Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Reserve: 30.7.2009
th
Date of Order: 4 August, 2009
OMP No. 282/2009
% 04.08.2009
Cairn Energy India Pty. Ltd. (Australia) ... Petitioner
Through: Mr. A.K.Ganguli, Sr. Advocate,
Mr. Rajiv Nayar, Sr. Advocate with
Mr. Ciccu Mukhopadhaya, Mr. Sanjay Kumar
and Mr. Ayush Agarwal, Advocates
Versus
UNION OF INDIA ... Respondent
Through: Mr. A.S.Chandoik, ASG with
Mr. Shasti Prabhu, Mr. Ritesh Kumar and
Mr. Sandeep Bajaj, Advocates
JUSTICE SHIV NARAYAN DHINGRA
1. Whether reporters of local papers may be allowed to see the judgment? Yes.
2. To be referred to the reporter or not? Yes.
3. Whether judgment should be reported in Digest? Yes.
JUDGMENT
The petitioner (former name: Command Petroleum India Pty. Ltd.) has
filed this application under Section 9 of the Arbitration & Conciliation Act, 1996 with a
prayer that this Court should restrain respondent i.e. Union of India from recovering
any amounts payable by the petitioner through Hindustan Petroleum Corporation
Limited (HPCL) and Bongaigaon Refinery Petrochemicals Ltd. (BRPL) pursuant to
th
judgment of the Malaysian Court dated 12 January, 2009.
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 1 of 9
2. Union of India had entered into a Production Sharing Contract (PSC)
th
dated 28 October, 1994 with Oil & Natural Gas Corporation Ltd., Videocon
Petroleum Limited (Videocon), Command Petroleum India Pty Limited and RAAVA
Oil Singapore Pte. Limited. The agreement provided a specific procedure of
calculation of Post Tax Rate of Return (PTRR). This contract specifically provided
as to what can be included in the accounts for the purpose of PTRR calculations.
However, the respondents did not follow the contractual provisions and started
including, for the purpose of PTRR calculation, the sums paid by the companies in
accordance with the Article 3.3 of Production Sharing Contract (PSC). A dispute
was raised by the Union of India on this method of calculation of PTRR by petitioner
and other two companies viz. Videocon and RAVVA OIL Singapore Pte. Ltd. and the
dispute was referred to an Arbitral Tribunal. The Arbitral Tribunal, by a majority,
upheld the method of calculating PTRR as adopted by the petitioner and other two
companies. Against the decision of Arbitral Tribunal, an appeal was preferred by
Union of India before the Malaysian Court at Kuala Lumpur and the Malaysian Court
after considering the terms of the contract came to the conclusion that it was wrong
for the Majority Arbitrators to have ignored the plain meanings of the words in the
relevant provisions and include “commercial sense” in the contract, since the words
were clear. The Malaysian Court therefore set aside the part of the award observing
as under:
On balance, and since I have found a manifest error of law on
the face of the relevant portion of the Partial Award, an order
that that portion of the Partial Award reading:
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 2 of 9
”The Companies are entitled to include in the accounts, for the
purposes of PTRR calculation (in accordance with Article 16
and Appendix D of the PSC) sums paid by the Companies in
accordance with Article 3.3 of the PSC”
be set aside, will be more appropriate, and so I order.
3. After this award was set aside by the Malaysian Court, the petitioner
preferred an appeal against the order of the Malaysian Court. The Appellate Court
at Malaysia did not grant stay against the order of the Malaysian Court. The Union
of India thereafter calculated the amounts recoverable from petitioner and other
companies which were short-paid to Union of India adopting a wrong method of
PTRR calculation. Since the petroleum supply was being made by the petitioner to
th th
HPCL and BRPL, Union of India issued letters dated 5 February, 2009 and 20
March, 2009 asking HPCL/BRPL to divert the amounts payable to the petitioner to
Union of India so that the amounts recoverable by Union of India from the petitioner
and other companies were recovered and adjusted. After these letters, the petitioner
has filed this petition under Section 9 of the Arbitration & Conciliation Act, 1996
seeking an interim injunction against recovery of these amounts.
4. The arbitration agreement between the parties reads as under:
ARTICLE 34
SOLE EXPERT, CONCILIATION AND ARBITRATION
34.1 Parties to Use Best Efforts to Settle Disputes
The Parties shall use their best efforts to settle amicably all disputes,
differences or claims arising out of or in connection with any of the terms and
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 3 of 9
conditions of this contract or concerning the interpretation or performance
thereof.
34.2 Reference to Sole Expert
Matter which, by the terms of this contract, the Parties have agreed to refer to
a sole expert and any other matters which the Parties may agreed to so refer,
shall be referred to an independent and impartial person of international
standing with relevant qualifications and experience appointed by agreement
between the Parties. Any sole expert appointed shall be acting as an expert
and not as an arbitrator and the decision of the sole expert on matters
referred to him shall be final and binding on the Parties and not subject to
arbitration. If the Parties are unable to agree on a sole expert, the matter may
be refereed to arbitration.
34.3 Unresolved Disputes
Subject to the provisions of this contract, the parties hereby agree that any
mater, unresolved dispute, difference or claim which cannot be agreed or
settled amicably within twenty one (21) days may be submitted to a sole
expert (where Article 34.2 applies) or otherwise to an arbitral tribunal for final
decision as hereinafter provided.
34.4. Composition of Arbitral Tribunal and Appointment of Arbitrators
The arbitral tribunal shall consist of three arbitrators. Each party to the dispute
shall appoint one arbitrator. The two arbitrators appointed by the Parties shall
appoint the third arbitrator.
34.5 Failure of a Party to Appoint Arbitrator
Any party may, after appointing an arbitrator, request the other Party(ies) in
writing to appoint the second arbitrator. If such other Party fails to appoint an
arbitrator within thirty (30) days of receipt of the written request to do so, the
second arbitrator may, at the request of the first party, be appointed by the
secretary general of the Permanent Court of Arbitrator at The Hague, within
thirty (30) days of the date of receipt of such request, from amongst persons
who are not nationals of the country of any of the Parties to the arbitration
proceedings.
34.6 Failure of Arbitrators to Appoint Third Arbitrator
If the two arbitrators appointed by or on behalf of the parties fail to agree on
the appoint of the third arbitrator within fourteen (14) days of the appointment
of the second arbitrator and if the parities do not otherwise agree, the
Secretary general of the Permanent Court of Arbitration at the Hague may, at
the request of either Party and in consultation with both, appoint the third
arbitrator who shall not be a national of the country of any party.
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 4 of 9
34.7. Failure of Arbitrator to Act
If any of the arbitrators fails or is unable to act, his successor shall be
appointed by the party or person which originally appointed such arbitrator or
as may be otherwise agreed by the parties to the dispute.
34.8 Decision of Arbitral Tribunal to be Binding
The decision of the arbitral tribunal, and, in the case of differences among the
arbitrators, the decision of the majority, shall be final and binding upon the
Parties.
34.9. UNCITRAL, Rules to Apply
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 these rules and the provisions of this Article 34,
the provisions of the Article 34 shall govern.
34.10 Survival of Right to Arbitrate
The right to arbitrate disputes and claims under this contract shall survive the
termination of this contract.
34.11. Conciliation
Prior to submitting a dispute to arbitration, the Parties may by mutual
agreement submit the matter for conciliation under the UNCITRAL
conciliation rules by a sole conciliator to be appointed by mutual agreement of
the parties. No arbitration proceedings hall be instituted while conciliation
proceedings are pending provided that a party may initiate arbitration
proceedings in the event the dispute has not been resolved by conciliation
within twenty one (21) days of the date of agreement by the Parties to submit
such dispute to conciliation.
34.12 Venue and Law of Arbitration Agreement
The venue of sole expert, conciliation or arbitration proceedings pursuant to
this Article, unless the parties otherwise agree, shall be Kuala Lumpur,
Malaysia, and shall be conducted in the English language. Insofar as terms of
this Contract notwithstanding the initiation of arbitral proceedings and any
pending claim or dispute. Notwithstanding the provisions of Article 33.1, the
arbitration agreement contained in this Article 34 shall be governed by the
laws of England.
5. The notice of this petition was served upon the respondent and the
respondent raised objection about the maintainability of this petition on dual grounds;
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 5 of 9
one, that the Courts in India have no jurisdiction to entertain petition under Section 9
in view of the above arbitration clause showing that the parties had intended that the
arbitration had to take place in Malaysia and the arbitration agreement shall be
governed by laws of England. The other ground raised by the respondent regarding
maintainability of this petition is that the notice of arbitration sent by the petitioner did
not disclose a dispute, in fact, the alleged dispute has already been the subject
matter of arbitration and an award has already been given by the Arbitral Tribunal
against which an appeal was preferred by Union of India (as seen in para 2 above)
and second appeal is pending before the Court in Malaysia therefore, the same
dispute cannot be raised again and an application under Section 9 was not
maintainable.
6. As far as the issue of territorial jurisdiction of this court in entertaining
an application under Section 9 in view of the specific arbitration clause is concerned,
another Bench of this Court on a petition filed by Union of India against Videocon
has held that this Court would have jurisdiction to entertain an application under
Section 9. I am told that the decision has been assailed by way of an SLP before
the Supreme Court and the matter is now subjudice before the Supreme Court. I,
therefore, consider that it would not be appropriate to go into the issue of territorial
jurisdiction of this Court in view of particular arbitration clause, since I find that this
petition is not entertain-able even otherwise for reasons given below.
7. It is the petitioner’s own case that the dispute regarding PTRR was
referred to the Arbitral Tribunal at Malaysia and the award passed by the Arbitral
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 6 of 9
Tribunal in respect of PTRR has been set aside by a competent Court at Malaysia
and the Court at Malaysia has given a finding that the accounting procedure adopted
by the petitioner for calculating PTRR was contrary to the terms of agreement. The
“commercial sense” on which the award was based by Tribunal could not be merged
into the agreement when the intention of the parties to the agreement was very
clear. Against this order of the Malaysian Court an appeal is pending. An enquiry
from the petitioner as to why the petitioner did not ask for stay of order from the
Appellate Court revealed that in Malaysia the Appellate Courts normally do not stay
the operation of the judgments and the judgments are implemented. Thus, what
compelled the petitioner to rush to Indian Courts was a situation that the petitioner
could not get relief from Court at Malaysia, despite the fact that an appeal was
preferred before the Court at Malaysia, so the petitioner thought it proper to invoke
Section 9 of the (Indian) Arbitration & Conciliation Act, 1996. When the petitioner
was asked as to what dispute the petitioner intends to raise, the petitioner stated that
though order of the Malaysian Court has been passed that accounting procedure
adopted by the petitioner was not proper but the exact amount recoverable by Union
of India has not been determined and the dispute as to what would be the exact
amount, recoverable by Union of India is yet to be resolved and has to be referred to
the Arbitral Tribunal.
8. I consider that the dispute stated by the petitioner in fact is no dispute
in the eyes of law and such a dispute cannot be raised by the petitioner unless the
petitioner disputed the quantum of the amount sought to be recovered by Union of
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 7 of 9
India. The petitioner has not disputed the quantum of amount, but the right to
recover the amount, which has already been adjudicated. Even otherwise, Clause
34.1 of the Arbitration agreement provides that where disputes/differences arise, the
first effort has to be made for amicable settlement and if the amicable settlement
fails, within 21 days then it has to be submitted to a sole expert (clause 34.2).
Whether the amount sought to be recovered by Union of India was in accordance
with the PTRR as ruled by Malaysian Court or not, can be referred to a Chartered
Accountant or an accounting expert. The petitioner had not written to Union of India
as to what would be the amount recoverable under the contract i.e. short-paid by the
petitioner in view of the judgment, neither the petitioner sought appointment of an
expert nor asked the respondent to resolve the differences regarding quantum of the
amount amicably. In view of the steps as provided under Article 34 of the Contract
not having been taken by the petitioner, the petitioner cannot invoke arbitration
clause and cannot make an application under Section 9.
9. It is not even the case of the petitioner in this petition that Union of
India was trying to recover more amount than what is due. I also consider that,
Section 9 of the Arbitration & Conciliation Act, 1996 is not a last refuge Section
available to those parties, who choose that the arbitration shall be held on a foreign
land in accordance with the foreign laws and shall not be governed by a procedure
as prevailing in India, so as and when they fail in the country where arbitration takes
place and whose laws are applicable, they rush to India and take help of Section 9
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 8 of 9
as a residual Section as if Courts in India were to give refuge to the parties who fail
in foreign courts.
I, therefore, consider that this petition under Section 9 seeking
injunction against Union of India against implementing the decision of Malaysian
Court is not maintainable. Section 9 is not meant to frustrate the gains of a foreign
Court’s judgments. The petition is hereby dismissed.
August 04, 2009 SHIV NARAYAN DHINGRA, J.
vn
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 9 of 9
Date of Reserve: 30.7.2009
th
Date of Order: 4 August, 2009
OMP No. 282/2009
% 04.08.2009
Cairn Energy India Pty. Ltd. (Australia) ... Petitioner
Through: Mr. A.K.Ganguli, Sr. Advocate,
Mr. Rajiv Nayar, Sr. Advocate with
Mr. Ciccu Mukhopadhaya, Mr. Sanjay Kumar
and Mr. Ayush Agarwal, Advocates
Versus
UNION OF INDIA ... Respondent
Through: Mr. A.S.Chandoik, ASG with
Mr. Shasti Prabhu, Mr. Ritesh Kumar and
Mr. Sandeep Bajaj, Advocates
JUSTICE SHIV NARAYAN DHINGRA
1. Whether reporters of local papers may be allowed to see the judgment? Yes.
2. To be referred to the reporter or not? Yes.
3. Whether judgment should be reported in Digest? Yes.
JUDGMENT
The petitioner (former name: Command Petroleum India Pty. Ltd.) has
filed this application under Section 9 of the Arbitration & Conciliation Act, 1996 with a
prayer that this Court should restrain respondent i.e. Union of India from recovering
any amounts payable by the petitioner through Hindustan Petroleum Corporation
Limited (HPCL) and Bongaigaon Refinery Petrochemicals Ltd. (BRPL) pursuant to
th
judgment of the Malaysian Court dated 12 January, 2009.
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 1 of 9
2. Union of India had entered into a Production Sharing Contract (PSC)
th
dated 28 October, 1994 with Oil & Natural Gas Corporation Ltd., Videocon
Petroleum Limited (Videocon), Command Petroleum India Pty Limited and RAAVA
Oil Singapore Pte. Limited. The agreement provided a specific procedure of
calculation of Post Tax Rate of Return (PTRR). This contract specifically provided
as to what can be included in the accounts for the purpose of PTRR calculations.
However, the respondents did not follow the contractual provisions and started
including, for the purpose of PTRR calculation, the sums paid by the companies in
accordance with the Article 3.3 of Production Sharing Contract (PSC). A dispute
was raised by the Union of India on this method of calculation of PTRR by petitioner
and other two companies viz. Videocon and RAVVA OIL Singapore Pte. Ltd. and the
dispute was referred to an Arbitral Tribunal. The Arbitral Tribunal, by a majority,
upheld the method of calculating PTRR as adopted by the petitioner and other two
companies. Against the decision of Arbitral Tribunal, an appeal was preferred by
Union of India before the Malaysian Court at Kuala Lumpur and the Malaysian Court
after considering the terms of the contract came to the conclusion that it was wrong
for the Majority Arbitrators to have ignored the plain meanings of the words in the
relevant provisions and include “commercial sense” in the contract, since the words
were clear. The Malaysian Court therefore set aside the part of the award observing
as under:
On balance, and since I have found a manifest error of law on
the face of the relevant portion of the Partial Award, an order
that that portion of the Partial Award reading:
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 2 of 9
”The Companies are entitled to include in the accounts, for the
purposes of PTRR calculation (in accordance with Article 16
and Appendix D of the PSC) sums paid by the Companies in
accordance with Article 3.3 of the PSC”
be set aside, will be more appropriate, and so I order.
3. After this award was set aside by the Malaysian Court, the petitioner
preferred an appeal against the order of the Malaysian Court. The Appellate Court
at Malaysia did not grant stay against the order of the Malaysian Court. The Union
of India thereafter calculated the amounts recoverable from petitioner and other
companies which were short-paid to Union of India adopting a wrong method of
PTRR calculation. Since the petroleum supply was being made by the petitioner to
th th
HPCL and BRPL, Union of India issued letters dated 5 February, 2009 and 20
March, 2009 asking HPCL/BRPL to divert the amounts payable to the petitioner to
Union of India so that the amounts recoverable by Union of India from the petitioner
and other companies were recovered and adjusted. After these letters, the petitioner
has filed this petition under Section 9 of the Arbitration & Conciliation Act, 1996
seeking an interim injunction against recovery of these amounts.
4. The arbitration agreement between the parties reads as under:
ARTICLE 34
SOLE EXPERT, CONCILIATION AND ARBITRATION
34.1 Parties to Use Best Efforts to Settle Disputes
The Parties shall use their best efforts to settle amicably all disputes,
differences or claims arising out of or in connection with any of the terms and
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 3 of 9
conditions of this contract or concerning the interpretation or performance
thereof.
34.2 Reference to Sole Expert
Matter which, by the terms of this contract, the Parties have agreed to refer to
a sole expert and any other matters which the Parties may agreed to so refer,
shall be referred to an independent and impartial person of international
standing with relevant qualifications and experience appointed by agreement
between the Parties. Any sole expert appointed shall be acting as an expert
and not as an arbitrator and the decision of the sole expert on matters
referred to him shall be final and binding on the Parties and not subject to
arbitration. If the Parties are unable to agree on a sole expert, the matter may
be refereed to arbitration.
34.3 Unresolved Disputes
Subject to the provisions of this contract, the parties hereby agree that any
mater, unresolved dispute, difference or claim which cannot be agreed or
settled amicably within twenty one (21) days may be submitted to a sole
expert (where Article 34.2 applies) or otherwise to an arbitral tribunal for final
decision as hereinafter provided.
34.4. Composition of Arbitral Tribunal and Appointment of Arbitrators
The arbitral tribunal shall consist of three arbitrators. Each party to the dispute
shall appoint one arbitrator. The two arbitrators appointed by the Parties shall
appoint the third arbitrator.
34.5 Failure of a Party to Appoint Arbitrator
Any party may, after appointing an arbitrator, request the other Party(ies) in
writing to appoint the second arbitrator. If such other Party fails to appoint an
arbitrator within thirty (30) days of receipt of the written request to do so, the
second arbitrator may, at the request of the first party, be appointed by the
secretary general of the Permanent Court of Arbitrator at The Hague, within
thirty (30) days of the date of receipt of such request, from amongst persons
who are not nationals of the country of any of the Parties to the arbitration
proceedings.
34.6 Failure of Arbitrators to Appoint Third Arbitrator
If the two arbitrators appointed by or on behalf of the parties fail to agree on
the appoint of the third arbitrator within fourteen (14) days of the appointment
of the second arbitrator and if the parities do not otherwise agree, the
Secretary general of the Permanent Court of Arbitration at the Hague may, at
the request of either Party and in consultation with both, appoint the third
arbitrator who shall not be a national of the country of any party.
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 4 of 9
34.7. Failure of Arbitrator to Act
If any of the arbitrators fails or is unable to act, his successor shall be
appointed by the party or person which originally appointed such arbitrator or
as may be otherwise agreed by the parties to the dispute.
34.8 Decision of Arbitral Tribunal to be Binding
The decision of the arbitral tribunal, and, in the case of differences among the
arbitrators, the decision of the majority, shall be final and binding upon the
Parties.
34.9. UNCITRAL, Rules to Apply
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 these rules and the provisions of this Article 34,
the provisions of the Article 34 shall govern.
34.10 Survival of Right to Arbitrate
The right to arbitrate disputes and claims under this contract shall survive the
termination of this contract.
34.11. Conciliation
Prior to submitting a dispute to arbitration, the Parties may by mutual
agreement submit the matter for conciliation under the UNCITRAL
conciliation rules by a sole conciliator to be appointed by mutual agreement of
the parties. No arbitration proceedings hall be instituted while conciliation
proceedings are pending provided that a party may initiate arbitration
proceedings in the event the dispute has not been resolved by conciliation
within twenty one (21) days of the date of agreement by the Parties to submit
such dispute to conciliation.
34.12 Venue and Law of Arbitration Agreement
The venue of sole expert, conciliation or arbitration proceedings pursuant to
this Article, unless the parties otherwise agree, shall be Kuala Lumpur,
Malaysia, and shall be conducted in the English language. Insofar as terms of
this Contract notwithstanding the initiation of arbitral proceedings and any
pending claim or dispute. Notwithstanding the provisions of Article 33.1, the
arbitration agreement contained in this Article 34 shall be governed by the
laws of England.
5. The notice of this petition was served upon the respondent and the
respondent raised objection about the maintainability of this petition on dual grounds;
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 5 of 9
one, that the Courts in India have no jurisdiction to entertain petition under Section 9
in view of the above arbitration clause showing that the parties had intended that the
arbitration had to take place in Malaysia and the arbitration agreement shall be
governed by laws of England. The other ground raised by the respondent regarding
maintainability of this petition is that the notice of arbitration sent by the petitioner did
not disclose a dispute, in fact, the alleged dispute has already been the subject
matter of arbitration and an award has already been given by the Arbitral Tribunal
against which an appeal was preferred by Union of India (as seen in para 2 above)
and second appeal is pending before the Court in Malaysia therefore, the same
dispute cannot be raised again and an application under Section 9 was not
maintainable.
6. As far as the issue of territorial jurisdiction of this court in entertaining
an application under Section 9 in view of the specific arbitration clause is concerned,
another Bench of this Court on a petition filed by Union of India against Videocon
has held that this Court would have jurisdiction to entertain an application under
Section 9. I am told that the decision has been assailed by way of an SLP before
the Supreme Court and the matter is now subjudice before the Supreme Court. I,
therefore, consider that it would not be appropriate to go into the issue of territorial
jurisdiction of this Court in view of particular arbitration clause, since I find that this
petition is not entertain-able even otherwise for reasons given below.
7. It is the petitioner’s own case that the dispute regarding PTRR was
referred to the Arbitral Tribunal at Malaysia and the award passed by the Arbitral
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 6 of 9
Tribunal in respect of PTRR has been set aside by a competent Court at Malaysia
and the Court at Malaysia has given a finding that the accounting procedure adopted
by the petitioner for calculating PTRR was contrary to the terms of agreement. The
“commercial sense” on which the award was based by Tribunal could not be merged
into the agreement when the intention of the parties to the agreement was very
clear. Against this order of the Malaysian Court an appeal is pending. An enquiry
from the petitioner as to why the petitioner did not ask for stay of order from the
Appellate Court revealed that in Malaysia the Appellate Courts normally do not stay
the operation of the judgments and the judgments are implemented. Thus, what
compelled the petitioner to rush to Indian Courts was a situation that the petitioner
could not get relief from Court at Malaysia, despite the fact that an appeal was
preferred before the Court at Malaysia, so the petitioner thought it proper to invoke
Section 9 of the (Indian) Arbitration & Conciliation Act, 1996. When the petitioner
was asked as to what dispute the petitioner intends to raise, the petitioner stated that
though order of the Malaysian Court has been passed that accounting procedure
adopted by the petitioner was not proper but the exact amount recoverable by Union
of India has not been determined and the dispute as to what would be the exact
amount, recoverable by Union of India is yet to be resolved and has to be referred to
the Arbitral Tribunal.
8. I consider that the dispute stated by the petitioner in fact is no dispute
in the eyes of law and such a dispute cannot be raised by the petitioner unless the
petitioner disputed the quantum of the amount sought to be recovered by Union of
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 7 of 9
India. The petitioner has not disputed the quantum of amount, but the right to
recover the amount, which has already been adjudicated. Even otherwise, Clause
34.1 of the Arbitration agreement provides that where disputes/differences arise, the
first effort has to be made for amicable settlement and if the amicable settlement
fails, within 21 days then it has to be submitted to a sole expert (clause 34.2).
Whether the amount sought to be recovered by Union of India was in accordance
with the PTRR as ruled by Malaysian Court or not, can be referred to a Chartered
Accountant or an accounting expert. The petitioner had not written to Union of India
as to what would be the amount recoverable under the contract i.e. short-paid by the
petitioner in view of the judgment, neither the petitioner sought appointment of an
expert nor asked the respondent to resolve the differences regarding quantum of the
amount amicably. In view of the steps as provided under Article 34 of the Contract
not having been taken by the petitioner, the petitioner cannot invoke arbitration
clause and cannot make an application under Section 9.
9. It is not even the case of the petitioner in this petition that Union of
India was trying to recover more amount than what is due. I also consider that,
Section 9 of the Arbitration & Conciliation Act, 1996 is not a last refuge Section
available to those parties, who choose that the arbitration shall be held on a foreign
land in accordance with the foreign laws and shall not be governed by a procedure
as prevailing in India, so as and when they fail in the country where arbitration takes
place and whose laws are applicable, they rush to India and take help of Section 9
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 8 of 9
as a residual Section as if Courts in India were to give refuge to the parties who fail
in foreign courts.
I, therefore, consider that this petition under Section 9 seeking
injunction against Union of India against implementing the decision of Malaysian
Court is not maintainable. Section 9 is not meant to frustrate the gains of a foreign
Court’s judgments. The petition is hereby dismissed.
August 04, 2009 SHIV NARAYAN DHINGRA, J.
vn
OMP No. 282/2009 Cairn Energy India Pty. Ltd. v. UNION OF INDIA Page 9 of 9