposes a duty on the tribunal to inform the claimant to show-cause why the
arbitral proceedings should not be terminated. The Tribunal had done so. However, the Court stated that the
Scheme of Section 25 of the Act clearly indicates that on sufficient cause being shown, the statement of claim can
be permitted to be filed even after the time as fixed by Section 23(1) has expired. Hence, it did not matter if the
cause was shown before or after termination of the proceedings under Section 25(a). The Court held that an
arbitral tribunal is not denuded from accepting the cause and allowing the submission of SOC after an order under
Section 25(a).

Termination under Section 25(a) versus Section 32(2)(c):

The Court made a comparative analysis of termination under Sections 25(a) and under Section 32(2). Whilst
Sections 32(2)(a) and 32(2)(c) were not applicable to the present case, the Court delved into Section 32(2)(c) –
where a tribunal may terminate proceedings if it finds that the continuation of the proceedings has for any other
reason become ‘unnecessary’ or ‘impossible’. The Court held that these terms did not cover a situation of ‘default’ as
under Section 25(a). Further, Section 32(2) would come into play when a situation under Section 25(a) is absent
i.e. the proceedings have continued. The Court also sought aid from Section 33(3) which reiterates termination of
the ‘mandate of the arbitral tribunal’. The absence of these words in Section 25(a) further reinforces the legislative
intent and purpose in making a distinction between the two provisions.

Ancillary powers of the arbitral tribunal: Power of Review

The Court drew a comparison between ancillary powers of an industrial tribunal to set aside its ex-parte award on
being satisfied that there was sufficient cause, despite absence of an express provision under the Industrial
Disputes Act, 1956. The Court held that a Tribunal or body should be considered to be endowed with such
ancillary or incidental powers as are necessary to discharge its functions effectively for the purpose of doing justice
between the parties, unless there is any indication in the statute to the contrary.

While recognizing that power of review has to be expressly conferred by a statute, the court held that power of
review of merits is distinguishable to review of procedure. A quasi-judicial authority is vested with inherent powers
to invoke procedural review. When a party establishes that the procedure followed by the quasi-judicial authority
suffers from illegality vitiating the proceeding, the order passed is liable to be recalled and reviewed.

The Court also analysed Section 19(2) of the A&C Act which permits the parties to agree on the procedure to be
followed by the arbitral tribunal. The Court held that this provision permitted parties to agree upon a remedy of
review/revival of arbitral proceedings in the arbitration agreement. Consequently, the Court opined that while
parties could agree to such a review, there was no reason to denude a tribunal from reviving the arbitral
proceedings already terminated – in the absence of such agreement.

Order IX Rule 9 of Code of Civil Procedure, 1908

The Court held that the tribunal could rely on Order IX Rule 9 of the Code of Civil Procedure, 19084 in setting
aside an order of dismissal where sufficient cause is shown after the order. The Court held that under Section
19 of the A&C Act, the tribunal is not bound by the procedure laid down under the Code. However, it is not
incapacitated from relying on the CPC. It can also travel beyond the Code of Civil Procedure and the only fetter
that is put on its powers is to observe the principles of natural justice. The Court held that principles of Order IX
Rule 9 could therefore be invoked by the arbitrator.

30
Scheme of the A&C Act
Delving into the object and purpose of the A&C Act, the Court held that upon denuding the arbitral tribunal from
recalling its termination order under Section 25(a), the parties would only be left with the remedy to approach the
High Court under its writ jurisdiction. This would be contrary to the object and purpose of the A&C Act to
provide effective dispute resolution. Going a step further, the Court held that if the tribunal was denuded from
its power to recall its decision under Section 25(a), it would also be denuded from recalling or reviewing a decision
under Section 25(b) where the respondent fails to communicate its Statement of defence and the tribunal continues
with the proceedings – leaving the respondent to approach the High Court by way of a writ petition.

Analysis:
Shutting the door on the oft heard argument of the arbitral tribunal being functus officio, this judgment reiterates the
purport of Section 5 of the A&C Act6 which remains central to effectuating speedy and effective dispute resolution
under the A&C Act. Courts in India are increasingly adopting the policy of minimal court intervention in
arbitration proceedings, thereby leaving a lion’s share of the proceedings emanating out of arbitration to be dealt
with by the arbitral tribunals themselves, wherever appropriate.

The judgment recognizes the critical distinction between power of review on merits – a statutory power, as
opposed to powers of a tribunal to review procedure – an inherent power. This distinction significantly cuts down
the scope of court interference where procedural defects arise in matter. Being procedural in nature, these defects
can be effectively cured by the forum involved and reduce the scope of court intervention. By extending the power
of procedural review to arbitral tribunals and vesting an arbitral tribunal with ancillary inherent powers, the
Supreme Court has taken a wide step towards empowerment of arbitral tribunals. This judgment also places
arbitral tribunals at a pedestal equal to quasi-judicial authorities – entailing equal applicability of principles
governing procedure.

31
 13. M/s Emkay Global Financial Services Limited v. Girdhar Sondhi

Introduction of fresh evidence for setting aside arbitral award:

• Proceedings under Section 34 of Arbitration Act are summary in nature Courts should not look beyond
the record of arbitral tribunal to set aside arbitral awards Leading evidence in Section 34 proceedings
should not be allowed unless absolutely necessary.
• The Supreme Court (“Court”) recently ruled in the case of M/s Emkay Global Financial Services Ltd. v.
Girdhar Sondhi, that unless absolutely necessary, the courts should not go beyond the record before the
arbitrator in deciding an application for setting aside an award.
• The court also reiterated that “seat” in the context of arbitration proceedings is akin to an exclusive
jurisdiction clause and would vest the seat courts with exclusive jurisdiction over the arbitration
proceedings.

Facts:

• The dispute arose between M/s Emkay Global Financial Services Ltd. (“Appellant”), who was a registered
broker with the National Stock Exchange (“NSE”) and Mr. Girdhar Sondhi (“Respondent”) who was
Appellant’s client. The Respondent had initiated arbitration proceedings against Appellant and claimed an
amount of INR 736,620 (Rupees Seven Hundred and Thirty-Six Thousand Six Hundred and Twenty) in
arbitration.
• The arbitration proceedings took place under Agreement dated July 3, 2008 (“Agreement”) and the NSE
bye-laws. Under the Agreement, exclusive jurisdiction was granted to the courts in Mumbai. Similarly,
under the NSE bye-laws, exclusive jurisdiction was also granted to the courts of Mumbai.
• The bye-laws further prescribed seats of arbitration for different regions, geographical locations for
conducting arbitrations etc. NSE referred the present dispute to a sole arbitrator who conducted
proceedings at Delhi and passed an award dated December 8, 2009 (“Award”) rejecting the claim of
Respondent. Subsequently, the Respondent filed an application to set aside the Award under Section 34
of the Arbitration and Conciliation Act, 1996 before District Court in Delhi (“District Court”).
• The District Court dismissed the application under Section 34 2 on the ground that it would not have the
jurisdiction in light of the exclusive jurisdiction clause. However, on appeal, the Delhi High Court held
that the issue of jurisdiction in the present case was a question of fact and parties were not allowed to lead
evidence on it.
• Accordingly, the High Court directed District Court to decide this question (in relation to existence of
territorial jurisdiction of Delhi Courts) after framing a specific issue and permitting parties to lead evidence
on it.

Judgment

• Seat is akin to exclusive jurisdiction clause The Court took note of its several judgments on the effect of
exclusive jurisdiction clause. Noting that the concept of ‘juridical seat’ which was evolved by courts in
England have taken root in India, the Court, referred to its recent judgment in the case of Indus Mobile
Pvt. Ltd. v. Datawind Innovations Pvt. Ltd.
• In this case, it was opined that the moment a seat is designated in arbitration, it is akin to an exclusive
jurisdiction clause. The court held that, under law of arbitration, unlike the Code of Civil Procedure
(“CPC”) which applies to civil suits, a reference to “seat” is a concept by which a neutral venue can be

32
 chosen by parties to an arbitration clause. Such neutral venue may not in the classical sense have
jurisdiction – implying that it may not have jurisdiction as per CPC.
• However, in arbitration, the moment a “seat” is determined, it would vest the “seat” courts with exclusive
jurisdiction i.e. if the “seat” is Mumbai, it would vest Mumbai courts with jurisdiction for the purposes of
regulating arbitral proceedings arising out of the agreement between the parties. Following the above
judgment, the court held that Mumbai courts will have exclusive jurisdiction owing to the Agreement and
NSE bye-laws in the present case.
• Leading evidence under Section34 proceedings should not be allowed Subsequently, the Court analyzed
the second aspect of the Delhi High Court’s order. The Delhi High Court had directed District Court to
conduct a trial on the question of fact relating to jurisdiction by allowing parties to lead evidence on it.
• In reference to above, the Court identified two of Delhi High Court’s own judgments, where High Court
had earlier opined that there is no requirement under Section 34 for parties to lead evidence. Thereafter,
the Court discussed its own judgment in the case of Fiza Developers &Inter-trade Pvt. Ltd. v. AMCI
(India) Pvt. Ltd. and Anr.
• The question in that case was whether issues are required to framed in a section 34 proceedings as they
are required in a normal suit as per Order XIV Rule 1 of the CPC. Answering the question in negative, it
was held that the Section 34 proceedings are summary proceedings and framing of issues was not an
integral process of the proceedings under Section 34.
• Thus, the Court indicated that proceedings under Section 34 may not have the facets of a normal civil suit.
Subsequently, the Court also observed the report of High-Level Committee to review the
institutionalization of arbitration mechanism in India, 2017 (“Srikrishna Committee Report”).
• In the report, the committee had expressed its displeasure over practice that had evolved in some High
Courts which allowed parties to lead evidence in Section 34 proceedings just like in a suit. Such practice
was developed because of the language of Section 34(2)(a) which required parties to “furnish proof” as to
the existence of the grounds under Section 34.
• Accordingly, Shrikrishna Committee Report recommended amending the language of Section 34(2)(a)
such that petitions under Section 34 do not take form of a civil suit. Taking heed from the Shrikrishna
Committee report, the government recently introduced Arbitration and Conciliation (Amendment) Bill of
2018 (“Proposed Amendments”) which proposes to incorporate this change into the Act.
• Relying on the above, the Court clarified that “an application for setting aside an arbitral award will not
ordinarily require anything beyond the record that was before the Arbitrator. However, if there are matters
not contained in such record, and are relevant to the determination of issues arising under Section 34(2)(a),
they may be brought to the notice of the Court by way of affidavits filed by both parties. Cross-examination
of persons swearing to the affidavits should not be allowed unless absolutely necessary, as the truth will
emerge on a reading of the affidavits filed by both parties.”

Conclusion:

• The Court recognised that speedy resolution of arbitral disputes has been the raison d'etre for enactment
of Arbitration Act in 1996. If issues are framed and oral evidence is led in a summary proceeding under
Section 34, then quite obviously, the object of legislation would be defeated. With the present judgment,
the Court has tightened the lid around Section 34 proceedings and set the law in its right place.
• However, at this juncture we may have to treat this judgment with slight caution. This is because the
judgment still leaves room (howsoever minuscule) and rightly so for leading evidence in applications under
Section 34 of the Arbitration Act. On the other hand, it also indicated that after the Proposed
Amendments are passed, there may be no room for leading evidence in Section 34 proceedings at all. It is
believed that this may raise certain concerns.
33
 • There may be situations where parties may want to bring on record certain facts which came to light post
the arbitral proceedings. A few examples could be: a. Facts regarding incapacity of party to the agreement,
being of unsound mind or minor etc.; b. Misrepresentation of facts (or fraud played) by a party in
arbitration not then known to other party; c. Facts relating to impartiality / conflict of interest of the
arbitrator, not then known to the innocent party.
• Hence, under limited circumstances, certain material facts should be allowed to be examined in
proceedings under Section 34. One may argue that even after the adoption of the language under the
Proposed Amendments, the courts can still examine additional facts in light of arbitral tribunal’s record
and give their findings.
• However, it now remains to be seen how the new language of Section 34(2)(a) under the Proposed
Amendments will operate in light of this judgment.

In its judgment dated August 20, 2018 in M/s Emkay Global Financial Services Limited v. Girdhar Sondhi,
the Supreme Court of India examined whether a party can lead evidence in proceedings instituted under Section
34 of the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’). Relying on its judgment in Fiza Developers
& Inter-Trade Private Limited v. AMCI (India) Private Limited., the Supreme Court held, inter alia, that in
order to ascertain whether a party has “furnished proof” under Section 34(2)(a) of the Arbitration Act, a Court
need not examine anything beyond the record of the proceedings before the arbitrator. If the matters relevant to
the determination of issues exist, which are not contained in the record of the arbitration proceedings, the same
may be brought to the notice of the Court by way of affidavits filed by the parties in the proceedings under Section
34 of the Arbitration Act. It was also held that cross-examination of persons swearing to such affidavits should
not be permitted unless absolutely necessary

34
 14. The Government of Haryana PWD Haryana (B and R) Branch v. M/s. G.F. Toll Road Pvt. Ltd.
& Ors.
• Former employee can be appointed as an arbitrator
• The Arbitration Act does not disqualify a former employee from acting as an arbitrator, provided there
are no justifiable doubts as to his independence and impartiality;
• Even the 2015 Amendment Act does not preclude former employees being appointed as arbitrators;
• When the mandate of an arbitrator terminates for any reason whatsoever, a substitute arbitrator shall be
appointed according to the rules applicable to the appointment of the original arbitrator.
Introduction: Recently, in the case of The Government of Haryana PWD Haryana (B and R) Branch (“State/
Appellant”) v. M/s. G.F. Toll Road Pvt. Ltd. & Ors1 (“Respondents”)., the Supreme Court once again had
occasion to decide whether the appointment of an arbitrator, who was formerly an employee of one of the parties,
could by itself lead to justifiable doubts regarding his independence and impartiality. It also considers the scope
of Entry 1 in the fifth schedule inserted to the Arbitration & Conciliation Act, 1996 (“Act”) by way of the
Arbitration and Conciliation (Amendment) Act, 2015 (“Amendment Act”).
Factual matrix:

• M/s. G. F. Toll Road Pvt. Ltd. (“Respondent No.1”) was awarded a works contract for construction,
operation and maintenance of Gurgaon Faridabad Road and Ballabhgarh-Sohna Road on a Build, Operate
and Transfer basis pursuant to which a concession agreement (“Agreement”) was entered into in 2009.
• The dispute resolution clause therein inter alia provided that “There shall be a Board of three arbitrators
of whom each party shall select one and the third arbitrator shall be appointed in accordance with the
Rules of Arbitration of the Indian Council of Arbitration”. The Arbitration was to be held in accordance
with the rules of the Indian Council of Arbitration (“ICA”).
• When disputes arose between parties, Respondent No.1 on March 30, 2015 invoked arbitration.
Respondent No.1 appointed a retired Engineer-in-Chief as their nominee arbitrator. The State also
appointed a retired Engineer-in-Chief as its nominee arbitrator.
• The ICA raised an objection to the arbitrator appointed by the State on the grounds that he was a retired
employee of the State and that therefore there may be justifiable doubts with respect to his integrity and
impartiality.
• Respondent No. 1 also raised the same objection and forwarded the same to the ICA. The State refuted
this by stating that there could not be any justifiable doubts since their nominee arbitrator had retired over
10 years ago. Thereafter, the ICA reiterated that it has been firmly established that the State’s nominee had
a direct relationship with the State, which may raise justifiable doubts as to his independence and
impartiality in adjudicating the dispute.
• It went on to state that ICA was in the process of appointing an arbitrator in place of the one appointed
by the State. In response, the State requested a period of 30 days to choose a substitute arbitrator as its
nominee. However, the ICA went ahead and appointed the substitute arbitrator as well as the presiding
arbitrator.
• The State approached the District Court challenging ICA’s appointment of a substitute arbitrator on its
behalf. The challenge was dismissed by the District Court which inter alia held that the same was not
maintainable and that the State could raise this issue under Section 16 of the Act before the tribunal.
Aggrieved by this decision, the State filed a civil revision petition before the Punjab and Haryana High
Court which refused to set aside the District Court’s decision.
• It also went on to hold that when the agreement is silent on the mode of appointment of a substitute
arbitrator, the rules applicable would be those of the institution under which the arbitration is held.

35
 Subsequent to this, the Section 16 application filed by the State also came to be dismissed by the Arbitral
Tribunal. Hence, the State approached the Supreme Court (‘Court”).
Judgment:
• On ICA’s appointment of the Substitute Arbitrator: The Supreme Court observed that the P&H High
Court had failed to take note of section 15(2) of the Act which provides that a substitute arbitrator must
be appointed according to the rules applicable to the appointment of the arbitrator being replaced.
• Placing reliance on ACC Ltd. V. Global Cements Ltd. it held that the procedure agreed upon by the parties
for the appointment of the original arbitrator is equally applicable to the appointment of a substitute
arbitrator, even if the agreement does not specifically provide so.
• Since in the present case, the Agreement expressly provided that each party shall nominate one arbitrator,
and the presiding arbitrator would be appointed under the ICA rules, the Court found that ICA’s
appointment of a substitute arbitrator in place of the one appointed by the State was wholly unjustified
and contrary to ICA Rules itself, especially since the State had requested 30 days to appoint a substitute.
• It observed that the ICA could have filled up the vacancy only if the State had no intention of filling up
the vacancy.
• On the State’s appointment of a former employee as its nominee Arbitrator: The Court noted that
the State’s nominee arbitrator had retired over 10 years ago from the services of the State.
• It observed that the 1996 Act does not disqualify a former employee from acting as an arbitrator, provided
that there are no justifiable doubts as to his independence and impartiality. In deciding this issue, the Court
considered the decisions in Locabail Ltd. v. Bayfield Properties and also on the Court of Appeal decision
in Re Medicaments and related Classes of Goods (No.2).
• In doing so, it held that the fact that the arbitrator was in the employment of the State over 10 years ago,
would make the allegation of bias untenable. The Court noted that the ICA had only made a bald assertion
that the State’s nominee arbitrator would not be independent and impartial and that mere allegations of
bias are not a ground for removal of an arbitrator
• On scope of Entry 1 in the Vth schedule of the Act introduced by the 2015 Amendments: The bench
took note of Entry 1 in the Fifth Schedule which was identical to Entry 1 in the Seventh Schedule 5
introduced by the Amendment Act. The fifth schedule contains grounds to determine whether
circumstances exist which could give rise to justifiable doubts as to the independence or impartiality of an
arbitrator.
Entry 1 to the Fifth Schedule reads as under: “Arbitrator’s relationship with the parties or counsel 1. The Arbitrator is an
employee, consultant, advisor or has any other past or present business relationship with a party.” (Emphasis supplied)”
The Court observed that the words "is an" indicates that the person so nominated is only disqualified if he is a
present/current employee, consultant, or advisor of one of the parties. It further observed that the words "other"
used in “any other” indicates a relationship other than an employee, consultant or an advisor and therefore held
that the word “other” cannot be used to widen the scope of the entry to include past/ former employees.
In any event, the objection of the ICA was untenable as the appointment had been made prior to the 2015
Amendment Act, i.e. when the Fifth Schedule had not been inserted.
Analysis:
• Independence and impartiality of arbitrators has always been a highly subjective issue. Prior to the
introduction of the Amendment Act, the practice of appointment of government employees as arbitrators
was always frowned upon by the Courts but permitted subject to certain thresholds.

36
• The Amendment Act introduced the fifth schedule as a steering tool laying out specific grounds to
determine whether circumstances exist which give rise to justifiable doubts as to the independence or
impartiality of an arbitrator.
• In spite of this being a pre-amendment case, the Court has taken the opportunity to reiterate the spirit of
the said amendments, so as to limit the subjectivity involved in the adjudication of such objections, while
at the same time ensuring that parties do not level bald allegations without any basis, for the purposes of
delaying/scuttling the arbitration.
• In this matter, the Court went on to note that the objection raised by the ICA against the arbitrator was
unjustified and contrary to the provisions of the Act.
• The Court, while concluding its judgement, allowed parties to agree upon the arbitration being conducted
by a sole arbitrator in supersession of the arbitration clause in the agreement which provided for a three-
member arbitration panel, facilitating the speedy disposal of the dispute especially since a lot of time had
already lapsed litigating around peripheral issues rather than the dispute itself.

37
 15. Union of India v. Hardy Exploration and Production (India) Inc.
Introduction
Proceedings for the setting aside of an arbitral award are initiated at the seat of arbitration before the courts
possessing supervisory jurisdiction. The Supreme Court of India was recently faced with the question of which
laws would be applicable to post-award arbitration proceedings when the parties have agreed upon only the
"venue" of arbitration and not the "seat" of arbitration in the case of Union of India v Hardy Exploration and
Production (India) Inc.1 The Court interpreted the arbitration agreement between the parties and the reference
to the UNCITRAL Model Law on International Commercial Arbitration 1985 (Model Law) to determine the seat
of arbitration.
Facts
The parties had entered a production-sharing contract in November 2016 (PSC) for the extraction, development
and production of hydrocarbons in a geographic block in India. Disputes arose between the parties as the Union
of India allegedly relinquished the rights of Hardy Exploration and Production (India) Inc (HEPI) to the
geographic block prematurely. HEPI initiated arbitration proceedings against the Union of India for re-entry to
the geographic block and payment of interest on its investment. The arbitral tribunal rendered its award in favour
of HEPI in February 2013. The award was signed and declared in Kuala Lumpur.
The clauses related to applicable laws and arbitration under the PSC read as: "This Contract shall be governed and
interpreted in accordance with the laws of India. Nothing in this Contract shall entitle the Contractor to exercise
the rights, privileges and powers conferred upon it by this Contract in a manner which will contravene the laws
of India.
Arbitration proceedings shall be conducted in accordance with the UNCITRAL Model Law on International
Commercial Arbitration of 1985 except that in the event of any conflict between the rules and the provisions of
this Article 33, the provisions of this Article 33 shall govern.
The venue of conciliation or arbitration proceedings pursuant to this Article unless the parties otherwise agree
shall be Kuala Lumpur and shall be conducted in English language. Insofar as practicable the parties shall continue
to implement the terms of this contract notwithstanding the initiation of arbitration proceedings and any pending
claim or dispute."
The Union of India approached the Delhi High Court for setting aside of the arbitral award under s.34 of the
Arbitration and Conciliation Act 1996 (the Act). An application for setting aside an arbitral award can be filed
under s.34 of Part I of the Act for arbitration proceedings seated in India. HEPI opposed this application stating
that the award was a "foreign" award as the seat of arbitration was Kuala Lumpur. The Delhi High Court ruled
that place of making the award was Kuala Lumpur and s.34 of Part I the Act would not apply.2 The Union of
India appealed the judgment of the Delhi High Court before the Supreme Court.
Held
The Supreme Court noted that an arbitration clause must be read holistically to understand its intentions to
determine the seat of arbitration. The Supreme Court clarified that there is no confusion with regard to the
difference between the venue and the seat of arbitration. However, if the "venue" of arbitration alone is mentioned
in the arbitration clause, it can be considered the "seat" of arbitration only if another factor(s) is added to it as a
concomitant. If the intention of the arbitration clause through a choice of venue and appended factors leads to
conclusion that the seat is outside India, Part I of the Act will be excluded.

38
Interpreting the facts of the case, the Supreme Court noted that the arbitration clause between the parties makes
a reference to the "venue" as Kuala Lumpur. As the arbitration clause makes a reference to the Model Law, the
Court interpreted its provisions, as extracted below: "
Article 20. Place of arbitration.—(1) The parties are free to agree on the place of arbitration. Failing such
agreement, the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances
of the case, including the convenience of the parties. (2) Notwithstanding the provisions of paragraph (1) of this
article, the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate
for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of goods,
other property or documents.
Article 31. Form and contents of award.—(3) The award shall state its date and the place of arbitration as
determined in accordance with article 20(1). The award shall be deemed to have been made at that place."
The Court noted that "place" and "seat" of arbitration can be used interchangeably. As per art.20(1) of the Model
Law, if the place of arbitration is not agreed between the parties, the arbitral tribunal can determine the same.
Article 31(3) stipulates that the award shall state the date and the place of arbitration as determined in accordance
with art.20(1). In the present case, the Supreme Court noted that although the award was signed and declared in
Kuala Lumpur, there was no express determination of the place of arbitration by the arbitral tribunal. The Court
opined that "determination" would require a positive act and an express opinion. Reversing the judgment of the
Delhi High Court, the Supreme Court held that the venue Kuala Lumpur *Int. A.L.R. N-27 could not be
considered as the place or seat of arbitration. The Supreme Court concluded that courts in India would have
jurisdiction to consider the application for setting aside of the award under s.34 of Part I of the Act as the award
rendered is not a "foreign award".
Comments
Through this judgment, the Supreme Court has stipulated and reiterated the manner of determination of the seat
of arbitration as below: Parties can expressly agree upon the seat or place of arbitration in their arbitration
agreement;
If the seat is not expressly agreed upon, it can be deduced from the arbitration clause and concomitant factors,
such as the venue and an additional factor;
The seat of arbitration can also be determined through the incorporation of rules such as the Model Law in the
arbitration agreement, which stipulates that if parties do not agree on the place of arbitration, the same shall be
determined by the arbitral tribunal.
While the Supreme Court interpreted the arbitration clause and the Model Law to conclude that Kuala Lumpur is
not the place of arbitration (by noting that there was no express determination of the place of arbitration by the
arbitral tribunal), the Court has not applied the same tests to determine why India is the place of arbitration. It
would have been helpful if the Court had made the positive determination that India is the seat of arbitration by
interpreting the facts of the case and applying the jurisprudence and criteria discussed by it. This case is yet another
example of why it is advisable that parties exercise caution while drafting arbitration clauses in their agreements
by constructing them with more clarity and by expressly specifying the seat or place of arbitration. This would
assist in avoiding delay and deliberation at the stages of post-award setting aside or enforcement proceedings.
What did the court decide?
If the parties have agreed on a "venue" but not a "seat" in their arbitration agreement, courts must look at
appended or attached factors to determine the seat of arbitration. Determination, as referred to in art.20(1) of the
UNCITRAL Model Law, signifies an expressive opinion.

39
However, if the "venue" of arbitration alone is mentioned in the arbitration clause, it can be considered the "seat"
of arbitration only if another factor(s) is added to it as a concomitant. If the intention of the arbitration clause
through a choice of venue and appended factors leads to conclusion that the seat is outside India, Part I of the
Act will be excluded.
In the present case, the Supreme Court noted that although the award was signed and declared in Kuala Lumpur,
there was no express determination of the place of arbitration by the arbitral tribunal.
The Court opined that "determination" would require a positive act and an express opinion. Reversing the
judgment of the Delhi High Court, the Supreme Court held that the venue Kuala Lumpur Int. A.L.R. N-27 could
not be considered as the place or seat of arbitration.
The Supreme Court concluded that courts in India would have jurisdiction to consider the application for setting
aside of the award under s.34 of Part I of the Act as the award rendered is not a "foreign award".

40
 16. Rajasthan Small Industries Corporation Limited v. M/s Ganesh Containers Movers Syndicate.
• Courts have no freehand in substituting arbitrators
• Arbitration agreement cannot be ignored in appointment of substitute arbitrators.
• Conduct of parties may constitute waiver of objections.
• Supreme Court exercises powers under Article 142 to set aside an arbitral award.
The Supreme Court in an unprecedented case of Rajasthan Small Industries Corporation Limited v. M/s Ganesh
Containers Movers Syndicate1, set aside the arbitral award exercising powers under Article 142 of the Constitution
of India. The Apex Court held that delay in passing the arbitral award does not entitle courts to replace the
arbitrator who was an employee of one party, ignoring the arbitration agreement. Substitute arbitrators have to be
appointed in accordance with the same arbitration agreement. The Court reaffirmed that Arbitration and
Conciliation Act, 1996 (“Arbitration Act”) as amended in 2015 would not apply to arbitrations commenced prior
to amendment in 2015.
Factual matrix:
• Rajasthan Small Industries Corporation Limited (“RSICL / Appellant”) entered into an agreement with
M/s Ganesh Containers Movers Syndicate (“Respondent / Contractor”) on January 28, 2000 for
transportation and handling of cargo at certain depots (“Contract”).
• Dispute arose between parties under the Contract and the Contractor requested for arbitration. The
Contract provided for settlement of disputes by arbitration. As per the clause 4.20.1, the arbitration was
to be referred to a sole arbitrator which could either be Managing Director of RSICL himself or his
nominee.
• One Mr. I. C. Shrivastava, IAS (Retd.) was appointed as the sole arbitrator in February 2005. However,
due to slow progress of the arbitration, Mr. Shrivastava was removed in 2009 and Chairman-cum-
Managing Director (“CMD”) of RSICL was subsequently appointed as arbitrator by consent of both
parties.
• Initially, the Contractor protested and raised doubts on impartiality of CMD as the arbitrator. However,
it finally gave its consent for CMD to arbitrate. Later on, the Contractor also declared its faith in the
arbitrator and requested that the matter be decided expeditiously. However, the first arbitrator could not
handover the record of arbitration to the subsequent arbitrator.
• As a result, Parties were directed to appear with complete records of claim and counter claim. During such
time, detailed discussions took place between parties and Contractor agreed to withdraw certain claims.
Thereafter, during April and May 2011, the arbitrator sought clarifications from parties to finalise the
award.
• However, in August 2011, the arbitral tribunal declared that chronological events need to be ascertained
and the records will have to be reconstructed and no award was passed. In 2013, the Contractor sent legal
notices to RSICL claiming the amounts pursuant to earlier settlement along with interest.
• It stated that despite the settlement, no award was passed by the arbitrator. RSICL denied the settlement
and also denied the amounts claimed. Consequently, in December 2015, the Contractor filed an application
under Section 11 of the Arbitration Act before the High Court of Rajasthan (“High Court”) for
appointment of an independent arbitrator to adjudicate the disputes.
• The Contractor requested that the arbitration proceedings be kept in abeyance till the High Court
proceedings are concluded. However, the arbitral tribunal passed the final award on January 21, 2016
(“Award”).
• Subsequently, in April 2016 the High Court also passed the final order appointing a retired District Judge
as the sole arbitrator to resolve the disputes between the parties. The said order was challenged by RSICL
before the Hon’ble Supreme Court.
41
Judgment
Contractor was not justified in filing an application under Section 11 of Arbitration Act
• Supreme Court held that when parties consciously chose to refer their disputes to Managing Director
himself or his nominee and having participated in the arbitral proceedings for some time, the Contractor
could not turn around and seek for appointment of an independent arbitrator.
• In fact, the Contractor in one of his communications stated that it has full faith in the arbitrator. The court
noted that the Contractor has not placed on record any material to show that the arbitrator has not acted
independently or impartially or is likely to not act independently or impartially.
• Accordingly, having participated in the arbitral proceedings, the Contractor was estopped from challenging
the competence of the arbitrator.
CMD has not become ineligible to act as arbitrator as per Section 12(5) of Arbitration Act
• In 2015, the Arbitration Act was amended and among other things, Section 12(5) and Seventh Schedule
was inserted. Section 12(5) read with Seventh Schedule prohibits employees of one of the parties from
being an arbitrator. The Contractor argued that by virtue of Section 12(5), CMD had become ineligible to
act as arbitrator.
• However, in the present case the arbitration proceedings were commenced in 2009. Application for
appointment of the arbitrator was also filed prior to 2015. Therefore, the Court held that the amended
Arbitration Act would not be applicable. It opined that amended Arbitration Act cannot have retrospective
operation unless the parties agreed.
High Court was not right in terminating the mandated of CMD as arbitrator
• The Contractor argued that the arbitrator failed to conclude the proceedings even after four years and
therefore, appointment of substitute arbitrator was justified. To support this argument, it relied upon the
judgment of Supreme Court in Union of India & Ors. v. Uttar Pradesh State Bridge Corporation Limited
(“UPSB Case”).
• In this case, the arbitral tribunal was unable to proceed in the matter for almost four years without any
justifiable reason despite specific orders of High Court to complete the proceedings within three months.
Hence, it was held that the termination of mandate of the arbitral tribunal and appointment of substitute
tribunal was justified.
• The Supreme Court however, distinguished the present case with the UPSB Case. It held that in the
present case, proceedings continued till August 2011. It was apparent that arbitration papers were
incomplete and accordingly, chronological events needed to be ascertained and records had to be
reconstructed. Owing to this, the Award could not be passed till 2013.
• The Contractor also never filed any application to expedite the proceedings nor did it file an application
under Section 14 of the Arbitration Act for terminating the mandate of the arbitrator because of failing to
act without undue delay. Supreme Court held that mere neglect of an arbitrator to act or delay in passing
the award by itself cannot be the ground to appoint another arbitrator disregarding the terms of arbitration
agreement. Section 15 of Arbitration Act deals with termination and substitution of an arbitrator.
• As per Section 15(2), after the termination, the appointment of substitute arbitrator has to be in accordance
with rules applicable to the appointment of arbitrator who was first appointed. The said rules also include
contractual provisions for such appointment.
• Thus, even appointment of substitute arbitrator has to be done in accordance with the original agreement.
In view of the above, the Supreme Court held that High Court was not right in appointing an independent
arbitrator without giving due regard to the terms of the Contract.
Exercise of power under Article 142

42
 • Interestingly, the Supreme Court remarked that the arbitral tribunal should not have passed the Award
when the High Court was seized of the matter. The proceedings were pending for a long time. The
arbitrator hastily passed the Award after the proceedings in High Court were commenced. The record of
arbitration had to be reconstructed and it is not clear whether it was done before the Award. The
Contractor was also not given an opportunity to substantiate its claims.
• Hence, in order to do complete justice, the Supreme Court set aside the Award in exercise of its powers
under Article 142 of the Constitution. The court held that it would also what is save parties much time if
they were to challenge the Award by way of fresh proceedings under Section 34 of Arbitration Act.
Conclusion:
• The present judgment throws light on the termination and substitution of the arbitrators. It emphasizes
the importance of terms of arbitration agreement which cannot be brushed aside by courts even when
substituting the arbitrators under Section 15 of Arbitration Act. After the amendment in 2015, arbitration
proceedings have to be concluded in a time bound manner (within twelve months with an extension of
six months by consent of parties).
• Consequences such as reduction in fees and substitution of arbitrators are also now provided in case the
tribunals are unable to meet the required timelines. The amended Arbitration Act also prohibits certain
persons who are listed in the Seventh Schedule from acting as arbitrators, one category of them being
“employees of one of the parties”.
• Accordingly, if a similar fact situation arose in the present-day circumstances, the results could have been
entirely different. Interestingly, exercise of powers under Article 142 to set aside the Award also raises
certain questions. The power was exercised only to save parties the trouble of filing fresh proceedings to
challenge the Award under Arbitration Act.
• The court should therefore, have considered the thresholds provided under Section 34 to set aside the
award. The question whether the Award was liable to be set aside because Contractor was actually unable
to present its case, does not appear to have been dealt with.
• Accordingly, it is only but hoped that the present case is a one-off exercise of power, given the peculiarity
of the facts and will not be widely used as a precedent.

43
 17. Rashid Raza vs. Sadaf Akhtar
• Arbitrability of fraud – ‘simply’ put by supreme court
• Simple allegations of fraud which do not vitiate the underlying contract and arbitration clause are
arbitrable. Allegations of fraud which do not have an implication in the public domain are arbitrable.
Introduction: The Supreme Court in its judgment in the case of Rashid Raza vs. Sadaf Akhtar1 clarified the scope
of arbitrability of disputes involving allegations of fraud. Relying upon the Supreme Court’s landmark ruling in
the case of A. Ayyasamy vs. A. Paramasivam (“Ayyasamy”), Justice R. F. Nariman set out the working tests for
determining whether an allegation of fraud is arbitrable. In the present case, the Supreme Court held that since
the dispute pertains to a ‘simple allegation of fraud’, the same is arbitrable.
Background:

• The dispute arose out of Partnership Deed dated January 30, 2015 (“Partnership Deed”) between the
parties. An FIR was lodged by the Respondent alleging siphoning of funds and other business
improprieties by the Appellant.
• On the other hand, the Appellant filed an arbitration petition before the High Court of Jharkhand at
Ranchi (“High Court”) under Section 11 of the Arbitration and Conciliation Act, 1996 (“Act”) for
appointment of an arbitrator pursuant to an arbitration clause in the Partnership Deed.
• Before the High Court, the Respondent argued that the matter pertains to a serious case of fraud which is
not fit to be decided in arbitration.
• Inter alia, the Respondent argued that the Petitioner (Appellant) had utilized the assets of the partnership
firm (S.R. Coating) in another firm run by his father; created proprietorship firm with a same name, S. R.
Coating, and introduced it to one of the firm’s existing business partners, Reliance Industries Ltd.; opened
a new bank account on the basis of a fake agreement; and transferred money into the Petitioner’s personal
bank account and his father’s bank account.
• Without commenting on the merits of the dispute, and relying on the principles laid down by the Supreme
Court in Ayyasamy, the High Court held that the dispute included serious allegations of fraud of a
complicated nature which are not fit to be decided in arbitration proceedings.
• The Court further held that the dispute may require voluminous evidence to be presented by the parties,
and a finding on such evidence can be properly adjudicated only by a court. Consequently, the High Court
dismissed the application for appointment of arbitrator. Aggrieved by the High Court’s ruling, the
Appellant approached the Supreme Court by way of a special leave petition.
Judgment:
The Supreme Court analyzed the law laid down on arbitrability of disputes involving fraud in the case of Ayyasamy.
In Ayyasamy, the Supreme Court held that a simple allegation of fraud may not be a ground to nullify the effect
of an arbitration agreement. However, when serious allegations of fraud are involved, the Supreme Court held
that courts can dismiss an application to refer a dispute to arbitration under Section 8 of the Act. Serious allegations
of fraud would involve:

• Allegations which would make a virtual case of criminal offence;

• Allegations of fraud so complicated that it becomes essential that such complex issues can be decided only
by civil court on the appreciation of the voluminous evidence that needs to be produced;
• Serious allegations of forgery/fabrication of documents in support of the plea of fraud;
• Where fraud is alleged against the arbitration provision itself or is of such a nature that permeates the
entire contract, including the agreement to arbitrate, meaning thereby in those cases where fraud goes to

44
 the validity of the contract itself of the entire contract which contains the arbitration clause or the validity
of the arbitration clause itself.
In Ayyasamy, the Supreme Court had further held that in the scenario where there are simple allegations of fraud
touching upon the internal affairs of the parties inter se without any implication in the public domain, the
arbitration clause need not be avoided and the parties can be relegated to arbitration.
Applying the relevant principles from Ayyasamy to the instant allegations of siphoning and improprieties, the
Supreme Court held that a distinction must be drawn between ‘serious allegations’ of forgery or fabrication
supporting the plea of fraud, and ‘simple allegations’ - to determine arbitrability. It culled out two working tests
from Ayyasamy to determine this distinction as follows:
“(1) does this plea permeate the entire contract and above all, the agreement of arbitration, rendering it void, or
(2) whether the allegations of fraud touch upon the internal affairs of the parties inter se having no implication in
the public domain”
Applying the aforementioned tests to the facts of the present case, the Supreme Court held that:

• There is no allegation of fraud which vitiates the Partnership Deed as a whole, including the arbitration
clause:
• The allegations pertain to the affairs of partnership and siphoning of funds, which do not pertain to
matters in the public domain.
The Supreme Court held that the allegations are arbitrable as they fall within the ambit of ‘simple allegations’. It
set aside the judgment of the High Court and proceeded to appoint an arbitrator under Section 11 of the Act to
resolve the disputes between the parties.
Analysis

• Upon an examination of the principles laid down in Ayyasamy and the twin tests set out in the instant
case, one could argue that the Supreme Court has potentially narrowed down the thresholds to identify
‘serious allegations of fraud’, when courts are approached with an application for appointment of an
arbitrator under Section 11 of the Act. However, it must be noted that Ayyasamy involved an application
under Section 8 of the Act.
• Section 8 provides a wider ambit to the Court to evaluate allegations of fraud for the purpose of referring
the matter or denying reference to arbitration.6 In contrast, in an application under Section 11 of the Act,
courts have a narrow purview to examine merely the existence of an arbitration agreement while
appointing an arbitrator.
• It is therefore debatable as to whether the working tests suggested by Ayyasamy to determine the
arbitrability of the allegation in depth propel courts to go beyond merely examining the existence of an
arbitration agreement and conduct an enquiry upon the seriousness or simplicity of the allegations of
fraud. One could suggest that the Supreme Court has indeed assessed the existence of the arbitration
agreement while laying out the first working test i.e. whether the existence of the arbitration agreement
itself has not been vitiated by the allegation of fraud.
• However, the second working test hinges upon the effect of fraud either inter se the parties or in the public
domain. A blanket application of this test to commercial disputes would always entail an effect inter se
between the parties. However, since fraud by its very nature is both a civil action and a criminal offence,
this enquiry would be a matter of fact in each case.
• In any event, the Supreme Court’s ruling does set a positive precedent ensuring cautioned and minimum
interference by courts in matters involving arbitration and allegations of fraud. It also reposes faith in the
arbitral tribunal to determine these allegations to fruition.
45
 18. BGS SGS SOMA JV v. NHPC Ltd
• Does the selection of a “seat” determine a court’s supervisory jurisdiction? Supreme court’s decision in
BGS soma and beyond
• The Supreme Court: Held that the concept of concurrent jurisdiction stipulated in BALCO must be read
holistically.
• When parties have chosen a seat of arbitration, or if the arbitral tribunal has determined a seat, such a
determination automatically confers jurisdiction on the courts at such seat of arbitration for the purposes
of interim orders and challenges to an award.
• Held that unless there are any contrary indications, the designation of a ‘venue’ in an arbitration clause can
indicate the ‘seat’ of the arbitration;
• Reiterated that an appeal is permissible only under the limited grounds prescribed in the Arbitration Act.
Introduction

• A three-judge bench of the Supreme Court of India (“Supreme Court”) in BGS SGS SOMA JV v. NHPC
Ltd.1 (“BGS Soma”) demystified ‘paragraph 96’ of Bharat Aluminium Co. v. Kaiser Aluminium Technical
Service, Inc., (“BALCO”), clarified the role of the ‘seat’ in an arbitration and set out the tests for
determining the ‘seat’ of arbitration.
• Consequently, the decision of the Division Bench of the Delhi High Court in Antrix Corporation Ltd. v.
Devas Multimedia Pvt. Ltd.4 (“Antrix Corporation”) was overruled, and the law set out by the Supreme
Court in Union of India v. Hardy Exploration and Production (India) Inc. (“Hardy Exploration”),
which provided a contrary view, was declared as not being good law.
Background:

• The Petitioner was awarded a contract by the Respondent for constructing a large hydropower project in
Assam and Arunachal Pradesh (“Agreement”).
• Clause 67.3 of the Agreement between the parties provided for dispute resolution, and the arbitration
agreement stated that, “Arbitration Proceedings shall be held at New Delhi/Faridabad, India and the
language of the arbitration proceedings and that of all documents and communications between the parties
shall be English.” (emphasis supplied).
• Disputes arose between the parties and an Arbitral Tribunal was constituted. Between August 2011 and
August 2016, 71 sittings of the Arbitral Tribunal took place at New Delhi. The Arbitral Tribunal delivered
a unanimous arbitral award in favour of the Petitioner in Delhi on August 26, 2016 (“Award”).
• Aggrieved by the Award, the Respondent filed an application under Section 34 of the Arbitration and
Conciliation Act, 1996 (“Arbitration Act”) seeking to set aside the Award before the Court at Faridabad.
• The Petitioner filed an application seeking a return of the petition challenging the Award for presentation
before the appropriate court at New Delhi and/or the District Judge at Dhemaji Assam. In 2017, the
Special Commercial Court at Gurugram (“Commercial Court”) allowed the application of the Petitioner
and returned the challenge petition before the courts in New Delhi.
• Thereafter, the Respondent filed an appeal under Section 37 of the Arbitration Act read with Section 13(1)
of the Commercial Courts Act, 2015 before the Punjab & Haryana High Court (“High Court”). The High
Court passed a judgment in favour of the Respondent, where it held that the appeal filed was maintainable,
and that Delhi was only a convenient venue where arbitral proceedings were held and not the seat of the
arbitration proceedings.
• The High Court held that Faridabad courts would have jurisdiction on the basis of the cause of action
having arisen in part in Faridabad. Aggrieved by the order of the High Court, the Petitioner filed a special
leave petition before the Supreme Court.
46
Issues before the Supreme Court: The Supreme Court had to consider the following issues: (a) Whether the
appeal before the High Court under Section 37 of the Arbitration Act was maintainable? (b) Whether the
designation of a “seat” is akin to an exclusive jurisdiction clause?; and (c) What is the test to determine the “seat”
of arbitration?
Judgment:
a) Maintainability of Section 37 Appeal before the High Court:
The High Court had held that it has jurisdiction to hear the appeal as the Commercial Court’s order that the
challenge petition be returned to court in New Delhi amounts to an order “refusing to set aside an arbitral award
under section 34”.
The Supreme Court referred to earlier judgments and reiterated that Section 37 of the Arbitration Act makes it
clear that appeals shall lie only pursuant to the grounds provided in sub-clauses 1(a) – (c) and from no others.
Further, the Supreme Court observed that the order of the Commercial Court did not relate to a refusal to set
aside an arbitral award, and merely provided that that the Commercial Court does not have jurisdiction to hear
challenge to the Award. Considering all these factors, the Supreme Court held that the appeal filed before the
High Court was not maintainable.
b) The Juridical Seat of Arbitration Proceedings:
The High Court, while referring to the Supreme Court’s decisions in BALCO and Indus Mobile Distribution
Private Limited v. Datawind Innovations Private Limited & Ors.,8 (“Indus Mobile”) observed that the arbitration
clause in the present case only refers to the venue of arbitration proceedings and not the seat of arbitration. On
this basis, the High Court held that since a part of the cause of action arose in Faridabad, and the Faridabad
Commercial Court was approached first, the Faridabad courts alone would have jurisdiction over the arbitral
proceedings.
The Supreme Court held that a reading of paragraphs 75, 76, 96, 110, 116, 123 and 194 of BALCO shows that
when parties have selected the seat of arbitration, such a selection would confer an exclusive jurisdiction clause to
the courts at the seat of arbitration for the purposes of interim orders and challenges to Award. Applying this
principle, the Supreme Court concluded that:
1. If the conflicting portion of BALCO is kept aside, the very fact that parties have chosen a seat would necessarily
intend that the courts at the seat have exclusive jurisdiction over the entire arbitral process.
2. The ratio in BALCO does not unmistakably hold that two courts have concurrent jurisdiction. This is incorrect
as the subsequent paragraphs of BALCO clearly and unmistakably state that choosing a seat amounts to choosing
the exclusive jurisdiction of the courts at which the seat is located.

• The Supreme Court observed that Section 42 of the Arbitration Act has been inserted to avoid conflicts
in jurisdiction of courts by placing the supervisory jurisdiction over all arbitral proceedings in one court
exclusively. An application must be made to a Court which has the jurisdiction to decide such an
application. When a seat has been designated, the courts at the seat alone would have jurisdiction and all
further applications must be made to the same Court by operation of Section 42 of the Arbitration Act.
• The Supreme Court also held that when a seat has not been designated by the arbitration agreement, and
only a convenient venue has been designated, there may be several courts where a part of cause of action
may have arisen.
• An application for interim relief before the commencement of arbitration under Section 9 of the
Arbitration Act may then be preferred in any court where a part of the cause of action has arisen as the
parties / arbitral tribunal has not determined the seat yet. In such a case, the earliest court before which
47
 an application has been made would be deemed the court having exclusive jurisdiction and all further
applications must lie before this court by virtue of Section 42 of the Arbitration Act.
c) Tests for Determination of “Seat”

• Relying upon the English Court’s decision in Roger Shashoua & Ors. v. Mukesh Sharma,10 (“Shashoua
Principle”) the Supreme Court set out that “…wherever there is an express designation of a “venue”, and
no designation of any alternative place as the “seat”, combined with a supranational body of rules
governing the arbitration, and no other significant contrary indicia, the inexorable conclusion is that the
stated venue is actually the juridical seat of the arbitral proceeding.” (emphasis supplied)
• The Court further held that when there is a designation of a venue for “arbitration proceedings”, the
expression “arbitration proceedings” make it clear that the venue should be considered the “seat” of
arbitration proceedings. Further, the expression “shall be held” at a particular venue would further anchor
the arbitral proceedings to a particular place and signify that such place is the seat of arbitral proceedings.
• On the contrary, language such as “tribunals are to meet or have witnesses, experts or the parties” may
signify that such a place is only the “venue” of the arbitral proceedings. These factors, along with the fact
that there are no other significant contrary indicia to state that the venue is merely a venue and not the
seat, would show that a venue has indeed been designated the “seat” of arbitral proceedings.
• The Supreme Court held that the three-judge bench in Hardy Exploration did not follow the Shashoua
Principle which was confirmed by the Supreme Court in BALCO. Consequently, the Supreme Court
declared that the law laid down in Hardy Exploration is not good law.
d) Application of the Tests to the Facts of the Case

• Upon the facts of the case before it, the Supreme Court noted that the venue of the arbitration in the
arbitration agreement had been designated as New Delhi/Faridabad. However, as there was no other
contrary indication, applying the Shashoua Principle, the Supreme Court held that either New Delhi or
Faridabad is the designated seat under the arbitration agreement.
• It was therefore up to the parties to choose in which place the arbitration is to be held. The Supreme Court
held that since all the arbitral proceedings were held in New Delhi and the final award was also signed in
New Delhi, the parties chose New Delhi and not Faridabad as the “seat” of the arbitration under Section
20 of the Arbitration Act.
• Therefore, the courts at New Delhi would have exclusive jurisdiction over the arbitral proceedings. Even
if some part of the cause of action did arise in Faridabad, it is irrelevant as the “seat” has been designated
by the parties at New Delhi and exclusive jurisdiction vests in the courts of New Delhi. Accordingly, the
judgment of the High Court was set aside and the Supreme Court ordered that the Section 34 petition be
presented before the courts in New Delhi.
Further updates:

• Relying upon the Supreme Court’s judgment in BGS Soma, the Bombay High Court has recently identified
the tests to be applied while determining a seat of arbitration:
o A stated venue is the seat of the arbitration unless there are clear indicators that the place named
is a mere venue, a meeting place of convenience, and not the seat;
o Where there is an unqualified nomination of a seat (i.e., without specifying the place as a mere
venue), the courts at the seat would have exclusive jurisdiction; and
o Where no venue/seat is named (or where it is clear that the named place is merely a place of
convenience for meetings), then any other consideration of jurisdiction may arise, such as cause
of action.

48
• Recently, a three-judge bench of the Supreme Court in Mankastu Impex Pvt. Ltd. v. Airvisual Ltd had to
determine the seat of arbitration. Although the arbitration clause specified that “…the place of arbitration
shall be Hong Kong…”, the clause also mentioned that “…courts at New Delhi shall have the
jurisdiction…”
• The Supreme Court held that
o The reference to courts at New Delhi do not take away or dilute the intention of the parties that
the arbitration be administered in Hong Kong, and such reference appears to have been added to
enable the parties to avail interim relief;
o A mere expression of “place of arbitration” cannot be the basis to determine the intention of the
parties that the “seat” of arbitration is at such place; and (
o The intention of the parties as to the “seat” of arbitration should be determined from other clauses
in the agreement and the conduct of the parties. Relying upon a clause in the agreement which
stated that the dispute “shall be referred to and finally resolved by arbitration administered in Hong
Kong”, and the place of arbitration being Hong Kong, the Supreme Court held that the seat is in
Hong Kong.

49
 19. Ashwani Minda and ors. v. U-shin Limited and Ors:.
India—parties cannot apply to courts after emergency arbitration.
Arbitration analysis:
The Delhi High Court found a petition for interim reliefs under section 9 of the Arbitration and Conciliation Act
1996 (ACA 1996), filed after the party had unsuccessfully applied for reliefs in an Emergency Arbitration in Japan,
was not maintainable on multiple grounds. This ruling, while highlighting the growing importance of emergency
arbitration, also finds that the parties had by agreement excluded the applicability of ACA 1996, s 9, which raises
certain questions.
What are the practical implications of this decision?
A number of cases have now emerged wherein the parties have initiated emergency arbitration outside India and
obtained relief; and thereafter applied for and obtained the same relief in India under ACA 1996, s 9 (HSBC PI
Holdings (Mauritius) Ltd v Avitel Post Studioz Ltd, Arbitration Petition No 1062 of 2012; Raffles Design
International India Private Ltd v Educomp Professional Education Ltd, OMP(I) (Comm) 23/2015, CCP(O)
59/2016; Plus Holdings v Xeitgeist Entertainment Group, Com Arb Pet No 399 of 2019).
An application under ACA 1996, s 9 is made considering that there are is no clear provision in ACA 1996 or
otherwise any jurisprudence on direct enforcement of foreign emergency arbitration awards in India. However, in
these cases, while the courts have taken into account the orders passed in emergency arbitration, they have clarified
that the findings have also been independently arrived at.
These cases reflect that Indian courts have given a certain degree of deference to emergency arbitration
proceedings which have previously taken place. From that perspective, the dismissal of the ACA 1996, s 9 petition
in this decision and the approach of the court to give deference to emergency arbitration appears reasonable and
cogent.
What was the background to this decision?
A dispute arose out of a joint venture agreement between an Indian party and a Japanese party. The dispute
resolution clause under the joint venture agreement provided:
‘In case of failure to reach a settlement, such disputes, controversies or differences shall be submitted to the arbitration under the
Commercial Rules of the India Commercial Arbitration Association to be held in India if initiated by [the Japanese Party], or under
the Rules of the Japan Commercial Arbitration Association to be held in Japan if initiated by [the Indian Party].’
The Indian party commenced arbitration proceedings seated in Japan and applied for interim relief through an
emergency arbitration under the rules of the Japan Commercial Arbitration Association (JCAA). However, the
emergency arbitrator declined to grant the relief. Thereafter, the Indian party approached the Delhi High Court
praying for the same interim relief.
What did the court decide?
The court duly traced the law on the ability of parties to claim interim relief in India in aid of foreign seated
arbitration. Having traced the march of law, the court found that the proviso to section 2(2) of the Act was inserted
by the Arbitration and Conciliation (Amendment) Act, 2015 (the Amendment Act), to cover the gap in law created
by the BALCO judgment (Bharat Aluminum and Co v Kaiser Aluminium and Co, (2012) 9 SCC 552) ie non-
availability of interim reliefs in India, in aid of foreign seated arbitration. ACA 1996, s 2(2) provides:
‘This Part shall apply where the place of arbitration is in India:

50
Provided that subject to an agreement to the contrary, the provisions of sections 9, 27 and clause (a) of sub-section (1) and sub-section
(3) of section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an
arbitral award made or to be made in such place is enforceable and recognised under the provisions of Part II of this Act.’
The court held that with the Amendment Act, the position of law went back to as it stood prior to the BALCO
judgment, namely as expounded in Bhatia International v Bulk Trading SA and another, (2002) 4 SCC 105, to the
limited extent of applicability of ACA 1996, ss 9, 27, 37(1)(a) and 37(3). With that background, the court held that
the applicability of ACA 1996, s 9 was impliedly excluded by the parties. The court stated:
‘The Dispute Resolution Mechanism agreed to, in the present case envisages conduct of Arbitration in Japan and regulated by the
JCAA Rules. JCAA Rules provide a detailed mechanism for seeking interim and emergency measures and was known to the parties
when entering into the Agreement. Reading of the Arbitration clauses clearly evinces the intention of the parties to exclude the
applicability of part I of the Act.’
The court also held that:

• the applicant, having unsuccessfully tried to obtain relief in an emergency arbitration, cannot have a second
bite at the cherry by asking for same interim relief from a court
• even as per the doctrine of election, the parties having chosen to go down the path of emergency
arbitration, cannot seek relief from the court, and
• the court cannot effectively sit in appeal over the judgment of the emergency arbitrator
The court interestingly distinguished Raffles Design Int’l India Pvt v Educomp Professional Education (2016) 234
DLT 349. In the Raffles case, the party after having successfully obtained reliefs in an emergency arbitration under
SIAC Rules (with the seat in Singapore), had applied for and obtained the same relief in India under ACA 1996, s
9. The court distinguished the case on following grounds
Firstly, in that case [Raffles case], there was no Clause in the Dispute Resolution Mechanism by which the parties had excluded the
applicability of Section 9 of the Act and secondly, unlike in the present case, the Rules governing the Arbitration were SIAC Rules,
which permit the parties to approach the Courts for interim relief.’
Consequently, the court having found that ACA 1996, s 9 was impliedly excluded, it held that the petition was not
maintainable.
Concerns with implied exclusion of section 9
Even though the overall approach of the court is welcome, the finding that parties had impliedly excluded ACA
1996, s 9. raises certain questions. The judgment states that the arbitration clause evinces an intention to exclude
‘ACA 1996, Pt 1’. We understand by ACA 1996, Pt 1, the reference is to ACA 1996, s 9. It is difficult to ascertain
how the arbitration clause in this case evinced an intention to exclude applicability of ACA 1996, s 9.
The application of pre-BALCO test for determination of implied exclusion of ACA 1996, Pt 1, for inferring an
implied exclusion of ACA 1996, s 9 pursuant to the proviso to ACA 1996, s 2(2), is not appropriate. In this case,
the arbitration clause provided for a Japan seated arbitration under the JCAA Rules in the event the arbitration
was initiated by the Indian party.
The selection of a foreign seat itself cannot imply an exclusion of section 9. If that were the case, then it would
conflict with the proviso to ACA 1996, s 2(2), which was inserted by the Amendment Act for the very purpose of
making the ACA 1996, s 9 applicable to foreign seated arbitrations. Additionally, merely choosing of institutional
rules for administering the arbitration also per se on its own cannot imply that the parties intended to exclude
ACA 1996, s 9.

51
Further, under the arbitration law of Japan (Article 3(2) read with Article 15 of the (Japan) Arbitration Act, 2003),
parties are permitted to approach the courts in aid of arbitrations seated in Japan and outside. Additionally, the
absence of a provision similar to Rule 30.3 of the SIAC Rules 2016 or Article 28.2 of the ICC Rules, 2017 in the
JCAA Rules does not make any difference.
Rule 30.3 of the SIAC Rules, 2016 and Article 28.2 of the ICC Rules, 2017 clarify that approaching a court for
interim relief is not contrary to the choice of arbitration. These rules are not positively conferring the ability on a
party to approach the court. Thus, simply an absence of such a provision in the rules of an institution, should not
imply that parties agreed to exclude their ability to approach courts for interim relief.
This also calls into question the basis on which the court distinguished the Raffles case. It appears that the courts’
approach is driven by the fact that an emergency arbitrator had previously declined to grant the relief. However,
an exclusion of section 9 has to be considered irrespective of the outcome of the prior emergency arbitration.
An exclusion of section 9, implies that the parties may not have any ability of obtain enforceable interim reliefs in
India. Thus, in this case, had the Indian party succeeded in obtaining the interim relief, it may not have any clear
path of effectuating those reliefs in India. This case highlights the importance of the choice between the parties
to choose between court proceedings or emergency arbitration for the purpose of obtaining the interim reliefs.
On the whole, the approach of the court is welcome.
However, going forward this case should not form the basis on which a determination of an implied exclusion of
ACA 1996, s 9 pursuant to proviso to ACA 1996, s 2(2) is made. The courts may recognise the findings of the
emergency arbitrator as part of the tests for granting relief under ACA 1996, s 9 and through that give deference
to the orders of the emergency arbitrator.

52