GMR ENERGY LIMITED vs. DOOSAN POWER SYSTEMS INDIA PRIVATE LIMITED & ORS

* IN THE HIGH COURT OF DELHI AT NEW DELHI
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% Reserved on: 14 September, 2017
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Decided on: 14 November, 2017
+ CS(COMM) 447/2017
GMR ENERGY LIMITED ..... Plaintiff
Represented by: Mr. Rajiv Nayar and
Mr. Darpan Wadhwa,
Sr. Advocates with Mr. Rishi
Agrawala, Ms. Malavika Lal,
Mr. Karan Luthra and
Mr. Saurabh Seth, Advocates.
versus

DOOSAN POWER SYSTEMS INDIA
PRIVATE LIMITED & ORS ..... Defendants
Represented by: Mr. Nakul Dewan, Mr. Sumeet
Lall, Mr. Sidhant Kapoor,
Ms. Neelu Mohan and Mr. Zain
Maqbool, Advocates for
defendant No.1.
Mr. A.S. Chandhiok,
Sr. Advocate with Ms. Shally
Bhasin, Advocate for defendant
Nos. 2 and 3.
CORAM:
HON'BLE MS. JUSTICE MUKTA GUPTA
I.A. No. 7248/2017 (under Order XXXIX Rule 1 and 2 CPC), 9068/2017
(under Order XXXIX Rule 4 CPC) and 9069/2017 (under Section 45 of
Arbitration and Conciliation Act, 1996)

1. The present suit has been filed by the plaintiff GMR Energy Limited
(in short ‘GMR Energy’) against Dossan Power Systems India Pvt. Ltd. (in
short ‘Doosan India’), the sole contesting defendant being the defendant
No.1 and GMR Chhattisgarh Energy Limited (in short ‘GCEL’) and GMR
CS(COMM) 447/2017 Page 1 of 98



Infrastructure Ltd. (in short ‘GIL’), proforma defendants impleaded as
defendant Nos. 2 and 3 respectively. In the suit GMR Energy inter alia
seeks a decree of permanent injunction restraining Doosan India and its
representatives, agents etc. from instituting or continuing or proceeding with
arbitration proceeding against GMR Energy before the Singapore
International Arbitral Centre (SIAC) being SIAC Arbitration No. 316/2016
(Arb. 316/16/ACU). SIAC Arbitration No. 316/2016 is based on the three
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agreements between Doosan India and GCEL all dated 22 January, 2010
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(for convenience ‘EPC agreements’ dated 22 January, 2010) being (i) the
Agreement for Civil Works, Erection, Testing and Commissioning (in short
‘CWETC Agreement’) executed between GCEL and Doosan India; (ii) the
Onshore Supply Agreement executed between GCEL and Doosan India;
(iii) the BTG Equipment Supply Agreement (in short ‘Offshore Supply
Agreement’) also executed between GCEL and Doosan India; and (iv) the
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Corporate Guarantee dated 17 December, 2013 (in short ‘Corporate
Guarantee’) executed between GCEL, GIL and Doosan India besides the
two Memorandum of Understandings (in short the two ‘MOUs’) between
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Doosan India and GMR Energy dated 1 July, 2015 and 30 October, 2015
2. Basing its claim on the three agreements, that is, EPC agreements
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dated 22 January, 2010, the Corporate Guarantee dated 17 December,
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2013 and the two MOUs, Doosan India sent a notice of arbitration dated 11
December, 2016 to GIL as first respondent, GMR Energy as second
respondent and GCEL as third respondent seeking enforcement of the
liability of the three respondents therein jointly and severally towards
Doosan India, GCEL being liable in terms of three EPC agreements, GIL in
terms of the Corporate Guarantee and GMR Energy, though not a party to
CS(COMM) 447/2017 Page 2 of 98



the three EPC Agreements and the Corporate Guarantee, but by virtue of the
two MOUs, common family governance, transfer of shareholding and being
the alter ego of GCEL and GIL. In the plaint GMR Energy claims that since
it was not a party to the three EPC agreements or the Corporate Guarantee
which contained arbitration clause, it responded to the correspondence
received from SIAC, objecting to its being arrayed as a party and sought
discharge of GMR Energy as a party, respondent and termination of the
reference, wrongfully and incorrectly initiated against GMR Energy by
Doosan India. Since SIAC neither acceded to nor rejected the request of
GMR Energy and was proceeding to appoint an arbitrator on behalf of GMR
Energy, the present suit was filed with the prayers as noted above. Along
with the suit, GMR Energy filed an application being I.A. No. 7248/2017
under Order XXXIX Rule 1 and 2 of Civil Procedure Code, 1908 (in short
‘CPC’) seeking an ad-interim ex-parte stay.
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3. When the present suit came up before this Court on 4 July, 2017 as
GMR Energy was not a party either to the three EPC agreements or to the
Corporate Guarantee, this Court passed an ad-interim ex-parte order staying
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operation of the letter dated 8 June, 2017 addressed from Ms. Adriana
noting that “in the circumstances, the President of the Court of Arbitration of
SIAC will now proceed to appoint all three arbitrators and shall designate
one of them to be the presiding arbitrator pursuant to Rule 12.2 of the SIAC
Rules.” and directed that no arbitrator be appointed on behalf of GMR
Energy till the next date of hearing which interim order is continuing till
date.
4. Pursuant to the service of summons two applications have been filed
by Doosan India being I.A. No. 9068/2017 under Order XXXIX Rule 4 CPC
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and I.A. No. 9069/2017 under Section 45 of the Arbitration and Conciliation
Act, 1996 (in short ‘Arbitration Act’). On completion of pleadings
arguments have been heard on behalf of both the parties in the three
applications, that is, under Order XXXIX Rule 1 and 2 CPC, Order XXXIX
Rule 4 CPC and Section 45 of the Arbitration and Conciliation Act, 1996 (in
short the Arbitration Act).
5. In support of the applications claim of Doosan India is that a valid and
binding arbitration agreement exists between Doosan India, GCEL, GIL and
GMR Energy being an alter ego and a guarantor of GCEL. Further as per
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the Independent Auditor Report of GCEL dated 27 May, 2016, GMR
Energy is a holding company of GCEL and has taken over GCEL liabilities
towards Doosan India. GMR Energy guaranteed to make payments and in
fact made certain payments on behalf of GCEL in partial discharge of the
liability of GCEL towards Doosan India and at that material time GMR
Energy owned 100% stakes in GCEL, co-mingled funds, was run by the
same family, had the same Directors and officers, interchangeably used each
other’s addresses and telephone numbers, observed little, if not any,
corporate formality and separation and as such being the alter ego of GCEL,
GMR Energy is bound by the arbitration agreement between Doosan India,
GCEL and GIL for resolution of dispute. Further GCEL is represented to be
a “ special purpose vehicle established by GMR Group specifically for
development of the Project ” and entered into the three EPC contract
agreements with Doosan India which is wholly owned subsidiary of Doosan
India Heavy Industries and Construction, (in short ‘Doosan Korea’), a
company registered and existing under the laws of Korea. After GCEL
failed to discharge its liability GMR Energy and Doosan India entered into a
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Memorandum of Understanding dated 1 July, 2015 being MOU-I between
GMR Energy, GCEL, Doosan India and Doosan Korea followed by the
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second Memorandum of Understanding dated 30 October, 2015 being
MOU-II between GMR Energy, GCEL and Doosan India.
6. Since the three EPC agreements and Corporate Guarantee Agreement,
all contain arbitration clause with the intention to resolve any dispute
through arbitration under SIAC Rules with the seat in Singapore and the two
MOUs are also governed by the same agreements, the payment obligation
being undertaken by GMR Energy for assuring proper execution of three
EPC agreements between Doosan India and GCEL, the arbitration clause
would also extend to GMR Energy.
7. Learned counsel for GMR Energy submits that the three EPC
agreements and the Corporate Guarantee agreement before this Court all
prescribe; (1) the law governing the contract shall be Indian law (2) “the
arbitration shall be conducted in Singapore” and (3) that the “arbitration
shall be as per SIAC Rules”. Since the relationship between GCEL, GIL
and Doosan India is only domestic in nature, all parties being Indian, Part-I
of the Arbitration Act would apply in view of the amendment in the
definition of “international commercial arbitration” under Section 2 (1) (f)
(iii) of the Arbitration Act. Reliance is placed on the decision of the
Supreme Court in 2008 (14) SCC 271 TDM Infrastructure Private Limited
vs. UE Development India Private Limited . Further observation of the
Supreme Court in TDM Infrastructure (supra) has been followed by
Bombay High Court in 2012 MhLJ 822 Seven Islands Shipping Ltd. vs. Sah
Petroleums Ltd., as well as 2015 SCC Online Bombay 7752 Aadhar
Mercantile Private Limited vs. Shree Jagdamba Agrico Exports Private Ltd.
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Since the arbitration is between two Indians, it cannot be termed as
international commercial arbitration and the Indian substantive law cannot
be derogated from by and between two Indian parties as held by the
Constitution Bench in the decision reported as 2012 (9) SCC 552 Bharat
Aluminum Company and Ors. etc. etc. vs. Kaiser Aluminium Technical
Service, Inc. and Ors. etc. etc.
8. Distinguishing the decision in 1998 (1) SCC 305 Sumitomo Heavy
Industries Ltd. vs. ONGC Ltd. & Ors. relied upon by learned counsel for
Doosan India reliance is placed on 2013 (3) CTC 709 National Highway
Authority of India vs. Oriental Structure Engineers Ltd. - Gammon India
Ltd. (JV) to contend that the Arbitration Act is “matter of substantive law”
and since governing law of the contract is Indian law, in the absence of a
specific choice of law governing the arbitration agreement, the law
governing the arbitration agreement would also be Indian law as held in the
decision reported as 2005 (7) SCC 234 Shin-Etsu Chemical Co. Ltd vs M/S.
Aksh Optifibre Ltd. & Anr . Reliance is placed on the decision reported as
2014 (5) SCC 1 ENERCON (INDIA) Ltd & Ors. vs. ENERCON GMBH &
Anr. wherein interpreting a similar arbitration agreement it was held that the
arbitration clause only provided that venue of arbitration was London
however, the seat of arbitration was in India, as the Arbitration Act was
made applicable by the parties. Further the identification of the parties to an
agreement is a question of substantive law and not procedural law as held by
the Commercial Court of England in 2002 EWHC 121 (Comm) Peterson
Farms Inc. and C & M Farming Ltd. Since two Indians cannot contract out
of the law of India and the Arbitration Act of 1996 is a substantive law,
exclusion of Part-I of the Arbitration Act which Doosan India seeks to do,
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would be hit by Section 28 of the Indian Contract Act. Simply because the
place of arbitration is out of India, Part-II of Arbitration Act would not apply
and as per the proviso to Section 2 (2) of the Arbitration Act engrafted
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through the amendment dated 23 October, 2015 Part-I of the Arbitration
Act would apply. Once the arbitration amongst two Indians ceases to be an
“international commercial arbitration”, it would automatically cease to be
“considered as commercial under the law enforced in India” which is the
principle condition for defining “a foreign award” under Section 44 of the
Arbitration Act. Despite the fact that GMR Energy is not a party to the
arbitration agreement Doosan India seeks to contend that GMR Energy must
comply with SIAC Rules, be governed by the laws of Singapore and only
file proceedings before the Court at Singapore which is clearly oppressive
and vexatious apart from being illegal. Since Part-II of the Act would not
apply the application filed by Doosan Indian under Section 45 of the Act is
not maintainable.
9. Learned counsel for GMR Energy further contends that even if it is
held that the Singapore Arbitration Laws are applicable to the arbitration
amongst Doosan India, GCEL, GIL however, GMR Energy not being a
signatory to any of the arbitration agreements, it cannot be roped into an
international arbitration by applying the principle of alter ego or “it being a
guarantor” without there being a written guarantee. Doosan India invoked
the arbitration by virtue of the three EPC agreements however, Clause 25.12
of CWETW Agreement and Clauses 23.12 of the onshore and offshore
supply agreements clearly provided that the parties have entered into the
agreement entirely on their own and in no manner, for and on behalf of any
shareholder of either party and neither party shall take recourse against such
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persons for any act omission, obligation whether based upon piercing of the
party’s corporate veil or any other legal theory based upon exercise or
control over the parties or otherwise. Reliance is placed on the decision
reported as 2003 (4) SCC 341 Modi Entertainment Network & Anr. vs.
W.S.G. Cricket PTE Ltd. and Peterson Farms (Supra).
10. Further even the principle of alter ego would not entitle Doosan India
to invoke arbitration against GMR Energy. Relying upon the decisions
reported as 2010 (5) SCC 306 Indowind Energy Ltd. vs. Wescare (India)
Ltd. , 2017 SCCOnline Del 8345 Sudhir Gopi vs. Indira Gandhi National
Open University and 2014 (9) SCC 407 Balwant Rai Saluja & Anr. vs. Air
India Ltd. & Ors. it is contended that the principle of alter ego as being
sought to be invoked cannot be invoked by Doosan India as each company is
a separate and distinct legal entity and the mere fact that the two companies
have common shareholders or common board of directors will not make the
two companies a single entity. Reference is also made to the decision

Enterprises decided by Division Bench of this Court. Even in the decision
reported as 2013 (1) SCC 641 Chloro Controls India Pvt. Ltd. vs. Severn
Trent Water Purification Inc. & Ors . relied upon by learned counsel for
Doosan India, Supreme Court held that a heavy onus lies on the party
seeking to claim under or through the principle of alter ego a non-signatory
party to an arbitration and Doosan India cannot get away by showing that
only a prima facie view has to be formed. Reliance is also placed on the
decisions reported as 2011 (11) SCC 375 Deutsche Post Bank Home
Finance Ltd. vs. Taduri Sridhar and 2017 (1) MhLJ 681 Integrated Sales
Services Limited vs. Arun Dev and Ors .
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11. Learned counsel for GMR Energy further contends that GMR Energy
is also not liable to be made a party to the arbitration on the basis of being
guarantor by virtue of the two MOUs for the reason admittedly the two
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MOUs stood terminated vide letter dated 3 November, 2016 of Doosan
India which letter was not made a part of the notice of arbitration. Relying
upon the decision reported as 1994 Suppl. (3) SCC 126 M/s P.K. Ramaiah
and Co. vs. Chairman & Managing Director, National Thermal Power
Corpn , it is contended that having terminated the two MOUs, Doosan India
cannot claim that there is arbitrable dispute. Referring to Rule 7 of the
SIAC Rules it is contended that GMR Energy being a non-signatory of the
arbitration agreement its impleadment was permissible only after
compliance of Section 7 of the SIAC Rules which admittedly Doosan India
has not complied with. Reliance is also placed on 2013 SGCA 57 PT First
Media TBK (formerly known as PT Broadband Multimedia TBK) vs. Astro
Nusantara International BV & Ors.
12. Since admittedly there is no arbitration clause governing GMR
Energy and Doosan India in view of the decision of this Court in 2009
SCCOnline Del 3213 Lucent Technologies Inc. vs. ICICI Bank Limited &
Ors. GMR Energy has remedy before this Court and cannot be compelled to
defend itself in proceedings before the Arbitral Tribunal which are without
jurisdiction and would cause irreparable loss and damage to GMR Energy.
Reliance is also placed on the decisions reported as in 2011 EWHC 1624
(Comm) Excalibur Ventures LLC and Texas Keystone Inc. & Ors. and 2002
(7) SCC 46 Prakash Narain Sharma vs. Burmah Shell Cooperative Housing
Society Ltd .
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13. Countering the arguments advanced on behalf of GMR Energy,
learned counsel for Doosan India submits that invocation of arbitration
against the alter ego of a signatory is a well recognized principle not only in
India but also in Singapore which is the chosen seat of arbitration. Reliance
is placed on the decision reported as Chloro Controls (supra). Relying upon
2009 SGHC 42 Jiang Haiying vs. Tan Lim Hui and Anr. a decision of the
High Court of Singapore, learned counsel contends that since parties agreed
to arbitration under the SIAC Rules with the seat of arbitration being at
Singapore, Part-II of the Arbitration Act would apply. Referring to Sections
44 and 45 of the Arbitration Act it is contended that the two provisions
recognize a situation where an arbitration agreement would extend to a non-
signatory to a contract.
14. Learned counsel for Doosan India further submits that if there is an
ex-facie or a prima facie basis for arbitration to proceed against the non
party to the agreement, Section 45 of the Arbitration Act warrants that the
judicial proceedings must be stayed in favour of the arbitration. Reliance is
placed on Shin-Etsu Chemical (supra), 2016 (4) Arb. LR 250 Delhi
Mcdonald's India Private Limited vs. Vikram Bakshi and Ors . and 2015
SGHC 225 Malini Ventura vs. Knight Capital Pte. Ltd. & Ors. which
decision of the Singapore High Court has been affirmed in the decision
reported as 2015 SGHC 57 Tomolugen Holdings Ltd & Anr vs. Silica
Investors Ltd. and Ors. It is further contended that the Arbitral Tribunal is
the appropriate forum to adjudicate on the issue of alter ego and the same
being determinable by the Arbitral Tribunal, this Court will not proceed with
the present suit to determine whether GMR Energy is liable to be proceeded
in the arbitration or not. Reliance is placed on the decision of Division
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Bench of Bombay High Court in Integrated Sales Services (supra), of the
High Court of Singapore reported as 2006 (3) SGHC 78 Aloe Vera of
America, Inc. vs. Asianic Food (S) Pte. Ltd. & Anr. , and M/s Sai Soft
Securities Ltd. vs. Manju Ahluwalia , FAO(OS) No. 65/2016 decided by the
Division Bench of this Court. Distinguishing the decision of the learned
Single Judge of this Court in Sudhir Gopi (supra) it is contended that in the
said matter this Court was not dealing with an international arbitration but
under Part-I of the Arbitration Act, hence the said decision has no
application to the facts of the present case.
15. Rebutting the arguments on behalf of GMR Energy that the parties
being Indian entities, the arbitration between them cannot be construed as an
International arbitration under Section 2 (1) (f) of the Arbitration Act and
they cannot choose a foreign seat of arbitration as the same would
contravene Section 28 of the Act, it is contended that even Indian parties can
agree to choose a foreign seat as has been done in the present case and as
held by the Supreme Court in 1998 (1) SCC 305 Sumitomo Heavy Industries
Ltd. vs. ONGC Ltd. & Ors. which recognizes that once arbitration
commences three laws are applicable, that is, substantive law of contract,
curial law and the proper law of the arbitration agreement. Reference is also
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made to Redfern and Hunter on International Arbitration , 6 Edn.
(Blackaby, Partasides, Redfern, el al.; Sep 2015 at pp. 157) and the decisions
reported as 1999 (7) SCC 61 Atlas Exports Industries vs. Kotak & Co. and
2015 SCCOnline M.P. 7417, Sasan Power Limited vs. North American Coal
Cornpn (India) (P) Ltd
16. Refuting the reliance of learned counsel for GMR Energy on TDM
Infrastructure (supra), it is contended that the observations of the Supreme
CS(COMM) 447/2017 Page 11 of 98



Court in the said case was in respect of proceedings under Section 11 of the
Arbitration Act and for no other purpose, thus the decision would not
constitute a binding precedent as held by the Supreme Court in the decision
reported as 2015 (3) SCC 49 Associate Builders vs. Delhi Development
Authority . Neither of the two decisions relied upon by learned counsel for
GMR Energy i.e. Seven Islands (supra) and Aadhar Mercantile (supra)
referred to the earlier decision of the Supreme Court in Atlas Exports
(Supra).

17. It is further contended that the parties in the present case have agreed
to seat the arbitration in Singapore in accordance with the SIAC Rules while
the merits of the disputes to be conducted in accordance with laws of India
which is permissible and not barred under the Indian law. Since the seat of
arbitration is in Singapore, Part-II of the Arbitration Act would apply and
the averments of learned counsel for GMR Energy that since all parties, that
is, GMR Energy, GCEL, GIL and Doosan India are Indian parties, Part-I of
the Arbitration Act would govern, is liable to be rejected. Reliance is placed
on the decisions reported as Bharat Aluminum (supra), Sasan Power (supra),
2014 (7) SCC 603 Reliance Industries Limited and Anr. vs. Union of India ,
2016 (11) SCC 508 Eitzen Bulk A/S and Ors. vs. Ashapura Minechem Ltd.
and Ors. , 2017 (5) SCC 331 IMAX Corporation vs. E-City Entertainment (I)
Pvt. Ltd. and 2017 (7) SCC 678 Indus Mobile Distribution (P) Ltd. vs.
Datawind Innovations (P) Ltd. It is further contended that the three EPC
agreements do not set out the law governing arbitration and thus this issue
must be determined.
18. Rebutting the contention of learned counsel for GMR Energy that
lifting of the Corporate Veil or determining the issue of alter ego can only be
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based on the allegation of fraud which can be determined by a judicial forum
as held in 1996 (4) SCC 622 DDA vs. Skipper Construction Co. (P) Ltd. and
Sudhir Gopi (supra), it is contended that fraud is not the only ground on
which the corporate veil can be pierced as held by the Supreme Court in
1988 (4) SCC 59 State of U.P. and Ors. vs. Renusagar Power Co. and Ors .
The concept of single common entity has been recognized by the House of
Lords in 1976 (3) ALL ER 462 DHN Food Distributors Ltd. v. Tower
Hamlets London BC . Reiterating that the principle of alter ego is arbitrable
and it will be for the arbitral tribunal to decide the issue, reliance is placed
on 2016 (10) SCC 386 A. Ayyasamy vs. A Paramasivam wherein the
Supreme Court has laid down the categories which are non arbitrable and
the issue of alter ego does not find mention therein.
19. Further refuting the contention of learned counsel for GMR Energy
that a non-party to the arbitration agreement can be impleaded only after
invocation of Rule 7 of the SIAC Rules it is contended that the concept of
joinder is different from invoking an arbitration agreement against an alter
ego. Rule 7 of the SIAC Rules would apply after Rule 3 and as GMR
Energy has been named as a party to the arbitration in accordance with Rule
3, Rule 7 has no application. In any case, Rule 7 of the SIAC Rules is not
mandatory but directory in nature and has no application to the facts of the
present case. It is thus prayed that the injunction granted in favour of GMR
Energy be vacated and arbitration be permitted to be carried out as the
Tribunal under the Singapore law is competent to decide the issue of alter
ego.
20. On contentions raised by the parties five issues which need
determination by this Court are : (i) Whether the arbitration that commenced
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at Singapore pursuant to Arb. 316/16/ACU would fall under Part-I or Part-II
of the Arbitration Act ? (ii) Whether on the basis of pleas in the notice of
arbitration issued by Doosan India a case is made out by Doosan India to
subject GMR Energy to arbitration with GCEL and GIL? (iii) Whether the
Arbitral Tribunal has no jurisdiction to pierce the corporate veil? (iv) In the
present suit whether this Court will form a prima facie opinion on the issue
of alter ego or return a finding? (v) Whether the invocation of arbitration
against GMR Energy is contrary to Rule 7 of the SIAC Rules?

21. Before dealing with the rival contentions of the parties it would be
appropriate to note the salient averments in the notice of arbitration dated
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11 December, 2016 issued by Doosan India to GMR Energy, GCEL and
GIL which is the foundation of subjecting GMR Energy to arbitration as
under:
B. GMR Infra – First Respondent

12. GMR Infra is a company incorporated and existing under
the laws of India. According to GMR Infra’s recent press
release, GMR Infra operates in the name of GMR Group,
which is “a leading global infrastructure conglomerate with
interests in Airport, Energy, Transportation and Urban
Infrastructure.” GMR Infra is the flagship holding company
formed to fund the capital requirements of GMR Group’s
various infrastructure projects, which it undertakes through its
various subsidiaries.
13. GMR Group represents that it is run by “Family
Governance guided by Family Constitution.” The founder and
chairman of GMR Group is Mr. GM Rao. As of November
2016, GMR Infra’s Chairman is Mr. G. Kiran Kumar, Mr. GM
Rao’s younger son. The chairman of the Energy arm of GMR
Group (GMR Energy and other Energy assets) is Mr. GBS
Raju, Mr. GM Rao’s older son. The chairman of the Airports
arm of GMR Group is Srinivas Bommidala, Mr. GM Rao’s
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son-in-law. The CEO of GMR Group’s Corporate Affairs arm
is Mr. G. Subba Rao, Mr. GM Rao’s first cousin.
14. .......

C. GMR Energy’s – Second Respondent
15. .....
16. GMR Energy is a company incorporated under the laws
of India and is the Energy arm of GMR Group. While GMR
Energy had a 100% stake in GCEL during their dealings with
Doosan India, GMR Energy no longer owns GCEL. As noted
above, its Chairman is the elder son of GM Rao and brother of
GMR Infra’s Chairman.
17. .......

D. GCEL- Third Respondent
18. GCEL is the owner of the Project and is registered and
existing under the laws of India. GCEL is represented to be a
“special purpose vehicle established by GMR Group
specifically for development of the Project” and was wholly
owned by GMR Energy until recently. As of November 2016,
GMR Infra directly and indirectly owns a 100% stake in
GCEL. During its dealings with Doosan India, Mr. S.N. Barde
doubled as President of both GCEL and GMR Energy.
19. .......

C. GMR Energy and Doosan Korea negotiate a payment
schedule for the Outstanding Debt, resulting in MOU I
between GCEL and Doosan India

27. In recognition of its responsibility to pay the Outstanding
Debt, GCEL agreed to a revised payment plan under which
GCEL committed to pay the sums initially due 31 July 2013
(i.e., approximately USD 170 million and INR 186 Crores) by
December 2013, and the remaining sums in the upcoming
years of 2014 and 2015 as per the milestones and other terms
of the EPC Agreements. After a few months, however, GCEL
notified Doosan India that it would not be able to comply with
the above payment plan due to “further complications with
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CS(COMM) 447/2017 Page 16 of 98

32. As memorialized in MOU I, GCEL and Doosan
representatives further agreed that “GMR Infrastructure
Limited will provide a primary, independent and absolute
Corporate Guarantee” by 20 December 2013, and that “in
case GCEL fails to make any of the monthly payments in the
Payment Plan or Corporate Guarantee...Doosan shall be
entitled to enter into suspension of work immediately upon
notice of suspension to GCEL notwithstanding anything stated
in the EPC Agreements...” GCEL further “expressly agree [d]
that GCEL shall not raise any objection or make any claims
with regards to Doosan’s decision to immediate suspension/
slowdown or the scope of such suspension/slowdown.” See
Appendix A, at 2. A copy of a draft “Corporate Guarantee”
bearing the parties’ initials is attached to MOU I.

E. GMR Energy acknowledges its responsibility for the
Outstanding Debt and signs MOU II with Doosan India

37. However, even after Doosan India resumed the Works,
GCEL continued to be delinquent in its payments, prompting
Doosan India to demand further assurance.

38. Doosan India was able to achieve the Commercial
Operations Date (“COD”) for unit I on 2 May, 2015, despite
GCEL’s failure to make timely payments and ensuing
subcontractor issues.

39. On 1 July, 2015, GMR Energy, which then owned a
100% stake in GCEL, represented in writing that it “agreed to
make payment of [INR 500 crores] directly to [Doosan India]
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CS(COMM) 447/2017 Page 18 of 98



52. By June 2016, GCEL’s overdue payments for the
Outstanding Debt had grown once again- to a sum including
USD 41,910,590 and INR 674,024,462. The late interest
accruing from the delayed payment stood at USD 5,219,643
plus INR 962,153,023.
53. On 9 June 2016, GCEL informed Doosan India that INR
12 Crores has been paid “out of 430 Crores transferred to
GMR Energy and Payment [was] also released directly from
GMR Energy”.

H. GMR Infra refuses to honor the GMR Infra Guarantee
61. .............
62. ...........
63. Specifically, on 18 July, 2016, GMR Infra responded that
it believed “only” INR 450 Crores (USD 65.8 million) of
payment was outstanding, and falsely claimed that it should
not have to honor its unconditional first demand guarantee as
said outstanding amount was “only a small portion of the
original contracted amount”.

J. Respondents are jointly and severally liable to Doosan
India
69. GMR Infra is liable to Doosan India pursuant to the
terms of the GMR Infra Guarantee. Further and in the
alternative, GMR Infra, GMR Energy and GCEL were at all
relevant times one and the same. Upon information and belief,
they freely co-mingle corporate funds, run by the members of
one family under the guise of the “Family Governance.” They
share directors and officers and use the same corporate
letterhead and corporate signage. They often interchangeably
use each other’s address and phone numbers.

70. Indeed, not only did GMR Energy step in to bear GCEL’s
payment obligations under the EPC Agreements, GMR Energy
in fact made payments to Doosan India on behalf of GCEL for
GCEL’s debts on several occasions.
71. No corporate formality is observed among GMR Infra,
GMR Energy and GCEL. GCEL was 100% held by GMR
Energy, but recently claimed to have gotten “transferred”
CS(COMM) 447/2017 Page 19 of 98



under the helm of GMR Infra. As of November 2016, GMR
Infra directly and indirectly owns a 100% stake in GCEL.

72. In addition, as noted above, GCEL, GMR Energy and
GMR Infra are all part of a family-owned business controlled
by one of India’s richest men, Mr. GM Rao. All the companies
bear his name. Mr. G.M. Rao’s elder son, Mr. G.B.S. Raju, is
the chairman of GMR’s Energy division and is responsible for
the group’s energy business. Mr. G.M’s Rao’s second son, Mr.
Kiran Kumar Grandhi is the Corporate Chairman of GMR
Group overseeing the group’s finance and corporate strategy.

IV. ARBITRATION AGREEMENT

74. Doosan India, GCEL and GMR Infra have a valid
arbitration agreement by which they have agreed to arbitrate
the present dispute, as evidenced by the GMR Infra Guarantee,
at Clause 17:
“17.1 All disputes arising between the parties relating to
this Guarantee or the interpretation of performance of this
Guarantee (each a “Dispute”) or any question regarding its
existence, validity or termination shall be finally settled by
arbitration before an arbitral tribunal consisting of three
arbitrators. The arbitration shall be conducted in accordance
with the arbitration rules of the Singapore International
Arbitration Centre (“SIAC Rules”). as in force at the time.
The guarantor and EPC Contractor shall each nominate one
arbitrator for confirmation by the Chairman of the Singapore
International Arbitration Centre. Both arbitrators shall agree
on the third arbitrator within 30 Days after their appointment.
Should the two arbitrators fail to reach agreement on the third
arbitrator within such 30 days period, the third arbitrator
shall be selected and appointed by Chairman of the Singapore
International Arbitration Centre. The Parties agree that the
arbitral tribunal shall have jurisdiction to adjudicate disputes
on whether amounts have become payable by GCEL and/or
whether GCEL has failed to make payment due under the EPC
Contract.
CS(COMM) 447/2017 Page 20 of 98



17.2 The place of arbitration shall be Singapore and the
language of the arbitral proceedings shall be English.

17.3 The award rendered shall be in writing and shall set out
in reasonable detail the facts of the Dispute and the reasons
for the arbitrators’ decision. The award rendered shall
apportion the costs of the arbitration. The award rendered in
any arbitration commenced under this Agreement shall be
final and binding upon the Parties. “(Emphases added.)

75. In addition, Doosan India and GCEL have a valid
arbitration agreement by which the parties have agreed to
arbitrate the present dispute, as evidenced by the CWETC
Agreement, the onshore Agreement, and the Offshore Supply
Agreement.

76. The CWETC Agreement contains an arbitration
agreement in the following terms:

“21.3.3 Unless the Parties agree otherwise and subject to
Section 21.4, such Dispute may be referred to arbitration in
th
accordance with Section 21.4, on or after the sixtieth (60 )
day after the day on which written notice of Dispute was given,
even if no attempt at negotiation or senior level discussion has
been made.

21.4.1 Any Dispute which has not been resolved by negotiation
and mediation pursuant to Section 21.3 shall, following notice
by either Party, be exclusively and finally decided by
arbitration in Singapore by a panel of three (3) arbitrators in
accordance with the provisions of the Singapore International
Arbitration Centre or any re-enactment or modification
thereof. Save as specified in this Section 21.4.1, no arbitration
provisions contained in any other law, shall apply to
arbitration of any Dispute.
21.4.2 Each arbitrator shall be and remain independent and
impartial, and no arbitrator shall be of the same nationality as
any party.
.......
CS(COMM) 447/2017 Page 21 of 98



21.4.5 The arbitral proceedings shall be conducted in the
English language

21.4.6 The Parties agree that, where a Dispute arises and a
dispute arises under one or more of the Other Contracts
relating to the Project, which are so closely connected in the
reasonable opinion of the Parties and the Parties deem it
expedient for any Disputes and any such disputes, arising
under one or more of the other contracts relating to the
Project, to be resolved in the same proceedings, then the
Parties may, at their option and by mutual agreement,
consolidate and submit all such disputes for adjudication by
the panel of arbitrators appointed hereunder and require such
panel of arbitrators to adjudicate upon the same. Upon the
aforesaid requirement by the Parties the panel of arbitrators
shall determine the Dispute and all other disputes which have
been consolidated, in accordance with provisions of this
Section 21.4.

21.4.7 The arbitral award shall be final and binding upon the
Parties and enforceable by any court having jurisdiction for
this purpose. The arbitral award may be enforced against the
Parties to the arbitration proceeding or their assets wherever
they may be found and a judgment upon the arbitral award
may be entered in any court having jurisdiction.”(Emphases
added.)

77. The Onshore Agreement contains an arbitration
agreement in the following terms:

“19.3.3 Unless the Parties agree otherwise and subject to
Section 19.4, such Dispute may be referred to arbitration in
th
accordance with Section 19.4 on or after the sixtieth (60 ) day
after the day on which written notice of Dispute was given,
even if no attempt at negotiation or senior level discussion has
been made.

19.4.1 Any Dispute which has not been resolved by negotiation
and mediation pursuant to Section 19.3 shall, following notice
CS(COMM) 447/2017 Page 22 of 98



by either Party, be exclusively and finally decided by
arbitration in Singapore by a panel of three (3) arbitrators in
accordance with the provisions of the Singapore International
Arbitration Centre(SIAC) or any re-enactment or modification
thereof. Save as specified in this Section 19.4.1, no arbitration
provisions contained in any other law, shall apply to
arbitration of any Dispute.

19.4.2 Each arbitrator shall be and remain independent and
impartial, and no arbitrator shall be of the same nationality as
any party.
......
19.4.5 The arbitral proceedings shall be conducted in the
English language.
......
19.4.7 The arbitral award shall be final and binding upon the
Parties and enforceable by any court having jurisdiction for
this purpose. The arbitral award may be enforced against the
Parties to the arbitration proceeding or their assets wherever
they may be found and a judgment upon the arbitral award
may be entered in any court having jurisdiction. “(Emphases
added.)

78. The offshore Supply Agreement contains an arbitration
agreement in the following terms:

“19.3.3 Unless the Parties agree otherwise and subject to
Section 19.4, such Dispute may be referred to arbitration in
th
accordance with Section 19.4 on or after the sixtieth (60 ) day
after the day on which written notice of Dispute was given,
even if no attempt at negotiation or senior level discussion has
been made.
19.4.1 Any Dispute which has not been resolved by negotiation
and mediation pursuant to Section 19.3 shall, following notice
by either Party, be exclusively and finally decided by
arbitration in Singapore by a panel of three (3) arbitrators in
accordance with the provisions of the Singapore International
Arbitration Centre(SIAC) or any re-enactment or modification
thereof. Save as specified in this Section 19.4.1, no arbitration
CS(COMM) 447/2017 Page 23 of 98



provisions contained in any other law, shall apply to
arbitration of any Dispute.

19.4.2 Each arbitrator shall be and remain independent and
impartial, and no arbitrator shall be of the same nationality as
any party.
......

19.4.5 The arbitral proceedings shall be conducted in the
English language.
......
19.4.7 The arbitral award shall be final and binding upon the
Parties and enforceable by any court having jurisdiction for
this purpose. The arbitral award may be enforced against the
Parties to the arbitration proceeding or their assets wherever
they may be found and a judgment upon the arbitral award
may be entered in any court having jurisdiction. “(Emphases
added.)

V. PLACE OF ARBITRATION

82. As noted, the four arbitration agreements in the EPC
Agreements and GMR Infra Guarantee provide that the
arbitration is to be submitted to the SIAC in Singapore, which
is reasonably construed to mean that the Parties intended for
the place of arbitration to be Singapore.

VI. NUMBER AND CHOICE OF ARBITRATORS

83. The arbitration agreements in the EPC Agreements and
GMR Infra Guarantee provide for three arbitrators.
84. So as to settle the disputes, Doosan India requests that
the procedures set out in SIAC Rule 12.2 for the appointment
for arbitrators be applied. Doosan India will nominate one
arbitrator and GCEL, GMR Energy and GMR Infra will
collectively nominate one arbitrator. As not all parties have
agreed upon another procedure for appointing the third
arbitrator, the third arbitrator shall be selected and appointed
CS(COMM) 447/2017 Page 24 of 98



by the President of the Singapore International Arbitration
Centre in accordance with SIAC Rule 11.3.

22. Issue No. 1: Whether the arbitration that commenced at
Singapore pursuant to Arb.316/16/ACU would fall under Part-I or
Part-II of the Arbitration Act?
22.1. The four fold submission on behalf of GMR Energy on this issue is
that firstly, on the plain reading of the arbitration clause, Singapore is not the
seat of arbitration but only the venue; secondly, the parties to the arbitration
being Indian entities, the arbitration cannot be construed to be an
international commercial arbitration under Section 2 (1) (f) of the
Arbitration Act, thirdly, the parties being Indian, choice if at all of a foreign
seat for arbitration is in contravention of Section 28 of the Contract Act and
fourthly, in case the arbitration is seated in Singapore the same would
amount to derogation of the Indian substantive law, hence not permissible.
22.2. Contention of learned counsel for the GMR Energy that on the plain
reading of the arbitration clause, Singapore is not the seat of Arbitration but
venue deserves to be rejected in view of the decision of the Supreme Court
reported as (2011) 9 SCC 735 Yograj Infrastructure Ltd. v. Ssangyong
Engineering & Construction Co. Ltd. wherein while interpreting a similar
clause for arbitration in the agreement, it was held where the arbitration
clause provides that the arbitration proceedings shall be in accordance with
the Singapore International Arbitration Centre (SIAC) Rules, it means that
Singapore shall be the seat of arbitration and the arbitration dispute will be
governed by the Singapore International Arbitration Act. The report notes:
47. Clause 27 of the agreement provides for the arbitration
and reads as follows:
CS(COMM) 447/2017 Page 25 of 98



“27.Arbitration
27.1. All disputes, differences arising out of or in
connection with the agreement shall be referred to
arbitration. The arbitration proceedings shall be
conducted in English in Singapore in accordance with
the Singapore International Arbitration Centre (SIAC)
Rules as in force at the time of signing of this
agreement. The arbitration shall be final and binding.
27.2. The arbitration shall take place in Singapore and
be conducted in English language.
27.3. None of the party shall be entitled to suspend the
performance of the agreement merely by reason of a
dispute and/or a dispute referred to arbitration.”

48. Clause 28 of the agreement describes the governing law
and provides as follows:
“This agreement shall be subject to the laws of India.
During the period of arbitration, the performance of
this agreement shall be carried on without
interruption and in accordance with its terms and
provisions.”

49. As will be seen from Clause 27.1, the arbitration
proceedings are to be conducted in Singapore in accordance
with the SIAC Rules as in force at the time of signing of the
agreement. There is, therefore, no ambiguity that the
procedural law with regard to the arbitration proceedings, is
the SIAC Rules. Clause 27.2 makes it clear that the seat of
arbitration would be Singapore.

50. What we are, therefore, left with to consider is the
question as to what would be the law on the basis whereof the
arbitral proceedings were to be decided?
51. In our view, Clause 28 of the agreement provides the
answer. As indicated hereinabove, Clause 28 indicates that the
governing law of the agreement would be the law of India i.e.
the Arbitration and Conciliation Act, 1996. The learned
counsel for the parties have quite correctly spelt out the
distinction between the “proper law” of the contract and the
CS(COMM) 447/2017 Page 26 of 98



“curial law” to determine the law which is to govern the
arbitration itself. While the proper law is the law which
governs the agreement itself, in the absence of any other
stipulation in the arbitration clause as to which law would
apply in respect of the arbitral proceedings, it is now well
settled that it is the law governing the contract which would
also be the law applicable to the Arbitral Tribunal itself.
Clause 27.1 makes it quite clear that the curial law which
regulates the procedure to be adopted in conducting the
arbitration would be the SIAC Rules. There is, therefore, no
ambiguity that the SIAC Rules would be the curial law of the
arbitration proceedings. It also happens that the parties had
agreed to make Singapore the seat of arbitration. Clause 27.1
indicates that the arbitration proceedings are to be conducted
in accordance with the SIAC Rules.

22.3. Supreme Court later in the decision reported as (2012) 12 SCC 359
Yograj Infrastructure Ltd. v. Ssangyong Engg. & Construction Co. Ltd.
clarified paras 50 to 56 of above report as under:

3. Mr Rautray then submitted that through inadvertence, in
paras 50 to 52 of the judgment in Yograj Infrastructure
[Yograj Infrastructure Ltd. v. Ssang Yong Engg. &
Construction Co. Ltd., (2011) 9 SCC 735 : (2011) 4 SCC (Civ)
864] , it has been indicated that there was no ambiguity that
the SIAC Rules would be the curial law of the arbitration
proceedings and that the same had been subsequently clarified
in para 54, wherein while indicating that the arbitration
proceedings would be governed by the SIAC Rules as the
curial law, which included Rule 32, which made it clear that
where the seat of arbitration is Singapore, the law of the
arbitration under the SIAC Rules would be the International
Arbitration Act, 2002 (Chap. 143-A, 2002 Edn., Statutes of the
Republic of Singapore). Mr Rautray submitted that it was a
clear case of inadvertence in paras 50 to 52 that needs to be
clarified by indicating that the curial law is the International
Arbitration law of Singapore and not the SIAC Rules.
CS(COMM) 447/2017 Page 27 of 98




8. Having regard to the submissions made on behalf of the
respective parties, we are inclined to agree with Mr Rautray
that the corrections and clarifications sought for have to be
allowed. In particular, the observations made in paras 50-52
and 54 in Yograj Infrastructure case [Yograj Infrastructure
Ltd. v. Ssang Yong Engg. & Construction Co. Ltd., (2011) 9
SCC 735 : (2011) 4 SCC (Civ) 864] , if read together, indicate
that, although, when the seat of arbitration was in Singapore,
the SIAC Rules would apply, the same included Rule 32 which
provides that it is the Singapore International Arbitration Act,
2002, which would be the law of the arbitration. Accordingly,
it is clarified that while mention had been made in paras 50 to
52 that the curial law of the arbitration would be the SIAC
Rules, what has been subsequently indicated in para 54 of the
judgment is that the Singapore International Arbitration Act,
2002 would be the law of the arbitration.

22.4. Learned counsel for GMR Energy emphasizing on omission of the
word “company” in Section 2 (1) (f) (iii) of the Arbitration Act states that
rd
pursuant to the amendment w.e.f. 23 October, 2015 since all the four
entities, that is, GMR Energy, GCEL, GIL and Doosan India are Indian
companies incorporated in India, the arbitration instituted is a domestic
arbitration and not an international commercial arbitration.
22.5. Section 2 (1) (f) of the Arbitration Act reads as under:

CS(COMM) 447/2017 Page 28 of 98

22.6. In Chloro Controls (supra) the three Judge Bench of Supreme Court
overruled the decision in Sumitomo Heavy Industries (supra) and held that
the language of Section 45 of the Arbitration Act, 1996 cannot be narrowly
construed using the definition of the word ‘party’ in Section 2 (1) (h) of the
Arbitration Act. It was held:
116. As far as Sumitomo Corpn. [(2008) 4 SCC 91] is
concerned, it was a case dealing with the matter where the
proceedings under Sections 397 and 398 of the Companies Act
had been initiated and the Company Law Board had passed an
order. Whether the appeal against such an order would lie to
the High Court was the principal question involved in that
case. The denial of arbitration reference, as already noticed,
was based upon the reasoning that disputes related to the joint
venture agreement to which the parties were not signatory and
the said agreement did not even contain the arbitration clause.
On the other hand, it was the other agreement entered into by
different parties which contained the arbitration clause. As
already noticed, in para 20 of Sumitomo [(2008) 4 SCC 91] ,
the Court had observed that a party to an arbitration
agreement has to be a party to the judicial proceedings and
then alone it will fall within the ambit of Section 2(h) of the
1996 Act. As far as the first issue is concerned, we shall
shortly proceed to discuss it when we discuss the merits of this
case, in light of the principles stated in this judgment.
However, the observations made by the learned Bench
in Sumitomo Corpn. [(2008) 4 SCC 91] do not appear to be
correct. Section 2(h) only says that “party” means a party to
an arbitration agreement. This expression falls in the chapter
dealing with definitions and would have to be construed along
with the other relevant provisions of the Act. When we read
Section 45 in light of Section 2(h), the interpretation given by
the Court in Sumitomo Corpn. [(2008) 4 SCC 91] does not
CS(COMM) 447/2017 Page 29 of 98



stand the test of reasoning. Section 45 in explicit language
permits the parties who are claiming through or under a main
party to the arbitration agreement to seek reference to
arbitration. This is so, by fiction of law, contemplated in the
provision of Section 45 of the 1996 Act.

117. We have already discussed above that the language of
Section 45 is incapable of being construed narrowly and must
be given expanded meaning to achieve the twin objects of
arbitration i.e. firstly, the parties should be held to their
bargain of arbitration and secondly, the legislative intent
behind incorporating the New York Convention as part of
Section 44 of the Act must be protected. Moreover, para 20 of
the judgment in Sumitomo Corpn. [(2008) 4 SCC 91] does not
state any principle of law and in any event it records no
reasons for arriving at such a conclusion. In fact, that was not
even directly the issue before the Court so as to operate as a
binding precedent. For these reasons, respectfully but without
hesitation, we are constrained to hold that the conclusion or
the statement made in para 20 of this judgment does not
enunciate the correct law.

22.7. Whether an arbitration between two Indian parties can be an
international commercial arbitration and whether two Indian parties can
choose a foreign seat was considered by the Madhya Pradesh High Court in
Sasan Power (supra) and it was held that two Indian parties were free to
arbitrate in a place outside India and an award rendered pursuant thereto
would be a foreign award falling under Part-II of the Arbitration Act. The
report notes:
57. On going through the scheme of the Arbitration and
Conciliation Act, 1996, we find that based on the seat of
arbitration so also the nationality of parties, an arbitration is
classified to be an ‘International Arbitration’, and the
governing law is also determined on the basis of the seat of
arbitration. Therefore, it is clear that based on the seat of
CS(COMM) 447/2017 Page 30 of 98

22.8. The decision of Madhya Pradesh High Court in Sasan Power (supra)
was taken up in appeal before the Hon’ble Supreme Court where this issue
was given up however, the Supreme Court in 2016 (10) SCC 813 Sasan
Power Ltd. vs. North American Coal Corpn (India) dealt with and rejected
the last contention raised by the plaintiff that the choice of foreign seat if
any by Indian parties is in derogation of Indian law and it was held as under
that this was not the scope of enquiry under Section 45 of the Arbitration
Act:
48. It is settled law that an arbitration agreement is an
independent or “self-contained” agreement. In a given case, a
written agreement for arbitration could form part of another
agreement, described by Lord Diplock as the “substantive
contract” [Aughton Ltd. v. MF Kent Services Ltd., (1991) 57
BLR 1 (CA) “the status of a so-called “arbitration clause”
included in a contract of any nature is different from other
types of clauses because it constitutes a “self-contained
contract collateral or ancillary to” “the substantive contract”.
These are the words of Lord Diplock in Bremer Vulkan
Schiffbau and Maschinenfabrik v. South India Shipping Corpn.
Ltd., 1981 AC 909: (1981) 2 WLR 141 (HL). It is a self-
contained contract, even though it is, by common usage,
CS(COMM) 447/2017 Page 31 of 98



described as an “arbitration clause”. It can, for example, have
a different proper law from the proper law of the contract to
which it is collateral. This status of “self-contained contract”
exists irrespective of the type of substantive contract to which
it is collateral.”] by which parties create contractual rights
and obligations. Notwithstanding the fact that all such rights
and obligations arising out of a substantive contract and the
agreement to have the disputes (if any, arising out of such
substantive contract) settled through the process of arbitration
are contained in the same document, the arbitration agreement
is an independent agreement. Arbitration agreement/clause is
not that governs rights and obligations arising out of the
substantive contract: It only governs the way of settling
disputes between the parties. [ See T.W. Thomas & Co.
Ltd. v. Portsea Steamship Co. Ltd., 1912 AC 1 (HL)]

49. In our opinion, the scope of enquiry (even) under Section
45 is confined only to the question whether the arbitration
agreement is “null and void, inoperative or incapable of being
performed” but not the legality and validity of the substantive
contract.

50. The case of the appellant as disclosed from the plaint is
that Article X Section 10.2 is inconsistent with some provisions
of the Indian Contract Act, 1872, and hit by Section 23 of the
Indian Contract Act (as being contrary to public policy). It is a
submission regarding the legality of the substantive contract.
Even if the said submission is to be accepted, it does not
invalidate the arbitration agreement because the arbitration
agreement is independent and apart from the substantive
contract. All that we hold is that the scope of enquiry under
Section 45 does not extend to the examination of the legality of
the substantive contract. The language of the section is plain
and does not admit of any other construction. For the purpose
of deciding whether the suit filed by the appellant herein is
maintainable or impliedly barred by Section 45 of the 1996
Act, the Court is required to examine only the validity of the
arbitration agreement within the parameters set out in Section
CS(COMM) 447/2017 Page 32 of 98



45, but not the substantive contract of which the arbitration
agreement is a part.
[Emphasis supplied]

22.9. It is thus evident that an arbitration agreement is an independent self-
contained agreement not dependant on the substantive agreement, therefore
irrespective of the contractual rights and obligations parties can opt for an
international arbitration. Undoubtedly the decision of Madhya Pradesh High
Court in Sasan Power (Supra) and the Supreme Court in Sasan Power Ltd.
(supra) was rendered pre amendment to Section 2(1)(f) of the Arbitration
Act however, needless to note that even in the present case, the agreements
rd
between the parties are prior to 23 October, 2015 i.e. pre-amendment to
Section 2 (1) (f) of the Arbitration Act.
22.10. Learned counsel for GMR Energy has relied upon the decision in
TDM Infrastructure (supra) wherein Supreme Court noted as under:
14. Whereas Part I of the 1996 Act deals with domestic
arbitration, Part II thereof deals with the foreign award. The
term “international commercial arbitration” has a definite
connotation. It, inter alia, means a body corporate which is
incorporated in any country other than India. However,
according to the petitioner, it is a Company whose central
management and control is exercised in any country other
than India and, thus, despite the fact that the Company is
incorporated and registered in India, its central management
and control being exercised in Malaysia, it will come within
the purview of sub-clause (iii) of Section 2(1)(f) of the 1996
Act.

15. Whenever in an interpretation clause, the word “means”
is used the same must be given a restrictive meaning.
“International commercial arbitration” and “domestic
arbitration” connote two different things. The 1996 Act
excludes domestic arbitration from the purview of
CS(COMM) 447/2017 Page 33 of 98



international commercial arbitration. The company which is
incorporated in a country other than India is excluded from
the said definition. The same cannot be included again on the
premise that its central management and control is exercised
in any country other than India. Although sub-clause (iii) of
Section 2(1)(f) of the 1996 Act talks of a company which would
ordinarily include a company registered and incorporated
under the Companies Act but the same also includes an
association or a body of individuals which may also be a
foreign company.
16. ….
17. ….
18. ….

19. Determination of nationality of the parties plays a crucial
role in the matter of appointment of an arbitrator. A company
incorporated in India can only have Indian nationality for the
purpose of the Act. It cannot be said that a company
incorporated in India does not have an Indian nationality.
Hence, where both parties have Indian nationalities, then the
arbitration between such parties cannot be said to be an
international commercial arbitration.

20. The learned counsel contends that the word “or” being
disjunctive, sub-clause (iii) of Section 2(1)(f) of the 1996 Act
shall apply in a case where sub-clause (ii) shall not apply. We
do not agree. The question of taking recourse to sub-clause
(iii) would come into play only in a case where sub-clause (ii)
otherwise does not apply in its entirety and not where by
reason of an exclusion clause, consideration for construing an
agreement to be an international commercial arbitration
agreement goes outside the purview of its definition. Once it is
held that both the companies are incorporated in India, and,
thus, they have been domiciled in India, the arbitration
agreement entered into by and between them would not be an
international commercial arbitration agreement and, thus, the
question of applicability of sub-clause (iii) of Section 2(1)(f)
would not arise.

CS(COMM) 447/2017 Page 34 of 98



21. The Chief Justice of India or his designate, furthermore,
having regard to sub-section (9) of Section 11 of the 1996 Act
must bear in mind the nationality of an arbitrator. The
nationality of the arbitrator may have to be kept in mind
having regard to the nationality of the respective parties. Only
in a case where, however, a body corporate which need not
necessarily be a company registered and incorporated under
the Companies Act, as for example, an association or a body
of individuals, the exercise of central management and control
in any country other than India may have to be taken into
consideration.

22. Chapter VI of the 1996 Act dealing with making of an
arbitral award and termination of proceedings in this behalf
plays an important role. In respect of “international
commercial arbitration”, clause (b) of sub-section (1) of
Section 28 of the 1996 Act would apply, whereas in respect of
any other dispute where the place of arbitration is situated in
India, clause (a) of sub-section (1) thereof shall apply. When,
thus, both the companies are incorporated in India, in my
opinion, sub-clause (ii) of Section 2(1)(f) will apply and not
sub-clause (iii) thereof.

23. Section 28 of the 1996 Act is imperative in character in
view of Section 2(6) thereof, which excludes the same from
those provisions which parties derogate from (if so provided
by the Act). The intention of the legislature appears to be clear
that Indian nationals should not be permitted to derogate from
Indian law. This is part of the public policy of the country.

24. Russell on Arbitration, 23rd Edn., p. 357, in his
commentary on the English Arbitration Act, 1996, shows that
although a distinction has been made between a domestic and
non-domestic arbitration but the provisions relating to
domestic arbitration had not been brought into force.

22.11. However, in para-36 of TDM Infrastructure (supra) Supreme Court
clarified that any findings/observations made hereinabove were only for the
CS(COMM) 447/2017 Page 35 of 98



purpose of determining the jurisdiction of the Court as envisaged under
Section 11 of the 1996 Act and not for any other purpose and is also evident
from the conclusions noted in para 20 and 22 of the report. Thus GMR
Energy cannot rely upon the decision in TDM Infrastructure (supra) to
contend that in the present case Part-I of the Arbitration Act would apply
and not Part-II.
22.12. It is trite law that three sets of law may govern arbitration, that is,
substantive law, curial law and appropriate law of contract which was duly

under:

CS(COMM) 447/2017 Page 36 of 98



The second group of obligations, consisting of what is
generally referred to as the ‘curial law’ of the arbitration,
concerns the manner in which the parties and the arbitrator
are required to conduct the reference of a particular dispute.
According to the English theory of arbitration, these rules are
to be ascertained by reference to the express or implied terms
of the agreement to arbitrate. This being so, it will be found in
the great majority of cases that the curial law, i.e., the law
governing the conduct of the reference, is the same as the law
governing the obligation to arbitrate. It is, however, open to
the parties to submit, expressly or by implication, the conduct
of the reference to a different law from the one governing the
underlying arbitration agreement. In such a case, the court
looks first at the arbitration agreement to see whether the
dispute is one which should be arbitrated, and which has
validly been made the subject of the reference, it then looks to
the curial law to see how that reference should be conducted
and then returns to the first law in order to give effect to the
resulting award.
*
It may therefore be seen that problems arising out of an
arbitration may, at least in theory, call for the application of
any one or more of the following laws—
1. The proper law of the contract, i.e., the law governing the
contract which creates the substantive rights of the parties, in
respect of which the dispute has arisen.
2. The proper law of the arbitration agreement, i.e., the law
governing the obligation of the parties to submit the disputes
to arbitration, and to honour an award.
3. The curial law, i.e., the law governing the conduct of the
individual reference.
*
1. The proper law of the arbitration agreement governs the
validity of the arbitration agreement, the question whether a
dispute lies within the scope of the arbitration agreement; the
validity of the notice of arbitration; the constitution of the
tribunal; the question whether an award lies within the
jurisdiction of the arbitrator; the formal validity of the award;
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the question whether the parties have been discharged from
any obligation to arbitrate future disputes.
2. The curial law governs the manner in which the reference is
to be conducted; the procedural powers and duties of the
arbitrator; questions of evidence; the determination of the
proper law of the contract.
3. The proper law of the reference governs the question
whether the parties have been discharged from their
obligation to continue with the reference of the individual
dispute.
*
In the absence of express agreement, there is a strong prima
facie presumption that the parties intend the curial law to be
the law of the ‘seat’ of the arbitration, i.e., the place at which
the arbitration is to be conducted, on the ground that that is
the country most closely connected with the proceedings. So in
order to determine the curial law in the absence of an express
choice by the parties it is first necessary to determine the seat
of the arbitration, by construing the agreement to arbitrate.”

11. The conclusion that we reach is that the curial law
operates during the continuance of the proceedings before the
arbitrator to govern the procedure and conduct thereof. The
courts administering the curial law have the authority to
entertain applications by parties to arbitrations being
conducted within their jurisdiction for the purpose of ensuring
that the procedure that is adopted in the proceedings before
the arbitrator conforms to the requirements of the curial law
and for reliefs incidental thereto. Such authority of the courts
administering the curial law ceases when the proceedings
before the arbitrator are concluded.
[Emphasis supplied]

22.13. Relying upon the decision in Shin-Etsu Chemical (Supra) learned
counsel for GMR Energy also contended that as per the three EPC
agreements and Corporate Guarantee, the law governing the contract
between the parties is Indian law and in the absence of a specific choice of
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the law governing arbitration agreement, the law governing arbitration
agreement would also be Indian law. In Shin-Etsu Chemical (supra)
Supreme Court was dealing with an arbitration clause wherein the parties
agreed to be governed by and construed and interpreted under the laws of
Japan. It was agreed that all disputes arising out or in relation to the said
agreement which could not be settled by mutual accord shall be settled by
arbitration in Tokyo, Japan in accordance with the Rules of Conciliation and
Arbitration of International Chamber of Commerce. It is on this term of the
agreement discussing the issue of final finding under Section 45 of the
Arbitration Act, Supreme Court referring to its earlier decision reported as
(1992) 3 SCC 551 National Thermal Power Corporation v. Singer Co., held
that the proper law of arbitration agreement is normally the same as proper
law of contract and only in exceptional cases that it is not so, even where the
proper law of contract is expressly chosen by the parties. However, where
there is no express provision in the arbitration agreement as such, a
presumption may arise that the law of the country where the arbitration is
agreed to be held is the proper law of the arbitration agreement but that is
only a rebuttable presumption. Supreme Court held:
80. There is yet another strange result which may come about
by holding that Section 45 requires a final finding. This can be
illustrated by reference to the facts of the present case. The
parties here have subjected their agreement to the laws of
Japan. The question that will arise is: When a court has to
make a final determinative ruling on the validity of the
arbitration agreement, under which law is this issue to be
tested? This question of choice of law has been conclusively
decided by the judgment of this Court in National Thermal
Power Corpn. v. Singer Co. [(1992) 3 SCC 551] where it was
observed:
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“23. The proper law of the arbitration agreement is
normally the same as the proper law of the contract.
It is only in exceptional cases that it is not so even
where the proper law of the contract is expressly
chosen by the parties. Where, however, there is no
express choice of the law governing the contract as
a whole, or the arbitration agreement as such, a
presumption may arise that the law of the country
where the arbitration is agreed to be held is the
proper law of the arbitration agreement. But that is
only a rebuttable presumption.” [Ibid., at SCC p.
563, para 23, per Thommen, J.]
[Emphasis supplied]

22.14. Expounding the territoriality principle of each part of the Act, the

89. That Part I and Part II are exclusive of each other is
evident also from the definitions section in Part I and Part II.
The definitions contained in Sections 2(1)(a) to (h) are limited
to Part I. The opening line which provides “In this Part, unless
the context otherwise requires….”, makes this perfectly clear.
Similarly, Section 44 gives the definition of a foreign award
for the purposes of Part II (Enforcement of Certain Foreign
Awards); Chapter I (New York Convention Awards). Further,
Section 53 gives the interpretation of a foreign award for the
purposes of Part II (Enforcement of Certain Foreign Awards);
Chapter II (Geneva Convention Awards). From the aforesaid,
the intention of Parliament is clear that there shall be no
overlapping between Part I and Part II of the Arbitration Act,
1996. The two parts are mutually exclusive of each other. To
accept the submissions made by the learned counsel for the
appellants would be to convert the “foreign award” which
falls within Section 44, into a domestic award by virtue of the
provisions contained under Section 2(7) even if the arbitration
takes place outside India or is a foreign seated arbitration, if
the law governing the arbitration agreement is by choice of the
parties stated to be the Arbitration Act, 1996. This, in our
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opinion, was not the intention of Parliament. The territoriality
principle of the Arbitration Act, 1996, precludes Part I from
being applicable to a foreign seated arbitration, even if the
agreement purports to provide that the arbitration proceedings
will be governed by the Arbitration Act, 1996.

22.15. Further in Reliance Industries Ltd. (supra) it was held:

22.16. In IMAX Corporation (supra) Supreme Court further held:
35. The relationship between the seat of arbitration and the
law governing arbitration is an integral one. The seat of
arbitration is defined as the juridical seat of arbitration
designated by the parties, or by the arbitral institution or by
the arbitrators themselves, as the case may be. It is pertinent
CS(COMM) 447/2017 Page 41 of 98

(supra) have been reiterated by Supreme Court in Indus Mobile Distribution
(supra). In the present case the parties have agreed to be governed by SIAC
Rules for arbitration and thus Singapore would not be a venue alone but also
the seat of arbitration.
22.18. Responding to the contention of learned counsel for Doosan India,
learned counsel for GMR Energy has also relied upon the decision of
National Highway Authority (supra). In National Highway Authority (supra)
the Full Bench of this Court was dealing with the issue of setting aside an
arbitral award and held that there was a restriction under the Arbitration Act
CS(COMM) 447/2017 Page 42 of 98



to issue notice limited to some or one of the grounds and if so done a
reasoned order is required to be passed. For this reason, it was held that
proceedings under Section 34 of the Arbitration Act do not necessarily take
the shape of execution proceedings and while dealing with the issue whether
the Court can pass an interim order even before arbitral proceedings
commences or arbitrator is appointed, it was held that the provisions of 1996
Act were very different from the provisions of 1940 Act and that the 1996
Act is a self contained code and displaces all such aspects of substantive and
procedural law in respect of which there is an explicit or implicit reference
in the said Act. However, the Court indicated that by implication it cannot
be held that every aspect of Code of Civil Procedure is excluded.
22.19. The plea of learned counsel for GMR Energy that two Indian parties
cannot choose a foreign seat as the same would contravene to Section 23
read with Section 28 of the Contract Act was turned down by the Supreme
Court in Atlas Exports (supra) wherein it was held:

CS(COMM) 447/2017 Page 43 of 98

22.20. The two decisions relied upon by learned counsel for GMR Energy

CS(COMM) 447/2017 Page 44 of 98



incuriam as have not considered the law laid by the Supreme Court in Atlas
(supra).
22.21. Contention of learned counsel for GMR Energy that the judgment in
Atlas (supra) was given prior to Arbitration and Conciliation Act, 1996, and
therefore not applicable to the present case, also deserves to be rejected in
view of the decision of the Supreme Court reported as 2011 (8) SCC 333
Fuerst Day Lawson vs. Jindal Exports Ltd wherein comparing the pre
amendment and post amendment Arbitration Act it was observed that the
new Act is more favourable to international arbitration than its previous
incarnation. The report comparing the provisions of the two Acts noted:

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65. A comparison of the two sets of provisions would show that
Section 44, the definition clause in the 1996 Act is a verbatim
reproduction of Section 2 of the previous Act (but for the
words “chapter” in place of “Act”, “First Schedule” in place
of “Schedule” and the addition of the word “arbitral” before
the word “award” in Section 44). Section 45 corresponds to
Section 3 of the previous Act.
66. Section 46 is a verbatim reproduction of Section 4(2)
except for the substitution of the word “chapter” for “Act”.
Section 47 is almost a reproduction of Section 8 except for the
addition of the words “before the court” in sub-section (1) and
an Explanation as to what is meant by “court” in that section.
67. Section 48 corresponds to Section 7; Section 49 to Section
6(1) and Section 50 to Section 6(2).
68. Apart from the fact that the provisions are arranged in a
far more orderly manner, it is to be noticed that the provisions
of the 1996 Act are clearly aimed at facilitating and expediting
the enforcement of the New York Convention Awards.
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69. Section 3 of the 1961 Act dealing with a stay of
proceedings in respect of matters to be referred to arbitration
was confined in its application to “legal proceedings in any
court” and the court had a wider discretion not to stay the
proceedings before it. The corresponding provision in Section
45 of the present Act has a wider application and it covers an
action before any judicial authority. Further, under Section 45
the judicial authority has a narrower discretion to refuse to
refer the parties to arbitration.

22.22. Yet another alternative argument raised by learned counsel for
Doosan India which deserves to be accepted is that in case the contention of
learned counsel for GMR Energy that the present arbitration is covered by
Part-I is to be accepted then this Court will have no territorial jurisdiction to
entertain the present suit for the reason in the jurisdictional para mentioned
in the plaint GMR Energy submits that the closest connect of the parties to
the present case is Chhattisgarh in India, thus the Court at Delhi is ousted of
the territorial jurisdiction to try the suit and pass orders.
22.23. In view of the discussion aforesaid the contentions raised by learned
counsel for GMR Energy are rejected and it is held that the arbitration that
commenced at Singapore pursuant to Arb.316/16/ACU would fall under
Part-II of the Arbitration Act and not Part-I.
23. Issue No.2: Whether on the basis of pleas in the notice of
arbitration issued by Doosan India a case is made out by Doosan India
to subject GMR Energy to arbitration with GCEL and GIL?
23.1. Learned counsel for GMR Energy further contends that assuming it is
held that the International Arbitration law of Singapore is applicable to the
arbitration amongst the three defendants, that is, Doosan India, GCEL and
GIL, GMR Energy not being the signatory to any of the three agreements, or
CS(COMM) 447/2017 Page 53 of 98



the corporate guarantee, it cannot be roped into an international arbitration
by applying the principle of alter ego or it being a guarantor without there
st
being a written guarantee. Further admittedly the MOU-I dated 1 July,
th
2015 and MOU-II dated 30 October, 2015 have been terminated by Doosan
India and liability of GMR Energy, if any was discharged by virtue of letter
rd
dated 3 November, 2016 which Doosan India deliberately suppressed in
the notice of arbitration. Thus GMR Energy cannot be made a party to the
arbitration agreement either by virtue of the three EPC agreements and the
Corporate Guarantee or the two MOUs as noted above by applying the
principle of alter ego.
23.2. Relying upon the decision reported as Indowind Energy Ltd (supra)
learned counsel for GMR Energy contends that each company is a separate
and distinct legal entity and the mere fact that two companies have common
shareholders or common Board of Director will not make the two companies
a single entity. Thus Doosan India cannot use the principle of alter ego to
invoke the arbitration clause against GMR Energy on the basis of common
shareholding and common Board of Directors of the two companies, that is,
GMR Energy and GCEL. By invoking arbitration against GMR Energy,
arbitration has proceeded in disregard of the corporate personality of GMR
Energy. Even in Chloro Controls (supra) Supreme Court laid a word of
caution that only in exceptional cases can a non-party to the arbitration
agreement be subjected to arbitration without its prior consent. Reliance is
also placed on the decisions reported as 2011 (1) SCC 320 S.N. Prasad,
Hitek Industries (Bihar) Limited vs. Monnet Finance Ltd. , Deutsche Post
Bank (supra) and Ameet Lalchand Shah (supra).
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23.3. Rebutting the contention of learned counsel for Doosan India that by
virtue of MOU-1 and MOU-II, GMR Energy guaranteed the liability of
GCEL it is contended that the MOU-I and MOU-II stood terminated by the
rd
letter of Doosan India dated 3 November, 2016 and that since Doosan India
is trying to approbate and reprobate at the same time, no arbitral dispute can
be said to be subsisting as per the decision in M/s P.K. Ramaiah (supra).
Further, in terms of the decision reported as X vs. Y & Z , 4A_128/2008 dated
th
19 August, 2008 even a guarantor cannot be pulled into an arbitration in
case there is no arbitration agreement with the guarantor. Distinguishing the
decisions relied upon by learned counsel for Doosan India, it is contended
that they were on their peculiar facts and not applicable to the present case.
23.4. Learned counsel for Doosan India countering the submissions of

Supreme Court recognized the legal basis to bind a non-signatory to an
arbitration agreement which inter alia are implied consent, third party
beneficiary, guarantors, assignment or other transfer mechanism of control/
rights, apparent authority, piercing of veil, agent principle relationship, agent
vendor relations etc. In Jiang Haiying (supra) the High Court of Singapore
referring to excerpts from Halsbury’s Laws of Singapore held that privity
rule, while strict, is not absolute and there are several situations where non-
signatories may be considered as party to the arbitration agreement, one
such being the corporate veil piercing on the basis of alter ego. It is further
submitted that the principle of invoking arbitration against the non-signatory
is consistent with Sections 44 and 45 of the Arbitration Act which
recognizes situations where there can be arbitration even between the non-
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signatories to a contract, as Section 44 recognizes the legal relationship
“whether contractual or not”.
23.5. Further relying upon the decision of this Court in M/s Sai Soft
Securities (supra) it is contended that the Division Bench of this Court
recognized the award wherein the corporate veil was lifted and arbitration
proceeded against a non-party. It is further contended that fraud is not the
only concept in which corporate veil can be pierced. Supreme Court in the
Renusagar Power Co. (supra) reiterated the expanding horizon of modern
jurisprudence enumerating certain circumstances besides fraud wherein
lifting of the corporate veil was permissible. The House of Lords in DHN
Food Distributors (supra) recognized the concept of single economic entity
and by lifting the corporate veil held that three companies should be for the
purpose treated as one. Contending that the decision in Sudhir Gopi (supra)
was per incuriam for the reason it failed to consider the issue of arbitrability
of alter ego and was passed without taking into consideration the decision of
the Supreme Court in A. Ayyasamy (supra) wherein the Supreme Court
carved out cases which cannot be sent for arbitration, fraud being one such
category. Hence the decisions relating to lifting the corporate veil on the
ground of fraud cannot be used to determine the present case where
arbitration is being invoked on the principle of alter ego and not on the
principle of fraud. Referring to the book tiled as International Commercial
nd
Arbitration (2 Edition) by Gary B. Born it is contended that concept of
domestic arbitrability differs from international arbitrability. Hence, the
decisions rendered on domestic arbitration cannot be applied ipso facto to
international commercial arbitrations.
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23.6. The seven grounds on which Doosan India invokes the principle of
alter ego against GMR Energy as also noted in the notice of arbitration
above are:

23.7. Supreme Court in the decision reported in Chloro Controls (Supra)
held:
“70. Normally, arbitration takes place between the persons
who have, from the outset, been parties to both the arbitration
agreement as well as the substantive contract underlining
(sic underlying) that agreement. But, it does occasionally
happen that the claim is made against or by someone who is
not originally named as a party. These may create some
difficult situations, but certainly, they are not absolute
obstructions to law/the arbitration agreement. Arbitration,
thus, could be possible between a signatory to an arbitration
agreement and a third party. Of course, heavy onus lies on
that party to show that, in fact and in law, it is claiming
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of arbitration can be said to include the signatory as well as
the non-signatory parties.

73. A non-signatory or third party could be subjected to
arbitration without their prior consent, but this would only be
in exceptional cases. The court will examine these exceptions
from the touchstone of direct relationship to the party
signatory to the arbitration agreement, direct commonality of
the subject-matter and the agreement between the parties
being a composite transaction. The transaction should be of a
composite nature where performance of the mother agreement
may not be feasible without aid, execution and performance of
the supplementary or ancillary agreements, for achieving the
common object and collectively having bearing on the dispute.
Besides all this, the court would have to examine whether a
composite reference of such parties would serve the ends of
justice. Once this exercise is completed and the court answers
the same in the affirmative, the reference of even non-
signatory parties would fall within the exception afore-
discussed.

74. In a case like the present one, where origin and end of all
is with the mother or the principal agreement, the fact that a
party was non-signatory to one or other agreement may not be
of much significance. The performance of any one of such
agreements may be quite irrelevant without the performance
and fulfilment of the principal or the mother agreement.
Besides designing the corporate management to successfully
complete the joint ventures, where the parties execute different
agreements but all with one primary object in mind, the court
would normally hold the parties to the bargain of arbitration
and not encourage its avoidance. In cases involving execution
of such multiple agreements, two essential features exist;
firstly, all ancillary agreements are relatable to the mother
agreement and secondly, performance of one is so intrinsically
interlinked with the other agreements that they are incapable
of being beneficially performed without performance of the
others or severed from the rest. The intention of the parties to
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refer all the disputes between all the parties to the Arbitral
Tribunal is one of the determinative factors.

xxxxx xxxxx xxx

102. Joinder of non-signatory parties to arbitration is not
unknown to the arbitration jurisprudence. Even the ICCA's
Guide to the Interpretation of the 1958 New York Convention
also provides for such situation, stating that when the question
arises as to whether binding a non-signatory to an arbitration
agreement could be read as being in conflict with the
requirement of written agreement under Article I of the
Convention, the most compelling answer is “no” and the same
is supported by a number of reasons.

103. Various legal bases may be applied to bind a non-
signatory to an arbitration agreement:

103.1. The first theory is that of implied consent, third-party
beneficiaries, guarantors, assignment and other transfer
mechanisms of contractual rights. This theory relies on the
discernible intentions of the parties and, to a large extent, on
good faith principle. They apply to private as well as public
legal entities.

103.2. The second theory includes the legal doctrines of agent-
principal relations, apparent authority, piercing of veil (also
called “the alter ego”), joint venture relations, succession and
estoppel. They do not rely on the parties' intention but rather
on the force of the applicable law.

xxx xxx xxx

xxx xxx xxx

109. The New York Convention clearly postulates that there
should be a defined legal relationship between the parties,
whether contractual or not, in relation to the differences that
may have arisen concerning the subject-matter capable of
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settlement by arbitration. We have referred to a number of
judgments of the various courts to emphasise that in given
circumstances, if the ingredients above-noted exist, reference
to arbitration of a signatory and even a third party is possible.
Though heavy onus lies on the person seeking such reference,
multiple and multi-party agreements between the parties to the
arbitration agreement or persons claiming through or under
such parties is neither impracticable nor impermissible.
[Emphasis supplied]

23.8. In Renusagar Power Co. (supra) Supreme Court noting that the
concept of lifting the corporate veil is a changing concept and is of
expanding horizons held:
64. We are, however, of the opinion that these tests are not
conclusive tests by themselves. Our attention was also drawn
to the decision of the Madras High Court in Spencer & Co.
Ltd. Madras v. CWT [AIR 1969 Mad 359 : 72 ITR 33 : 39 Com
Cas 212 : ILR (1969) 2 Mad 450] where Veeraswami, J. held
that merely because a company purchases almost the entirety
of the shares in another company, there was no extinction of
corporate character for each company was a separate juristic
entity for the tax purposes. Almost on similar facts, are the
observations of P.B. Mukharji, J. in Turner Morrison & Co.
Ltd. v. Hungerford Investment Trust Ltd. [AIR 1969 Cal 238]
where he held that holding company and subsidiaries are
incorporated companies and in this context each has a
separate legal entity. Each has a separate corporate veil but
that does not mean that holding company and the subsidiary
company within it, all constitute one company.

65. Mr Justice O. Chinnappa Reddy speaking for this Court
in LIC v. Escorts Ltd.[(1986) 1 SCC 264 : AIR 1986 SC 1370 :
1985 Supp (3) SCR 909 : (1986) 59 Com Cas 548] had
emphasised that the corporate veil should be lifted where the
associated companies are inextricably connected as to be, in
reality, part of one concern. It is neither necessary nor
desirable to enumerate the classes of cases where lifting the
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veil is permissible, since that must necessarily depend on the
relevant statutory or other provisions, the object sought to be
achieved, the impugned conduct, the involvement of the
element of the public interest, the effect on parties who may be
affected. After referring to several English and Indian cases,
this Court observed that ever since A. Salomon & Co. Ltd.
case [1897 AC 22] a company has a legal independent
existence distinct from individual members. It has since been
held that the corporate veil may be lifted and corporate
personality may be looked in. Reference was made to
Pennington and Palmer's Company Laws.

66. It is high time to reiterate that in the expanding horizon of
modern jurisprudence, lifting of corporate veil is permissible.
Its frontiers are unlimited. It must, however, depend primarily
on the realities of the situation. The aim of the legislation is to
do justice to all the parties. The horizon of the doctrine of
lifting of corporate veil is expanding. Here, indubitably, we
are of the opinion that it is correct that Renusagar was
brought into existence by Hindalco in order to fulfil the
condition of industrial licence of Hindalco through production
of aluminium. It is also manifest from the facts that the model
of the setting up of power station through the agency of
Renusagar was adopted by Hindalco to avoid complications in
case of take over of the power station by the State or the
Electricity Board. As the facts make it abundantly clear that
all the steps for establishing and expanding the power station
were taken by Hindalco, Renusagar is wholly owned
subsidiary of Hindalco and is completely controlled by
Hindalco. Even the day-to-day affairs of Renusagar are
controlled by Hindalco. Renusagar has at no point of time
indicated any independent volition. Whenever felt necessary,
the State or the Board have themselves lifted the corporate veil
and have treated Renusagar and Hindalco as one concern and
the generation in Renusagar as the own source of generation
of Hindalco. In the impugned order the profits of Renusagar
have been treated as the profits of Hindalco.

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67. In the aforesaid view of the matter we are of the opinion
that the corporate veil should be lifted and Hindalco and
Renusagar be treated as one concern and Renusagar's power
plant must be treated as the own source of generation of
Hindalco and should be liable to duty on that basis. In the
premises the consumption of such energy by Hindalco will fall
under Section 3(1)(c) of the Act. The learned Additional
Advocate-General for the State relied on several decisions,
some of which have been noted.

68. The veil on corporate personality even though not lifted
sometimes, is becoming more and more transparent in modern
company jurisprudence. The ghost of Salomon case [1897 AC
22] still visits frequently the hounds of Company Law but the
veil has been pierced in many cases. Some of these have been
noted by Justice P.B. Mukharji in the New Jurisprudence [
Tagore Law Lectures, p. 183] .

69. It appears to us, however, that as mentioned the concept of
lifting the corporate veil is a changing concept and is of
expanding horizons. We think that the appellant was in error
in not treating Renusagar's power plant as the power plant of
Hindalco and not treating it as the own source of energy. The
respondent is liable to duty on the same and on that footing
alone; this is evident in view of the principles enunciated and
the doctrine now established by way of decision of this Court
in Life Insurance Corpn. of India [(1986) 1 SCC 264 : AIR
1986 SC 1370 : 1985 Supp (3) SCR 909 : (1986) 59 Com Cas
548] that in the facts of this case Sections 3(1)(c) and 4(1)(c)
of the Act are to be interpreted accordingly. The persons
generating and consuming energy were the same and the
corporate veil should be lifted. In the facts of this case
Hindalco and Renusagar were inextricably linked up together.
Renusagar had in reality no separate and independent
existence apart from and independent of Hindalco.
[Emphasis supplied]

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23.9. Noting with approval observations of Lord Denning in the decision of
the Court of Appeal in DHN Food Distributors (supra), Supreme Court in
Renusagar Power Co. (supra) also noted:

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23.10. Learned counsel for GMR Energy relied on the decision reported as
Balwant Rai Saluja (supra). In the said decision as noted below, Supreme
Court held that mere ownership and control is not sufficient to pierce the
corporate veil, however, in the present case not only the group companies
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issue is involved, there were two MOUs between the parties, wherein GMR
Energy accepted its liability to pay and also made part payment:
70. The doctrine of 'piercing the corporate veil' stands as an
exception to the principle that a company is a legal entity
separate and distinct from its shareholders with its own legal
rights and obligations. It seeks to disregard the separate
personality of the company and attribute the acts of the
company to those who are allegedly in direct control of its
operation. The starting point of this doctrine was discussed in
the celebrated case of Salomon v. A. Salomon and Co. Ltd.
(1897) AC 22. Lord Halsbury LC (paragraphs 31-33),
negating the applicability of this doctrine to the facts of the
case, stated that:

...a company must be treated like any other independent
person with its rights and liabilities legally appropriate
to itself..., whatever may have been the ideas or schemes
of those who brought it into existence.

xxxx xxxx xxx

xxxx xxxx xxxx

82. The present facts would not be a fit case to pierce the
veil, which as enumerated above, must be exercised sparingly
by the Courts. Further, for piercing the veil of incorporation,
mere ownership and control is not a sufficient ground. It
should be established that the control and impropriety by the
Air India resulted in depriving the Appellants-workmen herein
of their legal rights. As regards the question of impropriety,
the Division Bench of the High Court of Delhi in the impugned
order dated 02.05.2011, noted that there has been no
advertence on merit, in respect of the workmen's rights qua
HCI, and the claim to the said right may still be open to the
workmen as per law against the HCI. Thus, it cannot be
concluded that the controller 'Air India' has avoided any
obligation which the workmen may be legally entitled to.
Further, on perusal of the Memorandum of Association and
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Articles of Association of the HCI, it cannot be said that the
Air India intended to create HCI as a mere facade for the
purpose of avoiding liability towards the Appellants-workmen
herein.

23.11. The decision in S.N. Prasad (supra) relied by learned counsel for
GMR Energy has no application to the facts of the case as even though
GMR Energy was not a signatory to the three EPC agreements and the
corporate guarantee by virtue of the two MOUs it undertook to discharge the
liability of GCEL. Even in Deutsche Post Bank (supra), Supreme Court was
dealing with an arbitration clause in a construction agreement to which the
appellant was not a party but had only entered into a loan agreement. The
Supreme Court was not dealing with the issue of ‘alter ego’ in the two
decisions hence the decisions are not applicable to the facts of the present
case.
23.12. As noted above the arbitration clause in the three EPC agreements
provided that where a dispute arises and a dispute arises under one or more
of the other contracts relating to the project which are so closely connected
in the reasonable opinion of the parties and the parties deem it expedient for
any dispute and any such disputes, arising under one or more of other
contracts relating to the project may be resolved in the same proceedings,
then the parties may at their option and by mutual agreement consult and all
other disputes by the panel of arbitrators appointed and require such panel of
arbitrators to adjudicate upon the same. As per clause 17.1 of the Corporate
Guarantee all the disputes arising between the parties relating to the
guarantee or the interpretation of the performance of the guarantee or any
question regarding its existence, validity or termination had also to be settled
CS(COMM) 447/2017 Page 67 of 98



by arbitration. It was thus the intention of the parties to consolidate all the
disputes relating to the project, refer the same by mutual agreement to the
same panel of arbitrators and get resolved through arbitration.
23.13. In the two MOUs relied upon by Doosan India in the notice of
arbitration, GMR Energy admitted its liability towards Doosan India and
secondly during the pendency of the dealings between the parties, GMR
Energy held 100% stakes in GCEL though the same were transferred again
pending disputes between the parties.
rd

23.14. Though the letter dated 3 November, 2016 does not form the basis
of the notice of arbitration however, since it has been heavily relied upon by
learned counsel for GMR Energy it would be appropriate to note contents of
the said letter:
“November 3, 2016
Ref. No.: Raipur-DP-GH-L-0725
GMR Chhattisgarh Energy Ltd.
Raikheda- Village, Tilda-Block, Dist.
RAIPUR (C.G.) Pin-493 225
Attention: Mr. S.N. Barde/President
C.C :Mr. Madhu Terdal/GMR Group CFO
Mr. G.B.S. Raju/BCM
Ref.1. [Raipur-DP-GH-L-0699]
Ref.2. Standstill Agreement
Subject: Corporate Guarantee Resolution Meeting with
DPSI
This letter is in continuation of the meeting held last week at
Mumbai office of GMR Infrastructure Ltd.
As we stressed during the meeting, the Contractor sincerely
hopes that the prolonged overdue issues can be cleared in
th
the next meeting to be held during the 4 week of November
so that we can avoid having to initiate a legal action.
In this regard, we would like to remind the Owner that the
Tripartite Agreement among GCEL, GEL and Doosan
st
became null and void as of 31 Dec., 2015 because the
CS(COMM) 447/2017 Page 68 of 98



conditions precedent for effectiveness were not fulfilled by
the agreed upon date. Further, the nullification was
th
notified to GCEL via the Contractor’s letter dated 4 Jan.,
2016. Please be advised, therefore, that the payment
obligation is not on GEL, but on GCEL and GIL, by the
invocation of Corporate Guarantee.
Also, as was discussed during the last week’s meeting, it is
necessary to execute the Standstill Agreement between
GCEL, GIL and the Contractor to continue negotiation
without initiating a legal proceeding right away. Please
review the attached Standstill Agreement and let us know of
your readiness to sign as soon as possible, but no later than
th
15 Nov., 2016.
As you may well understand, the Contractor has been in
serious financial trouble due to the overdue payment for a
long time and is now strained to initiate a legal proceeding
unless the Owner takes a tangible action immediately to
clear the overdue payment. Therefore, the Contractor
requests to the GCEL and GIL to provide a detailed
payment plan including the security of payment, methods of
delay interest payment and higher interest rates for the
th
deferred payment as soon as possible, but not later than 15
Nov., 2016, so that the Contractor can make decisions
th
internally before the next meeting in the 4 week of
November.
Kindly let us remind the Owner that the situation is such
that the Contractor will have to commence a legal action as
th
mentioned in the “Legal Notice” dated 14 Oct 2016,
unless the Owner provides the Contractor with a repayment
schedule acceptable to us, reliable payment security and
commitment of interest payment, as well as GCEL and
th
CIL’s confirmation of the Standstill Agreement until 15
Nov., 2016.
This letter is without prejudice to any of the rights and
remedies available to the Contractor in respect of any
breach of the Agreements, the MOU, the Corporate
Guarantee and related documentation and agreements,
whether now or in the future, under law or in equity.
Sincerely,
CS(COMM) 447/2017 Page 69 of 98




SD/-
Dong Jib Park
Raipur PM”

23.15. From the contents of the letter noted above it is evident that though
Doosan India stated that the tripartite agreement between GCEL and GMR
st
Energy and Doosan India became null and void on 31 December, 2015 and
that the payment obligation was now on the GCEL and GIL by invocation of
the corporate guarantee however, the said letter was without prejudice to the
rights and remedies available to Doosan India in respect of any breach of
agreements, MOUs, Corporate Guarantee and related documentation and
agreements. Further whether a tripartite agreement resulting in the two
MOUs between Doosan India, GCEL and GMR Energy could be novated by
a unilateral letter is a question to be decided on merits during the arbitration
and not in the present suit.
23.16. Learned counsel for GMR Energy heavily relied upon clause 23.12 of
the agreement between the parties which provided as under:

CS(COMM) 447/2017 Page 70 of 98



23.17. A perusal of clause 23.12 bars recourse to applications qua any
partner, shareholder, office, director, employee or agent of either party even
on the principle of piercing the parties’ corporate veil or any other legal
theory. However, the agreement did not bar other corporate entity to be
made subject to arbitration based on the principle of piercing of the
corporate veil or any such legal theory.
23.18. Considering the fact that firstly, GCEL was a joint venture of GMR
Group, secondly, the group companies did not observe separate corporate
formalities and comingled corporate funds, thirdly, by the two MOUs
entered into between Doosan India, GMR Energy and GCIL, GMR Energy
undertook to discharge liability and made part payments in discharge of
GCEL’s liability also, fourthly, when the two MOUs were entered into,
GMR Energy had acquired GCEL and fifthly, whether the two MOUs being
the tripartite agreement between Doosan India, GCEL and GMR Energy
st
could or could not be novated by letter dated 31 December, 2015 being an
issue to be decided on merits, it is held that from the notice of arbitration
Doosan India has made out a case for proceeding against GMR Energy to
subject GMR Energy to arbitration with GCEL and GIL.
24. Issue No.3: Whether the Arbitral Tribunal has no jurisdiction to
pierce the corporate veil?
24.1. Learned counsel for GMR Energy contends that the concept of
piercing the corporate veil is within the domain of the courts and not of the
Arbitral Tribunal as held by the Supreme Court in Balwant Rai Saluja
(supra). It is further contended that the principle of alter ego was considered
by the Single Judge of this Court in Sudhir Gopi (supra) wherein the Court
CS(COMM) 447/2017 Page 71 of 98



held that an arbitrator does not have the power to pierce the corporate veil
which function is essentially of the Court.
24.2. Learned counsel for Doosan India contends that this Court in Sudhir
Gopi (supra) failed to consider the issue of arbitrability of alter ego by the
Arbitral Tribunal. Relying upon the decision in A. Ayyasamy (supra)
wherein the Court laid down the non-arbitrability disputes, it is contended
that the issue of alter ego does not fall in the category of non-arbitrable
disputes hence can be determined by the Arbitral Tribunal. Reliance is also
placed on the decision of the Bombay High Court in Integrated Sales (supra)
wherein the High Court held that issues which were arbitrable can be gone
into by a tribunal in a foreign seat arbitration. It is further contended that
notions of international arbitration jurisprudence are different from notions
of domestic arbitrability as noted in the book ‘International Commercial
nd
Arbitration (Second Edition), 2 edition by Gary B. Born’.
24.3. In Sudhir Gopi (supra) this Court was dealing with the arbitration
agreement which falls in Part-I of the Arbitration Act, and held that whether
a court will compel any person to arbitrate would have to be examined in the
context of the specific provisions of the applicable statute. Though it is
universally accepted principle that dispute resolution by arbitration must be
encouraged, however, the courts determine the question whether an
individual or an entity can be compelled to arbitrate, guided by the domestic
law and the judicial standards of their country. This Court further held that
the courts would undoubtedly have the power to determine whether in a
given case the corporate veil should be pierced or not, however, an arbitral
tribunal has no jurisdiction to lift the corporate veil, its jurisdiction being
confined by the arbitration agreement which included the parties to
CS(COMM) 447/2017 Page 72 of 98



arbitration and it would not be permissible for the arbitral tribunal to expand
or extend the same to other persons. Continuing the discussion, this Court
also noted that an arbitration agreement can be extended to a non-signatory
in limited circumstances, firstly, where the Court comes to the conclusion
that there is an implied consent and secondly, where there are reasons to
disregard the corporate personality of a party, thus, making the shareholders
answerable for the obligations of the company. Thus, this Court recognized
that though limited, corporate veil could be lifted but it was for the court to
do it and not the arbitral tribunal. To come to this conclusion this Court in
Sudhir Gopi (supra) referred to the decision in DDA vs. Skipper
Construction (supra) wherein the Court lifted the corporate veil for the
reason the corporate character was being employed for the purpose of
committing illegality or for defrauding others.
24.4. The Constitution Bench comprising of seven judges of the Supreme
Court in (2005) 8 SCC 618 SBP & Co. Vs. Patel Engineering Ltd. & Anr.
held that an order of reference to an arbitration under Section 11 of the
Arbitration Act was a judicial decision and not an administrative decision.
The Chief Justice could also decide the question whether the claim was a
dead one or a long barred claim that was sought to be resurrected and
whether the parties have concluded the transaction by recording satisfaction
of their mutual rights and obligations or by receiving the final payment
without objection. It was further held that the Chief Justice is also required
to enquire whether the conditions for exercise of his power under Section 11
(6) of the Arbitration Act have been fulfilled.
24.5. Following the Constitution Bench decision in SBP & Co. (supra)
Supreme Court in 2009 (1) SCC 267 National Insurance Co.Ltd. Vs.
CS(COMM) 447/2017 Page 73 of 98



Boghara Polyfab (P) Ltd. identified and segregated three categories for
consideration in an application under Section 11 of the Arbitration Act,
Category (1) being where the Chief Justice/his designate has to/must decide
the issue; Category (2) where the Chief Justice/his designate may choose to
decide the issues or leave them to the decision of the Arbitral Tribunal and
Category (3) where the Chief Justice/his designate should leave the issues
exclusively to the Arbitral Tribunal. Issues falling in the three categories
were noted as under:-
22. Where the intervention of the court is sought for
appointment of an Arbitral Tribunal under Section11, the
duty of the Chief Justice or his designate is defined in SBP
& Co. This Court identified and segregated the preliminary
issues that may arise for consideration in an application
under Section 11 of the Act into three categories, that is, (i)
issues which the Chief Justice or his designate is bound to
decide; (ii) issues which he can also decide, that is, issues
which he may choose to decide; and (iii) issues which
should be left to the Arbitral Tribunal to decide.
22.1. The issues (first category) which the Chief Justice/his
designate will have to decide are:
(a) Whether the party making the application has
approached the appropriate High Court.
(b) Whether there is an arbitration agreement and whether
the party who has applied under Section 11 of the Act, is a
party to such an agreement.
22.2. The issues (second category) which the Chief
Justice/his designate may choose to decide (or leave them to
the decision of the Arbitral Tribunal) are:
(a) Whether the claim is a dead (long-barred) claim or a live
claim.
CS(COMM) 447/2017 Page 74 of 98



(b) Whether the parties have concluded the
contract/transaction by recording satisfaction of their
mutual rights and obligation or by receiving the final
payment without objection.
22.3. The issues (third category) which the Chief Justice/his
designate should leave exclusively to the Arbitral Tribunal
are:
(i) Whether a claim made falls within the arbitration clause
(as for example, a matter which is reserved for final decision
of a departmental authority and excepted or excluded from
arbitration).
(ii) Merits or any claim involved in the arbitration.”
24.6. In National Insurance Co.Ltd. (supra) Supreme Court also drew a
distinction between a reference to arbitration under Section 11 of the
Arbitration Act and a dispute referred to the Arbitral Tribunal without the
intervention of the Court and noted the questions which could be decided by
the Arbitral Tribunal as under:-
21. It is thus clear that when a contract contains an
arbitration clause and any dispute in respect of the said
contract is referred to arbitration without the intervention of
the court, the Arbitral Tribunal can decide the following
questions affecting its jurisdiction: (a) whether there is an
arbitration agreement; (b) whether the arbitration
agreement is valid; (c) whether the contract in which the
arbitration clause is found is null and void, and if so,
whether the invalidity extends to the arbitration clause also.
It follows, therefore, that if the respondent before the
Arbitral Tribunal contends that the contract has been
discharged by reason of the claimant accepting payment
made by the respondent in full and final settlement, and if
the claimant counters it by contending that the discharge
voucher was extracted from him by practising fraud, undue
influence, or coercion, the Arbitral Tribunal will have to
decide whether the discharge of contract was vitiated by any
CS(COMM) 447/2017 Page 75 of 98



circumstance which rendered the discharge voidable at the
instance of the claimant. If the Arbitral Tribunal comes to
the conclusion that there was a valid discharge by voluntary
execution of a discharge voucher, it will refuse to examine
the claim on merits, and reject the claim as not
maintainable. On the other hand, if the Arbitral Tribunal
comes to the conclusion that such discharge of contract was
vitiated by any circumstance which rendered it void, it will
ignore the same and proceed to decide the claim on merits.”
24.7. In A.Ayyasamy (supra) Supreme Court laid down that though the
Arbitration Act does not specify but the courts have held that certain
disputes like criminal offences of a public nature, disputes arising out of
illegal agreements and disputes relating to status, such as divorce, cannot be
referred to arbitration. The Court laid the categories of non-arbitrable
disputes being: (i) patent, trademarks and copyright; (ii)
antitrust/competition laws; (iii) insolvency/winding up; (iv) bribery/
corruption; (v) fraud; and (vi) criminal matters.
24.8. Following the decision in SBP & Co . (supra) and National Insurance
Co.Ltd. (supra) Supreme Court in Chloro Controls (supra) held as under :-
“129. We are not oblivious of the principle “kompetenz
kompetenz”. It requires the Arbitral Tribunal to rule on its
own jurisdiction and at the first instance. One school of
thought propagates that it has duly the positive effect as it
enables the arbitrator to rule on its own jurisdiction as it
widely recognized international arbitration. However, the
negative effect is equally important, that the courts are
deprived of their jurisdiction. The arbitrators are to be not
the sole judge but first judge, of their jurisdiction. In other
words, it is to allow them to come to a decision on their own
jurisdiction prior to any court or other judicial authority
and thereby limit the jurisdiction of the national courts to
review the award. The kompetenz kompetenz rule, thus,
concerned not only is the positive but also the negative effect
CS(COMM) 447/2017 Page 76 of 98



of the arbitration agreement. (Refer Fouchard Gaillard
Goldman on International Commercial Arbitration.)

130. This policy has found a favourable mention with
reference to the New York Convention in some of the
countries. This is one aspect. The more important aspect as
far as Chapter I of Part II of the 1996 Act is concerned, is
the absence of any provision like Section 16 appearing in
Part I of the same Act. Section 16 contemplates that the
arbitrator may determine its own jurisdiction. Absence of
such a provision in Part II Chapter I is suggestive of the
requirement for the court to determine the ingredients of
Section 45, at the threshold itself. It is expected of the court
to answer the question of validity of the arbitration
agreement, if a plea is raised that the agreement containing
the arbitration clause or the arbitration clause itself is null
and void, inoperative or incapable of being performed. Such
determination by the court in accordance with law would
certainly attain finality and would not be open to question
by the Arbitral Tribunal, even as per the principle of
prudence. It will prevent multiplicity to litigation and
reagitating of same issues over and over again. The
underlining (sic underlying) principle of finality in Section
11(7) would be applicable with equal force while dealing
with the interpretation of Sections 8 and 45. Further, it may
be noted that even the judgment of this Court in SBP & Co.
takes a view in favour of finality of determination by the
Court despite the language of Section 16 in Part I of the
1996 Act. Thus, there could hardly be any possibility for the
Court to take any other view in relation to an application
under Section 45 of the 1996 Act. Since, the categorization
referred to by this Court in National Insurance Co.Ltd. is
founded on the decision by the larger Bench of the Court in
SBP & Co., we see no reason to express any different view.
The categorization falling under para 22.1 of National
Insurance co. case would certainly be answered by the
Court before it makes a reference while under para 22.2 of
that case, the Court may exercise its discretion and decide
the dispute itself or refer the dispute to the Arbitral
CS(COMM) 447/2017 Page 77 of 98



Tribunal. Still, under the cases falling under para 22.3, the
Court is expected to leave the determination of such dispute
upon the Arbitral Tribunal itself. But wherever the Court
decides in terms of categories mentioned in paras 22.1 and
22.2, the decision of the Court is unreviewable b the Arbitral
Tribunal.

131. Another very significant aspect of adjudicating the
matters initiated with reference to Section 45 of the 1996
Act, at the threshold of judicial proceedings, is that the
finality of the decision in regard to the fundamental issues
stated under Section 45 would further the cause of justice
and interest of the parties as well:

131.1 To illustratively demonstrate it, we may give an
example. Where Party A is seeking reference to arbitration
and Party B raises objections going to the very root of the
matter that the arbitration agreement is null and void,
inoperative and incapable of being performed, such
objections, if left open and not decided finally at the
threshold itself may result in not only parties being
compelled to pursue arbitration proceedings by spending
time, money and efforts but even the Arbitral Tribunal would
have to spend valuable time in adjudicating the complex
issues relating to the dispute between the parties, that may
finally prove to be in vain and futile. Such adjudication by
the Arbitral Tribunal may be rendered ineffective or even a
nullity in the event the courts upon filing of an award and at
execution stage hold that the agreement between the parties
was null and void inoperative and incapable of being
performed. The court may also hold that the Arbitral
Tribunal had no jurisdiction to entertain and decide the
issues between the parties.

131.2 The issue of jurisdiction normally is a mixed
question of law and facts. Occasionally, it may also be a
question of law alone. It will be appropriate to decide such
questions at the beginning of the proceedings itself and they
should have finality.
CS(COMM) 447/2017 Page 78 of 98




131.3 Even when the arbitration law in India contained
the provision like Section 34 of the 1940 Act which was
somewhat similar to Section 4 of the English Arbitration
Act, 1889, this Court in Anderson Wright Ltd. took the view
that while dealing with the question of grant or refusal of
stay as contemplated under Section 34 of the 1940 Act, it
would be incumbent upon the court to decide first of all
whether there is a binding agreement for arbitration
between the parties to the suit or not.

131.4 Applying the analogy thereof will fortify the view
that determination of fundamental issues as contemplated
under Section 45 of the 1996 Act at the very first instance by
the judicial forum is not only appropriate but is also the
legislative intent. Even the language of Section 45 of the
1996 Act suggests that unless the court finds that an
agreement is null and void, inoperative and incapable of
being performed, it shall refer the parties to arbitration.”

24.9. Singapore High Court in the decision reported as 2006 SGHC 78 Aloe
Vera of America, Inc. vs. Asianic Food (S) Pte. Ltd. & Anr. held:
72. In my opinion, the above submissions are misplaced. It is
clear from the wording of the section itself that the
determination of whether a matter is arbitrable or not is
governed by Singapore law. The law of Arizona is irrelevant.
As far as Singapore law is concerned, as para 20.149
of Halsbury’s points out, no specific subjects have been
identified by statute as being or as not being arbitrable.
Instead, Halsbury’s states:
It is generally accepted that issues, which may have public
interest elements, may not be arbitrable, for example
citizenship or legitimacy of marriage, grants of statutory
licences, validity of registration of trade marks or patents,
copyrights, winding-up of companies …
Whether a person is the alter ego of a company is an issue
which does not have a public interest element. It normally
CS(COMM) 447/2017 Page 79 of 98



arises in a commercial transaction in which one party is trying
to make an individual responsible for the obligations of a
corporation. In my judgment, such an issue can in an
appropriate case be decided by arbitration. In this case, the
Arbitrator had first found an agreement between Mr Chiew to
arbitrate as he found the latter to be “properly a party to this
arbitration as a party under the broad definition found in
paragraph 13.7 of the Agreement”. It was only after hearing
evidence at the final hearing that the Arbitrator found that
Mr Chiew was the alter ego of Asianic based on Arizona law.
As the Arbitrator had clearly found Mr Chiew to be a party to
the arbitration agreement with AVA, he was entitled to go on
and decide in the course of the arbitration whether or not
Mr Chiew was the alter ego of Asianic. This issue was within
the scope of the submission to arbitration and was clearly
arbitrable.

24.10. In Chloro Controls (supra) the Supreme Court also drew distinction
between the question of formal validity of the arbitration agreement and
nature of parties to the agreement and held:
106. The question of formal validity of the arbitration
agreement is independent of the nature of parties to the
agreement, which is a matter that belongs to the merits and is
not subject to substantive assessment. Once it is determined
that a valid arbitration agreement exists, it is a different step
to establish which parties are bound by it. The third parties,
who are not explicitly mentioned in an arbitration agreement
made in writing, may enter into its ratione personae scope.
Furthermore, the Convention does not prevent consent to
arbitrate from being provided by a person on behalf of
another, a notion which is at the root of the theory of implied
consent.

24.11. In Chloro Controls (supra) Supreme Court reiterated the decision in
National Insurance Co.Ltd. (supra) wherein a distinction was carved out
between a court referred arbitration and an arbitration without the
CS(COMM) 447/2017 Page 80 of 98



intervention of the Court. In Chloro Controls (supra) Supreme Court was
dealing with an application under Section 45 of the Arbitration Act seeking
reference to arbitration. In the present case the arbitration was initiated
without the intervention of the Court and only after initiation of the
arbitration, GMR Energy filed the present suit invoking the jurisdiction of
this Court seeking an injunction against arbitration to proceed against it on
the basis of issue of alter ego. The issue of alter ego not falling within the
categories of non-arbitrable disputes as specified in A.Ayyasamy (supra) and
the nature of parties to the agreement being distinct from the formal validity
of the arbitration agreement and a question of merit as held in Chloro
Control (supra) would thus fall in the category (2) laid down by National
Insurance Co.Ltd. (supra) even if considering that Doosan India has filed an
application under Section 45 before this Court which is without prejudice to
its right. Thus, the issue of alter ego based on the facts as noted in the
present case and not on fraud can be decided by the Court as well as the
Arbitral Tribunal.
25. Issue No.4: In the present suit whether this Court will form a
prima facie opinion on the issue of alter ego or return a finding?
25.1. Learned counsel for GMR Energy contends that the present case deals
with a non-party to the agreement, which issue is covered by the decision of
the Supreme Court in Chloro Controls (supra) wherein discussing the earlier
judgment in Shin-Etsu Chemical (supra), Supreme Court held that the Court
must return a final finding in an application under Section 45 of the
Arbitration Act.
25.2. Learned counsel for Doosan India however contends that in the
present suit this Court will only apply the prima facie test and if from the
CS(COMM) 447/2017 Page 81 of 98



notice of arbitration a prima facie case is made out for proceeding against
GMR Energy then ultimately whether GMR Energy is liable to be proceeded
in the arbitration or an award passed against it would be in the sole domain
of the arbitral tribunal and this Court will not return a finding of fact on the
said issue. Reliance is placed on the decisions in Shin-Etsu Chemical

(supra) wherein the test of prima facie view was upheld. It is reiterated that
the Arbitral Tribunal is the proper forum to adjudicate upon the issue of alter
ego as held in Integrated Sales (supra).
25.3. Singapore High Court in the decision reported as Malini Ventura
(supra) held:
“19. This is where the chicken and the egg question arises.
Mr Nakul Dewan, counsel for the defendants, says that the
international arbitration regime in place in Singapore gives
primacy to the Tribunal and it is the Tribunal that has the first
bite at deciding whether or not there is an arbitration
agreement which confers jurisdiction on it. The defendants
further say that under s 6 of the IAA I have no choice but to
refer the question of the existence, validity or termination of an
arbitration agreement to the Tribunal. The plaintiff's riposte is
that s 6 would only apply to an "arbitration agreement" and
that since she did not sign the Guarantee, neither she nor the
defendants are parties to an "arbitration agreement" within
s 6(1) and therefore the defendants are not allowed to apply to
court for a stay of this action. It is for the court to decide
whether there is an arbitration agreement or not.
20. Essentially, my dilemma is how to apply s 6 of the IAA in
the circumstances of this case. The first two subsections of that
provision read:
Enforcement of intentional arbitration agreement
6.-(1) Notwithstanding Article 8 of the Model Law, where any
party to an arbitration agreement to which this Act applies
institutes any proceedings in any court against any other party
CS(COMM) 447/2017 Page 82 of 98



to the agreement in respect of any matter which is the subject of
the agreement, any party to the agreement may, at any time
after appearance and before delivering any pleading or taking
any other step in the proceedings, apply to that court to stay the
proceedings so far as the proceedings relate to that matter.
(2) The court to which an application has been made in
accordance with subsection (1) shall make an order, upon such
terms or conditions as it may think fit, staying the
proceedings so far as the proceedings relate to the
matter, unless it is satisfied that the arbitration agreement is
null and void, inoperative or incapable of being performed.
[emphasis added]
36. Bearing in mind the differences in the regimes governing
international arbitration in Singapore and in England, I do not
think it will be correct for me to fully take on board the
approach of the English courts as set out in Albon and Al-
Naimi. The regime in force here gives primacy to the tribunal
although, of course, the court still has an important role to
play. If I were to hold that, in a situation where the conclusion
of the arbitration agreement is in issue, the jurisdiction in
s 6(2) to stay the court proceedings would not bite unless I
could conclude, on the basis of the usual civil standard, that the
arbitration agreement had been entered into, I would be
imposing too high a burden on the party seeking the
implementation of the arbitration agreement. I consider that it
would satisfy the rights of both parties if the party applying for
the stay was able to show on a prima facie basis that the
arbitration agreement existed. The matter would then go to the
tribunal to decide whether such existence could be established
on the usual civil standard and then, if any party was
dissatisfied with the tribunal's decision, such party could come
back to the court for the last say on the issue. In another case
regarding a tribunal's jurisdiction, albeit a different aspect not
involving the formation of the arbitration agreement, the Court
of Appeal observed that it was only in the clearest case that the
court should decide that there was no jurisdiction instead of
remitting the matter to the tribunal for an initial decision
(see Tjong Very Sumito v Antig Investments Pte Ltd [2009] 4
SLR(R) 732 at [22]-[24]).
CS(COMM) 447/2017 Page 83 of 98

CS(COMM) 447/2017 Page 84 of 98

25.4. Following Malini Ventura (Supra) in Tomolugen Holding (supra) it
was held:
63 The prima facie approach was also the view urged upon
us by the amicus curiae, Prof Boo. We agree that a Singapore
court should adopt a prima facie standard of review when
hearing a stay application under s 6 of the IAA. In our
judgment, a court hearing such a stay application should grant
a stay in favour of arbitration if the applicant is able to
establish a prima facie case that:
(a) there is a valid arbitration agreement between the parties
to the court proceedings;
(b) the dispute in the court proceedings (or any part thereof)
falls within the scope of the arbitration agreement; and
(c) the arbitration agreement is not null and void,
inoperative or incapable of being performed.
64. ….
65. We part company with the English position and adopt the
prima facie approach for the purposes of the threshold
question essentially for four reasons. First, the prima facie
approach coheres better with what we consider was envisaged
by the drafters of the IAA. The earliest iteration of the IAA
(viz, the International Arbitration Act 1994 (Act 23 of 1994)
("the original IAA")) was enacted in 1994, and it drew heavily
from the recommendations made in the Report of the Sub-
committee on Review of Arbitration Laws (1993) (Chairman:
Giam Chin Toon) ("1993 Report on Review of Arbitration
Laws"). That report included a draft Bill, which was
considered and adopted with amendments by the Singapore
Academy of Law's Law Reform Committee, and this
subsequently resulted in the enactment of the original IAA in
1994 (see the remarks of Assoc Prof Ho Peng Kee, the then
Parliamentary Secretary to the Minister for Law, at the second
reading of the International Arbitration Bill 1994 (Bill 14 of
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1994) ("the 1994 International Arbitration Bill"): Singapore
Parliamentary Debates, Official Report (31 October 1994) vol
63 ("Singapore Parliamentary Debates vol 63") at cols 627-
628).
67. Second, to require the court, on a stay application under
s 6 of the IAA, to undertake a full determination of an arbitral
tribunal's jurisdiction could significantly hollow the
kompetenz-kompetenz principle of its practical effect. The full
merits approach has the potential to reduce an arbitral
tribunal's kompetenz-kompetenz to a contingency dependent
on the strategic choices of the claimant in a putative
arbitration. If the claimant decides to pursue its claim by
arbitration, the arbitral tribunal will determine any challenge
to its jurisdiction, and thus, its kompetenz-kompetenz will be
given full vent. But, if the claimant decides to pursue its claim
by bringing proceedings in court (instead of by recourse to
arbitration), the court will be seized of jurisdiction, and will be
able (and, indeed, on the full merits approach, obliged) to
make a full determination on the existence and scope of the
arbitration clause; this will deprive the putative arbitral
tribunal of its kompetenz-kompetenz. In our view, the strength
of the kompetenz-kompetenz principle cannot depend on the
arbitrary choice of the claimant as to whether it will pursue its
claim by way of court proceedings or by way of arbitration.
That undermines the principles of judicial non-intervention
and kompetenz-kompetenz which were at the forefront in the
drafting of the Model Law and the enactment of the original
IAA (see Assoc Prof Ho's remarks at the second reading of the
1994 International Arbitration Bill: Singapore Parliamentary
Debates vol 63 at cols 625-626). We should point out that the
strain which the English position puts on these principles of
judicial non-intervention and kompetenz-kompetenz has not
escaped criticism (see Arbitration Law (Robert Merkin gen ed)
(informa, Looseleaf Ed, 15 August 2011 release) at para 8.21,
as well as David Joseph QC, Jurisdiction and Arbitration
Agreements and their Enforcement (Sweet & Maxwell, 2nd Ed,
2010) ("Jurisdiction and Arbitration Agreements") at pp 346-
347). This difficulty is avoided if the prima facie approach is
adopted.
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68 Third, we consider that the fear of resource duplication
which, it is said, will arise from the prima facie approach is
overstated. A robust recognition and enforcement of the
kompetenz-kompetenz principle may, on the contrary, deter a
plaintiff from commencing proceedings in court in the face of
an arbitration agreement. The plaintiff will be well aware that
the court will stay the proceedings in favour of arbitration
except in cases where the arbitration clause is clearly invalid
or inapplicable. The author of Jurisdiction and Arbitration
Agreements also argues (at p 346), albeit anecdotally, that the
parties to an arbitration are likely to accept a well-reasoned
jurisdictional determination rendered by an arbitral tribunal
without appealing against it, and this would avoid re-litigation
of the same issue. Parties that attempt to protract proceedings
by making unmeritorious appeals against an arbitral tribunal's
jurisdictional determination also face the prospect of an
adverse costs order under s 10(7) of the IAA.
25.5. The issue as to whether the Court should form a prima facie opinion
or return a finding was also dealt in Chloro Controls (supra) and
distinguishing the decision in Shin-Etsu Chemical (supra) Supreme Court
held that if the decision of jurisdiction is left open and not decided finally at
the threshold itself, the same may result not only parties being compelled to
pursue arbitration proceedings by spending time, money and effort but even
the arbitral tribunal would have to spend valuable time in adjudicating the
complex issues relating to the dispute between the parties that may finally
prove to be in vain and futile. It would be thus appropriate to determine the
fundamental issues as contemplated under Section 45 of the Arbitration Act
at the very first instance by the judicial forum as is the legislative intent. It
was held:
“128. The judgment of this Court in Shin-Etsu Chemical Co.
Ltd. [(2005) 7 SCC 234] preceded the judgment of this Court
in SBP & Co. [(2005) 8 SCC 618] Though the Constitution
Bench in the latter case referred to this judgment in para 89 of
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the judgment but did not discuss the merits or otherwise of the
case presumably for absence of any conflict. However, as
already noticed, the Court clearly took the view that the
findings returned by the Chief Justice while exercising his
judicial powers under Section 11 relatable to Section 8 are
final and not open to be questioned by the Arbitral Tribunal.
Sections 8 and 45 of the 1996 Act are provisions independent
of each other. But for the purposes of reference to arbitration,
in both cases, the applicant has to pray for a reference before
the Chief Justice or his designate in terms of Section 11 of the
1996 Act. We may refer to the exact terminology used by the
larger Bench in SBP & Co. [(2005) 8 SCC 618] in relation to
the finality of such matters, as reflected in para 12 of the
judgment which reads as under: (SCC pp. 643-44)
“12. Section 16 of the Act only makes explicit what is
even otherwise implicit, namely, that the Arbitral
Tribunal constituted under the Act has the jurisdiction
to rule on its own jurisdiction, including ruling on
objections with respect to the existence or validity of
the arbitration agreement. Sub-section (1) also directs
that an arbitration clause which forms part of a
contract shall be treated as an agreement independent
of the other terms of the contract. It also clarifies that
a decision by the Arbitral Tribunal that the contract is
null and void shall not entail ipso jure the invalidity of
the arbitration clause. Sub-section (2) of Section 16
enjoins that a party wanting to raise a plea that the
Arbitral Tribunal does not have jurisdiction, has to
raise that objection not later than the submission of
the statement of defence, and that the party shall not
be precluded from raising the plea of jurisdiction
merely because he has appointed or participated in
the appointment of an arbitrator. Sub-section (3) lays
down that a plea that the Arbitral Tribunal is
exceeding the scope of its authority, shall be raised as
soon as the matter alleged to be beyond the scope of
its authority is raised during the arbitral proceedings.
When the Tribunal decides these two questions,
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namely, the question of jurisdiction and the question
of exceeding the scope of authority or either of them,
the same is open to immediate challenge in an appeal,
when the objection is upheld and only in an appeal
against the final award, when the objection is
overruled. Sub-section (5) enjoins that if the Arbitral
Tribunal overrules the objections under sub-section
(2) or (3), it should continue with the arbitral
proceedings and make an arbitral award. Sub-section
(6) provides that a party aggrieved by such an
arbitral award overruling the plea on lack of
jurisdiction and the exceeding of the scope of
authority, may make an application on these grounds
for setting aside the award in accordance with Section
34 of the Act. The question, in the context of sub-
section (7) of Section 11 is, what is the scope of the
right conferred on the Arbitral Tribunal to rule upon
its own jurisdiction and the existence of the
arbitration clause, envisaged by Section 16(1), once
the Chief Justice or the person designated by him had
appointed an arbitrator after satisfying himself that
the conditions for the exercise of power to appoint an
arbitrator are present in the case. Prima facie, it
would be difficult to say that in spite of the finality
conferred by sub-section (7) of Section 11 of the Act,
to such a decision of the Chief Justice, the Arbitral
Tribunal can still go behind that decision and rule on
its own jurisdiction or on the existence of an
arbitration clause. It also appears to us to be
incongruous to say that after the Chief Justice had
appointed an Arbitral Tribunal, the Arbitral Tribunal
can turn round and say that the Chief Justice had no
jurisdiction or authority to appoint the Tribunal, the
very creature brought into existence by the exercise of
power by its creator, the Chief Justice. The argument
of the learned Senior Counsel, Mr K.K. Venugopal
that Section 16 has full play only when an Arbitral
Tribunal is constituted without intervention under
Section 11(6) of the Act, is one way of reconciling that
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provision with Section 11 of the Act, especially in the
context of sub-section (7) thereof. We are inclined to
the view that the decision of the Chief Justice on the
issue of jurisdiction and the existence of a valid
arbitration agreement would be binding on the parties
when the matter goes to the Arbitral Tribunal and at
subsequent stages of the proceeding except in an
appeal in the Supreme Court in the case of the
decision being by the Chief Justice of the High Court
or by a Judge of the High Court designated by him.”
(Emphasis supplied)

We are conscious of the fact that the above dictum of the
Court in SBP case [(2005) 8 SCC 618] is in relation to the
scope and application of Section 11 of the 1996 Act. It has
been held in various judgments of this Court but more
particularly in SBP [(2005) 8 SCC 618] which is binding on
us that before making a reference, the Court has to dispose of
the objections as contemplated under Section 8 or Section 45,
as the case may be, and wherever needed upon filing of
affidavits. Thus, to an extent, the law laid down by this Court
on Section 11 shall be attracted to an international arbitration
which takes place in India as well as domestic arbitration.
This, of course, would be applicable at pre-award stage. Thus,
there exists a direct legal link, limited to that extent.

129. We are not oblivious of the principle “kompetenz
kompetenz”. It requires the Arbitral Tribunal to rule on its
own jurisdiction and at the first instance. One school of
thought propagates that it has duly the positive effect as it
enables the arbitrator to rule on its own jurisdiction as it
widely recognized international arbitration. However, the
negative effect is equally important, that the courts are
deprived of their jurisdiction. The arbitrators are to be not the
sole judge but first judge, of their jurisdiction. In other words,
it is to allow them to come to a decision on their own
jurisdiction prior to any court or other judicial authority and
thereby limit the jurisdiction of the national courts to review
the award. The kompetenz kompetenz rule, thus, concerned not
CS(COMM) 447/2017 Page 90 of 98



only is the positive but also the negative effect of the
arbitration agreement. (Refer Fouchard Gaillard Goldman on
International Commercial Arbitration.)

130. This policy has found a favourable mention with
reference to the New York Convention in some of the
countries. This is one aspect. The more important aspect as far
as Chapter I of Part II of the 1996 Act is concerned, is the
absence of any provision like Section 16 appearing in Part I of
the same Act. Section 16 contemplates that the arbitrator may
determine its own jurisdiction. Absence of such a provision in
Part II Chapter I is suggestive of the requirement for the court
to determine the ingredients of Section 45, at the threshold
itself. It is expected of the court to answer the question of
validity of the arbitration agreement, if a plea is raised that
the agreement containing the arbitration clause or the
arbitration clause itself is null and void, inoperative or
incapable of being performed. Such determination by the court
in accordance with law would certainly attain finality and
would not be open to question by the Arbitral Tribunal, even
as per the principle of prudence. It will prevent multiplicity to
litigation and reagitating of same issues over and over again.
The underlining (sic underlying) principle of finality in Section
11(7) would be applicable with equal force while dealing with
the interpretation of Sections 8 and 45. Further, it may be
noted that even the judgment of this Court in SBP & Co. takes
a view in favour of finality of determination by the Court
despite the language of Section 16 in Part I of the 1996 Act.
Thus, there could hardly be any possibility for the Court to
take any other view in relation to an application under Section
45 of the 1996 Act. Since, the categorization referred to by
this Court in National Insurance Co.Ltd. is founded on the
decision b the larger Bench of the Court in SBP & Co., we see
no reason to express any different view. The categorization
falling under para 22.1 of National Insurance co. case would
certainly be answered by the Court before it makes a reference
while under para 22.2 of that case, the Court may exercise its
discretion and decide the dispute itself or refer the dispute to
the Arbitral Tribunal. Still, under the cases falling under para
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CS(COMM) 447/2017 Page 92 of 98

25.6. However, in Chloro Controls (supra) the Supreme Court was dealing
with a case of reference to the arbitration under Section 45 and not an
arbitration which had already been initiated. Carving out the distinction
between the two in para 22 of the decision in National Insurance Co. Ltd.
(supra) Supreme Court held that the Arbitral Tribunal was also competent to
decide the issue including the validity of the arbitration agreement. In a case
where the arbitration is not a court referred arbitration it would be thus in the
domain of the Arbitral Tribunal to decide the issue of alter ego and Court in
a suit filed by the opposite party is competent to form an opinion based on
the affidavits filed by the parties as held in the Constitution Bench decision
in SBP & Co. (supra) as under:

39. It is necessary to define what exactly the Chief Justice,
approached with an application under Section 11 of the Act, is
CS(COMM) 447/2017 Page 93 of 98

application under Section 45 of the Arbitration Act filed by Doosan India
without prejudice to its rights and contentions, for the reason this Court
passed an interim injunction on the facts of this case it would be sufficient if
this Court returns a finding based on the pleadings supported by affidavits
by the parties without going into a full-fledged trial.
CS(COMM) 447/2017 Page 94 of 98



26. Issue No. 6: Whether the arbitration against GMR Energy is
contrary to Rule 7 of SIAC Rules?
26.1. The last issue raised by GMR Energy is that assuming SIAC Rules,
2016 are applicable to the arbitration even then GMR Energy could not be
impleaded as a party without compliance of Rule 7 of SIAC Rules and
without entailing an opportunity of hearing to GMR Energy even prior to the
constitution of Tribunal. Doosan India self impleaded GMR Energy and
thus the objections to GMR Energy to SIAC went unheard. In this regard
st th
GMR Energy through its letters dated 21 December, 2016, 13 January,
th th th
2017, 15 March, 2017, 20 May, 2017 and 27 May, 2017 objected to the
applicability of the arbitration agreement to GMR Energy and its inclusion
in the arbitration proceedings which went undetermined by SIAC. Even after
th
the impugned letter dated 8 June, 2017 issued by SIAC, GMR Energy on
th
13 June , 2017 requested SIAC to first determine its objections which were
not determined and compelling GMR Energy to file the present suit.
26.2. Countering the contention of non-invocation of Rule 7 of SIAC Rules,
learned counsel for Doosan India submits that the plea of GMR Energy is
clearly an afterthought, after a period of five months from the date of notice
th
of arbitration raised for the first time in the objections dated 20 May, and
th
27 May, 2017. Notwithstanding the objections, it is contended that Rule 7
of SIAC Rules has no application to the present arbitral proceedings as the
concept of joinder of parties is different from invoking an arbitration
agreement against an alter ego. Furthermore Rule -7 of SIAC Rules applies
at the stage, after the commencement of arbitration under Rule 3 and GMR
Energy not being named as a party to the arbitration in accordance with Rule
CS(COMM) 447/2017 Page 95 of 98



3, Rule 7 would have no application. Even otherwise Rule 7 of SIAC Rules
is not mandatory as it uses the term “May”.
26.3. Rule 7 of SIAC Rules provide as under:
7.1 Prior to the constitution of the Tribunal, a party or non-
party to the arbitration may file an application with the
Registrar for one or more additional parties to be joined in an
arbitration pending under these Rules as a Claimant or a
Respondent, provided that any of the following criteria is
satisfied.

a. the additional party to be joined is prima facie bound
by the arbitration agreement; or
b. all parties, including the additional party to be joined,
have consented to the joinder of the additional party.

26.4. The concept of joinder and consolidation while invoking an
arbitration agreement against an alter ego was considered in Bernard
Hanotiau, ‘Non-signatories in International Arbitration: Lessons from Thirty
Years of Case Law’, in Albert Jan Van den Berg (ed), International
Arbitration 2006; Back to Basics’, ICCA Congress Series, Volume 13
(Kluwer Law International 2007) pp. 341- 358 at pp 346 is as below:

7. Distinction of the Non-signatory Issue from Joinder and
Consolidation
The issue of “extension” of the arbitration clause to non-
signatories should be clearly distinguished from the issues
which are usually referred to as:

- Joinder: that is, whether a non-party to the arbitration may
intervene in the arbitration proceedings, once they have
been initiated, or whether a party to the arbitration
proceedings (Claimant on the one hand, Respondent on the
other hand) may join a non-party during the arbitration;
- Consolidation: that is, if multiple disputes that arise from,
or in connection with, different contracts, must in the first
CS(COMM) 447/2017 Page 96 of 98



place be the object of separate arbitration requests, can the
arbitral proceedings subsequently be consolidated?...

26.5. Thus there being a distinction between invoking arbitration against a
non-signatory and joinder of a non-party during arbitration, the contention of
learned counsel for GMR Energy that the invocation of arbitration against
GMR Energy is contrary to Rule 7 of the SIAC Rules is rejected. In any
case GMR Energy would be at liberty to raise the plea before the arbitral
tribunal.

27. This Court having held that the arbitration that has commenced at
Singapore would fall under Part-II of the Arbitration Act and not Part-I; the
arbitration pending in Singapore pursuant to Arb.316/16/ACU not on a
reference by Court, the issue of piercing the corporate veil, in the facts the
present case, can be decided both by the Court as well as the Arbitral
Tribunal; and this Court having formed an opinion based on the pleadings
on affidavit that from the notice of arbitration Doosan India has made out a
case for proceeding against GMR Energy to arbitration with GCEL and GIL;
I.A. No. 7248/2017 under Order XXXIX Rule 1 and 2 CPC is dismissed and
I.A. No. 9068/2017 under Order XXXIX Rule 4 CPC is disposed of.
th
Interim order dated 4 July, 2017 is vacated. There being an arbitration
pending at Singapore pursuant to Arb.316/16/ACU no further reference to
arbitration is necessary under Section 45 of the Arbitration Act. I.A. No.
9069/2017 under Section 45 of the Arbitration and Conciliation Act, 1996 is
accordingly disposed of as infructuous holding that GMR Energy is required
to submit to the arbitration pursuant to SIAC Arbitration No. 316/2016
(Arb.216/16/ACU).
CS(COMM) 447/2017 Page 97 of 98



28. It is clarified that the finding of this Court on the issue of alter ego is
for subjecting GMR Energy to arbitration and not a final determination on
merits to pass an award against GMR Energy which would be in the domain
of the Arbitral Tribunal.


(MUKTA GUPTA)
JUDGE
NOVEMBER 14, 2017
‘vn’


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