PRICOL LIMITED Vs JOHNSON CONTROLS ENTERPRISE LTD
Bench: RANJAN GOGOI
Case number: ARBIT.CASE(C) No.-000030-000030 / 2014
Diary number: 30551 / 2014
Advocates: DHEERAJ NAIR Vs
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NON-REPORTABLE
IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION
ARBITRATION CASE (CIVIL) NO.30 OF 2014
PRICOL LIMITED ...PETITIONER
VERSUS
JOHNSON CONTROLS ENTERPRISE LTD. & ORS. ...RESPONDENTS
JUDGMENT
1. Appointment of an Arbitrator under
the Joint Venture Agreement dated 26th
December, 2011 (for short “the JVA”) by
and between the parties has been sought by
means of the present application.
2. There is no dispute between the
parties with regard to the existence of
the JVA and/or with regard to the fact
that disputes and differences over the
respective rights and liabilities of the
parties under the JVA have surfaced. The
Arbitration clause under the JVA is in the
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following terms:
“ARTICLE 30
ARBITRATION
30.1 If any dispute arises between any of the Parties hereto during the subsistence or thereafter, in connection with the validity, interpretation, implementation or alleged material breach of any provision of this JVA or regarding any question, including the question as to whether the termination of this JVA by any Party hereto has been legitimate, the Parties hereto shall endeavour to settle such dispute amicably. The attempt to bring about an amicable settlement is considered to have failed as soon as one of the Parties hereto, after reasonable attempts which attempt shall continue for not less than sixty (60) days, given fifteen (15) days notice thereof to the other Party in writing.
30.2 In case of such failure, the dispute shall be referred to sole arbitrator to be mutually agreed upon by the Parties. In case the Parties are not able to arrive at such an arbitrator, the arbitrator shall be appointed in accordance with the rules of
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arbitration of the Singapore Chamber of Commerce.
30.3 The arbitration proceedings shall be held at Singapore. The arbitration proceeding s shall be in English language. The award shall be substantiated in writing. The court of arbitration shall also decide on the costs of the arbitration proceedings. The award shall be binding on the disputing Parties subject to applicable laws and the award shall be enforceable in any competent court of law. The provisions of this clause shall survive the termination of this JVA for any reason whatsoever.
30.4 Each of the Parties agree and acknowledge that damages would be inadequate to compensate for the breach of this JVA by either Party, and each Party shall be entitled to equitable relief by way of interim injunction or specific performance by recourse to courts/judicial forum with appropriate jurisdiction.
ARTICLE 31
GOVERNING LAW
31.1 This JVA shall be governed and construed in accordance with the laws of India.”
3. There are certain facts and events
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which have occurred during the pendency of
the present proceeding which must
immediately be taken note of.
4. The parties are not in dispute
that the “Singapore Chamber of Commerce”
mentioned in clause 30.2 of the JVA is not
an Arbitration Institution having any
Rules for appointment of Arbitrators.
However, construing the said reference to
the “Singapore Chamber of Commerce” to be
one to the “Singapore International
Arbitration Centre” (“SIAC” for short),
the first respondent, invoking the
arbitration clause, had moved the said
Authority i.e. SIAC for appointment of an
Arbitrator. This was so done on 5th
September, 2014. A copy of the said
notice/intimation was received by the
petitioner on 11th September, 2014.
Thereafter, the petitioner had instituted
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the present proceeding on 15th September,
2014. In the meantime, the SIAC,
exercising its powers under Section 8(2)
read with Section 8(3) of the Singapore
International Arbitration Act (Cap. 143A)
(for short “the IAA”), had appointed one
Mr. Steven Y.H. Lim as the sole
Arbitrator. In a preliminary meeting
between the parties and the learned sole
Arbitrator held on 30th October, 2014, it
was indicated by the petitioner that it
would be challenging the jurisdiction of
the sole Arbitrator appointed by the SIAC.
Accordingly, on directions of the learned
sole Arbitrator, there has been an
exchange of written submissions on the
issue of jurisdiction. A hearing on the
question of jurisdiction was also held in
Singapore on 18th November, 2014.
Thereafter, by a partial award, dated 27th
November, 2014, the sole Arbitrator had
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ruled that the appointment made by the
SIAC under the IAA is valid as the parties
have expressly agreed that Singapore would
be the seat of Arbitration.
5. On behalf of the petitioner, it is
contended that under clause 31.1, the
rights of the parties under the JVA is to
be governed by the laws of India.
Therefore, in the absence of any contrary
intention, even the arbitration agreement
will be governed by Indian Law i.e. the
Act of 1996. Clause 30.3 by which the
parties had agreed that “arbitration
proceedings shall be held at Singapore”
has to be consequently construed to mean
that the seat of Arbitration continues to
be India and Singapore is only the venue
of the hearings to be conducted in the
Arbitration proceedings. On the said
basis, it is contended that the present
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application under Section 11(6) of the Act
would justify appropriate orders from the
Court. It is also argued that the parties
to the JVA have not excluded the
application of Part I of the Act of 1996.
The JVA has been signed earlier to the
decision of this Court in Bharat Aluminium
Company vs. Kaiser Aluminium Technical
Services Inc. [(2012) 9 SCC 552].
Therefore, the procedural law governing
the conduct of the arbitration would be
the law prevailing in India.
6. It is alternatively submitted that
even assuming that the seat of Arbitration
is Singapore, as the rights of the parties
are to be governed by the Indian Law, it
is only the curial law of Singapore that
would apply to regulate the proceedings
after the appointment of the Arbitrator is
made and till the passing of the Award.
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Reference in this regard is made to
Sumitomo Heavy Industries Ltd. vs. ONGC
Ltd. and others [(1998) 1 SCC 305] On the
aforesaid basis, it is claimed that the
appointment of the sole Arbitrator by the
SIAC is without jurisdiction and this
Court ought to proceed to exercise its
powers under Section 11(6) of the Act.
7. In reply, the respondents submit
that clause 30.3 of the JVA makes it, ex
facie, clear that the parties have agreed
that the seat of Arbitration would be
Singapore. Though the substantive Law that
would govern the rights of the parties
under the JVA would be the Indian Law so
far as the appointment of Arbitrator is
concerned, it is the agreed terms (clause
30.2) which will prevail. It is submitted
that on a reasonable understanding of
clause 30.2, the request of the
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respondents to the SIAC for appointment of
a sole Arbitrator and the appointment made
does not suffer from any infirmity. It is
claimed that the “Singapore Chamber of
Commerce”, not being an Arbitration
Institution, the real intention of the
parties in clause 30.2 was to approach the
SIAC for appointment of an Arbitrator in
the event of the failure of a mutual
agreement on this score. This has been so
done by the respondents. Learned counsel
for the respondents has also taken the
Court to the past history of the dispute
between the parties commencing with the
grant of interim measures by the Civil
Court at Coimbatore under Section 9 of the
Act and the failure on the part of the
petitioner to agree to the appointment of
a retired judge of the Supreme Court of
India as the sole Arbitrator. The said
facts have been pointed out in support of
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the contention that the petitioner has
dragged its feet in the matter so as to
gain maximum advantage of the interim
order granted in its favour by the Civil
Court at Coimbatore. Lastly, it is
submitted that the Arbitrator having been
appointed by the SIAC in accordance with
the relevant Arbitration clause in the JVA
and the petitioner having submitted to the
jurisdiction of the Arbitrator and, in
fact, a partial award having been passed
by the sole Arbitrator on the issue of
jurisdiction, the present is not a fit
case for invoking the powers of this Court
under Section 11(6) of the Act.
8. On a consideration of the
respective submissions made by the parties
and the several precedents cited at the
bar, this Court is inclined to hold that
clause 30.2, on a reasonable and
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meaningful construction thereof, would
mean that in case the parties are not able
to name a sole Arbitrator by mutual
agreement, the Arbitrator is to be
appointed by the SIAC inasmuch as the
entity contemplated in clause 30.2 i.e.
“Singapore Chamber of Commerce” is
admittedly not an Arbitration Institution'
having its own Rules for appointment of
Arbitrators. Given the circumstance, the
most reasonable construction of the said
clause would be to understand the
reference to “Singapore Chamber of
Commerce” as to the “SIAC”.
9. From the relevant facts of the
case, it is also clear that the
respondents at one time had suggested the
name of a retired judge of the Supreme
Court of India as the sole Arbitrator,
which was not agreed to by the petitioner,
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who in turn, was inclined to nominate
another learned judge. Be that as it may,
in such a situation, the respondents by
invoking Arbitration clause 30.2 had
approached SIAC for appointment of an
Arbitrator. This was on 5th September,
2014 i.e. before the present proceeding
was instituted by the petitioner. Though
the notice of the said request was served
on the petitioner on 11th September, 2014,
no steps were taken by the petitioner to
pre-empt the appointment of a sole
Arbitrator by SIAC. Mr. Steven Y.H. Lim
came to be appointed as the sole
Arbitrator by the SIAC on 29th September,
2014. The petitioner has submitted to the
jurisdiction of Mr. Steven Y.H. Lim. Even
if it is held that such participation,
being under protest, would not operate as
an estoppel, what must be acknowledged is
that the appointment of the sole
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Arbitrator made by SIAC and the partial
award on the issue of jurisdiction cannot
be questioned and examined in a proceeding
under Section 11(6) of the Act which
empowers the Chief Justice or his nominee
only to appoint an Arbitrator in case the
parties fail to do so in accordance with
the terms agreed upon by them. To
exercise the said power, in the facts and
events that has taken place, would really
amount to sitting in appeal over the
decision of SIAC in appointing Mr. Lim as
well as the partial award dated 27th
November, 2014 passed by him acting as the
sole Arbitrator. Such an exercise would
be wholly inappropriate in the context of
the jurisdiction under Section 11(6) of
the Act, a view already expressed by this
Court in a recent decision in Antrix Corp.
Ltd. vs. Devas Multimedia P. Ltd.
[Arbitration Petition NO.20 of 2011
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decided on May 10, 2013, reported in
(2013) 6 SCR 453].
10. For the aforesaid reasons, this
application under Section 11(6) of the Act
has to fail. It is, accordingly,
dismissed, however, leaving it open to the
petitioner to avail of such remedies as
may be available to it in law.
....................,J. (RANJAN GOGOI)
NEW DELHI DECEMBER 16, 2014