Full Judgment Text
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CASE NO.:
Arbitration Petition 4 of 2007
PETITIONER:
M/s Shivnath Rai Harnarain (India) Ltd
RESPONDENT:
M/s. Abdul Ghaffar Abdul Rehman(Dead) by L.Rs
DATE OF JUDGMENT: 10/03/2008
BENCH:
H.K. SEMA
JUDGMENT:
J U D G M E N T
ARBITRATION PETITION NO. 4 OF 2007
H.K.SEMA,J.
(1) This is an application filed under Section 11(6) of
the Arbitration and Conciliation Act, 1996 (in short "the Act")
for appointment of an Arbitrator.
(2) I have heard Dr.A.M. Singhvi, learned senior
counsel for the applicant and Mr. Kailash Vasdev, learned
senior counsel for the respondents at length.
(3) The sole question that arises for consideration in
this petition is as to whether an application under Section
11(6) of the Act is maintainable?
(4) In view of the order that I propose to pass, it may
not be necessary to recite the entire facts, leading to the filing
of the present application.
(5) Suffice it to say that contract Nos.2001-SI/25,
2001-SI/26 both dated 12th January 2001 and Contract
No.2001-SII/41 dated 28th February 2001 were
amended/modified by way of a common addendum No.1 on
2.3.2001. By an addendum dated 2nd March, 2001 clause (ii)
was introduced. It reads:
"(ii) Settlement of disputes through Indian
Arbitration Council, Delhi."
(6) The dispute having arisen and as agreed to by both
the parties the matter was referred to one Mr. Samuel J.
Marshall, who was agent for both the parties in the
transactions and who also agreed to mediate between the
parties. With the intervention of Mr. Samuel J. Marshal, the
parties arrived at an agreement to resolve the dispute between
the parties. The settlement agreement was entered into on
18.1.2002. Clause 18 of the settlement reads:
"18. Should any dispute or non
implementation arise this will be adjudicated
solely by Mr. Samuel J. Marshall."
(7) It also appears from the letter dated 12.11.2002 and
accepted on 21.11.2002 the parties have agreed to resolve the
dispute under the following conditions:
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1. That the venue for resolution of this dispute
will take place in Singapore, assuming that
Mr. Marshall is resident there, alternatively
the UK;
2. That the Agreement dated 18th January
2002 is governed by India Law; and
3. UNCITRAL rules will apply.
(8) Pursuant to the aforesaid agreement, an application
was filed sometime in January 2004, before the Arbitrator
namely Mr. Samuel J. Marshall. However, the respondents
herein did not participate in the arbitration proceedings. On
20.6.2005, the Arbitrator proceeded with the arbitration at
Singapore and passed the Award in favour of the applicant.
(9) Aggrieved by the Award dated 20.6.2005, the
respondents herein challenged the said Award before the High
Court of Republic of Singapore in Originating Motion
No.35/2005/H inter alia on the ground of violation of
principles of natural justice. On 31.7.2006, the High Court of
Singapore, set aside the Award with a liberty to the parties to
apply for fresh arbitration. This is undisputed that the
applicant herein did not apply for fresh arbitration before the
Arbitrator at Singapore. However, this application has been
filed before this Court under Section 11(6) of the Act.
(10) Dr.Singhvi, learned senior counsel for the applicant,
would submit that the agreement is governed by Indian Law
and, therefore, the law in India is applicable and thus, this
Court can appoint Arbitrator in exercise of power under
Section 11(6) of the Act. Per contra Mr. Kailash Vasdev,
learned senior counsel for the respondents, would content that
this application under Section 11(6) is not maintainable
inasmuch as the parties have referred to the Arbitrator Mr.
Samuel J. Marshall in Singapore. The Award was passed by
Mr. Marshall at Singapore and the Award was set aside by the
High Court of Singapore with liberty to apply for fresh
arbitration and, therefore, the appropriate Court to apply is
the Court at Singapore and this application is misconceived.
(11) The facts are not disputed that the parties by a
mutual agreement referred the dispute to Mr. Samuel J.
Marshall. Mr. Samuel J. Marshall proceeded with the
arbitration and passed the Award on 20.6.2005, which was set
aside by the High Court of Singapore on 31.7.2006.
(12) Section 2(1)(e) of the Act defines Court. It reads:
"(e) "Court" means the principal Civil Court of
original jurisdiction in a district, and includes
the High Court in exercise of its ordinary
original civil jurisdiction, having jurisdiction to
decide the questions forming the subject-matter
of the arbitration if the same had been the
subject-matter of a suit, but does not include
any civil court of a grade inferior to such
principal Civil Court, or any Court of Small
Causes"
Further, Section 42 of the Act provides
jurisdiction of the Court. It reads:
"Jurisdiction.- Notwithstanding anything
contained elsewhere in this Part or in any other
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law for the time being in force, where with
respect to an arbitration agreement any
application under this Part has been made in a
Court, that Court alone shall have jurisdiction
over the arbitral proceedings and all subsequent
applications arising out of that agreement and
the arbitral proceedings shall be made in that
Court and in no other Court."
(13) Section 42 read thus, provides that notwithstanding
anything contained elsewhere in this part or in any other law
for the time being in force, where with respect to an arbitrator
agreement any application under this part has been made in a
court, that court alone shall have jurisdiction over the arbitral
proceedings and all subsequent applications arising out of
that agreement and the arbitral proceedings shall be made in
that court and in no other court.
(14) In the present case, as already adumbrated, the
parties agreed to refer to the Arbitrator, Mr. Samuel J.
Marshall for resolution of the dispute at Singapore. The
Award of the Arbitrator was passed at Singapore. The Award
of the Arbitrator was set aside by the High Court of Singapore
and, therefore, in my view, the Court at Singapore, which
alone shall have jurisdiction over the arbitral proceedings and
all applications arising out of that agreement shall be made in
that Court and no other Court.
(15) In support of his contention, Dr. Singhvi referred to
the judgment of this Court, rendered in National Agricultural
Coop. Marketing Federation India Ltd. Vs. Gains Trading
Ltd., (2007) 5 SCC 692. In that case Clause 17 of the
agreement deals with arbitration and it provides that the
dispute be settled amicably by negotiation and mutual
agreement and if no settlement can be reached the matter in
dispute shall then be referred to and finally resolved by an
arbitration in Hong Kong in accordance with the provisions of
the Arbitration and Conciliation Act, 1996.
(16) The question raised in that case was that whether
Section 11 of the Act is inapplicable in regard to the
arbitrations, which are to take place outside India? The
argument in that case was that as the venue of arbitration was
outside India, Section 11 would not apply and, therefore,
neither the Chief Justice of India nor his designate will have
the jurisdiction to appoint an arbitrator.
(17) The aforesaid contention has been repelled in
paragraph 9 of the judgment as under:-
"9. The rules of interpretation require the
clause to be read in the ordinary and natural
sense, except where that would lead to an
absurdity. No part of a term or clause should
be considered as a meaningless surplusage,
when it is in consonance with the other parts
of the clause and expresses the specific
intention of parties. When read normally, the
arbitration clause makes it clear that the
matter in dispute shall be referred to and
finally resolved by arbitration in accordance
with the provisions of the Arbitration and
Conciliation Act, 1996 (or any statutory
modification, enactment or amendment
thereof) and the venue of arbitration shall be
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Hong Kong. This interpretation does not render
any part of the arbitration clause meaningless
or redundant. Merely because the parties have
agreed that the venue of arbitration shall be
Hong Kong, it does not follow that laws in force
in Hong Kong will apply. The arbitration clause
states that the Arbitration and Conciliation
Act, 1996 (an Indian statute) will apply.
Therefore, the said Act will govern the
appointment of arbitrator, the reference of
disputes and the entire process and procedure
of arbitration from the stage of appointment of
arbitrator till the award is made and
executed/given effect to.
(18) In my view, the facts of that case are not squarely
applicable in the present case. The facts of the case at hand,
as already adumbrated, the parties to the agreement agreed to
refer the dispute to the Arbitrator Mr.Samuel J.Marshall. The
Award was passed by the said Arbitrator at Singapore. The
Award was also set aside by the High Court of Singapore with
liberty to apply for fresh arbitration.
(19) Having mutually agreed to have the dispute referred
to an arbitrator at Singapore, the applicant is not permitted to
turn around and say that this Court be appointed an
arbitrator.
(20) In the facts and circumstances of the case, as recited
above, filing of an application under Section 11(6) of the Act,
before this Court, is misconceived. The application is,
accordingly dismissed. No costs.